Recently an elder law colleague related the following. His client was sued by a nursing home for nonpayment, claiming nearly $60,000 in unpaid services. The client had applied for Medicaid, but his application was denied and the case was on appeal.

The problem was that the client’s daughter signed the nursing home admissions agreement for him, so now both of them were being sued. The daughter was his power of attorney and the nursing home knew this, but she didn’t sign “POA” after her name when she signed the contract.

The child had taken care of her father for more than 4 years and by the time she got him in the nursing home she was mentally and physically devastated. Needless to say, her thinking was not that clear at the time.

Had this been an assisted living or independent living facility, the daughter would have been stuck. The rules for nursing homes, however, are slightly different.

A nursing home cannot REQUIRE anyone to sign as a guarantor. The law, at 42CFR 482.12 (d)(2) (for Medicare and Medicaid facilities) says a facility must not require a third party guarantee of payment to the facility as a condition of admission or continued stay in the facility. However, the facility may require an individual who has legal access to a resident’s income or resources to sign a contract, without incurring personal financial liability, to provide the facility payment from the resident’s income or resources.

If the facility claims the daughter “voluntarily” signed as guarantor, it may be a tough case to win. The first defense would be lack of consideration for the guarantee since a guarantee could not be required. Adequacy of consideration is not a defense to a guarantee, but this is not the same as no consideration, which should be a defense.

If you find yourself in a similar situation, be sure to check with an elder law attorney.

Jerry Shiles
Author, Attorney
Parman & Easterday