US judge grants Trump admin request to scrap Biden-era medical debt rule

Audio By Carbonatix

Enlarge

WASHINGTON (Reuters) -A federal judge in Texas on Friday granted a request from the Trump administration and industry groups to scrap regulations adopted during the final days of Joe Biden’s presidency that would have removed consumers’ medical debts from their credit reports, court papers showed.

U.S. District Judge Sean Jordan, whom Trump appointed in 2019, agreed with current leadership of the Consumer Financial Protection Bureau and financial industry trade groups that the rule, adopted in January, exceeded the CFPB’s legal authorities and should be vacated.

Representatives of the CFPB, which ceased defending the rule after President Donald Trump took office this year, did not respond to a request for comment.

However, Dan Smith, head of the Consumer Data Industry Association, welcomed the decision, adding that medical debt helped indicate whether consumers could repay their debts. “This is the right outcome for protecting the integrity of the system,” he said in a statement.

Former Vice President Kamala Harris had championed the regulation, citing CFPB research indicating that, because consumers incurred medical debts due to accidents and illnesses they did not choose to suffer, the information was of little value in determining whether they could afford to borrow for other reasons.

She said the rule was to help people who carry medical debts more easily afford loans for housing and other important purchases by removing $49 billion in medical debts from the credit reports of 15 million Americans.

In his decision on Friday, Jordan said a 2003 law on accurate credit reports did not permit the CFPB to do this, adding that voiding the rule was therefore “the appropriate remedy.”

(Reporting by Douglas Gillison in Washington; Editing by Aurora Ellis)