Court Vacates Medical Debt Reporting Rule 

On July 11, the district court decided in favor of Cornerstone Credit Union League and Consumer Data Industry Association, who filed a lawsuit in January challenging the government agency’s rule.

The CFPB rule would have removed medical debt information from consumer credit reports and prohibited lenders from using such information in credit decisions. The lawsuit argued that the rule exceeded the agency’s statutory authority and violated the Administrative Procedure Act and Fair Credit Reporting Act.

The court agreed and completely nullified the CFPB rule, which will not take effect, pending any potential appeal. 

This news marks a big win for the credit and collections industry. Had the rule been enacted, healthcare providers would have lost $24 billion in the first year alone and potentially more than $972 billion over 10 years, according to the ACA.

In addition, medical collections referred to third-party debt collectors would have decreased by 8%, further reducing revenue for medical providers.

CBSI President Brian Grimes is currently serving as president of the Iowa Collectors Association and Vice President of the Iowa HFMA. He believes the court’s ruling is “a significant victory for fairness and financial accountability.”

“By preserving the ability to include medical debt on credit reports, the court ensures that consumers and lenders can continue to rely on accurate, comprehensive credit information,” Grimes said, adding that “it also protects vital revenue streams for healthcare providers, helping them maintain operations and continue caring for patients. This decision supports responsibility while safeguarding access to credit and healthcare."