Petition to seek limits on medical debt challenged

Health advocacy group Healthcare Rising Arizona is pushing a citizens’ initiative to limit interest on medical debt, but they’re being challenged by Republicans who claim the petition collection violated state law.

The Predatory Debt Collection Protection Act is a citizen’s initiative that would cap interest on medical debt at 3% and make several other small changes to debt collection practices, including increasing the amount of value in a person’s home and possessions that is protected from seizure by debt collectors.

An opposing political action committee called Protect Our Arizona is aiming to stop the initiative and engaged the services of Republican attorneys Kory Langhofer and Thomas Basile to sue Secretary of State Katie Hobbs over the petition, which they said collected invalid signatures and gave supporters misleading information about the initiative.

Healthcare Rising’s political action committee, Arizonans Fed Up With Failing Healthcare, introduced the petition and is now the defendant in the Protect Our Arizona lawsuit, which was filed in late July. Democratic consultant and Healthcare Rising spokesman Rodd McLeod said the lawsuit will get a ruling before the end of the month.

The petition summary states that if enacted, it would not change existing law regarding secured debt, but Langhofer contests that.

“This statement conveys objectively false or misleading information because the Act would, in fact, ‘change existing law regarding secured debt’ by preventing some secured creditors from collecting against certain debtor assets that are subject to levy under current law,” the legal complaint states.

The lawsuit also claims that there are problems with the signature collection, such as addresses listed without apartment numbers, or affidavits that are not dated.

The petition got 472,296 signatures on 58,717 sheets and only needed 237,645 valid signatures to make the November ballot. However, the lawsuit claims that enough of the signatures are invalid to kill the initiative.

Business owner Amber Russo is the PAC’s spokesperson and said that the initiative endangers Arizona’s economy because it could cause a drop in garnishments to collect on debts owed to creditors. In other words, banks and credit unions will not be able to collect the money they’re owed and might hold out on giving loans.

“If a lender cannot collect outstanding debts from a person earning $50,000*/year or less, why would they lend to them?” Russo asked in an email. She said she believes that the response from banks, credit unions, auto lenders and more will have a negative ripple effect on Arizona’s entire economic ecosystem.

McLeod doesn’t share that concern.

“The bankers of the world get up every morning and say a quick prayer to God and thank them for Amber Russo and Kory Langhofer, because anytime a big bank is in trouble, they know they can hire Amber Russo and Kory Langhofer to stand up for them,” he said. “We’re gonna stand up for Arizona’s families,” he added, pointing to analysis by the Secretary of State’s Office that found the initiative had enough valid signatures. McLeod also said he was confident that his group will win the lawsuit, which he referred to as a “Hail Mary” from the Republicans.

Protect Our Arizona is suspicious that Healthcare Rising is trying to trick voters into thinking their petition is just about limiting medical debt, when in reality it affects all kinds of debt. McLeod said that’s not a secret but pointed out that more than half of America’s bankruptcies are caused by medical debt. The first part of the petition’s description only refers to “medical debt,” but the last sentences forgo the word medical and simply refer to “debt.”

“It changes the formula for wage garnishment so that you have enough money to continue to pay your rent, own a car, drive to work, do your job and have some money to pay off your debt,” McLeod said. “If you become homeless, if you can’t get to your job, well, then there’s no way you’re getting your debt paid. So, there’s people who just get caught in the debt trap, and they get in the cycle of debt they can never get out. And this is designed to help people in that situation.”