Federal nursing home law prohibits nursing homes from requesting or requiring a third party, such as a resident’s family member or friend, to sign an agreement to be personally liable for a resident’s nursing home expenses. Despite these protections, nursing homes commonly use questionable admission agreements that seek to make family, friends, or other third parties liable for a resident’s nursing home debts. This can lead to nursing homes later suing family or friends for their loved ones’ bills—bills that can exceed $100,000. These third parties are pressured into paying the debts out of their own pockets to avoid loss of the resident’s desperately needed care and frequently wind up with costly default judgments against them if they fail to pay.
While the Consumer Financial Protection Bureau (CFPB) and Centers for Medicare and Medicaid Services (CMS) have attempted to address this problem in recent years, nursing homes are continuing to try to evade consumer protections, as shown by a recent report from Justice in Aging and the National Consumer Law Center. Alarmingly, the report found that 75% of survey respondents indicated they had seen nursing home admission agreements that make third parties (generally family or friends) liable for nursing home expenses.
This article explains new federal guidance from CMS confirming that these practices are illegal. The article also explains the practical implications of the new guidance, including how advocates can use the guidance to strengthen family and friends’ defenses to collection actions and support potential claims for individual and class actions against the nursing homes and attorneys who are engaging in illegal collection practices. For a more general discussion of nursing home debt and collections, see NCLC’s Collection Actions § 9.6. See also NCLC’s Defending Nursing Home Collection Lawsuits.
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