Provisions You May Want to Add to Your Admission Agreements
By: Gabriela Sanchez

Resident Admission Agreements are very important documents that govern a facility’s and resident’s interactions not only during the residency period, but also long after a resident has discharged from the facility. Therefore, it is important to think about what terms you should include in your Admission Agreement now that may assist you later, particularly if the relationship with a resident or family starts to sour. This article addresses a few provisions that Admission Agreements should include and should not. A future article will focus on who should sign the Admission Agreement and why.

Define Parties to Agreement. If an Admission Agreement will be signed by someone other than the resident, the Agreement should define who these parties are, in what capacity they are signing, and what authority they have to sign for the resident. For instance, if an Agreement uses the term “Responsible Party,” facilities should not assume that residents or the person signing the agreement will know what this term means. If a “Responsible Party” does not hold a general power of attorney, a healthcare durable power of attorney, or is not otherwise appointed by law to act on the resident’s behalf, you should specifically spell out that they will be binding the resident to a legal contract and they have the resident’s permission (either expressly or through the resident’s actions) to enter into the Admission Agreement on the resident’s behalf. This helps to avoid any later defenses by the resident that he or she is not bound to the terms of the Agreement because he or she did not consent to an agent signing the agreement.

Personal Liability Section. Another provision your Admission Agreement should have is a term imposing personal liability on individuals signing the Admission Agreement on behalf of the resident if these individuals misuse or misappropriate a resident’s funds that could have or should have been used to the pay the facility. By including such a provision, it allows the facility to sue these “bad-actors” directly for payment of the amount due.

Guaranty. Guarantees are tricky. In order for an Admission Agreement to be legal and not violate the Social Security Act, it must not require a third party to guarantee a Medicaid resident’s debt to the facility as a condition of admission or continued stay. It is perfectly okay, however, to have a resident’s “Responsible Party” or agent sign the Admission Agreement and impose personal liability on that person for misusing the resident’s funds. The key to an enforceable Guaranty is that it must be completely voluntary. If it is not, then you face the risk that your entire Admission Agreement may be deemed unenforceable.

Consequences of Default. Admission Agreements should include an interest provision that clearly spells outs how much interest will accrue on unpaid balances. A note of caution, however. Some states do not allow a facility to recover interest or any other fees against a Medicaid resident, so check with your state to see whether it allows you to recover interest against an unpaid Medicaid resident’s account. Additionally, you may want to include a provision that provides that interest will accrue even after the resident’s death to avoid arguments from a resident’s estate that interest stops when a resident dies. Furthermore, you should also include provisions that state a resident is subject to transfer if he or she does not pay, that authorize the facility to immediately become representative payee of the resident’s benefits, and that allow the facility to notify the appropriate state agency of the non-payment.

Authorization for contact with state agencies and third parties. To assist a facility, Admission Agreements should include an authorization allowing the facility to directly communicate with the appropriate state agency regarding the resident’s benefits. Additionally, agreements should have a separate authorization under which a resident lists individuals who may discuss the resident’s account at the facility with the facility’s attorney or others. Both these provisions make is much easier for the facility and its agents to work with third parties and state agencies to either address payment of the resident’s account or deal with care issues. It is much easier to obtain these types of authorizations at the outset of the relationship when everyone is on good terms than later when you have either lost communication with the resident or the relationship has soured.

Attorneys’ Fees Provisions. To have or not to have? That is the question. Most Admission Agreements include a provision that awards reasonable attorneys’ fees and costs to the facility if the facility initiates a collection action against the resident. By doing so, the facility may be inadvertently exposing itself to having to pay a resident’s attorneys’ fees and costs in a resident care lawsuit where a resident has also brought a breach of contract action against the facility. How is this possible? Many states have reciprocal attorneys’ fees statutes which provide that if an agreement awards attorneys’ fees to one party, then the benefit also extends to the non-benefitted party if the non-benefitted party prevails. However, depending on the specific claims brought in a lawsuit and the state in which the facility is located, the facility may already be subject to paying a resident’s attorneys’ fees and costs in a tort claim regardless of what the Admission Agreement says. Therefore, it may make sense for the Admission Agreement to include a reasonable attorneys’ fee provision that allows the prevailing party to collect the costs incurred in collecting accounts or defending malpractice actions. Whether to include an attorneys’ fee provision is a business decision and you should consult with your attorney to determine if an attorneys’ fee provision is something you may want to include in your Admission Agreement.

These are just a few of the many provisions a facility should consider including in its Admission Agreement. To discuss Admission Agreements, please contact Gabi Sanchez or Aaron Besen at (503) 227-1111.