Jun 26

Son Did Not Breach Contract With Mother’s Nursing Home by Not Retrieving Improperly Transferred Assets


Jessica Mayo made payments to her son and his wife for personal care services. A few years later, she appointed her other son, Robert, as her agent under a power of attorney. Mr. Mayo applied for Medicaid benefits on behalf of his mother and signed a nursing home admission agreement on her behalf as the "responsible party." The contract stated that if the state denied Ms. Mayo Medicaid benefits due to an improper asset transfer, it would be considered a breach of contract between the resident and the nursing home. The state imposed a penalty period due to the transfers to Ms. Mayo's son and his wife. After a hearing, the state upheld the penalty period, and Ms. Mayo died still owing the nursing home $26,414.31.

The nursing home sued Mr. Mayo for breach of contract. The trial court ruled in favor of the nursing home, finding that the admissions agreement contract defined the duty of the responsible party to include retrieval of improperly transferred assets from third parties. Mr. Mayo appealed, arguing that he was not responsible for transfers made before he entered into the contract with the nursing home.

The Illinois Court of Appeals, Fourth District, reverses, holding that Mr. Mayo did not breach the contract with the nursing home. The court notes that the contract states that an improper transfer of assets would result in a breach of contract with the resident, not the responsible party. According to the court, "nowhere in any of the contractual documents does [Mr. Mayo] promise to recover assets that [Ms.] Mayo transferred before the inception of [Mr. Mayo's] contractual relationship with [the nursing home]. "

For the full text of this decision, go to: http://www.illinoiscourts.gov/R23_Orders/AppellateCourt/2017/4thDistrict/4160651_R23.pdf