Wilmac Healthcare, Inc. v. Rodriguez

Wilmac Healthcare, Inc. v. Rodriguez No. CI-14-02800 Ashworth, J. January 15, 2015 Civil Breach of Contract Doctrine of Necessaries Preliminary Objections Nursing Home Admission Agreement Responsible Person Designation By signing the Admission Agreement as her resident husband s Financial Power of Attorney and Healthcare Power of Attorney, the defendant wife did not become personally liable to the nursing home for the debts of her husband, although she did contract to provide payment from her husband s income or resources for the care rendered by the nursing home. The Doctrine of Necessaries, codified at 23 Pa. C.S.A. 4102, makes the spouse who incurred the debt primarily liable and the spouse who did not secondarily liable, so the statute does not impose joint and several liability on each spouse that might allow a creditor of both spouses to reach entireties property. Wilmac failed to prevail in this instance against the wife pursuant to 4102 because it could not establish: (1) that it obtained a judgment against the husband for the cost of the necessaries ; (2) that it executed against him alone; and (3) that no property of the husband was found with which to satisfy the judgment. IN THE COURT OF COMMON PLEAS OF LANCASTER COUNTY, PENNSYLVANIA CIVIL ACTION LAW WILMAC HEALTHCARE, INC., : d/b/a LANCASHIRE HALL NURSING : & REHABILITATION CENTER : : v. : No. CI-14-02800 : ANA L. RODRIGUEZ : O P I N I O N BY: ASHWORTH, J., JANUARY 15, 2015

Before the Court for disposition are the Preliminary Objections filed on behalf of Defendant Ana Rodriguez. For the reasons set forth below, these Objections will be sustained and the Complaint of Plaintiff Wilmac Healthcare, Inc., d/b/a Lancashire Hall Nursing & Rehabilitation Center (Wilmac) will be dismissed in its entirety. I. Background On October 1, 2012, Ana Rodriguez, acting as the legal representative for her now-deceased Husband, Hector L. Rodriguez, signed an Admission Agreement with Wilmac. (See Complaint, 3; see also Exhibit A. ) On November 19, 2012, Mr. Rodriguez s Medicaid application eligibility ended and all subsequent expenses were charged to his account. (Id., Exhibit B. ) Mr. Rodriguez lived at Wilmac s facility until his death on December 2, 2012, at which time $18,615.72 was owed to Wilmac for services and supplies related to his care. (Id. at 6, 10; see also Exhibit C. ) On April 1, 2014, with the entire bill still outstanding, Wilmac brought suit alleging breach of contract against Defendant Wife as the responsible person under the Admission Agreement and, pursuant to the Doctrine of Necessaries, as the widow of Mr. Rodriguez. (See Complaint at 12-16.) Wilmac seeks the principal balance due and owing, as well as 1.25% monthly interest on the unpaid balance, as well as all reasonable attorney fees (30% of the unpaid balance) and court costs associated with the collection of the balance. (Id. at 17-22; see also Exhibit A at 4.2).) Defendant Wife has challenged the Complaint with Preliminary Objections, which raise the following issues: (1) whether Wilmac s Admission Agreement violates Pennsylvania law by making the responsible person signatory personally liable for the debt incurred by the resident; (2) whether Wilmac required a guarantee from Defendant Wife as a condition of her Husband s admission in violation of federal statutes; (3) whether Wilmac has pleaded sufficient facts to support its claim that Defendant Wife failed to comply with

the terms of the Admission Agreement by failing to provide information requested by the Department of Welfare for her Husband s Medical Assistance application; and (4) whether Wilmac has pleaded sufficient facts to support its claim pursuant to the Doctrine of Necessaries. Based upon these objections, Defendant Wife asks this Court to dismiss Wilmac s Complaint in its entirety. Briefs having been filed by the parties, this matter is now ripe for disposition. II. Discussion The Pennsylvania Rules of Civil Procedure provide that any party may file preliminary objections to a complaint for legal insufficiency, commonly referred to as a demurrer. Pa. R.C.P. 1028(a)(4). See also Schemberg v. Smicherko, 85 A.3d 1071, 1073 (Pa. Super. 2014). The question presented by the demurrer is whether, on the facts averred, the law says with certainty that no recovery is possible. Shafer Electric & Construction v. Mantia, Pa., 96 A.3d 989, 994 (2014) (quoting Lord Corp. v. Pollard, 548 Pa. 124, 128, 695 A.2d 767, 768 (1997)). Preliminary objections in the nature of a demurrer require the court to resolve the issues solely on the basis of the pleadings, and no testimony or other evidence outside of the complaint may be considered in disposing of the legal issues presented by the demurrer. Hess v. Fox Rothschild LLP, 925 A.2d 798, 805 (Pa. Super. 2007). In ruling on a preliminary objection in the nature of a demurrer, the court must accept as true all material facts set forth in the pleading at issue, as well as all inferences reasonably deducible therefrom. Schemberg, 85 A.3d at 1073. Where a doubt exists as to whether a demurrer should be sustained, this doubt should be resolved in favor of overruling it. Weiley v. Albert Einstein Medical Center, 51 A.3d 202, 208-09 (Pa. Super. 2012). A. Responsible Person Designation 3

Defendant Wife executed a 21-page, 26-paragraph Admission Agreement which outlined various terms of residential health care services to be provided by Wilmac to Defendant s Husband. The Agreement required the Resident and Responsible Person to use the Resident s income to pay Wilmac for the Resident s care. (See Complaint, Exhibit A at 2.1, 2.2.) The Agreement further required the Responsible Person to assist Wilmac in obtaining Medicaid for the Resident by providing the necessary financial information. (Id. at 5.7.) The parties dispute centers on the potential liability of the responsible person under the Agreement. Wilmac s claim against Defendant Wife rests upon the contention that Defendant personally obligated herself to perform under the Agreement when she signed the Agreement on the signature line as the Responsible Person. Wilmac argues that, as the Responsible Person, Defendant Wife had an independent contractual duty to pay for her Husband s care and to assist Wilmac in obtaining Medicaid for her Husband. The Admission Agreement requires that the Resident shall pay the Basic Daily Rate, specified in the rate schedule in effect at the time the service is rendered, for routine nursing services provided to Resident. (See Complaint, Exhibit A at 2.1 (emphasis added).) The Agreement further provides that Resident shall pay for other services and supplies provided by or through the Facility, which are not covered by the Basic Daily Rate as set forth in the Admission Package.... (Id. at 2.2 (emphasis added).) On page 5 of the Admission Agreement, under the heading Responsible Person s Obligations and Potential Liability, is the following language: The Responsible Person shall be obligated to fulfill the duties imposed by this Agreement and the duties imposed by the law governing fiduciary relationships. (Id. at 5.1.) Wilmac contends that this language imposes an obligation on Defendant Wife to make any payments for services and supplies that her Husband failed to make. (See Complaint at 13.) Moreover, it is Wilmac s assertion that Defendant knew or reasonably should have known that... such expenses would be her personal debt obligation as the Responsible Person. (Id. at 14.) 4

It is Defendant Wife s position that [n]owhere in the Admissions Agreement does it assign personal responsibility to be held liable for the debts of another to the Responsible Person. (See Preliminary Objections at 9.) Defendant Wife insists she signed the Admission Agreement solely in her capacity as the legal representative of her Husband to ensure that her Husband s money would be used to pay any and all bills associated with his admission. (Id. at 3.) When Mr. Rodriguez passed away, the remaining bill was left to his estate which did not possess the funds to pay for the expenses. (Id. at 4.) This position appears to be consistent with the acknowledgment by the Resident and Responsible Person that the Resident s estate shall be liable to and shall pay to [Wilmac] an amount equivalent to any unpaid obligations of Resident under this Agreement. (See Complaint, Exhibit A at 4.4.) Clearly, Defendant Wife by virtue of executing the Admission Agreement as the responsible person agreed to perform certain obligations. Although the term responsible person is not defined in the Agreement, it is frequently used in nursing home agreements. The term, however, is not used or defined in federal law governing nursing facilities. Nor is it defined in Pennsylvania law governing nursing facilities. It is found only in a regulation in Title 28 of the Pennsylvania Administrative Code (28 Pa. Code 201.24(a)), which permits a nursing home resident to name a responsible person. The term responsible person is defined in 28 Pa. Code 201.3 as follows: A person who is not an employee of the facility and is responsible for making decisions on behalf of the resident. The person shall be so designated by the resident or the court and documentation shall be available on the resident s clinical record to this effect. An employee of the facility will be permitted to be a responsible person only if appointed the resident s legal guardian by the court. 28 Pa. Code 201.3. Under this Code definition, a responsible person is not the party obligated to make payments for a resident s care. The Code only states that the responsible person is the one responsible for making decisions on behalf of the resident. 5

At the time Ana Rodriguez signed the Admission Agreement, she was apparently her Husband s agent pursuant to a power of attorney (POA), and was responsible for making decisions on his behalf. At the time Ana Rodriguez signed the Agreement, Wilmac presumably knew she was her Husband s POA because Ana Rodriguez is specifically identified in the Agreement as her Resident Husband s Financial Power of Attorney and Healthcare Power of Attorney. (See Complaint, Exhibit A at 9.1 and 9.2.) Entering into the Agreement with Wilmac was presumably within the scope of Ana Rodriguez s authority pursuant to her POA. The Admission Agreement was clearly entered into for Hector Rodriguez s benefit and his benefit alone. Hector Rodriguez did not sign the Agreement himself, presumably, because he was physically unable to do so. Without Ana Rodriguez s signature, Wilmac would not have had a written contract with Hector Rodriguez. The facts suggest one conclusion: Ana Rodriguez signed the Agreement as the agent and on behalf of her Husband, Hector Rodriguez, with no intention to personally bind herself. There is no allegation by Wilmac that Ana Rodriguez signed the Admission Agreement individually. By signing the Admission Agreement as her Husband s legal representative, Defendant Wife did not become personally liable to Wilmac for the debts of her Husband. The Admission Agreement did obligate Defendant Wife to use her Resident Husband s assets for the payment of nursing services. Defendant Wife, in fact, did contract to provide payment from her husband s income or resources for the care rendered by Wilmac. This contractual agreement, however, did not impose personal liability on Defendant Wife. Rather, Defendant Wife is liable only for her handling of her Resident Husband s assets and only to the extent that her Husband s assets would cover outstanding payments owed to Wilmac. B. Personal Guarantee 6

Defendant Wife contends that Wilmac required a third party guarantee of payment to the facility in direct violation of federal law which expressly prohibits any nursing home certified as eligible for Medicare or Medicaid reimbursement from requiring guarantees as a condition of admission or extended care. In both the Federal Medicare and Medicaid provisions, the key statutory language is set forth at 42 U.S.C. 1395i-3(c)(5)(A)(ii) and 1396r(c)(5)(A)(ii), which provides that participating skilled nursing facilities must not require a third party guarantee of payment to the facility as a condition of admission to, or continued stay in, the facility. Wilmac acknowledges these statutory provisions prohibiting the requirement of a third-party guarantee as a condition of admission to a nursing facility but contends that the [federal] statute does not prevent a facility from asking a third person voluntarily to guarantee payment to the institution. (See Plaintiff s Brief in Opposition to Preliminary Objections at 6 (emphasis in original).) Wilmac argues that Defendant Wife voluntarily assumed her Resident Husband s expenses as her personal debt obligation. The Honorable R. Stanton Wettick, of the Court of Common Pleas of Allegheny County, has addressed this issue of a responsible person or party knowingly and voluntarily guaranteeing payment for a nursing home resident. In Five Star Quality Care, Inc. v. Yablonski, 157 P.L.J. 284 (2009), Judge Wettick reasoned: There is... federal legislation which has resulted in the use of the term responsible party in nursing home admission agreements. For nursing homes certified as eligible for Medicare or Medicaid reimbursement, federal legislation provides: With respect to admissions practices, a skilled nursing facility must... not require a third party guarantee of payment to the facility as a condition of admission (or expedited admission) to, or continued stay in, the facility. 42 U.S.C. 1395i-3(c)(5)(A)(ii); 42 U.S.C. 1396r(c)(5)(A)(ii); 42 C.F.R. 483.12(d)(2). This federal legislation does not prohibit a nursing home governed by the legislation from having a third person voluntarily guarantee payments. Nursing homes responses to the federal law prohibiting 7

mandatory third-party guarantees, while allowing voluntarily third-party guarantees, is described in Katherine C. Pearson, Traps for the Unwary in Nursing Home Admission Agreements-Guarantor, Agent or Separate Promisor? 74 Pa.B.A.Q. 139 (October 2003). The author states that the admission agreements of nursing homes have added signature lines for a responsible party. Her review of more than twenty admission agreements from nursing homes in Pennsylvania revealed that all had signature lines for responsible party while using language that may confuse the signing party about the scope of his or her undertaking. She found that there is no uniformity in the contract language and the provisions that nursing homes later seek to characterize as a voluntary promise to guarantee payments are at best vague and at worst misleading. A relative asked to sign as a responsible party is likely to view his or her role to be a healthcare decision maker for the resident once the resident cannot make these decisions. The relative may also believe that he or she is agreeing to make payments to the nursing home from the resident's funds to which this relative has access, and to complete paperwork for the resident to obtain government funds for the nursing home. However, a relative is unlikely to believe that he or she has agreed to guarantee payments to the nursing home for the resident's care in a writing that does not even use the term guarantor. This is particularly true in the present case where the provision upon which Five Star relies states that the son agrees to assist in/assume the responsibility for payment of all previously mentioned fees (emphasis added). This provision may be reasonably construed as only imposing an obligation on the son to make his mother's funds, to which he has access, available to the facility. 157 P.L.J. at 285 (footnotes omitted; emphasis in original). In the instant case, the Agreement provides only that [t]he Responsible Person shall be obligated to fulfill the duties imposed by this Agreement and the duties imposed by law governing fiduciary relationships. (See Complaint, Exhibit A at 5.1 (emphasis added).) As noted above, Ana Rodriguez signed the Agreement as her Husband s fiduciary agent. (Id. at 9.1 and 9.2.) There is no indication 8

that she intended to personally bind herself. Had the language of the Admission Agreement clearly and unambiguously provided that the responsible person individually guarantees the obligations of the resident to make payments due under the Agreement, it would be necessary next to consider whether Defendant Ana Rodriguez knowingly and voluntarily assumed this obligation on behalf of her Husband. As the language does not impose an obligation on Defendant Wife to make payments due under the Admission Agreement, I need not reach this issue. 1 C. Medical Assistance Application Assistance Wilmac s Complaint avers that Defendant Wife failed to provide the information requested by the Pennsylvania Department of Welfare for Hector Rodriguez s Medical Assistance Application in violation of the Admission Agreement. The Agreement states that Resident and Responsible Person are obligated to make full and complete disclosure regarding all financial resources and income during the Medical Assistance application process. (See Complaint, Exhibit A at 6.3(a) (emphasis added).) Moreover, Responsible Person understands the failure to initiate and cooperate in the Medical Assistance application process may result in the discharge of Resident for non-payment and in personal liability to Responsible Person for losses incurred by Facility as a result of Responsible Person s failure to cooperate. 1 While the federal Medicare and Medicaid provisions prohibit the requirement of a third-party guarantee as a condition of admission to a nursing facility, the Social Security Act does allow a Medicare and Medicaid qualified nursing facility to require an individual, who has legal access to a resident's income or resources available to pay for care in the facility, to sign a contract (without incurring personal financial liability) to provide payment from the resident's income or resources for such care. 42 U.S.C. 1396r(c)(5)(B)(ii) (emphasis added). It is clear from this language that Congress did not want skilled nursing facilities to force others not in privity, such as a resident's family member, to accept personal financial responsibility for any cost of the resident s care. See also 104 H. Rpt. 651 (stating that purpose was to prevent financial exploitation of residents and their families). Furthermore, even though 42 U.S.C. 1396r(c)(5)(B)(ii) allows a nursing facility to require a person with legal access to a resident's funds to sign an admission agreement, the statute is equally clear that a person does so without incurring personal liability. See also 56 FR 48826 (when such a person signs an admission agreement, the person providing the guarantee [to disburse the income or assets of the resident] assumes no personal liability, distinguishing between third party guarantee and third party payor ). 9

(Id. at 5.8.) Wilmac avers that Defendant Wife did not cooperate with the Medicaid process and, therefore, Medicaid for Mr. Rodriguez was denied and this suit was initiated for payment. In support of this claim, Wilmac proffers Exhibit B, which is a letter from the Department of Welfare dated November 19, 2012, denying Mr. Rodriguez s application. This letter was not addressed to Defendant Ana Rodriguez, but rather was addressed to Lancashire Hall Nursing Home. Wilmac has failed to plead that Defendant Wife ever received this document and yet seeks to hold her personally liable for her alleged failure to comport with the terms therein. The November 19, 2012, letter from the Department of Welfare establishes only that Lancashire Hall Nursing Home failed to provide the requisite documents, not Defendant Ana Rodriguez. D. Spousal Liability for Necessaries As an alternative to its assertion that Defendant Wife breached the Admission Agreement and, therefore, is liable for the cost of Hector Rodriguez s care, Wilmac asserts that Defendant is liable under the so-called Doctrine of Necessaries. The present version of the common law doctrine is codified as follows: In all cases where debts are contracted for necessaries by either spouse for the support and maintenance of the family, it shall be lawful for the creditor in this case to institute suit against the husband and wife for the price of such necessaries and, after obtaining a judgment, have an execution against the spouse contracting the debt alone; and, if no property of that spouse is found, execution may be levied upon and satisfied out of the separate property of the other spouse. 23 Pa. C.S.A. 4102. This statutory provision relates to a legitimate state interest in safeguarding the support and maintenance of families and the individual members thereof. It is intended to ensure, among other things, the provision of needed medical services to married persons and recognizes that marriage involves shared wealth, expenses, rights and duties. Porter v. Karivalis, 718 A.2d 823, 826 (Pa. Super. 10

1998). Section 4102 furthers this state interest by making the spouse who incurred the debt primarily liable and the spouse who did not secondarily liable. Id. Thus, the statute does not impose joint and several liability on each spouse that might allow a creditor of both spouses to reach entireties property, but instead makes the spouse who incurred the debt primarily liable and the nondebtor spouse only secondarily liable. Porter, 718 A.2d at 826. See also In re O'Lexa, 476 F.3d 177, 180 (3d Cir. 2007). The statutory language indicates that the judgment creditor must first seek to collect from the assets of the spouse who incurred the debt for necessaries. While Plaintiff did not require Hector Rodriguez to personally execute the Admission Agreement when he entered its skilled nursing facility, Hector Rodriguez was the contracting party for purposes of 4102. Thus, for Wilmac to prevail in this instance pursuant to 4102, it must establish at a minimum: (1) that it obtained a judgment against Hector Rodriguez for the cost of the necessaries 2 ; (2) that it executed against him alone; and (3) that no property of Hector Rodriguez was found with which to satisfy the judgment. These requirements must be satisfied before Wilmac may execute and levy on Defendant Wife s property to satisfy the debt. Wilmac has failed to plead that even one of the above requirements of 4102 was satisfied. Wilmac produced no evidence whatsoever showing that it first obtained a judgment against the Resident, and that it executed on the judgment and sought to levy upon the assets of Hector Rodriguez i.e., against the spouse contracting the debt alone before seeking to recover from Defendant Wife. Moreover, Wilmac produced no evidence establishing that no property of Hector Rodriguez s was found upon which to levy to satisfy the judgment. 2 Defendant does not raise an issue with regard to the nursing home expenses as necessaries under 4102. The case law of Pennsylvania provides that medical care and services and expenses incident to a spouse s illness and death must be considered necessaries. See In re Waesch's Estate, 166 Pa. 204, 30 A. 1124 (1895); Harrisburg Medical Management, Inc. v. Arnold, 25 Pa. D.&C.4th 342 (Cumberland Co. 1995); Geisinger Medical Center v. Salerno, 40 Pa. D.&C.3d 668 (Montour Co. 1986). 11

A prerequisite for going after the non-debt incurring spouse is a judgment against the estate of the primarily liable spouse. See Bears Estate, 60 Pa. 430, 435 (1869). Since Wilmac has not pursued a judgment against the estate of Hector Rodriguez, it is not entitled to relief under the Doctrine of Necessaries. III. Conclusion For the reasons set forth above, Defendant Ana Rodriguez s Preliminary Objections will be sustained and Plaintiff s Complaint dismissed in its entirety. Plaintiff shall have 20 days to file an amended pleading relative to Defendant s alleged violation of the Admission Agreement with respect to the Medical Assistance Application process and Defendant s alleged liability pursuant to 23 Pa. C.S.A. 4102. 3 Accordingly, I enter the following: IN THE COURT OF COMMON PLEAS OF LANCASTER COUNTY, PENNSYLVANIA CIVIL ACTION LAW 3 Wilmac appears to have pled just one cause of action to recover for medical services rendered to Defendant s Husband. It has based this cause of action on several theories. Defendant objects to this inexactness and commingling of causes of action which is problematic for at least two reasons. First, it violates Pa. R.C.P. 1020(a) which, in relevant part, requires that [e]ach cause of action and any special damage related thereto shall be stated in a separate count containing a demand for relief. Second, it fails to adequately explain the nature of the claim to the opposing party so as to permit him to prepare a defense and... be sufficient to convince the court that the averments are not merely subterfuge. Bata v. Central-Penn National Bank, 423 Pa. 373, 380, 224 A.2d 174, 179 (1966). Any amended pleading should include individual causes of action in separate counts. 12

WILMAC HEALTHCARE, INC., : d/b/a LANCASHIRE HALL NURSING : & REHABILITATION CENTER : : v. : No. CI-14-02800 : ANA L. RODRIGUEZ : O R D E R AND NOW, this 15 th day of January, 2015, upon consideration of the Preliminary Objections of Defendant Ana Rodriguez, Plaintiff s response thereto, and the briefs filed by the parties, it is hereby ORDERED that said Objections are SUSTAINED and Plaintiff s Complaint is DISMISSED. It is further ORDERED that Plaintiff shall have 20 days from the date of this Order to file an amended complaint consistent with the attached Opinion. BY THE COURT: DAVID L. ASHWORTH JUDGE ATTEST: Copies to: Charles Rector, Esquire, Law Office of Charles Rector, P.C., 1104 Fernwood Avenue, Suite 203, Camp Hill, PA 17011-6912

Michael D. Hess, Esquire, Burke & Hess, 1672 Manheim Pike, Lancaster, PA 17602-3028