The Consumer Financial Protection Bureau (CFPB) has made a name for itself as one of the government agencies most willing to take bold enforcement action. It investigates not only the businesses directly involved in wrongdoing, but also those it perceives to have facilitated that wrongdoing. That is why every organization related to patient payments in the healthcare industry should be concerned about the CFPB’s behavior over the last year.

The CFPB’s Approach

A review of CFPB press releases reveals a general trend in the way it approaches industries. It first studies them—producing reports, participating in conferences, and conducting hearings, then it begins a series of enforcement actions. The Bureau announced an initiative to make mortgage costs more clear to consumers and participated in mortgage industry conferences before levying dozens of enforcement actions against lenders. Special Advisor to the Secretary of the Treasury Raj Date issued a statement on the importance of checking account transparency and later released a report on the impact checking account overdraft fees were having on consumers. On 28 April 2015, The CFPB fined Regions Bank $7.5 million for what it argued were unlawful overdraft practices. One of the CFPB’s earliest efforts to reform the credit card industry was to simplify credit card agreements. The same is true of it’s work with student loan providers. The Bureau later demanded that firms in both industries pay out millions of dollars to customers and in fines.

It is important to note that the CFPB pays close attention to consumer confusion. In each of the cases mentioned above, the ability of consumers to understand their agreements played a significant role in the Bureau’s actions. Many of the CFPB’s publications describe transparency as central to the organization’s mandate. “The consumer bureau’s mission is to bring transparency to the consumer financial markets so families can compare products and choose ones that are right for them,” said Elizabeth Warren when her office released a report examining the differences between the credit scores consumers and lenders receive. Industries that form financial relationships with consumers, but which struggle to provide adequate clarity about the terms of those relationships, are therefore more likely to attract the CFPB’s interest.

Suits Against Third Parties

In some cases, the CFPB has targeted companies that it feels facilitated the exploitation of consumers. Recent actions have indicated that the CFPB understands its mandate to include holding companies accountable for knowingly or unknowingly assisting the wrongful behavior of businesses with which they have a relationship.

On 25 August 2014, the Bureau announced that it had taken action against Global Payments for “[making] it possible for debt-settlement companies across the country to charge consumers illegal fees,” according to CFPB Director Richard Cordray. The Bureau asked a federal district court to make Global Payments pay over $6 million in relief to consumers and a $1 million civil penalty. As my colleague Justin Savage explained here: “The CFPB’s case against Global Payments made two primary arguments. First, it claimed that a business service provider can be liable for a client’s use of its services. Second, it argued that failure to enforce the terms of a private-party contract made the service provider complicit in the client’s illegal activity.”

What This Means for Healthcare

The CFPB began signaling its interest in healthcare in May 2014 when it found that medical debt overly penalizes consumer credit scores. A report it released in December 2014 more comprehensively explored the characteristics of medical debt. Most significantly, it found that the problem is large, that medical billing is confusing for patients, and that collection processes are inconsistent; more than half of collections tradelines come from medical debts, the nature of the healthcare industry has made it exceptionally difficult for consumers to understand their obligations, and the speed with which providers assign debt to collectors varies greatly. All of these findings suggested that the Bureau would begin taking greater interest in the healthcare industry.

The CFPB took its first major action against a medical debt collector in June, ordering Syndicated Office Systems, LLC to pay a $500,000 penalty and $5.4 million in relief to harmed consumers. The Bureau’s announcement of the enforcement action quoted Cordray: “These violations are particularly egregious given the challenges many consumers already face who are attempting to navigate the medical debt maze.”

A meeting between ACA International staff and the CFPB Advisory Board a few months earlier illuminates what “medical debt maze” meant to Mr. Cordray. According the ACA’s press release, “the major theme that emerged was that there is a lot of confusion surrounding medical debt. CFPB staff presentations concluded that many consumers do not understand the complexities of medical billing terminology and medical insurance policies.” “In their view,” the release continued, “the root problem is medical billing itself which needs to be addressed in order to effectively resolve the issues over medical debt reporting.”

The CFPB’s extraordinary emphasis on the complexities of medical billing and its history of pursuing legal action against seemingly peripheral companies like Global Payments should concern not only collectors of medical debt, but also the healthcare providers, insurance companies, and billing companies that originate it. The Bureau’s December 2014 report, mentioned above, hints at the kind of action it might take against providers. It highlights an IRS rule finalized last year specifying how non-profit hospitals must communicate with patients before sending their bills to collections. It notes that the Healthcare Financial Management Association and the Association of Credit and Collection Professionals have issued guidelines that align with the IRS’s position. This suggests that the CFPB might take legal action against non-profit hospitals that fail to meet the the IRS’s requirements, or start pressuring for-profit hospitals to adopt the same standards.

What it does next is anybody’s guess.

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