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What Exactly is a Responsible Party?

Jenny took over handling her dad’s finances shortly before he entered the nursing facility.  As a dutiful daughter and agent under his Power of Attorney she saw to it that he was well cared for.  She visited him at the facility and paid the facility’s bill promptly until it was time to file for Medicaid.  The nursing facility filed the application for her dad andJenny was relieved when she finally got the letter of approval from Medicaid 6 months later.  So why was the nursing facility insisting that she now owed them $40,000?

 Jenny explained to me that Medicaid didn’t approve Dad until 4 months after the date he ran out of money.  The $40,000 was the facility’s private pay rate for those months that Medicaid wouldn’t cover – the Medicaid penalty.  “And, why”, I asked, “did Medicaid assess a 4 month penalty?”  Jenny told me that Dad had helped out her brother with a $40,000 “loan” 4 and ½ years ago.  She didn’t know that, however, until the Medicaid caseworker found the transfers in the records that she provided as part of the application process.  Once the State assessed the Medicaid penalty there wasn’t anything she could do about it.

 The transfers that caused the penalty weren’t Jenny’s fault but they weren’t the facility’s fault either.  The nursing home was just looking to get paid for the 4 months of care that they had already provided.  They turned to the one family member they had been dealing with, Jenny, insisting that she was responsible to pay the bill, pointing to the admission agreement she signed on Dad’s behalf when he entered their facility.

 Now, I’m always careful to advise family members who serve as power of attorney that you must understand what you are signing.  Most agreements refer to the “resident”, the person receiving the care and the “responsible party”, that person who the facility will look to under their contract to make payments for the services they will provide.  The contract usually is an agreement printed by the facility with blank spaces to be filled in and signed in the appropriate places.    I’ve reviewed many of these agreements over the years and they are rarely filled out correctly.  In Jenny’s case, she signed as a responsible party on the signature page but no one filled her name in the space provided on the first page identifying that person.  It was left blank.  We’ll get back to that.

 But, the $64,0000 question really is “what exactly is the responsible party responsible for?”, meaning, is Jenny responsible to pay the bill from Dad’s assets only or must she use her own assets?   The answer is, “it depends on what the agreement says”.    

Unfortunately for Jenny, the contract clearly identified the resident and the responsible party as being “jointly and severally liable for all charges.  That means the facility can hold either one responsible.  She didn’t recall anyone pointing that out to her before she signed the agreement but, quite frankly, she couldn’t really remember that meeting at all.   Jenny had a real problem.  Next week, I’ll tell you how we helped Jenny.