Medical debt rule
Cornerstone Credit Union League v. Consumer Financial Protection Bureau
Date: July 11, 2025
Issue: The Texas federal court’s decision to vacate the Consumer Financial Protection Bureau (CFPB)’s medical debt rule.
Case Summary: Judge Sean Jordan of the Eastern District of Texas vacated CFPB’s medical debt rule.
The Fair Credit Reporting Act (FCRA) allowed consumer reporting agencies (CRAs) to report medical debt information, provided it is coded to protect privacy. The medical debt rule, however, barred CRAs from including medical debt in consumer reports regardless of coding and also from using medical debt information to assess a consumer’s creditworthiness.
Trade associations representing credit unions and consumer data industries challenged the rule, arguing it conflicted with FCRA’s express provisions and exceeded the bureau’s regulatory authority. The trades also moved for a preliminary injunction, after which the CFPB, under new leadership, asked the court for a three-month stay to reconsider its stance. The court granted the stay, but during the pause, the court granted intervenor status to two clinics and two individuals to defend the rule. Afterward, the trades and CFPB moved the court for a consent judgment.
In his order granting vacatur, Judge Jordan addressed several issues. The court confirmed that the trade associations had associational standing to challenge the rule, based on compliance costs and the impact on their members’ business operations. The court also determined the FCRA explicitly authorizes CRAs to report coded medical debt information, and the rule’s blanket prohibition cannot be squared with the FCRA’s text. The court emphasized the CFPB “may permit creditors to obtain or use medical information to determine creditworthiness in more circumstances than the statute otherwise allows, but it may not prohibit uses of coded medical information that the statute authorizes.”
The court also concluded the rule exceeded the CFPB’s authority by “fashioning a new regulatory scheme.” It held the CFPB cannot “restrict the use of permissible information allowed by statute,” such as properly coded medical debt. By vacating the rule, the court reaffirmed that CRAs may continue to report consumers’ coded medical-debt information as permitted under the FCRA.
Bottom Line: Relatedly, on July 14, 2025, a D.C. federal court received a status report indicating the CFPB revoked its medical debt advisory opinion, which was previously challenged by plaintiffs in two related cases. The CFPB stated it does not intend to reissue it. With the advisory opinion withdrawn and no plans for reissuance, the plaintiffs advised they would voluntarily dismiss their claims without prejudice.
Document: Opinion
