A bill has been introduced in the Hawaii Senate that would restrict lawsuits against consumers to collect on unpaid medical debts. The proposal, Senate Bill 2165, titled the Medical Debt Protection and Patient Dignity Act, would significantly reshape how medical debt can be collected in the state.
If enacted, the bill would prohibit health care providers and medical creditors from filing or maintaining civil lawsuits to collect medical debt from patients whose household income is at or below 500% of the federal poverty level. For collection professionals, that threshold is notably high and would likely encompass a large portion of patients with outstanding medical balances.
The bill goes further by banning several traditional post-judgment and pre-judgment collection tools entirely, regardless of income level. Under the proposal, medical creditors would be barred from seeking or enforcing wage garnishments, bank account seizures, or levies on personal property to satisfy medical debt. The bill would also prohibit placing or attempting to place a lien on a patient’s primary residence in connection with unpaid medical bills.
Another provision likely to draw significant attention from debt buyers and agencies is a complete prohibition on the sale or transfer of medical debt to third parties. Any sale or transfer conducted in violation of the bill would be deemed null and void, and the debt would be considered legally uncollectible. If passed, this provision would effectively eliminate the secondary market for medical debt in Hawaii.
The legislation also addresses access to care. Health care providers with annual gross revenues of $20 million or more would be prohibited from denying non-emergency medically necessary inpatient care based on a patient’s inability to pay, outstanding medical debt, or incomplete payment history. These providers would also be required to develop and publicly post a clear financial assistance policy.
Violations of the proposed chapter would be deemed unfair or deceptive practices and would be enforceable by the state. The bill also grants patients a private right of action, including the ability to seek damages, injunctive relief, and attorneys’ fees. If enacted, the law would take effect on January 1, 2027.
