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How to Put a Stop to Illegal Nursing Home Debt Collection Tactics

Q. Happy New Year! My mother has dementia, and we are looking into nursing home options. I had lunch with a friend today, and she told me a horror story that involved debt collectors. My friend was surprised and incredibly upset when she received a collection letter for tens of thousands of dollars for her father’s nursing home stay.

In doing research to help her, I saw that debt collection against family and friends with a loved one in a nursing home is illegal, even for people who signed admission agreements purporting to make them responsible. What can someone do if a debt collector is trying to collect nursing home bills from them, and who can they report illegal activities to? How can we ensure that such a thing doesn’t happen to us in the future? Thanks so much for your help!

A. Happy New Year to you too! I’m sorry to hear that this is happening to your friend. She is not alone in this situation, and luckily there are laws in place to help her and some things you can do to protect yourself.

Some Nursing Homes Are Trying to Collect Outstanding Bills from Family and Friends

Recently, it has been reported that bill collectors are seeking tens of thousands of dollars — sometimes even hundreds of thousands — in unpaid nursing home fees from friends and family members with loved ones in nursing homes. This should not be happening, as the Nursing Home Reform Act (NHRA) prevents a nursing home “from requiring a person other than the resident to assume personal responsibility for any cost of the resident’s care.” Despite this prohibition under federal law, some nursing homes and debt collectors do bill, and even file lawsuits against, nursing home residents’ family members and friends for the cost of care on the basis of their admission contracts.

Here’s how this can happen:

• During the admissions process, some nursing homes ask or require a person helping the resident gain admission to sign the admission contract as a “Responsible Party” or “Representative.”
• Based on these Responsible Party contract clauses, some nursing homes request unpaid balances from third parties. The sums that nursing homes seek to collect range from a few thousand dollars to hundreds of thousands of dollars.
• If the third party refuses to pay, some nursing homes hire debt collection firms to demand payment, report the debt to credit reporting companies as the third party’s personal debt, and sue the third party in court.

Know Your Rights: These Collection Tactics Are Illegal

As mentioned, some nursing home admissions contracts say that a caregiver, family member, or friend must pay the resident’s bill if the resident can’t afford to. Three laws make these practices illegal:

The Nursing Home Reform Act prevents a nursing facility “from requiring a person other than the resident to assume personal responsibility for any cost of the resident’s care.” Nursing facilities that participate in Medicaid or Medicare may not require any third party, including a family member or caregiver, to personally guarantee payment of the costs of the resident’s stay as a condition of admission, expedited admission, or continued stay in the facility. Any provision in a nursing home contract that violates the Nursing Home Reform Act are unenforceable.
The Fair Debt Collection Practices Act prohibits the use of “any false, deceptive, or misleading representation or means in connection with the collection of any debt.”

o Seeking repayment of a debt that violates the Nursing Home Reform Act therefore also violates the Fair Debt Collection Practices Act.
o Debt collectors that allege that a family member or friend engaged in financial wrongdoing, without having any basis for the allegation, are also in violation of the Fair Debt Collection Practices Act.
o Debt collectors who try to collect bills on behalf of nursing facilities may violate the Fair Debt Collection Practices Act by misrepresenting that a consumer must pay a debt that arises from a contract provision that is illegal and unenforceable under federal law.

The Fair Credit Reporting Act prohibits debt collectors from furnishing inaccurate information to any consumer reporting agency after receiving notice from a consumer that the information is inaccurate. Reporting that a third party owes a debt to a nursing facility for the costs of a resident’s care when the debt is based on an illegal contract clause violates the Fair Credit Reporting Act.

What to Do When You’re Asked to Sign a Nursing Home Admission Contract

1. Just Say No
If you are ever asked to sign an admission contract for a friend or family member entering a nursing home, the best response is to simply refuse. Tell the nursing home to have the agreement signed by the person actually entering the nursing home. If the nursing home tries to claim that the person is not competent, remind them that only a court of law can declare someone incompetent, and every adult is deemed to be competent unless a court says otherwise. If the nursing home tries to claim that the person can’t legibly sign their name, tell them that even an illegible scribble is still a valid signature — think about the fact that most doctors and lawyers who sign documents repeatedly have illegible scribbles for signatures, but they are still valid. My signature has never been legible except perhaps back in grade school. If the person entering the nursing home is completely unable to make any kind of mark, then keep reading.

2. Just Ignore
If your friend or family member is already in the nursing home, which happens frequently when a person goes into a nursing home for short-term rehabilitation after a hospital stay, then there is never any urgency to sign an admissions agreement, as the resident has already been admitted. There are only five reasons that nursing homes can discharge someone once they have been admitted, and failure to sign a contract is not one of them.

What to Look Out for in Nursing Home Admission Contracts if You Feel You Must Sign

If a nursing home pressures you into feeling that you must sign the admission contract or they will not admit your loved one, then you should carefully review the contract and of course have it reviewed by legal counsel before signing it.

Some language to look out for:

1. Beware of any language that seems to require you to pay for the resident’s care with your own money. Remember, a nursing home can’t make you promise to pay for the resident’s care with your own money; this is a clear violation of the Nursing Home Reform Act. If the contract has a provision asking you to agree to voluntarily use your own money, or to serve as a guarantor, then cross through the language and never sign as a guarantor.

2. Watch out for language calling you the “responsible party” or saying that you and the resident are “jointly and severally” responsible for the nursing home bills. Sometimes “responsible party” language is acceptable, but in some contracts it’s a sneaky way to get you to voluntarily assume liability for all nursing home bills.

3. Be on the lookout for language that requires you to file a Medicaid application accurately and on time, which then typically goes on to say if you don’t, you are responsible for paying the nursing home’s bills when the resident runs out of money. Filing a Medicaid application is an incredibly complicated endeavor, and ideally should be handled by an experienced Elder Law attorney to ensure that excess assets have been properly protected, that gifts made during the five-year look back period have been properly dealt with, and many other factors have been evaluated and dealt with prior to applying for eligibility. A great many people who apply for Medicaid on their own get denied for numerous reasons, and such a denial could be ground under the nursing home admission contract for the nursing home to sue you personally.

4. Be wary of language requiring you to use the resident’s assets to pay for care. Sometimes this language is completely reasonable and acceptable. However, if you are not the person’s agent under power of attorney, you don’t have legal access to that person’s assets and should not agree to such a provision. If you do have power of attorney for the nursing home applicant, then this might be a legitimate provision in the contract, but it’s important to understand that not all power of attorney documents are the same, and the power of attorney you have may not allow you to access all of the resident’s assets. Also, some assets are sometimes inaccessible or very difficult to access or sell, such as real estate in a poor market, or a partial ownership in real estate, or a financial account with a joint owner. Lastly, even if the power of attorney document does purport to allow you to access all of the resident’s funds, many financial institutions put up seemingly insurmountable roadblocks when you try to get them to accept the validity of the power of attorney. Please see this article about financial institutions refusing to accept a power of attorney.

Nursing Homes Have Been Warned About Illegal Debt Collection Practices

An increase in complaints to the Consumer Financial Protection Bureau led that agency and the Centers for Medicare and Medicaid Services to send a letter this past September to nursing homes and their debt collectors reminding them to follow the law. The Centers for Medicare and Medicaid Services and the Consumer Financial Protection Bureau reminded nursing home owners that they cannot require family members to agree to assume debt as an admissions condition. The letter also warned debt-collection agencies that pursuing such debt could be illegal.

Nursing home advocates are claiming that it’s only a handful of nursing homes participating in such debt collecting practices that have been described. If you’re having a problem with a debt collector, you can submit a complaint with the Consumer Financial Protection Bureau online or by calling 1-855-411-CFPB (2372).

For additional information on nursing home debt collection, visit these links:

• The CFPB recently released a new resource to help you identify and report illegal nursing home debt collection tactics. Click here to access the resource.
• The National Center on Law & Elder Rights also has a resource titled “Using Consumer Law to Protect Nursing Facility Residents.”
• CFPB did an Issue Spotlight on Nursing Home Debt Collection
• See info in the Consumer Financial Protection Circular 2022-05
• Justice in Aging published “25 Common Nursing Home Problems & How to Resolve Them.”

Beware of the “Doctrine of Necessaries” and Filial Responsibility Laws

Despite all of these warnings and guidance, there are still two very common exceptions where you might be on the hook for someone else’s nursing home bills regardless of these laws that might otherwise protect you. These exceptions are if you are a spouse or child of the nursing home resident.

The Doctrine of Necessaries

The common law doctrine of necessaries says that each spouse is required to pay for necessary medical bills (including nursing home bills), and sometimes other items that are “necessary” for the well-being of the other spouse. This is based on the old common law notion that a husband was required to provide for his wife and children during the marriage. States that have kept this law in affect have equalized it to apply to both spouses. Both Virginia and DC still follow the doctrine of necessaries. Maryland does not. In jurisdictions such as Virginia and DC that still follow the doctrine of necessaries, this allows nursing homes to sue spouses for past due bills regardless of whether the spouse signed the nursing home admissions agreement, but it is still best to follow the recommendations laid out above before signing any such agreement.

Virginia code section § 8.01-220.2 is entitled “Spousal liability for medical care,” and states as follows:

Each spouse shall be jointly and severally liable for all emergency medical care furnished to the other spouse by a physician licensed to practice medicine in the Commonwealth or by a hospital located in the Commonwealth, including all follow-up inpatient care provided during the initial emergency admission to any such hospital, which is furnished while the spouses are living together. For the purposes of this section, emergency medical care shall mean any care the physician or other health care professional deems necessary to preserve the patient’s life or health and which, if not rendered timely, can be reasonably anticipated to adversely affect the patient’s recovery or imperil his life or health.

Any lien arising out of a judgment under this section against the judgment debtor’s principal residence held as tenants by the entireties shall not be enforced unless the residence is refinanced or is transferred to a new owner.

Virginia code section § 55.1-202 also speaks to this issue, stating that “The doctrine of necessaries as it existed at common law shall apply equally to both spouses, except where they are permanently living separate and apart, but shall in no event create any liability between such spouses as to each other.”

DC Code Section 46–601(2) says that “both spouses [and] domestic partners shall be liable on any debt, contract, or engagement entered into by either of them during their marriage or the term of the domestic partnership for necessaries for either of them or for their dependent children.”

If you’re interested in other states, you may want to take a look at the listing of states at https://www.bills.com/learn/debt/doctrine-of-necessaries, but be aware that some of this information is inaccurate and/or out of date.

Filial Responsibility Laws

We have written many times on the topic of filial responsibility, which requires adult children to pay for medical care and nursing home bills of their parents under certain circumstances. These laws allow nursing homes to sue children for past due bills regardless of whether the children signed the nursing home admissions agreement. However, it is still best to follow the recommendations explained above before signing any such agreement. Click here for a list of all of our articles on the topic of filial responsibility, and click here for a list of the 30 states that still have filial responsibility laws.

Plan Ahead for Yourself and Your Loved Ones

It’s extremely important to plan ahead to protect assets and obtain Medicaid. The lawsuits and illegal collections practices aimed at family members and friends of nursing home residents typically don’t happen to nursing home residents on Medicaid. Both the doctrine of necessaries and filial responsibility laws end with regard to the nursing home once someone is on long-term care Medicaid.

To do proper Medicaid asset protection planning, families need the help of an experienced Elder Law attorney, such as myself. Whether you or your loved ones are years away from needing nursing home care, already in a nursing facility, or somewhere in between, the time to plan is now, not when your loved ones are about to run out of money. Call us to make an appointment for an initial consultation:

Elder Law Attorney Fairfax: 703-691-1888
Elder Law Attorney Fredericksburg: 540-479-1435
Elder Law Attorney Maryland: 301-519-8041
Elder Law Attorney DC: 202-587-2797

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About Evan H Farr, CELA, CAP

Evan H. Farr is a 4-time Best-Selling author in the field of Elder Law and Estate Planning. In addition to being one of approximately 500 Certified Elder Law Attorneys in the Country, Evan is one of approximately 100 members of the Council of Advanced Practitioners of the National Academy of Elder Law Attorneys and is a Charter Member of the Academy of Special Needs Planners.