Nursing homes and debt collectors are flouting a law that prohibits them from requiring friends and family of care home residents to shoulder the costs of the facilities, according to a federal report issued Thursday.
The Consumer Financial Protection Bureau said friends and family members have had to declare bankruptcy, had their wages garnished and their homes repossessed after signing unenforceable contracts called "admission agreements" with nursing facilities. As a result, they have been held liable as third parties for their loved ones' nursing home stays.
Distraught relatives, in sometimes emotional testimony, and lawyers for families told regulators Thursday about collectors seeking tens of thousands of dollars — even hundreds of thousands — in unpaid nursing home fees.
An increase in complaints led the agency and Department of Health and Human Services' Centers for Medicare and Medicaid Services to send a letter to nursing homes and their debt collectors reminding them to follow the law.
Rohit Chopra, director of the consumer bureau, held a virtual public hearing with advocates, nursing home administrators and people affected by what they say are unlawful debt collection practices.
Anna Anderson, a consumer protection lawyer in New York, said she has seen hundreds of lawsuits filed against friends and family of care home residents that seek reimbursement for of facilities' costs.
"It's not only routine" she said. "It's a deeply troubling practice."
She said it "puts families in a position of having to choose between protecting their family members at nursing facilities or putting themselves in a position of financial ruin."
Chris Ferris spoke of how he received a collection letter for thousands of dollars for his mother's nursing home stay. Through tears, he pleaded with bureau officials on the call to do something to stop creditors from hounding him and others for money that should not be legally owed.
"I implore you to do something to stop them," he said. "This is wrong."
The report described one woman who was sent to collections for $80,000 two days after her mother's death. Another woman received a letter from a law firm stating that she owed the nursing home $17,000 after her friend's death. The report did not identify the individuals by name.
The consumer bureau said in a statement that "collection of debts from those contracts may violate the consumer financial protection laws, including the Fair Debt Collection Practices Act" and its prohibition on false, deceptive, or misleading representations connected to debt collection.
The Centers for Disease Control and Prevention reports 1.3 million people live in nursing homes.
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As more people in the United States age, the cost of nursing home care is growing along with demand. The price has soar in the past 20 years. In 2021, the annual median cost of a single room in a nursing home was $108,405. Between 2004 and 2020, the cost rose by more than 60%.
Most older adults are not insured against the costs of long-term care. Medicare, which covers adults once they reach 65, offers limited benefits based on need and only pays for nursing home care for up to 100 days. Medicaid helps low-income people pay for nursing home care but eligibility rules can be stringent.
The Nursing Home Reform Act prevents facilities "from requiring a person other than the resident to assume personal responsibility for any cost of the resident's care."
But why that seems to happen so often is due in part to lax government enforcement, said Eric Carlson, a lawyer at Justice in Aging. Carlson said during the hearing that agencies in charge of oversight rarely cite and fine companies that require third parties to sign admission agreements.
David Bifulco, a Pennsylvania lawyer who represents debtors sued for hundreds of thousands of dollars, said the bureau and other agencies should educate federal and local courts about the prevalence of the problem, before they a default judgement is entered.
"It would go a long way," he said.
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