Helen Hosta of Cuyahoga County, Ohio, was admitted to Century Oak Care Center in February 2001. Mrs. Hosta was unable to sign the Century Oak admission agreement, so her daughter, Roberta, signed for her.

After Mrs. Hosta’s Medicare coverage ran out in March, 2001, her daughter Roberta and another daughter, Lynn Straka, applied for Medicaid to cover the nursing facility bills. Because she had financial resources in excess of Ohio’s Medicaid eligibility limits Mrs. Hosta failed to qualify for Medicaid coverage for another eight months.

Century Oak filed suit in August 2001 against Lynn Straka for non-payment of Mrs. Hosta’s bill. Ms. Straka answered the complaint claiming that she had no liability since she did not sign the contract with Century Oak, and Medicare and Medicaid regulations prohibit holding third parties liable for a patient’s bills. Ms. Straka also counterclaimed that Century Oak’s contract constituted negligent and false misrepresentation, and that the admission agreement contained the false and misleading statement that "’it is a federal crime to unlawfully divest assets to become Medicaid eligible.’"

Century Oak dismissed its claim against Ms. Straka after learning that she had not signed the care agreement. Century Oak pursued Mrs. Hosta for payment, but it also dismissed that lawsuit when payment was received. Ms. Straka, however, pursued her counterclaim against Century Oak for its alleged violation of federal and state law. The Ohio trial court dismissed Ms. Straka’s claim, and last month the Ohio Eighth District Court of Appeals upheld the trial court ruling. SWA, Inc., dba Century Oak Care Center v. Lynn Straka, June 19, 2003.

The Ohio courts found that Ms. Straka had no standing to pursue damages since she was not a party to the Century Oak contract. Interestingly, the Ohio court went further by saying that even if Ms. Straka could have sued her claim would have been over-reaching. Though Ms. Straka argued that Century Oak could not sue a third-party for a patient’s non-payment, the Ohio court pointed out that the federal law relevant to nursing facility admissions only prevents the facility from requiring someone else to guarantee payment as a condition of admission.

Although nursing homes can not require a third party to guarantee payment, someone with access to the patient’s funds (like a conservator or agent under a power of attorney) may be sued for non-payment. Anyone signing a nursing home admission contract should of course read it carefully and seek appropriate legal advice.

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