What to do when a POA agent doesn't pay
Long-term care facilities traditionally take steps to ensure that residents have a financial and a healthcare power of attorney in place upon admittance. But what happens when an agent named under a POA fails to make payments for the resident's stay at the facility?
In a bid to collect the delinquent sum, the facility could sue the resident, his or her personal guarantor, and/or the agent under the POA. Or, the facility could take a more proactive stance by filing a petition with the court to either revoke the POA – or the authority of the agent under the POA – and to appoint a guardian and/or conservator to make decisions about the resident's finances, place of residence, and other issues.
A growing number of facilities appear to be doing this: a study by The New York Times and researchers at Hunter College, of 700 guardianship cases filed in Manhattan over 10 years, shows that more than 12% were for nursing homes seeking guardianship of patients.
But your SNF should not rush to use a guardianship petition merely as a proxy for a collections action, because even if there is a bona fide billing dispute, a court may conclude that outstanding bills are not enough to revoke a POA or an agent's authority.
Instead, it's important to establish that the rationale for seeking the guardian and/or conservator appointment is the patient's well being. For example, it could be suggested that the agent's delinquency regarding the resident's bills may indicate that the agent is not paying additional costs, further jeopardizing the resident's care and treatment. Thus, the facility positions the guardianship/conservatorship petition as accomplishing more than a simple settlement of outstanding bills. Instead, the petition may help to prevent resident abuse by the agent under the POA.
Before moving forward with a petition, the facility should extensively document its attempts to obtain payment from the agent under the POA. Such evidence could include documentation of multiple attempts to obtain payment, and repeated warnings to the agent about the way that the resident's welfare is being jeopardized by the failure to pay for their care.
Of course, the agent under the POA may respond that the SNF is “self-interested” or “only interested in money.” To help minimize any claims that the facility is not truly acting in the resident's best interests, you could consider requesting appointment of an independent charitable institution – such as Catholic Charities, or Jewish Family Services – as the guardian/conservator.
To further rebut an allegation of self interest, the SNF could emphasize that a guardianship/conservatorship petition is not the most efficient way to collect delinquent costs of residency. In fact, it is more time-consuming, complex and expensive compared to a routine collections action. Instead, the facility would emphasize that it chose the petition because it is genuinely concerned about the resident's safety and well-being at the hands of the agent.
Your argument may also be strengthened if you have assembled evidence indicating improper conduct by the agent. For example, look for documentation showing that the agent is not paying some of the resident's other providers, or that the agent has acted dangerously at the SNF, or that the agent is generally unstable.
Allegations of self-interest may also be neutralized if the facility offers to waive reimbursement of attorney's fees incurred in the guardianship/conservatorship proceeding, even if state laws permit the petitioner to recover attorney's fees from the resident.
Petitioning for a guardian and conservator of a resident is a powerful tool. But even when a successful petition forces a conservator to bring current any delinquent balance to the SNF and ensure regular payment going forward, the petition should always be used for the benefit of the resident.
William W. Sleeth III is a partner in LeClairRyan, based in the national law firm's Williamsburg, VA office. He is a member of the firm's Long Term Care industry team and leader of its Estate & Trust Litigation practice area team. William.firstname.lastname@example.org