Elder Law of Louisville's Blog

Tuesday, January 18, 2011

Daughter Not Responsible for Dad's Nursing Home Bill

A Massachusetts trial court rules that a daughter who signed a "Financial Responsibility Agreement" upon her father's admission to a nursing home is not responsible for unpaid medical expenses following the father's failure to properly apply for Medicaid benefits when his personal funds ran out. 34 Lincoln St., Inc. v. Estate of Grace, (Mass. Sup., Middlesex, No. MICV2009-00618, Nov. 1, 2010).

In 2006, Arthur Grace, moved into the Riverbend nursing home. Although Mr. Grace was competent at the time, his daughter, Catherine Grace, acting in her individual capacity and not as her father's attorney-in-fact or guardian, helped Mr. Grace with the admission paperwork. Although Mr. Grace signed the majority of the paperwork himself, Ms. Grace, along with a nursing home representative, signed a "Financial Responsibility Agreement" as the "Responsible Party," but Mr. Grace did not sign the document as the "Patient."
A year later, Mr. Grace ran out of money and Ms. Grace assisted him with a Medicaid application, which was denied after Mr. Grace failed to file the proper back-up documentation. Mr. Grace continued to live at Riverbend, without submitting any further payment, until his death in 2008. Riverbend subsequently filed suit against Ms. Grace for breach of contract, unjust enrichment and breach of fiduciary duty, alleging that she had a responsibility under the Financial Responsibility Agreement to pay the balance of Mr. Grace's bill. Ms. Grace filed a motion for summary judgment, claiming that the Financial Responsibility Agreement was too vague, and that her role as a signatory was not properly defined in the document.
The Superior Court of Massachusetts, Middlesex Division, grants Ms. Grace's motion for summary judgment. The court explains that "[i]n order to have an enforceable contract, Riverbend must show the existence of mutual promises set forth in a manner that might intelligibly be understood as imposing specific obligations upon the parties . . . [t]his agreement, drafted by Riverbend, does not by its express terms impose upon [Ms. Grace] the obligations which Riverbend seeks to assert". The court distinguishes its ruling from several prior Massachusetts cases in which courts found that surviving relatives were responsible for patients' bills because the relatives used powers of attorney to divert funds into their names and away from the nursing home in an attempt to avoid payment.

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