Bethany Lutheran Health Services v. Patricia Cumpston

• Court: Court of Appeals of Iowa
• Decided: December 15, 2021
• Docket: 20-1700
• Status: Published

Opinion

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. 2

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 3

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. 4

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 5

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 6

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., 7

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 8

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 9

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”). 10

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 11

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. 12

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 13

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.