Industry Files Suit to Block Enactment of Nevada Medical Debt Collection Law

A dozen collection agencies, plus ACA International and the Nevada Collectors Association have filed a lawsuit against the state of Nevada seeking to block the enactment of a new law that governs how medical debts are to be collected in the state. The new law is scheduled to go into effect this Thursday, July 1, unless the plaintiffs are successful in convincing a federal judge in Nevada to grant a temporary restraining order blocking the bill from going into effect.

A copy of the complaint in the case is available by clicking here.

There has been a lot of confusion and concern about the law — SB248 — which places a number of new requirements on collectors that work healthcare accounts in Nevada. AccountsRecovery.net held a webinar last week seeking to provide information and answer questions about the law — a recording of the event is available by clicking here.

This is not the first time that the industry has stepped up to challenge a state’s attempt at enacting laws or regulations that limit how companies in the accounts receivable management industry can operate. Many should remember the lawsuit that ACA International filed against Maura Healey, the Attorney General of Massachusetts, when her office attempted to enact regulations at the start of the COVID-19 pandemic that would have prohibited collection agencies from initiating phone calls with consumers to try and collect on debts. A District Court judge granted ACA’s motion for a temporary restraining order and the regulation was nullified.

SB248 violates the First Amendment, Fourteenth Amendment as well as preemption provisions in the Fair Debt Collection Practices Act and the Fair Credit Reporting Act, the plaintiffs claim in their suit against the state of Nevada. Among the arguments put forth by the plaintiffs in their suit are that SB248, which prohibits collection agencies from “taking any action to collect a medical debt” for 60 days after sending a notice to consumers, does not define what “action” means, such as whether it simply prohibits initiating a collection lawsuit or whether the word encompasses other collection activity. SB248 also conflicts with existing state law in Nevada which requires collectors to send notifications to consumers within five days of an initial communication because SB248 says that agencies have to wait 60 days after sending the initial notice before taking any action. Now, the Financial Institutions Division of the Nevada Department of Business and Industry has been answering questions and attempting to provide guidance on some of these issues, but, at the end of the day, the law “erects artificial barriers to the collection of lawful medical debt and was designed specifically to prevent physicians, health care providers, and providers of emergency services from using licensed debt collection companies to secure payment for lawful debts arising from the provision of their medical goods and services to the public,” the plaintiffs allege in their complaint.

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