85 CBJ 283. NURSING FACILITY COLLECTION CASES: RESPONSIBLE PARTY LIABILITY.

• Author: By Carmine Perri(fn*)

Connecticut Bar Journal

Volume 85.

85 CBJ 283.

NURSING FACILITY COLLECTION CASES: RESPONSIBLE PARTY LIABILITY

Connecticut Bar JournalVolume 85, No. 3, Pg. 283September 2011NURSING FACILITY COLLECTION CASES: RESPONSIBLE PARTY LIABILITYBy Carmine Perri(fn*)Nothing signals the onset of advanced age like admission into a nursing facility. Humans, over decades, build and customize the location that we spend most of our time, our homes. At some point, however, when one needs assistance to carry on with his or her activities of daily living, a nursing facility provides an environment where a family member can live safely and comfortably.(fn1) Upon admission into a nursing facility there is an admission interview that includes the signing of a resident admission agreement (herein the "admission agreement"). The admission agreement is a contract between the resident and the nursing facility for the care and services it provides. The admission agreement, in addition to having a location for the resident to sign, also has multiple locations where a responsible party can sign.(fn2) This article focuses on what, if any, liability a responsible party incurs by virtue of signing the admission agreement. The article also discusses a recent case in which a nursing facility sought to buttress its collection arsenal by seeking to impute statutory liability on a resident's spouse merely because she said the words "I do," decades ago.(fn3)

1. Introduction To The Responsible Party

   The Nursing Home Reform Act, found in Sections 1395i-3 and 1396r of Title 42 of the United States Code, imposed sweeping changes on nursing facilities that are certified to accept payment from the Medicare or Medicaid programs.(fn4) Under the Nursing Home Reform Act, a nursing facility cannot require a family member or friend to sign the admission agreement as a condition of admission into the nursing facil-ity.(fn5) Not coincidentally, Title 19a of our General Statutes provides a nursing facility cannot require a third-party guarantee of payment as a condition of admission into the nursing facility.(fn6)

   So, if the responsible party is not guaranteeing payment as a condition of the resident's admission into the facility, what, if any, liability would the responsible party incur by virtue of signing the admission agreement in the first place?(fn7) A brief review of basic contract law followed by specific cases where responsible parties are defendants should help us locate the moving boundaries of responsible party liability.(fn8)

   The first issue is whether the responsible party is either a party to the admission agreement or a third-party beneficiary of it. In addressing the principles of contract law in a case recently before it, the Connecticut Supreme Court stated, "we set forth a general principle so fundamental that it rarely receives mention in case law or commentary, namely, that only parties to contracts are liable for their breach."(fn9) The Court cited language from a Montana Supreme Court case that addressed liability of parties to a contract and third parties to the contract.The obligation of contracts is limited to the parties making them, and, ordinarily, only those who are parties to contract are liable for their breach. Parties to a contract cannot thereby impose any liability on one who, under its terms, is a stranger to the contract, and, in any event, in order to bind a third person contractually, an expression of assent by such person is necessary.(fn10)

   In an attempt to bind responsible parties contractually, nursing facilities commonly argue that the responsible party assented to duties proscribed for them in the admission agreement. For that reason, the result is often going to be governed by the specific language in the applicable contract. A resident admission agreement from a nursing facility in Connecticut advises the responsible party of the following:Responsible Party. The Responsible Party does not personally guarantee or serve as surety for payment for the care provided to the Resident by the Facility unless the Responsible Party specifically signs a Voluntary Surety Agreement. The Responsible Party acknowledges and agrees that he or she wants the Resident to be admitted to the Facility and to receive the care and services provided by the Facility; that he or she is making certain promises in this Agreement; and that the Facility is admitting the Resident and providing care and services in reliance upon these promises. The Responsible Party is personally liable for any damages incurred by the Facility due to the Responsible Party's failure to fulfill these promises. Nothing in this paragraph is intended to eliminate any other legal obligation that the Responsible Party may owe to the Resident or the Facility by virtue of the Responsible Party's status as conservator or holder of a power of attorney.(fn11)

   A look at how the Appellate Court drew an analogy to trustee liability and how the term is defined in a sample resident admission agreement will provide insight for this analysis. on similar language, in part, to the language above, the Appellate Court in Sunrise Healthcare Corporation v. Azarigian,(fn12) compared the relationship between a responsible party and a resident to that of a relationship between a trustee and a beneficiary saying, "a trustee must act in accordance with the terms of the trust instrument."(fn13) "Accordingly, if the [responsible party] acted in breach of the [admission agreement] by not using the [resident's] assets as the contract required, then she is responsible for reimbursing the plaintiff."(fn14)

   In looking at the scope of a responsible party's obligations to the nursing facility, the Appellate Court also stated that responsible party obligations "extend well beyond [a responsible party's] role as [a resident's] power of attorney . . . [because] the trial court reasonably could have determined that the [responsible party], in carrying out her obligations under the contract, was not acting exclusively as [the resident's] power of attorney."(fn15) Put differently, the responsible party is more than just the resident's agent and as such has an obligation to the nursing facility pursuant to the terms in the admission agreement.

   Results will be different on different facts. Thus, a review of case-law will prove helpful in showing how Connecticut courts have applied the facts in each case, specifically liability under various admission agreements, to the law.

2. Responsible Party Liability: A Case-By-Case Analysis

   Responsible party liability has been shaped over the past three decades of case-law. The cases are easily categorized by the end result, whether the responsible party is liable for the debt owed or not.

   1. Cases Where the Responsible Party is Liable for the Debt Owed

      In the following cases, the responsible parties, all of whom were family members of residents, were held liable to the nursing facility for the debt owed to it.

      In Sturman v. Socha,(fn16) a case decided prior to the Nursing Home Reform Act, a balance was owed to the nursing facility because state payment did not fully cover the cost of services rendered to the defendant responsible party's father. The...