News10NBC Investigates: Family members still on hook for nursing home debt if they sign the admission agreement

ROCHESTER, N.Y. – An issue that one of our investigations exposed just before the pandemic is still happening. We found loved ones of deceased nursing homes residents getting put on the hook for nursing home debts.

It’s happening even if there’s a billing mistake or a dispute over a bill.

The thing that exposes spouses, children, relatives and friends is that they sign the admission agreement. That’s what happened to Gwen Gauger when her stepmother went into a nursing home.

“My stepmom became my stepmom when I was nine years old,” Gauger said.
“She took care of you so you wanted to take care of her,” I said.
“Absolutely,” she said.
But at Christmas of 2020, less than a year after Gauger’s stepmother died, the nursing home said Gauger owed money for the care. Three months after that, the nursing home’s law firm, Underberg & Kessler, told her the same thing.

Brean: “How much money does the law firm and nursing home say you owe?”
Gwen Gauger: “It’s a little over $7,200.”

The reason the nursing home and the law firm say Gauger owes the money is because she signed the admission agreement to get her stepmother a bed in the nursing home and signing the agreement automatically made her the fiscal agent.

Brean: “When you did that, did you know it would make you liable for debts?”
Gauger: “No.”

In January and February 2020, just weeks before COVID arrived in upstate New York, we did a series of investigations into lawsuits against spouses, children, relatives and neighbors getting sued over nursing home debt because they signed the admission agreements.

Some lawsuits were for debts in excess of $100,000.

Many people who didn’t respond to the complaint then faced a default judgement.

Our investigation prompted the the New York State Department of Financial Services to open an investigation into the practice. This week, DFS said “the Department cannot comment on any ongoing investigations.”

Gauger says the debt is not her mistake.
She says the nursing home charged her stepmother based on her stepmother’s gross income not her net income. In an email Gauger shared with me, the nursing home admitted it was unaware that federal taxes were being taken out of her stepmother’s teacher’s pension. “It looks like (the nursing home) is not taking into consideration the federal tax withholding” the nursing home’s account specialist wrote to Gauger in 2019.
Gauger says that happened for three years prior to her stepmother’s death and the difference between what the nursing home was charging and what Medicare was actually paying adds up to a little more than $7,200 in debt.

“I just hope that maybe, I know you did a story before, that maybe if there’s anybody else out there that’s going through this again that needs some help that to fight for it, to not just give in and pay up the money,” Gauger said. “I’m sure there’s got to be other people out there stressing over this.”

Gauger, the nursing home and the law firm have been going back and forth for three years. In early 2021, Gauger hired an accountant to get the taxes back that her stepmother was being charged.
The understanding is that money will be used to pay the debt.
But the IRS hasn’t processed it yet.

Gauger contacted me because for the first time since this started, the law firm actually asked her to pay money. In an email dated February 28th, the law firm email to Gauger “We continue to await payment. Are you able to make some sort of monthly payment until the tax return information is provided from the IRS?”

David Tang, from Underberg and Kessler, emailed me writing “We have asked for updates on the refund periodically since 2021. As of March 2023, the back balance is still not paid. We were told the IRS is still processing the refund. I am not aware of any Medicare issue on this account. The provider is simply asking for payment from the resident’s tax refund for the care services it provided, consistent with what the stepdaughter told the nursing home two years ago.”