Oak Crest v. Murphy
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In the Circu it Court for B altimore C ounty Case No. 03-C-02-006364 IN THE COURT OF APPEALS OF MARYLAND No. 27 September Term, 2003 ______________________________________ OAK CREST VILLAGE, INC. v. SHERWOOD R. MURPHY ______________________________________ Bell, C.J. *Eldridge Raker Wilner Cathell Harrell Battaglia, JJ. ______________________________________ Opinion by Wilner, J. ______________________________________ Filed: February 9, 2004 *Eldridge, J., now retired, participated in the hearing and conf erence of this case wh ile an active member of this Court; after being recalled pursuant to the Cons titution, Article IV, Section 3A, he also participated in the decisio n and ado ption of this opinion. In November, 2001, Ruth and Sherwo od M urphy m oved in to Oak Crest V illage, a continuing care retirement community (CCRC) in Baltimore County. Ruth, then 81, moved to an independent living apartment. Sherwood, then 94, was admitted directly into a comprehensive care facility (nursing facility), which Oak Crest called Renaissance Gardens. As a condition to their acceptance into the CCRC, the Murphys were required to sign Residence and Care Agreements. 1 Section 8.11 of those agreements contained a covenant that, unless they had the prior written consent of Oak Crest, Ruth and Sherwood would not divest themselves of, or sell or transfer, any of their assets or property interests if the sale or transfer would re sult in their respective net worth falling below the minim um nece ssary to becom e an O ak Cre st reside nt. The issue befo re us is wh ether that cov enant, as ap plied to Sherwood, contravenes Maryland Code, § 19.345 (b) of the Health General (HG) Article and implementing regulations of the De partment o f Health and Mental Hygiene ap plicable to the Medica id program and, for that reason, is unenforceable, at least while he remains a resident in the nursing faci lity. The Circuit Court for Baltimore County, in response to Oak Crest s action for breach of contract, fraudulent inducement, and fraudulent transfer, held the covenant invalid, and w e shall affirm that judgm ent. BACKGROUND 1 Sherwo od did no t actually sign his ag reement. It w as signed b y Ruth on his behalf. CCRC s provide elderly persons with a continuum of housing and health care so that they may age in place, without having to move away from a familiar setting when medical problems arise. In order to provide those services, CCRC s normally require from prospective residents either an advance transfer of a significant part of the ir assets or a substantial entrance f ee and a c ommitm ent to pay further periodic charges.2 Oak Crest uses the latter approach. CCRC s in Maryland are subject to the requirements of Maryland Code, Art. 70B, and to regulation thereunder by the State Department of Aging. If, as Oak Crest does, the CCRC chooses to participate in the Medicaid prog ram, it is also subject to the statutes and regulations governing that program. Consistent with the general purpose of CCRC s, Oak Crest operates three distinct, but integrated, lev els of hou sing and h ealth care: approximately 1,500 low-rise apartment units, where re sidents may live largely independent lives; 129 assisted living units, in which residents receive greater attention to their health care needs; and a 288-bed nursing home, Renaissance Garden s, in which residents receive continuous nursing care.3 Renaissance 2 Maryland Code, Art. 70B, § 7(d), which is part of the law regulating CCRC s and continuing care contracts, de fines con tinuing care as furnis hing or m aking ava ilable shelter and either medical and nursing services or other health related services to an individual 60 years of age or older no t related by blood or marriage to the provider for the life of the individual or for a period in excess of 1 year under on e or more w ritten agreem ents that requ ire a tran sfer of assets o r an entr ance f ee notw ithstand ing per iodic ch arges. 3 In its amicus brief, the Department of Aging points out th at CCR C s also co mmon ly provide communal dining facilities and other amenities, such as libraries, pools, and gardens. We shall assume that Oak Crest provides those servic es and fac ilities as well, although the record do es not revea l it. -2- Gardens constitutes a Medicaid certified skilled nursing facility, as that term is defined in Maryland Code, HG § 19-343(a). Residents may move from one level of care to another, as circumstances require and availability allows. That, indeed, is one of the hallmarks of a CCRC. Oak Crest has a formal, structured application process. In order to reserve space, prospective residents must (1) complete an application and deposit agreement, and, in furtherance of that application, provide detailed fina ncial inform ation to assu re their ability to pay the residential fees, and (2) submit to a Pre-Residency Health Evaluation and Intervie w, to determin e the level of care that w ill be needed . If accepte d, the applic ants then sign a R esidence a nd Care A greemen t. For some period of time before his admission to Renaissance Gardens, Sherwood Murphy suffered from a subdural hematoma an accumulation of blood in the space between the dural an d arachno idal mem branes (the outer and m iddle cove rings) of the brain which had rendered him incompetent to handle his affairs. Although it does not appear that he was e ver declare d legally disabled or that a guardian had ever been appointed for him, Ruth acted as his attorney-in-fact. He had been a patient at a facility know n as Gen esis Elder Care in Severna Park since August, 1999. The record does not reveal the nature of that facility. In April, 20 00, Ruth sold the family home, deposited the proceeds of $178,000 in a bank account owned jointly by Ruth and her daughter, Mildred, and began living at an indepe ndent liv ing com munity in Severn a Park k nown as Sun rise. -3- In June, 2001, the Murphys, through Ruth, filed a residency application with Oak Crest. In furtherance of the application, they supplied detailed f inancial and health information. The hea lth informatio n is not in the rec ord. The f inancial info rmation rev eals that the cou ple had about $ 450,000 in jointly own ed assets, Sh erwood had $19 ,000 in personal savings in his own name, Ruth had $126,000 in personal savings in her own name, and Ruth had an ad ditional $68,000 in saving s held jointly with her daughter. The Executive Director at Oak Crest reviewed the information, concluded that the Murphys had sufficient assets to pay the requisite fees based on actuarial projections of their life expectancy, and accepted the application. Ruth signed two separate Residence and Care Agreements, one for her and one, along with an adden dum, on b ehalf of She rwoo d. Only Sherwood s agreement is in the record. That agreement, dated November 26, 2001, governs residency at Oak Crest and professes to detail[] the services provided in each level of care and the limited circumstances for transfer to another level of care. Section 3.01 gives Sherwood the right to occupy room RENS-N132 in the continuing care unit, subject to various provisions gov erning transfers to other units or termination of the agreement. The agreement recites that Sherwood had paid a deposit fee of $150 and requires that he pay an entrance deposit of $78,000 and living unit fees, whic h, for the roo m in the continuing care unit, was set at $192/day ($1,344/week, -4- $69,888/year), subject to annual revision.4 Section 8.11 of the agreement stated that the financial informatio n submitted by or on beh alf of Sherwood was a material aspect upon which Oak C rest relied in de termining h is qualifications for becoming an Oak Crest resident. It continued that Oak Crest was committed to assisting a resident who has depleted his assets through normal living expenses so that he may continu e to remain at Oak C rest, but that, [t]o protect Oak Crest from a situation wherein a Resident divests him/herself of those assets for the purpose of qualifying for assistance or reduction of Monthly Fees, Resident agrees not to divest him/herself of, sell, or transfer any assets or property interests (excluding expenditures for Resident s normal living expe nses) that w ould result in a reduction in Resident s net worth (assets less liabilities) which is below the minimum criteria to become a Oak Crest resident, without having first obta ined the written consen t of Oa k Cres t. Section 8.11 m ade ref erence to § 6.04 h., dealin g with f inancia l inability to p ay. That section stated that it was not Oak Crest s policy to terminate a resident s occupancy because of financial inability to pay, provided that the resident was oth erwise in co mpliance with the terms of this Agreement, and that Oak Crest would endeavor to assist such residents by reducing monthly fees to an appropriate level or by providing other assistance. The section required, however, that a resident un able to ma ke the full m onthly paymen ts take one 4 By affidav it, Ruth ave rred that she h ad made the depos it of $78,00 0 with resp ect to her agreeme nt and that S herwoo d had ma de a depo sit of $133 ,000. The discrepanc y is unimpo rtant. She claimed that, in addition to the $192/day for Sherwood s room at the nursing facility, she was obligated to pay $1,075 /month fo r her indepe ndent living apartmen t. -5- or more of certain enumerated actions, as directed by Oak Crest s Executive Director. The first was to m ake every rea sonable ef fort to obtain assistance from family or other available means. The second, if the resident qualified, was to tak e nec essa ry step s to o btain cou nty, state, and fe deral aid or assista nce, ex cluding Med icaid, bu t includi ng M edicare , public assistance and any othe r public ben efit program. Procedurally, the resident would be required to file a statement with the Executive Director acknowledging, among other things, that the resident, from the date of application, has not sold or transferred and will no t sell or otherwise transfer any property in violation of the terms of this Agreement (see Section 8.11). The addendum stated that it was anticipated that Sherwo od s care w ould be pa id for by your own income, funds, and/or asse ts, and it includ ed a section dealing w ith Private Pay Residents . That sectio n stated that R uth wou ld be respo nsible for paying for items and services provided to Sherwood during any period of time tha t Sherwood was a resident of the facility and not determ ined eligible f or medica l assistance. In th e event R uth did not pay what was owed, it required her to seek from Medicaid a determination of Sherwood s income and asse ts available to pay the cost of his care and to use those assets and income to pay for his ca re. If Sherw ood shou ld have insu fficient inco me or asse ts to meet his financia l obligations, R uth agreed to apply for M edicaid ben efits and to coopera te fully in the eligibility de termina tion pro cess. Indeed, the addendum warned Ruth that she faced a $10,000 civil penalty if she willfully or with gross negligence failed to seek -6- Medica id assistance o n behalf o f Sherw ood or fa iled to cooperate fully in the M edicaid eligibility determination process. The addendum also contained a section dealing with Medicaid Residents, which noted that Oak C rest participates in the Me dicaid program and provided that a resident was not required to give up any of the Reside nt s rights to M edicaid benefits to be admitted or to stay at the Facility. It continued that if the resident s private funds were used up during his/her stay at the facility and the re sident is eligible for Medicaid, we will accept Medica id payments. The addendum added that if the resident was eligible for Medicaid, we may not charge, ask for, accept or receive any gift, money, donation or consideration other than Medicaid reimbursement as a condition of the Resident s admission or continued stay at the F acility. Th e term Facility w as defin ed as th e nursin g Facilit y. The addendum to Sherwood s agreeme nt was req uired to be s igned by Ru th because it recited that she had access to and management or control of Sherwood s income, funds, or assets. Although the agreement made clear that Ruth was not required to use her own funds to pay the fees charged to Sherwood, it obligated her to pay those fees from Sherw ood s f unds. Shortly after their move to the Oak Crest facilities, Ruth transferred over $356,000, which included the proceeds from the sale of the family home, savings that she and Sherwood owned jointly in the form of bank accounts, certificates of deposit, and brokerage accounts, and funds that she and her daughter owned jointly, into a consolidated bank -7- account in her name and that of her daughter, as joint ow ners with the right of survivorship. In February, 2002, she used $250,000 from that account to purchase a seven-year fixed term annuity that provided for monthly payments to Ruth of $3,520. In May, 2002, she used $30,000 from the accoun t to purchase an eight-year fixed term annuity that provided monthly payments of $353. Ruth withdrew the money and purchased the annuities as joint owner of the account and not as agent for Sherwood. The monthly payments are solely for the benefit of Ruth; Sherwood has no interest in them. At some point, Sherwood, being then bereft of substantial assets or income, applied for Medicaid benefits, and on July 24, 2002, effective June 1, 2002, he was found eligible. All private pay charges for Sherwoo d s care up to June 1, 2002, w ere paid in f ull. When Oak Crest learned that Sherwood had been approved for Medicaid, it filed this lawsuit for declarat ory and equitable relief, alleging a violation o f § 8.11 of She rwood s Residence and Care Agreement. Oak Crest sought to h ave the tran sfer of Sh erwood s assets annulled and, alternatively, a declaration that, by virtue of the breach, Oak Crest had the right to rescind the executory asp ects of the a greemen t, terminate Sh erwood s memb ership at Oak Crest, and discharge him from the nursing facility. Sherwood responded with a motion to dismiss the complaint on a number of grounds, including assertions that the contract pre sum ably § 8.11 w as unlaw ful under F ederal and State law and void for that reason and that it also conflicted with provisions in the addendum that assured Oak C rest s participation in Medicaid. -8- The claim of illegality was based, in part, on (1) 42 U.S.C. § 1396r(c)(5)(A)(i), which prohibits a nursing facility from requiring written or oral assurance that applicants for residence are not eligible for and will not apply for Medicaid benefits, (2) 42 U.S.C. § 1320a - 7b(d)(2), which makes it a criminal offense for a person to charge, solicit, accept, or receive, any amount in excess of the consideration established in a State Medicaid plan as a precond ition to adm itting a patient to a nursing f acility or as a requirement for the p atient s continued stay in such a facility, (3) Maryland Code, HG § 19-345(b)(1), which is part of the Marylan d Nursing Home Residents Bill of Rig hts and pre cludes a M edicaid certified facility from inclu ding in an a dmission c ontract any req uirement th at, to stay at the faci lity, the resident will be required to pay for any period of time or amount of money as a private pay resident for any period when the resident is eligible for Medicaid benefits, and (4) a regulation of the Departm ent of Health and Mental Hygiene (C OMA R 10.07.09.05B (4)) prohibiting a nursing facility from requiring residents or applicants to waive their rights to Med icaid. The court treated the motion to dismiss as one for summa ry judgment ( see Maryland Rule 2-322(c)) and, finding no genuine dispute of m aterial fact, granted it. The court found § 8.11, upon which Oak Crest s action rested, to be in violation of the State statute and regulation and therefore void. It declined to reach the question of whether § 8.11 also contravened either of the Federal statutes. Oak Crest appealed, complaining that (1) HG § 19-345 (b) does not apply to CCRC s and, for that reason, § 8.11 of the Agreement does not -9- violate Maryland law , (2) the trial court failed to give appropriate deference to a determination by the State De partment o f Aging that the Ag reement c omplies w ith applicable Maryland law, (3) Sherwood s continued residence at Oak Crest violates Oak Crest s exemption from the State requirement of a certificate of need, and (4) Policy Issues preclude S herwoo d s interpretatio n of the law. We granted certiorari prior to proceedin gs in the Cou rt of Specia l Appeals to consider those issues , and, as note d, shall affirm. As the Circuit Court restricted itself to the State law issue in entering the summ ary judgment, we shall do likewise. DISCUSSION Application of § 19-345 HG § 19-345 is part of a subset of statutes sometimes referred to as the Nursing Home Residents Bill of Rights. Along with §§ 19-345.1 and 19-34 5.2, it places certain limits and conditions on the ability of nursing facilities to transfer or disch arge patien ts without their consent. Section 19-345(a) prohibits a facility from transferring or discharging a resident except wh en (1) the transfer or discharge is necessary for the resident s welfare, (2) it is appropriate because the resident s health has improved sufficiently that the resident no longer needs the services provided by the facility, (3) the health or safety of an individual in the facility is endangered, (4) the resident has failed, after reasonab le notice to pay for, or have Medicare or Medicaid pay for, a stay at the facility, or -10- (5) the f acility ceas es to op erate. Section 19-345(b ) applies to a Medic aid certified facility. It precludes such a facility from including in a resident s admission contract any requirement that, to stay at the facility, the resident will be required to pay for any period of time or amount of money as a private pay resident for any period when the resid ent is elig ible for Med icaid be nefits, and it also precludes the facility from transferring or discharg ing a residen t involuntarily because the resident is a Med icaid be nefits re cipient. Sherwood s argument, which found favor with the Circuit Court, is that, to the extent that § 8.11 of the Residence and Ca re Agreement precludes him from qualifying fo r Medica id in order to discharge his obligations to Oak Crest and authorizes his discharge from Renaissance Gardens because he has qualified for Medicaid benefits, it is inconsistent with those statutory limitations. Oak Crest s response to that argument is essentially that § 19-345 (b) does not a pply to CCRC s. In a three-line footnote in its initial brief, Oak Crest averred that the court s holding was also error because the CCRC provision at issue does not require Mr. Murphy to pay at a private pay rate for any period when [Mr. Murphy] is eligible fo r Medica id benef its, and thus does not violate Section 19-345. No further explanation is provided in that brief on the issue of w hether, if § 19-345 (b) does apply, there is a conflict between it and § 8.11. In a reply brief, Oak Crest addressed the issue further but added little to that unenlightening comment. It noted that, under § 8.11, CCRC residents are prohibited from making expenditu res, other than normal livin g expens es, that wou ld reduce th eir net worth -11- below the minim um criteria fo r admission and posited simply that [t]his provision does not violate Section 19-345's prohibition against requiring Medica id nursing f acility residents to pay privately for a period of time. It conceded that the requirement that residents use all of their assets not required for normal living expenses to pay the private pay rate ($192/day for Sherwood) can affect the pace at which resident assets are diminished but, claimed that there is no requirement to maintain this pace for any predetermined period of time or at any pre scribed rate. Our initial response to this argument is that it is not properly before us. We have long and consistently held to the view that if a point germane to the appeal is not adequate ly raised in a party s brief, the court may, and ordinarily should, decline to address it. DiPino v . Davis, 354 Md. 18, 56, 729 A.2d 354, 374 (1999); Klauenb erg v. State, 355 Md. 528, 552, 735 A.2d 10 61, 1073 -74 (1999 ); Moosa vi v. State, 355 Md. 651, 660-61, 736 A.2d 285, 29 0 (199 9). See also Maryland Rule 8-5 04(a)(5). The three-line conc lusory footnote in Oak Crest s brief does not adequately present the issue; it gives no reasons or no basis for challenging the C ircuit Court s ruling that § 8.11 was substantively in conflict with HG § 19-345 (b). Nor is it permissible to present that argument in a reply brief. In Federal Land Bank v. Esham, 43 Md. App. 458, 459, 406 A.2d 928, 936 (1979 ), the Court of Special Appeals correctly noted that, although reply briefs are permitted under the Rules of appellate procedure, their function is limited to responding to points and issues raised in the appellee s brief. An a ppellant is req uired to articu late and ade quately argue all issues -12- the appellant desires the appellate cou rt to consider in the appellan t s initial brief. It is impermiss ible to hold back the main force of an argument to a reply brief and thereby diminish the opportunity of the appellee to respond to it. We have echoed similar sentime nts. See Fearnow v. C&P Telephone, 342 Md. 363, 384, 676 A.2d 65, 75 (1996); Warsam e v. State, 338 Md. 513 , 517, n.4, 659 A.2d 1 271, 1273, n.4 (199 5). We shall address the substantive co nflict issue, notwithstanding O ak Crest s failure to properly present it, in part because of its public importance, but mostly because it does not appear that Sherwood was prejudiced. Presumably in response to the footnote in Oak Crest s initial brie f, he did pre sent argum ent on the p oint. On its f ace, § 8.11 does not affirm atively impose a requirement that Sherwood pay at the private pay rate for any established period of time, even if he were to qualify for Medica id benefits. The effect of the anti-alienation provision, however, when coupled with § 6.04h., is to preclude Sherwood from taking lawful steps to qualify for Medicaid benefits. Even should his re sources be come insu fficient to pay his fees for reasons other than alienation, he is precluded from qualifying for Medicaid, absent Oak Crest s consent, without first seeking assistance from his family, and then seeking public assistance (other than Medicaid) from the county, S tate, and Fed eral govern ments becomin g a public charge. Section 8.11 thus effectively requires that he continue to pay at the private pay rate even when he would b e or could lawfully become eligible fo r Medicaid ben efits, contrary to HG § 19-345 (b)(l)(i), and permits him to be discharged from a Medicaid certified nursing -13- facility because he is a Med icaid recipient, contrary to § 19-345 (b)(l)(ii). The thrust of the a rgumen t properly prese nted by Oak Crest is that § 19-345(b) does not apply to CCRC s. Oak Crest urges that the statute applies only to nursing facilities and that Oak Crest, as a continuing care community, is not a nursing facility. For that reason, it says, § 19-345(b) does not apply to its agreement, which is a CCRC agreement and not a nursing fa cility agreemen t, and thus do es not serve to invalidate § 8.11 of its a greemen t. The short answer to this argument is that Renaissance Gardens the facility into which Sherwood was admitted is a Medicaid certified nursing facility to which the statute applies. Title 19 of the Health-General Article deals with health care facilities. Subtitle 3 of that title deals with ho spitals an d relate d institutio ns. With an exception not relevant here, HG § 19-301(o) defines a related institution as an organized institution, environment, or home that (i) Maintains conditions or facilities and equipment to provide dom icilia ry, personal, or nursing care for 2 or more unrelated individuals who are dependent on the administrator, operator, or proprietor for nursing care or the subsistence of daily living in a safe, sanitary, and healthful environment; and (ii) Adm its or retai ns the in dividu als for o vernig ht care. HG § 19-307(b) creates two classes of related institutions: a care home and a nursing home. A care ho me prov ides care to individuals who, because of advanced age or disability, require domiciliary o r personal c are in a prote ctive enviro nment. A related institution is -14- regarded as a n ursin g home if it (i) [p]r ovid es nu rsing care for c hron ically ill or convalescent patients; or (ii) [o ]ffers to provide 24-hour a day nursing care of patients in a home-type facility such as . . . [a] nursing unit of a home for the aged . . . Renaissance Gardens is clearly a nursing home under that definition. Sections 19-342 through 19-352 provide c ertain individual rig hts for patien ts in hospitals and related institutions. Section 19-345, dealing w ith the transfer or discharge of patients, speaks in terms of residents of a facility. That term, with respect to related institution s, is defined in § 19-343 as a related institution that, under the rules and regulations of the Department [of Health and Mental Hygiene], is a comprehensive care facility or an extended care facility. A compreh ensive care facility is defined in COMAR 10.07.02.01(6) as a facility which admits patients suffering from disease or disabilities or advanced age, requiring medical service and nursing service rendered by or under the supervision of a registered nurse. Renaissance Gardens is a com preh ensive ca re fa cility under that definition and thus a facility under HG § 19-345. Because Renaissance Gardens participates in the Medicaid program, it is also a Medicaid certified facility for purposes of § 19-34 5(b). See also COMAR 10.09.10.01(14), the definition section of regulations dealing with nursing facility services, which defines facility as a facility licensed under COMAR 10.07.02 and certified as meeting the requirements of Title XIX of the Soc ial Secu rity Act, 42 U.S.C . § 1396 et seq., fo r particip ation as a nursin g facility. A CCRC, as noted, provides a range of accommodations and services and is not just -15- a nursing facility. See Art. 70 B, § 7(d ), supra, defining continuing ca re. CCRC s are subject to regulation by the Department of Aging under Art. 70B of the Maryland Code, and there is no provision in Art. 70B comparable to H G § 19-345 (b). In seeking exclusion from § 19-345(b), Oak Crest stresses its status as a CCRC, urging that § 19-345 (b) applies only to a stand-alon e nursing fac ility, not a broad CCR C comm unity that, as part of its overall service , include s a nursing fac ility. Oak Crest raises an issue that is also of concern to the Department of Agin g and that, in another context, might ha ve more arguable validity. Because HG § 19-345(b) applies only to a Medicaid certified facility, and thus only to comprehensive a nd extended care facilities, it would n ot preclude a provision such as § 8 .11 in a contract for independent or assisted living the other two residential-type services provided by a CCRC. If a person, such as Ruth, m oved into a n indepen dent or assiste d living unit pursuant to a CCRC Residence and Care Agreement containing such a pro vision, there w ould be no conflict w ith § 19-345(b) and she would, indeed, be precluded from unilaterally transferring assets so as to deplete her net worth. The question might arise, should she later need admission into a Medicaid-certified nursing home associated with the CCRC to deal with some tempo rary medical problem, whether HG § 19-345(b) would become applicable during the period of her stay in that facility, causing a temporary suspension of the § 8.11 provision. That is not the case here, however, and we therefore need not address that situation. Sherwood was admitted directly into the nursing home and, at least at the time the judgment below was -16- entered, had neve r left it. Indeed, unlike the situation in Ruth s agreement, the periodic fee was set in his Agreement at the $192/day rate for the nursing home. The fact that a CCRC is subject to regulation under Art. 70B by the Department of Aging does not render HG § 19-345(b ) inapplicab le to a Me dicaid certifie d nursing f acility operated as part of the CCRC. There is nothing in that section that even suggests, much less directs, that it does not apply to a nursing facility connected with a CCRC and on the same campus with the independent and assisted living units that are also part of the CCRC, and, indeed, during consideration of the bill that enacted the provision, an effort to exempt CCRC s from part of its scope was rejected.5 As a matter of basic statutory construction, 5 Prior to 199 5, HG § 19-345(c ) precluded a Medic aid certified f acility from including in an admission contract a requirement that, to stay at the facility, the resident continue as a private pay reside nt for mor e than 1 year, if th e resident be comes elig ible for M edicaid benefits or from transferring or d ischarging a resident involun tarily because the resident became a Medicaid benefits recipient. 1995 Md. Laws, ch. 547 extended the preclusio n to any period and thus eliminated th e ability of such nursing fa cilities to require Medicaideligible residents to pay the private pay rate for up to one-year. That law also imposed a number of limitations and conditions o n the discha rge or transf er of nursin g facility patients. The bill was introduced at the urging of the Attorne y General an d, in its introductory form, was strongly supported by the then-Office on Aging, the precursor agency to the current Department of Aging. Among other things, the bill added a new § 19-345 .2, placing ce rtain substantive and procedural limitations on the involuntary discharge or transfer of a nursing home patient. Section 19-345.2(b) required that certain information and medication be given to the patient or his representative at the time of transf er or discharge. Subsec tion (c)(1), which was more sub stantive, proh ibited the no n-consen sual discha rge or transf er of a patien t, except to a safe an d secure en vironmen t where th e patient would be under the care of a licensed provider o r one wh o agreed in writing to provide the appropriate environment. The House of Deleg ates added an amen dment to th e bill that would have allow ed a facility to transfer a pa tient withou t his consent if the transfer was from a nursing facility in a CCRC to a different level of care within the same CCRC. The Attorney General s Office, noting (contin ued...) -17- we hold that § 19-345(b) applies to a Medicaid certified nursing facility, even when the nursing home is part of a CCRC. Approval by Department of Aging As noted, Art . 70B of the M aryland Code subjects C CRC s to certain statutory requireme nts and to regulation by the Department of Aging. A person may not operate as a CCR C unless it re ceives a ce rtificate of registration from that De partme nt. See §§ 9 and 11 of Art. 70 B. Section 13 contain s certain requ irements for CC RC ag reeme nts. Oak Crest points out that, prior to commencing its operation as a CCR C, it received a certificate of registration and that, in granting the certificate, the Department approved its CCRC Residence and Care Agreement and found it compliant with § 13. Oak Crest urges that the Department s determination that the agreement was compliant, and therefore lawful, must be given a ppropriate d eference by the court. Oak Crest s argument is a valid one, so far as it goes, but has no relevance to the 5 (...continued) that the effect of that amendment was to exempt residents of continuing care retirement facilities from the safeguards we have w orked so h ard to craft, in formed th e Senate that it opposed that amendment, as did the Department of Health and Mental Hygiene and the Office on Agin g. The O ffice on A ging, in a letter from its Director, pointed out that it was not the intent of Art. 70B to exclude CCRCs from laws applicable to nursing home require ments. Faced with that opposition, the Senate deleted that amendment and excused CCRC s only from the informatio nal and m edication req uirements of subsection (b) if the transfer was to a lower level of care within the same facility in accordance with a contractual agreeme nt. Even this limited attempt to exclude CCRC s from the effect of the restrictions failed. -18- issue before us . As we h ave indicate d, there is nothing in Art. 70B or COMAR 32.02.01.28 that prohibits a provision like § 8.11. The conflict arises from § 1 9-345(b) o f the Hea lth General Article, which applies to Medicaid certified nursing facilities, not to CCR C s generally, and, so far as this cas e is concerned, arises from the more limited circumstance of the direct admission of a p atient into such a nursing fac ility. The precise issue before us is one of first impression and does not appear to be one upon which the Department of Aging has previously taken any position. As noted, however, its predecessor agency, the Maryland Office on Aging, had recorded its view in 1995 that it was not the intent of A rt. 70B to exclu de CC RCs f rom law s applic able to n ursing h ome re quirem ents. We see nothing either explicit or implicit in the Departmen t of Aging s issuance of a certificate of registration to Oak Crest that suggests a determination on the Department s part that HG § 19-34 5(b) is n ot applic able to R enaissa nce G ardens . The De partment s o nly concern, as expressed in its amicus brief in this case, is that any decision h olding the a ntialienation clause ineffective be limited to situations involving residents dire ctly admitted into a Medicaid-participating nursing home that is a part of a CC RC. T hat is the only effect of our decision. Certificate of Need As a gene ral rule, a nursing facility may not operate without having received a Certificate of Need (CON ) from the M aryland Hea lth Care C omm ission. See HG § 19-120. -19- Subject to certain conditions and limitations, § 19-114(d)(2)(ii) provides an exemption from that requireme nt for a CC RC. O ne of the c onditions sta ted in that section is that the nursing facility be for the exclusive use of subscribers who, prior to entering the nursing facility, have executed continuing care agreements and paid entrance fees equal to the lowest fee charged for an inde pendent o r assisted living unit. That co ndition, enac ted no dou bt to avoid giving CCRC-operated nursing facilities an unfair advantage over stand-alone nursing facilities, would a pparently prec lude a CC RC w ithout a CON from admitting a patient directly in to its nurs ing f acility. Sections 19-12 3 and 1 9-124 provid e limited excep tions to th at cond ition. Section 19123 states that a CCRC does not lose its CON exemption by admitting an individual d irectly into a nursing facility if the admittee s spouse, relative, or other person with whom the admittee has a long-term significan t relationship is admitted at the same time to an independent or assisted livin g unit within the CCRC community. Section 10-124 allows a CCRC that qualifies for a CON exemption to admit a subscrib er directly into a comprehensive care nursing bed if, at the time of admission, the subscriber has the potential for an eventu al transfer to an independent or assisted living unit, as determined by the subscriber s personal physician . Those appear to be the bases upon which Sherwood was admitted to Renaissance Gardens. Ruth was admitted contemporaneously into an independent living unit and, notwithstanding S herwood s m edical history and cond ition, his physician certified that h e had the potential for eventual transfer to an independent or -20- assisted living u nit at Oa k Cres t Village CCR C. Oak Crest argues that, as Sherwood no longer qualifies for admission to the CCRC (because he breached ¶ 8.11 of the CCRC Agreement when he alienated his assets), he no longer qualifies for the nursing home CON exemption and therefore can no longer reside at Oak Crest s nursing facility. There may be several fallacies with that argument, but we need dwell only on o ne. Th e argum ent assu mes, a priori, the valid ity of § 8.1 1. If, as we hold, § 8.11 is inconsistent with § 19-345(b) and, for that reason, is invalid, Sherwood is not in breach of the Residence and Care Agreement, and is certainly not in breach of the addendum to that agreem ent. Assum ing that the d octor s certific ate was not a sham, Sherwood was properly admitted under § 19-124 and probably under § 19-123 as well. Oak Crest produced no evidence that Sherwood is no longer potentially able to move to an independent or assisted living unit, as the physician s certificate opined, so we see no violation of the condition to the CON exemption. Policy Issues Throughout its brief, Oak Crest asserts both the unfairness and the dreadful consequences of allowing people like Sherwood to agree to anti-alienation clauses like § 8.11 as a condition of being admitted to CCRC s that are so dependent upon such clauses and then, with im punity, violate them. As we hav e taken pa ins to point out, ou r decision in this case is a limited one. It precludes such clauses from being enforced wh en patients are -21- admitted directly into Medicaid certified nursing facilities, at least during the period that the patient continues to reside in the nursing facility. It does not otherwise invalidate those clauses. To find such a provision valid in the situation of a direct admission to a Medic aid certified nursing facility would be to ignore the clear language of the statute and obvious intent of the Legislature. If our enforcement of the statute creates unfairness or endan gers the financial h ealth of CCRC s, the address for relief should be made to the General Ass emb ly. 6 JUDGMENT A FFIRMED, WITH COSTS. 6 Although we have based our decision in this case solely on State law, there a re Federal statutes and re gulations of similar impo rt that may limit the General Assembly s authority in this area. We do not address that issue here. -22-
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