HB 1859

REPAYMENT OF MEDICAL DEBTS This bill creates the Freedom from Medical Debt Act, which requires the state treasurer ("treasurer"") to contract with a nonprofit entity to provide for the nonprofit entity's repayment of eligible debtors' medical debts . T he treasurer must ensure that the nonprofit entity (i) p urchases the medical debt of eligible debtors from healthcare providers at fair market value ; and (ii) c oordinates with the healthcare provider or debt collections agency to ensure that any adverse information resulting from the me dical debt is removed from the debtor's consumer report following the repayment of the debt. This bill authorizes a hospital or an ambulatory surgical treatment center to sell or otherwise transfer its medical debt to a nonprofit entity for the specific purpose of the nonprofit entity purchasing the medical debt of one or more patients by elimina tion of the indebtedness. A ""h ospital "" means any place held out to the general public as ready, willing and able to furnish care in connection with the services of a physician or dentist for care, diagnosis or treatment, including such hospitals as are st rictly maternity hospitals . However, ""hospital"" does not mean a hospital or institution, operated by the department of mental health and substance abuse services or the department of disability and aging, specially intended for use in the diagnosis, care and treatment of those suffering from mental illness, intellect ual disabilities, convulsive disorders, or other abnormal mental conditions . Interest Earnings This bill provides that it is the legislative intent that the treasurer's interest earnings in the sum of $1 million be recognized in fiscal year 2026-2027 in the general appropriations act. It is further the legislative intent that such funds be available for the purpose of the treasurer contracting with a nonprofit entity to purchase and repay medical debts incurred by residents of this state . DEBTOR ELIGIBILITY T o be eligible for repayment of medical debt, this bill requires the debtor to meet all of the following requirements:  The debtor must be a resident of this state .  The debtor must have a gross annual household income that is at or below 400% of the federal poverty level for the applicable household size, which is $128, 60 0 for a family of four according to the federal Department of Health and Human Services .  The debtor ow es medical debt in an amount that is 5% or more of the debtor's gross annual household income .  The debtor has a patient account that maintains an outstanding balance after more than 120 days have expired from the date the first bill is mailed to the debtor and after the healthcare provider has completed reasonable and customary attempts to collect the bill. STATE NOT PLEDGED TO PAY This bill requires a ll contracts entered into in connection with the repayment of medical debt to contain a prominent statement to the effect that the state is not obligated to pay any portion of the medical debt, and that the faith and credit and the taxing power of the state is not pledged to the payment of the principal of or the interest on such medical debts or related payment obligations of the nonprofit entity. CONSUMER REPORTING Beginning July 1, 2026, this bill prohibits a healthcare provider from report ing a patient's medical debt to a consumer reporting agency. However, this bill does not prohibit a healthcare provider from reporting a patient's medical debt to a debt collections agency. This bill also prohibits a consumer reporting agency from includ ing a record of medical debt on a consumer report. If a consumer reporting agency does include information in a consumer report, then the person to whom the consumer report applies may dispute the completeness or accuracy of such information, as provided under the federal Fair Credit Reporting Act . Violations and Penalties A violation of the provisions above concerning reporting to agencies constitute s a violation of the Tennessee Consumer Protection Act of 1977 (""TCPA""). I n addition to the penalties and remedies in this bill, violations constitute an unfair or deceptive act or practice affecting trade or commerce and is subject to the penalties and remedies as provided in the TCPA, which includes, but is not limited to, restraining orders, injunctions, private rights of action, and damages . Th is bill provides that the attorney general has all of the investigative and enforcement authority that the attorney general has under TCPA relating to alleged violations. The attorney general may institute any proceedings involving alleged violations in Davidson County circuit or chancery court or any other venue otherwise permitted by law. This bill prohibits c osts of any kind or nature from be ing taxed against the attorney general or this state in actions commenced under this bill."