Posts Tagged ‘filial responsibility’

“Filial Support” Laws and Nursing Home Collections

We read an interesting article today, posted on the Elder Law Prof Blog. It includes an interview with the child of a nursing home resident — the child (not the resident) was successfully sued for a portion of her mother’s nursing home bill. We thought it would be of interest to our readers, as well.

This is a topic we have discussed here (with the able help of Prof. Katherine Pearson, one of the Elder Law Professors in charge of the blog linked above). It is a worrisome issue, though we have not seen the tactic employed in Arizona.

Nursing Home Bills and “the Doctrine of Necessaries”

JULY 8, 2013 VOLUME 20 NUMBER 25
Under the English common law (inherited, to a greater or lesser degree, by all the states of the U.S.), a husband was obligated to support his wife and children. Because women could not legally enter into enforceable contracts, a person who provided goods or services to a woman (or a minor child) on credit might not be able to enforce the collection of the debt. Even if a merchant sold (for instance) food to a married woman on credit, the merchant ran the risk that he might never collect on the debt.

This commercial problem gave rise to a principle of the English common law called “the doctrine of necessaries.” If a merchant provided goods or services to a married woman or minor child, he would be able to collect from the husband/father — if the sale was for “necessaries.” That usually meant food, shelter, clothing, medical care and the like.

Today, where it still exists, the doctrine of necessaries is applied in a gender-neutral way. A husband OR wife might be sued for the “necessaries” provided to his or her spouse. One key step before bringing the action, though, is that the spouse to whom the necessaries were provided must first be determined to be unable to pay for his or her own care.

That neatly sets up the scenario in a recent Indiana Court of Appeals case. Marjorie and Orson (not their real names) were married; Marjorie was admitted to a nursing home. Eventually Marjorie was made eligible for Medicaid, which paid for much of her nursing home care. By the time of her death, though, she had a $5,871.40 unpaid bill at the nursing home.

The nursing home tried to collect from Marjorie’s family. They wrote to her daughter Wilma, who had signed her into the home (and had, incidentally, foolishly signed the admission papers as “guarantor”). They wrote to Orson. They did not get paid. Then they sued Orson and Wilma. When Orson died before the litigation was resolved, the nursing home made a claim against Orson’s estate. The nursing home’s argument: under Indiana’s version of the doctrine of necessaries, he was responsible for his wife’s nursing home bill, and it should be collectible from his estate.

The trial judge denied the nursing home’s claim, reasoning that the home should first have brought legal action against Marjorie (while she was still alive) or her estate. Besides, ruled the trial judge, it was Wilma who had signed her mother into the nursing home, not Orson.

The Indiana Court of Appeals upheld the denial of the claim. The three judges deciding the case first noted that the doctrine of necessaries might no longer be relevant in any event. If it is, though, the person making a claim under it must go through the steps required to pursue the claim. The nursing home should first have sued Marjorie or her estate; as a creditor, they could have opened an estate in Marjorie’s name to officially determine that she died without assets. Just saying that she had nothing, or even that she was a Medicaid patient and so must not have had anything, was not enough. Hickory Creek at Connersville v. Estate of Combs, June 27, 2013.

Let us assume for a moment that Marjorie’s estate was in fact insolvent. If the nursing home had initiated a probate proceeding, determined that she had no assets and then filed against Orson (and later his estate), they might have collected. But now they will be precluded from doing so; the time for presenting claims against Orson’s estate will have expired, and even if a new filing was made to establish Marjorie’s lack of assets there would be no opportunity to pursue the estate.

It is less clear (at least from the Court of Appeals decision) whether the nursing home could still pursue daughter Wilma. She did sign the admission document, and as “guarantor.” The resolution of the claim against her father’s estate does not necessarily resolve the nursing home’s lawsuit against Wilma. The lesson for others is clear: if you sign a nursing home admission agreement for another person (as, say, agent under a power of attorney, or conservator of the estate, or next of kin), make sure you cross out any reference to being a “guarantor” or “responsible party.”

But back to the doctrine of necessaries: does it still exist in Indiana? Yes, according to the Court of Appeals — though its vitality is doubtful.

What about Arizona? Remember that Arizona is a community property state, which means that the obligations of one spouse may not always be the responsibility of the other. Does this mean that the doctrine of necessaries does have vitality in Arizona? Probably not — though there are three reported Arizona Court of Appeals decisions about the doctrine. All three of them, however, involve failed attempts to apply the doctrine to care provided for minor children. In two of them, in fact, the doctrine was raised by out-of-state government agencies who provided welfare benefits to minors, and sought recovery against an Arizona father. Neither court allowed the doctrine of necessaries to apply — but mostly because the agencies have perfectly good rights to recovery under federal child-support rules.

Incidentally, the doctrine of necessaries is different from (even though similar to) so-called “filial support” or “filial responsibility” laws (we have provided information about filial support laws before). The concept of necessaries grew from a common law notion, and was originally applied exclusively to the provision of goods and services to married women and minor children. Filial support laws are state enactments that create a different liability — a child might be liable for an impoverished parent’s care under those newer laws, where they exist.

 

“Filial Support” Laws: Making Children Pay for Their Parents’ Nursing Home

JULY 30, 2012 VOLUME 19 NUMBER 29
When your parents go to the nursing home, could you be liable for their bills? That may seem unlikely, but as the country’s leading authority on the subject (Prof. Katherine Pearson from the Dickinson School of Law at Pennsylvania State University) notes, there are laws on the books in many states which could make children pay for their indigent parents’ care. Prof. Pearson guest-authored this week’s Elder Law Issues, and she explains the problem and trends:

The latest controversial effort to reduce public costs for long term care may come not from the budget cutters at state and federal offices for Medicare or Medicaid, but from nursing homes, assisted living facilities or personal care homes. Pennsylvania is the proving ground for the test – and other states are watching.

Over the course of several years, nursing homes have increasingly turned to Pennsylvania’s filial support law as a tool to compel children to either help a parent qualify for Medicaid — or be at risk of paying for the parent’s bills out of their own pockets. Pennsylvania’s provision dates to colonial times, but a 2005 transfer from the welfare laws to the domestic relations code increased its visibility. The law provides that a child has the “responsibility to care for and maintain or financially assist” a parent, if the parent is deemed “indigent.” The statute does not define the term, but case law has given it a practical meaning by holding a parent is indigent if he or she does not have sufficient means to pay for care.

Occasionally a suit is brought by a needy parent against a child. In 1994, in the case of Savoy v. Savoy, an uninsured mother who had $10,000 in unpaid medical expenses sued her son. The result: a modest award of $125 per month, perhaps more significant for its symbolic value than for the economic effect in the case itself.

Since then, a series of cases and decisions has expanded the importance of the law in Pennsylvania. The latest case was decided by an intermediate appellate court in May, 2012. In Health Care & Retirement Corporation of America vs. Pittas, the Pennsylvania Superior Court affirmed a trial court award of more than $92,000 against the son of a woman who had received six months of care at a facility. The son raised several challenges to the trial court ruling, including the argument his mother could not be deemed “indigent” because she had modest monthly income of $1100. The son argued this income, plus her husband’s retirement income, was enough for the couple if they had not had the auto accident that led to hospitalization and extraordinary costs for her subsequent care in a nursing home. The court rejected the argument and repeatedly cited the “plain language” of the statute as the reason for the harsh result.

The son also argued unsuccessfully that he could not be held solely liable because other family members had not been sued. While the court said it was “sympathetic with the [son’s] obligation to support his mother without the assistance of his mother’s husband or her other children,” it was up to the son to join those individuals in the case if he wanted proportionate relief. The court also rejected the son’s argument that the suit should be stayed or set aside because of a pending Medicaid application, noting that any successful award could reduce his liability. In fact, although not acknowledged in the opinion, the Medicaid application had been denied, apparently because of questions raised during the application process, and the time for appeal had lapsed.

The Pittas opinion is significant because, unlike prior court rulings such as the 2005 ruling in Presbyterian Medical Center v. Budd, the court made no findings that the family had engaged in transfers or other unsuccessful efforts to avoid Medicaid eligibility rules. The court found the son’s claim of “inability” to pay for his mother’s care to be lacking in credibility, noting he had at least $85,000 in net annual income. But the court did not suggest the son was at “fault” for his mother’s indigent status. This was not a case where liability was tied to a family member’s efforts to divert assets.

Could a Pittas-style filial support ruling be coming soon to a state court near you? The answer is already “yes” in South Dakota. In 1994 and again in 1998, South Dakota appellate courts used South Dakota’s filial support law to enforce liability against adult children for health care or long-term care expenses of a parent. However, in those cases, it appears the rulings were tied to attempts to divert or hide the parent’s assets. According to news reports, some states, such as North Dakota, have already expressed interest in the Pittas ruling. Another state, Idaho, went the opposite direction in 2011 by repealing its filial support law entirely, citing the potential for confusion for families with nursing home costs.

Approximately 28 states have some type of civil or criminal filial support law on their books, although the enforceability of many of the state laws have been blocked or limited because of state rules on Medicaid. In most states filial support laws have been largely ignored in recent years. Pennsylvania is one of the few states that expressly provides for suits by care facilities or similar third-parties. The Pennsylvania statute permits a petition to be filed by the indigent person “or any other person . . . having any interest in the care, maintenance or assistance of such indigent person.”

Filial support laws carry various labels, with modern terms tending to suggest moral overtones that emphasize a family’s obligation to share “responsibility” for care. States seeking to provide nursing homes with collection tools that reduce the need for Medicaid may seek to follow the Pennsylvania route to a new frontier. The 2005 transfer of the filial support statute to the domestic relations code was rushed through the Pennsylvania legislature quickly and packaged with a cost-savings statute that tightened the state’s rules for Medicaid eligibility. Interested persons in other states will want to keep their eyes open.

Interested in the area, or wondering what your state’s laws might be with regard to filial support? For a more expansive discussion of such laws, including the roles they play in other countries, see Prof. Pearson’s recent article: “Filial Support Laws in the Modern Era.” As Prof. Pearson notes, these laws are sometimes described in terms of filial “responsibility” — as long ago as 1995 we wrote about an attempt to extend “family responsibility” laws by federal action (it came to nothing, as it turned out), and we have described individual cases attempting to impose filial support concepts before. The trend Prof. Pearson describes, however, could go well beyond previous attempts to hold children liable for their parents’ long-term care costs.

Attempt to Force Children to Pay Father’s Hospital Bill Fails

JUNE 2, 2003 VOLUME 10, NUMBER 48

Are adult children liable for the medical care of their parents? Several states (not including Arizona) have laws that attempt to impose what is sometimes called “family responsibility” or “filial responsibility” on children for the care of indigent parents. A recent South Dakota case provides a little insight into such laws.

Before James Nelson died at McKennan Hospital in Sioux Falls, he incurred a bill of almost $75,000. McKennan submitted the bill to Medicare, which paid $15,657.85 and required that the hospital make adjustments of most of the rest of its charges. When the adjustments were completed a $42.73 claim remained against Mr. Nelson’s estate; when that amount was paid the hospital signed a release of any further claims it might have made against Mr. Nelson or his estate.

Unfortunately for the hospital, Medicare audited the payments on behalf of Mr. Nelson and noted that his “lifetime days” had already expired before admission to the hospital. As a consequence McKennan was not entitled to any payment from Medicare, and the agency simply reduced its next payment accordingly.

Since McKennan had already agreed not to pursue Mr. Nelson’s estate, it decided to seek reimbursement from his children. South Dakota law includes a provision requiring children to pay for their parents’ care, and so the hospital filed suit against Mr. Nelson’s three children.

Unfortunately for the hospital, South Dakota’s law requires children to pay for their parents’ care only if the parents are unable to pay for care themselves. Just eight days before Mr. Nelson’s death a pending personal injury lawsuit was settled by payment of $1.2 million into a trust for Mr. Nelson’s benefit; on his death, the remaining trust assets were distributed to his estate and ultimately to his children. He was not indigent, and his estate was sufficient to pay for his care.

McKennan then argued that principles of “equity and social policy” should be applied to prevent Mr. Nelson’s children from receiving his estate without having to pay for his medical care. The South Dakota Supreme Court rejected that argument, noting that the hospital’s “equity” argument was unsupported by any citations to legal authority. Accounts Management, Inc., v. Nelson, May 21, 2003.

Though “filial responsibility” laws exist in over half of the states, they are seldom invoked because both Medicare and Medicaid rules prevent efforts to seek additional payments in most circumstances. The Nelson case provides some insight into how changes in health care financing might affect families.

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