An obscure South Dakota law can force adult children to pay the cost of long-term care for their parents if the elder family members cannot pay on their own.
The civil law has been on the books in South Dakota since 1939, and is rarely used. But as the cost of long-term care skyrockets and nursing facilities increasingly face financial challenges, elder law experts theorize the law may be enacted more often when nursing home bills go unpaid.
South Dakota is one of 29 U.S. states that have the adult child payment requirement, commonly known as a "filial law" that addresses the responsibility of one person or a group of people to pay for the housing, feeding and care of family members, often parents.
The laws allow nursing home operators or owners to sue the children of patients who do not pay and makes no reference to whether the families have close relationships or whether the adult child received any financial assets of the parent.
Supporters of the laws argue that in certain cases they give nursing homes a remedy to collect outstanding bills rather than writing off those debts as a loss, which can diminish a facility's ability to provide quality care to all patients. The laws are most frequently enforced when an adult child was given money or assets or has misappropriated money from a parent prior to admission into a nursing home.
Some experts add that the laws uphold a general sentiment in law that there is a moral responsibility of those who can afford to pay for a family member's care to do so.
"We all have a duty to support our spouses, our children and our parents; we all have a moral obligation to do that," said Stephen J. Wesolick, an elder law attorney from Rapid City who said he isn't necessarily a supporter of filial laws but does understand why they exist. "These nursing homes don't want to be providing long-term care expense for people who have the ability to self-pay, especially if there has been inappropriate behavior by an adult child."
But opponents, including some who have tried in other states to repeal the laws, argue that the filial statutes are overly broad and can place an unfair burden on adult children who are trying to raise their own families or who may have already endured the financial burden of caring for aging or ill parents.
"It's antiquated and I think it's written very broadly," said attorney Bobbi Thury of Legacy Law Firm in Sioux Falls, which specializes in elder care and estate planning. "It's one thing as an adult if we consent to becoming a guarantor for another party, but in this situation, it could obligate someone who should not be obligated to pay. To hang the adult children out there to pay for these costs is scary."
Ancient idea, modern application
The statute is modeled on the Elizabethan Poor Relief Act of 1601 from England, and was passed into law in South Dakota in 1939.
The statute appears in Title 25 of South Dakota laws labeled Domestic Relations and within a chapter called Support Obligations. That chapter also includes the duty to support one's spouse, the obligation of parents to support a child and a requirement that stepparents must support their spouse's children.
The language in 25-7-27 is fairly straightforward: "Any adult child, having the financial ability to do so, shall provide necessary food, clothing, shelter, or medical attendance for a parent who is unable to provide for oneself." The law requires that written notice must be given 90 days in advance before a legal claim for payment can be made.
Though on the books in many states for decades, the laws drew new attention in 2005 after the federal Deficit Reduction Act made it harder for elderly people to qualify for Medicaid. Before people can qualify for Medicaid, in which the federal and state governments pay the cost of long-term care, they must show assets of less than $2,000.
Part of the law was designed to prevent prospective Medicaid patients from diverting their assets to family members to appear as insolvent in order to qualify for government payment of their long-term care.
The law extended from three years to five years the "look back" period in which assets of a prospective Medicaid recipient could not be transferred to family members without a penalty or delay before Medicaid payments kick in. At the time, some experts predicted that filial laws would be used more frequently by nursing homes that accept patients and later discover that not only are they unable to pay, but that they were also rejected by Medicaid due to recent divestiture.
Some states have seen a rise in the number of filial cases filed in recent years, including an oft-cited Pennsylvania case in which John Pittas was forced in 2012 to pay $93,000 for his mother's nursing home care after she was injured in a car accident. The state Supreme Court determined that since Pittas had a net annual income of over $85,000, he was responsible and capable of paying for his mother's care, even though she recovered and had since moved to Greece.
North Dakota has also seen a number of filial cases recently as nursing homes there, as in South Dakota, are facing financial challenges. South Dakota has seen three nursing homes close in the past three years and two more, in Madison and Mobridge, are targeted for closure in February due to financial losses. Nursing homes in South Dakota on average operate at a .7 percent profit margin, while two-thirds of North Dakota nursing homes expect to operate at a loss in 2018, according to Shelly Peterson, executive director of the North Dakota Long Term Care Association.
North Dakota enacted its filial law in 1877, before statehood and long before people were living so long and requiring years of specialized nursing care, Peterson said.
"It's being used periodically because our bad debt is growing," said Peterson, noting that the state expects its 80 nursing homes to write off about $1.5 million in unpaid bills in 2018. "We had a rural facility close here that had two non-payments of a half million dollars each, and you just can't absorb that."
Long-term care costs are rising nationally by about 6 percent a year, though Medicaid pay rates are holding steady or increasing only incrementally. The need for long-term care is sure to grow in both Dakotas as people live longer and the demand for increasingly complex services rises with them.
South Dakota is tied with Hawaii for the highest percentage of nursing home patients who are 95 or older, with 9.5 percent of patients in that age group compared to a national average of only 5.2 percent.
North Dakota has the highest percentage of patients aged 85-95 at 46 percent. South Dakota has 44 percent of its patients in that age range, and the national average is only 31 percent.
North Dakota nursing homes have residents ranging in age from an incapacitated girl of 13 months to a woman who is 114, Peterson said.
Peterson said it is important to note that she supports the use of filial laws only if it can be shown that an adult child benefited financially when their parent went into a home. She said Medicaid is a safety net for those who cannot afford to pay for their long-term care and should not be used as a way to take advantage of government by divesting assets prior to moving into a home and applying for Medicaid.
She said nursing homes will sometimes take in a patient and discover after that they don't qualify for Medicaid. If it's clear an adult child was given money, land or other assets prior to a parent's admission to the home, then filial laws allow a nursing home to seek recovery of those costs. She said she expects the laws to be used more frequently as finances tighten at long-term care facilities.
"If everybody gave away all their money and went into nursing homes and just relied in Medicaid, we would bankrupt the entire state," Peterson said. "If you have 50 people in a nursing home and 10 aren't paying the bill, it's going to affect everyone because we can't afford to provide quality care and services."
Peterson acknowledges that the North Dakota law, like the South Dakota law, is too broad in that it allows lawsuits against any adult child, not just those who accept assets from a parent. She is working with lawmakers to draft legislation for the 2019 legislative session to repeal the part of the law that allows anyone to be sued for unpaid costs at any time, and instead to target only those who benefited financially when a parent was placed in a home.
In a 2013 case, a North Dakota nursing home sued a man for $104,000 after his parents' long-term care bill went unpaid. The state Supreme Court upheld the verdict, arguing that since the parents had sold off land to their son at an undervalued rate, he was responsible to pay for their care.
A recent North Dakota case made headlines when three adult siblings and their mother were sued for $43,000 in unpaid bills by the Sioux Falls-based Evangelical Lutheran Good Samaritan Society. The society sued under the filial statute after a man fell ill and spent about six months in a Bismarck nursing home before dying.
The siblings argued that their mother was responsible for the bills and they were not because they had not benefited or received their father's assets before he entered the nursing home.
Peterson said the case was recently settled with a confidential agreement, and shows why the law should be changed to protect adult children who have not benefited financially prior to admitting a parent.
"Adult children who haven't taken their mom or dad's money, we don't want to hold them accountable," she said.
More cases in South Dakota?
Wesolick is concerned that filial laws could be applied more often and possibly in inappropriate ways as government and insurers continue to shift long-term care costs to families and individuals.
"I don't want people to think that this is regularly enforced and that adult children should fear somebody coming after them on a routine basis," he said. "But it is broadly written, and I could see where it could be too liberally enforced and harm families."
South Dakota has one of the lowest Medicaid payment rates to nursing homes in the nation, and the state portion of aid has risen only slightly in recent years. About 55 percent of South Dakota long-term care patients are on Medicaid. With a daily reimbursement rate of only $131, the state's 110 nursing homes lose about $32 a day for each Medicaid patient they house, a loss of $39 million a year statewide.
That equation and an increased need for costly specialized care could prompt nursing homes to bring more filial cases, Wesolick said.
"I don't know that the law has been abused in the state of South Dakota, but I fear it might be as states continue to shift that cost burden to the families," he said. "What I'm seeing is the desperation of families trying to provide compassionate long-term care for their loved one. They don't know how to do it without getting totally wiped out."
Thury would like to see the filial law repealed in South Dakota. In her practice, she said, she has seen spouses and children of long-term care patients go bankrupt while trying to pay for care of their loved one. She said that if a nursing home wants to seek payment from a spouse or adult child, they should do so through contractual agreements in which all parties agree and understand their obligations.
The South Dakota statute, she said, gives too much leeway to nursing homes to sue for unpaid bills by people who have already spent all they have.
"Long-term care is the number one reason why middle-class families go broke," she said, "and it's only going to get worse."