SEPTEMBER 28, 1998 VOLUME 6, NUMBER 13
When Thomas Caldwell became ill, he was taken to the local hospital in Lake Havasu, Arizona. When his illness turned out to be too serious for the regional medical center, he was transported to Phoenix’ Good Samaritan Hospital. His wife Delores Caldwell was asked to sign the admission documents, and she did so. After her signature she wrote the letters “POA,” indicating that she was signing on Mr. Caldwell’s behalf as his attorney-in-fact.
Mr. Caldwell did not recover. Before his death, however, he incurred medical bills of over $150,000 which were not paid by insurance.
Good Samaritan waited twenty-three months before beginning any action to recover for the medical care they had provided Mr. Caldwell. Under Arizona law, claims against a decedent are barred after two years, and so the hospital chose to pursue only Mrs. Caldwell. Mrs. Caldwell had signed the admissions documents, they argued, and adding “POA” after her name did not make it clear that she was not agreeing to be personally responsible for the debt. In any event, said the hospital, under Arizona’s community property rules each spouse is responsible for the debts incurred by the other, particularly for such necessities as medical care.
Mrs. Caldwell disagreed. She insisted that the “POA” designation after her signature made it clear that she was signing only on behalf of her husband, and had not agreed to pay the bill herself. And, she said, since the hospital could no longer pursue her husband they should not be permitted to come after her own assets, either.
The Arizona court split the difference. With regard to Mrs. Caldwell’s signature, the trial judge ruled that not only did Good Samaritan know what “POA” meant, but the actual power of attorney form was one provided by the hospital at the time of admission. On the question of Mrs. Caldwell’s liability for her husband’s medical care costs, however, the court ruled that the hospital was right. Mrs. Caldwell was ordered to pay her husband’s medical bill, at least to the extent of the couple’s community property. But since the debt was incurred on behalf of the community, Mrs. Caldwell’s separate property could not be touched by the hospital.
The Arizona Court of Appeals largely agreed with the trial court, with one exception. While the trial judge would have allowed Good Samaritan to pursue only Mrs. Caldwell’s half interest in community property, the appellate court permitted the hospital to collect from the total community property estate. Samaritan Health System v. Caldwell, May 7, 1998.
Mrs. Caldwell’s partial victory was probably more symbolic than substantive. Most Arizona couples own nearly all of their assets as community property. There are a handful of common exceptions, but few couples have any substantial separate property. The most frequent exceptions to the community property rules:
- Gifts and inheritances. Money or property received as a gift or by inheritance is separate, unless it has been given to the couple jointly.
- Previously owned property. Assets brought into the marriage by one spouse remain that spouse’s separate property unless turned into community property by the owner.
- Property brought into Arizona from a non-community property state. If property is owned separately in another state, and the couple relocates to Arizona, the type of ownership does not change.
Of course, it is easy to turn separate property into community property–by contributing to it from earnings, or by adding the non-owner spouse to the title, for example. As the Caldwell case demonstrates, that can lead to one spouse’s liability for the other’s debts.