Mike Herwig looked at his credit report recently and saw something even more disturbing than past due accounts.
He saw the words "Starlite Recovery Center."
As the name hints, Starlite is a drug and alcohol treatment clinic in Texas. Herwig, a 36-year-old Boston resident, received treatment for alcoholism there two years ago and wanted that to remain secret. But now he fears he's been outed as a recovering addict in front of future employers, landlords, insurance companies and any other organization that pulls his credit report.
Experian, which issued the credit report, says Herwig's fears are unfounded. Starlite's name is omitted from copies of the report given to others and appears only on Herwig's personal report, according to Experian’s Don Girard. In fact, federal law prohibits credit bureaus from listing the name of any medical treatment facility on a credit report furnished to lenders or employers, he said.
Still, Herwig's story is instructive about the alarming things that can appear on credit reports, and the kind of rights consumers have.
Like many Americans, Herwig is in the middle of a dispute with his health insurance provider. He said he was told his insurance would cover his entire stay at Starlite, when in fact it only covered 20 of his 29 days there. When he left, there was a gap of $3,480.
The good news is, Herwig says, the treatment worked, and he's been almost two years without a drink. He will soon finish school, and plans to test the marketability of his new economics degree in New York City. So in advance of applying for a Manhattan apartment, he did what consumers are supposed to do -- he got a copy of his credit score and his report.
And that's when he spotted the $3,480 balance listed next to the name "Sarma," a debt collection firm and, nearby, the Starlite Recovery Center listed as the original creditor.
Addict label cost him work?
It got Herwig thinking. He had recently been a finalist for a job at a chocolate retailer when suddenly he was dropped as a candidate. Was this entry on his credit report the reason?
Consumers should know that any time an employer, landlord, or creditor rejects them because of a credit report entry, the consumer is entitled to something called a "notice of adverse action. It’s a letter from the rejecting company which tells the consumer that something is amiss on their credit report.
Herwig didn't get such a notice from the chocolate store. Still, he wondered.
"They are outing me to the world that I was an alcoholic," he said. "I have gotten my life together and my fear is my credit report will tell N.Y. brokers not to rent me an apartment."
So he called Starlite, with a request.
"I asked them, 'Can't you just remove the name? Leave the collection on there, but not the name?" he remembers asking.
No, he says he was told. If he wanted Starlite off his credit report, he should just pay the bill.
Starlite did not return phone calls requesting comment for this story. Neither did Starlite's parent company, CRC Health Group Inc., nor Sarma, the debt collection firm.
Not on commercial credit reports
But officials at the Experian credit bureau did return our call, and they said Herwig does not have anything to fear from the credit reports issued to lenders, landlords or prospective employers. Reports furnished to others about Herwig do not include the name of the clinic or other details concerning medical treatments, Experian's Girard said.
It's little understood, but true, that the credit report that consumers receive when they ask for their own data is different from the report companies receive when looking into a person's financial background.
In many cases, the companies are entitled to see more information than the consumer can see – an anomaly that irritates consumer advocates. But in the case of medical information, consumers can see details that companies can’t.
The consumer credit report available for free at AnnualCreditReport.com and at various pay-for-credit-report sites -- technically called a "consumer disclosure" -- usually includes the name of the medical institution so that a consumer can act to clear up the dispute, Girard said. But specifics on medical debts, including the name are omitted from credit reports issued to others.
"Medical information under the law has to be treated very carefully," Girard said.
Generally, credit reports fashioned by Experian include the following explanation, Girard said:
"By law, we cannot disclose certain medical information (relating to physical, mental or behavioral health or condition). Although we do not generally collect such information, it could appear in the name of a data furnisher (i.e., "Cancer Center") that reports your payment history to us. If so, those names display in your report, but in reports to others they display only as MEDICAL PAYMENT DATA. Consumer statements included on your report at your request that contain medical information are disclosed to others."
Can't be bullied
Of course, Herwig is not entitled to see the version of his credit report produced for lenders, landlords, and employers, and you couldn’t blame him – or anyone else -- from wondering what medical information might slip through.
It's understandable that after seeing his own report, Herwif worried his reputation might haven been sullied by an entry identifying him as a former patient of Starlite.
And his concerns understandably grew when he believed he was being bullied by the center, which he says tried to use the potential credit report embarrassment to lean on him to pay his bill.
But he agreed to let MSNBC.com tell his story so others might better understand their rights regarding medical information and credit reports.
According to David Rubinger of Equifax Inc., the Fair and Accurate Credit Transaction Act of 2003 makes clear that the name, address, and other specific information about medical treatment facilities cannot be published in a consumer's credit report and sent to outside companies, with only a few narrow exceptions.
That's good to know, given the high number of collections disputes involving medical bills. According to a report issued by the Federal Reserve in 2003, about 52 percent of all collection activities arise from unpaid medical bills. While such bills can haunt you, and they can hurt your credit score, they cannot be used to embarrass you or reveal anything about your health.