Nursing Home May Sue On Surety Bond For Nonpayment

SEPTEMBER 10, 2001 VOLUME 9, NUMBER 11

When J. Michael Cantore, Jr., was appointed as conservator of the person and estate of Diana Kosminer, he was required to post a bond to help ensure that he would handle her finances properly. The purpose of a “surety” bond (the type usually required of conservators) is to protect the ward; if the conservator misspends money, or invests imprudently, or even steals from the ward, the bonding company will reimburse the ward for any loss and then pursue the conservator for recovery. That way the ward does not bear the loss for the conservator’s mistakes.

In 1989 (two years after the conservatorship was established) Ms. Kosminer moved into a nursing home. She would live in the home for the remaining six years of her life and, as it turned out, the $160,000 in her estate when she entered the facility would not be enough to pay for her care for the entire time.

From the very start Mr. Cantore tried to avoid using Ms. Kosminer’s money for her care. He made no payments to the nursing home, but instead made an application (eight months after her admission to the home) to have the state Medicaid agency pay for her care. That application was denied because Mr. Cantore did not provide the information the state required; if he had completed the application Ms. Kosminer would presumably have been denied because she had too much money to qualify for assistance.

Mr. Cantore tried twice more, unsuccessfully, to get Ms. Kosminer qualified for Medicaid benefits. In 1992, after the nursing home had cared for Ms. Kosminer for almost three years without payment, Mr. Cantore liquidated Ms. Kosminer’s assets and successfully qualified her for Medicaid.

Although Ms. Kosminer was not actually injured by Mr. Cantore’s failure to act properly, the nursing home filed a lawsuit against the conservatorship bond. The facility argued that Mr. Cantore had a duty to use Ms. Kosminer’s money for her care and then, when it ran out, to make a timely and complete Medicaid application. Had that been done, said the nursing home, they would not have lost $63,000 on her care.

The Connecticut courts initially threw the nursing home’s claim out of court because, the court ruled, a third party can not make a claim against the surety bond. The bond, according to that argument, is intended to protect the ward and not the ward’s creditors.

The Connecticut Supreme Court disagreed. It reinstated the lawsuit against the bonding company and ruled that Mr. Cantore had a duty to handle Ms. Kosminer’s finances in a timely and appropriate manner. If the nursing home can show that Mr. Kosminer failed in that duty, it can collect on the conservator’s bond. Jewish Home for the Elderly of Fairfield County v. Cantore, August 14, 2001.

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