Menendez Bill Seeks Protections for Consumers Overwhelmed by Medical Debt

March 25, 2016 | Health Care
Sen. Menendez is introducing legislation that prevent medical debt from harming credit scores.

By David Cruz

Imagine you’re injured in a gardening accident. You’re rushed to the ER, your severed thumb in a cup, no idea if you’re going to lose it, not even entirely sure what’s going on. That kind of trauma is bad enough, but when the aftermath is a trip down a medical insurance rabbit hole, that’s just insult on top of injury, and pretty much explains what former iron worker Arthur Lemise went through.

“I’m standing in the emergency room with my finger in a cup and you don’t think to ask a lot of questions when something like that happens to you. You’re concerned about your injury,” he recalled. “Luckily, I did meet a great doctor and he reattached my finger, almost 100 percent of the use.”

It almost sounds like a great success story, but within six months it all started to come apart. First a bill from the hospital, which struck Arthur as odd since, as an Ironworkers union member, he had a platinum medical plan. When he went to the union, they assured him it was all a mistake.

“Two months later I receive another bill,” he said. “A few months later, I get a third bill.”

Meanwhile, Arthur’s father was in hospice care out of state. Arthur, a father of two and his wife of 35 years soon found that the unpaid bills, which he was told were a mistake, were sent to a collection agency and were soon listed on his credit report as a default.

“I didn’t even know there was a judgment against me until I went to get a credit card and was denied,” he recounted.

Unfortunately, Arthur’s story is more common than you would think. In fact, the Consumer Financial Protection Bureau reported that more than half of all overdue debt on credit reports is from medical debt. It’s a problem for more than 43 million Americans says Sen. Bob Menendez, who appeared with Arthur at a press conference to talk about how to bring relief to families who, despite being fully insured, find their credit damaged and their lives turned upside down.

“That’s why I’ve joined several Senate colleagues in introducing the Medical Debt Relief Act to prevent medical debt from continuing to harm consumers credit scores even after it has been paid off or settled,” said the senator. “This simple, common sense measure will ensure that otherwise credit-worthy consumers are able to find affordable credit, which they can use.”

The major provisions of the act would require a 180-day waiting period before reporting medical debt to credit bureaus, requires debt collectors to notify consumer of waiting period and remove settled medical debt from credit reports within 45 days.

Beverly Brown Ruggia is with New Jersey Citizen Action, which provides services, including debt counseling to residents across the state.

“One of the leading factors that contributes to foreclosure and bankruptcy is medical debt,” she noted. “The Medical Debt Relief Act will give patients and their families the time to recuperate from the shock of sudden and/or debilitating illness before they have to sort out the financial transactions that result from medical treatment and care.”

It’s all a little late for Arthur Lemise who is still trying to get his credit back in order, but he said if Menendez’s bill helps someone else, he’ll be happy. Menendez said his office would get involved in his case to see if there’s any pressure — outside of this bill — that they can bring to bear.