How to Protect Against Home Care Clients, Caregivers Cutting Out Agencies

Shortly after Jocelyn Mayo founded Pampering Plus, a Pennsylvania-based company that provides medical and nonmedical at-home services, a caregiver and private-pay client struck a deal to continue working together while cutting the agency out of the picture.

Luckily, buyout agreements previously made with both parties helped Mayo recoup some of her losses.  

“[The client] paid the fee on their end, and they even paid their caregiver’s fee so there would be no litigation,” Mayo, who founded the company in 2004, told Home Health Care News.

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Still, Mayo negotiated with each party so that they did not pay out the full amount they were contractually obligated to give the agency.

But since then, Pampering Plus — which serves five counties and about 100 clients in the Philadelphia area — hasn’t been as fortunate.

“We get this all the time, and we lose clients,” Mayo said, identifying it as one of the biggest challenges facing her company. “It’s unfortunate, but I haven’t pursued it in court yet because I’m not sure I would even be successful with it.”

It’s a problem for providers nationwide, according to Angelo Spinola, a shareholder and attorney who represents home care companies at international labor and employment law firm Littler Mendelson.

“Normally, we get our calls after that’s happened,” Spinola told HHCN. “How do I prevent this from happening in the future? Or at least be able to be made whole if it does happen to me?”

Contract-wise, he says, companies like Pampering Plus — which presents clients and caregivers with separate agreements mandating they pay a fee if they cut the agency out of the picture and continue to work together — are doing everything right.

Home care agencies should use direct-hire provisions and non-solicit agreements to protect company assets, he previously told HHCN.

Direct-hire provisions are client agreements that require customers to pay the company a fee if they hire a caregiver directly. Non-solicits restrict workers from taking clients or employees with them when they leave and can have financial ramifications if broken.

No surefire remedy

Even with such safeguards, Mayo has found enforcement can be challenging. For example, she worries about going after caregivers who breach their contracts because she knows many of them cannot afford to pay the $5,000 term to which they agreed.  

“A lot of these employees are low income,” Mayo said. “So how do you recoup the funds even if you’re rewarded this judgment?”

Spinola says the first step — whether dealing with a client or caregiver — is to present the person in breach with a cease and desist letter.  

“You definitely want to include the agreement itself, the language you’re seeking to enforce and some type of explanation as to what you’ll do if they don’t respond, then a deadline for responding,” he said. “Basically what you’re requesting in the letter is the relief that you’re seeking and who the person should contact.”

Oftentimes, that’s the end of it: Clients and caregivers reach before the situation escalates to litigation.

Companies can send cease and desists letters themselves or through an attorney. The latter is often taken more seriously and comes at only a nominal fee to agencies, according to Spinola, whose company offers the service.

Once the client or caregiver has made contact, agencies should approach the conversation with a willingness to negotiate, especially if those in breach are likely unable to pay the full term. Something is better than nothing, Spinola says.

“It may be some kind of compromise where it’s not the full amount,” he said. “I think it’s a good idea to have the term in, and then the company can decide whether or not they want to enforce the term or not.”

In the rare event the situation continues on to litigation, Spinola says agencies should include attorney provisions — which require those in breach to help pay for legal fees — in agreements they present to caregivers and clients. That way, enforcement yields earnings rather than losses.

“Sometimes clients will bank on — look it’s $5,000, $3,000, $7,500 dollars — so if they sue me it’ll probably cost them more than the term,” Spinola said. “What you can do is add to the term reasonable attorney fees, so if we have to enforce this provision, we have the right to seek reasonable attorney fees.”

While Spinola says litigation in these cases is rare, whether the ruling is in favor of your agency ultimately depends on the court and the agreement. The judge is much more likely to side with agencies if their agreements are clearly outlined, fair and not overly restrictive, he said.

“It really does depend on the terms of the agreement,” Spinola said. “For example, if you had a direct-hire provision and the amount greatly exceeded the cost to the agency, that’s not likely going to be enforced.”

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