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[House Report 111-629]
[From the U.S. Government Publishing Office]


111th Congress                                                   Report
  2d Session                  HOUSE OF REPRESENTATIVES          111-629
=======================================================================
 
                    MEDICAL DEBT RELIEF ACT OF 2010 

                                _______
                                

 September 28, 2010.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

  Mr. Frank, from the Committee on Financial Services, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 3421]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Financial Services, to whom was referred the 
bill (H.R. 3421) to exclude from consumer credit reports 
medical debt that has been in collection and has been fully 
paid or settled, and for other purposes, having considered the 
same, report favorably thereon with an amendment and recommend 
that the bill as amended do pass.

                                CONTENTS

                                                                   Page
Amendment........................................................     2
Purpose and Summary..............................................     2
Background and Need for Legislation..............................     2
Hearings.........................................................     3
Committee Consideration..........................................     4
Committee Votes..................................................     4
Committee Oversight Findings.....................................     4
Performance Goals and Objectives.................................     4
New Budget Authority, Entitlement Authority, and Tax Expenditures     4
Committee Cost Estimate..........................................     4
Congressional Budget Office Estimate.............................     4
Federal Mandates Statement.......................................     5
Advisory Committee Statement.....................................     5
Constitutional Authority Statement...............................     5
Applicability to Legislative Branch..............................     6
Earmark Identification...........................................     6
Section-by-Section Analysis of the Legislation...................     6
Changes in Existing Law Made by the Bill, as Reported............     6

                               Amendment

  The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Medical Debt Relief Act of 2010''.

SEC. 2. FINDINGS AND PURPOSE.

  (a) Findings.--The Congress finds the following:
          (1) Medical debt is unique, and Americans do not choose when 
        accidents happen or when illness strikes.
          (2) Medical debt collection issues affect both insured and 
        uninsured consumers.
          (3) According to credit evaluators, medical debt collections 
        are more likely to be in dispute, inconsistently reported, and 
        of questionable value in predicting future payment performance 
        because it is atypical and nonpredictive.
          (4) Nevertheless, medical debt that has been completely paid 
        off or settled can significantly damage a consumer's credit 
        score for years.
          (5) As a result, consumers can be denied credit or pay higher 
        interest rates when buying a home or obtaining a credit card.
          (6) Healthcare providers are increasingly turning to outside 
        collection agencies to help secure payment from patients and 
        this comes at the expense of the consumer because medical debts 
        are not typically reported unless they become assigned to 
        collections.
          (7) In fact, medical bills account for more than half of all 
        non-credit related collection actions reported to consumer 
        credit reporting agencies.
          (8) The issue of medical debt affects millions.
          (9) According to the Commonwealth Fund, medical bill problems 
        or accrued medical debt affects roughly 72,000,000 working-age 
        adults in America.
          (10) For 2007, 28,000,000 working-age American adults were 
        contacted by a collection agency for unpaid medical bills.
  (b) Purpose.--It is the purpose of this Act to exclude from consumer 
credit reports medical debt that had been characterized as delinquent, 
charged off, or debt in collection for credit reporting purposes and 
has been fully paid or settled.

SEC. 3. AMENDMENTS TO FAIR CREDIT REPORTING ACT.

  (a) Medical Debt Defined.--Section 603 of the Fair Credit Reporting 
Act (15 U.S.C. 1681a), as amended by section 1088(a)(1) of the Dodd-
Frank Wall Street Reform and Consumer Protection Act (Public Law 111-
203; 124 Stat. 2086), is amended by adding at the end the following:
  ``(z) Medical Debt.--The term `medical debt' means a debt described 
in section 604(g)(1)(C).''
  (b) Exclusion for Paid or Settled Medical Debt.--Section 605(a) of 
the Fair Credit Reporting Act (15 U.S.C. 1681c(a)) is amended by adding 
at the end the following new paragraph:
          ``(7) Any information related to a fully paid or settled 
        medical debt that had been characterized as delinquent, charged 
        off, or in collection which, from the date of payment or 
        settlement, antedates the report by more than 45 days.''.

                          Purpose and Summary

    H.R. 3421, the ``Medical Debt Relief Act of 2009,'' amends 
the Fair Credit Reporting Act to require that fully paid or 
settled medical debt that has been characterized as delinquent, 
charged off or in collections, be removed from a consumer 
report within 45 days.

                  Background and Need for Legislation

    Under the Fair Credit Reporting Act (FCRA), a ``consumer 
report'' generally includes four types of information: (1) 
identifying information such as the person's name, date of 
birth, current and previous addresses; (2) trade account 
information that includes information on the type of credit 
being used such as whether it is revolving or installment 
credit; (3) information obtained from public records such as 
tax liens; and (4) a list of the number of ``hard'' inquiries. 
Under the FCRA, obsolete adverse information is prohibited from 
being reported. With certain exceptions, such as tax liens and 
bankruptcies, most adverse information may remain on a consumer 
report for at least seven years.
    Proponents of the bill argue that medical debt is unique 
because, unlike other types of debt, consumers do not choose 
when accidents happen or when a health crisis occurs. As such, 
consumers' creditworthiness should not be adversely impacted 
because of information about fully paid or settled medical debt 
that is contained on their consumer report. The Commonwealth 
Fund found in its Biennial Health Insurance Surveys, 2001-2007, 
that about 79 million adults, including 7 million adults age 65 
or more, report problems paying medical bills or have 
accumulated medical debt.

                                Hearings

    The Subcommittee on Financial Institutions and Consumer 
Credit held a hearing entitled, ``Keeping Score on Credit 
Scores: An Overview of Credit Scores, Credit Reports and their 
Impact on Consumers,'' on March 24, 2010. The following 
witnesses testified:
           Mr. Evan Hendricks, Editor/Publisher, 
        Privacy Times
           Mr. Stuart K. Pratt, President and CEO, 
        Consumer Data Industry Association
           Mr. Tom Quinn, Vice President, Global 
        Scoring Solutions, FICO
           Mr. Barrett Burns, President and CEO, 
        VantageScore Solutions LLC
           Mr. Chet D. Wiermanski, Global Chief 
        Scientist, Analytic Decision Services, TransUnion LLC
           Mr. Stan Oliai, Senior Vice President, 
        Decision Sciences, Experian Decision Analytics, 
        Experian
           Ms. Myra K. Hart, PhD, Senior Vice 
        President, Analytical Services, Equifax Inc.
           Ms. Anne P. Fortney, Partner, Hudson Cook 
        LLP
           Ms. Sandra Braunstein, Director, Division of 
        Consumer and Community Affairs, Federal Reserve Board 
        of Governors
           Mr. David Vladeck, Director, Bureau of 
        Consumer Protection, Federal Trade Commission
    The Subcommittee also held a hearing entitled ``Use of 
Credit Information Beyond Lending: Issues and Reform 
Proposals,'' on May 12, 2010. The following witnesses 
testified:
           Mr. Michael T. McRaith, Director, Illinois 
        Department of Insurance, on behalf of the National 
        Association of Insurance Commissioners
           Mr. David Snyder, Vice President and 
        Associate General Counsel, Public Policy, American 
        Insurance Association
           Mr. John Wilson, Director, Analytics, 
        LexisNexis Risk Solutions
           Ms. Chi Chi Wu, Staff Attorney, National 
        Consumer Law Center
           Mr. Mark Rukavina, Executive Director, The 
        Access Project
           Mr. Stuart K. Pratt, President and CEO, 
        Consumer Data Industry Association
           Ms. Anne Fortney, Partner, Hudson Cook LLP

                        Committee Consideration

    The Committee on Financial Services met in open session on 
July 28, 2010, and ordered H.R. 3421, Medical Debt Relief Act 
of 2009, as amended, favorably reported to the House by a voice 
vote.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. No 
record votes were taken with in conjunction with the 
consideration of this legislation. A motion by Mr. Frank to 
report the bill, as amended, to the House with a favorable 
recommendation was agreed to by a voice vote.
    During the consideration of the bill, the following 
amendment was considered:
    An amendment by Ms. Kilroy (and Mr. Frank), no. 1, a 
manager's amendment, was agreed to by a voice vote.

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee has held hearings and 
made findings that are reflected in this report.

                    Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the Committee establishes the 
following performance related goals and objectives for this 
legislation:
    H.R. 3421 amends the Fair Credit Reporting Act to require 
that fully paid or settled medical debt that has been 
characterized as delinquent, charged off or in collections, be 
removed from a consumer report within 45 days, so that 
consumers( creditworthiness should not be adversely impacted.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee adopts as its 
own the estimate of new budget authority, entitlement 
authority, or tax expenditures or revenues contained in the 
cost estimate prepared by the Director of the Congressional 
Budget Office pursuant to section 402 of the Congressional 
Budget Act of 1974.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                  Congressional Budget Office Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                                   August 20, 2010.
Hon. Barney Frank,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 3421, the Medical 
Debt Relief Act of 2009.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Susan Willie.
            Sincerely,
                                              Douglas W. Elmendorf.
    Enclosure.

H.R. 3421--Medical Debt Relief Act of 2009

    H.R. 3421 would prohibit credit reporting agencies from 
listing medical debts that have been paid or settled in 
consumer credit reports if those debts were paid or settled 
more than 45 days before the credit report is issued.
    Based on information from the Federal Trade Commission 
(FTC), CBO estimates that implementing H.R. 3421 would not 
significantly increase spending subject to appropriation. 
Enacting H.R. 3421 could increase the collection of civil 
penalties and thus could affect federal revenues; therefore, 
pay-as-you-go procedures apply. However, CBO estimates that 
such collections would not be significant in any year.
    H.R. 3421 contains no intergovernmental mandates as defined 
in the Unfunded Mandates Reform Act (UMRA) and would not affect 
the budgets of state, local, or tribal governments.
    H.R. 3421 would impose a private-sector mandate on consumer 
credit reporting agencies by requiring them to exclude certain 
debts from credit reports. Based on information from industry 
sources, CBO estimates that the cost of complying with this 
mandate would fall well below the annual threshold for private-
sector mandates established in UMRA ($141 million in 2010, 
adjusted annually for inflation).
    The CBO staff contacts for this estimate are Susan Willie 
(for federal costs), and Brian Prest and Paige Piper/Bach (for 
the impact on the private sector). The estimate was approved by 
Theresa Gullo, Deputy Assistant Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds that the 
Constitutional Authority of Congress to enact this legislation 
is provided by Article 1, section 8, clause 1 (relating to the 
general welfare of the United States) and clause 3 (relating to 
the power to regulate interstate commerce).

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

                         Earmark Identification

    H.R. 3421 does not contain any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9 of rule XXI.

             Section-by-Section Analysis of the Legislation


Section 1. Short title

    This section establishes the short title of the bill as the 
``Medical Debt Relief Act of 2009.''

Section 2. Findings and purposes

    This section outlines a number of congressional findings on 
the impact of medical debt on consumers, including that medical 
bills account for more than half of all non-credit related 
collection actions reported to consumer reporting agencies, and 
that medical debt issues affect millions of consumers.

Section 3. Amendments to the Fair Credit Reporting Act

    This section prohibits the reporting of information on 
fully paid or settled medical debt that has been characterized 
as delinquent, charged off or in collections on a consumer 
report, which from the date of payment or settlement, antedates 
the report by more than 45 days.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (new matter is 
printed in italic and existing law in which no change is 
proposed is shown in roman):

                       FAIR CREDIT REPORTING ACT


TITLE VI--CONSUMER CREDIT REPORTING

           *       *       *       *       *       *       *


Sec. 603. Definitions and rules of construction

  (a) * * *

           *       *       *       *       *       *       *

  (z) Medical Debt.--The term ``medical debt'' means a debt 
described in section 604(g)(1)(C).

           *       *       *       *       *       *       *


Sec. 605. Requirements relating to information contained in consumer 
                    reports

  (a) Information Excluded From Consumer Reports.--Except as 
authorized under subsection (b), no consumer reporting agency 
may make any consumer report containing any of the following 
items of information:
  (1) * * *

           *       *       *       *       *       *       *

          (7) Any information related to a fully paid or 
        settled medical debt that had been characterized as 
        delinquent, charged off, or in collection which, from 
        the date of payment or settlement, antedates the report 
        by more than 45 days.

           *       *       *       *       *       *       *