Prohibit the reporting of medical debt to a consumer reporting agency and to provide a penalty therefor.
Summary
HB1058 would prohibit medical creditors and medical debt collectors from reporting any information about medical debt to consumer reporting agencies. In practical terms, this means medical bills and related collection activity could not be used to create or update consumer credit reports in South Dakota. The bill defines key terms such as medical creditor, medical debt, medical debt collector, and consumer reporting agency to make the prohibition apply specifically to debts arising from health care services or treatments.
The bill also creates a criminal penalty for violations: a person who reports medical debt in violation of the new section would be guilty of a Class 2 misdemeanor. This would add a new restriction to state law governing debt collection and credit reporting, and it would affect hospitals, clinics, other health care providers, third-party medical collectors, and credit reporting practices involving consumer debt information.
Impact
HB1058 would amend South Dakota law by creating a new prohibition in chapter 54-1 against reporting medical debt to consumer reporting agencies. It would not eliminate the underlying debt itself, but it would prevent that debt from appearing on credit reports or being furnished to third parties for credit evaluation purposes. The bill would directly affect health care providers, medical billing offices, debt collectors, and credit bureaus, and it would make violations subject to criminal enforcement as a Class 2 misdemeanor.
Sentiment
The available vote history suggests the bill was controversial and did not receive broad support. It passed one committee vote 9-4 on a do-pass-amended recommendation, but then failed on the House floor by a vote of 24-44 on the same recommendation. That pattern indicates some support for limiting the credit consequences of medical debt, but also substantial opposition to the proposal as drafted.
Contention
The main point of contention appears to be whether medical debt should be treated differently from other consumer debt in credit reporting. Supporters likely viewed the bill as consumer protection for patients facing health care costs, while opponents may have been concerned about restricting credit reporting tools used by providers and collectors to encourage payment. The criminal penalty may also have been a point of concern, since it would expose medical creditors and collectors to misdemeanor liability for reporting violations.