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The recent appellate decision in Bloomfield Health Care Center of Connecticut v. Jason Doyon (Conn. App. Ct., No. AC 40281, Oct. 9, 2018) should serve as a cautionary tale for guardians. In that case, a nursing home brought suit, outside of the guardianship court, against a guardian for failure to timely file a Medicaid application. The lower court dismissed the action for lack of privity but the appellate court reversed and remanded.

 ‘Bloomfield’

Samuel Johnson was admitted to the Bloomfield Nursing Home in April 2013. In September of that year his daughter filed a Medicaid application on his behalf. Medicaid denied that application in January 2014 for failure to provide information, such as an explanation of the proceeds of the sale of Johnson’s home.

The nursing home then initiated a conservatorship proceeding to assist Johnson in filing for Medicaid so that it could be paid. Jason Doyon was appointed conservator in April 2014. He paid over the proceeds of the sale of the home and Johnson’s monthly Social Security benefits to the nursing home. He did not file a Medicaid application until January 2015. This application was denied for failure to submit required documentation of eligibility.

The guardian then filed a further Medicaid application in August 2015 which was approved. However, the retroactive date that Medicaid eligibility began, May 1, 2015, left a gap in coverage and a debt owed to the nursing home. The nursing home brought suit directly against the guardian, in a plenary action, alleging his failure to timely file the Medicaid application was negligent and harmed the nursing home.

The guardian filed a motion for summary judgment arguing that he owed a duty only to his ward and had no duty of care to the nursing home. The trial court granted his motion. holding that “the defendant’s duty, and in fact, his authority to pursue Medicaid benefits on behalf of his ward, does not arise out of any relationship between the plaintiff and him, but solely from his appointment by the Probate Court as conservator …”

The appellate court reversed, finding the nursing home had advanced sufficient facts to demonstrate the foreseeability of harm to the nursing home if the Medicaid application were not filed timely by the guardian. The Bloomfield court gave great weight to the fact that the initial nursing home petition for the appointment of a conservator specifically mentioned the need for the Medicaid application; the guardian had exclusive access and control over the patient’s assets; the guardian had paid the proceeds of the sale of the home to the nursing home and paid the ward’s monthly Social Security benefits to the nursing home and knew of the debt to that facility. In this case the guardian was directly involved in the financial relationship between the ward and the nursing home.

New York State

In New York state, suits brought against guardians by third parties in plenary actions have been few in number and have been unsuccessful.

In Columbia Memorial Hospital v. Barley, 790 N.Y.S.2d 576 (App. Div. 3d Dept., 2005), the plaintiff hospital sued the patient’s guardian, the Columbia County Department of Social Services (DSS), alleging that the guardian failed to prevent the fraudulent transfer of the patient’s home or seek to have it set aside. DSS moved for summary judgment in the trial court and that motion was denied. The Appellate Division reversed and granted summary judgment to the guardian finding that “Plaintiff’s claim against DSS for breach of fiduciary duty should have been dismissed, however, because plaintiff neither pleaded nor proved facts demonstrating that DSS owed a fiduciary duty to plaintiff or had any relationship approaching privity …”

Martin v. Ability Beyond Disability, 2014 N.Y. Misc. LEXIS 5094 (Sup. Ct. Westchester Cty., 2014) reached a similar conclusion. This was a suit by mother of a deceased ward (John Martin II) against the guardian (Philip E. Conaty) for loss of the right of sepulcher. She alleged the guardian failed to notify her of her son’s death. The guardian argued lack of privity. The court agreed with the guardian: “The plaintiffs do not have standing to bring an action against Conaty. First the Court notes that Conaty owes no duty to the plaintiff other than in his capacity as a guardian for John.”

Complexity of the Medicaid Application

Bloomfield can be taken as a warning to guardians in New York to be timely in the filing of Medicaid applications on behalf of their wards. The fact that it took three applications to secure a Medicaid approval in Bloomfield can be taken as an indication of the complexity of a Medicaid nursing home application.

That application requires complete monthly statements from all financial investment and income tax returns over a five-year period immediately preceding the filing of the application. Those records must be analyzed to determine whether any uncompensated transfers were made within that time period by reviewing all withdrawals of $2,000 or more. In addition, the application must explain all of the income received during the five-year period, such as Social Security, pension, annuities, interest and dividends and required minimum distributions from retirement accounts. Further the application must document factors of age, citizenship, marital status, health insurance, and residence.

Obtaining all of the required information for a third party who is a resident of a nursing home and may be unable to assist in the process due to dementia can be an arduous process. The guardian should be aware of the information that will be required by Medicaid and ensure that the commission authorizes the guardian to secure the necessary information (e.g., birth certificates, marriage certificates, divorce decrees, death certificates and tax information).

The guardian should have the skill to timely file the Medicaid application and if not seek court approval for the retention of an appropriate professional with the experience and capability of properly filing the application and monitoring the processing of the application by the Medicaid agency.

Conclusion

Even though the nursing home in Bloomfield brought the original guardianship petition, it brought a separate proceeding against the guardian for the delay in the filing of the application. The nursing home might have avoided the privity issue if it had brought the proceeding for the delay in the guardianship court where the matter originated. The matter is made more difficult in New York state, where some nursing homes have brought guardianship petitions to secure payment for care and been criticized for using Article 81 of the Mental Hygiene Law for debt collection purposes. “To the extent that the nursing home is seeking to be paid for the care it has rendered to the person, the petitioner must seek a different avenue of redress for that relief as a guardianship application is inappropriate.” Matter of G.S., 841 N.Y.S.2d 428, Sup. Ct. Bronx Cty., 2007).

This case should serve as notice to guardians to pay close attention to the status of potential Medicaid eligibility of wards and to seek advice from a source that has extensive experience with the intricate requirements of Medicaid eligibility. A Medicaid application is a daunting task for the first-time filer, and trying to master it without sufficient experience in the document requirements, deadlines, fair hearing and litigation options can expose a guardian to liability. The Bloomfield decision was not on the merits and only found that summary judgment was not appropriate in this case. The case is very fact specific, but the risk that a guardian could be liable to a third party for failure to properly process a Medicaid application for a ward is a genuine concern.

Daniel G. Fish is a partner at McLaughlin & Stern.