Tuesday, February 4, 2014
On January 30, 2014, the Indiana Court of Appeals reversed a ruling in favor of a nursing home, concluding that a daughter who signed the nursing home admission agreement on the line for "responsible party/agent" was not liable for breach of contract where she held no Power of Attorney or other authority to handle her mother's finances.
In Hutchinson v. Trilogy Health Services LLC, the mother, suffering from cancer and needing constant care after a hospitalization, was admitted to the skilled care facility from November 11, 2011 until February 5, 2012. She passed away in February 2013. During the interim, Trilogy sued both the mother and the daughter for breach of contract. Following a trial, the small claims court entered judgment against the daughter in favor of Trilogy for $2,610 plus court costs. The amount of the judgment covered costs for "bed hold fees, beauty shop services and respiratory equipment."
In reversing the trial court judgment, the Indiana Court of Appeals cited the lack of any evidence the daughter held power of attorney or that daughter misused her mother's resources, as well as the son-in-law's testimony that a nursing home representative reassured his wife at the time of signing that she was not incurring personal liability for her mother's costs of care. The Court of Appeals distinguished the facts from those in cases such as Sunrise Healthcare Corp. v. Azarigian, a Connecticut appellate case decided in 2003, where the daughter held Power of Attorney and used it to make transfers that created ineligibility for Medicaid.
I hope readers will forgive me for a moment of immodesty for mentioning that the Indiana Court of Appeals also cited my law review article analyzing "responsible party" liability issues. When I wrote that article for the University of Michigan's Journal of Law Reform, it was exactly this set of facts I was pointing to with concern, where an "innocent" family member or other person signs a nursing home's document believing that doing so is necessary to authorize admission, with no intent (and sometimes no personal ability to afford) to pay privately, only later to be sued for "breach of contract" or on statutory theories such as "filial support."