On September 8, 2022, the Consumer Financial Protection Bureau (CFPB) held a field hearing on debt collection practices by nursing facilities and their debt collectors. The hearing featured a panel of experts, followed by individuals who described their personal experiences being sued by facilities for the nursing home debts of their relatives or friends. On September 8, CFPB also released an Issue Spotlight[1] and a Consumer Financial Protection Circular,[2] both describing common debt collection practices and their illegality in detail. In addition, CFPB issued a “Notification Letter”[3] jointly with the Centers for Medicare & Medicaid Services, reminding nursing facilities and debt collectors of their responsibilities under three federal laws: the Nursing Home Reform Act (NHRA), Fair Debt Collections Practices Act (FDCPA), and Fair Credit Reporting Act (FCRA).
- NHRA, enacted in 1987, prohibits nursing facilities from requesting or requiring a third-party guarantee to a nursing facility as a condition of admission or continued stay.[4] Nursing home contracts with residents that violate NHRA and its implementing regulations are unenforceable.
- FDCPA prohibits use of “any false, deceptive, or misleading representation or means in connection with the collection of any debt.” Seeking repayment of a debt that violates NHRA violates FDCPA. Debt collectors that allege that a family member or friend engaged in financial wrongdoing, without having any basis for the allegation, also violate FDCPA.
- Finally, “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,” in violation of FCRA.
The agencies’ focus on nursing facilities’ and debt collectors’ illegal contracts and actions follows the July report by Kaiser Health News and National Public Radio that nursing homes are illegally suing families and others for residents’ nursing home debts.[5]
Nursing home owners and operators deny that the illegal practices are common and complain about family members shielding residents’ estates from debts and failing to use a resident’s income to pay for care.[6]
September 14, 2022 – T. Edelman
[1] CFPB, “Nursing home debt collection” (Issue spotlight, Sep. 2022), https://files.consumerfinance.gov/f/documents/cfpb_issue-spotlight-nursing-home-debt-collection_report_2022-09.pdf
[2] CFPB, “Consumer Financial Protection Circular 2022-05, “Debt collection and consumer reporting practices involving invalid nursing home debts” (Sep.8, 2022), https://files.consumerfinance.gov/f/documents/cfpb_2022-05_circular_2022-09.pdf
[3] CMS and CFPB, “Notification Letter” (Sep. 3, 2022), https://files.consumerfinance.gov/f/documents/cfpb_nursing-home-debt-collection_joint-letter_2022-09.pdf
[4] 42 U.S.C. §§1395i-3(c)(5)(A)(ii), 1396r(c)(5)(A)(ii), Medicare and Medicaid, respectively; 42 C.F.R. §483.15(a)(3)
[5] Noam N. Levey, KHN/NPR, “Nursing Homes Are Suing the Friends and Family of Residents to Collect Debts” (Jul. 28, 2022), https://khn.org/news/article/diagnosis-debt-nursing-home-lawsuits-third-party-debt-collection/; see “Kaiser Health News/National Public Radio Report on Nursing Home Lawsuits Against Families and Others for Residents’ Nursing Home Debt” (CMA Alert, Aug. 11, 2022), https://medicareadvocacy.org/nursing-home-roundup-2 /
[6] James M. Berklan, “Nursing homes fire back after CMS warning about ‘exploitative’ debt-collection practices,” McKnight’s Long-Term Care News (Sep. 12, 2022), https://www.mcknights.com/news/nursing-homes-fire-back-after-cms-warning-about-exploitative-debt-collection-practices/