A bill in the Colorado legislature, filed in response to reports that patients were confused when a company they’d never heard of sued them over medical debts, would limit how collection agencies can pursue payment.
HB-1380, which passed the state House on Wednesday, would require debt collectors operating in the state to disclose who initially held the debt, and would only allow the collector to sue if they had complete freedom to settle the debt.
Rep. Javier Mabrey, a Denver Democrat and one of the bill’s sponsors, said he is pushing it in response to a 9News and Colorado Sun investigation that found UCHealth was suing patients after assigning medical debts to a collection agency. Some patients said they didn’t understand why they were being sued, because the plaintiff was a company they’d never heard of.
“What we’re trying to do is add transparency,” Mabrey said.
UCHealth doesn’t oppose the bill, spokesman Dan Weaver said.
The National Federal of Independent Business Colorado testified against the bill, saying it would force businesses to manage debts themselves, which is not their area of expertise. A previous version of the bill forbade assigning the debt to collection agencies, unless the agency had purchased the debt.
It also would make the businesses’ attempts to collect debts a public record, federation state director Tony Gagliardi said in written testimony.
“This can cause unjustified prejudice against the business,” he said.
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The bill would make it an unfair trade practice to seek to have someone arrested in connection with a debt, including for contempt of court if they didn’t show up to hearings. A judge could still order a defendant’s arrest, but the debt collector couldn’t petition the court to do so. Mabrey said that he had heard of a few cases where debtors got arrested, but the provision was more about clarifying a principle.
“There should not be criminal consequences for civil disputes,” he said.
It also forbids collection agencies from bundling unrelated debts. Sometimes, a hospital will assign a medical debt to an agency, which then looks to see if the defendant has other debts it could pursue, such as an unpaid cable bill, Mabrey said.
“If somebody is going to court to defend themselves, it should be about one thing,” he said.
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