Judge Can Not Impose an ‘Unusual’ Condition on a Reversal of a Default Judgment in a Nursing Home Breach of Contract Lawsuit

Nursing homes are proficient in protecting themselves from risk of loss where Medicaid is concerned.  Spouses and children of the Medicaid applicants often find themselves being sued to recover for delays in seeking and obtaining Medicaid.

Courts and the law are often sympathetic to the cause of the nursing home, particularly when admission agreements include provisions making family responsible.  In a recent case, the "sympathy" crossed a line towards activism on behalf of the institution.  Fortunately, on appeal, the ship of equity was righted.

George Brown entered a nursing home and signed an admission agreement, agreeing to apply for Medicaid benefits to pay for his care. Mr. Brown did not submit the necessary information to complete his Medicaid application, so his application was denied. The nursing home sued Mr. Brown and his wife, Gloria Brown, for breach of contract and her for lack of spousal support. Ms. Brown appeared at the initial hearing and argued that Mr. Brown had dementia and did not knowingly sign the agreement. In addition, she claimed he was mistreated at the nursing home.

The judge informed Ms. Brown that she needed to file an answer to the nursing home’s complaint. Ms. Brown never filed an answer, and the judge entered a default judgment against her. Six months later, Ms. Brown filed a request to remove the default judgment because she had been in the hospital and therefore unable to answer the Complaint. The judge granted her request to vacate the default judgment on the condition that she waive any claims against the nursing home to the extent the monetary recovery amount exceeded the amount Mr. Brown owed to the nursing home. The court, in effect, protected the nursing home from any risk of losing more than it was owed! Ms. Brown refused the condition and appealed.

The Massachusetts Appeals Court reversed, holding that the condition imposed by the judge was inappropriate.   Care One Management, LLC v. Brown (Mass. Ct. App., No. 19-P-1165, Oct. 7, 2020). Because the judge did not find that the nursing home suffered any prejudice from the default or the delays, there existed no authority for the court to , in essence, protect the nursing home. According to the court, although the judge made passing reference to Ms. Brown’s delay in fighting the default judgment, the judge “did not explain how or why such factors impacted [the nursing home’s] claim, and did not evaluate and explain whether and to what extent [the nursing home] suffered any prejudice, before imposing the unusual condition on the removal of the default judgment.”

The legal system worked to restore balance in this case.  The wife, though, has attendant cost and expense for which she will never be compensated.  This is just one unavoidable cost of institutional care, dutifully protected by the legal system.