Consumer Credit Fairness Act: Are You Prepared to Properly Handle Collection Cases?

The New York Consumer Credit Fairness Act (CCFA) (enacted April 1, 2022), was intended to strengthen consumer protections by requiring debt collectors to be more honest and transparent in their communications. However, the law has significant implications for nursing homes seeking to collect amounts they are owed for services rendered.

One of the most crucial changes enacted by the CCFA is the establishment of a three-year statute of limitations for claims arising from a consumer credit transaction. Previously, these claims were subject to a six-year statute of limitations as a breach of contract claim. With the new, shorter statute of limitations in effect, it is even more critical for nursing homes to refer cases for collection in a timely manner or risk termination of collection rights.

The CCFA also introduced strict notice requirements that directly impact nursing home collection efforts. In a consumer credit transaction lawsuit, the clerk of the court is now required to send an additional notice of the lawsuit to the defendant, providing information about resources that may be useful in defending against the claim. Additionally, the CCFA mandates that a notice be sent to the defendant when a dispositive motion has been filed. These notice provisions enhance transparency and ensure that defendants are promptly informed about legal actions against them, but they can also cause substantial delays in a collections action.

Further, the CCFA requires that all consumer debt collection actions be initiated through a Summons and Complaint. Previously, such actions could be quickly commenced with a simple Summons with Notice signed by an attorney. In contrast, a Complaint is a substantive document that includes factual allegations supporting each claim which must be verified by an officer or agent of the facility in the presence of a notary. Importantly, the Summons and Complaint must also contain specific details about the debt, including the name of the original organization to which the consumer owed the debt, the last four digits of the consumer’s account number, the date of the last payment made, if any, and an itemization of the amount sought. As such, this requirement creates additional layers of administrative work and still further delays.

In practical terms, nursing homes will need to update their internal processes and legal procedures to comply with the CCFA’s requirements. Nursing homes should consult legal counsel and review their processes to ensure they are in full compliance with this new legislation and prepared to seamlessly provide information and documentation to counsel to efficiently pursue claims.

Cona Elder Law’s experienced attorneys continue to monitor the most recent developments regarding this legislation and other important legal matters concerning the nursing home industry. Contact us at 631.390.5000 to learn more about how our firm can help your facility preserve its bottom line and ensure your ability to continue to provide quality services to your nursing home residents.