SJC hears dispute over Heritage at Framingham's "community fee" after Ryan remand

Ivy Nguyen, attorney for appellant Mary Ann Morse Healthcare Corporation doing business as Heritage at Framingham, told the court the summary-judgment judge below failed to follow this court's 2019 decision in Ryan v. Maryann Morse Health Care Corp. by not giving the remand's limited exception proper effect: "Our position is the summary judgment judge did not properly apply the directives that this court gave in that decision," Nguyen said.

Nguyen argued the remand required the parties to develop evidence tying the upfront community fee to statutorily permitted assisted-living (ALR) onboarding services and other ALR-specific functions. She told justices the facility retroactively calculated staff time and other payroll costs to show onboarding expenses exceeded fees collected and said a flat market-based fee was sometimes the only practicable approach because intake varies year to year.

Joshua Garrick, counsel for James Ryan and the certified class, responded that the record produced at summary judgment shows admissions that Heritage did not charge residents separately for specific ALR services identified in Ryan. Garrick said the record includes testimony by the facility's controller and admissions by "President Kubiak" that screening, application processing and updated service coordination plans were provided without charge: "The summary judgment record will show indisputably" those services were provided gratis, Garrick argued.

Justices repeatedly questioned both sides about two related points: (1) whether retrospective allocations of staff time and attached spreadsheets satisfy the admissibility and evidentiary standards for a Rule 56 summary-judgment record; and (2) whether the community fee's use of funds included capital or general-building expenditures that fall outside the ALR-specific categories this court flagged in Ryan.

Respondent counsel pointed to the trial record and to what he characterized as admissions that the facility's market surveys only reported what other facilities charged for a community fee, not itemized ALR service charges. He also urged the court to consider 651 CMR 12.08(2)(a)(9), arguing the regulation requires itemization when providers charge on a fee-for-service basis and that a residency agreement describing broad categories can be decisive when combined with evidence that discrete services were not separately billed.

Appellant counsel acknowledged Heritage used market surveys (approximately every two to three years) to set fees and described the community fee in the record as $2,800 against monthly rent of about $4,000. Nguyen argued that the ALR assessment process can be extensive, that some staff duties are devoted entirely to onboarding and that a flat fee can be practical where prospective-resident assessments vary widely.

The justices explored burden-of-proof questions arising from Ryan, asked whether the appeal raised only segregation/itemization or broader legal error, and discussed whether capital expenditures shown in the facility's capital budget (which the parties dispute contain ALR-specific and non-ALR items) are dispositive on summary judgment. Counsel differed on which party bore the ultimate burden to show permissibility under Ryan.

No decision was announced at argument; the court's resolution will determine whether summary judgment should be affirmed, reversed or remanded for additional fact finding on the community fee's purpose and use and on the admissibility of retrospective cost allocations.

The case returned to this court after the 2019 Ryan decision, which allowed certain upfront charges when tied to ALR-specific onboarding services but left open the question of capital/reserve funds and itemization requirements. The record cites job descriptions, interrogatory responses and capital-expenditure reports as the primary evidentiary sources the parties dispute.