ACA International, the association representing the accounts receivable industry, has filed suit against the CFPB, alleging that the bureau’s advisory opinion on medical debt was overtly political, issued in violation of the Administrative Procedures Act (APA) and should be nullified.

The association charged that although the CFPB was designed to be independent, the bureau’s advisory opinion was announced at an event at the White House and was first introduced by Vice President Kamala Harris, who at the time was running for president.

Moreover, the agency issued the rule in violation of the APA, ACA International alleged.

In October the CFPB issued an advisory opinion stating that debt collectors are strictly liable under the Fair Debt Collection Practices Act and Regulation F for engaging in such practices as attempting to collect a medical debt that was not owed and or was unsubstantiated.

The association contended that the advisory opinion establishes rules that would improperly thrust debt collectors into the patient-provider health care decision making process and would require the medical debt and healthcare billing industry to dramatically change their conduct in that the opinion would require medical debt collectors to “ensure that every aspect of a billed procedure was actually performed on a patient.”

“The Advisory Opinion establishes expectations that are impossible to meet and contrary to the plain text of the FDCPA, as well as the CFPB’s previous determinations when it finalized Regulation F, 12 C.F.R. Part 1006,” ACA alleged in its suit, filed in the U.S. District Court for the District of Columbia.

In a statement as the lawsuit was filed, ACA charged that a CFPB press release that accompanied the advisory opinion “demonstrated a fundamental misunderstanding of health care receivables and the health care industry, while unfairly portraying health care providers and their service partners as bad actors who work to harm patients.”

Among other things, the ACA asks the district court to issue declarations that the CFPB’s advisory opinion is:

• Arbitrary, capricious, or otherwise contrary to law within the meaning of the APA.
• In excess of statutory jurisdiction, authority, or limitations, or short of statutory right within the meaning of the APA.

In addition to the ACA lawsuit, R.M Galicia Inc., a debt collector that operates as Progressive Management Systems and engages in medical debt collection, has filed its own suit in the U.S. District Court for the District of Columbia. The company’s allegations are similar to those of ACA; it charged that the rule was issued in violation of the APA because, among other things, the bureau failed to open the new policy to comment before it was issued.

On Capitol Hill, Rep. Gary Palmer, R-Al., on Nov. 13 introduced a resolution under the Congressional Review Act to nullify the rule. The resolution, H.J.Res. 220, would have to pass both Houses and then be signed by the President before the rule would be nullified.