Wife in Bankruptcy Must Still Pay Husband’s Income to Nursing Home

A bankruptcy court rules that a nursing home admission contract is not an executory contract that is subject to rejection, meaning that the resident’s wife must still pay the cost-share for his nursing home care each month. In re Barnicoat (U.S. Bkrtcy. Ct., D. Conn., No. 13–21751(ASD), June 23, 2014).

When Jean Barnicoat’s husband entered a nursing home, Mrs. Barnicoat signed an admission agreement as the responsible party and agreed to pay the nursing home from Mr. Barnicoat’s funds. The state approved Mr. Barnicoat’s Medicaid application, but Mrs. Barnicoat was required to pay a portion of Mr. Barnicoat’s income to the nursing home as his cost-share. Mrs. Barnicoat later filed for bankruptcy.

The nursing home filed a petition asking for a declaratory judgment that the admission agreement was not an executory contract and therefore not subject to rejection in the bankruptcy proceedings. Under bankruptcy law, a debtor can reject an executory contract, which means the other party to the contract must pursue an unsecured pre-petition claim against the estate.

The U.S. Bankruptcy Court grants the declaratory judgment, holding that the admissions agreement is not an executory contract because a material breach by Mrs. Barnicoat does not excuse performance on the nursing home’s part. In addition, the court rules that because Mrs. Barnicoat’s “obligation to turn over the ‘applied income’ arises from a determination by Medicaid, and not [the nursing home], her obligation is imposed by statute.”

For the full text of this decision, click here.

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