Publications: Legal Matters - Create Contracts to Hold Families Responsible

Question -

We’d like to get more relatives taking responsibility for deceased residents’ unpaid bills. What is effective to include in admission agreements as to having children sign on as guarantors, etc.? When can we make someone else sign on the dotted line if there is reluctance on relatives’ part?

Answer -

Although the Medicare Conditions of Participation prohibit a nursing home from conditioning an individual’s admission to, or continued stay at, a facility on a third party guarantee of payment, the Conditions of Participation expressly state that a facility “may require an individual who has legal access to a resident’s income or resources available to pay for facility care to sign a contract, without incurring personal financial liability, to provide facility payment from the resident’s income or resources.” 42 C.F.R.§483.12(d)(2); see also 42 U.S.C. 1396r(c)(5)(B)(ii).

A court recently reviewed these laws and upheld a breach of contract claim brought by a nursing home against a resident’s daughter who had signed the facility’s admission contract as a responsible party, on the basis that the daughter had failed to use her mother’s funds ( to which she had access as her mother’s power of attorney, to pay for the cost of care at the facility. Sunrise Healthcare Corp. v. Azarigia 821 A.2d 835,76 Conn.App.800 (2003).

If the responsible party has control of or access to the resident’s income and/or asset the responsible party agrees that these funds (shall be used for the resident’s welfare, including but not limited to, making prompt payment in accordance with the terms of this agreement.

The court rejected the daughter’s argument that such language constituted a third party guarantee of payment in violation of the Conditions of Participation. Instead, the cow ruled that the daughter had violated her obligation under the contract when she transferred, some of her mother’s assets for estate planning, purposes and hired a personal companion for her mother.
The court concluded that since the daughter had failed to use her mother’s fund as required by the admission contract, she had breached the contract and was financially liable to the facility.

Reproduced with permission from McKnight's Long-Term Care News

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