Court Opinion

ID: 2727190
Source: CourtListenerOpinion
Date Created: 2014-09-08 21:12:28.004935+00
Date Added: 2024-06-11T10:03:13.407423
License: Public Domain

FOR PUBLICATION                                                Jun 27 2013, 7:29 am

ATTORNEYS FOR APPELLANT:                     ATTORNEY FOR APPELLEE:

PAUL (RICK) RAUCH                            JAMIE H. HARVEY
MARC A.W. STEARNS                            Smith Harvey Law Office
Harrison & Moberly, LLP                      Connersville, Indiana
Indianapolis, Indiana

                             IN THE
                   COURT OF APPEALS OF INDIANA

HICKORY CREEK AT CONNERSVILLE,               )
                                             )
      Appellant-Plaintiff,                   )
                                             )
             vs.                             )      No. 21A04-1211-ES-600
                                             )
ESTATE OF OTTO K. COMBS,                     )
                                             )
      Appellee-Defendant.                    )
                                             )

         INTERLOCUTORY APPEAL FROM THE FAYETTE CIRCUIT COURT
                    The Honorable Eugene A. Stewart, Judge
                        Cause No. 21C01-1203-ES-048

                                    June 27, 2013

                             OPINION - FOR PUBLICATION

VAIDIK, Judge
                                         Case Summary

       According to the doctrine of necessaries, each spouse is primarily liable for his or

her independent debts. To the extent that the debtor spouse is unable to satisfy his or her

own necessary expenses, the law will impose limited secondary liability upon the

financially superior spouse by means of the doctrine of necessaries.

       In this case, Marianne Combs, a Medicaid recipient, died in a nursing home, but

no estate was opened for her. The nursing home did not open a creditor’s estate for

Marianne in order to preserve its claim. When Marianne’s spouse died a little over a year

later, the nursing home filed a claim for her expenses against his estate. We find that

according to the doctrine of necessaries, a creditor must first seek satisfaction from the

income and property of the spouse who incurred the debt and only if those resources are

insufficient may a creditor seek satisfaction from the non-contracting spouse.

                                 Facts and Procedural History

       Marianne Combs and Otto Combs were married. Marianne was a resident of

Hickory Creek, a long-term care facility in Connersville, Indiana. Appellant’s App. p. 5,

45 (Joint Stipulation of Facts). Marianne’s daughter, Wanda Ferriell, was Marianne’s

Durable Power of Attorney for Health Care; Wanda admitted Marianne into Hickory

Creek, signing as her financial guarantor.            Id. at 5, 35, 38.      During her residency,

Marianne received Medicaid,1 but she accrued a private-pay account balance of

       1
           According to FSSA:

       Established in 1965, Medicaid is a state and federally funded health care program
       designed to assist low income individuals and families. In order to qualify for Medicaid
       assistance the individual/family must meet certain eligibility requirements. The Medicaid
                                                  2
$5871.40. Id. at 45 (Joint Stipulation of Facts). Marianne died on December 22, 2010.

Id. No estate was opened for Marianne.2 Id.

       In July 2011, Hickory Creek filed a complaint against Wanda and Otto for

Marianne’s account balance. Appellant’s Supp. App. p. 75. Hickory Creek’s theory was

that Wanda signed as Marianne’s “financial guarantor” and Otto was Marianne’s

“surviving spouse.” Id.

       On January 12, 2012, Otto died. Id. An estate was opened for Otto on July 25,

2012. Appellant’s App. at 2, 45 (Joint Stipulation of Facts). On August 1, 2012, Hickory

Creek filed a claim against Otto’s Estate for Marianne’s account balance pursuant to

Indiana’s doctrine of necessaries. Id. at 2, 5, 45 (Joint Stipulation of Facts). Otto’s

Estate denied the claim and requested that the matter be set for trial. Following a hearing,

the trial court denied Hickory Creek’s claim against Otto’s Estate. Id. at 59. The court

reasoned that Hickory Creek’s failure to file a claim upon Marianne’s death was a bar to

recovery under the doctrine of necessaries. Id. The court also reasoned that Wanda

admitted Marianne into Hickory Creek, not Otto. Id.

       program is administered on the state level; as a result, some requirements and rules vary
       from state to state.

       In Indiana, Medicaid is administered through the Family and Social Services
       Administration (FSSA) by the Department of Family Resources (DFR). Changes to the
       Medicaid program come from the Indiana General Assembly as well as the Center for
       Medicare and Medicaid Services (CMS).

FSSA, Low-Income Assistance/Medicaid, http://www.in.gov/idoi/files/Nav_Guide_4_Section_
O_Low_Income_Assistance.01_08_pub.pdf (last visited June 6, 2013).
       2
          Marianne had an interest in property she held with Otto as joint tenants with rights of
survivorship, which Marianne lost upon her death. Appellant’s App. p. 53.
                                                  3
       This discretionary interlocutory appeal pursuant to Indiana Appellate Rule 14(B)

now ensues.

                                Discussion and Decision

       Hickory Creek contends that the trial court erred in denying its claim against

Otto’s Estate. Specifically, Hickory Creek argues that the doctrine of necessaries did not

require it to open up and then make a claim against Marianne’s estate, which it alleges

would not have had any assets. Hickory Creek argues this is so because the doctrine of

necessaries “allows a creditor to file a claim against a spouse for a decedent debtor’s

unpaid medical necessaries without wasting time, its money and the court’s resources

opening an insolvent debtor’s estate to preserve its claim against the debtor’s spouse.”

Appellant’s Br. p. 4.

       The doctrine of necessaries originated at a time in which married women had been

stripped of virtually all means of self-support by their incapacity to contract. Bartrom v.

Adjustment Bureau, Inc., 618 N.E.2d 1, 3 (Ind. 1993). During this time, married women

were dependent on their husbands, who had a common-law duty to support their wives.

Id.   The doctrine of necessaries was developed to protect women whose husbands,

despite their common-law duty, failed to provide necessary support. Porter Mem’l Hosp.

v. Wozniak, 680 N.E.2d 13, 16 (Ind. Ct. App. 1997). Under the doctrine of necessaries,

women were able to purchase necessary goods and services on their husband’s credit,

making the husband liable. Bartrom, 618 N.E.2d at 3. After women were given the legal

ability to contract in their own name, the doctrine was infrequently invoked, but it did not

die. Wozniak, 680 N.E.2d at 16. In Memorial Hospital v. Hahaj, 430 N.E.2d 412 (Ind.

                                             4
Ct. App. 1982), abrogated by Bartrom, 618 N.E.2d 1, this Court agreed with Jersey

Shore Medical Center-Fitkin Hospital v. Estate of Baum, 417 A.2d 1003 (N.J. 1980), and

ruled that the doctrine of necessaries should be applied in a gender-neutral manner to

apply to debts created by both wives and husbands. Because of disagreement about the

continued vitality of the doctrine among several states and concern over Memorial

Hospital, our Supreme Court in Bartrom clarified how the doctrine of necessaries was to

operate in Indiana.

       That is, according to the doctrine of necessaries, each spouse is primarily liable for

his or her independent debts. Bartrom, 618 N.E.2d at 8. Typically, a creditor may look

to a non-contracting spouse for satisfaction of the debts of the other only if the non-

contracting spouse has otherwise agreed to contractual liability or can be said to have

authorized the debt by implication under the laws of agency. Id. Agency requires some

indicia that the principal intended or authorized the agent to conduct business on his or

her behalf. See Quality Foods, Inc. v. Holloway Assocs. Prof’l Eng’rs & Land Surveyors,

Inc., 852 N.E.2d 27, 31-32 (Ind. Ct. App. 2006). Marriage alone is insufficient. A

number of methods are available to prove this, such as a durable power of attorney,

guardianship, or evidence of a conversation.

       When, however, there is a shortfall between a dependent spouse’s necessary

expenses and separate funds, the law will impose limited secondary liability upon the

financially superior spouse by means of the doctrine of necessaries. Bartrom, 618 N.E.2d

at 8. The liability is characterized as “limited” because its outer boundaries are marked

by the financially superior spouse’s ability to pay at the time the debt was incurred. Id.

                                               5
It is “secondary” in the sense that it exists only to the extent that the debtor spouse is

unable to satisfy his or her own personal needs or obligations. Id. These rules assist

enforcement of the marital duty of support in both a workable and an equitable manner. 3

Id. & n.14.

       Otto’s Estate argues that this case is “remarkably” similar to South Bend Clinic v.

Estate of Ruffing, 501 N.E.2d 1114 (Ind. Ct. App. 1986). Appellee’s Br. p. 7. In that

case, Edna Ruffing and Frank Ruffing, Jr., were married. South Bend Clinic provided

medical services to Edna, who passed away. South Bend Clinic did not file a claim

against Edna’s Estate, although Edna’s Estate made a partial payment to South Bend

Clinic for Edna’s medical expenses. When Frank later died, South Bend Clinic filed a

claim for the balance of Edna’s medical expenses against Frank’s Estate. Frank’s Estate

filed a motion for summary judgment alleging that South Bend Clinic’s claim was barred

because it failed to file a claim against Edna’s Estate. The trial court entered summary

judgment in favor of Frank’s Estate.

       On appeal, this Court, in explaining primary and secondary liability, held that “a

creditor must first seek satisfaction from the income and property of the spouse who

incurred the debt. Only if those resources are insufficient may a creditor seek satisfaction

from the other income and property of the marital relationship.” South Bend Clinic, 501

N.E.2d at 1116 (citing Jersey Shore Med. Ctr., 417 A.2d 1003). This Court explained

that because it was Edna who incurred the medical expenses, South Bend Clinic had to

first seek satisfaction from her income and property. But because South Bend Clinic did

       3
          We question the viability of the antiquated doctrine of necessaries. Nonetheless, since it
remains Indiana law, we analyze this case according to that precedent.
                                                 6
not timely do so, its claim was forever barred. Id. at 1116-17. As for South Bend

Clinic’s argument that there were no assets in Edna’s Estate and therefore it would have

been a vain or useless act to file a claim, this Court noted that had South Bend Clinic

filed a claim, it could have preserved its right to any newly discovered assets. Id. at

1117. This Court therefore affirmed the trial court. Id.

       Hickory Creek argues that Otto’s Estate’s analogy to South Bend Clinic “comes up

short” because it was decided before Bartrom, and South Bend Clinic relied on Memorial

Hospital, which our Supreme Court abrogated in Bartrom.4 Appellant’s Reply Br. p. 3.

We note, however, that our Supreme Court did not mention South Bend Clinic in Bartrom

and therefore South Bend Clinic still appears, at least facially, to be good law. See 25

Aline F. Anderson & Diane Hubbard Kennedy, Indiana Practice, Anderson’s Probate

Forms, § 2:205 (2012) (citing South Bend Clinic). But even if South Bend Clinic did not

survive Bartrom, a creditor must first seek satisfaction from the income and property of

the spouse who incurred the debt. And only if those resources are insufficient may a

creditor seek satisfaction from the non-contracting spouse. This is because the doctrine

of necessaries imposes secondary liability on the non-contracting spouse, not primary

liability. And secondary liability exists only to the extent that the debtor spouse is unable

to satisfy his or her own personal needs or obligations. Bartrom, 618 N.E.2d at 8.

       Allowing a creditor to first pursue a non-contracting spouse erodes the concept of

secondary liability in at least two ways. First, it allows a creditor to file suit against the

       4
         Hickory Creek also argues that South Bend Clinic is distinguishable because an estate was
opened for Edna and South Bend Clinic received a partial payment for her medical expenses whereas no
estate was opened for Marianne and Hickory Creek did not receive a partial payment for her nursing-
home expenses. However, the salient fact remains the same in both cases: neither South Bend Clinic nor
Hickory Creek filed a claim against either Edna or Marianne.
                                                  7
non-contracting spouse after making its own determination that the debtor spouse has no

income or property. Second, it shifts the burden of proving the financial inability of the

debtor spouse from the creditor to the non-contracting spouse. This is not the purpose of

the doctrine of necessaries.

       Here, Hickory Creek essentially determined for itself that Marianne had no assets.5

Hickory Creek claims, without any citation to the record, that Marianne had no assets

because Indiana approved her Medicaid application and that it tried to collect her balance

for several months before her death to no avail.6 Also without any citation to the record,

Hickory Creek claims that after Marianne’s death, it conducted an investigation into her

possible assets and determined that she lacked the financial resources to pay her account

balance. Hickory Creek asserts that this justified its decision not to open an estate for

Marianne just “for the sake of preserving its claim.” Appellant’s Reply Br. p. 8.

       We disagree and find that Hickory Creek was first required to file a claim against

Marianne to determine whether she was unable to satisfy her obligations. And because

Marianne had passed away and no estate was opened for her, this meant that Hickory

Creek, as a creditor, should have opened an estate for her, which it was permitted to do as

an interested person. See Ind. Code §§ 29-1-1-3, 29-1-7-4. However, Hickory Creek did

not do so. And now, it cannot do so because the time has passed. See Ind. Code § 29-1-

       5
         Citing Wozniak, Hickory Creek argues that Marianne’s Medicaid status indicated that a shortfall
existed between her necessary expenses and her funds. Appellant’s Reply Br. p. 7. In Wozniak, the
debtor was discharged from bankruptcy before she paid her hospital bill, and the hospital pursued her
husband pursuant to the doctrine of necessaries. 680 N.E.2d at 16. Here, however, no shortfall was ever
determined to exist.
       6
         For example, Hickory Creek baldly asserts that “Mr. Combs never opened an estate for his wife
because she possessed no assets to probate.” Appellant’s Reply Br. p. 3.
                                                   8
14-1 (non-claim statute which provides that claims against a decedent’s estate shall be

“forever barred” unless filed against the estate within three months after the date of the

first published notice to creditors or within nine months after the decedent’s death);

Appellant’s Br. p. 8-9 & Reply Br. p. 5 (Hickory Creek conceding that Indiana law bars a

claim against Marianne’s estate at this point).

        Nevertheless, Hickory Creek claims that requiring it to open an estate for

Marianne, a Medicaid recipient, would “inundate the court system with unnecessary

filings” and “does not make sense from a public policy standpoint to force nursing homes

to preserve their claim in an estate, by filing a fruitless petition to open an estate and

subsequently close it, once it is shown the decedent had no money.” Appellant’s Reply

Br. p. 8. But as noted by the Court in Bartrom, there could be newly discovered assets.

And regardless, although this case involves an estate, it does not mean that all cases

involving the doctrine of necessaries will; the doctrine applies to living spouses,

divorcing spouses, nursing-home expenses, and medical expenses. Policy cannot be

based solely on a deceased Medicaid recipient in a nursing home. The doctrine of

necessaries is based on the concept that the non-contracting spouse is liable only to the

extent that the debtor spouse is unable to satisfy his or her own personal needs or

obligations. Accordingly, because Hickory Creek did not first pursue Marianne, the trial

court did not err in denying Hickory Creek’s claim against Otto’s Estate.7

        7
          In addition, we note that the evidence shows that Wanda was Marianne’s Durable Power of
Attorney for Health Care, admitted her into Hickory Creek, and signed as her financial guarantor.
According to Bartrom, a creditor may look to a non-contracting spouse for satisfaction of the debts of the
other only if the non-contracting spouse has otherwise agreed to contractual liability or can be said to
have authorized the debt by implication under the laws of agency. Marriage alone is insufficient.
                                                    9
        Affirmed.

KIRSCH, J., and PYLE, J., concur.

Hickory Creek has failed to point to any evidence that Otto authorized the debt. The trial court essentially
made this finding when it said that Wanda admitted Marianne into Hickory Creek, not Otto.
                                                    10