Promissory Note and Nursing Home Resident’s Daughter
Corona Estate Planning Attorney Joseph Hudack knows that a Kentucky appeals court holds that a promissory note executed by a nursing home resident’s daughter, agreeing to pay the nursing home for the resident’s outstanding expenses, is not illegal because there was no evidence her mother’s stay in the nursing home was conditioned on her signing the note. Roberts v. Mt. Washington Health Care, LLC (Ky. Ct. App., No. 2020-CA-1190-MR, Oct. 29, 2021).
Erma Basham entered a nursing home in 2018. She applied for Medicaid in 2019 and was approved, but she owed $34,742.26 in expenses for her care before her Medicaid application was approved. Ms. Basham’s daughter, Christy Roberts, executed a promissory note, agreeing to pay the nursing home monthly to pay down Ms. Basham’s bill. Ms. Roberts made one payment and defaulted on the note.
The nursing home sued Ms. Roberts. The trial court found Ms. Roberts had executed a valid promissory note and entered judgment in favor of the nursing home. Ms. Roberts appealed, arguing that the promissory note was illegal because, under federal law, the nursing home cannot require a third-party guarantee of payment as a condition of admission or continued stay in the facility.
The Kentucky Court of Appeals affirms in part, holding that the promissory note is not illegal. According to the court, there was “no testimony or other evidence of record apart from Ms. Roberts’ unsupported assertions indicating that her mother’s admission or continued stay at the appellee’s facility was conditioned upon Ms. Roberts executing the February 12, 2019, promissory note.” However, the court finds that the interest charged by Ms. Roberts was too high and remands the case to enter a lower interest rate.