A bipartisan group of Michigan lawmakers has introduced a pair of bills aimed at protecting consumers from certain medical debt collection practices and give the Attorney General more power under the state’s consumer protection laws. The proposals would cap interest rates on unpaid medical bills, limit certain collection actions, regulate the sale of medical debt, and classify violations as unfair trade practices under the Michigan Consumer Protection Act.
The background: The legislative package, introduced by State Rep. Angela Rigas, a Republican, alongside Rep. Laurie Pohutsky, a Democrat, and Sens. Sarah Anthony, a Democrat, and Jonathan Lindsey, a Republican, seeks to address what lawmakers describe as a mounting medical debt crisis affecting millions of Michiganders. Sponsors say the bills aim to prevent families from facing foreclosure, wage garnishment, or bankruptcy because of unpaid medical bills.
“Medical debt affects millions of Michiganders, often leading to bankruptcy, denied care, or ruined credit,” Rigas said, in a statement. “By curbing predatory practices, we can ease burdens on working families without undue strain on providers.”
Lindsey added that while broader healthcare reform is still needed, “too many Michiganders are failed by the current system and saddled with extraordinary medical debt.”
The details: The first measure, Senate Bill 701 (House companion HB 5254), amends the Michigan Consumer Protection Act to make violations of a new “Medical Debt Protection Act” an unfair, unconscionable, or deceptive trade practice, which would give the state Attorney General the authority to enforce medical debt protections through existing remedies.
The second measure, Senate Bill 702 (House companion HB 5255), establishes the Medical Debt Protection Act itself. It creates several key restrictions and safeguards:
- Interest and Fee Caps: Large healthcare providers and medical debt buyers cannot charge interest or late fees until 90 days after the final invoice due date, with an annual interest cap of 3%.
- Limits on Extraordinary Collection Actions: Arrests, foreclosures, personal property liens, and wage garnishment for financially eligible patients are prohibited. Providers must also wait at least 120 days after invoicing before pursuing lawsuits, credit reporting, or liens and must provide a 30-day notice that includes financial assistance information.
- Debt Sale Restrictions: Creditors may sell medical debt only under written agreements requiring buyers to comply with the same restrictions and permitting debt recall if patients qualify for financial assistance.
- Refunds and Transparency: Providers must refund any overpayments within 60 days and clearly disclose collection policies.
Sen. Anthony said the legislation is a response to a growing statewide problem: “For too many Michigan families, one trip to the emergency room can lead to months or even years of financial hardship — even for those who have insurance. This reality is unacceptable. Plain and simple.”
If enacted, the twin bills would represent one of the most comprehensive state-level efforts to date to regulate medical debt collection and align it with consumer protection enforcement mechanisms.
Read Senate Bill 701. Read Senate Bill 702
