Manahawkin Convalescent v. O’Neill v. Broadway Health Care Management, A-0841-11T4; Appellate Division; opinion by Maven, J.S.C., temporarily assigned; decided and approved for publication May 31, 2012. Before Judges Baxter, Maven and Carchman. On appeal from the Law Division, Ocean County, L-2523-09. DDS No. 09-2-xxxx [17 pp.]

Third-party plaintiff Frances O’Neill, in her capacity as executrix of the estate of Elise Hopkins, appeals from the order granting summary judgment in favor of third-party defendants, including Manahawkin Convalescent Center; denying summary judgment of her claims; and dismissing her counterclaim and third-party complaint, with prejudice.

The issue presented is whether the Rehabilitation and Nursing Home Admission Agreement, required to be signed prior to admission of plaintiff’s mother, Elise Hopkins, to Manahawkin Convalescent Center, violated the Nursing Home Act (NHA), the Truth-in-Consumer Contract, Warranty and Notice Act (TCCWNA), and the Consumer Fraud Act (CFA). The narrower issue is whether the nursing home’s lawsuit filed against plaintiff as the responsible party, to collect the outstanding debt owed for services rendered for her mother’s care, violates the CFA.

When plaintiff’s mother became a patient at Manahawkin, plaintiff signed the admission agreement designating herself as the “responsible party” and assigning the direct payment of her mother’s Medicaid benefits to Manahawkin. Plaintiff did not agree to be the private pay guarantor for her mother’s expenses and declined to have her mother’s Social Security benefits deposited directly to the nursing home. Thus, plaintiff assumed the responsibility of making monthly payments from her mother’s financial resources to Manahawkin. Plaintiff made the payments until her mother’s death.

Plaintiff disputed an outstanding balance due of $878.20 for the final month of care. Defendant filed a Special Civil Part complaint to compel plaintiff, as the responsible party, to pay the outstanding debt. Plaintiff filed an answer, a counterclaim seeking class-action certification and a third-party complaint. Plaintiff contended the admission agreement required a third party to incur personal financial liability for Medicaid and Medicare patients contrary to the NHA and TCCWNA; and the admission agreement, as an unconscionable consumer contract, violated the CFA.

In granting summary judgment to defendants, the trial court determined that neither the contract nor the representations made on behalf of defendant indicated that plaintiff’s personal assets would be placed in jeopardy.

Held: Defendant was entitled to seek payment from plaintiff, the responsible party, for the outstanding nursing home debt owed for care provided to plaintiff’s mother, as authorized by federal and state law. The manner in which defendant pursued its financial interest was lawful. Defendant’s billing and collection practices are considered part of the services rendered and, as such, fall within the “learned professional” exception of the Consumer Fraud Act.

On appeal, plaintiff disputes the trial court’s interpretation of the admission agreement and the court’s legal conclusions. Plaintiff contends the trial court erroneously found that (1) the “responsible party” was not personally liable; (2) the caption of the Special Civil Part complaint naming “Frances O’Neill” rather than the “Estate of Elise Hopkins” was a “matter of semantics”; and (3) plaintiff knew that she was contacted and sued as the responsible party. The essence of plaintiff’s position is that defendant’s suit against plaintiff as the responsible party equates to defendant holding plaintiff personally financially liable for her mother’s debt in contravention to NHA and federal laws regulating nursing facilities.

The trial court compared the contract language to the controlling federal laws and found that the admission agreement complies with the applicable provisions concerning third-party guarantees. The trial court also reviewed New Jersey law that provides that nursing home facilities are prohibited from requiring a third-party guarantee of payment as a condition of admission where the prospective resident is a Medicare or Medicaid recipient. The federal and state laws make it clear that defendant could not have legally required plaintiff to use her own assets to satisfy her mother’s financial obligations. Although the admission agreement provided a “private pay” guarantor option, plaintiff did not sign that section.

The appellate panel concurs with the opinion of the trial court that there was no implicit or explicit action taken by defendant to hold plaintiff personally financially liable for her mother’s debt for care received at Manahawkin. The panel concludes the admission agreement is a lawful contract, that defendant’s collection effort did not violate state or federal law, and that the grant of summary judgment was not error.

Plaintiff’s claim that the admission agreement violates the New Jersey CFA also fails. To sustain a claim of violation of the CFA, plaintiff must prove “1) unlawful conduct by defendant; 2) an ascertainable loss by plaintiff; and 3) a causal relationship between the unlawful conduct and the ascertainable loss.” Plaintiff cannot satisfy the first element, as the admission agreement is lawful.

The panel also finds the learned-professional exception precludes the application of the CFA to Manahawkin. The “learned professional” exception proscribes consumer protection actions against certain types of professionals or industries that are regulated by separate state or federal agencies, where such regulation could conflict with regulation under the CFA. Hospital billing activities are within the learned-professional exception due to state and federal regulations associated with the receipt of Medicaid and Medicare funding. Like hospitals, nursing home facilities, particularly those accepting patients who receive federally funded medical assistance, are strictly regulated. The New Jersey Department of Health and Senior Services is authorized to enforce the provisions of the NHA and any rules or regulations promulgated pursuant to the statute. Here, the billing services of the defendant-nursing home fall within the “learned professional” exception of the CFA.

For appellant — Sander D. Friedman. For respondent — Tracy L. Burnley (Marshall, Dennehey, Warner, Coleman & Goggin).