Monday, June 8, 2015

2d Circuit Addresses Nursing Home Collection Practices in Cross-Border Dispute

In Eades v. Kennedy PC Law Offices, decided June 4, 2015, the Second Circuit ruled that a federal court in New York has personal jurisdiction to address alleged unfair debt collection practices of a Pennsylvania law firm in seeking to collect unpaid nursing home fees totaling $8,000.  The plaintiffs, New York residents -- the husband and adult daughter of a woman in a Pennsylvania nursing home -- challenged statements in correspondence and phone communications allegedly made by the Pennsylvania law firm.  The claims against the daughter were based on Pennsylvania's filial support law.

As reported on this Blog in December 2013, the United States District Court for the Western District of New York dismissed the suit, finding no personal jurisdiction and further rejecting application of the federal Fair Debt Collection Practices Act (FDCPA). The Second Circuit's ruling concludes, however, that the law firm's "three purposeful contacts with New York," of mailing a debt collection notice to the New York family members, engaging in a debt collection phone call with the daughter, and mailing a summons and complaint to both the daughter and the nursing home resident's husband, are enough to establish personal jurisdiction under New York's long-arm statute.  Further, the defendant law firm had not shown that exercise of such jurisdiction was unreasonable.

On the questions raised by the FDCPA claims, the Second Circuit rejected several key arguments by the plaintiffs, concluding that Pennsylvania's filial support law is not preempted by the Nursing Home Reform Act's prohibition on nursing homes requiring third party guarantees of payment:

"[T]he NHRA is not inconsistent with the Pennsylvania indigent support statute, which holds an indigent person’s spouse or child liable for the person’s maintenance or financial support, unless the spouse or child is financially unable to support the indigent person or meets other statutory exceptions. 23 Pa. Cons. State 4603(a).  By its terms the Pennsylvania statute does not appear to condition the continuing care of the indigent person on a family member’s financial support. Thus, a nursing home can petition a court to order an indigent resident’s spouse or child to pay for the resident’s nursing home care pursuant to the state statute without violating the NHRA, as long as the nursing home refrains from conditioning the resident’s admission, expedited admission, or continued stay on a third party guarantee of payment. For these reasons, we conclude that the indigent support statute does not conflict with the NHRA."

Nonetheless, the court ordered remand to consider the plaintiffs' allegations that the law firm's representative stated, during a telephone call, that the firm would garnish the daughter's wages if she did not pay the debt, and, further, it would place a lien on the husband's  home.  The plaintiffs contend these constitute unlawful threats of immediate, pre-judgment action under the FDCPA.  

The Second Circuit details certain allegations that I find worrisome, but which are not fully addressed in the opinion.  After two months in the nursing home, Mrs. Pike's husband was "required ... to sign an admission agreement in order to keep his wife at the nursing home." It is this agreement that became the basis for the breach of contract claim against the husband for his alleged failure to pay.  It will be interesting to see whether this alleged nursing home admission practice is further addressed on remand.

Consumer Information, Ethical Issues, Federal Cases, Federal Statutes/Regulations, Health Care/Long Term Care, Legal Practice/Practice Management, State Cases, State Statutes/Regulations | Permalink


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