[co-author: Stephanie Kozol]*
What Happened
HCA Healthcare Inc., a major U.S. hospital operator with more than 180 hospitals across 20 states, announced a $3.5 million settlement to address allegations of state consumer protection and labor law violations brought by the attorneys general (AG) of California, Colorado, and Nevada. The allegations centered on HCA’s enforcement of training repayment agreements (TRAs) with new nurses.
These agreements required nurses to repay training costs if they left their jobs within two years. The states’ investigation alleged that many nurses were misled regarding the terms and financial obligations of the TRAs and that HCA recruiters frequently failed to disclose these repayment requirements during the hiring process. By the time nurses learned of the TRA obligations, they had already accepted employment and were committed to their roles, leaving them with few options to avoid the financial burden. Furthermore, the TRA contracts were presented in a read-only format, preventing any negotiation or modification of terms once disclosed. In some instances, recruiters imposed deadlines for accepting job offers, further limiting the time available for nurses to inquire about employment terms and conditions. The California complaint specifically asserted that since 2018, approximately 34,500 new-graduate registered nurses (RNs) participated in the StaRN (Specialty Training Apprenticeship for Registered Nurses) Program and entered into TRAs with HCA. In California, TRAs often set a training value of $4,000, obligating RNs to repay a prorated amount if they left before completing two years of employment, with deductions potentially taken directly from their final paycheck. In Colorado, the training value was set at $10,000, significantly higher than in California, with similar repayment obligations for early departures.
The settlement concludes a joint investigation into HCA’s practices and releases the states’ claims.
Consent Judgment Monetary Terms
Despite denying any wrongdoing, HCA agreed to the settlement, citing the best interests of its nurses and hospitals. The California consent judgment requires HCA Healthcare to pay $1,162,900 to the California AG’s office with the amount designated for restitution and consumer protection enforcement, with funds potentially allocated to the California Victims of Consumer Fraud Restitution Fund. Additionally, HCA agreed to provide restitution to affected nurses, including refunds and adjustments for loss of use of funds, calculated using the Consumer Price Index.
HCA will pay approximately $75,776 to fully reimburse Nevada nurses who made payments on their unlawful TRA provision (TRAP) debt to HCA and will also make a $786,500 penalty payment to the state of Nevada.
In Colorado, the consent judgment mandates HCA to pay at least $424,408.22 for consumer redress, with funds held in trust by the AG for various consumer protection purposes. Furthermore, HCA agreed to pay $968,600 to the Colorado AG, to be used for consumer protection and enforcement efforts.
Consent Judgment Injunctive Terms
The California consent judgment permanently enjoins HCA Healthcare and its affiliates from engaging in practices related to TRAs, including advertising, marketing, collecting, and reporting to consumer agencies. It mandates that all amounts owed under TRAs during the relevant period be treated as void and invalid, requiring HCA to request consumer reporting agencies to delete any related information.
Similarly, the Colorado consent judgment imposes a permanent prohibition on HCA and its affiliates from participating in or assisting others in any activities related to TRAs, including advertising, marketing, and collecting. It also voids all TRA-related debts and requires HCA to ensure the deletion of any information furnished to consumer reporting agencies. Colorado specifically mandates that HCA maintain records for two years to demonstrate compliance and cooperate with the AG to identify affected consumers.
Nevada similarly prohibits HCA from imposing TRAPs on nurse employees and attempting to collect on any outstanding TRAP debt incurred by Nevada nurses who signed TRAPs with HCA. All judgments emphasize the cessation of practices deemed unfair and the protection of consumer rights through stringent injunctive measures.
Our Take
By prioritizing transparency and flexibility in employment agreements, health care companies can protect their reputation, foster trust with employees, and mitigate the risk of costly legal disputes. The settlements emphasize the role of state AGs in enforcing consumer protection laws, which can have significant implications for business operations. The resolution of these cases highlights the potential legal and financial risks associated with using TRAs that may be perceived as unfair or coercive. The settlement serves as a reminder to health care companies to carefully evaluate their recruitment and employment practices to avoid similar pitfalls.
*Senior Government Relations Manager
