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Show Me the Money (Even if We Didn’t Sign a Contract)

When admitting a senior to a nursing home, as with most care scenarios in the healthcare sector, a contract must be signed between the facility and the resident/patient. As with any service, this contract will lay out the terms of the patient’s stay, including care to be received, as well as payments to be remitted to the facility by the patient him or herself, or through partial or full payment from an insurance policy (private, Medicare, Medicaid, etc.). As the Act states under Section 2-202(a), “Before a person is admitted to a facility, or when the source of payment for the resident’s care changes from private to public funds or from public to private funds, a written contract shall be executed between a licensee [the facility] and [the patient].”

Nursing Home Contract Issues

A problem may exist where a nursing home or long-term care facility does not get the proper signatures to memorialize the agreement of services and payment between it and the patient or the patient’s representative or family. This may be because of the haste with which a patient must be checked in for care, or if a staffer simply “screws up” pure and simple. In these cases a patient may receive care for days, weeks, months, or possibly years without actually having signed the formal agreement with the facility. In not having a signed contract, the facility technically has violated the aforementioned law that a contract be executed prior to the patient’s admission. The question that arises is whether or not a patient or his or her family must pay for services if the contract was never signed and thus the facility failed to follow the law. In general under the law, in the absence of a signed contract, sometimes one party will owe another under a certain theory that recognizes the value of services rendered and the assumption that the one side would pay, even if nothing was signed.

The answer in Illinois, until just recently, was that facilities could seek payment for services rendered where a contract was not signed, but only in a narrow theory of law. In a 2010 appellate court case called Carlton at the Lake, Inc. v. Barber, the court held that a nursing home could collect, if it proved it was entitled to the payments, on unpaid bills even in the absence of a signed contract under the legal theory called “quantum meruit” that provides for reasonable payment for services already rendered even without a contract. However, a significant caveat was that there could be no actual claims under a “breach of contract” theory. Thus in more useful layman’s terms, the contract never existed, but given that the facility did provide services to the patient who willingly accepted them, the patient did owe a payment of reasonable value for those services.

Now, however, this same first district appellate court reopened the question, deciding it would reconsider its dismissal of the breach of contract claim, while the possibility of payments for services rendered would stay alive. This reversal is on the basis of another Illinois Supreme Court case, which had similar circumstances and in which the Illinois Supreme Court decided that a breach of contract claim could also be considered in these circumstances. Thus while the Carlton case has not been re-decided yet, it appears that based on another ruling at the state’s highest court, nursing home facilities have multiple theories on which to base a claim for unpaid bills where a contract was never signed.

See Other Blog Posts:

High Court Dismisses Nursing Home Whistleblower’s Claim

The Finances of Proper Elder Care: Medicaid and Nursing Homes