California Attorney General Sponsors Bill Banning Credit Reporting of Medical Debt

On April 2, the California Senate Judicial Committee passed Senate Bill 1061. The bill seeks to prevent health care providers and contracted collection agencies from providing information about patients’ medical debt to credit reporting agencies. The bill would also prevent credit reporting agencies from accepting, storing, or sharing information related to medical debt.

The bill defines “medical debt” as “a debt related to, in whole or in part, a transaction, account, or balance arising from a medical service, product, or device.” “Medical debt” does not include any debt charged to a credit card.

California Attorney General Rob Bonta has sponsored the bill. Bonta says the bill “can stop the harmful spiral where people have unforeseen, catastrophic medical debt and become unhoused, unemployed, or [are] without a vehicle to get to work.”

SB-1061 is the latest in a wave of efforts to limit credit reporting of medical debt. If the bill is enacted, California would be the third state to remove medical bills from credit reports, joining Colorado and New York. Minnesota legislators have introduced a similar bill, and the Consumer Financial Protection Bureau is also beginning a rulemaking process to remove medical bills from credit reports. These efforts follow a 2022 announcement that the three largest credit reporting agencies in the United States would stop reporting medical debt under $500 and any paid-off medical debt.