Natl. Church Residences First Community Village v. Kessler , 2023 Ohio 1437 ( 2023 )

[Cite as Natl. Church Residences First Community Village v. Kessler, 2023-Ohio-1437.]
IN THE COURT OF APPEALS OF OHIO
THIRD APPELLATE DISTRICT
UNION COUNTY
NATIONAL CHURCH RESIDENCES
FIRST COMMUNITY VILLAGE,
PLAINTIFF-APPELLEE, CASE NO. 14-22-22
v.
KATHY KESSLER,
OPINION
DEFENDANT-APPELLANT.
Appeal from Union County Common Pleas Court
Trial Court No. 2020-CV-0128
Judgment Reversed and Cause Remanded
Date of Decision: May 1, 2023
APPEARANCES:
Vincent P. Zuccaro for Appellant
David S. Brown for Appellee
Case No. 14-22-22
ZIMMERMAN, J.
{¶1} Defendant-appellant, Kathy Kessler (“Kessler”), appeals the October 5,
2022 judgment of the Union County Court of Common Pleas granting summary
judgment in favor of defendant-appellee, National Church Residences First
Community Village (“National Church”). We reverse.
{¶2} On September 8, 2020, National Church filed a breach-of-contract and
promissory-estoppel complaint seeking damages from Kessler for services provided
to Kessler’s mother, Rosa McGlone (“McGlone”), for McGlone’s nursing-facility
care from November 1, 2017 through March 31, 2018.1 McGlone was admitted to
National Church’s First Community Village nursing home on August 15, 2016.
Because McGlone “suffered from dementia and was unable to care for herself or
handle her own finances,” Kessler executed National Church’s Nursing Facility
Admission Agreement (the “agreement”) on August 24, 2016. (Doc. No. 57). (See
also Doc. No. 2, Ex. 1). Importantly, the parties do not dispute that Kessler did not
execute the agreement in her personal capacity; rather, they agree that she executed
the agreement in her representative capacity for McGlone. (See Doc. No. 57);
(Appellee’s Brief at 7).
{¶3} On August 25, 2016, the Ohio Department of Job and Family Services
(“ODJFS”) informed the parties that it approved McGlone’s Medicaid benefits. The
1
McGlone died on June 8, 2019.
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benefits included the cost of McGlone’s nursing-facility care. Pertinently, that
notice informed the parties that McGlone was eligible for a category of Medicaid
benefits with a resource limit of $2,000.00.2
{¶4} Even though Kessler retained primary access to McGlone’s account
with US Bank as her attorney in fact, National Church “was authorized to sign
[McGlone’s] Social Security checks for deposit only to be applied to [her] balance.”
(Doc. No. 57). In 2016 and 2017, McGlone received monthly direct deposits from
the Social Security Administration (for $727.00) into her US Bank account. As a
result of those deposits, McGlone’s US Bank account accumulated a balance of
$7,164.67 as of August 15, 2017. Consequently, on August 15, 2017, ODJFS sent
Kessler a “Medicaid Eligibility Review Verification Request List, seeking
information related to [McGlone’s] assets” to which Kessler responded on August
30, 2017 by providing McGlone’s bank statements. (Id.). Because McGlone’s
assets exceeded the $2,000.00 threshold, her Medicaid benefits were terminated.
However, ODJFS notified only Kessler and McGlone (on August 31, 2017) of its
termination of McGlone’s Medicaid benefits (without providing a reason).
{¶5} Even though McGlone’s benefits had been terminated, Medicaid
continued to pay for her care through September 30, 2017. National Church became
aware of the termination of McGlone’s Medicaid benefits on November 14, 2017
2
“In August 2016, [McGlone] maintained a checking account at US Bank with a balance of $838.98.” (Doc.
No. 57).
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when it “ran an Eligibility Search * * * .” (Id.). “The Eligibility Search did not
indicate why [McGlone’s] Medicaid terminated.” (Id.). Critically, National Church
failed to contact ODJFS (between November 14, 2017 and February 2018) or
Kessler (between November 14, 2017 and January 8, 2018) to discuss McGlone’s
Medicaid-benefit termination. Nevertheless, on January 8, 2018, National Church
issued a statement for McGlone’s care for $42,620.99 (for October 2017 through
January 2018) to Kessler, but sent the statement to a wrong address.
{¶6} On February 20, 2018, National Church emailed Kessler requesting that
she execute “another Authorized Representative Form, so that [National Church]
could reapply for Medicaid for [McGlone].” (Id.). Kessler responded to that email
that same day, and National Church submitted “a new Medicaid application on
behalf of [McGlone]” that same day. (Id.). On April 2, 2018, Kessler “spent down
[McGlone’s checking account] by issuing National Church two checks [from
McGlone’s account] totaling $10,483.67.” (Id.).
{¶7} ODJFS approved McGlone’s re-application for Medicaid benefits on
February 29, 2019 “retroactive to April 1, 2018.” (Id.). “ODJFS’s determination
on the February 20, 2018, [sic] Medicaid application was delayed because of a
communication error between ODJFS’s system, and the Central Ohio Area Agency
on Aging’s system.” (Id.).
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{¶8} The parties stipulated that “[t]he $10,483.67 payment was used to
satisfy [McGlone’s] private pay balance for the month of October.” (Id.).
Consequently, the parties agree that McGlone’s private pay balance for the care that
she received from November 1, 2017 through March 31, 2018 is $50,116.82 and
that the Medicaid reimbursement rate for that time period is $33,861.06.
{¶9} Kessler filed her answer to National Church’s complaint on October 15,
2020. Thereafter, on December 29, 2020, Kessler filed a motion for a judgment on
the pleadings under Civ.R. 12(C), arguing that she cannot be held personally liable
for McGlone’s debt. On January 11, 2021, National Church filed a memorandum
in opposition to Kessler’s motion for a judgment on the pleadings, arguing that
Kessler’s liability stems from the breach of her duty “to pay from the resident’s
funds and to obtain and maintain Medicaid on behalf of the resident.” (Doc. No.
12). Kessler filed her reply to National Church’s memorandum in opposition to her
motion for a judgment on the pleadings on February 18, 2021. On April 1, 2021,
the trial court denied Kessler’s motion for a judgment on the pleadings after
concluding “that there are a set of facts that would support” National Church’s
breach-of-contract and promissory-estoppel claims against Kessler. (Doc. No. 16).
{¶10} On November 15, 2021, National Church filed a motion for summary
judgment in which it argued there are no genuine issues of material fact that Kessler
breached the agreement “because she failed to take necessary action to ensure that
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[McGlone’s] assets remained within allowable limits for Medicaid, resulting in the
termination of [McGlone’s] Medicaid benefits for being over resourced.” (Doc. No.
37). On December 20, 2021, Kessler filed a memorandum in opposition to National
Church’s motion for summary judgment along with a motion for leave to file a
motion for summary judgment instanter, which the trial court denied. On January
14, 2022, National Church filed its reply to Kessler’s memorandum in opposition to
its motion for summary judgment. On February 10, 2022, the trial court denied
National Church’s motion for summary judgment after concluding that “[b]oth
[National Church] and [Kessler] failed to timely address the notice from Medicaid
regarding the later ineligibility of [McGlone] for Medicaid benefits.” (Doc. No. 48).
{¶11} Kessler filed a motion for summary judgment on March 25, 2022,
arguing that there is no genuine issue of material fact that she did not agree to be
personally liable for McGlone’s debt.3 (Doc. No. 59). On October 5, 2022, the trial
court granted National Church’s request for reconsideration of its motion for
summary judgment, denied Kessler’s motion for summary judgment, and granted
summary judgment in favor of National Church. (Doc. No. 60). Specifically, the
trial court concluded that there are no genuine issues of material fact that Kessler
breached McGlone’s admission agreement by failing to maintain McGlone’s
Medicaid eligibility. Consequently, the trial court awarded National Church
3
The parties filed joint stipulations of fact on March 16, 2022. (Doc No. 57).
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$33,861.06—“[t]he Medicaid reimbursement rate for” “the care provided to
[McGlone] from November 1, 2017 through March 31, 2018”—in damages. (Id.).
{¶12} Kessler filed her notice of appeal on November 2, 2022. She raises
two assignments of error for our review, which we will address together.
Assignment of Error No. I
The Trial Court erred in denying Defendant’s Motion for
Summary Judgment.
Assignment of Error No. II
The Trial Court erred in granting Plaintiff’s Motion for
Summary Judgment.
{¶13} In her assignments of error, Kessler argues that the trial court erred by
denying her motion for summary judgment and granting summary judgment in favor
of National Church because there is no genuine issue of material fact that the
agreement constitutes “an unlimited, involuntary, and unlawful personal
guarantee.” (Appellant’s Brief at 9). Similarly, Kessler contends that there is no
genuine issue of material fact that she did not agree to be personally liable for
McGlone’s debt.
Standard of Review
{¶14} We review a decision to grant summary judgment de novo. Doe v.
Shaffer, 90 Ohio St.3d 388, 390 (2000). “De novo review is independent and
without deference to the trial court’s determination.” ISHA, Inc. v. Risser, 3d Dist.
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Allen No. 1-12-47, 2013-Ohio-2149, ¶ 25, citing Costner Consulting Co. v. U.S.
Bancorp, 195 Ohio App.3d 477, 2011-Ohio-3822, ¶ 10 (10th Dist.). Summary
judgment is proper where there is no genuine issue of material fact, the moving party
is entitled to judgment as a matter of law, and reasonable minds can reach but one
conclusion when viewing the evidence in favor of the non-moving party, and the
conclusion is adverse to the non-moving party. Civ.R. 56(C); State ex rel. Cassels
v. Dayton City School Dist. Bd. of Edn., 69 Ohio St.3d 217, 219 (1994).
{¶15} “The party moving for summary judgment has the initial burden of
producing some evidence which demonstrates the lack of a genuine issue of material
fact.” Carnes v. Siferd, 3d Dist. Allen No. 1-10-88, 2011-Ohio-4467, ¶ 13, citing
Dresher v. Burt, 75 Ohio St.3d 280, 292 (1996). “In doing so, the moving party is
not required to produce any affirmative evidence, but must identify those portions
of the record which affirmatively support his argument.” Id., citing Dresher at 292.
“The nonmoving party must then rebut with specific facts showing the existence of
a genuine triable issue; he may not rest on the mere allegations or denials of his
pleadings.” Id., citing Dresher at 292 and Civ.R. 56(E).
Analysis
{¶16} In this case, the trial court granted summary judgment in favor of
National Church after concluding that Kessler breached McGlone’s admission
agreement by failing to “promptly act to maintain [McGlone’s] eligibility for
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Medicaid.” (Doc. No. 60). Specifically, the trial court concluded that Kessler
breached the admission agreement by failing to (1) “manage [McGlone’s] checking
account * * * in a manner that would ensure continued Medicaid eligibility from
November 3, 2016 through April 1, 2018”; (2) “take any action until [National
Church] contacted [her] via email in February 2018” “upon receipt of the notice of
termination”; and (3) “timely address the Medicaid termination once [National
Church] became aware of the same.” (Id.). Based on that conclusion, the trial court
also denied Kessler’s motion for summary judgment.
{¶17} “A cause of action for breach of contract requires the claimant to
establish the existence of a contract, the failure without legal excuse of the other
party to perform when performance is due, and damages or loss resulting from the
breach.” Lucarell v. Nationwide Mut. Ins. Co., 152 Ohio St.3d 453, 2018-Ohio-15,
¶ 41. However, “‘“[a] contract is binding only upon parties to a contract and those
in privity with them.”’” Gilchrist v. Saxon Mtge. Servs., 10th Dist. Franklin No.
12AP-556, 2013-Ohio-949, ¶ 23, quoting DVCC, Inc. v. Med. College of Ohio, 10th
Dist. Franklin No. 05AP-237, 2006-Ohio-945, ¶ 19, quoting Samadder v. DMF of
Ohio, Inc., 154 Ohio App.3d 770, 2003-Ohio-5340, ¶ 25 (10th Dist.). “Privity is
defined as ‘[t]he connection or relationship between two parties, each having a
legally recognized interest in the same subject matter.’” Bohan v. Dennis C.
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Jackson Co., L.P.A., 188 Ohio App.3d 446, 2010-Ohio-3422, ¶ 12 (8th Dist.),
quoting Shoemaker v. Gindlesberger, 118 Ohio St.3d 226, 2008-Ohio-2012, ¶ 10.
{¶18} In this case, the parties do not dispute that Kessler executed
McGlone’s admission agreement in her capacity as McGlone’s representative.
(Doc. No. 57). In other words, there is no dispute that Kessler did not execute the
agreement in her personal capacity. Accord Vancrest Mgt. Corp. v. Mullenhour, 3d
Dist. Allen No. 1-18-59, 2019-Ohio-2958, ¶ 14.
{¶19} An “agent” is a person “‘who is authorized to act for or in place of
another; a representative.’” (Emphasis added.) Marion v. Cendol, 3d Dist. Marion
No. 9-12-59, 2013-Ohio-3197, ¶ 16, quoting Black’s Law Dictionary 72 (9th
Ed.2009), and citing John Hancock Mut. Life Ins. Co. v. Luzio, 123 Ohio St. 616(1931), syllabus (proposing that, “[i]n the absence of statutory definition, the term
‘agent,’ * * * should be given its legal meaning, as being one who is acting within
the scope of his authority in the business intrusted [sic] to him by his principal”).
See also R.C. 1337.22(A) (defining an agent as “a person granted authority to act
for a principal under a power of attorney, whether denominated an agent, attorney
in fact, or otherwise”). Generally, “‘[w]here an agent acts for a disclosed principal,
in the name of such principal, and within the scope of authority, such agent is
ordinarily not liable on the contracts the agent makes.’” Whitt Sturtevant, LLP v.
NC Plaza LLC, 10th Dist. Franklin No. 14AP-919, 2015-Ohio-3976, ¶ 96, quoting
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Oelberg v. Skaggs, 10th Dist. Franklin No. 97APE10-1383, 1998 WL 292231, *2
(June 4, 1998).
{¶20} Because Kessler is not a party to the agreement (in her individual
capacity), she could not have breached it. Accord Gilchrist, 2013-Ohio-949, at ¶ 23
(“Because appellee was not a party to the TPP, it could not have breached it.”). As
a result, National Church’s ability to recover from Kessler for debt incurred by
McGlone is limited since Kessler (in her personal capacity) is not a party to the
contract. See Vancrest at ¶ 14, citing Huntington Natl. Bank v. A & J Plumbing,
Inc., 11th Dist. Geauga No. 2011-G-3021, 2012-Ohio-526, ¶ 27, Extendicare Health
Servs., Inc. v. Dunkerton, 11th Dist. Portage, 2017-Ohio-427, ¶ 28, and Gilchrist at
¶ 23. See also Classic Healthcare Sys., LLC v. Faun Miracle, 12th Dist. Warren
No. CA2017-03-029, 2017-Ohio-8540, ¶ 33 (Powell, P.J., dissenting) (“Under
traditional agency principles, the agent (David) is never liable for the obligations of
the principal (Faun) unless the agent enters into an obligation but fails to disclose
his role as an agent for the principal.”).
{¶21} Importantly, “R.C. 1337.092(A) precludes personal liability when a
party enters into a contract in a representative capacity as attorney in fact and
discloses that representative capacity in the contract * * * .” Gilchrist at ¶ 18. See
also Vancrest at ¶ 15 (noting that R.C. 1337.092 provides “that ‘the attorney in fact
is not personally liable on the contract, unless the contract otherwise specifies’”),
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quoting R.C. 1337.092(A). R.C. 1337.092 “sets forth exceptions to that general rule
and provides, in its relevant part, as follows:
(B) An attorney in fact is not personally liable for a debt of the
attorney in fact’s principal, unless one or more of the following
applies:
(1) The attorney in fact agrees to be personally responsible for the
debt.
***
(3) The negligence of the attorney in fact gave rise to or resulted in
the debt.”
Vancrest at ¶ 15, quoting R.C. 1337.092(B)(1), (3). Critically, because National
Church failed to raise the applicability of R.C. 1337.092 in the trial court, it waived
any argument relative to the statue for purposes of appeal. Accord Village at the
Greene v. Smith, 2d Dist. Montgomery No. 28762, 2020-Ohio-4088, ¶ 18; Vancrest
at ¶ 17; Extendicare at ¶ 31. See also Gilchrist at ¶ 21-22.
{¶22} For these reasons, we conclude that Kessler cannot be held liable for
breaching McGlone’s admission agreement since she has no contractual privity to
the agreement and because National Church failed to allege an alternative means
for recovery under its breach-of-contract claim under R.C. 1337.092. See Gilchrist
at ¶ 26 (concluding that because “no contract existed between appellant and appellee
pursuant to R.C. 1337.092(A),” there was no breach).
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{¶23} Even if Kessler was in privity to McGlone’s admission agreement, we
conclude that there is no genuine issue of material fact that Kessler did not breach
the agreement in the manner described by National Church. That is, contrary to
National Church’s argument, there is no triable issue that Kessler did not breach the
provision of the agreement requiring her “‘to act promptly to establish and maintain
[McGlone’s] eligibility for Medicaid, including, but not limited to, taking any and
all necessary action to ensure that [McGlone’s] assets are appropriately reduced to
and remain within allowable limits for Medicaid as established by applicable law.’”
(Appellee’s Brief at 19, quoting Doc. No. 37, Ex. 1). See HCF of Findlay, Inc. v.
Bishop, 3d Dist. Hancock No. 5-18-20, 2019-Ohio-319, ¶ 8 (assuming “without
deciding that the parties executed a valid contract, * * * there [was] no genuine issue
of material fact that [the resident’s representative] did not breach the contract in the
manner described by [the nursing facility]”).
{¶24} “In order to determine whether there was a breach of the contract, we
must interpret the terms of the contract.” HCF of Findlay at ¶ 9. “When confronted
with an issue of contract interpretation, our role is to give effect to the intent of the
parties.” Id. “‘Courts presume that the intent of the parties to a contract resides in
the language they chose to employ in the contract.’” Id., quoting Judson v.
Lyendecker, 10th Dist. Franklin No. 12AP-615, 2013-Ohio-1060, ¶ 12. “‘Ordinary
words in a written contract must be “given their ordinary meaning unless manifest
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absurdity results, or unless some other meaning is clearly evidenced from the face
or overall contents of the instrument.”’” Id., quoting Nippon Life Ins. Co. of Am. v.
One Source Mgt., Ltd., 6th Dist. Lucas No. L-10-1247, 2011-Ohio-2175, ¶ 22,
quoting Alexander v. Buckeye Pipe Line Co., 53 Ohio St.2d 241 (1978), paragraph
two of the syllabus.
{¶25} “‘“If a contract is clear and unambiguous, then its interpretation is a
matter of law and there is no issue of fact to be determined.”’” Id. at ¶10, quoting
Barhorst, Inc. v. Hanson Pipe & Prods. Ohio, Inc., 169 Ohio App.3d 778, 2006-
Ohio-6858, ¶ 10 (3d Dist.), quoting Inland Refuse Transfer Co. v. Browning-Ferris
Industries of Ohio, Inc., 15 Ohio St.3d 321, 322 (1984). “In that case, we apply a
de novo standard of review.” Id.{¶26} Without addressing the validity of the agreement here, we conclude
that the agreement is clear and unambiguous. Accord id. at ¶11 (concluding that the
terms of the contract at issue in that case requiring the resident’s representative to
cooperate in the Medicaid application process were clear and unambiguous).
Indeed, the agreement designates, in its relevant part that “the Representative agrees
to pay from his/her own resources any unpaid charges due to Facility as a result of
the Representative’s failures to cooperate in the Medicaid eligibility or
redetermination process.” (Doc. No. 2, Ex. 1). Regarding Medicaid, the agreement
instructs, in its relevant part, as follows:
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E4. Medicaid Residents.
***
b. Responsibility for Payment if Medicaid Coverage Denied or
Terminated. You are responsible for applying or renewing the
Resident’s Medicaid coverage. While Facility may assist You in
applying for Medicaid coverage, Facility does not guarantee that
Medicaid coverage will be available to the Resident. If the Resident’s
application for Medicaid coverage is denied or if the Resident
becomes ineligible at any time for Medicaid coverage, You shall be
required to pay Facility the private-pay rate for all charges incurred
by the Resident.
***
E5. Medicaid Applications.
a. Notification for Advance Planning. You agree to inform Facility
when the Resident’s assets reach $20,000. In addition, if the Resident
does not have monthly income sufficient to pay for the cost of care
and services (e.g., Basic Rate and for Additional Services), You agree
to apply for Medicaid or to promptly make arrangements to pay for
the Resident’s continued stay at Facility when the Resident’s assets
reach $5,000.
(Id.). Significantly, the agreement defines “cooperate” to mean:
d. Cooperation in Application Process. You are obligated to make
full and complete disclosure regarding all financial resources and
income during the Medicaid application process, and to cooperate
fully in providing all requested information. You agree to act
promptly to establish and maintain the Resident’s eligibility for
Medicaid, including, but not limited to, taking any and all necessary
action to ensure that the Resident’s assets are appropriately reduced
and remain within allowable limits for Medicaid as established by
applicable law.
(Emphasis sic.) (Id.).
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{¶27} Based on our review of the record, we disagree with the trial court’s
conclusion that Kessler “failed to comply with the Admission Agreement insomuch
as [she] did not promptly act to maintain McGlone’s eligibility for Medicaid.” (Doc.
No. 60). Rather, reasonable minds can conclude only that Kessler cooperated in the
Medicaid eligibility process in the manner described in the contract. Indeed, based
on the facts and circumstances of this case, there is no genuine issue of material fact
that Kessler acted promptly to establish McGlone’s eligibility for Medicaid as
required under the agreement. Compare HCF of Findlay at ¶ 13 (concluding “that
there [was] no genuine issue of material fact that [the resident’s representative]
acted promptly to establish [the resident’s] eligibility for Medicaid”).
{¶28} Likewise, there is no triable issue that Kessler made a full and
complete disclosure of McGlone’s financial resources and income during the
Medicaid application process and that she cooperated fully by providing all
requested information. Compare id. at ¶ 14 (concluding “that there [was] no
genuine issue of material fact that [the resident’s representative] made a full and
complete disclosure of [the resident’s] financial resources and income during the
Medicaid application process and cooperated fully in providing all requested
information”).
{¶29} To illustrate, the record reflects that, in each instance that Kessler was
instructed to take specific action, she timely responded. Specifically, Kessler
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responded (with the requested information) to ODJFS’s August 15, 2017 request for
information regarding McGlone’s assets on August 30, 2017. See id. at ¶ 18.
ODJFS notified only Kessler and McGlone (on August 31, 2017) that it denied
McGlone’s application for Medicaid benefits. Significantly, ODJFS did not provide
a reason to Kessler or McGlone for its decision to terminate McGlone’s benefits.
{¶30} Even though ODJFS notified only Kessler and McGlone of its
decision terminating McGlone’s Medicaid benefits, Medicaid continued to pay for
McGlone’s care through September 30, 2017. Moreover, National Church did not
conduct “an Eligibility Search” until November 14, 2017 to ascertain McGlone’s
Medicaid-eligibility status. Notwithstanding the results of the search reflecting that
McGlone’s Medicaid benefits were terminated, National Church waited to attempt
to contact Kessler for nearly two months (when it sent a statement to the wrong
address on January 8, 2018).
{¶31} Nevertheless, National Church further waited until February 20, 2018
to again try to contact Kessler. On that day, National Church emailed Kessler
requesting that she execute “another Authorized Representative Form, so that
[National Church] could reapply for Medicaid for [McGlone].” (Emphasis added.)
(Doc. No. 57). Kessler responded to National Church’s email that same day, and
National Church submitted “a new Medicaid application on behalf of [McGlone]”
that same day. (Id.). Consequently, viewing the evidence in favor of Kessler (as
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the non-moving party here), reasonable minds can conclude only that Kessler
cooperated in the Medicaid-eligibility process in the manner described in the
agreement.
{¶32} Furthermore, reasonable minds can conclude only that Kessler acted
promptly to establish McGlone’s Medicaid eligibility as required under the
agreement. Critically, neither the notice sent to Kessler and McGlone by ODJFS
nor National Church’s eligibility search provided a reason for the decision
terminating McGlone’s benefits. Nevertheless, shortly after National Church
established communication with Kessler, Kessler “spent down [McGlone’s
checking account] by issuing National Church two checks totaling $10,483.67” on
April 2, 2018. (Doc. No. 57). Consequently, we conclude that the record reflects
that Kessler cooperated in the Medicaid-eligibility process by acting within a
reasonable amount of time to establish or maintain McGlone’s Medicaid eligibility.
Compare HCF of Findlay at ¶ 15 (concluding that the resident’s representative
“cooperated in the Medicaid redetermination process in the manner described in the
contract” because she “took the necessary action to appropriately reduce [the
resident’s] assets to the allowable limit to be eligible for Medicaid benefits”).
{¶33} For these reasons, we conclude that there is no genuine issue of
material fact that Kessler did not breach the agreement by failing to cooperate in
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the Medicaid-eligibility process in the manner described in the agreement. Accord
id. at ¶19.
{¶34} Notwithstanding our conclusions, it is judicious for this court to
address the argument presented under Kessler’s second assignment of error. In sum,
Kessler contends that the trial court erred by denying her motion for summary
judgment because there is no genuine issue of material fact that the agreement
constitutes “an unlimited, involuntary, and unlawful personal guarantee” and that
there is no genuine issue of material fact that she did not agree to be personally
liable for McGlone’s debt. (Appellant’s Brief at 9). We agree. Importantly, it is
undisputed that Kessler did not expose herself to individual liability for the expenses
incurred for McGlone’s care when she executed the agreement as McGlone’s
representative. Accord Village at the Greene, 2020-Ohio-4088, at ¶ 19 (concluding
“that Smith, in executing the contract with Village as Father’s representative
(whether through his power of attorney or otherwise), did not become subject to
individual liability for the expenses incurred for Father’s care”).
{¶35} Generally, federal and state regulations under the Nursing Home
Reform Act “provide that a nursing home cannot make a third-party guarantee a
requirement for admission or for a continued stay in the facility.” Classic
Healthcare, 2017-Ohio-8540, at ¶ 32 (Powell, P.J., dissenting). See also Cook
Willow Health Ctr. v. Andrien, 54 Conn. L. Rptr. 729, 2012 WL 5200369, *3 (Sept.
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28, 2012) (noting that a nursing-facility agreement “unambiguously complies with”
federal regulations when “‘it expressly prohibits personal liability on the part of the
defendant for payments made to [a nursing facility] from [a resident’s] account,’
and second, ‘the contract obligates the defendant to use [the resident’s] assets for
the payment of services’”), quoting Sunrise Healthcare Corp. v. Azarigian, 76
Conn.App. 800, 808 (2003). See generally Manahawkin Convalescent v. O’Neill,
217 N.J. 99, 116, 85 A.3d 947 (2014) (characterizing the Nursing Home Reform
Act as “Congress’s statutory scheme intended to protect nursing home residents and
their families”), citing Omnibus Budget Reconciliation Act of 1987, Pub.L. No.
100203, § 4211, 101 Stat. 1330, 182, 182-221 (1987). “Indeed, ‘federal law has
long barred nursing homes accepting either Medicaid or Medicare from compelling
third party guarantees of resident payment, but permits such facilities to require
individuals with legal access to the resident’s assets to pay for the resident’s care
with such assets.’” Vancrest at ¶ 18, quoting Manahawkin Convalescent at 116.4
{¶36} In particular, one component of the federal-statutory scheme provides,
“[w]ith respect to admissions practices a nursing facility must * * * not require a
third party guarantee of payment to the facility as a condition of admission (or
4
See Pearson, The Responsible Thing to Do About “Responsible Party” Provisions in Nursing Home
Agreements: A Proposal for Change on Three Fronts, 37 U. Mich. J.L. Reform 757, 777-778 (2004)
(discussing the application of traditional-agency theory to third-party liability provisions of nursing-facility
agreements); Heiby Oil Co. v. Pence, 3d Dist. Auglaize No. 2-99-02, 1999 WL 378370, *2 (June 3, 1999)
(discussing traditional agency law).
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expedited admission) to, or continued stay in the facility.” 42 U.S.C.
1396r(c)(5)(A)(ii). However,
[s]ubparagraph (A)(ii) shall not be construed as preventing a facility
from requiring an individual, who has legal access to a resident’s
income or resources available to pay for care in the facility, to sign a
contract (without incurring personal financial liability) to provide
payment from the resident’s income or resources for such care.
(Emphasis added.) 42 U.S.C. 1396r(c)(5)(B)(ii).5 See Manahawkin Convalescent
at 116 (suggesting that the regulation distinguishes “between a nursing home
resident’s assets in the control of a third party, which may be pursued by the facility,
and that third party’s personal funds, which are beyond the facility’s reach”).
Somewhat more restrictively, the Code of Federal Regulations provides, in its
relevant part, as follows:
(3) The facility must not request or require a third party guarantee
of payment to the facility as a condition of admission or expedited
admission, or continued stay in the facility. However, the facility may
request and require a resident representative who has legal access to a
resident’s income or resources available to pay for facility care to sign
a contract, without incurring personal financial liability, to provide
facility payment from the resident’s income or resources.
(Emphasis added.) 42 C.F.R. 483.15(a)(3).6 Finally, Ohio’s regulation provides, in
its relevant part, as follows:
(C) A provider of a [Nursing Facility] shall not:
5
“Similar language appears in [42 U.S.C. 1395i-3(c)(5)(A)(ii) and (B)(ii)], which govern skilled nursing
facilities that accept Medicare.” Manahawkin Convalescent v. O’Neill, 217 N.J. 99, 116, 85 A.3d 947 (2014).
6
“42 C.F.R. 483.15(A)(3) * * * was amended in October 2016 to prohibit facilities from requesting a third-
party guarantee of payment.” Montefiore Home v. O’Donnell, 8th Dist. Cuyahoga No. 107074, 2018-Ohio-
5238, ¶ 6.
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***
(4) Require a third party to accept personal responsibility for paying
the facility charges out of his or her own funds. However, the facility
may require a representative who has legal access to an individual’s
income or resources available to pay for facility care to sign a contract,
without incurring personal financial liability, to provide facility
payment from the individual’s income or resources if the individual’s
medicaid application is denied and if the individual’s cost of care is
not being paid by medicare or another third-party payor. A third-party
guarantee is not the same as a third-party payor (i.e., an insurance
company), and this provision does not preclude the facility from
obtaining information about medicare and medicaid eligibility or the
availability of private insurance. The prohibition against third-party
guarantees applies to all individuals and prospective individuals in all
certified [nursing facilities] regardless of payment source. This
provision does not prohibit a third party from voluntarily making
payment on behalf of an individual.
(Emphasis added.) Ohio Adm.Code 5160-3-02(C)(4).7 8
{¶37} Here, there is no genuine issue of material fact that Kessler did not
personally guarantee payment for McGlone’s care under the agreement. Indeed, the
parties (as well as the trial court) agree that Kessler did not assume personal liability
for McGlone’s debt under the agreement. See Extendicare, 2017-Ohio-427, at ¶ 28
7
“‘Resources’ means cash, funds held within a financial institution, investments, personal property, and real
property an individual and/or the individual’s spouse has an ownership interest in, has the legal ability to
access in order to convert to cash, and is not legally prohibited from using for support and maintenance.”
Ohio Adm.Code 5160:1-1-01.
8
See Pearson, 37 U. Mich. J.L. Reform at 782-783 (suggesting that the “roles” of third-party signers can be
susceptible to “alternative, inconsistent means” and that roles identified, for instance, as “attorney in fact”;
“responsible party”; “representative”; “guarantor;” or “sponsor” are not mutually exclusive). See also
Meadowbrook Center, Inc. v. Buchman, 149 Conn.App. 177, 201-203, 90 A.3d 219 (2014) (addressing the
nuances of third-party identifiers in admission agreements); Manahawkin Convalescent, 217 N.J. at 120(concluding that the “cause of action was not defined in sufficient detail * * * and was not properly pled”
because it was unclear whether the nursing home was asserting its claim against O’Neill in her fiduciary
capacity or against her individually).
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(emphasizing that “[a]ppellant signed the admission agreement and the payor
confirmation as his father’s attorney-in-fact, and neither document provides that
appellant was [his father’s] voluntary guarantor”). See also Village at the Greene,
2020-Ohio-4088, at ¶ 19 (noting that “Smith specifically disclaimed in writing any
intent or willingness to assume personal responsibility for Father’s charges”).
{¶38} Notwithstanding the parties’ agreement that Kessler did not personally
guarantee payment for McGlone’s care, National Church maintains that Kessler is
personally liable for breaching the provisions of the agreement requiring her to
cooperate in the Medicaid-eligibility process. Importantly, in support of its
argument, National Church directs this court to the provision of the agreement
providing, in relevant part, that “‘the Representative agrees to pay from his/her own
resources any unpaid charges due to Facility as a result of the Representative’s
failure to cooperate in the Medicaid eligibility or redetermination process.’”
(Emphasis added.) (Appellee’s Brief at 7, quoting Doc. No. 2, Ex. 1).
{¶39} We previously addressed our concern with the inclusion of provisions
in nursing-facility agreements imposing personal liability on a resident’s
representative, but ultimately determined that the issue was not ready for review.
See Vancrest, 2019-Ohio-2958, at ¶ 19 (resolving that “we are constricted by the
notions of due process from addressing the applicability of the Federal Nursing
Home Reform Act and corresponding Ohio regulations” in that case since it was not
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properly before the court). We are not so constrained here. Therefore, we conclude
that provisions in a nursing-facility agreement purporting to impose “personal
liability on a resident’s representative who does not voluntarily agree to assume that
responsibility” violates federal and Ohio law. Village at the Greene at ¶ 24.
{¶40} To be clear, the provision of the agreement providing that “the
Representative agrees to pay from his/her own resources any unpaid charges due to
Facility as a result of the Representative’s failure to cooperate in the Medicaid
eligibility or redetermination process” is unenforceable. (Doc. No. 2, Ex. 1). See
Village at the Greene at ¶ 25 (concluding that the nursing home was “not entitled to
enforce [the] provision” it “required Smith to sign in order to admit Father to
Village’s care[, which] provided that Smith ‘agree[d] to pay from his/her own
resources any unpaid charges due to [Village] as a result of the Representative’s
[Smith’s] failure to cooperate in the Medicaid eligibility process’”). Specifically,
such contract provision directly contravenes “the provisions of 42 U.S.C.
1396r(c)(5)(A)(ii), 42 C.F.R. 483.15(a)(3), and Ohio Adm.Code 5160-3-02(C)(4) *
* * .” Id.{¶41} Critically, the bounds of Ohio and federal law authorize nursing
facilities to only request and require the resident’s representative (with legal access
to the resident’s assets) to pay for the resident’s care with such assets (without
incurring personal-financial responsibility). See Inova Health Systems Services,
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Inc. v. Bainbridge, 81 Va.Cir. 39, 2010 WL 7765105, *4 (July 19, 2010) (“It is clear
* * * that Congress did not want nursing homes to force others not in privity, such
as a resident’s family member, to assume personal financial responsibility for the
care of the resident.”), citing H.R. Rep. No. 104-651 (1996).
{¶42} In this case, it is undisputed that Kessler complied with federal and
state law by paying for McGlone’s care by exhausting McGlone’s assets after her
Medicaid benefits were terminated. See, e.g., Ohio Adm.Code 5160-3-02(C)(4)
(authorizing, in relevant part, that “the facility may require a representative who has
legal access to an individual’s income or resources available to pay for facility care
to sign a contract, without incurring personal financial liability, to provide facility
payment from the individual’s income or resources if the individual’s medicaid
application is denied”). That is, the parties agree that Kessler paid National Church
$10,483.67 from McGlone’s checking account in April 2018. Consequently, there
is no genuine issue of material fact that Kessler fulfilled her statutory
responsibilities.9 Thus, we conclude that any provision of the agreement imposing
9
There is no evidence in the record whether National Church pursued the debt from McGlone’s estate. See
Classic Healthcare Systems, LLC v. Faun Miracle, 12th Dist. Warren No. CA2017-03-029, 2017-Ohio-8540,
¶ 35 (Powell, P.J., dissenting) (noting that “[w]ithout the ability to proceed against [the resident’s
representative], [the nursing facility] was limited to pursuing the debt from [the resident]. However, the
record reflects that [the resident] died shortly before the trial commenced and [the nursing facility] voluntarily
dismissed its claims against her instead of substituting her estate” and that “[t]he record contains no indication
whether an estate was opened for [the resident”] but the nursing facility, “as [the resident’s] creditor, had the
ability to open her estate and present claims within the time permitted by statute”).
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personal liability is void and any claim that Kessler is liable for McGlone’s debt is
without merit.
{¶43} Nevertheless, National Church maintains that it “has not sought to
hold [Kessler] personally liable for the expenses incurred by Ms. McGlone. If it
had, it would have sought damages in the amount of $50,858.87. Instead [National
Church] simply sought” $33,861.06. (Appellee’s Brief at 13). National Church’s
argument—being raised for the first time on appeal—is not only disingenuous but
does not change the outcome of our analysis.
{¶44} It is well-settled that a party cannot change their theory of the case and
present new arguments for the first time on appeal. Brewer v. Brewer, 10th Dist.
Franklin No. 09AP-146, 2010-Ohio-1319, ¶ 23. Indeed, in its motion for summary
judgment National Church unequivocally demanded that the trial court award it
$50,806.82 in damages as a result of its claim that Kessler breached the agreement.
(See Doc. No. 37).
{¶45} Moreover, National Church’s argument contradicts the term of its
agreement reflecting that the resident “shall be required to pay Facility the private-
pay rate for all charges incurred by the Resident” “[i]f the Resident’s application for
Medicaid coverage is denied or if the Resident becomes ineligible at any time for
Medicaid coverage.” (Doc. No. 37, Ex. 1). Thus, based on our conclusions
regarding Kessler’s privity to the agreement and the propriety of any provision in
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the agreement purporting to personally obligate Kessler to pay McGlone’s debt,
National Church’s argument is feckless.
{¶46} For these reasons, Kessler’s assignments of error are sustained.
{¶47} Having found error prejudicial to the appellant herein in the particulars
assigned and argued, we reverse the judgment of the trial court and remand for
further proceedings consistent with this opinion.
Judgment Reversed and
Cause Remanded
MILLER, P.J. and WALDICK, J., concur.
/jlr
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