The general background. Nursing homes continue to feel the same financial squeeze that individuals and families have been feeling. As a consequence, we have noticed much more aggressiveness by nursing homes in going after all potential sources of payment for unpaid nursing home charges. Typically, an account for a resident is unpaid during a gap in coverage for the nursing home resident: Medicare and/or private insurance coverage has ended, and Medicaid eligibility has not been established. With private pay rates in Connecticut averaging $10,000.00 and more per month, a 3 month gap can put quite a dent in the nursing home’s financial structure.
The underlying facts of a recent case, Aaron Manor, Inc. v. Janet A. Irving. William Ammon was admitted to Aaron Manor, a skilled nursing facility, on October 29, 2002. The Patient/Resident Admission Agreement (“Agreement”) was signed by his daughter, Janet Irving, as a “responsible party”. The Agreement included a paragraph that said “if the responsible party has control of or access to” the resident’s income and/or assets, the responsible party agrees to use the funds for the resident’s welfare, including “making prompt payment for care and services rendered to the Patient.”
Medicare paid for the cost of Mr. Ammon’s care from the date of his admission March 1, 2003. There was no coverage from March 1, 2003 through June 11, 2003. On June 11, 2003 coverage for the cost of care resumed through private health insurance. So, the gap in coverage was between March 1, 2003 and June 11, 2003 during which time charges totaled $27,340.00.
Mrs. Irving was not the conservator of her father’s estate, nor had her father appointed Mrs. Irving as his attorney-in-fact pursuant to a Durable Power of Attorney Instrument. In fact, Mr. Ammon had appointed his son, William Ammon, Jr., as his attorney-in-fact to make financial decisions for him. This had been disclosed to Aaron Manor at the time of Mr. Ammon’s admission.
What must have irked Aaron Manor is that during the time between March 1, 2003 and June 11, 2003, Mr. Ammon had enough money in the bank to pay his bills, he owned stock in publicly traded companies, had certificates of deposit, and owned his home. Moreover, during that same period of time Mr. Ammon, Jr. made gifts of his father’s assets to himself and his sister, and reimbursed his sister (Mrs. Irving) for money she previously had spent to buy things for their father.
The lawsuit. Aaron Manor sued Mrs. Irving seeking to recover from her the unpaid charges of $27,340.00. The theory of Aaron Manor was that Mrs. Irving, as the “responsible party”, had breached the terms of the Agreement by receiving money from her brother and not applying it towards the unpaid charges of her father. The trial court found in favor of Mrs. Irving and Aaron Manor appealed that finding to the Connecticut Appellate Court. The Connecticut Appellate Court decided the case in an opinion officially released on February 22, 2011. You can find the opinion of the Court at 126 Conn. App. 646. The Court found that Mrs. Irving did not have “control of or access to” her father’s funds. Since this was an essential predicate to finding a breach of the terms of the Agreement, the trial court was correct in deciding the case in favor of Mrs. Irving. The money given to her by her father (acting through her brother as her father’s attorney-in fact) became Mrs. Irving’s property as soon as she received the money; she had no legal obligation to use her money to pay her father’s bills.
Why didn’t Aaron Manor sue Mr. Ammon, Jr.? There was no contractual undertaking between Aaron Manor and Mr. Ammon, Jr. Moreover, the mere fact that he is his father’s attorney-in-fact creates no statutory or common law basis for establishing such liability. That issue was decided by the Connecticut Appellate Court on November 23, 2010 in the case of Kindred Nursing Centers v. Morin, which can be found at 125 Conn. App. 165.
The lesson to be learned? Be assured that nursing homes will continue to look for all sources of potential payment for the cost of care. If you are admitting a family member be cautious about what you sign, particularly if you are an attorney-in-fact or Court appointed conservator for the person being admitted.