During the nursing home admissions process, caregivers must often sign lengthy admission agreements (“AA”) along with many other documents. The caregiver often has no opportunity to negotiate the AA even if she or he has the time, attention, and ability to read and understand it. The AA often includes terms that attempt to hold caregivers or other third party personally liable for the resident’s nursing facility costs. The AA may assert that the caregiver, as a “responsible party,” is personally liable for the resident’s unpaid bills if the resident’s Medicaid application is deemed inaccurate, untimely, or incomplete. Some nursing facilities engage debt collectors, including law firms, to collect the resident’s unpaid bill from third parties based on these AA terms. In addition to alleging breach of the AA, law firms may claim in lawsuits against caregivers that they have engaged in financial wrongdoing, without having any factual basis.
The Nursing Home Reform Act (“NHRA”) prohibits nursing facilities from requesting or requiring that a third party personally guarantee payment to the facility as a condition of a resident’s admission or continued stay in the facility. Contract terms that conflict with the NHRA is unlawful, and alleged debts resulting from such unlawful contract terms are invalid and unenforceable. Some nursing facilities have attempted to evade this prohibition by creating AAs that attempt to hold third parties liable for a resident’s debt. When a nursing facility claims that a non-resident is personally financially responsible for a resident’s bill and hires a third-party debt collector to collect the debt, the debt collector may violate the Fair Debt Collections Practices Act (FDCPA) by attempting to collect debts that are invalid under the NHRA. They may also violate the FCRA by furnishing information regarding such invalid debts to consumer reporting agencies. Nursing facilities that violate the NHRA’s requirements may be subject to enforcement action by state agencies and by the Centers for Medicare & Medicaid Services (“CMS”). Debt collectors who violate the FDCPA and FCRA may be subject to enforcement actions by the Consumer Financial Protection Bureau (“CFPB”) and other federal and state government agencies, as well as to private actions brought by consumers.
Under the Nursing Home Reform Act (NHRA) and its regulations, nursing facilities that participate in Medicaid or Medicare may not request or require any third party, including a family member or caregiver, to personally guarantee payment of the costs of the resident’s stay as a condition of admission, expedited admission, or continued stay in the facility. This prohibition prevents a nursing facility “from requiring a person other than the resident to assume personal responsibility for any cost of the resident’s care.” The prohibition applies to all residents and prospective residents of a nursing facility, regardless of whether they are eligible for Medicare or Medicaid. Courts have recognized that contract terms that conflict with the NHRA and its regulations are unenforceable.
The Fair Debt Collection Practices Act (FDCPA) prohibits the use of “any false, deceptive, or misleading representation or means in connection with the collection of any debt”. Debt collectors, including law firms, who collect on behalf of nursing facilities, may violate the FDCPA by misrepresenting that a consumer must pay a debt that arises from a contract provision that is illegal and unenforceable under federal law. Thus, debt collectors may violate the FDCPA by falsely claiming that caregivers are personally liable for residents’ nursing facility bills based on AA terms that violate the NHRA. In lawsuits against third parties, debt collection law firms have also alleged that the caregiver is responsible for the resident’s debt because they engaged in financial wrongdoing in relation to the resident’s resources. In some cases, debt collectors lack any basis for such allegations, and the allegations prove to be false. A debt collector may violate the FDCPA’s prohibition on misrepresentations by making a false, baseless allegation in a lawsuit that a third party engaged in financial wrongdoing as a means to hold them personally liable for a resident’s debts.
The Fair Credit Reporting Act (“FCRA”) prohibits persons from furnishing inaccurate information to any consumer reporting agency after receiving notice from a consumer that the information is inaccurate. FCRA and its regulations also require furnishers to investigate consumer disputes to verify the accuracy of the information furnished, and to establish and implement reasonable written policies and procedures regarding the accuracy and integrity of the information that they furnish. Reporting that a third party owes a debt to a nursing facility for the costs of a resident’s care when the debt is based on an illegal contract clause may demonstrate that furnishers lack reasonable written policies and procedures regarding the accuracy and integrity of information they furnish.
Contact NY Nursing Home Debt Collection attorneys Friedman & Ranzenhofer, PC at (585) 484-7432 if you have nursing home debt collection questions.