Today's Law As Amended


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AB-1020 Health care debt and fair billing.(2021-2022)



As Amends the Law Today


SECTION 1.

 Section 1788.14 of the Civil Code is amended to read:

1788.14.
 No debt collector shall collect or attempt to collect a consumer debt by means of the following practices:
(a) Obtaining an affirmation from a debtor of a consumer debt which has been discharged in bankruptcy, without clearly and conspicuously disclosing to the debtor, in writing, at the time such affirmation is sought, the fact that the debtor is not legally obligated to make such affirmation;
(b) Collecting or attempting to collect from the debtor the whole or any part of the debt collector’s fee or charge for services rendered, or other expense incurred by the debt collector in the collection of the consumer debt, except as permitted by law; or
(c) Initiating communications, other than statements of account, with the debtor with regard to the consumer debt, when the debt collector has been previously notified in writing by the debtor’s attorney that the debtor is represented by such attorney with respect to the consumer debt and such notice includes the attorney’s name and address and a request by such attorney that all communications regarding the consumer debt be addressed to such attorney, unless the attorney fails to answer correspondence, return telephone calls, or discuss the obligation in question. This subdivision shall not apply where prior approval has been obtained from the debtor’s attorney, or where the communication is a response in the ordinary course of business to a debtor’s inquiry.
(d) Sending a written communication to a debtor in an attempt to collect a time-barred debt without providing the debtor with one of the following written notices:
(1) If the debt is not past the date for obsolescence set forth in Section 605(a) of the federal Fair Credit Reporting Act (15 U.S.C. Sec. 1681c), the following notice shall be included in the first written communication provided to the debtor after the debt has become time-barred:
“The law limits how long you can be sued on a debt. Because of the age of your debt, we will not sue you for it. If you do not pay the debt, [insert name of debt collector] may [continue to] report it to the credit reporting agencies as unpaid for as long as the law permits this reporting.”
(2) If the debt is past the date for obsolescence set forth in Section 605(a) of the federal Fair Credit Reporting Act (15 U.S.C. Sec. 1681c), the following notice shall be included in the first written communication provided to the debtor after the date for obsolescence:
“The law limits how long you can be sued on a debt. Because of the age of your debt, we will not sue you for it, and we will not report it to any credit reporting agency.”
(e) Collecting consumer debt that originated with a hospital licensed pursuant to subdivision (a) of Section 1250 of the Health and Safety Code without including in the first written communication to the debtor a complete, itemized hospital bill, including the dates of services, the health coverage or lack of coverage on record with the hospital, an application for charity care and financial assistance, notification that the collector will wait at least 180 days before reporting adverse information to a credit reporting agency or taking any action against the debtor, and, if the debtor has already been denied financial assistance, information on why the application for financial assistance was denied and who to contact to appeal the denial.
(e) (f)  For purposes of this section, “first written communication” means the first communication sent to the debtor in writing or by facsimile, email, or other similar means.

SEC. 2.

 Section 1788.185 is added to the Civil Code, immediately following Section 1788.18, to read:

1788.185.
 (a) The complaint in an action brought by a debt collector for debt that originated with a hospital licensed pursuant to subdivision (a) of Section 1250 of the Health and Safety Code shall allege all of the following:
(1) That the plaintiff is a debt collector.
(2) The nature of the underlying debt and the hospital services from which it is derived, in a short and plain statement.
(3) A statement of efforts to comply with Section 127420 of the Health and Safety Code to screen the individual for health coverage programs and hospital financial assistance.
(4) The debt balance at charge off and an explanation of the amount, nature, and reason for all post-charge-off interest and fees, if any, imposed by the charge-off creditor or a subsequent purchaser of the debt. This paragraph shall not be deemed to require a specific itemization, but the explanation shall identify separately the charge-off balance, the total of any post-charge-off interest, and the total of any post-charge-off fees.
(5) The date of default or the date of the last payment, and the date of charge off.
(6) The name and address of the hospital at the time of charge off.
(7) The hospital’s account number associated with the debt.
(b) A copy of the hospital bills and documentation of efforts to comply with Section 127420 of the Health and Safety Code to screen the individual for health coverage programs and hospital financial assistance shall be attached to the complaint in an action brought by a debt collector for debt that originated with a hospital licensed pursuant to subdivision (a) of Section 1250 of the Health and Safety Code.
(c) This title does not require the disclosure in public records of personal, financial, or medical information, the confidentiality of which is protected by state or federal law. The plaintiff shall redact protected information filed with the complaint.
(d) A default or other judgment shall not be entered against a debtor for debt pursuant to this section unless business records, authenticated through a sworn declaration, are submitted by the debt collector to the court to establish the facts required to be alleged pursuant to subdivision (a).
(e) If a debt collector plaintiff seeks a default judgment and has not complied with this title, the court shall not enter a default judgment for the plaintiff and may, in its discretion, dismiss the action.
(f) Except as provided in this title, this section does not modify or otherwise amend the procedures established in Section 585 of the Code of Civil Procedure.

SEC. 3.

 Section 127400 of the Health and Safety Code is amended to read:

127400.
 As used in this article, the following terms have the following meanings:
(a) “Allowance for financially qualified patient” means, with respect to services rendered to a financially qualified patient, an allowance that is applied after the hospital’s charges are imposed on the patient, due to the patient’s determined financial inability to pay the charges.
(b) “Federal poverty level” means the poverty guidelines updated periodically in the Federal Register by the United States Department of Health and Human Services under authority of subsection (2) of Section 9902 of Title 42 of the United States Code.
(c) “Financially qualified patient” means a patient who is both of the following:
(1) A patient who is a self-pay patient, as defined in subdivision (f), or a patient with high medical costs, as defined in subdivision (g).
(2) A patient who has a family income that does not exceed 350 400  percent of the federal poverty level.
(d) “Hospital” means a facility that is required to be licensed under subdivision (a), (b), or (f) of Section 1250, except a facility operated by the State Department of State Hospitals or the Department of Corrections and Rehabilitation.
(e) “Office” means the Office of Statewide Health Planning and Development.
(f) “Self-pay patient” means a patient who does not have third-party coverage from a health insurer, health care service plan, Medicare, or Medicaid, and whose injury is not a compensable injury for purposes of workers’ compensation, automobile insurance, or other insurance as determined and documented by the hospital. Self-pay patients may include charity care patients.
(g) “A patient with high medical costs” means a person whose family income does not exceed 350 400  percent of the federal poverty level, as defined in subdivision (b). For these purposes, “high medical costs” means any of the following:
(1) Annual out-of-pocket costs incurred by the individual at the hospital that exceed the lesser of  10 percent of the patient’s current  family income or family income  in the prior 12 months.
(2) Annual out-of-pocket expenses that exceed 10 percent of the patient’s family income, if the patient provides documentation of the patient’s medical expenses paid by the patient or the patient’s family in the prior 12 months.
(3) A lower level determined by the hospital in accordance with the hospital’s charity care policy.
(h) “Patient’s family” means the following:
(1) For persons 18 years of age and older, spouse, domestic partner, as defined in Section 297 of the Family Code, and dependent children under 21 years of age, whether living at home or not.
(2) For persons under 18 years of age, parent, caretaker relatives, and other children under 21 years of age of the parent or caretaker relative.
(i) “Reasonable payment plan” means monthly payments that are not more than 10 percent of a patient’s family income for a month, excluding deductions for essential living expenses. “Essential living expenses” means, for purposes of this subdivision, expenses for any of the following: rent or house payment and maintenance, food and household supplies, utilities and telephone, clothing, medical and dental payments, insurance, school or child care, child or spousal support, transportation and auto expenses, including insurance, gas, and repairs, installment payments, laundry and cleaning, and other extraordinary expenses.

SEC. 4.

 Section 127401 of the Health and Safety Code is amended to read:

127401.
 Each general acute care hospital licensed pursuant to subdivision (a) of Section 1250 shall comply with the provisions of this article as a condition of licensure. The State Department of Health Services  Office of State Health Planning and Development  shall be responsible for the enforcement of these provisions.

SEC. 5.

 Section 127405 of the Health and Safety Code is amended to read:

127405.
 (a) (1) (A) Each hospital shall maintain an understandable written policy regarding discount payments for financially qualified patients as well as an understandable written charity care policy. Uninsured patients or patients with high medical costs who are at or below 350 400  percent of the federal poverty level, as defined in subdivision (b) of Section 127400, shall be eligible to apply for participation under a hospital’s charity care policy or discount payment policy. Notwithstanding any other provision of this article, a hospital may choose to grant eligibility for its discount payment policy or charity care policies to patients with incomes over 350 400  percent of the federal poverty level. Both the charity care policy and the discount payment policy shall state the process used by the hospital to determine whether a patient is eligible for charity care or discounted payment. In the event of a dispute, a patient may seek review from the business manager, chief financial officer, or other appropriate manager as designated in the charity care policy and the discount payment policy.
(B) The written policy regarding discount payments shall also include a statement that an emergency physician, as defined in Section 127450, who provides emergency medical services in a hospital that provides emergency care is also required by law to provide discounts to uninsured patients or patients with high medical costs who are at or below 350 400  percent of the federal poverty level. This statement shall not be construed to impose any additional responsibilities upon the hospital.
(2) Rural hospitals, as defined in Section 124840, may establish eligibility levels for financial assistance and charity care at less than 350 400  percent of the federal poverty level as appropriate to maintain their financial and operational integrity.
(b) A hospital’s discount payment policy shall clearly state eligibility criteria based upon income consistent with the application of the federal poverty level. The discount payment policy shall also include an extended payment plan to allow payment of the discounted price over time. The policy shall provide that the hospital and the patient shall negotiate the terms of the payment plan, and take into consideration the patient’s family income and essential living expenses. If the hospital and the patient cannot agree on the payment plan, the hospital shall use the formula described in subdivision (i) of Section 127400 to create a reasonable payment plan.
(c) The charity care policy shall state clearly the eligibility criteria for charity care. In determining eligibility under its charity care policy, a hospital may consider income and monetary assets of the patient. For purposes of this determination, monetary assets shall not include retirement or deferred compensation plans qualified under the Internal Revenue Code, or nonqualified deferred compensation plans. Furthermore, the first ten thousand dollars ($10,000) of a patient’s monetary assets shall not be counted in determining eligibility, nor shall 50 percent of a patient’s monetary assets over the first ten thousand dollars ($10,000) be counted in determining eligibility.
(d) A hospital shall limit expected payment for services it provides to a patient at or below 350 400  percent of the federal poverty level, as defined in subdivision (b) of Section 127400, eligible under its discount payment policy to the amount of payment the hospital would expect, in good faith, to receive for providing services from Medicare, Medi-Cal, the Healthy Families Program, or another government-sponsored health program of health benefits in which the hospital participates,  Medicare or Medi-Cal,  whichever is greater. If the hospital provides a service for which there is no established payment by Medicare or any other government-sponsored program of health benefits in which the hospital participates, the hospital  Medi-Cal, the hospital  shall establish an appropriate discounted payment. Patients eligible under this article shall not be required to undergo an independent dispute resolution process. 
(e) A patient, or patient’s legal representative, who requests a discounted payment, charity care, or other assistance in meeting his or her  their  financial obligation to the hospital shall make every reasonable effort to provide the hospital with documentation of income and health benefits coverage. If the person requests charity care or a discounted payment and fails to provide information that is reasonable and necessary for the hospital to make a determination, the hospital may consider that failure in making its determination.
(1) For purposes of determining eligibility for discounted payment, documentation of income shall be limited to recent pay stubs or income tax returns.
(2) For purposes of determining eligibility for charity care, documentation of assets may include information on all monetary assets, but shall not include statements on retirement or deferred compensation plans qualified under the Internal Revenue Code, or nonqualified deferred compensation plans. A hospital may require waivers or releases from the patient or the patient’s family, authorizing the hospital to obtain account information from financial or commercial institutions, or other entities that hold or maintain the monetary assets, to verify their value.
(3) Information obtained pursuant to paragraph (1) or (2) shall not be used for collections activities. This paragraph does not prohibit the use of information obtained by the hospital, collection agency, or assignee independently of the eligibility process for charity care or discounted payment.
(4) Eligibility for discounted payments or charity care may be determined at any time the hospital is in receipt of information specified in paragraph (1) or (2), respectively.

SEC. 6.

 Section 127410 of the Health and Safety Code is amended to read:

127410.
 (a) Each hospital shall provide patients with a written notice that shall contain information about availability of the hospital’s discount payment and charity care policies, including information about eligibility, as well as contact information for a hospital employee or office from which the person may obtain further information about these policies. This written notice shall be provided in addition to the estimate provided pursuant to Section 1339.585. The notice shall also be provided to patients who receive emergency or outpatient care and who may be billed for that care, but who were not admitted. The notice shall be provided in English, and in languages other than English. The languages to be provided shall be determined in a manner similar to that required pursuant to Section 12693.30 of the Insurance Code. Written correspondence to the patient required by this article shall also be in the language spoken by the patient, consistent with Section 12693.30 of the Insurance Code and applicable state and federal law.
(b) Notice of the hospital’s policy for financially qualified and self-pay patients shall be clearly and conspicuously posted in locations that are visible to the public, including, but not limited to, all of the following:
(1) Emergency department, if any.
(2) Billing office.
(3) Admissions office.
(4) Other outpatient settings.
(5) Prominently displayed on the hospital’s internet website, with a link to the policy itself.

SEC. 7.

 Section 127420 of the Health and Safety Code is amended to read:

127420.
 (a) Each hospital shall make all reasonable efforts to obtain from the patient or his or her  the patient’s  representative information about whether private or public health insurance or sponsorship may fully or partially cover the charges for care rendered by the hospital to a patient, including, but not limited to, any of the following:
(1) Private health insurance, including coverage offered through the California Health Benefit Exchange.
(2) Medicare.
(3) The Medi-Cal program, the Healthy Families Program, the  California Children’s Services program, or other state-funded programs designed to provide health coverage.
(b) If a hospital bills a patient who has not provided proof of coverage by a third party at the time the care is provided or upon discharge, as a part of that billing, the hospital shall provide the patient with a clear and conspicuous notice that includes all of the following:
(1) A statement of charges for services rendered by the hospital.
(2) A request that the patient inform the hospital if the patient has health insurance coverage, Medicare, Healthy Families Program,  Medi-Cal, or other coverage.
(3) A statement that, if the consumer does not have health insurance coverage, the consumer may be eligible for Medicare, Healthy Families Program,  Medi-Cal, coverage offered through the California Health Benefit Exchange, California Children’s Services program, other state- or county-funded health coverage, or charity care.
(4) A statement indicating how patients may obtain applications for the Medi-Cal program and the Healthy Families Program,  program,  coverage offered through the California Health Benefit Exchange, or other state- or county-funded health coverage programs and that the hospital will provide these applications. The hospital shall also provide patients with a referral to a local consumer assistance center housed at legal services offices. If the patient does not indicate coverage by a third-party payer specified in subdivision (a) or requests a discounted price or charity care, then the hospital shall provide an application for the Medi-Cal program, the Healthy Families Program,  program  or other state- or county-funded health coverage programs. This application shall be provided prior to discharge if the patient has been admitted or to patients receiving emergency or outpatient care.
(5) Information regarding the financially qualified patient and charity care application, including the following:
(A) A statement that indicates that if the patient lacks, or has inadequate, insurance, and meets certain low- and moderate-income requirements, the patient may qualify for discounted payment or charity care.
(B) The name and telephone number of a hospital employee or office from whom or which the patient may obtain information about the hospital’s discount payment and charity care policies, and how to apply for that assistance.
(C) If a patient applies, or has a pending application, for another health coverage program at the same time that he or she  the patient  applies for a hospital charity care or discount payment program, neither application shall preclude eligibility for the other program.

SEC. 8.

 Section 127425 of the Health and Safety Code is amended to read:

127425.
 (a) A hospital shall not sell patient debt to a debt buyer, as defined in Section 1788.50 of the Civil Code.
(a) (b)  Each A  hospital shall have a written policy about when and under whose authority patient debt is advanced for collection, whether the collection activity is conducted by the hospital, an affiliate or subsidiary of the hospital, or by an external collection agency.
(b) (c)  Each A  hospital shall establish a written policy defining standards and practices for the collection of debt, and shall obtain a written agreement from any agency that collects hospital receivables that it will adhere to the hospital’s standards and scope of practices. This agreement shall require the affiliate, subsidiary, or external collection agency of the hospital that collects the debt to comply with the hospital’s definition and application of a reasonable payment plan, as defined in subdivision (i) of Section 127400. The policy shall not conflict with other applicable laws and shall not be construed to create a joint venture between the hospital and the external entity, or otherwise to allow hospital governance of an external entity that collects hospital receivables. In determining the amount of a debt a hospital may seek to recover from patients who are eligible under the hospital’s charity care policy or discount payment policy, the hospital may consider only income and monetary assets as limited by Section 127405.
(c) (d)  At time of billing, each a  hospital shall provide a written summary consistent with Section 127410, which includes the same information concerning services and charges provided to all other patients who receive care at the hospital.
(d) (e)  For a patient that lacks coverage, or for a patient that provides information that he or she may be a patient with high medical costs, as defined in this article, a  A  hospital, any assignee of the hospital, or other owner of the patient debt, including a collection agency, shall not report adverse information to a consumer credit reporting agency or commence civil action against the patient for nonpayment at any time prior to 150  before 180  days after initial billing.
(e) (f)  If a patient is attempting to qualify for eligibility under the hospital’s charity care or discount payment policy and is attempting in good faith to settle an outstanding bill with the hospital by negotiating a reasonable payment plan or by making regular partial payments of a reasonable amount, the hospital shall not send the unpaid bill to any collection agency or other assignee, unless that entity has agreed to comply with this article.
(f) (g)  (1) The hospital or other assignee that is an affiliate or subsidiary of the hospital shall not, in dealing with patients eligible under the hospital’s charity care or discount payment policies, use wage garnishments or liens on primary residences as a means of collecting unpaid hospital bills.
(2) A collection agency or other assignee that is not a subsidiary or affiliate of the hospital shall not, in dealing with any patient under the hospital’s charity care or discount payment policies, use as a means of collecting unpaid hospital bills, any of the following:
(A) A wage garnishment, except by order of the court upon noticed motion, supported by a declaration filed by the movant identifying the basis for which it believes that the patient has the ability to make payments on the judgment under the wage garnishment, which the court shall consider in light of the size of the judgment and additional information provided by the patient prior to, or at, the hearing concerning the patient’s ability to pay, including information about probable future medical expenses based on the current condition of the patient and other obligations of the patient.
(B) Notice or conduct a sale of the patient’s primary residence during the life of the patient or his or her  the patient’s  spouse, or during the period a child of the patient is a minor, or a child of the patient who has attained the age of majority is unable to take care of himself or herself  themselves  and resides in the dwelling as his or her  their  primary residence. In the event a person protected by this paragraph owns more than one dwelling, the primary residence shall be the dwelling that is the patient’s current homestead, as defined in Section 704.710 of the Code of Civil Procedure, or was the patient’s homestead at the time of the death of a person other than the patient who is asserting the protections of this paragraph.
(3) This requirement does not preclude a hospital, collection agency, or other assignee from pursuing reimbursement and any enforcement remedy or remedies from third-party liability settlements, tortfeasors, or other legally responsible parties.
(g) (h)  Extended payment plans offered by a hospital to assist patients eligible under the hospital’s charity care policy, discount payment policy, or any other policy adopted by the hospital for assisting low-income patients with no insurance or high medical costs in settling outstanding past due hospital bills, shall be interest free. The hospital extended payment plan may be declared no longer operative after the patient’s failure to make all consecutive payments due during a 90-day period. Before declaring the hospital extended payment plan no longer operative, the hospital, collection agency, or assignee shall make a reasonable attempt to contact the patient by telephone and, to give notice in writing, that the extended payment plan may become inoperative, and of the opportunity to renegotiate the extended payment plan. Prior to the hospital extended payment plan being declared inoperative, the hospital, collection agency, or assignee shall attempt to renegotiate the terms of the defaulted extended payment plan, if requested by the patient. The hospital, collection agency, or assignee shall not report adverse information to a consumer credit reporting agency or commence a civil action against the patient or responsible party for nonpayment prior to the time the extended payment plan is declared to be no longer operative. For purposes of this section, the notice and telephone call to the patient may be made to the last known telephone number and address of the patient.
(h) (i)  Nothing in this section shall be construed to  This section does not  diminish or eliminate any protections consumers have under existing federal and state debt collection laws, or any other consumer protections available under state or federal law. If the patient fails to make all consecutive payments for 90 days and fails to renegotiate a payment plan, this subdivision does not limit or alter the obligation of the patient to make payments on the obligation owing to the hospital pursuant to any contract or applicable statute from the date that the extended payment plan is declared no longer operative, as set forth in subdivision (g). (h). 

SEC. 9.

 Section 127435 of the Health and Safety Code is amended to read:

127435.
 Each (a)  A  hospital shall provide to the office a copy of its discount payment policy, charity care policy, eligibility procedures for those policies, review process, and the application for charity care or discounted payment programs.  programs, as well as a copy of its debt collection policy.  The office may determine whether the information is to be provided electronically or in some other similar  manner. The information shall be provided at least biennially on January 1, or when a significant change is made. If no significant change has been made by the hospital since the information was previously provided, notifying the office of the lack of change shall meet the requirements of this section. The office shall make this information available to the public. public on its internet website. 
(b) The office shall review a hospital’s policy for compliance with this article.
(c) A patient shall not be denied financial assistance that would be available pursuant to the policy published on the office’s website at the time of service.

SEC. 10.

 Section 127436 is added to the Health and Safety Code, to read:

127436.
 (a) The Director of the Office of Statewide Health Planning and Development shall impose an administrative penalty for each violation against a hospital that fails to comply with this article in the billing of a patient.
(b) Upon receipt of a complaint by a patient that a hospital has not followed the requirements of Sections 127405 to 127435, inclusive, the director shall do all of the following:
(1) Review the patient’s eligibility for charity care or financial assistance under the hospital’s published financial assistance policy in effect at the time the patient was first billed.
(2) Review the hospital’s compliance with this article.
(3) If, after completing the actions in paragraphs (1) and (2), the director believes that the hospital may have violated this article, issue a notice to the hospital describing the alleged violation. The notice shall state all of the facts supporting the alleged violation. The hospital shall have 30 days after issuance of the notice to file a response with the director.
(4) If, after considering all of the information included in any response filed by the hospital, the director determines that a violation has occurred, assess a penalty in the amount of the most recent bill presented to the patient at the time the patient filed the complaint, plus interest accrued from the date of the first violation at the rate set forth in Section 685.010 of the Code of Civil Procedure. Ongoing violations, including failure to post notice of financial assistance, shall be deemed to have been first violated on the date of the first bill to the patient.
(5) Notify the patient of the violation and the patient’s right to reimbursement pursuant to Section 127440.
(6) Collect the penalty from the hospital within 30 days of its assessment.
(c) The office shall promulgate regulations to establish a process whereby a hospital may appeal the director’s determination that a violation has occurred or the amount of any penalty assessed, subject to the following requirements:
(1) A hospital shall have 30 days from issuance to appeal any determination or penalty.
(2) A hospital may submit any relevant evidence during the appeal process.
(3) The office shall provide the patient who filed a complaint with timely notice of the appeal and a copy of any evidence submitted by the hospital, and offer the patient 30 days to submit a response, including any additional evidence in support of the complaint.
(4) The office shall consider all relevant evidence.
(5) The office may reduce an assessment in the interest of fairness.
(6) The office may reduce or waive a penalty if a violation was due to factors beyond the hospital’s control, such as a patient failing to provide accurate information or an unauthorized person removing signage from hospital walls.

SEC. 11.

 Section 127440 of the Health and Safety Code is amended to read:

127440.
 The hospital shall reimburse the patient or patients any amount actually paid in excess of the amount due under this article, including interest. Interest owed by the hospital to the patient shall accrue at the rate set forth in Section 685.010 of the Code of Civil Procedure, beginning on the date payment by the patient is received by the hospital. However, a hospital is not required to reimburse the patient or pay interest if the amount due is less than five dollars ($5.00). The hospital shall give the patient a credit for the amount due for at least 60 days from the date the amount is due. refund the patient within 30 days.