Opinion
No. CV 08 5006913 S
May 15, 2008
MEMORANDUM OF DECISION
The plaintiff, Spectrum Healthcare Derby, LLC d/b/a/ Birmingham Health Center, brings this action for damages against the defendant, Warren Stevens, alleging breach of the defendant's obligations under a certain Admission Agreement entered into by the parties in connection with nursing home care provided by the plaintiff to the defendant's mother, Christine Stevens. The defendant has denied the plaintiff's allegations and the parties, having waived trial by jury, tried the matter to the court on April 30, 2008.
Background
After a series of adverse health issues, Christine Stevens, age 84, was admitted to Birmingham Health Center on September 14, 2006. The plaintiff, (defined as the "Facility" in the Agreement), and the defendant, (the "Responsible Party"), entered into a seven-page Admission Agreement dated September 15, 2006 (the "Agreement") for the care of Ms. Stevens (the "Resident").
The plaintiff asserts that the defendant is liable for the plaintiff's loss of medical assistance payments from the State of Connecticut Department of Social Services ("DSS") under the Title XIX Medicaid Program for a period of time allegedly caused by the defendant's breach of his obligations under the Agreement. Specifically, the plaintiff's complaint alleges:
"16. The Defendant, on behalf of Christine Stevens, breached said Agreement by failing to take all necessary action to ensure that the Christine Stevens' assets [sic] were appropriately reduced for Medicaid eligibility."
The obligations of the Resident and Responsible Party with regard to Medicaid Assistance are set forth in paragraph K of the portion of the Agreement entitled "Financial Agreements." The pertinent provisions of paragraph K are as follows:
"K. Medicaid Assistance: With respect to applying for and receiving Medicaid (Title XIX) assistance, the Resident and Responsible Party agree as follows:
1. At the time that the Resident's assets approach twelve thousand dollars ($12,000.00), if the Resident does not have monthly income sufficient to pay for the cost of care and services, the Resident and Responsible Party agree to inform the Facility of the status of the Resident's assets and to make prompt application for Medicaid assistance to the Connecticut Department of Social Services.
2. The Resident and the Responsible Party agree to provide all information that may be requested by the Connecticut Department of Social Services in connection with the application in accordance with any deadlines established by the Department.
3. The Resident and the Responsible Party agree to inform the Facility of the status and progress of the application and, upon the request of the Facility, to provide the Facility with copies of any information and documentation supplied to the Connecticut Department of Social Services in connection with the application.
4. The Resident and the Responsible Party agree to act promptly and expeditiously to establish and maintain eligibility for Medicaid assistance including, but not limited to, taking all necessary action to ensure that the Resident's assets are appropriately reduced to and remain within allowable limits for Medicaid assistance as established by the Connecticut Department of Social Services."
Subparagraph K(8) of the Agreement requires the monthly payment to the plaintiff of the amount of the Resident's monthly income determined by the Department to be the Resident's "applied income." The parties have stipulated that any disputes concerning this issue have been settled and are not part of the case. There is no claim that the defendant received any benefit nor was there any evidence of any transfer of assets by his mother.
As noted, Christine Stevens was admitted to Birmingham Health Center on September 14, 2006. The first one hundred days of her care at Birmingham Health Center following her hospitalization was covered and paid for by Medicare. After her Medicare benefits expired in December 2006, Mrs. Stevens continued to incur room and board charges with the plaintiff at the rate of $295.00 per day. Her application for Title XIX benefits was ultimately approved by DSS, but made effective March 1, 2007. As a result of the delay in establishing Mrs. Stevens' eligibility for benefits, the plaintiff received no payments for a period of time and claims that it is owed for two days in December 2006, twenty-seven days in January 2007 and twenty-eight in February 2007. The total sum claimed is $9,525.01 after all credits and adjustments between the parties.
The essence of the plaintiff's claim is that the gap in receiving medical assistance was caused by the defendant's breach of his contractual obligation to promptly take all necessary action to reduce his mother's assets to the level necessary for Title XIX Medicaid eligibility, which would have made benefits available for the plaintiff's charges during the period in question.
Legal Standard
"The elements of a breach of contract action are the formation of an agreement, performance by one party, breach of the agreement by the other party and damages." (Internal quotation marks omitted.) Whitaker v. Taylor, 99 Conn.App. 719, 728, 916 A.2d 834 (2007).
"[I]n a civil case, [t]he general burden of proof rests upon the plaintiff." (Internal quotation marks omitted.) Somers v. LeVasseur, 230 Conn. 560, 568, 645 A.2d 993 (1994). "[A] breach of contract claim . . . requires proof by a preponderance of the evidence." Foley v. Huntington Co., 42 Conn.App. 712, 732 n. 7, 682 A.2d 1026, cert. denied, 239 Conn. 931, 683 A.2d 397 (1996) citing Waicunas v. Macari, 151 Conn. 134, 137, 193 A.2d 709 (1963).
The Application for Medical Assistance
Christine Stevens applied for Title XIX medical assistance pursuant to a lengthy State of Connecticut application form dated August 30, 2006 which was prepared with the assistance of a local social service agency.
Leonard Marcello, a supervisor employed by DSS, testified that he was primarily involved in Mrs. Stevens' application for medical assistance and that:
1. In order to be eligible for medical assistance, an individual cannot have assets in excess of $1,600.00.
2. Although the Stevens application was dated August 30, 2006, there was apparently an error within DSS and the application did not reach the correct division of DSS until December 20, 2006. An entry dated 12/12/06 on a DSS internal memo state "Application screened as SO2 in error" and that it would be "reassigned to a convalescent intake worker." (Defendant's Exhibit C-10.)
3. On December 21, 2006 a Form W-1348 was mailed to the defendant outlining the issues that needed resolution in order to approve the application. The items listed were six months checking account bank statements, face and cash values of three life insurance policies and a copy of an AARP membership card.
4. On February 14, 2007, DSS notified the defendant that verification of the cash values of the policies was needed.
The testimony of the witnesses and exhibits submitted by the parties establish that Mrs. Stevens had two life insurance policies with John Hancock, having cash values of $1,236.38 and $1,281.97 and a policy with Mutual of Omaha having a cash value of $745.71. The foregoing assets, being in excess of the allowable limit of $1,600.00, made Mrs. Stevens ineligible until such time as they were reduced to the allowable assets level.
To verify the actual cash values of the policies, DSS sent Forms W-279 to the insurers. The record shows that the W-279 was received from Mutual of Omaha on February 27, 2007. (Defendant's Exhibit C-6.) The Mutual of Omaha policy was permitted to be surrendered to The Riverview Funeral Home in partial payment of a pre-paid funeral contract. The State then sent another W-279 to Mutual of Omaha on March 16, 2007 to confirm that the policy had been transferred to the funeral home. The record shows an additional entry by Mr. Marcello that another W-279 was sent to Mutual of Omaha on April 23, 2007 seeking confirmation of the same information. (Defendant's Exhibit C-7.) A DSS entry on May 1, 2007 states "W-36 received from Webster verifies current balance. Only need verification that ownership of Mutual of Omaha policy was transferred to funeral home."(Defendant's Exhibit C-7.) It wasn't until May 7, 2007 that an entry notes "All verifications received policy was properly transferred to funeral home 3/07 to be asset eligible." (Defendant's Exhibit C-7.) On May 15, 2007 a letter from DSS addressed to "Spectrum Healthcare Derby for Christine Stevens" advised that medical assistance payments were approved for Mrs. Stevens effective March 1, 2007.
Therefore, the issue to be decided in the present case is whether the plaintiff has sustained its burden of proof to show that the defendant breached the Agreement and that the plaintiff has sustained damages as a result thereof.
The Breach of Contract Claim
Whether the defendant breached the Agreement turns on the language of the Agreement and the circumstances connected with the transaction. "A contract must be construed to effectuate the intent of the parties, which is determined from the language used interpreted in the light of the situation of the parties and the circumstances connected with the transaction." (Internal quotation marks omitted). Tallmadge Bros., Inc. v. Iroquois Gas Transmission System, L.P., 252 Conn. 479, 498, 746 A.2d 1277 (2000).
The Language of the Agreement
The plaintiff does not claim that the defendant is directly or secondarily liable for the payment of the expenses of the Resident's care. Paragraph B in the section of the Agreement entitled "Obligation of the Parties" expressly provides that:
"The Responsible Party does not personally guarantee or serve as surety for payment as described in the Financial Agreements, A-I. The Responsible Party agrees that his or her liability for failure to perform any of the other obligations set forth in this Agreement shall be determined in accordance with the terms and conditions of this Agreement."
Specifically, the plaintiff claims that the defendant breached his obligation "to act promptly and expeditiously to establish and maintain eligibility for Medicaid assistance including, but not limited to, taking all necessary action to ensure that the Resident's assets are appropriately reduced to and remain within allowable limits for Medicaid assistance as established by the Connecticut Department of Social Services."
Since the Agreement does not define "promptly" or "expeditiously" nor specify any particular date or number of days for performance, the court is required to construe the language of the Agreement.
The adjective "prompt" which is defined in Merriam-Webster's Collegiate Dictionary (10th Ed. 1998) as "being ready and quick to act as occasion demands" and the tern "expeditious" is defined as "characterized by or acting promptly and efficiently."
The defendant also testified that he was advised by Nancy DiLuzio that the DSS review of applications for Title XIX benefits customarily took approximately one hundred days.
The defendant testified that when he inquired of DSS of the status of his mother's application and was told that it was "in process."
The defendant testified that he first learned from the letter dated February 21 from L. Marcello that the cash value of the life insurance policies would put his mother over the permissible asset limits and that his first phone call from the plaintiff was from Samatosky in May 2007.
Leonard Marcello of DSS testified that the defendant's responsiveness during the application process was "cooperative" and "prompt" and that if he had determined that the defendant's performance was anything less than cooperative, he would have imposed additional sanctions. Marcello also described the application process as confusing to many lay persons and that the DSS experience with Mrs. Stevens' application was "average."
The general rule is that ambiguous language in a contract is construed against the one who drafted the contract, Rejouis v. Greenwich Taxi, Inc., 57 Conn.App. 778, 786, 750 A.2d 501, cert. denied, 254 Conn. 906, 755 A.2d 882 (2000). The rationale for this rule is that "[s]ince one who speaks or writes, can by exactness of expression more easily prevent mistakes in meaning, than one with whom he is dealing, doubts arising from ambiguity are resolved in favor of the latter." Griswold v. Union Labor Life Ins. Co., 186 Conn. 507, 513, 442 A.2d 920 (1982).
"In the absence of a specified time limit to comply with a condition precedent, the law implies a reasonable time." (Citations omitted.) Christophersen v. Blount, 216 Conn. 509, 513, 582 A.2d 460 (1990).
The Situation of the Parties and Circumstances Connected with the Transaction
Applying the second element of contract construction set forth in Tallmadge Bros., Inc. v. Iroquois Gas Transmission System, L.P., supra, 252 Conn. 498, a finding that the defendant did not breach the Agreement becomes even more compelling.
The plaintiff's office manager, Susan Samatosky, testified that it is the plaintiff's practice to explain the terms of the Admission Agreement to incoming residents and their families and to provide limited advice on the complexities of qualifying for Title XIX benefits but emphasized that the Agreement places the onus on the applicants to comply with all DSS requirements for eligibility. Samatosky testified that, as office manager, it was not her function to personally meet with incoming residents and their families and that it appeared from the signature on the Agreement that an employee, Nancy DiLuzio, discussed the Agreement with the defendant. DiLuzio did not testify at trial.
The defendant testified that on September 15, 2006, while the Agreement was being discussed with Nancy DiLuzio at Birmingham Health Center, his mother had another heart attack and was taken from the health center by ambulance back to the hospital.
The plaintiff's office manager testified that the care for a substantial majority of its residents is provided by Medicaid. As a business enterprise, engaged in Medicaid issues on a daily basis, the plaintiff can be expected to be more knowledgeable and experienced than the average person in the complexities of Medicaid, especially persons signing an agreement under stressful conditions. Although not contractually bound to participate in the application process, the plaintiff clearly was in a superior position to intervene and render assistance when necessary to protect its own self-interest rather than resort to a breach of contract claim to recover damages in the event of a bureaucratic delay. Under the circumstances of this case, to find that the defendant has breached the Agreement would offend traditional notions of fairness.
Even if the court were to find that the defendant breached the Agreement, the plaintiff has not shown that any damages suffered were the result of any such breach. "General contract damages are allowable whenever they arise directly from and as a natural consequence of the breach." Barry v. Posi-Seal International, Inc., 36 Conn.App. 1, 27, 647 A.2d 1031, cert. denied., 231 Conn. 942, 653 A.2d 822 (1994). "It is axiomatic that the burden of proving damages is on the party claiming them." (Citations omitted.) 24 Leggett Street Ltd. Partnership v. Beacon Industries, Inc., 239 Conn. 284, 308, 685 A.2d 305 (1996).
The evidence shows that Mrs. Stevens' application dated August 30, 2006 was not routed to the proper DSS office until December 20, 2006. The plaintiff has not submitted any evidence that the defendant was in any way responsible for the delay in processing the application. "It is hornbook law that to be entitled to damages in contract, a plaintiff must establish a causal relation between the breach and the damages flowing from that breach. Such causal relation must be more than surmise or conjecture, inasmuch as a trier is concerned not with possibilities but with probabilities. Where . . . the damages claimed are remote from the breach complained of and the causal connection is wholly conjectural, there can be no recovery." (Internal quotation marks and citations omitted.) West Haven Sound Development Corporation v. West Haven, 207 Conn. 308, 314-15, 541 A.2d 858 (1988). There was evidence in the form of a statement by the plaintiff's employee, DiLuzio that the normal processing time for approval of Medicaid applications was one hundred days. The Stevens' application was received December 20, 2006 and approved effective March 1, 2007 placing it well within the normal processing period. "As a general rule, contract damages are awarded to place the injured party in the same position as he would have been in had the contract been fully performed." (Internal quotation marks omitted.) Fuessenich v. DiNardo, 195 Conn. 144, 153, 487 A.2d 514 (1985).
Conclusion
On the basis of the evidence submitted, the court finds that the plaintiff has failed to sustain its burden of proof that the defendant breached the Agreement by failing to act promptly under the circumstances connected with the transaction or prove that it has suffered damages as a result of the defendant's actions. Accordingly, judgment may enter in favor of the defendant. No costs are awarded.