As a healthcare provider, staying compliant with state-specific regulations is essential to protecting both your practice and your revenue. We want to bring an important California legal requirement to your attention regarding patient financial agreements and medical debt collection.
What is the New Requirement?
Under California Civil Code Section 1785.27 (enacted via Senate Bill 1061), any written contract or patient agreement entered into that could potentially create medical debt must include specific, mandatory statutory language.
This law completely prohibits the reporting of medical debt to consumer credit reporting agencies. To enforce this, the state requires an explicit disclosure to be embedded directly within your patient contracts.
The Cost of Non-Compliance: Voided Debt
The consequences for omitting this language are severe. According to the statute, if a patient agreement is missing this exact wording, the underlying medical debt becomes completely void and unenforceable. Furthermore, collection agencies and internal compliance teams are legally required to audit these agreements. If your intake forms or financial contracts do not contain the required text, collection companies cannot legally attempt to recover any unpaid balances on your behalf.
The Required Language
If you use your own custom intake forms, financial agreements, or payment policies with California-based patients, you must ensure the following exact text block is included:
“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.”
Where and How to Include This Language
The law states that this disclosure must be present in any contract that creates a financial obligation/debt for medical or therapy services. It does not need to be on every single clinical form (like HIPAA consents or intake questionnaires).
We highly recommend updating the following specific documents:
1. Patient Financial Policy / Billing Agreement
What it is: The document where patients agree to your session rates, late cancellation fees, and copay responsibilities.
Where to place it: Insert it directly above the final patient signature line, or under a dedicated section titled "Credit Bureau Reporting Disclosure."
2. Credit Card Authorization Forms
What it is: The form where patients authorize you to keep a card on file for future unpaid balances or fees.
Where to place it: Add it right below the terms of authorization, ensuring it is visible before they sign.
3. Payment Plan Agreements
What it is: Any custom written agreement where a patient commits to paying off an outstanding balance over time.
Where to place it: This is strictly considered a "debt contract" under California law. The text must be included on the main page of the repayment terms.
Action Items for Help Therapy Providers
Option A: If You Use SimplePractice
No action is required. For providers utilizing SimplePractice, intake forms sent out by Help Therapy through the platform automatically include this mandatory California statutory language. The system handles this disclosure on your behalf.
Option B: If You Use Your Own Custom Intake Forms
If you choose to use your own external financial agreements or paperwork for California patients instead of the automated SimplePractice pipeline, you must update them immediately:
- Review your current templates.
- Insert the exact statutory text block provided above into your relevant financial forms.
If you have any questions regarding this requirement or need assistance transitioning to SimplePractice to automate your compliance, please reach out to provider@helptherapy.com.