Pay Your Parents' Bills or Else

July 15, 2009— -- Could you be sued for your parents' unpaid health care bills? It happened to Andrea August.

One spring day, the 39-year-old Pennsylvania woman was stunned to learn that a nursing home was suing her for more than $300,000 in unpaid bills related to her father, who died after spending about a year in the home, and her mother, a dementia patient still living there.

"I was devastated," August said. "We're living basically paycheck to paycheck. We don't try to live beyond our means -- it was just unbelievable that all of a sudden there was this debt hanging over us."

August said that both she and her husband work two jobs each to make ends meet for themselves and their two children. She loves her parents, she said, and did what she could to help them. But footing their bills was out of the question.

"I don't think anybody should be responsible for someone else's bill," she said. "You can only do so much."

August found herself among a growing number of adult children facing legal pressure to pay their parents' medical bills.

In recent years, nursing homes in Pennsylvania have filed numerous lawsuits against the grown children of patients with unpaid bills under a little-known law that requires adult children to support destitute parents. Similar cases have also arisen in South Dakota.

The law is based on a concept known as "filial support" or "filial responsibility" -- the term often used to describe an adult child's obligation to a parent. The idea that adult children should be held legally responsible for their parents' welfare dates back to 17th-century England and carried over to colonial America.

Today, some form of filial support law remains on the books in 30 states but, according to Katherine Pearson, a law professor at Penn State and an expert on elder law, only Pennsylvania and South Dakota have recent track records of health care providers using the law to sue patients' children. It's unclear whether nursing facilities in other states will ever employ the law in a similar fashion.

Nursing Homes See Low Profits, High Needs

Pearson said the law is used most effectively to secure financial support from adult children who "overreached" in dipping into their parents' finances, such as a 2003 case of a daughter who "helped herself to her mother's accounts, to the tune of tens of thousands of dollars," she said.

"The problem with the statute is it's not limited to bad kids," Pearson said. "... I think that if you ask the average person if they have a moral obligation to help their parents, if they say no, it's because of a longstanding history of reasons why."

In August's case, the Norristown, Pa. woman said she simply didn't have the money to help.

"$300,000 is not something you can play with," she said, "I don't have anything even worth that," including, she added, her home.

In a statement to ABCNews.com, the nursing home, Suburban Woods Health and Rehabilitation Center of Norristown, Pa., called the August case a "very complicated situation" and said it had "taken the necessary legal steps to recoup monies owed to our center."

The willingness of nursing homes to head to court may be symptomatic of an industry desperate to stay in the black.

Profit margins at most nursing homes these days hover at about 1 percent, according to the American Health Care Association, which represents more than 10,000 assisted living facilities, nursing homes and other long-term care providers.

Industry representatives have long complained that too-low Medicaid reimbursements have unfairly squeezed their budgets. The recession, they say, has made the situation especially dire: Now cash-strapped states have even less Medicaid dollars to fund nursing home patients' stays.

"They're trying to stretch their dollars among a variety of different providers," said David Hebert, AHCA's senior vice president for policy and government affairs. "It becomes extremely difficult to do justice to all of them."

First, Seek Medicaid Coverage

Part of what's driving recent lawsuits hinging on filial support may be a 2005 federal law called the Deficit Reduction Act.

John Kennedy, a Harrisburg, Pa., lawyer who said he's represented Pennsylvania nursing homes in hundreds of such cases, said the act made it more complicated for nursing home patients to obtain Medicaid coverage for their bills.

Kennedy said that for most of his cases, he uses filial support lawsuits to persuade adult children to do the paperwork necessary to establish Medicaid eligibility for their parents. Most of the time, he said, the children being sued agree to help and aren't stuck paying their parents' bills.

"Most people would rather cooperate then be held financially personally responsible," he said.

In its statement, Suburban Woods said its first recourse is usually to apply for Medicaid coverage and to seek help from family members if a patient can't apply on her own.

Andrea August's lawyer, Linda Berman, said her client had already helped fill out Medicaid forms for her parents -- her particular case, Berman said, was more complicated than that. August said she never had power of attorney over her parents' assets and, before the lawsuit, thought that the nursing home and a guardian appointed to look after her mother had worked out how the bills would get paid.

August considers herself lucky -- her husband's employer had a legal coverage plan that allowed the couple to afford Berman's services. Many adult children hit with such claims, Berman said, can't afford legal representation and often get sacked with costly judgments. A Havertown, Pa. man tried representing himself in court against an $8,000 nursing home claim and lost, according to the Philadelphia Inquirer.

August was more fortunate. Through Berman, she contested the nursing home's claim and in January, she and the nursing home reached a settlement that freed her of her parents' debts.

Part of the reason they were successful, Berman said, is because Pennsylvania's fillial support law states that adult children can only be held liable if they have the means to pay. August, she said, clearly didn't.

For now, August said she's grateful for how her case was resolved. But she's unhappy that Pennsylvania's fillial support law is being enforced and she hopes others are able to fight back against lawsuits based on the statute.

"People are just letting these default judgments go through," she said. "They need to realize if we don't stand up for ourselves we're going to be in debt for the rest of our lives for something that we didn't even do."

With reports from ABC News' Nathalie Tadena.