Maryland Legal Alert for Financial Services
Federal Court Vacates CFPB Medical Debt Reporting Rule; Implications for Maryland Law
On July 11, 2025, the U.S. District Court for the Eastern District of Texas vacated the Consumer Financial Protection Bureau’s (CFPB) rule prohibiting the inclusion of medical debt on consumer credit reports. The CFPB’s rule, finalized in January 2025, addressed concerns that medical debt is often inaccurate and not reflective of a consumer’s creditworthiness. The court determined that the rule exceeded the CFPB’s statutory authority under the Fair Credit Reporting Act (FCRA) and violated the Administrative Procedure Act (APA). Significantly, the court also concluded that the FCRA expressly preempts state laws that attempt to impose similar restrictions on medical debt reporting.
In its decision, the court emphasized that the plain text of the FCRA authorizes consumer reporting agencies to include medical debt information in credit reports, provided the information is properly coded to protect medical privacy. By barring such reporting, the CFPB’s rule directly conflicted with the statute. The court held that an agency cannot prohibit what Congress has explicitly permitted.
This ruling casts doubt on the enforceability of new laws in several states. Although the decision arises from a federal district court in Texas, its reasoning may influence challenges to state laws nationwide.
In 2025, Maryland enacted two statutes directly regulating medical debt reporting: (1) HB 268, prohibiting hospitals from reporting medical debt to consumer reporting agencies, and (2) HB 1020 prohibiting consumer reporting agencies from including medical debt in credit reports.
Both measures now face significant legal risk. Under the Texas court’s reasoning, these provisions attempt to restrict reporting that the FCRA expressly permits, rendering them vulnerable to preemption challenges. While the Texas ruling is not binding on Maryland courts, it provides grounds to challenge Maryland’s new laws.
Intervenors have 60 days from the ruling to appeal, but for now the decision provides a defensible basis for lenders to assess medical debt in credit evaluations.
For more information concerning this topic, please contact Tamia J. Morris.
For more information, contact Tamia J. Morris.
Tamia J. Morris | 410-576-4021