Responsible Party Provisions in Nursing Home Admissions Agreements

March 2nd, 2015 by beasleyferber

When someone is admitted to a nursing home for custodial (long-term) care, the family is presented with a set of admissions documents and contracts to sign.  Often, there might be pressure to have the person admitted quickly, and there might not be time to thoroughly review the documents, which can be 20-plus pages.   One of the concepts in the admissions documents is that of “Responsible Party.”  Usually, the Responsible Party is the resident’s power of attorney holder.  The concept of Responsible Party is frequently left vague, and is not adequately defined.  For example, is the Responsible Party merely the “contact person, ” i.e., the person who gets the mail?  Is the Responsible Party the person who uses the resident’s funds to pay the nursing home bill?  Both of these are straightforward.  But, sometimes a nursing home will bury an important concept in the papers, and this is an agreement by the Responsible Party to personally guarantee payment of the nursing home charges.  Obviously, this is what you need to be very careful about, and never agree to sign.

The recent court case of Andover Village Retirement Community v. Cole, a 2014 case out of Ohio, shows how you can get in trouble over a Responsible Party agreement.  In that case, Mrs. Cole’s son Richard was her power of attorney, and he admitted his mother to the nursing home.  In connection with the admission, he signed an admission agreement which stated that he was the “Responsible Person.”  As Responsible Person, he agreed to pay the nursing home out of his mother’s funds.  The agreement also stipulated that he was not personally responsible for the charges.  Despite this, he signed a separate agreement whereby he voluntarily assumed personal responsiblity for his mother’s charges.  After she died, the nursing home sued him for the balance due.   The trial court ruled against him, and he appealed to the Ohio Court of Appeals.  The Court of Appeals also ruled against him, on the ground that he signed two separate and distinct contracts, and the fact that they said different things was not relevant.

In our opinion, the Ohio court reached the wrong decision.  This is because Federal Law specifically prohibits a nursing home from requiring a family member or friend to become personally liable for the nursing home charges.  The law is Title 42, US Code Sec. 483.12(d)(2), which says, “The facility must not require a third party guarantee of payment to the facility as a condition of admission….”   The rationale behind this law is simple, i.e., since Medicaid is available to pay the charges of residents who run out of money, there is no reason for a nursing faciltiy to look to family members or friends for payment.

Despite the clear prohibition in federal law, Mr. Cole got in trouble.  The lesson to be learned is this:  Look for the Responsible Party language, and read it carefully.  If there is language which seems to require you to be personally liable, cross it out and initial the cross-out.  Your right to do this is protected by the federal law cited above.

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