Medical Debt Credit Reporting Defeat
On Friday, July 11, the U.S. District Court for the Eastern District of Texas issued a significant ruling, vacating the CFPB’s medical debt credit reporting rule. This decision came in response to a lawsuit filed in January 2025 by the Cornerstone Credit Union League and the Consumer Data Industry Association.
The plaintiffs argued that the rule—which would have removed medical debt from consumer credit reports and prohibited its use in lending decisions—exceeded the CFPB’s statutory authority and violated both the Administrative Procedure Act (APA) and the Fair Credit Reporting Act (FCRA). The court agreed, finding that:
- The CFPB exceeded its statutory authority
- The rule violated the FCRA
- The rule was “contrary to law” under the APA
As a result, the court vacated the rule in its entirety. It will not take effect, pending any potential appeal. (Importantly, the rule had not yet been implemented due to a prior stay.)
Implications for Healthcare Providers
Although most healthcare providers do not currently report to credit bureaus, healthcare organizations have understood that many patients hold a perception that nonpayment may impact their credit score. This decision represents a meaningful victory. As discussed in our recent HFMA webinar, the rule’s proposed limitations reduced patient accountability and created a clear disincentive for payment.
Former CFPB economist Dr. Andrew Nigrinis projected substantial financial harm if the rule had gone into effect, estimating $24 billion in losses in the first year and more than $972 billion over a decade. Additionally, collections of medical accounts by third-party agencies would have dropped by 8%, significantly affecting provider revenue streams.
State’s Industry Leadership
State was proud to play a central role in this advocacy effort. Tim Haag, our President and CEO, served as ACA International’s Board President during this pivotal period. Mike Frost, our Chief Compliance Officer, chairs ACA International’s Federal Affairs Committee, which was instrumental in challenging the rule.
We also extend our deep appreciation to Brownstein Hyatt Farber Schreck and, in particular, shareholder Leah Dempsey for her exceptional legal leadership. Additionally, Leah’s collaboration with the State team—through webinars, HFMA presentations, and client engagements—has been deeply appreciated.
Looking Ahead
This legal victory marks a critical moment for healthcare financial sustainability, but our work is far from over. State remains committed to advocating for providers nationwide and ensuring their voices are heard in future policy decisions.
Thank you for your continued partnership and trust.