As our population continues to age, a common occurrence is that children have to act on behalf of their elderly disabled parents in handling their affairs. This may include acting as an agent on behalf of the parent in admitting the parent to a nursing home or assisted living facility. Maryland’s highest court in the case of Walton v. Mariner Health recently addressed under what circumstances the child acting as an agent for a parent in such a situation may be liable if the nursing home bills are not paid.
The opinion relates that Patricia Walton signed an Agreement, acting as her mother’s agent, to admit her mother to a nursing home. The lengthy agreement included an attached document setting forth the agent’s obligations. The contract indicated that the nursing home costs would be paid solely by Medicare or Medical Assistance, and obligated the agent Patricia Walton to file the appropriate applications with Medicare for payment. However, it specifically said that the agent was not accepting financial responsibility to pay any of the costs for her mother’s care.
Medicare originally paid the $4,800 per month bills, but when the time came for a re-application to be filed Patricia Walton failed to file the application and Medicare stopped making payment. After more than a year went by, the nursing home attempted to get the agent to make the payments. She indicated she had been given no notice that Medicare had stopped making payments, and that the nursing home had not notified her of any problem until the home was sold to a new company. No evidence was presented by the home as to why no notice was given to Ms. Walton that Medicare had stopped paying.
The nursing home sued both the mother and her agent, and the trial court entered a judgment in favor of the nursing home against both defendants for back payments due and attorneys fees called for in the agreement. The Court of Appeals reversed and held that the agent was not liable to the nursing home for unpaid costs, and explained the provisions of the law that led to this result.
Maryland in 1988 enacted laws to limit the financial responsibility of agents for persons admitted to such facilities, and in 1995 added provisions to safeguard residents from being discharged from facilities for non-payment. Section 19-344(c) of the Health General Article and regulations enacted under the law spell out the duties of such agents, including the obligation to apply for Medicare or Medical Assistance, and to pay monies received pursuant to such claims to the facility.
The law and regulations include provisions that if an agent acts “willfully or with gross negligence” in failing to apply for benefits, the Attorney General may seek a civil penalty against he agent of up to $10,000. However, the Court held that there is nothing in the law which authorizes a nursing home to sue the agent for damages if no application is filed. It refused to expand the law to provide such a right to sue. It noted that under federal law a nursing home cannot require a third party to guarantee payment, and in Maryland the agent is only obligated to pay if she agrees to do so in writing. Under general contract law, an agent who receives no benefit from a contract signed for the benefit of another is not liable for breach of the agreement.
While this opinion is good news for persons trying to assist their elderly parents, it underscores the importance of carefully reading any agreement for such services to be certain what obligations you are undertaking.