'Stay-or-Pay' Suits Cast Light on Immigrant Nurse Recruiting

Marie Montalvo moved from the Philippines to Tennessee in early 2023 for the opportunity to become a nurse—her chance for a successful career with competitive pay starting with training, licensing and immigration assistance.

She’d accepted a recruiting firm’s offer that came with a caveat: if she dropped out of the program “for any reason” before her three-year commitment ended, she’d be back-charged thousands of dollars for National Health Corp.'s investment in her.

Nearly a year later and amid working conditions she considered unsafe, Montalvo decided to quit her nursing home position. But National Health wouldn’t let her.

Instead, they locked Montalvo into the facility and refused to let her out until she agreed to pay $33,000 for her resignation, according to the class action complaint she joined. Her Filipino coworkers were threatened with the same confinement if they tried to leave too, their complaint said.

Montalvo said she wasn’t released until she called an attorney, who was only able to free her after threatening to call 911. That didn’t stop National Health from suing her for that sum in liquidated damages.

That case was put on indefinite hold in June after Montalvo and other nurses sued the Mufreesboro, Tenn., company, two executives and the recruiter, Infinity Care Partners LLC, claiming they built a “multi-million-dollar businesses on the backs of the indentured servitude.”

National Health didn’t respond to Bloomberg Law’s requests for comment about the claims, but it’s urging the court to drop the case, arguing the plaintiffs “want to resign and enjoy all the benefits of working in the United States without paying any costs associated with their new opportunities.” Infinity hasn’t responded to the complaint or requests for comment.

Proliferating Complaints

Montalvo and her co-plaintiffs are among dozens of Filipino nurses fighting to extricate themselves from similar employment contracts proffered by international hospital staffing agencies. Her case is one of at least 10 such federal class actions, filed by nurses who are battling training repayment agreements and provisions (sometimes called TRAPs by regulatory agencies) dating back to 2019. The complaints typically cite to the Fair Labor Standards Act and the Trafficking Victims Protection Act, if not both, along with other state and federal regulations.

Over half of the cases were filed by Filipino nurses within the past two years. More complaints have been lodged with the National Labor Relations Board, compelling one staffing agency to give up the practice of demanding repayment.

Staffing agencies, and sometimes health-care facility operators, will charge their foreign-recruited nurses as much as $50,000 in reimbursement for costs incurred if the recruits leave before their three-to-four-year contract ends, court filings say. Many of these breach fees aren’t prorated, meaning the nurse would have to pay the total amount no matter how long they worked for the company.

‘Necessary’ Commitments

Staffing agencies argue that the agreements are necessary to keep their business afloat, especially as hospitals have grappled with an unprecedented staffing shortage since the Covid-19 pandemic. Nearly 100,000 registered nurses have left the workforce within the past two years, according to the National Council of State Boards of Nursing.

“Without such a commitment, staffing agencies would not be able to dedicate the enormous resources necessary to identify, recruit, train, and facilitate the immigration of nurses,” a spokesman for the American Association of International Healthcare Recruitment said in an emailed statement. The spokesman added that the terms of this commitment “are transparently explained to prospective applicants upfront” before they travel to the US.

TRAPs have been common for truck drivers, pilots, and other types of health-care employees, the Consumer Finance Protection Bureau said. But unlike the agreements given to those workers, international hospital staffing agencies add costs accumulated from immigration processing, temporary housing, and arbitration proceedings, complaints filed by foreign-trained nurses said.

The American Hospital Association and American Association of Colleges of Nursing declined to comment on the practice. Staffing agencies facing class actions, including Avant Healthcare and RN Express Registry, also didn’t respond to requests for comment.

Lost Profits

Nurses in at least five of the cases claim their employer threatened to report them to immigration authorities or hold them responsible for an undetermined amount of debt labeled as damages or lost profits.

In one case, Caribbean nurse Lucinda Byron and Jamaican nurse Latoya Lewis say they’ve experienced both threats to their citizenship status and a non-disclosed amount of debt. A few other cases described experiencing elements of both these situations.

Rachel Dempsey, an employment attorney for Towards Justice, said these factors add “an extra level of coercion” for foreign-trained nurses stuck in a TRAP agreement.

Dempsey, along with Loyola Law School professor Jonathan Harris, said employers may use those agreements more frequently because noncompete agreements face increasing regulation from the Federal Trade Commission and state legislatures. Harris said he is concerned about the potential rise in TRAPs because they can be “more nefarious” than noncompetes and have a higher impact on workers.

“No matter what they do after their job—even if they become unemployed, have to take care of a family member who’s gotten sick, or they’ve decided to leave the workforce, or change careers and not work for a competitor—they still have to pay,” said Harris, who leads research on the use of training repayment and provision contracts.

Cheap Labor

Patricia Pittman, a professor of health workforce equity at George Washington University’s Milken Institute School of Public Health, said foreign-trained nurses from developing countries are heavily targeted by agencies to provide cheap hospital labor.

Filipino-exchange nurses have been especially desirable to US hospitals because they’re trained in English that’s derived from the country’s long-established Americanized medical system, said immigrant labor rights attorney and Radford Scott LLP partner Dan Werner.

While American registered nurses earned a median annual wage of $86,000 in 2023, according to the US Bureau of Labor Statistics, the immigrant nurses suing alleged to be earning approximately $60,000 a year.

These earnings, predetermined by the Department of Labor for workers on EB-2 and EB-3 visas are intended to match what the average American nurse makes, but get cut significantly by the assessment of breach fees, Filipino nurses Novie Dale Carmen and Marie Alexandrine Baldia alleged in their respective complaints.

Carmen’s employer, Health Carousel, agreed to a $6 million settlement with the foreign nurses who sued it for pursuing them for repayment.

“While Health Carousel acted lawfully and in good faith, we decided that agreeing to this settlement is in the best interest of our company and our healthcare professionals,” company CEO John Sebastian said in an emailed statement.

Litigation Outcome

For the cases filed since 2023, it may be too early to tell whether the courts will side with the nurses or their employers. Judges have allowed at least two lawsuits to move forward to discovery, and dismissed two other ones. There are at least four where judges haven’t ruled on dismissal.

The DOL in 2023 sued Advanced Care Staffing LLC, as their breach fees too brought nurse earnings “well below the minimum wage.” The agency also filed a friend-of-the-court brief in support of a Filipino nurse who was trying to keep his claims in court. Advanced Care didn’t respond to requests for comment.

“A lot of these coercive practices are really turning our employment protections on their head,” DOL Solicitor Seema Nanda said in a July interview. “It’s particularly problematic given the unequal bargaining power that exists.”

The power dynamic between these nurses and the companies that recruit and hire them won’t be balanced without a blanket ban on breach of contract fees, professor Pittman said.

“The more dissemination we have of what happened in these human trafficking cases, the more people understand the problems in the industry and the more the industry is likely to self correct,” Pittman said.