The background. This case focused on the question of personal liability of an individual who signed an agreement as a “responsible party” when admitting his mother to a nursing home. Nursing home contracts drafted by the facilities often ask for a responsible party to sign as an agent for residents who lack capacity to contract. This signing requirement can create a blurred line of responsibility for these third-parties. The facility may point to some “no personal liability” language in the agreement, however, if something goes wrong with the Medicaid application the facility will likely look to that responsible party as having the obligation to fix the problem or otherwise face potential personal liability.

The case. Maude Buchman, who was suffering from dementia, was admitted to a skilled nursing facility, Meadowbrook Center (“plaintiff”), in November of 2006. Her son, Robert Buchman (“defendant”), entered into an agreement with the plaintiff to provide care for his mother. The agreement identified the defendant’s mother as “the resident” and the defendant as “the responsible party.” The relevant part of the agreement stated that Maude would be responsible for paying for her care unless Medicaid or another third party made payment. Another part of the agreement stated that Maude and the responsible party, the defendant, agree to make prompt application for Medicaid assistance to the Connecticut Department of Social Services (“DSS”) when Maude’s assets were insufficient to pay for her care.

As it turned out, the defendant was not diligent in pursuing his mother’s Medicaid application.  By the time of Maude’s death, the unpaid balance due to the plaintiff for her care was $99,820.78. The plaintiff sought to recover damages from the defendant for breach of contract because the defendant had signed the admission documents as the responsible party. The plaintiff alleged that the defendant breached the agreement when he failed to provide DSS with certain requested information for his mother’s Medicaid application in a timely fashion. The parties stipulated that if DSS had granted the mother Medicaid benefits, DSS would have paid the facility $47,561.18. The Trial Court rendered judgment for the plaintiff, awarding damages of $47,561.18.

The appeal. The defendant appealed, claiming that the award of damages was impermissibly speculative because the record did not disclose any evidence indicating that his conduct was the cause of those damages. The majority of the three judge panel came to the conclusion that the defendant, who signed the agreement as the responsible party, could not be held liable based on the evidence, or lack of evidence, presented at trial.

The evidence did establish that the defendant failed to provide all the information requested by DSS and therefore breached his duty as a responsible party under the agreement. However, the majority concluded that he could not be held liable because there was “no evidence in the record… indicating that, had the defendant complied with his obligations under the agreement, the plaintiff would have received any Medicaid payments.”

In other words, the nursing home proved that the defendant breached the contract, but did not prove that his breach was the legal cause of damages, even though “the parties stipulated…that if the department granted Medicaid benefits to the defendant’s mother, the department would have paid the facility $47,561.18.”  The ruling focuses on the fact that the “if” exists here.

A concurring opinion, written by Judge Schaller raised another issue, apparently not briefed by the parties. Judge Schaller took the position that federal Medicaid law and Connecticut’s patients’ bill of rights preclude a nursing home from imposing liability on a responsible party unless the responsible party has been shown to have misappropriated the resident’s resources, because without that personal fault, the responsible party agreement becomes a “guaranty,” prohibited by federal Medicaid law And Connecticut’s patient’s bill of rights The majority, however, “strongly” rejected that analysis.

The future. You can expect more litigation between nursing homes and family members who sign admission agreements as responsible parties. Although there may have been many other defenses to Meadowbrook’s claim, the failure of Meadowbrook to offer any proof that the defendant’s breach of contract was the legal cause of damages is as far as the Court needed to go.  If you are a family member being asked to sign an admission agreement, it would be prudent to have it reviewed in advance by legal counsel. You want to help your family, but, at the same time, you don’t want to put your own assets at risk by doing so.