The buck stops with verbal assurances
Your words could hold your feet to a financial fire even if you haven’t signed an agreement for payment. A recent ruling from Ohio’s Court of Appeals found in favor of a long-term care facility stating that a signature on a contract is not necessary to find a third-party responsible for the long-term care bill of another.
After a $20,000 outstanding bill went unpaid, the representative who repeatedly offered assurances of payment, was put through her paces to deem if her merits warranted responsibility for the bill.
Referring to the case of Montefiore Home v. Fields, the original trial court decision was reversed after the Court deemed Fields, power of attorney for Hazel Thornton, was not responsible for the bill incurred at the long-term care facility where Thornton lived, because she had not signed an agreement for payment. However, as a named representative, she held verbal conversations with Montefiore Home stating she would settle Thornton’s debts with Thornton’s funds. Because of the assurances received, the long-term care facility allowed Thornton to reside in the home for 16 months. In the end, an unpaid balance of $20,000 remained. While acting as Thornton’s representative, Fields reportedly depleted any accounts Thornton had, leaving no funds to resolve the bill with Montefiore Home.
While typically a power of attorney is not responsible for paying another person’s debts out of their own pocket, they do hold a fiduciary responsibility to act within their power-of-attorney duties with ethical judgement for the person’s best interest. According to Ohio’s Power of Attorney statute, a power of attorney may be personally liable for those debts if their negligence results in debt, increase in debt or if they incurred the debt outside the scope of their power of attorney authority.
According to case filings, Montefiore Home claimed Fields made fraudulent transfers and acted outside the scope of her power of attorney authority. She acted as both a responsible party assuring payment could be made on such debts incurred by Thornton, and at the same time, using her power-of-attorney role to act in a way that rendered Thornton’s accounts to be inadequate to cover the debt.
Based on Field’s promises of payment, Montefiore Home chose to not evict Thornton, a decision that, while well meaning, left the facility holding a hefty bill. In the original trial, Field’s single argument was that she had not signed an agreement and therefore could not be held responsible for the debt. However, in certain circumstances, Ohio’s Uniform Fraudulent Transfer Act allows creditors to remove the financial responsibility of a debt from the debtor and place the responsibility on the transferee, if fraudulent transfers are suspected. A fraudulent transfer allows the creditor to sue the transferee, or subsequent transferees, for the value of the transferred assets.
Of the $32,000 Fields had access to, the transfers made were not used to settle Thornton’s debts, nor was there evidence that the funds were used for Thornton’s benefit. In the end, while Fields represented to the institution that the debt would be settled, she depleted Thornton’s assets to the point she was unable to satisfy the debt.
As family members and caring individuals assume roles and responsibilities for the well-being of those they love, it is important that all aspects of those roles are understood. Knowing all the nuances of being named, and acting, as someone’s power of attorney should be paramount before holding conversations with creditors, making transfers or other financial decisions. This case should be a word of caution for us to not make assurances for payment on debts or other financial commitments.
If you find yourself needing to act as a power of attorney for a loved one, or you have questions about managing financial or healthcare decisions for someone facing long-term care, contact Koler Law Office. As an Elder Law firm, our team stands ready to support you and your family with the right Medicaid and Estate Planning tools. Contact our office at 260-449-9621 for your complimentary consultation.