1. What defense did Patricia Walton raise in the lawsuit against her by the nursing home for payment of her mother’s nursing home bills?

2. How did the court decide this case?

3. Speculate on why the state enacted a Nursing Home Bill of Rights Law.

Audrey Walton was transferred from a hospital to Mariner Health Nursing Home on January 26, 2001. Her daughter, Patricia Walton signed a 30-page document entitled “Resident’s Agent Financial Agreement.” Patricia indicated in that agreement that the only method of payment would be Medicare or Medical Assistance. Medicare assistance stopped in February 2001. On January 10, 2003, Mariner Health sued both Audrey and Patricia for unpaid monthly bills amounting to $86,235. From a judgment for Mariner Health against both the patient and her daughter, Patricia appealed.

JUDICIAL OPINION

GREENE, J.… If the contract is to benefit the principal only, the agent is immune from personal liability for breach of that contract. (“It is also a universal principle of the law of agency that the powers of the agent are to be exercised for the benefit of the principal only, and not for the agent or third parties.”); (“It is a well settled principle of agency law that an agent acting within the scope of his authority for a disclosed principal is not bound on a contract made in the principal’s name.”).…

Patricia, as an agent, had a primary duty to Audrey, the principal, and Patricia’s duty to Mariner Health, a third party, was limited. Agency law precludes a finding against Patricia for damages. As an agent, Patricia entered into the contract only for the benefit of Audrey and is personally insulated from liability by virtue of her station as an agent.…

In 1988, the General Assembly passed House Bill 683 which amended § 19–344 of the Health–General Article and prescribed in subsection 19–344(c) the rights and responsibilities of an “agent.” The legislature intended to limit an agent’s personal liability. That intent was evidenced by the bill summary, which states: “…the legislative rationale for the amendment was that the circumstances surrounding admission to a nursing home are highly stressful for applicants and their  families. Most people are not in a position to carefully read and negotiate a contract at this time. It is vital that the contracts be screened to assure that they conform to existing law and are clear and understandable.…” Supra at 2.

In summary, an agent’s responsibility is limited to the administration and management of the resident’s funds. An agent is not personally liable for the resident’s nursing home care costs, unless the agent, voluntarily and knowingly agrees to pay for the resident’s care with the agent’s own funds.…