Texas Court: FCRA Preempts State Medical Debt Reporting Ban

Case: Consumer Data Industry Association v. State of Texas
Court: U.S. District Court for the Western District of Texas
Citation: No. 1:19-cv-876-RP (W.D. Tex. Aug. 10, 2026) (unpublished)
Decided: August 10, 2026
Bottom line: State laws that keep medical debt off credit reports now face a real preemption risk, so consumers should not assume a state ban will protect them.

Background

In 2019 Texas amended its state credit reporting law to add Texas Business & Commerce Code § 20.05(a)(5). It barred consumer reporting agencies from reporting a medical collection account if the consumer had health coverage and the balance was owed to an emergency or facility-based provider for an out-of-network claim. In plain terms, it protected Texans from surprise-billing debts showing up on their credit reports.

The Consumer Data Industry Association, the trade group for the credit bureaus, sued that year, arguing the FCRA preempts the law. The case moved slowly, with a trip to the Fifth Circuit on standing and ripeness and a stay along the way. Meanwhile the CFPB flipped its position: a 2022 interpretive rule read FCRA preemption narrowly, and an October 2025 rule withdrew it and read preemption broadly.

What the court held

The FCRA’s preemption clause, § 1681t(b)(1)(E), bars state requirements “with respect to any subject matter regulated under” § 1681c, “relating to information contained in consumer reports.” Section 1681c sets time limits on reporting adverse information and has rules on medical information and veterans’ medical debt.

The court took a middle path. It rejected CDIA’s broadest argument, adopted in the CFPB’s 2025 rule, that the clause preempts any state law touching information in consumer reports. Agreeing with the First Circuit in Consumer Data Industry Association v. Frey, 26 F.4th 1 (1st Cir. 2022), Judge Pitman held that reading would ignore Congress’s reference to § 1681c. He also declined to defer to either CFPB rule.

But he then disagreed with Frey on the key question. He found the “subject matter” of § 1681c(a)(5), which covers “any other adverse item of information,” ambiguous and turned to legislative history. Congress added § 1681t(b) in 1996 with a sunset clause that would have let states pass stronger laws after 2004, then repealed the sunset in 2003. The court read that history as showing Congress intended “to preempt States from passing legislation more protective of consumers in relation to adverse information,” including medical debt. It also held the veterans’ medical debt provisions, § 1681c(a)(7) and (a)(8), preempt the law, while § 1681c(a)(6) on medical-provider confidentiality does not.

The court declared § 20.05(a)(5) preempted and permanently enjoined the Attorney General from enforcing it.

Our take

We think the First Circuit has the better reading. Section 1681c(a)(5) is a time limit: it says how long adverse information can be reported. A state law about whether a particular kind of debt can be reported at all is a different subject. The FCRA’s original savings clause, § 1681t(a), which Congress kept, reflects that states may regulate consumer reporting unless they conflict with federal law. The court acknowledged both readings were reasonable before resolving the ambiguity with legislative history, which is a thin basis for displacing a state statute.

Still, this ruling matters. It creates a clear split with Frey and gives the industry a roadmap against the medical debt reporting laws that, by published counts, more than a dozen states have passed. Expect it to be cited in pending challenges elsewhere. Texas may appeal to the Fifth Circuit, which would make the split one between circuits.

It is also a district court decision. It binds the parties, not other courts, and the First Circuit in Frey read § 1681t(b) more narrowly.

What it means if your report is wrong

If a medical bill is on your credit report, do not rely only on a state reporting ban. Check whether the debt is accurate: Was it billed to insurance? Is the balance correct? Was it paid? Under the No Surprises Act, many out-of-network emergency charges should never have been billed to you at all. An inaccurate or misleading medical collection can still be disputed under the FCRA’s federal accuracy and reinvestigation rules, §§ 1681e(b) and 1681i, regardless of what happens to state laws. A free case review can assess how this ruling affects your claim, with no fee unless we win.

Sources

Primary

Commentary we reviewed

Updated November 1, 2026. "Our take" is the firm's opinion. This page is general information, not legal advice, and later decisions may change the law.