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Attention: Facilities and Debt Collectors
Reminder from CMS and CFPB
The Consumer Financial Protection Bureau (CFPB) and the Centers for Medicare & Medicaid Services (CMS) remind you of your responsibilities under the Nursing Home Reform Act (NHRA), Fair Debt Collections Practices Act (FDCPA), and Fair Credit Reporting Act (FCRA).
The NHRA prohibits nursing facilities from requesting or requiring that a third party personally guarantee payment to the facility as a condition of a resident’s admission or continued stay in the facility. Contract terms that conflict with the NHRA are unlawful, and alleged debts resulting from such unlawful contract terms are invalid and unenforceable. Some nursing facilities have attempted to evade this prohibition by creating admission contracts that attempt to hold third parties liable for a resident’s debt. When a nursing facility claims that a non-resident is personally financially responsible for a resident’s bill and engages a third-party debt collector to collect the debt, the debt collector may violate the FDCPA by attempting to collect debts that are invalid under the NHRA. They may also violate the FCRA by furnishing information regarding such invalid debts to consumer reporting agencies.
Nursing facilities that violate the NHRA’s requirements may be subject to enforcement action by state agencies and by CMS. Debt collectors who violate the FDCPA and FCRA may be subject to enforcement actions by the CFPB and other federal and state government agencies, as well as to private actions brought by consumers. We urge nursing facilities and their debt collectors to examine their practices to ensure that they comply with the NHRA, FDCPA, and FCRA.