The CFPB publishes a report and a circular on the recovery of EHPAD debts


Whether you are collecting a debt for nursing home care, you may want to check who is responsible for the payment. Last week, alongside an on-the-ground hearing, the CFPB released a new consumer financial protection circular and an update on violations of the Fair Debt Collection Practices Act (FDCPA) and the Fair Credit Reporting Act (FCRA ) in relation to the debt of retirement homes. The CFPB also released a letter sent jointly with the Centers for Medicare & Medicaid Services (CMS) on third-party guarantees for nursing home debt.

Spotlight on the problem. Motivated by concern for the rising cost of nursing home care and the financial difficulties consumers face in paying for it, the report examines the efforts of nursing facilities to obtain payment from non-residents. The Nursing Home Reform Act (NHRA) prohibits a nursing facility that participates in Medicaid or Medicare from seeking or requiring a guarantee of third-party payment as a condition of admission, expedited admission, or continued stay in the nursing home. ‘establishment. Provided that a resident’s representative does not incur personal liability, the NHRA permits a nursing facility to require a representative with lawful access to a resident’s income or available resources to sign a contract to pay a payment to the establishment from the resident’s income or resources.

The report finds that some nursing homes include clauses in their admission contracts that attempt to hold a third party financially responsible for the costs of the resident’s nursing home and discusses the different forms these clauses can take. The report says many third parties are unaware that there are legal restrictions on nursing home admission contracts and may also lack the resources to properly respond to a lawsuit seeking to recover costs from a resident on the basis of these contractual conditions. As a result, courts can issue default judgments, allowing debt collection companies to use wage garnishment or garnishment to recover residents’ costs from third parties. The report also states that nursing homes and debt collectors may also report a resident’s debts to credit reporting companies as a personal debt of a third party in order to create pressure on the third party to pays these debts.

The report also addresses claims made in debt collection lawsuits that a third party engaged in financial wrongdoing, such as intentionally misusing, hiding or stealing resident funds. As an example, the report refers to boilerplate language used in numerous trials in New Yorks alleging that a third party had engaged in fraudulent transfers.

Circular. The circular addresses the risk of violations of the FDCPA and FCRA based on debt collection and consumer reporting practices relating to debts that are invalid under the NHRA or state laws analogous to the NHRAs that contain similar prohibitions.

The CFPB acknowledges that it does not enforce NHRA compliance and is not generally responsible for overseeing the operations of nursing facilities. However, he warns that a debt collector, including a litigation law firm, who states that a third party must personally pay a nursing facility resident’s debt may violate the prohibition on FDCPA on misrepresentation when the debt is based on a contractual provision that is unenforceable under the NHRA or analogous state law. The CFPB also warns that a debt collector can violate the FDCPA’s prohibition on misrepresentation by making baseless allegations in a lawsuit that a third party has engaged in financial wrongdoing.

With respect to FCRA liability, the CFPB warns that because it is inaccurate to report that a consumer has a debt based on an illegal contractual provision, a debt collector who provides information about the debts of a nursing home or consumer reporting agency (CRA) that includes such information in a consumer report may violate the FCRA’s accuracy requirements if the debts are not valid under the NHRA or a analogous state law. (The issue of whether a CRA can be held liable for violating the accuracy requirements of the FCRA when the accuracy of a debt reported by the CRA requires a legal determination as to the validity of the debt is raised in a case currently pending in the Second Circuit.) A provider or consumer reporting agency may also violate the FCRA by failing to meet its litigation obligations with respect to information about nursing home debts.

Joint letter. CMS, in conjunction with the Department of Health and Human Services, has issued rules implementing the NHRA and, together with DHHS, is responsible for enforcing the NHRA. Their joint letter addresses the potential violations of the FDCPA and FCRA outlined in the circular and sets out CFPB and CMS expectations for nursing facilities and their collectors to comply with the NHRA, FDCPA and the FCRA.

None of the three new nursing home debt collection articles mention the Affordable Care Act (ACA), which the CFPB discussed in a blog post about the connection between eligibility for financial assistance in under policies mandated by the ACA and Medical Recoveries. The ACA requires nonprofit hospitals to establish financial assistance policies for consumers who are unable to pay their medical bills. It also prohibits nonprofit hospitals from reporting medical debt as collections to credit reporting companies or selling the debt to another party, without first trying to determine if the patient would be eligible for their medical policies. ‘financial aid. In the blog post, the CFPB suggested that nonprofit hospitals may not provide low-income consumers with the financial assistance for which they are eligible and may report medical debt in violation of the ACA. (Based on the CFPB’s position on the NAHA, it seems likely that the CFPB would similarly assert that attempts to collect medical debts incurred due to the hospital’s failure to provide medical assistance required by the ACA may violate the FDCPA and that reporting debts prohibited by the ACA may violate the FCRA.)


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