An appeals court held that an agreement to apply for Medicaid benefits for a nursing home resident made by the resident’s guardian or family members may be legally enforceable by the nursing facility in which the resident resides. Pine Brook Care Center v. D’Alessandro, Docket No. A-3197-18T1 (NJ Appellate Division, November 23, 2020)

In April 2014, Michael D’Alessandro was found to be “a vulnerable adult and an incapacitated person,” and the court appointed Michael’s three daughters, Maryanne D’Alessandro (Maryanne), Nancy D’Alessandro (Nancy), and Antoinette Senft (Antoinette) as their father’s co-guardians.

Two years later, in October 2016, Michael was admitted to Pine Brook Care Center, a long-term nursing facility. Although Pine Brook accepts Medicaid benefits in payment of its residents’ fees and costs, Michael was admitted as a private-pay-rate resident because he was not financially qualified for Medicaid at the time. However, Antoinette informed the facility’s admission director that she was working with a third-party service to begin the Medicaid application process.

The facility’s admission director later reached out to Antoinette, Nancy, and Maryanne to determine the status of the Medicaid application for Michael. The admission director inquired about the status of the third-party service that was assisting the co-guardians  in the Medicaid application process, but she was told at first that the application would be handled by an attorney instead of the service. However, that did not occur. The director then offered Antoinette “assistance in completing the application,” but the offer was declined. The director was finally told the family would file the Medicaid application themselves. The admissions director cautioned the family that it was their responsibility to obtain Medicaid benefits for Michael.

One year after Michael’s admission to the nursing home, Maryanne first applied for Medicaid benefits on Michael’s behalf. The Monmouth County Board of Social Services (MCBOSS) determined that Michael was medically eligible for Medicaid benefits, but requested additional documentation to establish his financial eligibility. MCBOSS established a deadline for submission of the requested information and extended the deadline at Maryanne’s request, but it denied the application because the requested information was not supplied. MCBOSS later agreed to re-evaluate the application if Maryanne supplied the requested information, but the information was never supplied. No further efforts were made by Maryanne, Antoinette, or Nancy to obtain Medicaid benefits on Michael’s behalf. However, Michael somehow was approved for Medicaid benefits effective September 21, 2018, almost two years after he was first admitted to Pine Brook.

The court discharged Antoinette and Nancy as Michael’s guardians “for health reasons.” Thereafter, Maryanne served as Michael’s sole guardian.

In August 2017, Pine Brook filed a collection complaint for sums due for nursing home services rendered to Michael. Plaintiff claimed that the facility provided $212,992.03 in services to Michael, plaintiff received only $31,699 on his behalf, and plaintiff was owed $181,293.03 for the outstanding balance.

In count one of the complaint, Pine Brook asserted a claim against Michael for the sums due. The remaining counts of the complaint were asserted against Antoinette, Nancy, and Maryanne, claiming they were personally liable for sums due for Michael’s nursing home care.

Antoinette and Nancy each filed an answer to the complaint containing a crossclaim against Maryanne, alleging she breached her duties as guardian by failing to obtain Medicaid benefits for Michael. They also filed counterclaims alleging, among other claims, that plaintiff’s attempt to impose liability upon them “constitute[d] an unfair, deceptive and/or fraudulent trade and/or commercial practice”; violated “the Nursing Home Reform Act of 1987, violated the New Jersey Consumer Fraud Act. Maryanne also filed an answer, but it did not include a counterclaim or crossclaim.

After discovery concluded, defendants filed motions for summary judgment, which the court granted. The court determined plaintiff’s claims against the co-guardians were barred because state law precluded the imposition of personal liability against Antoinette, Nancy, and Maryanne for nursing home services provided to Michael. The court found the law “prohibits plaintiff from seeking payment for outstanding bills directly from . . . defendant[s’] assets.” The court also granted a motion filed by plaintiff and entered an order awarding plaintiff summary judgment on the counterclaims. Other motions filed by the parties were denied.

All the parties appealed. The appeals court reversed the lower court’s orders granting summary judgment on plaintiff’s claims against defendants. The appellate court held as follows:

In sum, the [law] provides only that a nursing home may not require a third-party guarantee of payment as a condition of a nursing home resident’s admission or continued residence. A nursing home, however, may require that an individual who has control over a resident’s income and assets agree to pay for the resident’s care from that income and those assets without incurring any personal financial liability. The statute does not prohibit a nursing home from requiring that an individual enter into an agreement other than a guarantee of payment, and the statute does not immunize individuals from personal liability based on contractual obligations undertaken that are not proscribed by [the law]., or that are founded on alleged tortious conduct.

The appeals court specifically discussed the co-guardians promise to apply for Medicaid  benefits on Michael’s behalf, holding that promise may be legally enforceable:

We observe, however, that an agreement to make an application for Medicaid benefits on Michael’s behalf is not a guarantee of payment or an agreement to pay proscribed by [state law]. By making any purported agreement to apply for Medicaid payments, neither Antoinette, Nancy, nor Maryanne guaranteed payment for the costs of Michael’s nursing home care or agreed to pay those costs. Thus, any such agreement, if proven, does not run afoul of [state law] and is not unenforceable under its terms. An agreement to apply for Medicaid benefits is just that—a commitment to assist the resident in obtaining Medicaid benefits so those benefits pay for his or her care. A failure to honor that commitment does not convert an agreement to apply for Medicaid benefits into a guarantee of payment or an agreement to pay the resident’s costs of care [,prohibited under state law].

Finally, the appellate court vacated the orders granting plaintiff summary judgment on Antoinette’s and Nancy’s counterclaims and denying defendants’ requests for attorney’s fees award, and remanded the lawsuit for further proceedings in the trial court. .

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