Effective July 1, 2025, California law requires any contract creating medical debt to include a specific consumer disclosure indicating that the debt cannot be reported to a credit reporting agency.¹ SB 1061 amends California’s Consumer Credit Reporting Agencies Act, applying this new requirement to all medical debt contracts entered into on or after July 1, 2025.  Critically, if the disclosure is omitted from an applicable contract, the debt is void and unenforceable.² Below is the newly required contract language:

NOTICE TO CA CONSUMER:  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.³

Key Points for Providers to Consider:

1. Broadly Applies to Any Person or Entity that Enters into a Medical Debt Contract. The new disclosure requirement applies broadly to any person or business entity that enters into a medical debt contract with a consumer. The new law defines “medical debt” to mean debt “owed by a consumer to a person [or agent or assignee] whose primary business is providing medical services, products, or devices” and includes medical bills that are not past due or that have been paid.⁴
2. Required for Out-of-State Providers Treating California Patients. SB 1061 amends the Consumer Credit Reporting Agencies Act, which requires all notices to be made to consumers who have a California mailing address.⁵ The disclosure obligation notably turns on where the patient resides, rather than where the services were rendered. If a provider located outside California treats a California resident and enters into a contract that creates medical debt, the disclosure requirement applies to that contract even if the services were furnished outside of California. Providers should leverage their demographic intake processes to screen for patient residence when determining whether the disclosure is required.
3. Not Required at Every Visit or on Every Form.  SB 1061 does not require that every patient intake form or document include this disclosure language. The requirement applies only when a new contract creating medical debt is entered into on or after July 1, 2025.  This means the disclosure is likely required in annual financial agreements, payment plan forms, or financing contracts, but not necessarily on forms that do not create a debt obligation like HIPAA consents, general consents to treat, or one-time visit acknowledgments. Providers should focus their updates on documents that create an obligation by a California patient to pay for services over time or under specific repayment terms.
4. Regulatory Consequences for Licensed Providers.  In addition to rendering a debt unenforceable, SB 1061 specifies that failure to include the required disclosure is also deemed a violation of state licensing laws.⁶ Although the law provides minimal enforcement penalty details, it opens the door for meaningful disciplinary or regulatory consequences for noncompliance by California licensed professionals and facilities.

What Providers Should Do Now:

• Update templates: Revise contracts, payment plans, medical bills, and other financing documents used with California residents that create medical debt to include the required disclosure language.
• Confirm or update intake data processes: Confirm adequate processes are in place to collect and maintain patient mailing addresses, or else update intake data processes as needed to ensure California residents can be easily identified within the patient population.
• Coordinate with vendors: Confirm that any affiliated billing or financing companies are including the required disclosure language in their contracts that create medical debts.
• Train appropriately: Emphasize that the requirement is not for all forms, only those that create medical debt—and that it is triggered by patient residence, not location of service.

Our team will continue to monitor developments and enforcement concerning this new law. Please reach out to any member of our team with any questions.

1. See generally Cal. Civ. Code § 1785.27. ↩︎
2. Cal. Civ. Code § 1785.27(c)(2). ↩︎
3. Cal. Civ. Code § 1785.27(c)(1). ↩︎
4. See Cal. Civ. Code § 1785.3(j)(1). ↩︎
5. Cal. Civ. Code § 1785.6. ↩︎
6. Cal. Civ. Code § 1785.27(d). ↩︎