The case of Hutchison v. Trilogy Health Services, LLC provides an excellent example of why a carefully crafted Power of Attorney is so important even well before senior is ready to enter a nursing facility. See Hutchison v. Trilogy Health Services, LLC 30A01-1307-SC-316 (decided January 30, 2014). Like so many adult children, Alexis Hutchison was faced with an abrupt need to find a skilled care nursing facility for her mother to stay in after she was unable to return home following a hospital stay.

At the time Ms. Hutchison’s mother was admitted, the nursing facility had Ms. Hutchison sign a “Move-In Agreement” as a “Responsible Party/Agent.” Among other things, this agreement stated that the Responsible Party/Agent agreed “to pay for the Resident’s services and supplies that are billed by the Facility” from the Resident’s funds to which the Responsible Party/Agent had access.

After Ms. Hutchison’s mother was finally well enough to move out of the facility, the nursing home filed a claim against both Ms. Hutchison’s mother and Ms. Hutchison. The claim sought to recover the costs associated with the nursing home stay directly from the adult child, Ms. Hutchison.

When this case went to trial, the facility representative testified that the facility did not have a copy of a Power of Attorney for Ms. Hutchison and Ms. Hutchison testified that she was not her mother’s Power of Attorney. Ms. Hutchison’s husband also testified that at the time Ms. Hutchison signed the Move-In Agreement she asked a facility employee “whether signing the Agreement would make her personally financially responsible [and the facility] representative answered with ‘an emphatic no.’” Despite this evidence, the trial court ruled in favor of the facility and against Ms. Hutchison – whose mother passed away prior to trial.

Ms. Hutchison appealed the trial court’s ruling and the Indiana Court of Appeals determined that the facility could not collect against Ms. Hutchison personally because the Move-In Agreement specifically stated that the signor would be responsible only IF the Resident designated a Responsible Party/Agent and that Responsible Party/Agent had access to the Resident’s funds. The court found that Ms. Hutchison’s mother had never made such a designation. Id. at 8. The court also noted that Ms. Hutchison was not her mother’s Power of Attorney and could not technically access her mother’s funds. Id. Therefore, the court determined that the facility could not collect against Ms. Hutchison personally. Id.
But, facilities can require a family member to pay a parent’s facility costs from the Resident’s own funds if the family member has the legal right to access the Resident’s funds (e.g. through a Power of Attorney). Id. p. 7 (citations omitted). When a family member signs a Move-In Agreement or other admission document, it is important that the family member signs as the Power of Attorney and not in their own personal capacity in order further protect the signor from the type of litigation which Ms. Hutchison was subjected to.

While this case addresses a situation where an adult child is not a Power of Attorney, this case teaches how best to handle this situation. An adult child who is in a position of assisting an elderly family member should have a well-developed Power of Attorney that makes it clear that the adult child is acting in the capacity of the senior and not signing documents in his or her individual capacity. A proper Power of Attorney can make it clear that the adult child is not personally liable for the debts of the senior.

In addition, the Hutchison v. Trilogy Health Services, LLC case points out some federal laws which adult children caring for their parents should be aware of. For instance, federal law prohibits a nursing home certified as eligible for Medicare or Medicaid reimbursement from requiring guarantees as a condition of admission or extended care: [federal law also states that] the facility “must not require a third party guarantee of payment to the facility as a condition of admission . . . to, or continued stay in, the facility.” []. These provisions plainly prohibit facilities from conditioning admission upon a third party’s guarantee of private pay costs.
Id. (citations omitted).