Nursing Home Resident’s Son Who Filed A Medicaid Application Which Was Denied Did Not Breach Admissions Agreement

A New Jersey appeals court held that a nursing home is not entitled to summary judgment in a case alleging breach of the admissions agreement against a resident’s son based solely on the fact that Medicaid denied the resident’s application due to excess resources. Meridian Nursing and Rehabilitation Inc. v. Skwara (N.J. Super. Ct., App. Div., No. A-5369-16T1, Jan. 18, 2019)

Edmund Skwara’s mother suffered a stroke that left her mentally incapacitated, unable to speak and partially paralyzed. She was admitted to a Meridian Nursing and Rehabilitation facility. Because Ms. Skwara was incapable of entering into an admission agreement with Meridian, her son Edmund signed Meridian’s admission agreement as the “responsible party.” The agreement provided that Mr. Skwara would apply for Medicaid on his mother’s behalf and if she did not qualify, she would pay as a private-pay resident.

Pursuant to his contractual obligations under the admissions agreement, Mr. Skwara applied for Medicaid for his mother. The Medicaid application was denied due to excess resources because she owned 75 percent of a limited liability company (LLC). Mr. Skwara appealed the denial by requesting a fair hearing.  The Administrative Law Judge (ALJ) did NOT conclude that Ms. Skwara had excess resources, but found her ineligible for Medicaid because, within the 5-year look-back period, she transferred real property to the LLC which was owned by Ms. Skwara and her son Edmund. In her Final Agency Decision, the Director upheld the denial of Medicaid, but rejected the ALJ’s decision, finding that Ms. Skwara was ineligible because she owned excess resources, rather than having gifted an asset. Mr. Skwara never appealed the Final Agency Decision to the Superior Court, Appellate Division, and never filed another Medicaid application on his mother’s behalf.

Mr. Skwara’s mother’s nursing home bill went unpaid for more than 3 years. Mr. Skwara said that he couldn’t pay his mother’s bill with her assets because the LLC was insolvent.

The nursing home sued Mr. Skwara for breach of his contractual obligations under the admissions agreement. Both parties filed for summary judgment. The trial court granted summary judgment in favor of the nursing home. The trial court held that Mr. Skwara breached the admissions agreement by never appealing the Medicaid decision, filing another application, or paying for his mother’s care with her assets.

The New Jersey Superior Court, Appellate Division, reversed, holding that summary judgment in favor of Meridian was inappropriate. The court ruled that Mr. Skwara fulfilled his contractual obligation of applying for Medicaid on his mother’s behalf and he was “not liable for his mother’s cost of care based on the Medicaid determination alone.” The court also determined that more information is needed about whether Mr. Skwara could have liquidated the LLC in order to pay for his mother’s care.

Interestingly, the appeals court noted that Mr. Skwara represented that his mother did not make gifts, to deplete her assets, within 5 years in the hopes of qualifying for Medicaid in the admissions agreement with Meridian. However, Mr. Skwara breached the agreement because he engaged in business dealings with his mother two years before she was admitted to Meridian’s facility. Had the Medicaid Director found that Ms. Skwara gifted assets to defendant, Mr. Skwara may have been personally liable to repay such a gift, given his representation in the contract. But, given the Director’s contrary finding, the court held that it need not determine the proper remedy for such a breach.

The case is attached here – Meridian Nursing and Rehabilitation Inc. v. Skwara

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Donald D. Vanarelli has been a practicing attorney since 1983 in New Jersey and New York. Don provides legal services in the areas of elder law, estate planning, trust administration, special education, special needs planning and trial advocacy, including probate litigation, will contests, contested guardianships and elder abuse trials.

Don is a Certified Elder Law Attorney, an Accredited Veterans Attorney and a Past Chair of the Elder and Disability Law Section of the New Jersey State Bar Association. Don is a recipient of the Lifetime Achievement Award, the highest honor given by the New Jersey State Bar Association – Elder and Disability Law Section. The Lifetime Achievement Award is bestowed on an attorney with an established history of distinguished service who has made significant contributions in the field of elder and disability law throughout his or her career.

Don is actively involved in trial advocacy on behalf of elderly and disabled citizens. Don represented the plaintiff in a pivotal special needs trust case decided by the New Jersey Supreme Court entitled Saccone v. Police and Firemen’s Retirement System, 219 N.J. 369 (2014). He also represented the plaintiff in a seminal estate planning / guardianship case entitled In re Keri, 181 N.J. 50 (2004). Don was also co-counsel representing the plaintiff in Galletta v. Velez, Civil No. 13-532 (D.N.J. June 3, 2014) in which a federal court ruled, for the first time, that a pension from the Department of Veterans Affairs may not be counted as income in determining Medicaid eligibility.

When he’s not working, Don spends his time with his wife, Marion, and his three adult children, Julianne, Evan and Alex.