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Before you read this article, go and grab a copy of your facility’s admission agreement. Get a cup of coffee (or you might need something stronger for what I’m about to tell you). Then, give your admission agreement a quick review and circle every place you see the term “responsible person” or “responsible party.”

Now, hold on to your coffee cup because we’ve got a news flash for you. The term “responsible person” or “responsible party” is not used or defined in federal law governing nursing facilities. It’s also not defined in North Carolina law governing nursing facilities, but it is used once—and only once—in our state long term care law.
Yet we find that the vast majority of nursing facilities use this term in admission agreements which they believe to be, and intend to be, legally binding. And, what’s worse, that term is used in the belief that it binds some third person, other than the resident, to certain obligations, including paying for care provided to a resident.

So how in the heck did it wind up in nearly everybody’s admission agreement? Now THAT’s a really good question. The answer may be that the term is actually used in one place, and only one that we can find, in North Carolina law, and it’s found, of all places, in a simple little statute dealing with complaint investigations. N.C.G.S. 131E-124(c) says, “a person who has filed a complaint shall have access to information about a complaint investigation involving a specific resident if written authorization is obtained from the resident, legal representative, or responsible party.” That’s it, the full use of and discussion of “responsible parties” in state nursing home law and the term is not even defined there. It isn’t used anywhere in federal nursing home law at all.

So, when someone signs your admission agreement as “responsible party” for a resident, it really has little or no meaning unless in your agreement you spell out precisely what they are agreeing to do (i.e., you define the term for them) AND those obligations they are undertaking are permitted by state and federal law. There are two primary reasons facilities ask for a responsible person: 1) to guarantee payment for services provided to the resident and 2) to know who they should contact to give required notices (such as a change in condition, or intent to discharge, for example) or to obtain consent to treatments.

Let’s talk first about the payment issue. One rule you have to know—federal law prohibits nursing facilities from requiring a guarantee of payment by a third party from their personal funds or assets as a condition of admission or continued stay, but you can require that third party to use funds of the resident over which the third party has control to pay for the care of the resident. If your “responsible party” agreement or provision tries to do more than that, it’s unenforceable. This becomes a huge issue when you are trying to collect for an unpaid balance and are considering who can be sued for nonpayment of services provided to the resident.

Now to the “notice and consent issue.” Federal law requires that you give notice of certain events (change in condition, discharge, change in roommate, accidents involving injury, a need to alter treatment significantly, etc.) to the resident and, if known, to a family member or legal representative (note federal law does not call this person a “responsible person or party”). A legal representative is someone given authority by law (such as a guardian) or by the resident (such as in a durable power of attorney or health care power of attorney) to make decisions for the resident. If the issue you are dealing with is obtaining medical consent, rather than simply giving a required notice, don’t forget that North Carolina has a statute telling you who is empowered to give consent for any medical issue. The statute is N.C.G.S. 90-21.13 (“Informed Consent to Health Care Treatment or Procedure”). If you seek and obtain consent consistent with this statute, you are protected from liability for obtaining an improper consent or failing to obtain a valid consent. See our prior Shorts articles on this statute for how it works.

So, now that we’ve blown your “responsible party” out of the water, what do you do about it? We recommend one of two options: 1) either clearly define the term “responsible party” in the admission agreement if you want to keep using it, spelling out precisely what that individual is agreeing to do (assuming that is consistent with state and federal law), or 2) our recommendation is to get rid of the term altogether and replace it with two other terms—financial legal representative and personal legal representative.

The financial legal representative is the person who has control over and/or access to any funds or assets of the resident and agrees in writing (we do this via a separate financial legal representative agreement) to use those funds to pay for the resident’s care. We believe state law would permit a suit against that person if he or she fails to use those funds for that purpose and/or uses them for his or her own benefit (and potentially for failing to seek Medicaid or Medicare qualification for the resident if the agreement binds them to do so).

The personal legal representative simply agrees to receive notices for the resident that you are required by law to give. That can be spelled out in your admission agreement and really doesn’t warrant a separate agreement. The medical consent issue is governed by the statute we mentioned above and the personal legal representative may or may not be the person who, under that statute, is the appropriate person to give consent for medical treatments.

We like this approach because it uses the legal representative term that is found throughout federal nursing facility law, and we like breaking it up into two types—financial and personal—so no one, including our clients, confuses the two roles and/or writes another admission agreement that may, at least in part, try to bind third parties to more than can be legally required, and thus potentially makes them unenforceable.

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