Troy Nursing & Rehabilitation Ctr., LLC v. Naylor (N.Y. App. Div., 3d Dept., No. 512311)

A New York appeals court rules that a deceased nursing home resident's daughter is personally liable to the nursing home for unpaid bills due to her breach of an agreement promising to use her access to the resident's assets to pay for his care. Troy Nursing & Rehabilitation Ctr., LLC v. Naylor (N.Y. App. Div., 3d Dept., No. 512311).

Ernest Naylor was a resident of Springs Nursing & Rehabilitation Center from late 2005 until his death in October 2008.  On two occasions, Mr. Naylor's daughter, Diana Gaetano, executed agreements with the nursing home in which she promised to use her authority over her father's assets – pursuant to a power of attorney – to use those assets to pay his nursing home bills.  When the bills were not paid, the nursing home filed a collection and breach-of-contract action against her.

A trial court held that Ms. Gaetano had breached the agreements by failing to use her access to her father's assets to pay his nursing home bills.  The court found that she had, in part, used her father's income to maintain his former residence, although he would clearly never reside there again, not only through payment of the mortgage and taxes but also for other services like cable television and newspaper delivery.  The court granted the nursing home's motion for summary judgment and held Ms. Gaetano liable for $80,509.55, reflecting the unpaid bill and interest.

Ms. Gaetano appealed, arguing that the agreements with the nursing home violated the Federal Nursing Home Reform Act's provisions prohibiting a nursing home from requiring a third-party guarantee of payment as a condition of a resident's admission.

The Appellate Division of the Supreme Court of New York, Third Department, affirms the trial court's holding that Ms. Gaetano's breach of the agreements with the nursing home made her personally liable for payment of her father's unpaid bills.  The court notes that the federal nursing home law expressly permits a facility to contract with a third party who has legal access to the resident's assets to use those assets to pay for the resident's care.  However, the appeals court remands the matter to the trial court for a determination of damages and the extent to which Ms. Gaetano's liability may be limited by the amount of her father's assets available to her prior to his death.