Credit Bureaus Conspiracy Regarding Unpaid Medical Bills

There has been a lot of upheaval ever since the three big credit reporting agencies – TransUnion, Equifax and Experian – announced that they were making major changes to how medical debt was treated. Now a California doctor has filed a class-action lawsuit against TransUnion, Equifax and Experian alleging that the credit reporting agencies (CRAs) conspired to remove unpaid medical bills under $500 from consumers’ credit reports—causing increased costs for medical providers and reduced access to care for patients.

The Case

The lawsuit, filed by Derrick Adams, owner at Twelve Bridges Dermatology in Lincoln, CA, alleges on behalf of similarly situated providers that the CRA’s actions regarding unpaid medical bills are in violation of the Sherman Antitrust Act and California’s Cartwright Act.

The complaint, filed in the U.S. District Court for the Eastern District of California, states, “While the [d]efendants celebrated their joint action as benefitting patients, the agreement represents a categorical violation of the Sherman Act and the Cartwright Act, and its imposition not only illegally restrains trade, but will also diminish access to medical care by driving providers out of certain markets.”

CRA Changes

In March 2022, the CRAs announced that they were enacting rules that would result in the majority of paid medical debt tradelines being removed from consumers’ reports. The announcement outlined three major steps:

1. Effective July 1, 2022, the CRAs will no longer include on consumers’ credit reports any medical debt that has been paid in full after being sent to collections.
2. Effective July 1, 2022, unpaid medical bills cannot be reported until they are at least 365 days past the date of first delinquency.
3. Effective March 30, 2023, the CRAs will no longer include on consumer reports any medical debts with an original balance less than or equal to $500.

Case Arguments

This lawsuit, Adams v. Experian Information Solutions, Inc., revolves around the third change of not including any unpaid medical bills with an original balance less than or equal to $500. Stating that most of the bills sent from his practice are for an amount under $500 after insurance is applied and it hampers his efforts to collect payment.

The lawsuit argues the CRAs “conspiracy to devalue their credit reports, by agreeing not to report unpaid medical bills under $500, targets medical providers and has inevitably harmed them. Medical providers now have a more costly path to collect payment on unpaid medical bills, if they can feasibly collect at all. Defendants’ conduct also places individual medical providers, such as Dr. Adams, at a severe financial disadvantage compared to larger and more expensive medical practices, such as hospitals.”

Adams’s case makes the argument that the three CRAs, by making an agreement to stop reporting medical debts under $500, are anticompetitive for the market because there are no other entities that take this information into consideration in terms of credit reporting. Also, this is the only area that the CRAs have such an agreement, not affecting credit cards or car payments, just medical debt.

Conclusion

At the time of the release of this article, the lawsuit was filed and there has not been any action taken. Americollect will continue to monitor this case regarding unpaid medical bills and any changes that may come in the future.