Fleming & Curti, P.L.C. - Do Not Sign As “Responsible” On Nursing Home Agreement

MAY 7, 2007 VOLUME 14, NUMBER 45

Do Not Sign As “Responsible” On Nursing Home Agreement

It is a common—though arguably illegal—practice in the nursing home industry. While the family is in crisis, worrying about placement of an ill parent (or other family member), and unsure about the availability of public benefits, nursing homes routinely offer form admission agreements for signature as “responsible party.” It is important that family members not sign in that capacity.

Consider what happened to Helen Henderson’s family. When she was first admitted to the Extendicare Health Services Facility in Minnesota, her son Brett signed the admission agreement on the line marked “responsible party.” Buried in the pre-printed form contract was a provision that defined the term, including his assurance that he had access to his mother’s money and agreed to use it for her care. He did not sign as “guarantor,” which would have indicated his promise to pay for her care with his own money.

At first Ms. Henderson’s care was paid for by insurance. When that coverage ran out, and a Medicaid application was denied because she had too much in available resources, the facility went unpaid for some months. When, a year after her admission, Ms. Henderson died, she left an unpaid bill owed to Extendicare.

Ms. Henderson’s son Craig handled her estate, but Extendicare failed to make a formal claim for payment from her assets before the time period ran out. Instead, Extendicare sued both Brett and Craig.

Craig had not made any promises to the facility (that is, he had not signed the admission agreement himself). Brett had signed as “responsible party,” but there was no evidence that he actually did have access to his mother’s funds. Consequently the trial judge dismissed the complaint against both brothers.

The Minnesota Court of Appeals agreed with that result. It also chided the facility for its questionably legal practices—the preprinted form gave family members no option except to sign as “responsible party,” and “a nursing home that offers no alternative to the type of form admissions agreement that Brett Henderson signed here is in danger of violating the statute governing nursing-home admission contracts.” Extendicare Health Services, Inc., v. Henderson, April 3, 2007.

So if Craig and Brett Henderson prevailed in their dispute against Extendicare, why do we point to this case as evidence that family members should refuse to sign as “responsible party”? Because this case turned on Minnesota statutes that are not the same in other states (including Arizona), though the result is likely to be the same in those states. And because the Hendersons had to devote time, money and mental anguish to a lawsuit that should not have been, but was, filed.

What can you do to protect against the Hendersons' problem if you have to admit your parent or other family member to a facility? First, do not sign as "responsible party," and definitely do not sign anything that indicates that you are willing to be a "guarantor" or similar term. Read the contract, and have it reviewed by your lawyer. If time does not permit a closer review, sign the contract by writing out, for instance, "Helen Henderson, by her attorney-in-fact Brett Henderson" (assuming you have a power of attorney), or "Brett Henderson, only in his capacity as attorney-in-fact." Draw a line through the phrase "responsible party" if there is no other signature choice in the contract. Strike out any provisions that appear to indicate you promise to pay your family member's bills yourself—though the facility may insist on the contract being signed without changes (and might even refuse to accept your loved one as a patient if you insist on making changes). If you have already signed such a contract, do not panic—but visit an attorney immediately to find out if you can reverse the promise to pay from your personal assets.

The bottom line is that federal law prohibits nursing homes from requiring a guarantee of payment from family members as a condition of admission. If you have signed such a promise, it is likely to be unenforceable under any of several legal theories—but you should not take that chance.