Liability for the Cost of Nursing Home Care

//Liability for the Cost of Nursing Home Care

Liability for the Cost of Nursing Home Care

By: Anthony J. Lamberti, Esq., Chairman, Elder Law Committee

  • INTRODUCTION

               The issue of liability for the cost of care at Nursing Homes on its surface does not seem to be very complicated but various factual circumstances that occur in these cases can add to the complications.

The case usually starts with a call that Grandma was just admitted to the nursing home for short term rehabilitation and they hope she will return home with home care. An initial consultation may explore care costs for home care and facility care, the need for Guardianship and whether or not prior assets transfers occurred in the previous five (5) years. It usually does not encompass the nursing home admission agreement.

This article will address the liability issues for cost of care at nursing homes which usually arise under the terms of an admission agreement.

  • ADMISSION AGREEMENT

               The first significant legal issue that must be presented is the federal law and New York State Regulations regarding the admission agreement.

Generally, when a non-resident party signs an admission agreement on behalf of the resident, there is no contractual person liability for the non-resident party for unpaid service bills nor could a nursing home facility legally require such a guaranty as a condition of the resident’s admission. However, theses federal laws and state regulations permit nursing homes legally require the authorized representative (i.e., spouse, attorney in fact or joint account holder) or an individual having access and control over the resident’s assets and income to provide the facility with payment using that access to the resident’s available income or resources without incurring any personal financial liability. See 42 U.S.C. 1396r(c)(5)(A)(ii); 42 U.S.C.1396r(c)(B)(ii); and 10 NYCRR 415.3(b).

  • RESIDENT’S LIABILITY

               A. SIGNED ADMISSION AGREEMENT

               The clearest case, in terms of liability for cost of care, is that where a resident with full mental capacity signs an admission agreement and payment is not forthcoming. The usual case of action for breach of contract is asserted by the nursing home and the resident may answer with any number of defenses to this type of action.

The most significant issue in these type cases is whether the resident voluntarily signed the admission agreement and understood the consequences in doing so. In Baptist Home of Brooklyn v. Schott, 902 NYS 2d 368 (2d Dept. 2010), the Court denied the nursing home’s motion for summary judgment because there was a triable issue of fact regarding the voluntary signing the agreement issue.

               B. WITHOUT A SIGNED ADMISSION AGREEMENT

               The most common scenario occurs where a resident has mental capacity and is admitted for long term care and the facility staff did not obtain a signed agreement.

                1. QUANTUM MERUIT

               The quantum meruit claim is an implied contract based upon the conduct of the parties. Generally, the elements of a quantum meruit claim are as follows:

  1. Performance of services in good faith;
  2. Acceptance of services;
  3. Expectation of compensation by provider;
  4. Reasonable value should be awarded for services rendered.

This is usually the strongest cause of action against a resident who has not signed an admission agreement.

               2. ACCOUNT STATED

               In order to promulgate this cause of action a facility needs to establish the following:

  1. A bill is rendered and delivered to resident;
  2. Resident is bound to examine the bill that is being charged;
  3. A reasonable time passes where no objection is made by resident and the resident’s silence is construed as acceptance.In Erdman Anthony & Associates v. Barkstrom 298 A.D. 2d 981 (4th Dept., 2002), the Court held that oral objections are sufficient to rebut an inference of an implied contract to pay the account.

              3. UNJUST ENRICHMENT

This is essentially an equitable claim where it needs to be established that a nursing home conferred a benefit to the resident and the resident obtained the benefit without having tendered adequate consideration for services.

  • LIABILITY OF THE RESIDENT’S SPOUSE

         A.     COMMON LAW

               The common doctrine of the law of necessaries is often cited as a cause of action by nursing homes against the spouses of residents. The main element under this cause of action would be reciprocal duty upon each spouse to furnish the other with reasonable necessaries including medical care (Medical Business Associates v. Steiner, 183 A.D. 2d 588 (2d Dept. 1992)).

This common law theory of necessaries may be applied against a spouse of a resident as long as the non-resident spouse has the ability to pay the debt and that an attempt was made to secure payment form the debtor spouse first.

          B.     LIABILITY UNDER STATUTE

               Section 412 of the Family Court Act provides that:

“…..A married person is chargeable with the support of his or her spouse and, if possessed of sufficient means or able to earn such means, may be required to pay for his or her support a fair and reasonable sum, as the court may determine, having due regard to the circumstances of the respective parties.”

This statue seems to imply that there is a legal obligation that one spouse is responsible for the other spouse’s financial obligations. However, further analysis of the Family Court Act (Section 422) does not give standing to third parties (i.e. creditors) to assert their claims.

This is not to be confused with actions brought by Medicaid against a spouse who has filled a spousal refusal. In that circumstance, a Medicaid recipient has subrogated his rights against the spouse who has filed a spousal refusal.

  • THIRD PARTY LIABILITY

               A.     DOES A SIGNED ADMISSION AGREEMENT EXIST

               Federal and State law clearly set forth that a facility shall not require a third party guaranty of payment as a condition of admission. However, the facility may require an individual who has legal access to a resident’s income or resources available to pay for care, to sign a contract without incurring personal liability to provide payment from the resident’s income or resources.

In Prospect Park Nursing Home v. Goutier, 12 Misc. 3d 1192(A), 824 NYS 2d 770 (NYS Civil Ct 2006), the Court held that even though the defendant (a friend of the resident) signed an admission agreement, he was not liable for the resident’s unpaid nursing home charges. The defendant did not have legal access to the resident’s funds at the time the agreement was signed and the debt was incurred.

              B.     DOES LEGAL ACCESS TO RESIDEN’T FUNDS EXIST

In Amersterdam Nursing Home Corp. v. Lang, 16 Misc. 3d 1138(A), 824 NYS 2d 56 (Sup Ct 2007), the facility sought to have the resident’s grandson held liable for unpaid net available monthly income (NAMI) as determined by the budgeting of the local social services district.

The nursing home did not present any evidence that the defendant had any legal access to the resident’s assets or income.

The holdings in the Goutier and Lang cases appear to support the proposition that a third party can be liable for a resident’s nursing home bill but only where the third party has legal access or control over the resident’s funds.

               C.     WHAT IS A DESIGNATED REPRESENTATIVE HAS BEEN APPPOINTED BY THE RESIDENT

               In many admission agreements, a resident may appoint a designated representative. In New York Congregational Nursing Center v. Gilchrist, 21 Misc. 3d 1136(A) (Sup Ct 2008) a designated representative (who did not sign the admission agreement) was sued for the outstanding bill of the resident. The court held that the defendant was not the designated representative and thus could not be held liable for the cost of care under the agreement.

              D.     LIABILITY OF ATTORNEY-IN-FACT

Another interesting issue is whether a third party attorney-in-fact can be held liable for the resident’s cost of care in cases where the attorney-in-fact fails to use the resident’s income and assets for the resident’s nursing home costs.

This issue was addressed in Troy Nursing & Rehabilitation Center v. Naylor and Gaetano, (3d Dept. 2012). The defendant, Gaetano, is the resident’s daughter and attorney-in-fact of the resident (defendant Naylor). She signed an admission agreement on behalf of her father wherein she agreed to utilize her access to her father’s assets (by virtue of his power of attorney) to pay for his care.

The record indicates that the attorney-in-fact used the resident’s funds to maintain and upkeep real property which had been transferred to a trust and made no payment toward the cost of his care.

The attorney-in-fact contended that she cannot be personally liable since she signed the document as “POA” and it violated federal law by making her a guarantor for payment as a condition of admission.

The Appellate Division affirmed the Supreme Court’s decision that the defendant accepted personal responsibility to utilize her access to her father’s funds to pay for his care and then breached that agreement by failing to use available assets to pay the nursing home bill.

  • CONCLUSION

It appears that there are some clearly defined statutory and case law doctrines that have emerged in nursing home litigation cases. It’s imperative for the practitioner to be diligent in fact gathering with their client to determine a course of action to defend an action brought by a nursing home.

By | 2016-11-16T20:33:19+00:00 January 16th, 2016|Uncategorized|0 Comments