Credit Reporting Agencies Agree to Change Reporting of Unpaid Medical Bills

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Clients who have been injured often express concern about their medical bills showing up on credit reports, harming prospects for major purchases, credit cards, employment and even security clearances in their work.

Anyone looking for a job, applying for a mortgage or car loan, renting an apartment, getting a cell phone, or seeking a new or renewed credit card can be affected. Those who work in sensitive roles in the financial services industry and in jobs requiring national security clearances have additional headaches when medical bills that remain unpaid pending a settlement show up on credit reports.

After a significant injury, it can take months or years to get the insurer for the party responsible to settle, and most will not pay anything on medical bills until the entire case is settled. Even if the person injured has health insurance or medical payments coverage under an auto insurance policy, insurers can take months to process payments, looking for any excuse to stall or cut payments.

Such delays can result in medical providers reporting unpaid balances to credit reporting agencies. Until now, those medical bills could linger on a person’s credit report for years, even long after the balances were paid off. We have seen individuals haunted by bad credit reports resulting from balances that the medical providers had never bothered to bill to insurance and had mailed to the wrong address for the patient. Only when trying to buy a car years later did the patient become aware of those balances for which no bills had ever been received.

Now, due to action by the Attorney General of New York, the three major credit reporting agencies — Experian, Equifax and TransUnion — have agreed to a nationwide change in their practices regarding reporting of medical debts. Under this agreement, the three companies will:

• Establish a six-month waiting period before reporting medical debts on consumers’ credit reports. This will providing more time for consumers to resolve issues that might amount only to a delayed insurance payment or another dispute. That is not enough time to resolve most liability cases, but it does allow some opportunity for dealing with recalcitrant health insurance or auto medical payments coverage.
• Remove medical debts from an individual’s report after the debt is paid by insurance. While I am not naïve enough to believe this will happen automatically, it will help folks get their lives back to normal after a long ordeal with an injury or illness.

In practice, we often try to avert medical bill balances ever being reported to credit agencies by communicating with the medical providers about the status of clients’ cases. When a particular provider is unwilling to voluntarily defer reporting, this change in practices by credit reporting agencies will help.

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Ken Shigley is past president of the State Bar of Georgia, chair-elect of the American Association for Justice Motor Vehicle Collision, Highway & Premises Liability Section, lead author of Georgia Law of Torts: Trial Preparation & Practice, and a double board certified civil trial attorney.