CFPB, CMS Crack Down on Illegal Nursing Home Debt Collections

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Family and friends signing admission agreements with residential nursing care facilities cannot be held liable for unpaid debts associated with a patient’s stay, according to laws in place that forbid the practice.

Families have been sued by nursing home debt collectors, had their wages garnished, lost their homes, and some were forced into bankruptcy, according to a report issued by the Consumer Financial Protection Bureau (CFPB) on Thursday (Sept. 8).

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The report indicated that the Nursing Home Reform Act specifically states that a nursing care facility can’t require a third-party caregiver to personally guarantee payment of a resident’s bills as a condition of admission.

Many facilities have clauses in their contracts that require a caregiver to be a responsible party for the resident’s costs of care. Other times, a clause includes a statement that the caregiver will incur financial liability if the person being admitted incurs a debt, according to the report.

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“Nursing homes that participate in Medicare and Medicaid are prohibited from forcing a resident’s family or friends to assume responsibility for the cost of care as a condition of admission or continued stay in the facility,” CFPB Director Rohit Chopra said in a press release about the report. “Debt collectors must take steps to ensure they are not violating the law by collecting on invalid nursing home debts.”

The CFPB and Centers for Medicare and Medicaid Services (CMS) sent a joint letter to nursing homes and collection agencies to remind them of their responsibilities regarding nursing home admissions and debt collection.

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The area falls under several laws aside from the Nursing Home Reform Act, which isn’t under the CFPB’s jurisdiction. Multiple attempts to collect nursing home debts, however, could violate the Fair Debt Collection Practices Act and the Fair Credit Reporting Act, per the Consumer Financial Protection Circular on Thursday (Sept. 8).

The CFPB’s “Issue Spotlight: Nursing Home Debt Collection,” also released on Thursday, takes a look at how caregivers can be affected by “questionable contract provisions and debt collection tactics.”