California Assembly Passes AB 1020

The California Assembly on Tuesday passed AB 1020, a bill that would ban hospitals from selling patient debts, require collectors to certify that patients have been screened for public programs and financial assistance before filing a collection lawsuit, and extend the period before a debt could be placed with a collection agency until 180 days after the initial billing, among other provisions. The bill now moves to the state Senate for its consideration.

Representatives from the accounts receivable management industry have been lobbying to get the provisions of the bill amended, and will continue to do so while the California Senate takes up the bill for consideration.

AB 1020 was introduced by state Assemblymember Lauren Friedman, a Democrat. It was referred out of committee in May via a unanimous vote and passed in the state Assembly by a vote of 65 to three. The bill provides “solid protections for consumers and real consequences for hospitals and debt collectors that fail to follow the law,” Friedman said in a statement when the bill was passed by the state Assembly’s Judiciary Committee in April.

When filing a lawsuit against an individual for an unpaid debt that originated with a hospital in California, the collector would be required to provide documentation of the efforts to comply with a state law enacted 15 years ago aimed at ensuring hospitals offer charity care to individuals who are underinsured or uninsured. Anyone earning less than 400% of the federal poverty limit would be eligible for charity care under the proposed legislation.

Collectors would also be required to inform individuals about how to obtain an itemized bill in their initial communication notices.

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