Two U.S. regulatory agencies rip nursing homes for sketchy debt collection

cfpbchartnursinghomecost-300x226Two federal regulatory agencies have rebuked nursing homes and their debt collectors, warning them that they may be breaking the law with sketchy efforts to make loved ones and friends pay for the care of sick, injured, and debilitated residents in long-term facilities.

Bottom line: A lot of the forms that you may sign for a loved one as they are admitted to a nursing home are straight-up illegal if they purport to make you responsible for paying the facility’s bills.

The Consumer Financial Protection Bureau (CFPB) has conducted hearings and issued a report as well as putting out a joint letter with the Centers for Medicare and Medicaid Services (CMS), the agency with oversight of nursing homes and other long-term care facilities.

Too many regular folks have experienced unjustified legal and financial threats from nursing home debt collection efforts, the CFPB found in public hearings and reported in its recent “issue spotlight,” as well as via a legal circular.

Federal regulators say the consumer nightmares trace to the nerve-wracking time when a loved one or friend suffers such severe injury or illness that they require nursing home care. Few people plan for this. But a cascade of complications follows, when, say, hospitals inform patients they are well enough to transition to another facility. Hospital costs are so high that federal regulators have pushed these caregiving institutions to get patients out of their units, pronto.

But that can create domestic crises as patients, their loved ones, and friends scour for suitable, nearby accommodations that are affordable, appropriate, and will take in a new resident. During this stressful admission period, nursing homes may bury loved ones and friends with piles of paperwork — all of which must be digested and accepted in a hurry.

The CFPB and CMS both have warned nursing homes that federal regulations bar them — especially if they receive Medicare and Medicaid funding that most facilities rely on — “from requesting or requiring that a non-resident personally guarantee the cost of nursing home care as a condition of admission, expedited admission, or continued stay in the facility. The prohibition applies to all residents and prospective residents of a nursing facility, regardless of whether they are eligible for Medicare or Medicaid. Yet some nursing home admission agreements include clauses that appear to require third parties to pay for residents’ cost.”

The consumer agency, in its report and in public hearings, found too many aggrieved family members and friends of nursing homes residents were hounded by nursing homes and their debt collectors, with too many cases based on admission contracts with questionable clauses on who would be the “responsible party” for residents’ care costs.

Loved ones — who may be distant family members — and friends have found themselves sued by nursing homes or their debt collectors over residents’ care costs, even though the legal basis for such actions is dubious, the CFPB and CMS said. Defendants in such cases likely will not possess the legal knowledge as to how sketchy nursing homes’ financial responsibility suits likely will be, and they should not be burdened with the cost and stress of battling these cases.

The consumer agency blasted nursing homes and debt collectors for suing residents’ loved ones and friends on another dodgy grounds, relying on contractual boilerplate, as the CFPB reported:

“In addition to alleging breach of contract, debt collection lawsuits may also claim that a third party has engaged in financial wrongdoing. A majority of the lawsuits against third parties reviewed by the CFPB included claims that either the third party or the resident had intentionally misused, hidden, or stolen the resident’s funds. Other than the fact that the nursing home bills remain unpaid, these claims typically did not include supporting information. This raises the possibility that some lawsuits could be alleging financial malfeasance without justification for the claim and potentially as a technique of coercion.”

This is unacceptable. In my practice, I see not only the harms that patients suffer while seeking medical services, but also the damage that can be inflicted on them and their loved ones by neglect and abuse in nursing homes and other long-term care facilities.

The coronavirus pandemic laid bare the increasing failures in the long-term care industry, which has cried “poor me” and sought large and larger taxpayer support. This is occurring even as big, private investors gobble up facilities, hike prices, reduce services, and make their operations, management, and ownership ever-more opaque to outsiders. With overcrowding, poor staffing, flawed infection control practices, slow vaccination practices, and other problems, nursing homes and long-term care facilities saw 200,000 of their residents and staff die — a quarter of the nation’s staggering 1 million-plus death toll due to the disease.

More than 1 million already frail and debilitated nursing home residents and staff were infected with the disease. Tens of millions of residents endured crushing loneliness, isolation, and further erosion of their mental and physical health during pandemic lockdowns of their care facilities. Too many residents and loved ones still struggle with the tough choice of potentially pursuing justice and remedies in the civil system for long-standing, well-known, and unacceptable wrongs in nursing home care.

But those who are appalled by aspects of long-term care and seek legal redress may find their efforts challenged — again, by documents signed under duress and during the admission process.

Owners and operators of facilities too often get residents and loved ones to sign arbitration agreements. This means their complaints will be forced into a legal system in which in many ways the decks are stacked against them. Their cases will be heard by hired guns, arbitrators who often themselves work for big legal enterprises that have frequent dealings with nursing home operators, including whether they get retained in the first place, and meaning they can benefit by maintaining favorable relationships with them.

Arbitrations do not occur in open, public court rooms but often in secured office buildings or closed corporate headquarters, sometimes those of the disputing parties. They do not always follow rigorous standards that courts must on evidence. Arbitrators’ decisions are binding and can require heavy legal lifting to contest and reverse.

While alerting the public about scams involving nursing home debt collections, the CFPB underscored some key points about the widespread importance of keeping honest these care facilities in our rapidly graying nation, reporting:

“There are approximately 48 million family members and friends caring for adults with health or functional needs in the United States, and nearly one in six adults is supporting the health and well-being of an older adult through illness or disability.”

The agency also reported this:

“As population changes increase the demand for long-term care, costs are expected to rise. By 2060, nearly a quarter of the U.S. population (94.7 million people) will be at least 65 years old. After age 65, nearly half of all adults will require some paid long-term services and supports such as a home health aide, assisted living, or nursing home care, and over one-quarter will receive nursing home care. Nursing home residents stay for significant amounts of time. The average nursing home stay among current nursing home residents is 1 year and 4 months, and more than half of current residents have stayed in the nursing home at least 100 days. From age 65 on, 15% of older adults are estimated to spend more than two years in a nursing home. In addition, life expectancy is expected to rise through 2060. With increased life expectancy, older adults are also expected to experience age-related healthcare needs for longer periods.”

By the way, the agency reported this about the spiking expense of this care (see CFPB chart, above):

“Multiple factors contribute to the likelihood that older adults who need nursing home care will go into debt. Nursing home care is expensive. In 2021, the annual median cost of a single room in a nursing home was $108,405. Between 2004 and 2020, this cost rose by over 60%, or 19% if adjusted for inflation. This price growth has consistently outpaced growth in consumer and medical care prices.”

We have much work to do to reform nursing home and long-term care to ensure its maximum safety, accessibility, affordability, and quality. We also must protect our legal system, so those with serious, legitimate claims of harm and injury have appropriate access to courts that are not jammed up with dubious and venal claims.

Patrick Malone & Associates, P.C. listed in Best Lawyers Rated by Super Lawyers Patrick A. Malone
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