Effective July 27, 2025, Washington’s SB 5480 prohibits the reporting of medical debt to credit bureaus. Health care providers should be aware of how this new law may affect their collection practices.
What Does the Law Do?
SB 5480 has two key provisions. It:
- Voids any medical debt that is reported to a consumer credit reporting agency.
- Treats the reporting of such debt as an unfair or deceptive practice under the Consumer Protection Act (CPA).
When Does the Law Apply to Health Care Providers?
SB 5480 applies when any person, health care provider, health care facility, or licensed collection agency furnishes medical debt to a credit bureau. While the law clearly applies if a provider reports debt directly to a credit bureau, the debt is void regardless of who furnishes it. So, if a provider assigns medical debt to a collection agency and the agency reports it, the debt is still void, even if the provider retains ownership. Further, even if a third party reports the debt, there may be an argument that the provider engaged in unfair or deceptive conduct by enabling the violation, opening itself up to potential CPA liability.
Practical Takeaways for Health Care Providers
Do Not Furnish Medical Debt to Consumer Reporting Agencies
This will void the debt and open you up to liability. If your office or billing vendor reports unpaid bills to credit bureaus, this practice should cease immediately.
Choose Collection Agencies Carefully
If your collection agency reports debt to a credit bureau, then the debt will be void and your organization will be at risk. Only use collection agencies you are confident are knowledgeable of and will comply with the law.
Update Your Collection Agreements
Review your agreements with collection agencies. At a minimum, consider:
- Requiring written assurances that the agency will not violate SB 5480.
- Including an indemnity provision for SB 5480 violators.
Why It Matters
Beyond the financial loss of voided debts, the CPA carries steep penalties. A consumer who brings a successful claim can recover treble damages and attorney’s fees.
If you have questions about how this law might affect your organization or would like help reviewing your collection practices or vendor agreements, please contact an attorney in our Health Law practice group.