Bethany Lutheran Health Services v. Patricia Cumpston ( 2021 )

IN THE COURT OF APPEALS OF IOWA
No. 20-1700
Filed December 15, 2021
BETHANY LUTHERAN HEALTH SERVICES,
Plaintiff-Appellee,
vs.
PATRICIA CUMPSTON,
Defendant-Appellant.
________________________________________________________________
Appeal from the Iowa District Court for Pottawattamie County, Jeffrey L.
Larson, Judge.
Patricia Cumpston appeals from the order finding her responsible for the
outstanding balance owed to Bethany Lutheran Health Services. AFFIRMED.
Amanda Heims, Council Bluffs, for appellant.
Jennifer E. Lindberg and Jordan D. Nickerson of Brown, Winick, Graves,
Gross and Baskerville, P.L.C. and Emily S. Hildebrand Pontius and Brandon R.
Underwood of Fredrikson & Byron, P.A., Des Moines, for appellee.
Heard by Mullins, P.J., and Schumacher and Ahlers, JJ.
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AHLERS, Judge.
Bethany Lutheran Health Services (Bethany Lutheran) filed suit against
Patricia Cumpston seeking to recover amounts owed by her late husband. The
district court found the amounts owed were reasonable and necessary family
expenses under Iowa Code section 597.14 (2018) and entered judgment against
Cumpston for the amounts owed. Cumpston appeals. She argues section 597.14
was not properly before the court, the amounts Bethany Lutheran charged were
not family expenses, and Bethany Lutheran breached a fiduciary duty it owed to
her. We reject Cumpston’s arguments and affirm.
I. Background Facts and Proceedings.
Bethany Lutheran is a residential facility located in Council Bluffs that
specializes in providing assisted living and skilled therapy and nursing services. In
March 2017, Cumpston, acting as an authorized representative for her husband,
Dean, executed a residency agreement for her husband to reside at and receive
care from Bethany Lutheran. At the time, Cumpston and Dean had been married
for more than fifty years.
In August 2017, Cumpston, assisted by her daughter, completed and
submitted her first application for Medicaid assistance to pay for Dean’s charges
incurred at Bethany Lutheran. The Iowa Department of Human Services (DHS)
responded with a request for additional information. The DHS later denied the first
application for failure to provide the requested information.
Cumpston approached Lisa Hough, an accounting associate for Bethany
Lutheran, for help with a new Medicaid application. In November 2017, Hough
and Cumpston completed and submitted a second Medicaid application. The DHS
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again requested additional information, which Cumpston and Hough provided.
The DHS later denied the second application because the Cumpstons’ income was
above the Medicaid income limit. Hough directed Cumpston to an attorney to
establish a Miller Trust1 in order to keep their income within the Medicaid limit.
In January 2018, after establishing a Miller Trust, Hough and Cumpston
completed and submitted a third Medicaid application. The DHS again requested
additional information and later denied the application because the Cumpstons’
total resources were above the Medicaid resource limit.
In late February or early March 2018, Cumpston met with an attorney to
seek assistance qualifying for Medicaid. The attorney testified Cumpston was
concerned Bethany Lutheran “wanted her to use all of her money.” Cumpston’s
resources at the time included a recent insurance settlement check for $19,017.37
to pay for repairs from storm damage to her home. The attorney testified this check
should have been excluded from Cumpston’s resources when applying for
Medicaid.2 The attorney further testified, “I told [Cumpston] not to pay [Bethany
Lutheran] until we got information on the Medicaid application.”
Nevertheless, Cumpston continued working with Hough to qualify for
Medicaid. For the next application, Hough testified:
[Cumpston] needed to [spend] down about $19,000 in order to get to
the threshold. I think it was nineteen seven something, and one of
the options I gave her was to write a check to [Bethany Lutheran]
1 Hough testified a Miller Trust “makes the State of Iowa the beneficiary on any
funds left in that account after the resident’s passing. It allows them basically to
make too much money but still get approved for Medicaid.” The DHS’s request for
information advised Cumpston to establish a Miller Trust due to the couple’s
reported income.
2 A representative from the DHS agreed a recent insurance check to repair damage
to a home is excludable when calculating resources for Medicaid eligibility.
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because it would cash right away and it would be applied to Dean’s
old balance with us. That would immediately put her down at the
threshold limit—at the resource limit.
On March 5, Cumpston wrote a check to Bethany Lutheran for $19,700.00, which
reduced her resources at the time to below the Medicaid resource limit. That same
day, Hough and Cumpston submitted a fourth Medicaid application, which the DHS
denied because resources for Medicaid eligibility are measured as of “the first
moment of the first day of the month.”
On March 21, the attorney and Cumpston submitted Cumpston’s fifth
Medicaid application. After requesting and receiving additional information, the
DHS approved the Medicaid application on April 19.
Following Dean’s death in July 2018, Bethany Lutheran filed a petition
against Cumpston seeking to recover Dean’s unpaid balance owed to Bethany
Lutheran under theories of breach of contract and unjust enrichment. Cumpston
filed a separate petition against Bethany Lutheran claiming breach of fiduciary
duty, negligence, and unjust enrichment related to Bethany Lutheran’s actions
while Cumpston attempted to qualify for Medicaid. The district court consolidated
the two petitions into the current action. Both parties moved for summary
judgment, which the court denied.
The case went to trial. About one week after the trial finished, Bethany
Lutheran moved for leave to amend its petition to add a claim for recovery under
Iowa Code section 597.14 (2018). Two months after that, the district court issued
its order finding Cumpston liable for Dean’s expenses owed to Bethany Lutheran
under section 597.14 and rejecting all other claims from both parties. The court
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ordered Cumpston to pay damages of $16,933.48. Cumpston appeals the finding
of liability under section 597.14 and the denial of her fiduciary-duty claim.
II. Standard of Review.
The parties disagree on the standard of review. “Generally, we will hear a
case on appeal in the same manner in which it was tried in the district court.”
Johnson v. Kaster, 637 N.W.2d 174, 177 (Iowa 2001). To determine whether a
proceeding was at law or equity, we consider “[t]he pleadings, relief sought, and
nature of the case” as well as “whether the court ruled on evidentiary objections.”
Nelson v. Agro Globe Eng’g, Inc., 578 N.W.2d 659, 661 (Iowa 1998).
Bethany Lutheran captioned its petition “at law,” and it primarily asserts a
contract claim, which is typically heard at law. See Van Sloun v. Agans Bros., 778
N.W.2d 174, 178 (Iowa 2010). Cumpston’s petition does not specify at law or
equity, though her claims—and Bethany Lutheran’s unjust-enrichment claim—are
typically heard in equity. See Mendenhall v. Judy, 671 N.W.2d 452, 454 (Iowa
2003) (finding a fiduciary-duty claim was heard in equity); Iowa Waste Sys., Inc. v.
Buchanan Cnty., 617 N.W.2d 23, 30 (Iowa 2000) (finding “a claim for unjust
enrichment is rooted solely in equitable principles” and is typically heard in equity).
Both petitions primarily request money damages but also request any other relief
the court deems appropriate. The court ruled on evidentiary objections at trial;
however, the court sustained few objections, and those it did sustain were mostly
directed at keeping the parties focused on the issues and the trial moving rather
than excluding substantively inadmissible evidence.
While we are not convinced the proceeding was heard in equity, we will
nevertheless apply de novo review because of the closeness of the question and
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the fact “our ultimate resolution of [the issues] is the same under a de novo review
as it would be under a review for correction of errors of law.” City of Davenport v.
Shewry Corp., 674 N.W.2d 79, 82 (Iowa 2004). Applying de novo review, we give
weight to the fact findings of the district court, especially regarding the credibility
of witnesses, but we are not bound by them. Iowa R. App. P. 6.904(3)(g).
III. Analysis.
A. Liability Under Iowa Code Section 597.14
The district court awarded Bethany Lutheran damages under section
597.14, which states, “The reasonable and necessary expenses of the family . . .
are chargeable upon the property of both husband and wife, or either of them, and
in relation thereto they may be sued jointly or separately.” Cumpston challenges
whether this claim was properly before the court and whether the charges for which
Bethany Lutheran sought damages were “reasonable and necessary expenses of
the family.”
1. Pleading the Section 597.14 Claim
Cumpston argues section 597.14 “was not properly before the court.” The
exact nature of Cumpston’s argument is unclear. Cumpston asserts “[i]t was
extremely prejudicial for the district court to seemingly allow” Bethany Lutheran’s
post-trial amendment to add a section 597.14 claim. However, as Cumpston
recognizes, the court only “seemingly allow[ed]” the amendment. The court never
explicitly permitted Bethany Lutheran to plead a section 597.14 claim, as the court
failed to rule on Bethany Lutheran’s post-trial motion for leave to amend its petition.
If the court had granted Bethany Lutheran’s motion for leave to amend, we would
review that decision for abuse of discretion. See Scott v. Grinnell Mut. Reins. Co.,
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653 N.W.2d 556, 561 (Iowa 2002). However, because the court failed to rule on
Bethany Lutheran’s motion, we have no decision to review.
While Cumpston filed a resistance to Bethany Lutheran’s motion for leave
to amend, she never raised—and the district court never ruled on—her claim to us
that section 597.14 was not properly before the court. In order to argue this issue
on appeal, Cumpston was required to file a rule 1.904(2) motion to bring the issue
to the court’s attention and preserve the issue for our review. See Meier v.
Senecaut, 641 N.W.2d 532, 540 (Iowa 2002). Without a ruling on the issue by the
district court, any claim that section 597.14 was not a proper ground for the court’s
ultimate order is not preserved for our review. See id.Furthermore, even if the district court impliedly granted Bethany Lutheran’s
motion for leave to amend by awarding damages under section 597.14, the court
is entitled to “considerable discretion in ruling on motions for leave to amend
pleadings.” Rife v. D.T. Corner, Inc., 641 N.W.2d 761, 766 (Iowa 2002); see also
Iowa R. Civ. P. 1.402(4) (“Leave to amend, including leave to amend to conform
to the proof, shall be freely given when justice so requires.”). The court should
permit an amendment to the petition unless the amendment “substantially changes
the issues” and results in prejudice or unfair surprise to the non-moving party. Rife,
641 N.W.2d at 767.
Bethany Lutheran’s amendment may have substantially changed the issues
because its original breach-of-contract and unjust-enrichment claims did not
require proof that the Cumpstons were married when the charges were incurred or
that the charges were “reasonable and necessary expenses of the family.”
Compare Iowa Code § 597.14, with Royal Indem. Co. v. Factory Mut. Ins. Co., 786
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N.W.2d 839, 846 (Iowa 2010) (providing elements for breach of contract), and
Endress v. Iowa Dep’t of Hum. Servs., 944 N.W.2d 71, 80 (Iowa 2020) (providing
elements for unjust enrichment); see also Davis v. Ottumwa Young Men’s Christian
Ass’n, 438 N.W.2d 10, 14 (Iowa 1989) (in finding a post-trial motion for leave to
amend should have been granted, noting “[t]he evidence supporting and refuting
the [original] and [amended] claims would be virtually identical”). Nevertheless,
the amendment did not cause Cumpston prejudice or unfair surprise. Bethany
Lutheran first referred to section 597.14 in its reply addressing the pending
summary judgment motions well before trial. In denying summary judgment, the
district court noted section 597.14 “permits [Bethany Lutheran] to bring an action
against [Cumpston] for her husband’s unpaid balance,” even though at the time
section 597.14 was an unpled claim distinct from breach of contract and unjust
enrichment. In an order on a motion to reconsider its summary judgment order,
the court again stated Bethany Lutheran “retains the right to bring action against
[Cumpston] for the balance under” section 597.14. Also, at the start of the trial,
the court reiterated “it appears to the court [Cumpston] would be liable under Iowa
Code section” 597.14.3 Given the court’s statements alerting the parties to the
applicability of section 597.14, Cumpston could not have suffered prejudice or
unfair surprise when Bethany Lutheran sought to add a section 597.14 claim after
trial. Furthermore, Cumpston never asked for a continuance or to reopen the
record to address the substance of Bethany Lutheran’s section 597.14 claim. See
Smith v. Vill. Enters., Inc., 208 N.W.2d 35, 38 (Iowa 1973) (in finding no abuse of
3The court apparently misidentified the section number at trial, but the context
makes clear the court was referring to section 597.14
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discretion in granting leave to amend, noting the appellant “did not ask permission
to reopen in order to introduce what is now claimed to be vital evidence”). Even
on appeal, Cumpston offers no persuasive factual or legal argument to deny the
substance of Bethany Lutheran’s section 597.14 claim if given the opportunity to
do so at trial. Therefore, even if the district court impliedly granted Bethany
Lutheran’s motion for leave to amend, we find no abuse of discretion in doing so.
2. Expenses of the Family
Cumpston argues the expenses charged by Bethany Lutheran are not
“reasonable and necessary expenses of the family” under section 597.14. Long
ago, our supreme court observed:
The term “family expense” has not been very clearly defined in our
cases, and perhaps no definition should be attempted. Generally
speaking, the only criterion which the statute furnishes is that the
account must be for items of goods furnished for and on account of
the family, and to be used therein. No limitation is put upon the
expenditures, and it need not appear that they be “necessaries,” as
that term is generally used. It has been held that a cook stove and
fixtures, wardrobes, bureaus, bedsteads, organs, watches, and other
jewelry, medical services, wearing apparel, etc., are family
expenses. It is essential, of course, that the expenditures be for
property which was used or kept for use in the family. But a reaping
machine or other agricultural implements, used by the husband in
the prosecution of his business of farming, rent of a farm, medical
assistance to a husband away from home, or money borrowed to pay
for goods furnished the family, are not properly chargeable as family
expenses.
McDaniels v. McClure, 120 N.W. 1031, 1032 (Iowa 1909) (citations omitted); see
also In re Marriage of Erpelding, 917 N.W.2d 235, 240 n.2 (Iowa 2018) (stating
section 597.14 codifies the basic principle “that a spouse is obligated to support
the other spouse”).
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The district court found Dean’s balance owed to Bethany Lutheran
constitutes “medical expenses” for which Cumpston is liable. While “medical
expenses” are not defined or even mentioned in section 597.14, Cumpston
recognizes “[m]edical and hospital expenses” are recoverable under the statute.
St. Luke’s Med. Ctr. V. Rosengartner, 231 N.W.2d 601, 602 (Iowa 1975).
Nevertheless, Cumpston notes Bethany Lutheran’s charges under the admission
agreement include “room, meals, nursing and personal care, cable, and other
personal services such as laundry, maintenance, and housekeeping.” Cumpston
argues these nursing home expenses do not qualify as recoverable medical and
hospital expenses.
Cumpston testified about the course of events that resulted in Dean staying
at Bethany Lutheran. According to her testimony, Dean fell at home, was
immediately taken to the hospital for a stay of about one month, and then “they”—
meaning hospital staff—placed Dean at Bethany Lutheran “because that was the
only home that opened up.” Cumpston’s testimony indicates Bethany Lutheran
provided a continuation of Dean’s hospital care. While Bethany Lutheran’s
expenses included a room for Dean, this room was necessary for his medical care
at Bethany Lutheran and not realty that lacked any benefit to the family. See
Scheiz v. McMenamy, 48 N.W. 806, 806 (Iowa 1891) (concerning a realty lease
the husband signed in his name only, finding the wife not liable for the lease during
the period she did not live on the premises). Cumpston argues Dean was
“involuntarily” placed at Bethany Lutheran, but the record shows Bethany Lutheran
was one of a limited number of providers able to care for Dean and Cumpston was
free to place Dean at another facility or even at home if she could have secured
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the necessary care. See Delaware Cnty. V. McDonald, 46 Iowa 170, 171 (1877)
(finding the husband not liable for care the wife received while committed at a
“hospital for the insane provided by the State”). We agree Bethany Lutheran’s
charges were reasonable and necessary family expenses, and we affirm that
Cumpston is liable under section 597.14 for Dean’s outstanding balance owed to
Bethany Lutheran.
B. Fiduciary Duty
Cumpston argues Bethany Lutheran had a fiduciary duty to her, which it
breached during the Medicaid application process. Cumpston specifically argues
Bethany Lutheran breached its duty to her when it repeatedly failed to properly
complete the Medicaid applications and “erroneously required [Cumpston] to write
a check for $19,700.”4
“A fiduciary relationship exists between two persons ‘when one of them is
under a duty to act for or to give advice for the benefit of another upon matters
within the scope of the relation.’” Vos v. Farm Bureau Life Ins. Co., 667 N.W.2d
36, 52 (Iowa 2003) (quoting Kurth v. Van Horn, 380 N.W.2d 693, 695 (Iowa 1986)).
“Because the circumstances giving rise to a fiduciary duty are so diverse, any such
relationship must be evaluated on the facts and circumstances of each individual
4 Bethany Lutheran argues we have no authority to consider Cumpston’s fiduciary-
duty claim because Cumpston failed to exhaust her administrative remedies by
appealing the denials of her Medicaid applications. See Ghost Player, LLC v.
State, 860 N.W.2d 323, 326 (Iowa 2015) (“When a party fails to exhaust all of its
required administrative remedies, the court has no authority to hear the
case . . . .”). Bethany Lutheran cites no authority to support its argument that
failure to exhaust administrative remedies relieves an alleged fiduciary from any
duty to assist the complainant with the agency action. Thus, we will consider the
merits of Cumpston’s fiduciary-duty claim.
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case.” Id. (quoting Kurth, 380 N.W.2d at 696). To establish a fiduciary relationship,
courts look for: “the acting of one person for another; the having and the exercising
of influence over one person by another; the reposing of confidence by one person
in another; the dominance of one person by another; the inequality of the parties;
and the dependence of one person upon another.” Id. (quoting Kurth, 380 N.W.2d
at 696). As the party claiming a fiduciary relationship, Cumpston must prove
Bethany Lutheran acted in a fiduciary role. Id.Hough repeatedly testified she merely “assisted” Cumpston with the
Medicaid applications and completed the applications using information Cumpston
provided. Cumpston testified to her independence, including that she alone
decided to pay $19,700.00 to Bethany Lutheran. Cumpston emphasizes her age
and lack of knowledge to us, but she testified she has no disability that would
prevent her from making decisions. The court, having observed Cumpston’s
testimony, necessarily agreed Cumpston can make her own decisions when it
rejected her fiduciary-duty claim, and we place weight on the court’s assessment.
See In re Marriage of Vrban, 359 N.W.2d 420, 423 (Iowa 1984) (“We are denied
the impression created by the demeanor of each and every witness as the
testimony is presented.”).
Cumpston notes the residency agreement explicitly allows Bethany
Lutheran to apply for Medicaid on Dean’s behalf. However, this agreement does
not create a fiduciary relationship with Cumpston because she is not a party to the
agreement. Cumpston also notes Hough suggested actions for Cumpston to take
in order to qualify for Medicaid, such as establishing a Miller Trust and paying
Bethany Lutheran to reduce her resources, which goes beyond merely completing
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the applications using information Cumpston provided. The district court found
these actions “may have been irresponsible,” and we agree. However, the record
does not show Bethany Lutheran was in such a dominant position over Cumpston
as to create a fiduciary relationship. Therefore, we agree Cumpston failed to prove
her fiduciary-duty claim.
V. Conclusion.
We find Cumpston failed to preserve her argument that section 597.14 was
not properly before the court. Even if she did, the district court did not abuse its
discretion in impliedly permitting Bethany Lutheran’s post-trial amendment
asserting a section 597.14 claim, as Cumpston suffered no prejudice or surprise.
Further, Bethany Lutheran’s charges were for reasonable and necessary
expenses of the family for which Cumpston was responsible. Finally, Cumpston
failed to prove Bethany Lutheran owed her a fiduciary duty in applying for
Medicaid. Therefore, we affirm.
AFFIRMED.