Recently, the Consumer Financial Protection Bureau published policy statements on debt collection in the nursing home industry. See Federal Register. This is great news for families. The CFPB highlights “some of the difficulties and experiences heard from caregivers about being pursued over friends’ or family members’ alleged debts from nursing home facilities.” A Kaiser Family Foundation (KFF) and NPR report found that “about one in seven adults who have had health care debt say they’ve been threatened with a lawsuit or arrest.”
The policy statements warn the industry about the illegality of third-party guarantors. The CFPB and CMS confirm that a nursing home may not require a third-party guarantor for payment of bills. This emphasizes that nursing homes cannot sue families for their loved ones’ bills.
The new Consumer Financial Protection Circular discuss customary practices that violate the Nursing Home Reform Act (NHRA). Any subsequent attempts to collect debts from caregivers violate the Fair Debt Collection Practices Act and Fair Credit Reporting Act.
Under the NHRA, a nursing facility may not condition a resident’s admission or continued stay on receiving a guarantee of payment from a third party. Contractual provisions that violate that prohibition are illegal and unenforceable. The CFPB notes:
“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.”
This is unacceptable. I am glad it will not happen in the future.