“The state’s creation of anti-poverty programs, including tax credits and stimulus packages, while allowing the collections program to continue is like attempting to “plug a bleed on one end while another end is still an open wound,” said Courtney McKinney, spokesperson for the Western Center on Law & Poverty.”
Many Californians, whether insured, underinsured, or uninsured, are carrying the burdens of medical debt in their lives. This year, Western Center co-sponsored AB 1020 (Friedman) to address this problem. AB 1020 strengthens the existing Hospital Fair Pricing Act, which requires California hospitals to provide free or discounted care to uninsured and underinsured patients who are low income; and the Rosenthal Fair Debt Collection Practices Act and Fair Debt Buying Practices Act, which require debt collectors and debt buyers to follow fair debt collection procedures.
The amendments aim to inform more people of the availability of financial assistance when receiving hospital services and hold hospitals, debt collectors, and debt buyers accountable to this assistance. Since the Hospital Fair Pricing Act was passed 15 years ago, legal services advocates have navigated an opaque application process with their clients who should have qualified for charity care but never received notice or an application. Patients were left in murky negotiating situations when they had to deal with accounts that had been assigned or sold to debt collectors and debt buyers. Patients needed a clearer application process. AB 1020 does the following:
- Requires hospitals to provide patients with notices about their charity care and discounted payment policies and actual applications at specific points in the billing and collections cycle;
- Requires hospital contracts with debt buyers to include patient protection provisions;
- Imposes additional requirements for collection of medical debt;
- Authorizes the Department of Health Care Access and Information to penalize hospitals for non-compliance (coming in 2024); and
- To keep up with the higher cost of living, increases the income eligibility threshold to 400% of the federal poverty level.
Our Health Care Practice Tip this month details these changes and more. One common unlawful provision found in many hospitals’ fair pricing policies is a specific time period to apply, often set at 150 days. These deadlines violate the Hospital Fair Pricing Act, which allows patients to apply for charity care or discounted payments at any time, without time limit. Meanwhile, hospitals may still commence collection activity after the statutory time period has passed. The Health Care Practice Tip explains this issue.
Even in the pandemic, the accumulation and collection of medical debt have not stopped. Our state’s charity care and collections laws still require rigorous enforcement by advocates.
Here is the full report: Health Care Practice Tip – December 2021
FOR IMMEDIATE RELEASE
Bank levy protections offered by California’s newly implemented SB 616, co-sponsored by Western Center, boosts California from ‘C’ grade in 2019
SACRAMENTO — As millions of families suffer job loss or struggle to pay bills during COVID-19, states have an important role in protecting them from seizure of essential wages and property to pay old debts, or to protect against seizure for debts that have already been paid or result from fraud or error. A new report from the National Consumer Law Center, No Fresh Start 2020: Will States Let Debt Collectors Push Families into Poverty in the Wake of a Pandemic?, surveys exemption laws to protect wages, assets in a bank account, and property from seizure by creditors in the 50 states, the District of Columbia, Puerto Rico, and the Virgin Islands. The report gives California a ‘B’ grade, up from last year’s ‘C’, making it one of the most improved states in the country.
One significant reason California is recognized as one of the most improved states is because of Senate Bill 616 by Senator Bob Wieckowski, which protects the first $1,788 dollars in a person’s bank account from consumer bank levies; the law went into effect in September. Western Center proudly co-sponsored SB 616 with the California Low-Income Consumer Coalition, East Bay Community Law Center, and the California Asset Building Coalition; and earlier this month, Western Center honored Delilah L. Clay of Manatt, Phelps & Phillips, LLP’s Sacramento office for her pro-bono service, which contributed to the passage of the bill.
“In California, we like to say we lead the country with progressive policies,” said Jessica Bartholow, a Western Center policy advocate who has pursued consumer justice legislation for several years. “The reality is that when it comes to consumer protection, that hasn’t been the case. But things are changing, as evidenced by this year’s ‘most improved state’ recognition following the enactment of several new consumer laws. We’re combing the 2020 report to see what other states are doing and how we can emulate the better policies that are out there.”
Other improvements made in California include a new homestead exemption, which protects against home loss during bankruptcy, and establishes a new state entity charged with licensing debt collectors and protecting consumers from abusive and illegal debt collection practices. California also now prohibits foreclosures on a person’s principal residence for any consumer debt under $75,000, unless the home was collateral for the debt when it was accrued.
“By reforming their exemption laws, states will not only protect families from destitution but will promote economic recovery by enabling families to spend their money in state and local communities,” said Carolyn Carter, National Consumer Law Center deputy director and author of the report.
Strong exemption laws are important for many reasons, but particularly because weak protections exacerbate the racial wealth gap. Communities of color are disproportionately burdened by debt, subject to judgments in collection lawsuits, and subject to wage garnishment. Because of longstanding discrimination, Black and Latinx households have less wealth and less of a safety net to draw on during challenging times, like during a global pandemic.
Key recommendations from the report include automatic updating of exemption amounts for inflation, and making them self-enforcing, to the extent possible, so consumers don’t have to file complicated papers or attend court hearings (see report for the full list of recommendations). Model language for California to achieve these goals is provided in the National Consumer Law Center’s Model Family Financial Protection Act. The model law also includes steps the state can take to reduce the pervasive abuse of the court system by debt buyers.
California can prevent over-aggressive debt collectors from plunging families into poverty. Such protections also benefit the state by keeping workers in the workforce, helping families stay together, and reducing the demand on funds for unemployment compensation and social services. Overall, everyone benefits when consumers have the financial resources to improve their earning power and pay off debt in a way that honors their humanity.
Jessica Bartholow, Western Center on Law & Poverty – jbartholow[at]wclp.org
Stephen Rouzer, National Consumer Law Center – srouzer[at]nclc.org
About Western Center on Law & Poverty: Through the lens of economic and racial justice, Western Center on Law & Poverty fights in courts, cities, counties, and in the Capitol to secure housing, health care and a strong safety net for low-income Californians.
The nonprofit National Consumer Law Center® (NCLC®) works for economic justice for low-income and other disadvantaged people in the U.S. through policy analysis and advocacy, publications, litigation, and training.
“When SB 616 was signed into law by Gov. Gavin Newsom last October, the Western Center on Law & Poverty estimated the average Californian owed $15,100 in non-mortgage debt, including medical, student, auto and credit card obligations.
That amount is now almost certainly higher, said Jessica Bartholow, policy advocate for the Los Angeles-based nonprofit organization, which played an instrumental role in passage of the new law.
“It’s not hard to imagine that a lot of Californians are loading up their credit cards right now, just trying to get by,” she told me. “Once debt gets to a collector, they’ll go after it any way they can.”
“Jessica Bartholow of the Western Center on Law & Poverty, a co-sponsor of SB 616, agreed that the law will help families in these tough times.
“Amid the pandemic, Californians are falling behind on rent payments,” Bartholow said, “and they are using whatever credit they have left to keep their families from going hungry. Protection from aggressive debt collection is needed now more than ever. With the implementation of SB 616, people will have breathing room to catch up on bills without a zeroed-out bank account. SB616 also includes an exemption for FEMA payments to ensure fire victims keep their disaster payments so they can rebuild as intended.”
“Jessica Bartholow, a policy advocate for the California-based Western Center on Law & Poverty, thinks a lack of awareness about public assistance repayments led to what she sees as an oversight in the federal CARES Act. It allowed federal stimulus payments to be intercepted for child support debt, thus letting the money flow away from families who have received public assistance and back to the government.
“Congress incorrectly made the assumption that all the money goes to a custodial parent,” she said. “We believe Congress just didn’t understand that.”
“SB 908 is also supported by California Low-Income Consumer Coalition, Consumer Reports, Center for Responsible Lending, Consumer Federation of California, Bay Area Legal Aid, East Bay Community Law Center, Bez Tzedek, Courage California, Western Center on Law and Poverty, and Consumers for Auto Reliability and Safety, among other groups.”
“Usually people on the other end of overpayment or overissuance claims don’t have attorneys to help, said Jessica Bartholow, a policy advocate at the Western Center on Law & Poverty. “That’s really appalling, because a public benefits fraud case can be enough to kick you out of the country if you’re an immigrant; they could go to jail; they could lose their kids if they go into Child Protective Services.” When people have lawyers, by contrast, “one out of two times” they can prove there was no overpayment at all.”
“But “how will a bank know whether the income is COVID-related or not?” asked Jessica Bartholow, policy advocate for the Western Center on Law and Poverty. “If the banks don’t know which money is protected, you need to put things on pause.”
“This policy victory would have never happened without the Policy Advocacy Clinic. When impacted community members dedicate their lives to undoing the injustices they have experienced, they deserve the best teammates to support them in achieving big goals, not half-a-loaf solutions,” says Jessica Bartholow, policy advocate for the Western Center on Law & Poverty and a clinic client. “The clinic shows up to be that partner every time and the Franchise Tax Board action was a perfect example of how magical the combination of deep partnership and strategic preparation can be.”