An Ohio appeals court rules that while federal and state regulations prevent a nursing home from requiring a guarantor to sign a nursing home agreement as a condition of admission, they do not bar a facility from imposing financial liability on a third-party guarantor. SWA, Inc., v. Straka (Ohio Ct. App., No. 82103, June 19, 2003).
Helen Hosta was admitted to a skilled nursing facility operated by SWA, Inc., in February 2001. Mrs. Hosta's daughter signed the contract on behalf of herself and her sister, Lynn Straka. Several months later, SWA sued Mrs. Straka seeking payment for amounts due for services that it rendered to her mother. Mrs. Straka claimed that she did not sign the contract and that billing procedures under Medicaid and Medicare regulations prohibit imposing personal liability on a third party. She also filed several counterclaims arising from her contention that nursing homes are prohibited by federal and state regulations from imposing financial liability on third-party guarantors, and contending that a provision in the nursing home's admission agreement informing the contractee that "it is a federal crime to unlawfully divest assets to become Medicaid eligible" was a false and misleading statement because that was not the law when the contract was signed. SWA eventually dismissed its claims, leaving only Mrs. Straka's counterclaims remaining. The trial court granted summary judgment in favor of SWA.
The Court of Appeals of Ohio affirms. First, the court finds that Mrs. Straka lacked standing to seek damages regarding the enforcement of the contract because she was not a party to it, and should have filed a claim for frivolous conduct instead. But even if Mrs. Straka had standing, the court rules that federal and state regulations only prevent a nursing home from requiring a guarantor to sign the nursing home agreement as a condition of admission, and that SWA was within its rights to sue to force a guarantor to pay fees. The court also rules that the "federal crime" provision in the agreement "was merely informational and not a contract term."
For the full text of this decision in PDF format, go to: https://www.supremecourt.ohio.gov/rod/docs/pdf/8/2003/2003-ohio-3259.pdf (If you do not have the free PDF reader installed on your computer, download it here.)
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