Agent Under Power of Attorney Liable for Damages to Nursing Home for Breach of Contract

Nursing homes have devised numerous strategies to legally seek reimbursement from residents' family members in light of federal and state laws prohibiting them from demanding that family members personally guarantee payment of  a resident's nursing home bill. The Nursing Home Reform Act (NHRA), for example, which governs skilled nursing facilities and nursing facilities accepting Medicare and Medicaid assisted residents facilities cannot “require a third party guarantee of payment to [its] facility as a condition of admission (or expedited admission) to, or continued stay in, [its] facility.” 42 U.S.C. § 1395i–3(c)(5)(A)(ii); 42 U.S.C. § 1396r(c)(5)(A)(ii); see also 42 C.F.R. § 483.12(d)(2).  

Nursing Home admission agreements are, therefore, filled with alternate provisions, such as those requiring that family member or agents assist in obtaining Medicaid or other government assistance, or those requiring family member agents to ensure that the resident's assets are spent down on nursing home care.  Planners are concerned that these provisions might negate or interfere with otherwise lawful spend down strategies, such as spending assets for improvement of a home, or for purchase of a car for a resident's spouse.  

Supporting these efforts to find alternative reimbursement is a recent decision by an Ohio Court of Appeals.  The Court ruled in favor of a nursing home suing a resident's agent for breach of contract, holding that the nursing home is entitled to damages if the agent had control of liquid assets at the time the nursing home invoice came due even though some of the assets were paid to maintain the resident's home. Classic Healthcare Systems, LLC v. Miracle (Ohio Ct. App., 12th Dist., No. CA2017-03-029, Nov. 13, 2017).

David Miracle was his mother's agent under a power of attorney. When his mother entered a nursing home, he signed the admission agreement on her behalf and agreed to use his mother's finances to pay the facility. Mr. Miracle paid the nursing home infrequently, and his mother owed more than $100,000 by the time she was discharged.

The nursing home sued Mr. Miracle for breach of contract. Evidence showed that Mr. Miracle used $56,486.63 of his mother's resources to maintain her real estate and spent an additional $12,971.54 on payments not related to his mother. The trial court found that the additional payments were unauthorized and awarded the nursing home damages in that amount. The nursing home appealed, arguing that it was also entitled to the money that was used to maintain Mr. Miracle's mother's home.

The Ohio Court of Appeals reversed and remanded the case to the trial court.  The Court held that the nursing home is entitled to damages for breach of contract if Mr. Miracle "had control over liquid assets at the time an invoice came due." The court ruled that the trial court improperly looked at the entire nursing home stay as one transaction. According to the court, if Mr. Miracle "had control of [his mother's] liquid assets on the due date that were not paid to [the nursing home] then that amount constitutes damages properly payable to [the nursing home]."

For the full text of the opinion, go here. 

Patients Are Not Given Quality-Of Care Information When Discharged From Hospitals to Nursing Homes

"Aging in Place" as a discreet estate planning objective requires knowledge, planning, and proper assessment of risks.  One persistent risk is the health care system's incentivizing institutional care.  Another risk is that of short term institutional care turning what should be a short term need for care into a long term or permanent need for institutional care.  

These are important risks given that a significant number of nursing home residents are shorter-term residents who are recuperating from surgery or illness. A recent study centered on the information provided when patients are discharged from hospitals to nursing homes, and they or their families are tasked with choosing a post-acute care facility.

As a result of regulations and incentives imposed by CMS and the Affordable Care Act, hospitals began being held partly accountable for Medicare patients’ care after discharge. The process of patients choosing a post-acute care facility was, however, a subject of speculation.

Researchers have recently illuminated the process.  Researchers used a case study approach to determine how patients select a post-acute care facility. The study explored how patients requiring post-acute care decide which skilled nursing facility to select. Further, the study examined the role of hospital staff members in the patients’ decision-making process.

Researchers interviewed 138 staff members of 16 hospitals and 25 skilled nursing facilities, as well as 98 patients in 14 of the skilled nursing facilities. The study found that most patients reported that they received only lists of skilled nursing facilities from hospital staff members, with no other data or information regarding quality of care. The researchers concluded that  hospital staff members provided little guidance to patients when they were selecting a facility for postacute care:

Hospital staff members do not appear to provide patients who need care in a skilled nursing facility with data that would allow them to select better-quality facilities. This is in spite of the fact that hospitals are now held at least partly accountable for the postacute care their patients receive, including for rehospitalizations. A system based on quality reporting and competition for patients cannot succeed if patients do not have the data necessary to make an informed choice. Hospitals should provide these data and help patients and their families understand them. 

Staff members reported that patient choice regulations precluded them from sharing data about facilities’ quality with patients. Consequently patients’ choices of a skilled nursing facility following hospitalization were usually not based on quality data that is readily available.

According to the report:

"Across the country, the postacute care patients we interviewed made strikingly similar comments—reporting that hospital discharge planners offered them lists of SNFs containing names and addresses but little else. Patients’ experiences did not vary based on hospital characteristics, bed availability in the market, or the patient’s diagnosis or condition. In the cases where patients were Medicare Advantage beneficiaries, either they were given lists of the managed care organization’s contracted facilities, or the managed care organization staff handled discharge planning. When we asked patients what information they had been given by hospital staff members to help them select a SNF, only four patients said that they had received any information about SNF quality or instructions about where to find such data.

Instead, patients made comments such as this: “I got a two-page list of different facilities that I could go to. It basically was the name, the address, and a phone number.” Several patients in one market reported receiving a list of all SNFs in the region, which contained over 100 such facilities. When asked to describe the list she received, one patient said: “Well, there were— there’s like a hundred of them. It’s all the facilities in the area.”

What we heard from patients was consistent with what we had heard from hospital staff members. Almost all of the discharge planners we interviewed reported providing lists of SNFs to patients, with no qualitative information. Only one discharge planner reported pointing patients and their family members to the Nursing Home Compare website, which provides data to aid consumers in their selection of a postacute care facility. Typical of what we heard from hospital staff members was this comment: “So right now, how it works is everybody gets a list with all of the local SNFs on it, and everybody can choose.” Another discharge planner similarly reported: “We hand them the list. The patients usually do it [choose a SNF] based on location or preference, but we try absolutely not to sway it. In fact, we do have a form that the patients do sign with their choice.” 

Consumers have greater accesss to information regarding the quality of nursing homes.  It is unfortunate that hospitals are not aiding patients and their families access and understand this information at a time when they are in need, and vulnerable to poor decision-making.