Starting January 1, 2025, health care facilities and licensed health care providers may not furnish any information related to medical debt to consumer reporting agencies, or that debt is void and unenforceable.

SB 1061, signed into law in September, amends the California Civil Code to make several changes aimed at protecting consumers from the negative impacts of medical debt. “Medical debt” is defined as “a debt owed by a consumer to a person whose primary business is providing medical services, products, or devices, or to the person’s agent or assignee, for the provision of medical services, products, or devices” and includes debt a consumer incurs for services provided by a skilled nursing facility, hospital, ground ambulance provider, and any other licensed health care entity or provider. It does not include debt incurred for cosmetic surgery.

Medical debt becomes void and unenforceable if any “person” (defined as “any individual, partnership, corporation, trust, estate, cooperative, association, government or governmental subdivision or agency, or other entity”) knowingly furnishes information about the medical debt to a consumer credit reporting agency. There is a narrow exception to the prohibition if the consumer received direct payment from a health insurer for the services and failed to submit the payment to the health care entity.

New Disclosure Language Required in 2025

Beginning on July 1, 2025, all health care facilities and providers must include the following term in any contract that creates a medical debt, or the contract is void and unenforceable:

A holder of this medical debt contract is prohibited by Section 1785.27 of the Civil Code from furnishing any information related to this debt to a consumer credit reporting agency. In addition to any other penalties allowed by law, if a person knowingly violates that section by furnishing information regarding this debt to a consumer credit reporting agency, the debt shall be void and unenforceable.

Health care facilities and providers should update their contracts to include this language to preserve the ability to enforce the contract and collect for services rendered.

Note that skilled nursing facilities must continue to use the California Standard Admission Agreement, which must comply with state law. We will be keeping a lookout for changes to the Standard Admission Agreement that include this new language. Skilled nursing facilities should be sure to always use the most recent version.