Walton v. Mariner Health

894 A.2d 584

391 Md. 643

Audrey WALTON, et al. v. MARINER HEALTH OF MARYLAND, INC.

No. 33, September Term, 2005.

Court of Appeals of Maryland.

March 14, 2006.

COPYRIGHT MATERIAL OMITTED

Benjamin J. Woolery (McGill & Woolery, on brief), of Bowie, Ron M Landsman (Ron M. Landsman, P.A. on brief), of Rockville, for appellants.

Norman L. Smith, Fisher & Winner, LLP, Baltimore, for Brief of Amicus Curiae Maryland Chapter of the National Academy of Elder Law Attorneys in Support of appellants.

David F. Clinnin of Towson (Kenneth L. Rosen on brief), of Baltimore, for appellees.

John F. Lessner, Howard L. Sollins, Ober, Kaler, Grimes & Shriver, A Professional Corporation, Baltimore, for Brief of Amicus Curiae Health Facilities assocciation of Maryland.

Argued before BELL, C.J., RAKER, WILNER, CATHELL, HARRELL, BATTAGLIA and GREENE, JJ.

GREENE, J.

This case primarily involves a review of the laws of agency and contracts and the rules of statutory interpretation. Although Patricia Walton ("Patricia") and Audrey Walton ("Audrey") are both named parties in this case, the issue before us is whether Patricia, an agent for Audrey, can be held personally liable for Audrey's outstanding debt. On January 10, 2003, Mariner Health of Southern Maryland ("Mariner Health"), a nursing home facility, sued Patricia, as agent, and her mother, Audrey, for breach of contract for failing to pay Audrey's nursing home bill as allegedly agreed to by the parties. On August 11, 2004, the Circuit Court for Prince George's County found both mother and daughter liable to Mariner Health for the outstanding balance incurred by Audrey and for attorney fees. The Waltons appealed that decision to the Court of Special Appeals. Before that court could decide the appeal, we granted certiorari. Walton v. Mariner Health, 388 Md. 97, 879 A.2d 42 (2005).

We must determine whether a contract between an agent, on behalf of the nursing home resident, and a nursing home facility, entitles the nursing home to a private cause of action against an agent for the cost of the resident's care. If an agent neglects his or her duty to apply for Medicare or Medical Assistance¹ on behalf of the resident under Maryland Code (1982, 2000 Repl.Vol.), § 19-344(c) of the Health-General Article, can the agent be held personally liable for the debt incurred by the resident of the nursing home? We must also resolve whether § 19-344(c) of the Health-General Article limits a nursing home facility to statutory remedies or if it may pursue a private cause of action against an agent for personal liability for an outstanding debt incurred by the resident.

We reverse the judgment of the Circuit Court for Prince George's County. The Circuit Court erred in holding that the financial agreement signed by the agent on behalf of the resident rendered the agent personally liable for the outstanding nursing home bill² even though the agent failed to seek Medicare or Medical Assistance for the resident. In addition, we hold that a nursing home facility is limited to remedies prescribed by statute.

FACTS

On January 26, 2001, Audrey was transferred from Southern Maryland Hospital Center to Mariner Health of Southern Maryland. That same day, Patricia, as an agent of Audrey, signed the Resident's Agent Financial Agreement with Mariner Health of Southern Maryland ("Agreement"). Patricia indicated in the agreement that the only methods of payment would be Medicare or Medical Assistance. In the agreement, Patricia expressly denied any personal responsibility for Audrey's bill. When Audrey was admitted to the facility, Medicare paid for Audrey's nursing home bill, however, at the end of February, 2001, Medicare stopped paying for Audrey's nursing home care. Patricia, as agent, was required, as stipulated in the agreement, infra at note 9, to reapply for eligibility or Medical Assistance. There was testimony that Audrey would have been a successful candidate for Medical Assistance and, most likely, Medicare. From March 2001 through August 2002, Audrey incurred a debt of approximately $4,800.00 a month for her care. The outstanding balance was $86,235.91 for those eighteen months. On January 10, 2003, Mariner Health filed a Complaint against Patricia and Audrey for Audrey's outstanding bill. The amount requested by Mariner Health was $86,235.91, representing the outstanding balance due and owing, plus $12,935.39 in attorney fees.

On July 6, 2004, Patricia testified at trial that she was not aware that Medicare ceased paying for her mother's care and that the nursing home debt was being incrementally calculated. Patricia stated that she would have applied for medical benefits for her mother had she been aware that Medicare had stopped paying for Audrey's nursing home bill. Patricia testified that she was not given notice of the outstanding monetary obligation until after Mariner Health sold the facility to another group. Mariner Health offered no explanation or evidence as to why it failed to notify Audrey or Patricia that Medicare had ceased paying or that a debt had been incrementally tallied for eighteen months.

The trial judge interpreted two provisions of the agreement and, based on that interpretation, held that both Patricia and Audrey were contractually obligated for paying Mariner Health for Audrey's nursing home bill, but reserved judgment on damages for a compromise by the parties. On August 11, 2004, after the parties failed to settle the issue of damages, the court entered a judgment against both women and in favor of Mariner Health for damages in the amount of $75,000.00 and $11,250.00 for attorney fees.

RESIDENT AGENT'S FINANCIAL AGREEMENT

In the case, sub judice, the agreement consists of thirty pages collectively. The Resident's Agent Financial Agreement identified in the Circuit Court record as exhibit one (1) consisted of "The Financial Agreement With Mariner Health of Southern Maryland" ("Financial Agreement") and "Exhibit 1 Obligations of the Agent." Both agreements contained the agent, Patricia Walton's signature. The Financial Agreement consisted of twenty-two pages and "Exhibit 1 Obligations of the Agent" was eight (8) pages long.³ Both of the agreements contained several provisions pertinent to our discussion.

FINANCIAL AGREEMENT WITH MARINER HEALTH

The Financial Agreement that Patricia signed was an agreement between an agent on behalf of a resident and Mariner Health. The contract explained a resident's agent's rights and obligations and required that the agent select the type of financial program responsible for paying for the resident's care. Several payment options were provided including Medicare and Medical Assistance, other third party insurers, the resident's personal funds, the agent's personal funds, and other methods of payment.⁴ The relevant provision in the Financial Agreement that clearly qualified Patricia as a statutory agent, as defined in § 19-344(c)(1), was as follows:

This Contract is between Mariner Health of Southern Maryland ... and Patricia Walton (the "Agent" or "you") because you have access to (use, management or control of) the income, funds and/or assets of Audrey Walton (the "Resident") and because you are willing to act on behalf of the Resident.⁵

Financial Agreement at 1.

Patricia signified that both "The Medicare Program" and "The Medicaid Program" (also known as "Medical Assistance") would pay for Audrey's care by marking an "X" in the appropriate boxes. Patricia did not indicate that she would be liable for payment for Audrey's care from her own personal funds or that payment would be made from Audrey's personal assets:

3.... A. Who Can be Required to Pay for the Resident's Care.

Only the Resident and the Resident's insurers can be required to pay for the Resident's care. You cannot be required to pay for the Resident's care from you own funds, unless you knowingly and voluntarily agree to pay for the cost of the Resident's care with your own funds.

* * * *

It is anticipated that the Resident's care will be paid for by:

[X] The Medicare Program;

[X] The Medicaid Program (also known as "Medical Assistance);

[] Other third-party insurer, ...

[] You with the Resident's income, funds and/or other assets;

[] You with your own income fund and/or assets;

[] Other....

Financial Agreement at 4.

Section "3.B Private Pay Resident," contained information on specific payment and service requirements for residents paying with their own private funds.⁶ Although Audrey was not a Private Pay Resident, this section is relevant to our discussion because the trial judge based his judgment on language contained within this section. The pertinent language in this section provided that:

You [as an agent to a Private Pay Resident] understand and agree that you are responsible for paying the Facility... during which [time] the Resident has not been determined eligible for Medical Assistance. If you do not pay the amount owed us after receiving Facility bills and we hire a collection agency or attorney because of your breach of this Agreement, you agree to pay their fees, expenses and court costs with your own funds.

If you do not pay what is owed the Facility, you agree to apply to Medical Assistance for a determination of the Resident's income and assets available to pay the cost of the Resident's care. Once Medical Assistance determines the income and assets available to pay for the Resident's care, you agree to use such income and assets to pay the Facility's bills.² (Your request for this determination is not the same as applying for Medical Assistance on behalf of the Resident.)

² If you do not request a determination by Medical Assistance, or if payment is not made with the income and assets determined to be available for the Resident's care, the Facility may ask the court to order you to obtain the determination or to make payment.

Financial Agreement at 5-6.

Audrey's care was not paid for by Medical Assistance because...