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
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.