Maryland Bar Bulletin
Publications : Bar Bulletin : May 2006

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Must We Still Beware of Nursing Home Contracts?

The Court of Appeals recently considered whether an agent who signed a nursing home contract on behalf of a nursing home resident can be held personally liable for the resident's nursing home debt. In the March 2006 decision Walton Mariner Health of Maryland, the Honorable Clayton Greene, Jr., opined that the agent is not responsible for the debt and that the nursing home is limited to remedies found in the Health.

For attorneys whose clients have been sued by a nursing home over such a debt, the facts in the Walton case are familiar. A Mariner Health nursing contract was signed by Patricia Walton ("Patricia") as agent for her mother, Audrey Walton ("Audrey"), on January 26, 2001. Patricia testified that she was not aware that Medicare had stopped paying for her mother's care and did not apply for Medicaid. Eighteen months of costs of care amounted to an outstanding bill owed to Mariner Health of $86,235.91.

The Court examined the nursing home contract carefully and noted that Patricia had selected "The Medicare Program" and "The Medicaid Program", from which payment was anticipated for Audrey's care. The other contract options were "Other third-party insurer", "[y]ou with the resident's income, funds and/or other assets", "you with your own income funds and/or assets", and "Other" – none of which were selected by Patricia. Patricia also stated in the contract that she would not agree to make payment from her own funds.

Judge Greene's opinion described Patricia as a statutory agent under Sec. 19-344(c) and reviewed the 1988 legislation that was intended to limit an agent's liability for nursing home costs. He also reiterated what attorneys already know – that the law of agency protects an agent from personal liability.

The Court examined whether Patricia could be personally liable as a result of the contract with Mariner Health and whether the terms of the contract stating that an agent was personally liable if they failed to apply for Medicaid were enforceable. The Court found that the trial judge's interpretation of those terms was incorrect and did not apply to Audrey, who was not a private pay resident.

Most importantly, the Court did not recognize a private cause of action for a nursing home in Sec. 19-344(c), citing the 1990 decision Sugarloaf Citizens Assoc. v. Gudis.

Benjamin J. Woolery, Esquire, represented the appellant; Ron M. Landsman served as his co-counsel. The Amicus Curiae filed by Norman Smith on behalf of the Maryland Chapter of the National Academy of Elder Law Attorneys (NAELA) in support of the Waltons' position was quoted in the opinion and presumably gave weight to the appellant's argument.

At right, Benajamin J. Woolery has provided some practice pointers for attorneys advising a client who will be signing a nursing home contract as agent of a nursing home resident.

Nomiki Bouloubassis Weitzel is a member (and past chair) of the MSBA Elder Law Section Council. She often lectures on Elder Law issues for legal, community and health care groups.

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Publications : Bar Bulletin: May 2006

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