Americana Healthcare Center, a Div. of Manor Healthcare Corp. v. Randall

• Decision Date: 16 March 1994
• Docket Number: No. 18186,18186
• Citation: 62 USLW 2719,513 N.W.2d 566
• Parties: AMERICANA HEALTHCARE CENTER, A DIVISION OF MANOR HEALTHCARE CORPORATION, Plaintiff and Appellee, v. Robert L. RANDALL, Individually and as Trustee of a certain Maintenance Agreement between Juanita A. Randall and Robert L. Randall, as Trustee, Defendant and Appellant.
• Court: South Dakota Supreme Court

Page 566

513 N.W.2d 566

62 USLW 2719

AMERICANA HEALTHCARE CENTER, A DIVISION OF MANOR HEALTHCARE CORPORATION, Plaintiff and Appellee, v. Robert L. RANDALL, Individually and as Trustee of a certain Maintenance Agreement between Juanita A. Randall and Robert L. Randall, as Trustee Defendant and Appellant.

No. 18186.

Supreme Court of South Dakota.

Argued Aug. 31, 1993.

Decided March 16, 1994.

Dennis Maloney of Maloney and Maloney, Aberdeen, for plaintiff and appellee.

Ronald A. Wager and Kennith L. Gosch of Bantz, Gosch, Cremer, Peterson & Oliver, Aberdeen, for defendant and appellant.

Mark Barnett, Atty. Gen., Steve Cowan Asst. Atty. Gen., Pierre, for amicus curiae, State of S.D.

AMUNDSON, Justice.

Robert Randall appeals the trial court's judgment in favor of Americana Healthcare Center for the costs of care for his elderly mother pursuant to SDCL 25-7-27. We affirm.

FACTS

Appellant Robert Randall (Robert) is the only child of Harry and Juanita Randall. Although he grew up in Aberdeen, Robert has not resided in South Dakota since in 1954. Robert is now a resident of the District of Columbia.

Robert's father died in 1981. Four years after his death, Robert's mother Juanita hired counsel to draft a trust document entitled "Juanita Randall Maintenance Trust Agreement." This irrevocable trust named Juanita as the income beneficiary and Robert as both trustee and residual beneficiary. The trust principal consisted of Juanita's house which was valued at approximately $30,000 and $100,000 in mutual funds. The trust did not grant the trustee authority to invade the principal for the benefit of Juanita. Juanita was ninety-two years old when she executed the trust document in 1985.

Following an accident which required Juanita's hospitalization, Robert came back to Aberdeen and checked into various nursing homes to place his mother. In the fall of 1990, Juanita was admitted to the Arcadia Unit of Americana Healthcare Center (Americana) in Aberdeen, South Dakota. The Arcadia Unit is specifically designed to deal with individuals who possess mental problems such as Alzheimer's disease. Robert completed and signed all the necessary documents under the power of attorney from his mother and made a two-month advance payment to Americana from his mother's checking account. He also listed himself as the person who should be sent the monthly statements from the nursing home.

At that time, in view of Juanita's limited income, Robert discussed the possibility of financial assistance from Medicaid with various Americana personnel. Later that month, Robert completed an application for long-term care medical assistance for Juanita. In November, the South Dakota Department of Social Services (DSS) denied this application because Juanita had not exhausted all of her assets. ¹ At the time, Juanita's only assets were the house and mutual funds which had been conveyed to the trust.

Juanita's bill was two months delinquent at the time Americana learned of the rejected Medicaid application. Americana then contacted Robert about his mother's unpaid bills. Because of Juanita's financial position, Robert, as her legal guardian, filed a Chapter 11 bankruptcy on her behalf in the District of Columbia. The District of Columbia court dismissed this bankruptcy proceeding after Americana refused resolution under bankruptcy. Robert then filed a Chapter 7 bankruptcy petition which was transferred to South Dakota and discharged the Americana bill for Juanita individually and Robert, as her guardian, on October 30, 1991. Meanwhile, Americana filed this suit to collect the unpaid bills. ²

While Juanita stayed at Americana she received social security payments and income from the trust. While the amount of social security benefits is not shown in this record, Robert estimated that the trust produced about $5000-$6000 income per year. This income was used by Robert to pay legal fees incurred by forming the guardianship, the bankruptcy proceedings and the unsuccessful pursuant of Medicaid benefits.

In June of 1991, Robert was requested to remove his mother from Americana because of the unpaid bills. Despite this request, Juanita remained at Americana until her death on December 8, 1991. At the time of Juanita's death, the unpaid balance for her care was $36,772.30.

Americana notified Robert of his mother's unpaid bills on many occasions. Robert was named as a party to this suit in three capacities: individually, as trustee, and as guardian of the person and estate of Juanita Randall. Americana alleged that Robert had agreed to pay his mother's nursing home bill at the time of her admission to Americana's facility.

Prior to trial, the court granted Robert's motion for summary judgment as to Robert Randall as guardian of the person and estate of Juanita because of the discharge in bankruptcy, but denied summary judgment to Robert Randall individually and as trustee of the Juanita A. Randall Maintenance Trust. At the summary judgment hearing, Americana raised its claim under SDCL 25-7-27 for the first time. ³

On September 3, 1992, Robert renewed his motion for summary judgment on the additional ground that SDCL 25-7-27 was unconstitutional and requested a continuance. Robert also notified the South Dakota Attorney General that the constitutionality of SDCL 25-7-27 was being challenged. The trial court stated that it was premature to rule on the constitutionality of the statute at that time and denied the continuance.

A court trial was held September 22, 1992. At the conclusion of Americana's case, Robert moved for directed verdict on the grounds that Americana had failed to establish either an oral or written contract to act as guarantor for his mother's nursing home bills. Additionally, Robert requested a directed verdict because Americana failed to submit any evidence regarding his financial ability to pay the nursing home bill pursuant to SDCL 25-7-27. The trial court granted Robert's motion for directed verdict on Americana's claims for liability based on an oral or written contract of guarantee. However, the court denied Robert's motion for directed verdict on the SDCL 25-7-27 claim and allowed Americana to orally amend their complaint to include the SDCL 25-7-27 claim. The trial court found in favor of Americana on its SDCL 25-7-27 claim. This appeal followed.

ISSUES

1. Was Robert Randall liable for his mother's nursing home bill under SDCL 25-7-27?

2. Does SDCL 25-7-27 deny Robert Randall equal protection of the law?

3. Does SDCL 25-7-27 deny Robert Randall his right to due process?

4. What are reasonable costs for Juanita Randall's nursing home care?

ANALYSIS

ISSUE 1

Was Robert Randall liable for his mother's nursing home bill under SDCL 25-7-27?

First, Robert argues that the trial court abused its discretion when it allowed Americana to amend its complaint to include the SDCL 25-7-27 claim. Before a court allows a complaint to be amended, it must determine whether the opposing party will be prejudiced by the amendment; i.e., did he or she have a fair opportunity to litigate the issue, and could he or she have offered any additional evidence if the case had been tried on a different issue. Beyer v. Cordell 420 N.W.2d 767 (S.D.1988); Bucher v. Staley 297 N.W.2d 802 (S.D.1980); SDCL 15-6-15. The trial court's decision to permit amendment of pleadings will not be disturbed on appeal absent a clear abuse of discretion which results in prejudice to the nonmoving party. Tesch v. Tesch, 399 N.W.2d 880 (S.D.1987). Robert was aware of the statutory claim two months before trial and had sufficient time to defend the claim despite being denied a continuance. He has not demonstrated that he has been unfairly prejudiced by this amendment. Prior to trial, Robert notified the South Dakota Attorney General that the constitutionality of SDCL 25-7-27 would be contested in this action. Therefore, it was proper for the trial court to amend the complaint to include the SDCL 25-7-27 claim.

At common law, an adult child was not required to support a parent. Such an obligation could only be created by statute. McCook County v. Kammoss, 7 S.D. 558, 64 N.W. 1123 (1895); 67A C.J.S. "Parent & Child" Sec. 97 (1985). Such statutes trace their beginnings from the Elizabethan Poor Law of 1601 in England. Swoap v. Superior Court, 10 Cal.3d 490, 111 Cal.Rptr. 136, 516 P.2d 840, 848 (1973). South Dakota adopted the current version of SDCL 25-7-27 in 1963.

The North Dakota Supreme Court considered a claim premised on a similar statutory provision in Bismarck Hospital & Deaconesses Home v. Harris, 68 N.D. 374, 280 N.W. 423 (1938). That court stated:

If the person against whom liability is sought to be established refuses to pay for services rendered, an action may be brought against him by such third party. In such action, the plaintiff must establish the kinship of the parties, the financial ability of the person sought to be charged, the indigence of the person to whom relief was furnished, the reasonable value of the services, and that such relief was an immediate necessity.

Id. 280 N.W. at 426.

SDCL 25-7-27 requires an adult child to provide support only when they have the financial ability to do so. Robert claims that this is constitutionally defective because it is unclear when financial ability is to be determined. However, under the facts of this case, a fair reading of the statute shows that the financial ability of the adult child may be determined at any time there is an outstanding debt which has not been barred by the statute of limitations. This certainly seems appropriate where the parent continues to receive care while the child is in control of, and is expending, the parent's assets which are available to pay the debt.

Although Robert could not pay his mother's bills from his own funds, he certainly had the ability to pay after the trust assets had been distributed to him. ⁴ At trial, it was proven that Robert had received approximately...