[Congressional Record Volume 156, Number 80 (Tuesday, May 25, 2010)]
[Senate]
[Pages S4220-S4221]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. MERKLEY (for himself, Mr. Dorgan, Mr. Schumer, Mr. 
        Menendez, Mr. Durbin, and Mr. Harkin):
  S. 3419. A bill to exclude from consumer credit reports medical debt 
that has been in collection and has been fully paid or settled, and for 
other purposes; to the Committee on Banking, Housing, and Urban 
Affairs.
  Mr. MERKLEY. Mr. President, I rise today to propose legislation to 
address the problem of medical debt and credit scores. While historic 
health reform legislation enacted this year sets us on a path towards 
ending the crushing problem of Americans who lack health insurance, the 
challenges of our health care billing system remain a work in progress. 
One of those problems arises when our system of third-party payment 
leads to errors in billing and payments that, through no fault of the 
borrower, nevertheless undermine a borrower's credit scores. The 
borrower then must pay more for a home, a car, or his or her credit 
card, and in some cases, cannot at all get the loan he or she needs and 
deserves. To address this unfair burden, I have introduced the Medical 
Debt Relief Act.
  Unlike consumer debt, Americans do not get to choose when accidents 
or medical emergencies happen. Medical debt is not the result of 
irresponsible consumer spending and is a not an indicator of poor 
credit. According to the Commonwealth Fund, accrued medical debt 
plagued nearly 72 million adults in 2007, and over 28 million American 
consumers were harassed by collection agencies for unpaid medical bills 
that same year. Research done by the Federal Reserve has found that 
medical bills make up the majority of non-credit card related accounts 
in collection and found on credit reports.
  Nor is the problem of medical debt in relation to credit scores 
simply a question of whether one has insurance or not. Rather, medical 
debt credit challenges are a direct function of the nature of our 
insurance system. Because of the third-party payment system of 
insurance, medical debt is far more likely to be in dispute, 
inconsistently reported, mired in the complex medical payment 
bureaucracy, or transferred to collections without the consumer's 
knowledge. It can often take months, if not years, to adjudicate these 
claims. Unfortunately, even one negative medical collection mark can 
damage a consumer's credit score, thereby costing the consumer higher 
interest rates on automobile loans, home loans, and credit cards. It 
can even block the consumer from making purchases entirely. Sadly, even 
after the consumer has

[[Page S4221]]

paid off or settled delinquent medical debt, the negative mark on the 
credit report continues to plague the consumer for years.
  The Medical Debt Relief Act is a straight forward solution to this 
problem. It would require the removal from a consumer's credit report 
those medical-related debts that have been fully paid. Companion 
legislation has already been introduced in the House by Rep. Mary Jo 
Kilroy and presently enjoys the support of 70 cosponsors. This 
legislation is also supported by the Consumer's Union, National 
Consumer Law Center and the National Association of Consumer Advocates.
  I am honored today to be joined by Senators Dorgan, Schumer, 
Menendez, and Harkin in this effort to fix this important problem in 
how Americans access credit. This is common sense legislation that will 
offer tangible relief to the ordinary Americans who work hard, pay 
their bills, and want to borrow money at reasonable rates to finance 
the next step in their American dream. I urge my colleagues to join us 
in the effort.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 3419

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

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

     SEC. 2. FINDINGS AND PURPOSE.

       (a) Findings.--Congress finds that--
       (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 the credit score 
     of a consumer for years;
       (5) as a result, consumers may 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, coming 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 of 
     consumers;
       (9) according to the Commonwealth Fund, medical bill 
     problems or accrued medical debt affects roughly 72,000,000 
     working-age adults in America; and
       (10) in 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 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) is amended by adding at the 
     end the following:
       ``(y) 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:
       ``(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.''.
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