Classic Healthcare Sys., L.L.C. v. Miracle
2017 Ohio 8540
| Ohio Ct. App. | 2017Background
- Plaintiff Classic Healthcare Systems (Franklin Ridge) provided skilled nursing care to Faun Miracle from 2010 until ~April 2014; monthly charges ≈ $5,000 and total facility charges ≈ $199,217.99.
- Faun’s son David, her attorney-in-fact under a power of attorney, signed Franklin’s billing policy as "Responsible Party" and agreed to “utilize the resident’s assets over which [he] has control” to pay for services; he did not personally guarantee payment.
- David received monthly invoices, paid intermittently and underpaid; total paid to Franklin ≈ $149,615.08, leaving an unpaid balance and Franklin sued David and Faun in Nov. 2014.
- Magistrate found Faun had total available resources of $219,073.25 while a resident, concluded David used $56,486.63 for permissible preservation/maintenance payments and $12,971.54 for unauthorized personal expenditures, and recommended damages of $12,971.54 against David.
- Trial court adopted the magistrate’s decision; Franklin appealed the limited damages calculation, arguing the contract required use of liquid assets to pay invoices as due rather than allowing preservation for maintenance or other uses; the appellate court reversed and remanded for recalculation of damages on a month-by-month liquidity basis.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the contract authorized David to preserve Faun’s assets for property maintenance and other uses rather than applying liquid assets to Franklin’s monthly invoices | Franklin: contract requires David to utilize resident assets under his control to pay facility charges when invoices are due; preservation for other purposes is not contractually authorized | David: contract allows use of resident assets to maintain/preserve property and does not impose personal liability; preserving assets consistent with Medicaid planning was permissible | Court: Reversed trial court’s authorized/unauthorized expenditure approach; ordered remand to determine month-by-month whether David controlled liquid assets on each invoice due date and, if so, award damages for unpaid amounts up to those assets |
| Proper method and measure of damages for breach of the agreement to use resident assets to pay invoices | Franklin: damages should be measured by amounts that David failed to pay when liquid assets under his control were available each month; carry forward unpaid portions that could not be satisfied to next invoice | David: the magistrate’s aggregate review and allowance for preservation expenditures was appropriate; argued no personal liability and payments to preserve assets were legitimate | Court: Treat each month as a separate transaction; calculate damages by comparing (a) invoice due and any past-due amount and (b) liquid assets under David’s control on that invoice date; repeat monthly until total damages computed (limited by proved damages and Faun’s total assets) |
Key Cases Cited
- Westfield Ins. Co. v. Galatis, 100 Ohio St.3d 216 (2003) (contract ambiguities construed against drafter)
(Other authorities cited in the opinion include Ohio appellate decisions and federal/state nursing-facility regulations, but only Westfield has an official-report citation suitable for inclusion here.)