Facts
- A nursing-home resident entered Dadeville Convalescent Home in 1994 and remained until his death after January 15, 1999.
- Prime Healthcare Corporation operated the facility.
- From 1994 through 1998, Medicaid paid part of the resident’s care costs; the remainder was paid from the resident’s Social Security retirement benefits.
- The resident’s stepson, William Slovik, served as the resident’s Social Security representative payee and handled financial matters.
- In 1998, Medicaid asserted it had overpaid benefits for 1997 and sought reimbursement, later disqualifying the resident from Medicaid benefits effective December 31, 1998, until repayment.
- Prime Healthcare claimed that, during the Medicaid dispute, the resident’s required share of cost increased and that payments were not made at the increased rate, creating an unpaid balance.
- Prime Healthcare alleged Slovik orally agreed to be responsible for paying the facility from the resident’s Social Security income for amounts not covered by Medicaid.
- Prime Healthcare introduced a document Slovik signed as “personal representative”; it was admitted only to show his signature, not to prove the document’s contents.
- Slovik denied ever agreeing to personal liability and maintained he acted only in a representative capacity.
Issues
- Whether substantial evidence supported a finding that Slovik entered an oral contract personally obligating him to pay the nursing-home charges.
- Whether any alleged promise was unenforceable absent a writing under Alabama’s statute of frauds as a promise to answer for another’s debt.
Decision
- The Alabama Court of Civil Appeals reversed the judgment for Prime Healthcare and remanded.
- The court held the evidence was insufficient, as a matter of law, to prove Slovik assumed a personal contractual obligation for the resident’s nursing-home debt.
- Because no personal promise was proven, the court did not decide whether the statute of frauds would bar enforcement of the alleged promise.
Legal Principles
- The plaintiff bears the burden to present substantial evidence of contract formation and the defendant’s intent to be personally bound.
- A person acting and signing in a representative capacity is not personally liable absent clear evidence of an individual undertaking.
- Vague testimony about a “verbal agreement,” without a clear distinction between managing another’s funds and promising personal payment, is insufficient to impose personal liability.
- Where the record shows payments were made from the resident’s funds and documents identify the signer only as a representative, a court will not infer an individual assumption of the debt.
Conclusion
The appellate court set aside the damages award against Slovik because Prime Healthcare failed to prove that he personally agreed to pay his stepfather’s nursing-home charges, as opposed to acting only as representative payee managing the stepfather’s Social Security benefits.