Appellate Division Reverses Summary Judgment and Allows Question of Third Party Liability For Nursing Home Payments To Proceed

Pine Brook Care Center v. D’Alessandro, No:  A-3197-18T1, 2020 WL 6852609 (N.J. Sup. Ct. App. Div. Nov. 23, 2020).

In 2014, Michael D’Alessandro was adjudicated incapacitated.  His three daughters, Antoinette, Nancy, and Maryanne, were appointed co-guardians.

In 2016, Michael was admitted to Pine Brook Care Center.  The Pine Brook admission package included an Admission Agreement which advised that federal and state law prohibit a nursing home from requiring a third-party guarantee of payment to the facility as a condition of admission, expedited admission, or continued stay in the facility.  The Admission Agreement also obligated the co-guardians to apply for Medicaid.

The admission package included a Payor Agreement which stated that although the facility did not require a third-party guarantee of payment, the facility did require an individual who has legal access to a resident’s income or resources to sign a contract, without incurring personal liability, to provide payment to the facility from the resident’s income or resources.

On May 2017, Antoinette and Nancy were discharged as Michael’s guardians, leaving Maryanne as the sole guardian.

In October 2017, one year after Michael’s admission to the nursing home, Maryanne first applied for Medicaid benefits on Michael’s behalf.  The application was denied because Maryanne never supplied the requested financial information.  No other efforts were made by Maryanne, Antoinette, or Nancy to obtain Medicaid benefits for their father.

Michael obtained approval for Medicaid benefits effective September 21, 2018, apparently as the result of an application filed by Pine Brook.

Pine Brook filed a collection action against Michael and his three daughters for the balance due.  The daughters responded that the New Jersey Nursing Home Act left the care facility unable to pursue them.  The trial court granted summary judgment to the daughters.

The Appellate Division reversed the grant of summary judgment, noting:

The Nursing Home Act serves to complement the Federal Nursing Home Reform Act, Congress’ statutory scheme intended to protect nursing home residents and their families.  Manahawkin Convalescent v. O’Neill, 217 N.J. 99, 116 (2014) .… As explained by the court in Manahawkin Convalescent, federal law has long barred nursing homes accepting either Medicaid or Medicare from compelling third-party guarantees of resident payment, but permits such facilities to require individuals with legal access to the resident’s assets to pay for the resident’s care with such assets.

Id. at *8 (quoting Manahawkin Convalescent v. O’Neill, 217 N.J. 99, 116 (2014).

The Appellate Division continued that in 1997, the New Jersey Legislature amended the Nursing Home Act to add language similar to the federal provision.  The New Jersey amendment provides in pertinent part that “a nursing home shall not, with respect to an applicant for admission or a resident of the facility, require a third-party guarantee of payment . . ., except that when an individual has legal access to a resident’s income or resources available to pay for facility care pursuant to a durable power of attorney, order of guardianship or other valid document, the facility may require the individual to sign a contract to provide payment to the facility from the resident’s income or resources without incurring personal financial liability.” Id. (quoting N.J.S.A. 30:13-3.1(a)(2)).

The appellate court disagreed with the trial judge’s reliance on Manahawkin Convalescent and explained in Manahawkin Convalescent, the court was required to determine only whether a contract obligating a third-party to make payments for a resident’s care from the resident’s assets violated the New Jersey Nursing Home Act.  The court was not presented with, and did not decide, the broader issue presented in Pine Brook:  whether the New Jersey Nursing Home Act prohibits the imposition of personal liability on a third-party based on (i) contractual obligations that are not guarantees of payment or (ii) other tort-based theories of liability.  Id. at *9.

It is important to note that the Appellate Division did not grant judgment in favor of Pine Brook; the court only reversed summary judgment in favor of the defendants.  In dicta, the court stated:

[W]e observe, however, that an agreement to make an application for Medicaid benefits on Michael’s behalf is not a guarantee of payment or an agreement to pay proscribed by the Nursing Home Act.  By making any purported agreement to apply for Medicaid payments, the co-guardians did not guarantee payment for the cost of Michael’s nursing home care or agree to pay these costs.  Thus, any such agreement, if proven, does not run afoul of the New Jersey Nursing Home Act and is not unenforceable under its terms.

Id. at *11.