Nursing homes and debt collectors are billing and suing family members and friends of long-term care residents, demanding payments for debts those people don’t legally owe, say consumer lawyers and federal regulators.
Some nursing home admission agreements include provisions that attempt to make caregivers or other third parties personally liable for payments for the resident’s care, the Consumer Financial Protection Bureau said in a statement. new report review institutions’ debt collection practices. Under federal law, nursing homes participating in Medicare and Medicaid cannot make these provisions a condition of admission or continued stay at the facility. Still, some nursing homes are hiring debt collectors to collect residents’ unpaid bills — which can run into the hundreds of thousands of dollars — from third parties based on those invalid provisions, regulators said.
Family members and friends victimized by these actions are often unaware of the law and lack the resources to respond to litigation, resulting in judgments against them. Some carers targeted for payments for the care of a loved one have had their wages garnished and even lost their homes, the CFPB said.
When debt collectors attempt to collect invalid debts and provide information about those debts to credit bureaus, they may violate federal debt collection and credit reporting laws, the CFPB and the Centers for Medicare and Medicaid Services in a joint letter to nursing homes and debt collectors Thursday.
Medical debt “is a very big problem across the board, and we’re particularly concerned that medical debt on credit reports is often inaccurate,” CFPB Director Rohit Chopra told MarketWatch on Thursday. Speaking of the large number of nursing home residents who have died during the pandemic, he said, their caregivers may now, in some cases, be “subject to potentially unlawful debt collection”.
After age 65, more than a quarter of adults will need nursing home care at some point, according to federal estimates. The median annual cost of a private room in a nursing home was over $100,000 in 2021, according to Genworth Financial GNW,
which offers long-term care insurance. Most adults don’t have long-term care insurance, and Medicare provides only limited coverage for nursing home care. For low-income residents who are depleting their resources, Medicaid may pay for nursing home care, but the application process is often lengthy. Gaps in different types of coverage can lead to massive bills.
A person who has legal access to resident income or resources, such as through a financial power of attorney, may be asked to sign an agreement to make payments to the facility from those resident resources, said Toby Edelman, senior policy attorney at the nonprofit. Medicare Defense Center. But outside of those scenarios, she said, clauses to hold third parties liable “are not enforceable provisions.”
In response to the CFPB report, the nursing home industry trade group American Health Care Association/National Center for Assisted Living said, “We have not heard of our members doing this and we do not believe whether it is a widespread practice; however, we support efforts to end inappropriate practices. Scott Purcell, CEO of debt collection industry group ACA International, said in a statement that members of the group “have strong compliance management systems that consider contractual and legal obligations when working with creditors of good reputation”. The group is not aware of a pattern of abuse in nursing home debt collection practices, he said.
Several people speaking at a virtual CFPB hearing on Thursday described being embroiled in long and arduous legal battles over debts they did not owe. Chris Ferris said a nursing home sued him over his mother’s debt “even though I was not involved and never had access to her money”. Bursting into tears, he said, “The hell they put me through, I’ll never see justice.”
Most of the lawsuits brought by nursing homes against third parties reviewed by the CFPB involved allegations that the resident’s money had been intentionally misused, hidden or stolen – often using boilerplate language and without any specifics to support the allegations, the Office said in its report. This raises the possibility that the allegations have no substantiation and are “a technique of coercion,” the Office said.
In some cases, nursing homes and debt collectors are “fabricating allegations of fraudulent transfer” or transferring money to avoid debts, New York attorney Emma Caterine said during a CFPB hearing on Thursday. . “The debt collection law firms and nursing homes we have witnessed have engaged in a widespread and systemic deceptive debt collection scheme to extract money from hundreds of consumers who do not owe it. .”
The CFPB report didn’t address another legal issue that can sometimes trap families in debt in nursing homes: More than half of states have “filial liability” laws, which can be used to hold children adults responsible for their parents’ unpaid medical bills. These laws generally don’t allow a third party, like a nursing home, to sue for the unpaid debt – but an adult child caring for a parent, for example, could sue their siblings. for contributing to the cost of care, said Katherine Pearson, a law professor at Penn State Dickinson Law.
Pennsylvania, however, is a state that allows caregivers to bring filial support actions against children or adult relatives, Pearson said. And in 2019, the Pennsylvania Supreme Court ruled that the state’s filial support law applied to a residential care facility‘s claim against out-of-state relatives for care provided in Pennsylvania for their adult son.