Vermont Court Rejects Skilled Nursing Facility's Attempt to Cite Connecticut Case Law to Support its Contention That Responsible Party is Personally Liable Under Admissions Agreement

By Taylor Equi, Czepiga Daly Pope & Perri

Recently, a Vermont superior court rejected a skilled nursing facility’s attempt to cite Meadowbrook Ctr., Inc. v. Buchman, 149 Conn. App. 177 (Conn. App. Ct. 2014) and Sunrise Healthcare Corp. v. Azarigian, 76 Conn. App. 800 (Conn. App. Ct. 2003) to support its claim that its resident’s wife, Mrs. Rich, is personally liable for her husband’s debt, despite the court ultimately finding that Mrs. Rich breached the Admissions Agreement.

The facts of Cent. Vt. Med. Ctr., Inc. v. Rich, 2015 Vt. Super. LEXIS 35 (Vt. Super. Ct. July 15, 2015) are rather familiar: a skilled nursing facility admitted Mr. Rich as a resident into its facility, and promptly requested his wife, Mrs. Rich, to sign the Admissions Agreement as his “representative”.  Mrs. Rich accommodated the request.

At the time of his admission, Medicare paid the facility for Mr. Rich’s care.  Once Medicare stopped paying for Mr. Rich’s stay at the facility, Mrs. Rich applied for Medicaid benefits on behalf of Mr. Rich; this application was subsequently denied. 

Following Mr. Rich’s denial of Medicaid benefits, the facility sued Mr. and Mrs. Rich for breach of contract.  The facility sought to impose personal liability on Mrs. Rich due to her breach of the Admissions Agreement

In support of its claim that Mrs. Rich should be held personally liable, the facility cited two Connecticut Appellate court cases, Meadowbrook v. Buchman and Sunrise Healthcare v. Azarigian.  The facility claimed that these cases stand for the proposition that individuals who sign Admissions Agreements shall be held personally liable if that individual fails to obtain Medicaid benefits for the resident.  The Vermont court rejected the facility’s argument that the Connecticut Appellate Court cases impose personal liability on responsible parties:

The breach does not automatically make her personally liable for the entire debt.  There is no allegation that Ms. Rich misappropriated any of the funds that Mr. Rich has available to pay Woodridge or otherwise has attempted, on Mr. Rich's behalf, to avoid the liability to Woodridge.  What resources Mr. Rich has had available to pay Woodridge, he presumably still has available to pay Woodridge. She simply has failed to write checks as promised.  This breach may be the immediate cause of this collection action, but it does not shift the whole liability to Ms. Rich and suddenly make her assets available to satisfy Mr. Rich's liability.  Doing so would put her in the position of being a guarantor, which she is not.

Cent. Vt. Med. Ctr. at *10.

The Vermont court, unfortunately, but not unsurprisingly, did not end its analysis there, however, and found that, had Mrs. Rich diverted her husband’s funds to anyone other than the facility, the court would have found Mrs. Rich personally liable for her husband’s debt.

Ultimately, the Vermont court held that since Mrs. Rich “voluntarily” signed the Admissions Agreement, Mrs. Rich must use her husband’s funds to which she has access to pay for the damages caused by her breach.

So, what is the importance?  While the Vermont court found that Mrs. Rich was liable under the Admissions Agreement due to her “voluntary” signature,¹  the Vermont court, in this writer’s opinion, adopted Judge Schaller’s concurring opinion in Meadowbrook Ctr., Inc. v. Buchman. That concurring opinion was heavily criticized by the majority opinion writers, for limiting Mrs. Rich’s liability to her actual access to her husband’s assets, and refusing to impose personal liability upon Mrs. Rich by virtue of her signature on an Admissions Agreement.  This is another example of a court following the logic of Aaron Manor, Inc. v. Irving, 307 Conn. 608 (Conn. 2013), where the court found, among other determinations, that Mrs. Irving was not personally liable to the skilled nursing facility, because she neither had control of nor access to the resident’s assets.

¹Putting aside for another time a discussion of whether there is consideration to support a contract between the responsible party and the skilled nursing facility, and that no one signs these admission agreements voluntarily.

This article was originally published in the CT-NAELA Practice Update, Fall 2015, Volume 6, Issue 2