'Conspiracy!' Medical providers sue credit bureaus for omitting unpaid bills under $500

A group of medical providers hit Experian, Equifax and TransUnion with an antitrust class action Aug. 22 in the U.S. District Court for the Eastern District of California, alleging the credit bureaus conspired to omit unpaid medical bills under $500 from consumer credit reports.

The suit, filed on behalf of a class of medical providers, accused the defendants of carrying out a “transparent conspiracy” to refrain from reporting unpaid medical bills under $500. Lead plaintiff Dr. Derrick Adams filed suit.

Specifically, the lawsuit targeted a formal agreement struck between the three credit agencies “in very public fashion.” Their deal, the complaint alleged, will not only restrain trade but will diminish access to medical care by driving providers out of certain markets.

“Medical providers now have a more costly path to collect payment on unpaid medical bills, if they can feasibly collect at all,” the complaint stated. “Defendants’ conduct also places individual medical providers, such as Adams, at a severe financial disadvantage compared to larger and more expensive medical practices, such as hospitals.”

Related: Medical credit card crackdown: Feds zeroing in on regulations to protect patients

According to the complaint, more than one million active physicians in the U.S. have already been negatively impacted by the agreement. Because Atlanta-based Equifax, Costa Mesa, California-based Experian and Chicago-based TransUnion are the only agencies that report medical debt information, the complaint said,” the scope of monetary effect from the conspiracy is massive.”

“Historically, the risk that an unpaid medical bill under $500 could be reported on a consumer’s credit report incentivized the patient to pay the bill,” the complaint said. ”Patients understood that an unpaid bill listed on their credit report harmed their credit score, which in turn reduced their access to credit, increased their costs to obtain that credit, and decreased options for other financial transactions such as leasing a car.”

On Equifax’s website, according to the complaint, the bureau states that reporting an unpaid medical bill “can help incentivize stronger payment performance.” But while accounts-receivable services still report unpaid bills under $500 to the three credit bureaus, doing so has been ”rendered pointless” by the bureaus’ agreement not to include that information on credit reports.

Even the federal government, the complaint said, publicized “the conspiracy” in April 2022 when the Consumer Financial Protection Bureau announced the agencies’ decision.

Following the announcement, the CFPB predicted that 22.8 million people would have at least one medical collection removed from their credit reports.

“Using the CFPB’s estimate, if each of the 22.8 million people had just one unpaid medical bill that averaged $100, the conspiracy would affect $2.28 billion in money owed to medical providers,” the complaint said.

Counsel has not yet entered an appearance for the defendants.