The issue before the Court is whether defendant Ronald Lang can be held liable for the cost of care his grandmother received at a nursing home, based on his signature on the admission agreement.

Background

Plaintiff Amsterdam Nursing Home (plaintiff or Amsterdam) commenced this case against defendant Ronald Lang (defendant or Lang) to recover the sum of $18,574.53, allegedly due for the services provided to Clarissa Merritt, a resident of the facility (Affirmation of Susan Mauro, Esq. in Support of Motion [Mauro Aff.], at ¶ 3). Lang is the grandson of Ms. Merritt (id.). Lang signed the Admission Agreement, as the "Legally Authorized Representative", of Ms. Merritt Mauro Aff., Ex. I [Admission Agreement] at 14). According to the submitted affidavit of service, plaintiff was able to effectuate service of process on Lang on or about February 5, 2006, after several unsuccessful attempts. Lang has failed to appear, or otherwise respond to the complaint; nor has he requested an extension of time to do so.

Plaintiff moves: (1) for an order, pursuant to CPLR 306-b, for an extension of time for service of process; and (2) for an order, pursuant to CPLR 3215, authorizing the entry of a default judgment against Lang. For the reasons set forth below, both branches of plaintiff's motion are denied.

Discussion

1. Extension of Time for Service of Process

Plaintiff commenced this action by filing the summons and complaint, on or about May 19, 2005 (Mauro Aff., Ex. A). Amsterdam made several unsuccessful attempts to serve Lang at his last known address of 131 St. Nicholas Avenue, Apt. 13A, New York, New York 10026. A process server employed by plaintiff unsuccessfully attempted to personally serve Lang with the summons and complaint at the above address on or about May 31, 2005, and was advised by the new tenant in Lang's apartment that Lang had moved and had left no forwarding address (Mauro Aff., Ex. C). In response to plaintiff's inquiry, on or about June 20, 2005, the United States Postal Service indicated that Lang had not filed a change of address form (Mauro Aff., Ex. D).

On or about September 16, 2005, nearly three months after being advised by the U. S. Postal Service that Lang had left no forwarding address, Amsterdam's attorneys employed a private investigative agency, Windsearch, to [*2]make additional efforts to locate Lang (Mauro Aff., at ¶ 9 and Ex. E). In or about November 2005, Windsearch advised Amsterdam's attorneys that, after searching many nationwide databases, it could not locate an address for Lang, other than his last known address of 131 St. Nicholas Avenue (id.). Amsterdam was finally able to effectuate service on Lang by the nail, mail and file method at his last known address, pursuant to CPLR 308 (4). After several unsuccessful attempts to personally serve Lang at the 131 St. Nicholas Avenue address, a process server retained by plaintiff affixed a copy of the summons and complaint to his last known residence, on or about January 18, 2006, and then mailed a copy of the summons and complaint to Lang at his last known address on January 24, 2006 (Mauro Aff., Ex. F). The affidavit of service was filed with the office of the New York County Clerk on January 26, 2006. In accordance with CPLR 308 (4), service on Lang was complete ten days after the filing, on or about February 5, 2006.

CPLR 306-b provides that service of the summons and complaint must be made within 120 days after filing, or in the instant case on or about September 20, 2005. In this case, however, Amsterdam did not effectuate service on Lang until over four months after the prescribed time. CPLR 306-b further provides, however, that the court may extend the time for service of process "upon good cause shown or in the interest of justice". In order to show "good cause", Amsterdam must establish that it made reasonably diligent efforts to serve Lang within the prescribed 120 day period (see Leader v Maroney, Ponzini & Spencer, 97 NY2d 95, 105 [2001]). Amsterdam has failed to demonstrate that it made reasonably diligent efforts to effectuate service on Lang within 120 days after filing the summons and complaint. There is no justification for the delay of more than three months in retaining the private investigative agency, after being advised by the U.S. Postal Service that there was no forwarding address for Lang. Nor did Amsterdam provide any explanation for the further delay of approximately two months in serving Lang by the nail, mail and file method, after receiving the report from the investigative agency. If Amsterdam cannot establish "good cause' for failing to effectuate timely service on Lang, it certainly cannot demonstrate a basis for extending the time for service "in the interests of justice', which requires the balancing of a number of factors, including the reasonable diligence of efforts to serve Lang (id., at 105-106).

2. Default Judgment; Merits of Lang's Liability for Services Rendered to his Grandmother

Even assuming, for the sake of argument, that Amsterdam had established a basis to extend its time to effectuate service on Lang, it has failed to demonstrate entitlement to the entry of a default judgment against him for services rendered to his grandmother. This case deals with the relatively novel issue of third-party liability for the costs of nursing home services. As discussed in detail below, Amsterdam has shown no basis for holding Lang liable for the services it rendered to his grandmother, under the facts and circumstances herein.

The requirements for nursing home reimbursement pursuant to the Medicaid program, as was the case at bar, are set forth in certain provisions of the Federal Social Security Act, 42 U.S,C. § 1396r. That statute contains the following provision:

"(5) Admissions policy

(A) Admission

With respect to admissions practices, a nursing facility must ——

(ii) not require a third party guarantee of payment to the facility as a condition of admission (or expedited admission) to, or continued stay in, the facility; and ...

(B) Construction...

(ii) Contracts with legal representatives

Subparagraph (A) (ii) shall not be construed as preventing a facility from requiring an individual, who has legal access to a resident's income or resources available to pay for care in the facility, to sign a contract (without incurring personal financial liability) to provide payment from the resident's income or resources for such care."

(42 U.S.C. § 1396r [c] [5] [A] [ii] and [B] [ii]). There are similar provisions in the section of the Social Security Act dealing with Medicare benefits (42 U.S.C. § 1395i [c] [5] [A] [ii] and [B] [ii]).

The federal regulations for the Centers for Medicare and Medicaid Services (CMS) contain the following provision, reflecting the above statutory requirements:

"(2) The facility must not require a third party guarantee of payment to the facility as a condition of admission or expedited admission, or continued stay in the facility. However, the facility may require an individual who has legal access to a resident's income or resources available to pay for facility care to sign a contract, without incurring personal financial liability, to provide facility payment from the resident's income or resources."

The regulations of the New York State Department of Health contain a provision reflecting the federal statutory and regulatory requirements, discussed above:

"(b) Admission rights. The nursing home shall protect and promote the rights of residents and potential residents by establishing and implementing policies which ensure that the facility:

(1) shall not require a third-party guarantee of payment to the facility as a condition of admission, or expedited admission, or continued stay in the facility;...

(6) may require an individual who has legal access to a resident's income or resources available to pay for facility care, to sign a contract, without incurring personal financial liability, to provide the facility payment from the resident's income or resources; ...."

(10 NYCRR § 415.3 [b] [1] and [6]).

Amsterdam argues that Lang, based upon his signature on the Admission Agreement as his grandmother's "Legally Authorized Representative", assumed responsibility for payment of her Net Available Monthly Income (NAMI), an amount determined by Medicaid that a nursing home resident is responsible for paying a health care facility, after evaluating her assets and income (Mauro Aff., at ¶ 22, and Ex. J). In this case, the New York City Medicaid agency determined that Ms. Merritt's NAMI, based upon the net pension and Social Security income available to her, was $1043.65 (Mauro Aff., Ex. J). The $ 18,574.53 sought by Amsterdam is the total of Ms. Merritt's unpaid NAMI for her stay at the facility.

Lang did not sign a third-party guarantee requiring him to be personally liable for his grandmother's unpaid NAMI and other fees owed to Amsterdam; nor could Amsterdam legally require such a guarantee as a condition of Ms. Merritt's admission (see 42 U.S.C § 1396r [c] [5] [A] [ii] and [B] [ii]; 10 NYCRR § 415.3 [b] [1] and [6]). The Admission Agreement does not define the term, "Legally Authorized Representative^[FN1]" (Admission Agreement, at 13-14[K]). Further, the Admission Agreement only requires the resident, in this case Ms. Merritt, rather than the Legally Authorized Representative, to pay the basic daily rate and all other charges for services not covered by Medicare, Medicaid or other third-party insurance, and to pay the NAMI, as determined by the Department of Health (see Admission Agreement, at 3 [C] [1] and 4 [d]).

The following provision of the Admission Agreement describes the responsibilities of the Legally Authorized Representative:

"K. LEGALLY AUTHORIZED REPRESENTATION DOCUMENTATION

Resident's Legally Authorized Representative agrees to obtain and provide Amsterdam with formal documentation confirming authorization to act on behalf of Resident with respect to financial and/or personal matters. Resident's Legally Authorized Representative will obtain formal court appointment as a guardian, or power-of-attorney to act on Resident's behalf, or any such formal designation that is determined to be necessary by Amsterdam. Upon receipt and verification of such documentation, Amsterdam will give to the Legally Authorized Representative all notification of information which is required to be given to Resident by applicable laws or regulations subject to applicable limitations based upon confidentiality."

In addition, it is significant that Lang did not sign the last page of the Admission Agreement, containing the following language: "The undersigned agrees, without incurring personal financial liability, to provide Amsterdam with payment from Resident's income or resources for any amounts due from Resident under the terms of this Agreement" (Admission Agreement, at 15). This language reflects the provisions of the Social Security Act and the applicable federal and state regulations discussed above (see 42 U.S.C. § 1396r [c] [5] [A] [ii] and [B] [ii]; 42 C.F.R. § [*4]483.12 [d] [2]; and 10 NYCRR § 415.3 [b] [1] and [6]). Even if Lang had signed the above provision of the Admission Agreement, Amsterdam could only legally require him to provide the facility with payment for his grandmother's NAMI, using his access to her available income or resources, without incurring any personal financial liability (see 42 U.S.C § 1396r [c] [5] [A] [ii] and [B] [ii]; 10 NYCRR § 415.3 [b] [1] and [6]). As has been emphasized, however, Amsterdam has presented no evidence that Lang has any legal control over or access to his grandmother's financial resources (see Mauro Aff., at ¶ 19; Admission Agreement, at 13-14[K]). Therefore, based upon the record before this Court, Amsterdam has failed to establish that Lang is liable to pay for the services rendered to his grandmother.

The limited case law on this issue from New York supports the above conclusion. In the recent decision of Prospect Park Nursing Home, Inc. v Goutier (12 Misc 3d 1192[A] [Civ Ct, Kings County 2006] [Battaglia, J]), the court concluded that a third party who had signed a resident's nursing home admission agreement as the "Designated Representative" was not liable to pay for services rendered to the resident by the facility, in excess of the funds received from third party sources. The court found no evidence that the third party, who had obtained a durable power of attorney over the resident's financial assets two years after the resident had left the nursing home, had any access to the resident's assets or had received any of those assets . As noted above, in the instant case, Amsterdam presented no evidence that Lang had a power of attorney or other legal control over his grandmother's assets and income (see also Wedgewood Care Ctr., Inc. v McGloin, 2002 NY Slip Op 40545 [U] [App Term 2002] [summary judgment denied to nursing home operator seeking reimbursement from widow for unpaid balance for husband's services; widow was not guarantor for her husband, but question of fact existed as to whether widow acted as a trustee to receive benefits on behalf of her husband]).

The New York decisions cited by Amsterdam are distinguishable from the instant matter. For example, in Putnam Nursing and Rehabilitation Ctr. v Bowles (239 AD2d 479 [2d Dept 1997]), the Appellate Division held that a nursing home could assert claims against the defendants, who were third parties to whom a deceased resident had transferred ownership of her residence. In addition, one of the defendants had executed a "Responsible Party" agreement with the facility, agreeing to guarantee continuity of payment from the resident's funds or from third-party sources (id., at 480). Defendants obtained a loan of $20,000 after mortgaging the residence, but did not transfer this money to the nursing home (id.). The Appellate Division held that the defendants could be held liable to the nursing facility for both breach of contract and for a fraudulent conveyance voidable pursuant to the Debtor and Creditor Law (id., at 481). In Putnam Nursing and Rehabilitation Ctr. v Bowles, the "responsible party" actually had control over the resident's property and had obtained monetary resources based upon that property. By contrast, in the instant case, Amsterdam has presented no evidence that Lang obtained any control over or access to his grandmother's assets or income (see also Daughters of Sarah Nursing Home Co. v Lipkin, 145 AD2d 808 [3d Dept 1988] [holding defendant liable for resident's charges as third-party guarantor where charges were incurred prior to effective date of provisions of Social Security Act prohibiting nursing homes from requiring third-party guarantees as a condition of admission]).

Decisions from other states support the imposition of liability on third parties for the cost of a nursing home resident's care only where the third party has legal control over or access to the resident's assets and/or income. For example in Sunrise Healthcare Corp. v Azargian (76 Conn App 800, 821 A2d 835 [2003]), a Connecticut appellate court concluded that a nursing home could hold a daughter liable for breach of contract, where the daughter had signed her mother's contract as the "legal representative" and had power of attorney over her mother's financial assets. In Sunrise Healthcare, the daughter had improperly transferred money from her mother's accounts, instead of using her mother's assets to pay for her care (see also Methodist Manor of Waukesha, Inc. v Martin, 255 Wis2d 707, 647 NW2d 409 [2002] [nursing facility stated cause of action against son for conversion, where son was mother's attorney-in-fact and joint bank account holder, and had failed to turn over to the facility his mother's Social Security benefits which were under his control]; compare Slovik v Prime Healthcare Corp., 838 So2d 1054 [Ala 2002] [court finds insufficient evidence to hold stepson liable for failing to pay his stepfather's Social Security benefits to a nursing facility]).

Thus, Amsterdam's complaint must be dismissed on the merits, as it is not entitled to hold Lang liable for any portion of his grandmother's outstanding charges, based upon the language of the Admission Agreement he signed, the applicable provisions of the Social Security Act, the federal and state regulations, or the relevant case law.

Accordingly, it is

ORDERED that plaintiff's motion for an extension of time to effectuate service of process on defendant or, in the alternative, to enter a default judgment against defendant is denied, and the complaint is dismissed and the Clerk of the Court shall enter judgment in accordance herewith.

This constitutes the Decision and Order of the Court.

Dated:ENTER: [*5]

Doris Ling-Cohan, JSC

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