Nursing Care Contracts and Admission Agreements: Starting a Relationship the Right Way

From the perspective of a proprietor of a nursing care facility, admission agreements are the beginning of the credit relationship between a facility and the resident. Although the main concern behind this agreement is care for the resident, the agreement also needs to outline the rights and responsibilities of the resident's family, guarantors, responsible parties, and individuals with powers of attorney.  Invariably, these agreements are entered into with the very best of intentions.  However, there are some actions to take at the very beginning of the relationship that can provide protection in the event the relationship goes bad. 

At the beginning of the relationship, it is advisable to have the resident and/or any secondary liable party fill out and sign an application as part of the agreement.  A credit/account application can provide all relevant information about liable parties, while also providing asset information should collection of the account become a necessity.  The more detailed and specific the information provided, the easier it will be to recover on an unpaid debt.    

The application should include a request for all basic information from resident and responsible parties or family members.  This includes the address, telephone number, fax number, email, and social security number of the resident and any secondarily liable party.  If the secondarily liable party happens to be court appointed, it is important to know the legal status (i.e. court, case number, with/without bond, over person and/or estate).   

It is also important for the application to include the names, titles, and contact information for every individual that is authorized to make financial and/or medical decisions for the resident.  A common dispute when an account goes unpaid is that the charges incurred were not authorized.  Identifying the individuals authorized to make such decisions eliminates this possible defense should legal action be required, while also lessening the possibility of unauthorized charges. 

It is also useful to request a list of financial references in the application.  This information creates a possible avenue for collection should legal action be required to collect the debt.  If able to obtain a judgment on an unpaid account, banking information on the application is a good first step in determining sources of income to help collect.

Along with an application, the facility should employ an exhaustive and detailed admission agreement.  The admission agreement should outline the rights and responsibilities of the resident and all secondarily liable parties involved.  It should clearly outline whether a secondarily liable individual is a guarantor of payment, or merely a responsible party to ensure the resident's financial assets are diverted to the facility as payment for the care.  The more detailed the responsibilities, the better. 

In order to ensure that the provisions contained in the agreement are enforced by the court, there must be proof that liable parties agreed to the provisions.  "When the terms of the contract are unambiguous and clear on their face, the court does not need to go beyond the plain language of the contract to determine the rights and obligations of the parties and the court must give effect to the contract's express terms"  DiGioia Bros. Excavating, Inc. vs. Cleveland Dept. of Pub. Util., Div. of Water (1999), 135 Ohio App.3d 436, 734 N.E.2d 438.  It is generally presumed that the intent of the parties to a contract resides in the language they choose to employ in the agreement. Shifrin vs. Forest City Enterprises (1992), 64 Ohio St.3d 635, 1992 Ohio 28, 597 N.E.2d 499.

While some agreements include language that a signature on the application is confirmation that the terms and conditions have been read and understood, this language may not be strong enough to be enforced by the court.  As such, it is recommended to include a space for liable parties to affix a signature (or at least signed initials) on each page of the terms and conditions, and that the terms and conditions are attached in some way to the credit application.  Taking these extra measures can eliminate any allegations that the liable party did not receive nor had an opportunity to review the additional terms and conditions and ensure the court enforces them.  The signature on the terms and conditions can remove any ambiguity surrounding the transaction, and leave the court little to interpret in enforcing its provisions. 

Obviously, the authorized signature of the liable party is needed on the admission agreement and corresponding application.  However, it is also advisable to seek an individual guaranty as part of the agreement, recognizing this cannot be a requirement as it is contrary to law.  While a family member or other individual may be reluctant to personally guarantee any unpaid amounts, it provides much more security.

Personal guaranties must be in writing and signed by the party to be charged.  Ohio Revised Code Sec. 1335.05.  As such, it is imperative that the guarantee be clearly defined in the credit application.  The signature of the guarantor should also be affixed directly below the guarantee provision.  The signature on the guarantee should state "individually" or "personally", and anyone who signs cannot do so in a representative capacity, such as "Power of Attorney".  Above all, the language of the guaranty must be clear and unambiguous that the signor is personally guaranteeing the debt, or otherwise it may not be enforceable.

If the liable party is signing as only a responsible party, it is extremely important to be clear about their obligations.  A list of a resident's assets and the responsible party's agreement to divert those assets to the facility is advisable.  It may also be helpful to clearly outline the responsible party's obligations to secure Medicaid funding for the resident, along with a step-by-step process on how to accomplish this goal.  Above all, it is important to outline the responsible party's potential liability for failing to comply with the terms of the responsible party agreement and the possible consequences therefrom.    

The tips listed above are just a brief overview of the items that can be included in an application and agreement.  The parties to such a transaction are generally able to agree to terms as they see fit.  However, by including the items listed above, in a specific and detailed manner, it creates more security in recovering unpaid debts due if the relationship goes bad.