Performant Healthcare announces confirmation of RAC opportunity with New York State.

The Consumer Financial Protection Bureau (CFPB) banned Performant Recovery from servicing or collecting any student loan debts and ordered the company to pay a $700,000 penalty after finding that it used unlawful debt collection practices.The regulator’s order alleged that Performant delayed borrowers’ loan rehabilitation processes to generate fees for itself, the CFPB said in a Monday (Dec. 9) press release.“Performant concocted a scheme to juice their profits by delaying student borrowers their rightful relief,” CFPB Director Rohit Chopra said in the release. “The CFPB is holding Performant accountable for its unlawful debt collection practices that cost borrowers thousands of dollars.”Performant did not immediately reply to PYMNTS’ request for comment.The CFPB’s action centered on Performant’s practices when it collected on student debt, including from borrowers who had defaulted on Federal Family Education Loan Program (FFELP) loans, according to the regulator’s press release.FFELP borrowers who have defaulted have a one-time right to rehabilitate their loans and bring them back into good standing, and loan holders did not charge the borrowers collection costs for the rehabilitations if the borrowers entered into loan rehabilitation agreements within 65 days of default, the release said.However, between 2015 and 2020, Performant delayed borrowers’ loan applications beyond 65 days by routing borrowers to specialized agents, requiring borrowers to mail documents, and using other methods to delay their rehabilitations beyond 65 days, enabling Performant to generate fees for itself, per the release.“As a result of the intentional delays caused by Performant, borrowers incurred costs amounting to 16% of the loans’ outstanding balances, plus additional interest charges over time,” the release said. “The delays also postponed benefits of loan rehabilitation, including restoring student aid eligibility, ending federal withholding of tax refunds, and removing the record of default from borrowers’ credit reports.”The CFPB said in January that it was monitoring the experiences of student borrowers and that it had notified student loan servicers that they may be violating federal consumer financial protection law.In November, the regulator said it was urging legislators and other policymakers to make reforms that it said would improve student loan servicing. For example, the CFPB said it wants to see borrowers held harmless when they encounter servicing errors, and servicers held accountable for performance failures.Performant said in a March 2021 press release that it intended to focus on its healthcare operations and had signed an agreement to sell some of its non-healthcare recovery contracts

Performant Financial (Nasdaq: PFMT) has been selected for a tentative award of the New York State Medicaid Recovery Audit Contractor (RAC) by the NYS Office of the Medicaid Inspector General (OMIG).