Case Confirms that Nursing Homes Cannot Hold Family Members Personally Liable for Resident’s Outstanding Invoice, Westchester Women’s Bar Association Newsletter, September, 2010
By: Virginia K. Trunkes
Many people worry about the responsibility for paying their sick relative’s bills for health services following the treatment. This is particularly true if one was named on a joint account so as to assist in paying the relative’s bills. Even patients in nursing homes who qualify for Medicaid are obligated to pay something from their funds, known as Net Available Monthly Income (“NAMI”). A recent case from Queens Civil Court should ease the anxiety of family members when the nursing home seeks payment of a NAMI bill following the resident’s stay.
In Hillside Manor Rehabilitation & Extended Care Center LLC v. Barnes, 27 Misc.3d 1229(A) (May 28, 2010, J.Buggs), prior to Mable Simms’ admission to plaintiff nursing home, she added her daughter’s name to her bank account. Ms. Simms then became a resident of the nursing home for seven months before she passed away. Following Ms. Simms’ passing, plaintiff sent bills for the unpaid NAMI amounts. After the bills remained unpaid, plaintiff sued Ms. Simms’ daughter individually (“defendant”), alleging that she retained Ms. Simms’ funds which should have been paid to plaintiff. Plaintiff asserted causes of action of breach of contract and fraud.
Defendant did not deny having access to Ms. Simms’ funds, but explained that she used those funds to pay household bills to maintain Ms. Simms’ home. Defendant also emphasized that she never signed a contract with plaintiff to pay it from Ms. Simms’ funds. The court found in favor of defendant and dismissed the complaint. The court found that there was no evidence of an agreement requiring defendant to pay plaintiff from the joint account or for any of Ms. Simms’ resources. In any event, the court determined, even if such an agreement existed, there could be no personal financial liability to defendant, because regulations of the New York State Department of Health, the Social Security Act and the Centers for Medicare and Medicaid Services all prohibit nursing homes and/or health care providers from requiring a third party guarantee as a condition to admission. See 10 N.Y.C.R.R. § 415.3(b)(1) and (6); 42 U.S.C. § 1396r(c)(5)(A)(ii); and 42 C.F.R. § 483.12(d)(2).
Indeed, the Court observed, “in the relatively thin body of case law in New York State regarding third party liability for nursing home bills,” two other courts have held that there is no such liability, even where the third party signed the nursing home paperwork. See Amsterdam Nursing Home Corp. v. Lang, 16 Misc.3d 1138(A) (SupCt. New York Co. 2007, J. Ling-Cohan) (defendant signed portion of the admission agreement which identified him as his grandmother’s “Legally Authorized Representative”); Prospect Park Nursing Home, Inc. v. Goutier, 12 Misc.3d 1192(A) (Civ Ct. Kings Co. 2006, J. Battaglia) (defendant signed the admission agreement and was later designated as attorney-infact).
Accordingly, the nursing home was compelled to find another avenue of redress. How, then, can nursing homes better ensure payment? As the Hillside Manor and the other two referenced courts noted, the same federal statute which bars a nursing home from requiring a third-party guarantee also permits a facility to “requir[e] an individual, who has legal access to a resident’s income or resources available to pay for care in the facility, to sign a contract (without incurring personal financial liability) to provide payment from a resident’s income or resources for such care.” 42 U.S.C. §1396r(c)(5)(B)(ii) (parentheses in original); see also 42 C.F.R. § 483.12(d)(2) and 10 N.Y.C.R.R. § 415.3(b)(1),(b)(6). By virtue of the statute’s exact language, to collect on the unpaid bill the facility must show that the defendant has “legal access” or “control” over the resident’s funds, and that the resident’s income or resources are available to pay for the care. “Legal access” can be demonstrated via a durable power of attorney which allows the attorney-in-fact access to the principal’s funds. See Prospect Park, at *4. Proof of available “income or resources” may be shown via a current Medicaid budget identifying the source of the resident’s income. Cf. Prospect Park, at *5 (the plaintiff made no showing that the income identified in the Medicaid budget was available to pay for care in the facility since the defendant has held the Power of Attorney). Otherwise, the facility may have to provide evidence of a bank account to which there is access, and the amount of funds therein. See id. Engaging in discovery to obtain that information may be necessary.
It may appear that the courts have uniformly placed a heavy burden on the nursing homes – which understandably should be paid for the care they have provided. Certainly a nursing home should not be discouraged from accepting a Medicaid patient because of difficulties in collecting his NAMI share.
The impediments to collecting on an unpaid invoice, however, must be viewed with a consideration for caregiver family members. As the Prospect Park court commented, “neither should the relatives and friends of the elderly and infirm be discouraged from participating in their care by fear of potentially crippling personal financial responsibility.” Id, *5. Thus, if the heavier burden on the facilities is necessary to assure families that they can procure needed care for a loved one without having to assume personal responsibility for the charges, then an appropriate balance has been achieved.