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.

Troutman Pepper Locke State Attorneys General Team

	Ashley Taylor – Co-leader and Firm Vice Chair Ashley is co-leader of the firm’s nationally ranked State Attorneys General practice, vice chair of the firm, and a partner in its Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group. He helps his clients navigate the complexities involved with multistate attorneys general investigations and enforcement actions, federal agency actions, and accompanying litigation.
	Clay Friedman – Co-leader Clay co-leads the firm’s State Attorneys General practice and is nationally ranked by Chambers USA for AG Government Relations and in Best Lawyers for Advertising Law. He has dedicated his entire career to state attorney general and federal work, serving for nearly a decade in a senior role and more than 25+ years in private practice. Clay focuses his practice on helping industry-leading companies mitigate the risks associated with state and federal regulatory investigations and associated litigation.
	Chris Carlson Chris advises clients on regulatory, civil, and criminal investigations and litigation. With a background as an assistant attorney general, he provides practical guidance to clients with matters involving state attorneys general and federal regulatory agencies.
	Lauren Fincher Lauren has vast experience handling state attorneys general investigations, navigating complex regulatory compliance matters, and providing strategic counsel in enforcement actions across various industries. She helps clients manage high-stakes regulatory matters and guides them through complex legal landscapes.
	Stephen Piepgrass Stephen leads the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group, representing clients in single and multistate enforcement actions, including inquiries and investigations, as well as litigation involving state attorneys general and other state and federal governmental enforcement bodies. He has significant experience handling actions with federal agencies, including the CFPB and FTC, as well as single plaintiff and class action litigation for clients in highly regulated sectors such as financial services, health care, pharmaceutical, and education.
	Michael Yaghi Mike handles high-profile state attorneys general, FTC, and CFPB investigations by advising clients through these complex government inquiries. He assists clients through the entire life cycle of investigations, from regulatory enforcement through formal litigation.
	Samuel E. “Gene” Fishel Gene is a former regulator with two decades of experience who has overseen state privacy and cybersecurity regulation enforcement, led national, multistate attorneys general privacy investigations, and prosecuted computer crimes at the state and federal levels. He has served at the forefront of state attorney general and federal enforcement, and utilizes this experience to proficiently represent client interests.
	Jay Myers Jay assists clients in heavily regulated industries, including health care, energy, insurance, emerging industries, and data privacy. He provides both regulatory legal advice and government relations strategies. Jay’s past and current clients include Fortune 10 companies, startups, nonprofits, industry associations, and advocacy groups. Recognizing that state government matters are often complex and multifaceted, he utilizes regulatory guidance, government advocacy, or both in tandem to deliver tailored solutions for each client’s unique needs.
	Jessica Birdsong Jessica is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement Practice Group. She received her J.D. from the University of Richmond School of Law, magna cum laude, where she served as associate articles editor of the Journal of Law & Technology.
	Blake R. Christopher Blake collaborates with clients on matters related to government contracting, investigations, and disputes. His senior-level government experience generates valuable insights and strategies for clients across a variety of industries.
	Nick Gouverneur Nick is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement Practice Group. He received his J.D. from the University of Illinois College of Law, where he served as a member of the Journal of Law, Technology & Policy.
	Troy Homesley Troy is an accomplished litigator who has represented and defended clients across a wide range of complex, high-stakes disputes at both the trial and appellate levels. He has represented technology companies, business executives, law firms, investment funds, high-ranking federal officials, international non-profits, and asylum seekers. Troy draws on his broad litigation experience to advise clients before litigation arises, while claims are pending or threatened, and leading up to and through trial and appeals.
	Natalia Jacobo Natalia is an associate in the firm’s Regulatory Investigations, Strategy and Enforcement (RISE) practice, based on the West Coast. She routinely counsels clients on a variety of state and federal regulatory matters, with a particular emphasis on consumer protection and data privacy matters.
	Namrata Kang Namrata (Nam) is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group, based in the Washington, D.C. office. She routinely advises clients on a wide variety of state and federal regulatory matters, with a particular emphasis on state consumer protection laws relating to consumer financial services and marketing and advertising. Nam’s experience transcends multiple industries, including financial services, telecommunications, media, and sports betting.
	Michael Lafleur Michael is an associate in the firm’s Regulatory Investigations, Strategy, and Enforcement Practice Group. Based out of the firm’s Boston office, Mike has deep experience in litigation, investigations, and other regulatory matters involving state-level regulators and state attorneys general.
	Philip Nickerson Philip represents clients in sectors such as financial, tech, real estate, and energy in a range of litigation matters. He is experienced in matters involving trade secrets, government investigations, commercial contracts, construction and product defect.
	Lane Page Lane specializes in federal and state regulatory investigations and complex civil litigation. He focuses on representing financial institutions and other businesses, with a particular emphasis on consumer protection and fair lending issues.
	Dascher Pasco Dascher is an attorney within the Regulatory Investigations, Strategy, and Enforcement practice, based in the Richmond office. She joined our firm after working in personal injury and medical malpractice for a Virginia trial law firm. Dascher brings varied legal experience to the firm with strong litigation and regulatory strategy capabilities.
	Kyara Rivera Rivera Kyara is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement Practice Group. She received her J.D. from the University of Richmond School of Law, cum laude, where she served as publications and online editor of the Public Interest Law Review.
	Timothy Shyu Timothy is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement Practice Group.
	Trey Smith Trey focuses his practice on representing and advising regulated utilities before state public utility commissions. He routinely helps clients obtain certificates of public convenience and necessity for transmission infrastructure. In this role, Trey works with his clients’ subject-matter experts to manage administrative proceedings, including by preparing initial filings; responding to discovery requests; drafting rebuttal testimony; and litigating any disputed issues.
	Daniel Waltz Dan helps clients navigate all aspects highly regulated relationships between industry participants and federal, state and local governments. Whether engaging with regulators, negotiating transactions or representing clients in the courtroom, he delivers solutions that help his clients achieve their strategic goals.
	Cole White Cole is a member of the firm’s Regulatory Investigations, Strategy and Enforcement (RISE) group. He has a decade of experience working in the attorney general community, having joined the firm from the Wyoming Office of the Attorney General, where he was assistant attorney general.
	Stephanie Kozol Stephanie is Troutman Pepper Locke’s senior government relations manager in the state attorneys general department.