A nursing home resident’s adult child who signs an admission agreement as the “Responsible Party” can be sued in his/her individual capacity for services rendered to the resident, if the adult child fails to use the resident’s financial resources to pay for care provided by the facility. Manahawkin Convalescent v. O’Neill, 217 N.J. 99 (2014).

In February 2007, Elise Hopkins became a patient at Manahawkin Convalescent Center. Her daughter, plaintiff Frances O’Neill, signed the admission agreement as “Responsible Party.” Plaintiff assigned her mother’s Medicaid benefits to Manahawkin, and paid her mother’s monthly Social Security benefits to the nursing home. Plaintiff made all required payments until her mother’s death in June 2008. Plaintiff disputed an outstanding balance due of $878.20 for the final month of care, for which Manahawkin sought payment from plaintiff.

After several collection attempts, Manahawkin filed a lawsuit to compel plaintiff to pay the outstanding debt. Plaintiff filed an answer, a counterclaim and a third-party complaint alleging, among other things, that the admission agreement required a third party to incur personal financial liability for Medicaid and Medicare patients contrary to the Nursing Home Act, and that it also violated the Consumer Fraud Act.

After the trial court granted summary judgment in favor of defendant, the appellate court affirmed, holding that, contrary to plaintiff’s claim, defendant was not attempting to hold plaintiff personally financially liable for her mother’s debt just because it filed a lawsuit against plaintiff as the responsible party. The Appellate Division found that,

there was no implicit or explicit action taken by defendant to hold plaintiff personally financially liable for her mother’s debt. … [Under New Jersey law,] a facility may require [an] individual [with legal access to a resident’s income or resources available to pay for facility care pursuant to a durable power of attorney] to sign a contract to provide payment to the facility from the resident’s income or resources without incurring personal financial liability. [That was done in this case. Therefore,] the effort to collect the outstanding debt from plaintiff, as the responsible party, was not unlawful. …

I blogged about the Appellate Division decision here.

The New Jersey Supreme Court granted plaintiff’s petition for certification and affirmed the decision of the Appellate Division. The Supreme Court, like the Appellate Division, held that the facility’s admission agreement did not violate either the Nursing Home Reform Act or the Consumer Fraud Act. The Supreme Court’s opinion is annexed here – Manahawkin Convalescent v. O’Neill

As these New Jersey cases and other recently decided cases in other states demonstrate, nursing homes often seek to hold family members who signed the nursing home admission agreement as a “responsible party” personally liable for the unpaid bills of parents and other facility residents.

The New Jersey Supreme Court case is annexed here – Manahawkin Convalescent v. O’Neill

A Connecticut case is annexed here –  Meadowbrook Center v. Buchman

As these and other litigated cases show, individuals must understand the significance of nursing home agreements before signing. Family members who are involved in the admission process for a parent or loved one should seek legal advice from specialists in state Medicaid law before signing an admission agreement or similar documents. Further, family members are also advised to seek legal help again if any problems arise during the Medicaid application process.

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