North Dakota nursing homes eye law as tool to recoup unpaid bills

FARGO - To recoup an increase in unpaid costs, North Dakota nursing homes are eyeing an arcane state law that holds adult children financially responsible for their parents’ care.

“We’ve always seen that law as potentially a tool to help pay for parents’ care, however under very limited circumstances,” said Shelly Peterson, president of the North Dakota Long Term Care Association. She referred to a largely unknown law that has been on the state books since 1877.

The statute is relatively brief in its wording:

“It is the duty of the father, the mother, and every child of any person who is unable to support oneself, to maintain that person to the extent of the ability of each.

“This liability may be enforced by any person furnishing necessaries to the person. The promise of an adult child to pay for necessaries furnished to the child’s parent is binding.”

Susan Johnson-Drenth, an attorney who specializes in elder law, said nursing homes may become emboldened to use the law because a similar statute in Pennsylvania was recently upheld on appeal. A nursing home successfully secured a $90,000 judgment against the adult child of a parent who had an unpaid bill.

Nursing homes are in a difficult spot because families find it more difficult to qualify for Medicaid assistance when a parent needs long-term care, Johnson-Drenth said.

She said nursing homes have recently begun suing spouses when a husband or wife has trouble qualifying for Medicaid, or if the process of applying becomes drawn out for whatever reason.

“It’s not unusual for me to be involved in at least one, if not two, cases monthly of someone who is stuck between a rock and a hard place,” Johnson-Drenth said.

‘Convoluted’ rules

At issue are convoluted and bureaucratic rules that can thwart or slow down Medicaid eligibility if families weren’t careful about how they made gifts or other financial decisions in the five years prior to applying for assistance, she said.

In some cases, Johnson-Drenth said, minimal gifting can mean someone has to wait before Medicaid will pay.

“They (clients) can’t pay the bill because they don’t have enough money, but they can’t get eligible for Medicaid because they can’t jump through all the hoops that are needed,” she said.

In one case she handled, assistance was denied even after her client paid a bank $3,000 to produce five years worth of canceled checks.

Another family Johnson-Drenth represented was denied assistance for a husband in a nursing home because the wife, who was in her 80s, was not aware of eligibility problems that can arise when annuities are not handled just the right way.

While Johnson-Drenth said Medicaid eligibility is sometimes denied because people do improper things when they move their assets, at other times the reason for denial is less straightforward.

“Sometimes it’s because the husband is in the nursing home and he handled all the finances,” she said. “And the wife is trying her best, never having written a check in their life, to try and figure out these forms and what’s all needed.” Johnson-Drenth said North Dakota’s law regarding familial responsibility will likely only increase the problems families face.

Targeting gifts

Peterson, of the nursing home group, said the goal is not to go after assets of children who have not received gifts from their parents.

She said to help secure payment for nursing home care, the law would only be used to go after assets given away in the five years before someone applies for Medicaid assistance.

“I don’t know of any facility that has ever done that, nor do we see that as appropriate,” she said. “We don’t see adult children responsible for their parents’ bill, unless they want to.”

Peterson said for every 100 nursing home residents in North Dakota, 51 are on Medicaid and six qualify for Medicare, meaning they spent three days in the hospital before going to a nursing home.

The rest are people who have income and assets, and are paying for care themselves.

“We probably have one of the highest private-paying populations in the United States,” she said.

On the other hand, Peterson said, “We are seeing more and more collections issues and we’re seeing more and more people that don’t qualify for Medicaid.”

Lori Bott, chief financial officer for Valley Memorial Homes in Grand Forks, agreed.

“We’ve seen a lot of people who come in and are paying privately and when they spend down their assets they apply for Medicaid and there’s usually been, in some cases, some rather large transfers to family, which are considered ineligible transfers for Medicaid,” Bott said.

In such cases, she said, the nursing home bill often goes unpaid because the family members receiving the gifts either spent the money, or don’t feel it’s their responsibility.

“We kind of feel we’re the ones holding the bill at the end and have no means of collecting on it,” Bott said, adding the situation can hurt small nursing homes or those short on resources.

If it came to it, she said she wouldn’t shy away from using North Dakota’s family responsibility law to address unpaid bills.

“I think we’d pursue any option that’s available to us, if our attorneys felt like it would stand up.

“I don’t think there’s any case law in North Dakota to support it yet, so it would be kind of testing new water,” Bott said.

Lawmaker views

Judy Lee, a Republican state senator from West Fargo, said she sees no problem with North Dakota’s family responsibility law as long as it’s used the way Peterson suggests.

She said as lawmakers revisited the statute over the years, they established that the modern intent of the law is to address only situations where gifts made by parents are subject to recapture by nursing homes.

Fellow state Sen. Tim Mathern, a Democrat from Fargo, said because of the way the law is worded, it may be unenforceable, and therefore ought to be repealed or replaced.

Johnson-Drenth shares that position, stating that the recently upheld Pennsylvania law does not explicitly mention gifts, and the adult child who was sued by a nursing home did not receive gifts from his parents.

She plans to talk with lawmakers about repealing or changing the North Dakota law.

Peterson said her organization would oppose any change.

“We’ve had at least one small rural nursing home where they accumulated almost half a million dollars in bad debt,” she said. “They eventually collected on the debt, but it put a financial drain on the facility.”

Many people want to leave something for their children, “and that is perfectly fine,” Peterson said. “But if you find yourself in need of care, you should answer the question: How am I going to pay for my care as I age?’ ”

Peterson said one answer is long-term care insurance, which she said is relatively inexpensive if someone starts buying it in their late 40s or early 50s.

“It’s just nice to protect that nest egg that you’ve grown,” she said. “People don’t want to think about getting old, so to plan otherwise, people don’t like to do that.”

Readers can reach Forum reporter Dave Olson at (701) 241-5555

Tags: north dakota, business, fargo, health