Governor Murphy Signs "Louisa Carman Medical Debt Relief Act"

Legislation Honors Late Policy Analyst and Aims to Protect New Jersey Residents from Medical Debt

NEW JERSEY – Governor Phil Murphy has signed the Louisa Carman Medical Debt Relief Act, a significant piece of legislation designed to help New Jersey families avoid falling into medical debt and protect individuals from predatory medical debt collectors. 

The Act is named in honor of Louisa Carman, a dedicated policy analyst in the Governor’s Office, who tragically passed away in a car accident on New Year’s Day at the age of 25. The bill was signed in the presence of Louisa’s family and advocates, reflecting the Governor’s commitment to making New Jersey’s health care system more accessible and affordable.

“With this legislation, we honor Louisa by carrying forward her mission to ensure every New Jerseyan can access the health care they deserve without breaking the bank,” said Governor Murphy.

Key Provisions of the Louisa Carman Medical Debt Relief Act

The new legislation includes several critical measures to safeguard patients from medical debt collection practices:

1. Prohibition on Reporting Medical Debt:
   • Medical creditors or debt collectors are prohibited from reporting a patient’s medical debt to any consumer reporting agency for health care services performed after the bill’s effective date.
2. Restrictions on Medical Debt Collection:
   • Medical creditors or collectors cannot:
     • Report a patient’s paid medical debt or debts less than $500.
     • Charge an interest rate exceeding three percent per year on medical debt.
     • Garnish wages of patients earning less than 600 percent of the federal poverty level.
     • Initiate collection actions until 120 days after the first bill is sent or if the patient complies with a reasonable payment plan.
3. Limitations on Collection Actions:
   • Collection actions are defined to include selling the patient’s debt, placing liens on property, seizing bank accounts, and garnishing wages. These actions are restricted under the new law.
4. Protections Against Illegal Reporting:
   • Any portion of a medical debt reported to a consumer reporting agency in violation of this bill will be considered void.
5. Penalties for Violations:
   • Medical creditors or collectors violating the bill may face civil penalties and may be ordered by the Attorney General to restore any improperly acquired funds or property.

Legislative Support and Sponsorship

The bill was sponsored by Senators Shirley K. Turner and M. Teresa Ruiz, along with Assemblymembers Verlina Reynolds-Jackson, Wayne P. DeAngelo, Anthony S. Verrelli, and Herb Conaway Jr. Their collaborative efforts have been instrumental in advancing this critical legislation aimed at protecting New Jersey residents from the financial burdens of medical debt.