A District Court judge in Texas has ruled that a state law barring consumer reporting agencies from listing certain out-of-network medical debts on credit reports is preempted by the Fair Credit Reporting Act.
The background: The fight has been running for years, dating to a state effort to keep surprise medical bills off consumers’ credit reports.
- Years ago, the state amended its own fair credit reporting law to bar reporting of a narrow slice of medical debt: out-of-network emergency and facility-based charges still owed after a patient’s insurance, copays, and deductibles were applied.
- Soon after, the plaintiff, a trade association representing consumer reporting agencies, sued the state, contending that the FCRA preempts the measure and asking the court to void it and block its enforcement.
- The case turned on how broadly to read the preemption clause of the Act, which bars states from imposing requirements “with respect to any subject matter regulated under” the federal provision governing what may appear on a consumer report.
- The plaintiff argued the clause sweeps broadly enough to knock out any state rule touching consumer report content, and that the state’s restriction in any event regulates the same adverse information the Act already covers.
- The state countered that the clause reaches only the specific content the Act itself addresses, noting that Congress left a separate, narrower preemption provision in place rather than occupying the entire field of credit reporting.
- Adding to the uncertainty, the Consumer Financial Protection Bureau had taken both sides, reading the clause narrowly in a 2022 rule and then, under a new administration, recasting it in 2025 as a strong, broad bar on state credit reporting laws.
The ruling: Judge Robert Pitman of the District Court for the Western District of Texas granted the plaintiff’s motion for summary judgment in part, voiding the state law while declining to adopt the plaintiff’s broadest theory of preemption.
- Judge Pitman first rejected the sweeping reading, agreeing with the state that the clause does not erase every state law touching consumer report content, since that would read Congress’s specific cross-reference out of the statute.
- He found the narrower question closer, concluding that the disputed subject matter was ambiguous enough to warrant a look at the statute’s legislative history.
- What tipped the balance, the judge wrote, was Congress’s handling of a sunset provision: lawmakers first gave states a window to enact tougher protections, then repealed it before it opened, choosing national uniformity instead.
- That sequence, Judge Pitman reasoned, was strong evidence that Congress meant to stop states from going beyond the Act on adverse information in consumer reports, a category he said includes medical debt.
- Judge Pitman said he was sympathetic to the state’s goal of shielding residents from unexpected medical bills but could not “overrule Congress’s judgment based on [its] own policy views.”
- The judge acknowledged his conclusion diverged from the First Circuit, which had confronted a similar state law without finding it preempted, faulting that court for skipping the legislative history he found decisive.
- Because the medical debt limit regulated a subject the Act already governs, the judge declared it preempted and permanently barred the state from enforcing it.
