A recent decision of the Supreme Court of New Jersey, entitled Manahawkin Convalescent v. O’Neil, sheds some light on how the courts of this state should view collection efforts by nursing homes against family members of nursing home residents. When an individual enters a nursing home, the nursing home will often asked a member of his family to sign the nursing home admissions agreement. The family member signing the agreement may or may not be the power of attorney agent of the nursing home resident.
If, for whatever reason, the nursing home does not get paid, the nursing home often tries to sue the family member who signed the admissions agreement. The nursing home will often intimidate the family member into paying some or all of what the nursing home claims is owed; the family member will end up using his own money to pay for a bill the nursing home resident incurred.
In the Manahawkin case, the nursing home was owed a paltry $848. After the death of the nursing home resident, the nursing home sued the family member who signed the nursing home admissions agreement. In its suit, the nursing home stated the claim was against the family member, not the nursing home resident or the nursing home resident’s estate.
The family member counter-sued, claiming that the nursing home violated various laws. One of the laws the family member claimed the nursing home violated was New Jersey’s version of the federal Nursing Home Reform Act. The Nursing Home Reform Act prohibits a nursing home from requiring a family member to sign a guarantee that the family member will pay for the nursing home resident’s bill.
Faced with cogent claims against it, the nursing home dropped its suit against the family member. In all likelihood, the nursing home was probably caught off guard by such a vigorous defense and offense by the family member, particularly given the small amount of money that was owed the nursing home.
After the nursing home dropped its claim, the family member continued to pursue her claims against the nursing home.
In the end, the Supreme Court held that the nursing home did not violate the Nursing Home Reform Act, but only because the nursing home did not make the family member sign its guarantee of payment document in this case. It is of some note that the nursing home had such a document at all, since both federal and state law prohibit a nursing home from obtaining a third-party guarantee of private payment. Given this fact, one would wonder why the nursing home has such a document for family members to sign.
The nursing home also did not find any violations of law based upon the nursing home suing the family member individually, as opposed to the resident or the resident’s estate. The Supreme Court viewed this aspect of the suit as a close call but gave the benefit of the doubt to the nursing home and thought the nursing home simply worded its suit inartfully. In other words, when the nursing home’s complaint said it was against the family member, the Supreme Court viewed the suit as being against the resident’s estate, not the family member.
The Supreme Court did specifically admonish attorneys for the nursing home industry to draft nursing home admissions agreements in a manner that would permit residents and their family members to understand their rights. I think because of the small amount involved in the case, the Supreme Court wanted to get rid of the case but let nursing homes know that they have a duty to be fair with residents and their families.