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. 

Nursing Home May Sue Resident's Daughter for Breach of Contract

A Connecticut trial court has ruled that a nursing home may sue a resident's daughter for breach of contract because she agreed to use her mother's assets or Medicaid to pay for the nursing home, even though she did not sign as a personal guarantor. Cook Willow Health Center v. Andrien (Conn. Super. Ct., No. CV116008672, Sept. 28, 2012).

Judy Andrien admitted her mother to a nursing home and signed an admissions agreement as her mother's responsible party. She agreed to take steps to ensure the nursing home was paid out of her mother's assets or by Medicaid.

The nursing home sued Ms. Andrien for breach of contract, alleging that she did not use her mother's assets to pay the nursing home or apply for Medicaid when the assets were near depletion. Ms. Andrien filed two special defenses. She argued that the admissions agreement was void and unenforceable because it made Ms. Andrien personally liable for the cost of her mother's care. She also argued the agreement was a surety contract, so the nursing home was required to meet certain preconditions before enforcing the contract. The nursing home moved to strike Ms. Andrien's two defenses.

The Connecticut Superior Court granted the nursing home's motion to strike the special defenses. The court rules that the contract does not contain a personal guarantee, so it did not violate federal law prohibiting nursing homes from requiring a third-party guarantee as a condition of admission. The court also ruled that the contract is not a surety contract, i.e., a guarantee of one party for the obligation of another to a third party.  According to the court, the nursing home's "complaint is not based upon a breach of a promise to answer for the debt of another, but rather a breach of contract."  The contract, according to the court, "does set forth a scenario in which the responsible party would be liable for any costs of care and services for the resident incurred should the resident make a transfer rendering him/her ineligible for Medicaid payment or assistance."  The Court wrote that the Complaint alleged no facts that would indicate such a scenario, but nonetheless, set aside all of Ms. Andrien's affirmative defenses, and permitted the action to proceed.   

For the full text of this decision, click here.