SF #022

This material has been developed by and is presented by The Sandwich Generation (r)


What You Need to Know

About Those Ilegal Clauses

in Nursing Home Contracts

by Carol Abaya, M.A.


When a person has to go into a nursing home as the result of a sudden illness or as a result of over-time deterioration, family members are usually emotionally stressed out.


The decision to place has been a difficult one -- although most often a necessary one.


Placement during a time of emotional stress and crisis is not a good time to have to read the fine print in a nursing home contract. But everyone should be aware that many nursing home contracts contain clauses that are illegal (by federal and/or state law) or unenforceable.


Many contracts give the impression that the patient and family have less rights than they really have.


Federal regulations, state law, state regulations and court case law govern nursing homes. Some laws and regulations, such as OBRA 87, cover only Medicare and Medicaid situations. While others, especially state laws, may be broader. Laws and regulations vary from state to state, and what may be illegal and/or unenforceable in one state may be legal in another. In addition, court case law has also deemed certain practices illegal.




Federal law and/or the law/regulation in many states make it illegal for nursing homes to contain a number of clauses that are still used. Many have not updated their contract. Some of the most widely abused ones include the following.


  1. Require a sizable lump sum payment up front. Homes are able to ask for a month or two security deposit, which MUST be returned when the patient leaves or dies. But they cannot require a lump sum payment as a condition for entry acceptance.


  2. Require a spouse or child to pledge to pay as a private pay patient for a patient for a specific period of time. Federal law forbids this.


  3. A sponsor (an adult child or spouse) cannot be held liable for paying the Home bills of a patient if a patient defaults in payment (or money runs out) and the patient is not eligible for Medicare or Medicaid. Federal Law prohibits this clause and it is not enforceable.


  4. Require a patient to turn over control of assets upon entering a Home as a condition for acceptance. No one has to turn over assets. A spouse or other family member should maintain control of assets, and pay bills as they come.


  5. A private pay patient or sponsor does not have to designate the Home as the representative payee for the patients social security checks or other income or assets as a condition of admission. If a person is on Medicaid, then social security usually is assigned to the nursing home.


  6. Unless the contract lists in detail the extra charges (such drugs), then everything is included in the per diem charge. The Home, then has to pay for all costs, including the services of a private duty nurse if medically required and equipment such as wheelchairs.


  7. A Home cannot transfer a patient from one room to another without proper notification to the family and permission from the patient/family.


  8. The Home cannot discharge a patient for just any reason, including non-payment. If payment is not made, then the Home has to go to court for an eviction proceeding similar to that if the person lived in an apartment. It is also illegal for a Home to discharge a patient to his/her former home or that of a family member without approval of the patient or the family member.


  9. The Home cannot require as a condition for admission a blanket waiver which would give the Home consent for all medical treatment, discharge or transfer at the Homes whim. Even procedures asked for by the doctor, except in emergencies, should be OKd by the resident or health representative.


  10. Homes cannot prevent a patient from leaving their premises at will. A patient has the right to leave whenever he/she wants and with whomever he/she wants. Homes can ask the patient and/or person with whom the patient is leaving to sign a sign out book in order to keep track of who is on and off the premises.


  11. Clauses saying that the Home and its employees have no responsibility for the loss or damage to the residents personal property, such as false teeth, hearing aids, glasses may be unenforceable. Negligence cannot be waived. The Home must show that is has a procedure in place to limit the loss or damage to personal belongings.


  12. Clauses saying the Home and its employees will have no responsibility or liability for injury to the patient are illegal. The Home retains such liability.







These two scenarios point out common problems when family members look for nursing home placement. Both of these criteria for admission are illegal and unenforceable.


Scenario 1: Two sisters are sitting in the Admissions office of a nursing home (SNF). Their father is in a nearby hospital as a result of a stroke. The hospital is releasing the father in two days, and the doctors recommended he be moved to a nursing home for therapy. He has Medicare.


The sisters have been presented a multi-page contract and have been asked to guarantee payment as a private pay patient for 12 months.


It is an emotional time for the family as the father was never ill until the recent stroke.


Scenario 2: A couple is sitting in the Admissions office of a nursing home. The wifes mother has been living with the couple and their children for two years. The wife is now unable to continue caring for her mother because of severe dementia and incontinency problems. The couple is looking for a nursing home nearby so they can visit often and that would provide the kind of care they want for the mother.


The Admissions director is saying You have to give us a deposit of $20,000 and turn over your mothers social security and other assets to us. Then we will admit her.


The Law


In spite of laws and regulations, both federal and state, many nursing homes still have clauses in their contracts that are illegal and unenforceable.


The Federal Nursing Home Reform Act (OBRA 87) has some interesting protection for all patients in Medicare and Medicaid - certified nursing homes. The rights apply to private pay as well as Medicare and Medicaid patients.


But the families faced with such contracts as noted above have to make a decision. In Scenario 1, the time frame is critical. In Scenario 2, the time frame is not as critical, but the emotional elements are reaching a breaking point.


In Scenario 1: If the nursing home is Medicare certified it cannot refuse to accept a Medicare patient unless there is absolutely no bed available. Second, it cannot ask the family to promise to pay as a private pay patient as Medicare pays full or part of the cost for the first 100 days. Even if the Home does not know how it will be paid after Medicare benefits are used up, it cannot refuse to accept the patient or require a promise from children to pay. If the patient has no assets and/or sufficient income after Medicare benefits are used up, then it is the Homes responsibility to help the family apply for Medicaid.

The law backs up family rights. You dont have to promise to pay for a parents care nor do you have to turn over any assets to a nursing home.


In Scenario 2: A large lump sum entrance fee is illegal under federal law. A month or two deposit can be requested (similar to the one you put down on an apartment or house rental), but whatever is left after the patient leaves the home must be returned to the family with interest.


Second, it is also illegal for a Home to ask for/require the turning over of income and or/assets to the Home as a condition for placement. No family has to turn over assets. Have the Home bill the patient/family, and pay bills as they come in.


What To Do


Nursing home patient advocates say, Often SNFs keep working on the fears of families that their loved one will not be admitted if they ask too many questions or that quality care will not be given. However, if families dont question illegal clauses or practices, they are buying into the continuing financial and psychological abuse.


Advice: Open up communications and establish a dialogue with the nursing home staff. Ask questions, and do not be afraid to do so.


Advice: If you dont understand a clause, diplomatically ask for an explanation. If you know the clauses are illegal or unenforceable, say nicely, I understand such a clause is illegal, and I would like to cross it out. Initial the crossed out clause and have the SNF representative also do so.


One nursing home advocate suggests that If the SNF representative insists on the clause, do not sign. You might say, I think I would like to check this out with the State (health department) to make sure.


Another advocate says a family has a number of choices of how to handle potentially problem contracts. First she recommends that a family member never sign a contract in the admission office without taking it home and reading it in a less emotionally charged atmosphere. When there are clauses that are illegal or unenforceable, a sandwich generationer can cross it out, initial it and have the nursing home representative initial it. Before crossing out such a clause, question it. It is the responsibility of relatives to challenge illegal clauses. You can ask for a new contract.


If there is a time pressure factor such as in Scenario 1, the following is suggested. Sign the contract, but after the family member is in the nursing home, write a letter to the administrator. Say, I have been surprised to learn that _____ clause is illegal (or unenforceable). I am hereby putting you on notice and would like those clauses crossed out (or want a new contract).


There are political pressures to get relatives to be more financially responsible and the current laws may change. Everyone needs to watch for changes in the law, both state and federal.


Many elder law attorneys recommend that a spouse or sandwich generationer sign the contract as Power of Attorney for _____ or on behalf of ____. And if the word Sponsor is at the end of the line for your signature, cross out that word.


The key agency in all states is the State Health Department, which administers both federal and state SNF regulations. The name of the appropriate person and telephone number can usually be obtained through the Area Agency on Aging or the hospital discharge planner or social worker.


Remember: A squeaky wheel does get results and often better care for the loved one. The SNFs administration and staff realize you know the laws and your rights and will respect you for this.







Medicare pays all charges when a patient is in a nursing home for the qualifying time period.


Medicare pays

  • for skilled nursing home care if a patient has had a hospital stay of a least 3 consecutive days within the 30 days prior to admission to the nursing home. This means that a patient can have returned home after a hospital stay and then found that nursing home care was really needed.


  • 100% of all the charges for the first 20 days. For days 21 through 100, the patient must contribute (co-pay) about $100 per day. After day 100, Medicare stops its payment. It is then the responsibility of the patient to pay, unless Medicaid is appropriate.


  • Medicare - paid per diem payments also include all costs for wheelchairs, geri-chairs and walkers. The nursing home cannot bill the patient for use of these types of aids.


  • for home care on a short term intermittent basis for skilled nursing care, and physical and/or speech therapy if the patient is homebound and under the care of a physician who says the care is medically needed and sets up the home care plan. Coverage includes nursing visits, therapy, home health aides, medical social services, medical supplies, and 80% of durable medical equipment.


  • hospice care either in a facility or the patients home when a doctor has certified that the patient is terminally ill, and the care is provided by a Medicare participating program.


    A patient or his/her family member does not have to pay a nursing home if they think Medicare should be paying until Medicare makes a determination. And if Medicare does refuse to pay, a patient/family has the right to appeal. Too often the insurance company handling Medicare rejects an application even if by law they should be paying the Home.


    If Medicare refuses to pay, there is an appeal process. Any one turned down should appeal!



    Procedure: the nursing home will bill the patient. If the patient has no money - or then uses up his/her money - the nursing home has the responsibility to file to Medicaid.


    It may take a month or two for Medicaid processing. In the meantime, the patient is entitled to all appropriate care and services. The nursing home will be paid retroactively.





    Nursing Homes Tidbits


    Medical Records Access


    Many states guarantee a patients right to have access to medical records and the information contained in them. A doctor, hospital or nursing home cannot refuse to show a patient or the patients representative the records.


    Patient Consent: A Must


    A hospital or nursing home cannot provide medical treatment to a patient without the consent of either the patient or the patients representative. This covers any surgical procedure or medical treatment that involve the touching of the patients body.


    Any unauthorized touching of the body can constitute battery, a crime under the law.


    A patient or nursing home resident can also refuse to take medications. If the nursing home forces the patient to take the medication, they can be held liable under the law.



    This material is copyrighted by Carol Abaya Associates and cannot be reproduced in any manner, print, or electronically.