Lately, I’ve seen several clients who have come to us too late. They were presented with an admission agreement for a nursing home or other care facility and were told that the agreement needed to be signed “right away.” This can be an expensive mistake.
Usually, you are given the admission papers in the midst of a crisis. Many times, I’ve seen them close to 40 pages long! Often, there are also several more pages of attachments. Throughout the document, there are several signature pages. In the details lie the trips and traps.
It is better to have an attorney review the paperwork before signing anything. Facilities often slip terms into the contract that can get you or a loved one into unexpected trouble. Fortunately, these terms can be crossed out, initialed, and returned to the facility with the necessary signatures.
The following are the three biggest and most common trips and traps I see:
- First, the nursing home wants a loved one to sign as a “responsible party.” WARNING – Doing so puts your loved one at great risk of being personally responsible for paying for your care. By law, if your loved one is your legal guardian or financial agent under your Durable General Power of Attorney, she can limit her liability by signing on your signature line. Never sign on the signature line for the “responsible party.”
To limit their liability, the signature looks ideally like this: “Jane Smith by John Smith, Guardian [or POA].” A short form of this signature is simply “John Smith, Guardian [or POA].” To be cautious, I prefer that my clients use the long form of the signature. By law, when your loved one is acting as a Guardian or Agent, her liability is limited. By signing as a “responsible party,” your loved one risks losing that protection.
Signing as a Guardian or POA may still not be enough. Some contracts are now written with language by which your loved one can actually agree to be personally liable for your care. An example of a situation where she could be liable is if, for some reason, your Medicaid application was turned down. Since most nursing homes cost at least $7,000 or more per month and it can take many months to process a Medicaid application, your loved one could face severe financial hardship.
- Second, many people legitimately wish to ensure that their spouse has sufficient assets to live if one spouse has to live in a nursing home. Other times, single people wish to plan to receive Medicaid. Such planning can be a complex, but is a legal process to maximize how much wealth you can retain or pass on to a loved one. Often, buried in these agreements are requirements that you not do this planning. This can severely limit your ability to care for your spouse or preserve wealth.
- Third, many facilities now have mandatory arbitration clauses. Arbitration is a binding process in which your legal dispute with a facility is decided by a private person (or group of people). Your case is not considered by a judge or jury. You sign the agreement before anything bad happens and, once you do, your rights are severely limited.
These contracts often require that you pay at least half of the arbitration fees, which can run into the thousands of dollars. In contrast, with a court, you pay fees, but these costs are usually much less. Also, these agreements often limit your ability to collect damages for extremely bad conduct by the facility which injures you. They can also limit your ability to recover your attorneys’ fees. Imagine if you are seriously neglected or injured in a nursing home. It could happen at any time after admission.
And remember, the facility has likely chosen the arbitrator who will decide your case. It is likely an arbitrator with whom they do repeat business. Is this who you want deciding if you have been mistreated?
While there has been some movement to limit the ability of facilities which accept Medicaid or Medicare to require arbitration as part of their admission agreements, a current proposal by the federal Centers for Medicare and Medicaid Services would only require that arbitration agreements be “fair.”[1] The proposed rule has been criticized[2] for not banning arbitration agreements which are signed before something bad happens.
In the meantime, when facing the decision to enter a facility, you or your loved one should read the fine print. It would also be a good idea to hire an elder law attorney to review the papers. An hour of that attorney’s time could spare you the trips and traps of entering into a long term care facility contract.
[1] Proposed CMS Rule CMS-2015-0083-0001 See, http://www.regulations.gov.
[2] http://www.citizen.org/documents/FAN-CMS-arbitration-comments-10-14-15.pdf