BEWARE: Illegal Provision in Nursing Home Contracts

Many nursing homes follow standard operating procedures that are illegal. You might think that admission agreements would be compliant with law, given the combined efforts of the nursing home’s management and legal advisers. You would be wrong. Admission agreements frequently misstate the law in a way that is designed to disadvantage residents.

An analysis of approximately 200 admission agreements collected from nursing homes across Missouri give a good sample of the types of illegal and improper provisions that are seen in admission agreements across the country.

The area of visitation rights is perhaps the best example of the disconnect between the Nursing Home Reform Law and the nursing home status quo. A nursing home resident has the right to be visited by a family member at any time. But posted visiting hours are common in most nursing homes, and family members are accustomed to apologizing and hustling out when they’ve stayed beyond an 8 p.m. (for example) close of visiting hours.

Some examples of illegal provisions are: “Regular daily visiting hours for the facility have been established and posted. The facility reserves the right to limit any or all visitors.” “Posted hours apply. Facility retains right to limit any/all visitors. Relatives, on request, with doctor’s consent, can see critically ill resident anytime.” “Regular daily visiting hours for the facility have been established and posted. The facility reserves the right to limit any or all visitors. Relatives or guardians and clergy, if requested by the resident or family, will be allowed to see critically ill residents at any time in keeping with the orders of the physician.”

Access to Resident’s Income
A nursing home “may not require residents to deposit their personal funds with the facility.” Regardless, some admission agreements require a resident under certain circumstances have his income directly deposited to the facility. One admission agreement stated: “I authorize Facility to request and be named Payor on my Social Security checks.” Similarly, another admission agreement gave notification that “it is the policy of the facility to complete a Representative Payee form to the Social Security Administration requesting the resident’s Social Security income be directly sent to the facility.”

In one admission agreement, direct deposit was contingent on a resident’s failure to pay timely. However, slowness in paying does not waive the federal law referenced above. As a creditor, a nursing home has the right to give a nonpaying resident a transfer/discharge notice and/or to file a collection action. The nursing home cannot, however, require that it become the resident’s financial agent.

Financial Guarantors
The Nursing Home Reform Law prohibits a nursing home from requiring a third party guarantor as a condition of a resident’s admission or continued stay. Absent this provision, a nursing home could force a resident’s relative or friend to become liable for potentially devastating expenses. For example, a resident’s next door neighbor could find himself liable for a ten thousand dollar debt if, for whatever reason, the resident’s Medicaid application had been mishandled and denied. For example, a man who attended the same church as the resident, and found himself sued by the nursing home because he (the church member) had signed the admission agreement as a financially liable “responsible party.”

Like other provisions of the Nursing Home Reform Law, this guarantor prohibition applies to all residents of any nursing home that accepts Medicare and/or Medicaid. Thus, if a nursing home accepts either Medicare or Medicaid, this law applies whether the resident is eligible for Medicare or Medicaid payment, or pays personally for her nursing home care.

The examined admission agreements ran afoul of the law in several ways – by requiring a financial guarantee, by claiming that a “responsible party” was “volunteering” to become financially liable, or by holding the responsible party liable to the extent that he handled to the resident’s money

Regarding purportedly voluntary guarantee agreements, one representative admission agreement required a “Responsible Party to be fully responsible for all financial obligations,” and defined a Responsible Party as “[a]n individual who voluntarily agrees to become obligated for the care and treatment of the Resident.”

In the real world, of course, no one “volunteers” to become financially liable for nursing home expenses. A resident’s family member or friend signs as “responsible party” not because she is gratuitously offering to become financially liable, but because she feels that signing is a routine part of the admission process.

A “voluntary” guarantee is illegal and unenforceable for at least one of three reasons. First, the nursing home may be requiring the guarantee. The admission coordinator likely will be directing family members and friends to sign as responsible party. Second, the term “responsible party” is deceptive, because it suggests that a “responsible party” is the person who should be called in case of an emergency. As a result, a family member or friend might sign as a “responsible party” without understanding that she purportedly is becoming financially liable for all nursing home bills. The deceptiveness of the agreement is a reason for its invalidation under state consumer protection law.

Finally, these “responsible party” provisions are unenforceable because they provide no benefit to either a resident or a “responsible party.” In other words, the contract is invalid due to a lack of consideration. A “responsible party” signature cannot facilitate a resident’s admission – after all, the Nursing Home Reform Law prohibits a nursing home from requiring a guarantor as a condition of admission. Indeed, by its terms a “responsible party” signature provides no benefit to either a resident or a “responsible party”: the admission agreement itself generally states that the “responsible party” is volunteering.

Guarantees Based on Access to Resident’s Money
A typical admission agreement held a resident’s friend or family member liable only “to the extent of the resident funds received.” These types of provisions should generally be unenforceable against a responsible party since, absent tortuous behavior, an agent is not liable for the principal’s debts.

In summary, the no guarantee provision is likely to be determinative when asserted by a family member or friend who has not misappropriated the resident’s money. However, a court will be inclined to rule against a family member or friend who has used the resident’s money for personal purposes while leaving the nursing home unpaid.

Other miscellaneous improper provisions
“The Facility provides general duty nursing care. If the Resident is in such condition as to need continuous special duty nursing care, it is agreed that such must be arranged by the Resident or his/her legal representative or physician and that the Facility shall in no way be responsible for failure to provide the same and is hereby released from any and all liability arising from the fact that said Resident is not provided with such additional care.”

Also, the agreements characterize falling, choking, and other traumatic events as an inevitable part of nursing home life: “The parties hereto agree that the services provided by [facility] and others within this facility are not designed to somehow protect the Resident from everyday, normal risks and responsibilities of living, including, but not limited to, such general accidents and situations such as falling, choking and weight loss and/or dehydration resulting from a Resident’s failure to partake of food and drink.”

Although perhaps not inevitable, assault is presented as something that is part of everyday life: “We strive to hire and employ only people who have high ethical and moral standards and a compassion for others. However, the nursing home simply cannot read the minds and consciences of all its employees. … Think about going to the store, for example. There is the risk of physical or verbal assault, neglect by store employees and theft, among others. These same risks exist in any [group] environment, including the nursing home. We believe that the risk is small. But before moving your loved one into a nursing home you should understand and accept fully the risk.”

All of these provisions are invalid due to their inconsistency with the federal Nursing Home Reform Law and relevant state law. The Reform Law, for example, broadly requires a facility to provide the care necessary for a resident to “attain or maintain the highest practicable physical, mental, and psychosocial well being.”

How can nursing home practices (including admission agreements) be so frequently noncompliant with federal nursing home law? A big part of the answer rests with consumers’ unfamiliarity with both nursing home laws and nursing home life more generally. If consumers don’t know what to expect and/or are afraid to complain, it is small wonder that so many nursing homes get away with illegal practices.

Source: Eric Carlson is an attorney for the National Senior Citizens Law Center. He is the author of (among other things) The Baby Boomer’s Guide to Nursing Home Care (with co author Katharine Hsiao), and 20 Common Nursing Home Problems – and How to Resolve Them. The publications are available at

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