The Oct. 26 workshop will focus on impacts of the regulations to implement the state’s medical debt law on small businesses.
Following comments collected through a small business impact statement last month, Nevada’s Financial Institutions Division (NFID) is holding a workshop on regulations pertaining to medical debt collections and S.B. 248. from 10 a.m. to 1 p.m. MDT Oct. 26
The NFID issued draft proposed regulations on S.B. 248 as requested by U.S. District Judge Richard F. Boulware II, who has been presiding over proceedings on an emergency motion for a temporary restraining order (TRO) in a lawsuit filed by ACA International, the Nevada Collectors Association (NCA) and 14 other plaintiffs, ACA previously reported.
The proposed regulations are only in draft form and therefore do not impose any requirements on ACA members subject to S.B. 248, but they may indicate what’s to come as the NFID works to finalize the regulations.
Based on the timeline from the NFID, final regulations would not be issued until January 2022 at the earliest.
S.B. 248, which became effective on July 1, requires debt collectors that collect medical debt, as defined in the law, to provide medical debtors with a 60-day notice of placement or assignment before the debt collector takes any action to collect a medical debt. It also prohibits certain practices relating to the collection of medical debt, including restrictions on civil actions to collect medical debt, restrictions on credit reporting medical debt, and restrictions on collection fees (including attorney’s fees) that can be added to medical debt balances.
The regulatory process includes a small business impact survey and the upcoming workshop on the draft regulations.
The NFID received 55 responses to the small business impact statement indicating concerns with S.B. 248.
NFID Commissioner Sandy O’Laughlin noted in the small business impact statement that the division cannot change the law but has drafted the proposed regulations with the goal to mitigate concerns from industry stakeholders and provide clarification on the law’s requirements.
The NFID also provided responses to commenters on the small business impact statement, which are available in the meeting notice for the Oct. 26 workshop.
Comments ranged from concerns about consumer communications and the requirement for communication through certified mail to the possible negative impacts for creditors and consumers and costs to businesses.
One commenter stated, “The 60-day letter will cause confusion and [a] false sense of urgency for medical debtors. The 60-day letter will be considered as a communication to the medical debtor because it is a notice from a collection agency.”
In response, the NFID noted it cannot change the S.B. 248 law, but noted some language in the proposed regulations that may help:
“The Nevada State Legislature enacted the law, S.B. 248, which requires no action to be taken on medical debt less than 60 days. NFID cannot remove this requirement; however, the proposed regulations provide clarification through sections three, four and six. Section three defines ‘action to collect a medical debt’ and section 4 states “…such written notification to a medical debtor is not intended to be a communication under the Fair Debt Collection Practices Act.” In addition, section 6 also requires a 60-day letter to have the disclosure: This is not intended to be a communication under the Fair Debt Collection Practices Act.”
ACA encourages members to provide public comment and attend the Oct. 26 workshop, which will be held online or there is the option to join the meeting by phone. Details on joining the meeting as well as the proposed regulations and the small business impact statement comments are available here.
Meanwhile, ACA and other parties await Boulware’s ruling on the emergency temporary restraining order motion on S.B. 248, ACA previously reported.
In the course of the proceedings on ACA’s motion for a temporary-restraining order, Boulware required the NFID to clarify its intent regarding potential regulations and propose a timeline for the issuance of those regulations. Those proceedings appear to have prompted the issuance of these proposed draft regulations.
Following an August evidentiary hearing, the plaintiffs filed an amended complaint to clarify some of the claims in the lawsuit, e.g., that S.B. 248 violates the FDCPA by creating a false sense of urgency when a medical debt collector sends written notification to a medical debtor via certified mail.
Boulware’s pending order could enjoin the enforcement of S.B. 248 temporarily, or it could simply find that, at this juncture, ACA and the other plaintiffs have not sufficiently demonstrated a likelihood of success on the merits of the case.
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