Is a Guardian Personally Liable for Nursing Home Costs of Ward?

That is the question posed (on narrow facts) in this week's Elder Law Issues article at elder-law.com. The answer in that case -- and probably in most cases raising similar questions -- turned on the language of the admission contract itself.

To start with the result: in Five Star Quality Care v. Lawson, the case described in Elder Law Issues, the Missouri Court of Appeals ruled that the Public Administrator, Bonnie Sue Lawson, would not be personally liable for her ward's nursing home bills. The reason the issue even arose: it took Ms. Lawson over a year to figure out that she would need to get appointed as conservator of her ward's estate (she was already guardian of the person) in order to liquidate two small life insurance policies to get her ward's assets below the eligibility limit. During that time the nursing home incurred over $15,000 of unpaid bills caring for the ward.

The reason Ms. Lawson was not liable turned on the language of the admissions agreement. A general term of the contract (it was in fact included under the heading "General Provisions") required Ms. Lawson to use "due care." Elsewhere, however, the contract dealt specifically with what would happen if a Medicaid application was denied: the agreement required Ms. Lawson to pay all the nursing home costs, but limited that payment to being made "from the Resident's assets."

More generally, a guardian or conservator who signs a nursing home agreement should not be personally liable for the nursing home costs. That result could be different, in particular facts, if:

    1. The signer owed an obligation of support to the nursing home resident that would make the signer liable whether or not they signed the contract (most often this argument will come up when a spouse is institutionalized).

    2. The admissions document clearly indicates that the signer is assuming personal responsibility. The best way to avoid this result is, of course, to read the document before signing. It also helps to sign "as guardian" (or "as conservator" or "as agent under a power of attorney" or whatever fiduciary relationship the signer may have). In fact, it might be even better to sign "as guardian only, and not individually" (with appropriate adjustments for the actual fiduciary relationship, of course). Remember, though, that even if the signer foolishly accepts individual responsibility, that may not be the final word on the subject. There is likely still an argument to be made that the signer received nothing in return for his or her acceptance of the liability.

    3. The fiduciary commits fraud, or breaches his or her fiduciary duty. It is likely that a fiduciary breach would need to be fairly egregious before the fiduciary would be personally liable for the resident's nursing home expenses -- but it is not difficult to image a scenario in which a conservator (or an agent under a power of attorney) might take all the ward's money improperly and leave the nursing home without any source of payment.

The bottom line: read the nursing home admission agreement before signing it. Have it reviewed by an attorney if you are unsure of what you are agreeing to do. Do not sign without clearly indicating your fiduciary relationship.

Robert B. Fleming
Fleming & Curti, PLC
Tucson, Arizona
www.elder-law.com

Comments

[Ross Hart]

Diligence is critical with nursing home contracts. I tell my clients NEVER to sign them until I've reviewed them. In cases I serve as guardian, I NEVER sign as "responsible party" but sign as the resident, by me, as whatever hat I'm wearing (guardian, conservator, POA, etc.). I then add a disclaimer to the face of the NH contract that I'm signing as agent and expressly disclaim personal responsibility and, finally, send the contract back with a cover letter confirming my agent status, disclaiming personal responsibility, and providing a required billing format.

Billing format is Resident name, "Care Of" me (or agent) and bills addressed to me, personally, are returned with a form letter stating that it won't get paid until it is correctly billed. Virginia has a statute that states that a guardian/conservator can be personally responsible unless they make it clear they're an agent. I'm compulsive about making it that clear.

Final thing I always change in NH contracts is to delete the arbitration clause, which also waives jury. If asked, I explain that as court appointed guardian, I don't have the authority to waive the resident's right to a jury (that issue is worthy of its own discussion)

Nursing homes in my area are used to my "rossiferous" approach but, at the same time, I work with them in resident care without being intrusive unless really needed.

-- ross hart