Thursday, November 14, 2013

Nursing Home Contracts Revisited: The Nutmeg State Adds Spice

Nursing homes, contracts, agents and payment demands.  I'm seeing interesting cases and laws coming out of Connecticut.  The topic is whether (and when) liability arises for an individual, often a son or daughter, who admits a parent to a nursing home, if a gap arises in payment for that parent's care.  Here are a few highlights from the Nutmeg State:

  • In early 2013, the Supreme Court of Connecticut upheld a judgment in favor of a defendant/daughter, who was sued for breach of contract by her father's nursing  home. The judgment included attorneys' fees for daughter under a state law governing the rights of successful consumers in disputes with commercial parties.  The daughter had signed documents at the time of her father's admission, as a condition of admission.  The nursing home's contract attempted to establish contractual obligation for the signer as a responsible party "if the responsible party has control or access to the patient/resident's income and/or assets, including but not limited to making prompt payment for care and services...." Under the court's ruling, however, this clause did not bind the daughter to pay for her father's care, as she was neither an appointed agent under a power of attorney, nor a court-appointed guardian. Aaron Manor, Inc. v. Irving, 57 A.3d 342 (Conn. 2013). 
  • Digging deeper into the Aaron Manor case, I looked to see why there was a payment gap. What wasn't clear from the Aaron Manor decision by the Connecticut Supreme Court, was the potential importance of the role played by another adult, the father's son.  As reported in greater detail at the intermediate appellate level, the son (and thus also brother to the daughter/defendant discussed above) did have a power of attorney and control over the father's accounts, had not signed the admissions contract, and had made transfers (including gifts) to himself and his sister from those accounts. Eligibility for Medicaid was not discussed in the intermediate court's case history. My best guess is the son declined to pay the nursing home bills for dad (and the history suggests a gap of a couple of months may have been connected to terms of some private insurance, so perhaps there was a separate insurance coverage dispute), but the son wasn't sued because he hadn't signed that nursing home contract.  Connecticut has a filial support law, by the way, but it is not comparable to Pennsylvania's filial law. Aaron Manor, Inc. v. Irving, 12 A.3d 584 (Conn. App. 2011). 
  • Here is where things get interesting (spicier?) -- at the Legislature.  Effective on October 1, 2013, the Connecticut Legislature amended state law to permit a nursing home to collect a debt for unpaid care for a resident from third parties, if that resident has been denied Medicaid because of one or more transfers by or to those parties, causing ineligibility.  The Connecticut law provides that nursing home collection suits may be filed against the "transferor" or the "transferee." A successful nursing home may also seek attorneys' fees.  Sections 128-130 of Connecticut Public Act 13-234.

It looks like the statutory change is a direct response to the type of facts represented in the Aaron Manor case, and would give nursing homes potent options for the future, as the son was a transferor (and transferee) and the daughter was a transferee.  I have written about liability issues arising out of nursing home contracts, including discussion of an earlier Connecticut case, Sunrise Healthcare Corp. v. Azarigian, 821 A.2d 835 (Conn. App. 2003), a case that was distinguished by the courts in analyzing Aaron Manor. (In fact, the last few years I've spent so much time reading contracts and cases connected to financial responsibility for long-term care, that I finally volunteered to add Contract Law to my teaching package.)  No secret that I find this area to be a fascinating juncture of substantive concepts, requiring analysis of health care policy, family law, contract law, agency law and elder law (which includes, of course, Medicaid law).

How did the Legislative change come about? According to a report by Wiggin & Dana, a Connecticut law firm representing providers, the changes to Connecticut law "grew out of a multiyear effort by LeadingAge Connecticut to convince the General Assembly to address the need to assist nursing homes facing bad debts. . . .  Although the elder law bar and legal services advocates initially opposed the legislation, the Co-Chairs of the General Assembly's Human Services Committee . . . led a successful mediation process resulting in compromise language that received the support of all parties." 

In writing about the new Connecticut Law, ElderLawGuy Jeff Marshall comments that this may be part of a "trend to make perceived 'wrongdoers' . . .  liable for unpaid nursing home costs." Further he predicts such an approach, which is an alternative to liability under filial support laws, could "spread to other states." 

See also the Elder Law Prof Blog's earlier post: "New Hampshire Establishes Liability for Agents Who Fail to File Timely Medicaid Applications."

Feel free to comment below on your views on this potential trend.

Health Care/Long Term Care, Medicaid, State Cases, State Statutes/Regulations | Permalink

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