Nursing Home Not Permitted to Recover Attorney's Fees

An Oregon appeals court rules that foreclosing on a lien to recover the costs of a resident's care does not allow a nursing home to also recover attorney’s fees pursuant to a contract with the resident's agent. King City Rehab, LLC v. Clackamas County  (Or. Ct. App., No. CV05020792; A132436, Aug. 1, 2007).

Matilda Smirnes’ son, Richard, entered into a contract with King City Rehab for her nursing home care. The contract provided that if King City was required to hire an attorney to pursue collection efforts, Ms. Smirnes would pay reasonable attorney's fees and cost. Richard paid the monthly bill until his death two years later, after which Ms. Smirnes’ bill remained unpaid. Senior Guardianship Assistance Program (Senior Gap) was appointed Ms. Smirnes’ guardian until her death shortly thereafter.

King City sought foreclosure on a lien on real property owned by Ms. Smirnes’ estate for the full cost of care. Senior Gap sent a check to King City covering the cost of care plus interest. King City refused to accept the check, demanding that Senior Gap also pay its attorney’s fees. Senior Gap refused. The trial court ruled that Senior Gap had tendered full payment of the lien, and King City appealed.

The Oregon Court of Appeals affirms, finding that the statutory language unambiguously provides for a lien for the “cost of care,” and that, despite King City’s contention to the contrary, this does not include attorney’s fees. The court notes that where it wished to do so, the Oregon legislature expressly allowed attorney’s fees. “[F]or whatever reason," the court writes, "King City did not bring an action to enforce the terms of its contract…,” instead instituting a lien foreclosure action.