Washington State
House of Representatives
Office of Program Research
BILL
ANALYSIS
Consumer Protection & Business Committee
ESSB 5480
Brief Description: Protecting consumers by removing barriers created by medical debt.
Sponsors: Senate Committee on Law & Justice (originally sponsored by Senators Riccelli, Bateman, Alvarado, Chapman, Hasegawa, Lovelett, Nobles, Orwall, Ramos, Robinson, Slatter, Stanford, Trudeau, Valdez and Wilson, C.).
Brief Summary of Engrossed Substitute Bill
  • Prohibits hospitals, physician groups, professional partners, and collection agencies from reporting medical debt to credit reporting agencies or credit bureaus. 
  • Exempts medical debt from being included on a consumer's credit report. 
  • Makes medical debt reported to a credit reporting agency void and unenforceable, with enforcement provided for under the Consumer Protection Act.
Hearing Date: 3/18/25
Staff: Megan Mulvihill (786-7304).
Background:

Medical Debt in Collections. 

Under the laws governing collection agencies, "medical debt" means any obligation for the payment of money arising out of any agreement or contract, express or implied, for the provision of health care services. 

 

A health care provider or health care facility may sell or assign medical debt to a collection agency no sooner than 120 days after the initial billing statement has been transmitted to the patient or other responsible party.  A collection agency may report medical debt to a credit reporting agency or credit bureau 180 days after the original obligation was received by or assigned to the collection agency.  

 

Consumer Protection Act. 

The Consumer Protection Act (CPA) declares a variety of business practices unlawful.  These unlawful practices include:  engaging in unfair methods of competition and unfair or deceptive acts or practices in the conduct of commerce or trade; the formation of contracts, combinations, and conspiracies in restraint of trade or commerce; and monopolizing or attempting to monopolize trade.  A person injured by a violation of the CPA may bring a civil action to enjoin further violations and to recover actual damages, costs, and attorney's fees.  Recovery may also include an increased award of triple the actual damages.   

 

A plaintiff who brings a private claim under the CPA must establish five elements:  (1) an unfair or deceptive act or practice; (2) the act or practice occurred in trade or commerce; (3) a public interest impact; (4) injury to the plaintiff's business or property; and (5) causation.  However, a per se violation of the CPA is established when the Legislature declares in statute that a certain act or practice violates one or more elements of the CPA, usually declaring that the violation affects the public interest, is an unfair or deceptive act in trade or commerce, and is an unfair method of competition.  This thereby leaves the last two elements, injury and causation, left for the plaintiff to establish. 
Summary of Bill:

Under the laws governing collection agencies, the definition of "medical debt" is modified to mean debt owed by a consumer to a person whose primary business is providing medical services, products, or devices, or to the person's agent or assignee, for the provision of medical services, products, or devices.  Medical debt includes, but is not limited to, medical bills that are not past due or that have been paid.  The definition of "medical services, products, or devices" includes, but is not limited to, any service, drug, medication, product, or device sold, offered, or provided to a patient by a health care provider or health care facility, except that it does not include cosmetic surgery.  Reconstructive surgery resulting from trauma, infection, or other diseases is not considered cosmetic surgery. 

 

Hospitals, physician groups, other professional partners, and collection agencies are prohibited from reporting adverse information about medical debt to credit reporting agencies.  A credit reporting agency may not include medical debt on a consumer's credit report. 

 

If a person, health care provider, health care facility, hospital, physician group, professional partner, or licensed collection agency furnishes information regarding medical debt to a credit reporting agency, the medical debt is void and unenforceable.  Enforcement is provided for under the CPA, establishing a per se violation for the reporting of medical debt to a credit reporting agency.  In addition, a violation is deemed a violation of the law governing the license of the hospital, physician group, or professional partner. 
Appropriation: None.
Fiscal Note: Requested on March 12, 2025.
Effective Date: The bill takes effect 90 days after adjournment of the session in which the bill is passed.