The Consumer Financial Protection Bureau’s (CFPB) proposed debt collection rules, released a week ago doesn’t only apply to collection agencies and debt collectors. Healthcare providers should be concerned, as well. In this post, I’ve tailored it to healthcare providers and the challenges they will face once the new rules go into effect.

The proposed rules include new requirements for working within a combination of communication channels. Both collection agencies and healthcare providers need to ensure they are complying with the rules.  

Several provisions under consideration are calling for creditors (healthcare provider) to take action before a debt is assigned to a collection agency to facilitate the collection agency’s use of electronic communications with the consumer.

The provisions that allow a patient’s consent to receive electronic communications to be transferred from a creditor to a debt collector either require the healthcare provider to keep accurate records of the consumer’s prior consent, or require the healthcare provider to disclose to the patient about the placement of the debt with a collection agency. They must then track any patient opt-outs from receiving electronic communications from the debt collector.

The options for transferring consent will help to avoid the potentially significant impact of the call frequency restrictions. Healthcare providers must consider the requirement of new processes or system development and new data communication streams that require a healthcare provider’s support.  

Healthcare providers will be required to exercise adequate supervision over debt collectors with whom they place accounts, and understanding the proposed rules will be essential to doing this. Also, providers will likely see increased documentation demands and requests for additional representations and warranties from their collection agency to maximize their ability to use existing consumer contact information to begin collection efforts.

There is a distinct chance that the potential rules, when finalized, will be applied directly to healthcare providers. Although the proposed rules make occasional distinctions between provider collections and those of third-party debt collectors, the main thrust of the proposed rules is to define unfair and deceptive practices in debt collection like harassment and third-party disclosure.

Although there are good reasons to treat provider collections differently than third-party debt collections, the potential exists for some portions of the proposed rules to be applied to creditors by analogy under the CFPB’s Unfair, Deceptive or Abusive Acts and Practices authority. The Bureau released a Bulletin in 2013 stating that it would consider doing so concerning specific provisions of the FDCPA.

There are several proposed approaches (e.g., contact limitations, using text and email, etc.) that could have a direct impact on how collections are performed by the provider or in the first-party environment by an outsourcer. It’s a fair bet that the CFPB will seek to convey the same expectations to first-party collections through enforcement using its UDAAP authority. Additionally, many states have debt collection statutes modeled after the FDCPA, but which also apply to providers or first party agencies collecting a debt. The state agencies responsible for enforcing these statutes could claim that the unfair or deceptive practices as defined in the final CFPB rules are also prohibited by these state laws.

Healthcare providers should judiciously analyze the proposed rules and decide about which ones may apply, and how to incorporate them into their collections efforts — ignoring the possible effects and as applicable only to debt collectors is an imprudent strategy. It is also important to note that providers can be held responsible for the actions of a debt collector collecting on their behalf. Stay tuned to the CFPB’s proposed debt collection rules as more information becomes available.

This information should not be considered legal advice. If you have questions about the content of this post, check with your attorney for further clarification. 

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