## Facts

- Gloria Wood granted her daughter, Vicki Azarigian, power of attorney giving Azarigian legal access to and control over Wood’s assets.
- To admit Wood to Sunrise’s nursing facility, Azarigian signed an admission agreement as Wood’s legal representative and “responsible party.”
- The agreement did not impose a personal guaranty on Azarigian, but required her to (1) take necessary steps to establish Wood’s Medicaid eligibility and (2) apply Wood’s assets for Wood’s welfare, including paying the facility’s charges.
- During Wood’s residency, Azarigian used Wood’s assets to pay the facility, to make inter vivos gifts consistent with Wood’s prior gifting pattern, and to pay for a private companion.
- Roughly a year after admission, Azarigian stopped paying Sunrise from Wood’s assets and applied for Medicaid.
- Medicaid was denied in part due to asset transfers treated as disqualifying transfers under Medicaid rules.
- Wood died with approximately $79,000 in unpaid nursing-home charges owed to Sunrise.
- Sunrise sued Azarigian for breach of the admission agreement, alleging she diverted Wood’s assets and failed to secure Medicaid, leaving the facility unpaid.

## Issues

1. Whether a nursing-home admission agreement requiring a resident’s legal representative with access to the resident’s assets to use those assets to pay for care and to pursue Medicaid violates the federal Medicaid Act or Connecticut patient-rights law as an impermissible third-party guaranty.
2. Whether Azarigian breached the agreement by using Wood’s assets for gifts and other expenditures that contributed to Medicaid ineligibility and nonpayment of the facility’s charges.

## Decision

- The Connecticut Appellate Court affirmed judgment for Sunrise.
- The court held the agreement did not violate the federal Medicaid Act or Connecticut patient-rights law because it did not require Azarigian to personally guarantee payment and instead permissibly required payment from the resident’s assets by a person with legal access to those assets.
- The court held Azarigian breached the agreement by failing to apply Wood’s assets as required and by making transfers that rendered Wood ineligible for Medicaid and resulted in substantial unpaid charges.
- Azarigian was liable in contract for the unpaid balance.

## Legal Principles

- Federal Medicaid law prohibits nursing facilities from requiring a third-party personal guaranty as a condition of admission, but permits requiring a person with legal access to a resident’s income or resources to agree to apply those funds to pay for the resident’s care.
- A contract obligating an attorney-in-fact or similar representative to use the resident’s assets for the resident’s care and to cooperate in obtaining Medicaid is enforceable if it does not impose personal liability beyond the resident’s resources.
- Where an admission agreement prioritizes paying for care and obtaining Medicaid eligibility, “welfare” or expenditure-discretion language does not authorize asset transfers that defeat those purposes and foreseeably jeopardize payment and eligibility.
- An agent who diverts a principal’s assets in a manner that causes Medicaid ineligibility and leaves nursing-home charges unpaid may be found to have breached the admission agreement and be held liable for resulting damages.

## Conclusion

The court upheld a nursing-home admission agreement requiring a resident’s attorney-in-fact to apply the resident’s assets to care and pursue Medicaid without imposing a personal guaranty, and it affirmed contract liability where the agent’s transfers and nonpayment caused Medicaid ineligibility and left substantial charges unpaid.


Sunrise Healthcare Corp. v. Azarigian, 821 A.2d 835 (Conn. App. Ct. 2003)