Extraordinary Collection Actions (ECA)
Collection actions — including lawsuits, credit reporting, and selling the debt — that a nonprofit hospital cannot take against a patient before making reasonable efforts to determine financial assistance eligibility.
An extraordinary collection action (ECA) is one of a specific list of steps a nonprofit hospital is barred from taking against a patient until it has made reasonable efforts to determine whether that patient qualifies for its financial assistance policy. Under 26 CFR 1.501(r)-6, ECAs include starting a lawsuit or other legal or judicial process, placing a lien, garnishing wages, selling the debt to a debt buyer or other third party, reporting the debt to a credit bureau, and deferring or denying medically necessary care over an earlier unpaid bill.
The rule requires the hospital to complete a notification period — ending 120 days after the first billing statement — during which it must share its FAP and attempt to determine eligibility, then give at least 30 days’ written notice, including a plain-language FAP summary, before actually taking an ECA. A nonprofit hospital is accountable for these actions even when a debt collection agency, debt buyer, or other party acting on its behalf carries them out — referring or selling the account doesn’t transfer away the hospital’s own compliance obligation.
This restriction is specific to nonprofit hospitals bound by IRS Section 501(r); it doesn’t apply to for-profit hospitals. See Medical Debt Escalation for how this fits into the full timeline from first bill to collections, and Lawsuit Filed (Summons) or Debt Validation Request for what to do once an account is already past this stage.
Frequently asked
What counts as an extraordinary collection action?
A specific list under IRS rules — starting a lawsuit, placing a lien, garnishing wages, selling the debt to a buyer or collector, reporting it to a credit bureau, and deferring or denying medically necessary care over an earlier unpaid bill.
— US Debt Compass Editorial Team
Can a hospital take an ECA immediately after a bill goes unpaid?
No — it has to complete a notification period ending 120 days after the first billing statement, then give at least 30 days' written notice, including a plain-language summary of its financial assistance policy, before taking an ECA.
— US Debt Compass Editorial Team