Default Judgment Vacated in Claim That Nursing Home Resident’s Daughter Lied on Application

June 23, 2016

A New York appeals court rules that in a lawsuit by a nursing home against a resident’s daughter for allegedly misrepresenting her mother’s asset transfers on the admission application, the trial court properly vacated a default judgment entered against the daughter because the daughter demonstrated a possible meritorious defense against the charges. Baptist Health Nursing and Rehabilitation Center v. Baxter  (N.Y. Sup. Ct., App. Div., 3rd Dept., No. 521981, June 9, 2016).

Ruth Baxter admitted her mother to a nursing home and filled out a preadmission form in which she represented that her mother had not transferred assets within the previous five years. The state subsequently denied the mother’s application for Medicaid benefits, finding that she had transferred assets for less than fair market value.

The nursing home sued Ms. Baxter for fraud and breach of contract, claiming that Ms. Baxter made misrepresentations on her mother’s application for Medicaid benefits. Ms. Baxter did not respond and did not appear in court, so the court entered a default judgment against her. Ms. Baxter moved to remove the default judgment, arguing that she has a meritorious defense to the nursing home’s claims. The trial court granted Ms. Baxter’s motion, and the nursing home appealed.

The New York Supreme Court, Appellate Division, Third Department, affirms, vacating the default judgment. The court holds that Ms. Baxter has demonstrated a potentially meritorious defense by showing that some of the transfers may have been permissible payments to Ms. Baxter for services rendered to her mother. The court notes that at “this juncture, it is unnecessary for [Ms. Baxter] to establish that she is entirely absolved from liability.”

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