Wednesday, December 17, 2014
Reason for celebration. Not only did Congress act, but it came together to help those with disabilities. The Achieving a Better Life Experience (ABLE) Act cleared the Senate on Tuesday on a vote of 76 to 16, which is the last step on its way to the President. As Gail Russell Chaddok of the Christian Science Monitor observes:
"But the reasons for its success go deeper and point to potential bipartisan paths forward on one of Congress’s most intractable issues: entitlement reform. The aim of the ABLE Act is to remove bureaucratic obstacles to help Americans save their own money to help pay for long-term care. To some activists, that could provide a template for reforming Medicare and Social Security in the next Congress.
The ABLE Act helps people with disabilities save for college and retirement. Under current law, a child diagnosed with a disability can’t have assets worth more than $2,000 or earn more than $680 per month without forfeiting eligibility for government programs like Medicaid. The ABLE Act would allow a tax-free savings account up to $100,000 to pay for disability-related expenses."
Tuesday, December 16, 2014
Mark Friedman, an elder law and special needs attorney from New Jersey, recently wrote to comment on the important series offered by National Public Radio on use and misuse of certain medications in long-term care settings. Here is what Mark said:
"NPR ran a story on 'chemical restraints,' - nursing homes using anti-psychotic drugs to make unruly residents more pliable. According to the article, the residents are usually Alzheimer’s or dementia patients, and anti-psychotics can make the residents easier for staff to manage. But the drugs can be dangerous, increasing a resident’s risk of falls and exacerbating health problems. At high doses, anti-psychotics can also sap away emotions and personality and put the resident into a 'stupor.'
Administering drugs in this manner, any drugs, including anti-psychotics, without medical need and for the convenience of staff, is contrary to federal regulations. Unfortunately, it may also be widespread.
The NPR story includes a tool drawn from CMS data that shows the rate of residents on anti-psychotics at nursing homes across the country. You can look up the facility in which your loved one resides.
The news coverage shows that this issue is getting increased attention, and that’s a good thing. I think that as Americans age and more people have spouses and parents in nursing homes, the use of anti-psychotics as chemical restraints will have to diminish or end. People won’t stand for their loved ones being drugged into a stupor."
Thanks, Mark, for making sure we included this topic and the latest links for more coverage and your additional commentary. Along the same lines, I listened to an interesting follow-up conversation on AirTalk, a Los Angeles public radio affiliate's program, discussing "How California is Doing in the National Fight to Curb Over-Medication of Nursing Home Patients." That program, now available as a 23-minute podcast, included an articulate medical professional, Dr. Karl Steinberg, who described how he sees medication practices changing in long-term care, including better use of behavior health techniques, rather than medication, to help residents.
December 16, 2014 in Cognitive Impairment, Current Affairs, Dementia/Alzheimer’s, Ethical Issues, Federal Statutes/Regulations, Health Care/Long Term Care, Science | Permalink | Comments (0) | TrackBack (0)
Sunday, November 30, 2014
Justice Department Reaches $437,500 Agreement with City of Ocean Springs, MS to Resolve Disability Discrimination Lawsuit
The Justice Department announced a comprehensive settlement today, resolving a federal civil rights lawsuit against the City of Ocean Springs, Mississippi, for alleged violations of the Americans with Disabilities Act (ADA). Under the proposed consent decree, the City will pay $437,500 in damages to a psychiatric treatment facility that was discriminated against by the City. The decree also requires systemic reforms to the City's land use and zoning practices to eliminate barriers for providers of mental health services to people with disabilities and combat the stigma of mental illness. The complaint, also filed in federal court today, alleges that the City discriminated against Psycamore, LLC, an outpatient psychiatric treatment facility, when it denied a certificate of occupancy and a use permit because Psycamore treats patients with mental illness.
Saturday, November 29, 2014
On November 26, 2014, in Nay v. Department of Human Services, the Oregon Court of Appeals invalidated a 2008 attempt by the state to expand Medicaid estate recovery rules to reach assets conveyed prior to death by the Medicaid recipient to his or her spouse.
The court's ruling analyzes the portion of federal statutory law that permits, but does not require, states to expand Medicaid estate recovery programs to cover "any other real or personal property and other assets in which the [deceased] individual had any legal title or interest at the time of death... including such assets conveyed to a survivor, heir, or assign of the deceased individual through joint tenancy, tenancy in common, survivorship, life estate, living trust or other arrangement." Analysis of this language, which was mirrored by Oregon statutory law, leads the court to conclude that some ownership interest at time death of the Medicaid recipient must be present to make the asset a valid target of Medicaid estate recovery:
"Therefore, we conclude that 'other arrangement' in the context of the definition of “estate” means that assets transferred from the deceased 'individual'—the Medicaid recipient—by operation of law on account of or occurring at the recipient's death are included in that definition. Thus, the 'including' clause in the federal permissive definition of 'estate' incorporates nonprobate assets that are transferred from the Medicaid recipient to a third party by operation of law or other mechanism, but in which the deceased Medicaid recipient retained legal title or 'any' interest at the time of his or her death."
"By including the 'interspousal transfer' text in the pool of assets from which the state can recover from the surviving spouse's estate, the rule includes assets that necessarily were transferred before the recipient's death. Because we have concluded that such predeath transfers are antithetical to the definition of estate as provided by federal and state law (requiring that the recipient have an interest in the property at the time of his or her death), we conclude that DHS's amendments of OAR 461–135–0835(1)(e)(B)(iii) relating to interspousal transfers exceeded its statutory authority granted by ORS 416.350 and 42 USC section 1396p, and we hold those provisions invalid."
Monday, November 24, 2014
Several high profile incidents, such as those reported here in our Blog and here by the Philadelphia Inquirer, involving attorneys disciplined or convicted of theft of client funds, have triggered proposed changes in Pennsylvania's Rules of Professional Conduct for attorneys. The rule changes proposed by the Pennsylvania Supreme Court's Disciplinary Board include:
- imposing restrictions on an attorney's brokering or offering of "investment products" connected to that lawyer's provision of legal services;
- clarifying the type of financial records that attorneys would be required to maintain and report, regarding their handling of client funds and fiduciary accounts;
- clarifying the obligation of attorneys to cooperate with investigations in a timely fashion;
- clarifying the obligation of suspended, disbarred, or "inactive" attorneys to cease operations and to notify clients "promptly" of the change in their professional status.
The Disciplinary Board called for comments on the proposed rule changes, noting that although individual claims against the Pennsylvania Lawyers Fund for Client Security are confidential, "Fund personnel can attest that from time to time, the number of claims filed against a single attorney will be in double digits and the total compensable loss will amount to millions of dollars." The comment window closed on November 3. 2014.
In recommending changes, the Disciplinary Board noted common threads running through many of the cases, including:
November 24, 2014 in Crimes, Elder Abuse/Guardianship/Conservatorship, Estates and Trusts, Ethical Issues, Federal Cases, Federal Statutes/Regulations, State Cases, State Statutes/Regulations | Permalink | Comments (0) | TrackBack (0)
Friday, November 21, 2014
On November 19, attorneys representing families and the Commonwealth of Pennsylvania argued consolidated cases before a panel of the Third Circuit Court of Appeals, involving use of short-term annuities in connection with applications for Medicaid-funded care. The argument follows appeals from a January 2014 decision on summary judgment motions by the Western District of Pennsylvania in the case of Zahner et al. v. Commonwealth of Pennsylvania.
A key issue on appeal is whether use of "shorter" term annuities is permitted by the language of federal Medicaid statutes referring to actuarially-sound annuities, or whether such use automatically constitutes a transfer of assets for less than fair value, and thus is treated as a prohibited gift. HCFA Transmittal 64 is the subject of much of the very technical debate.
The jurists on the panel are Judge Theodore McKee (the male judge's voice on the recording), Judge Marjorie Rendell, and Senior Judge Dolores Sloviter (the softer voice on the recording). Interestingly, rather early in the argument, at least two of the judges interject to make the observation that "there is nothing wrong with Medicaid planning, per se," noting, rather, that the issue is the extent to which specific planning approaches have been directly addressed by federal law.
Listening to the oral argument in this case provides an opportunity for students in advanced legal studies on asset planning to consider cutting edge legal issues and policy concerns. The argument is also an opportunity for even first-year law students to discuss argument techniques, and to consider what does or does not work well with judges (and vice versa). It was a "hot" bench and there was a lot of interruption from both sides.
Wednesday, November 5, 2014
I recently read an HHS Inspector General report about Medicare paying for HIV drugs ... for the dead....The OIG report, Medicare Paid for HIV Drugs for Deceased Beneficiaries, released on Halloween (shades of trick or treat), is available here as a pdf.
OIG report # OEI-02-11-00172 focuses on HIV drugs and the prompt for the investigation was "ongoing concerns about Medicare paying for drugs and services after a beneficiary has died."
The report found that under the existing policy (which allows this to occur), Medicare continued to pay for HIV drugs for 150 decedents. Medicare cuts off payments "for drugs with dates of service more than 32 days after death [because] CMS's practices allow payment for drugs that do not meet Medicare Part D coverage requirements. Most of these drugs were dispensed by retail pharmacies."
Why just look at HIV drugs because isn't it likely that this continued payment could be occurring beyond just this group of drugs? CMS agrees that "these "findings have implications for all drugs because Medicare processes PDE records for all drugs the same way. Considering the enormous number of Part D drugs, a change in practice would affect all Part D drugs and could result in significant cost savings for the program and for taxpayers."
The OIG report recommends a change in practice to "prevent inappropriate payments for drugs for deceased beneficiaries and lead to cost savings for the program and for taxpayers. CMS concurred with [the OIG] recommendation."
Wednesday, October 22, 2014
I've heard about the backlog for SSD appeals, but I had no idea how much of a backlog exists until I read the story in the October 19, 2014 Washington Post. Waiting on a Social Security disability appeal? Get in line — a very long line brings a new perspective on waiting lists. The story reports that there are 990,399 (you read that right, 990,399) SSD appeals waiting for ALJ hearings. We have been hearing a lot about the backlog with the VA (526,000 according to the story) so why haven't we heard about the SSDI case backlog? Want to know how long it takes for a backlog of almost one million cases to occur? According to the Post story, the backlog has been going on since President Ford's administration, but a significant increase occurred between 2008-20014. Why did this occur? "[T]he system became, in effect, too big to fix: Reforms were hugely expensive and so logistically complicated that they often stalled, unfinished. What’s left now is an office that costs taxpayers billions and still forces applicants to wait more than a year — often, without a paycheck — before delivering an answer about their benefits." As well, factor in the "Great Recession" and Boomers. The article also mentions budget cuts to SSA as well as the government shutdown in 2013.
A sad irony-the story quotes one of the ALJs in S. Florida who had 2 claimants die before their appeals were heard, but the ALJ still had to hear the case of one, because if the decedent were determined to have been disabled, then the decedent's surviving child might receive benefits.
Although SSD waiting lists outnumber both VA and Patents, according to the story, the wait time to decision is shorter than that for the VA and Patent office. The SSA ALJs "are the moral centerpiece of this system: a symbol that the government intends to apply the old American ideal of due process before the law to the vast new caseloads of the American welfare state. They are also the system’s biggest problem — a 40-year-old clog in the pipe." A law prof at GW, Richard Pierce, takes the position "that the government should eliminate the judges altogether and just let the bureaucrats with the paperwork decide. [Professor Pierce] said that the main thing these hearings bring to the process — that face-to-face interaction between judges and applicants — often adds only pathos, not useful information."
A push to shrink the backload resulted in a drop of both cases and wait time in 2010 but a review of the decisions noted an uptick in the award of benefits. It would seem, from reading this article, that part of the problem is outdated requirements and resources available to the judges (or lack thereof). SSA has lessened the pressure on the ALJs to some extent, so now the ALJs are "limited ... to 720 cases a year and [SSA] imposed new checks to make sure the “yes” decisions are as well thought-out as the 'noes.'" The uptick in benefits awards has dropped, with the award of benefits at 44%. Despite the fact that SSSA has hired more ALJs, the backlog is pushing one million. The Post reports that there were an additional 13,000 added in the first two weeks of October! The story concludes by noting that the backlog isn't limited to just the ALJs. The Appeals Council also has a backlog: "There are 150,383 people waiting for an Appeals Council decision. The average wait there is 374 days."
Friday, September 12, 2014
In a GAO study titled "Inability to Repay Student Loans May Affect Financial Security of Small Percentage of Retirees," researchers reveal that a significant -- and growing -- proportion of "student loan" debt is owed by Americans aged 65 or older. In addition to the growth in the total amount of "senior" student loan debt, from $2.8 billion in 2005 to $18.2 billion in 2013, the GAO findings include:
- Relatively few households headed by individuals 65 or older hold student loan debt -- the number is about 706,000 households in the U.S. -- but the amount they owe may be significant, with estimates that the median debt owed is around $12,000, as compared to a median for those aged 64 and younger of $13,000.
- Most -- about 82% -- of this debt was for the individual's own education. It is not known whether how "old" the loans are.
- Older borrowers hold defaulted federal student loans at a higher rate -- and defaults can have conquences, including offsets on Social Security payments. Generally speaking, student debts cannot be discharged in bankruptcy; however adjustments may be possible to keep the individual's monthly income above the poverty threshold.
For more discussion on the GAO report, see "Senior (Citizen) Student Debt Rising," in Inside Higher Ed by Michael Stratford. Hat tip to Professor Laurel Terry for pointing out this new study.
Our friend and health law/elder law rock star, Marshall Kapp, sent me a note about a book review he authored (thanks Marshall) that appears in The Gerontologist Advance Access. The review is of the book, The Rule of Nobody: Saving America from Dead Laws and Broken Government by Phillip K. Howard.
You may be wondering why a blog for elderlawprofs is posting about laws and government regulations. Three words: nursing home regulation. Although a subscription is required to read the full review, an excerpt is available for free, much of which I have reproduced here
The brilliant satirist Jonathan Swift said long ago, “Laws are like cobwebs, which may catch small flies, but let wasps and hornets break through.” (Brainy Quote, n.d.). Swift certainly did not intend that remark as a compliment to either laws or cobwebs. Nonetheless, almost all laws originate to accomplish some reasonably defensible public purpose, even though ... poorly drafted, inconsistently ... enforced, and perpetuated beyond ... their original justification ....
In this latest project, Howard despairs that regulation in the United States has veered far from its proper function as a setter of boundaries or parameters within which individuals are empowered... (end of excerpt).
Since Marshall sent me a full copy of the book review, I can explain further what the abstract does not, how the author uses nursing home regulations as an example. Marshall describes this on page 1-2 of his review
One of the primary examples that author Howard utilizes throughout The Rule of Nobody to illustrate his constructive critique about the largely dysfunctional nature of the contemporary American regulatory situation is the overwhelmingly extensive and complex set of formal command and-control rules we have promulgated on the federal and state levels to govern the operation of nursing homes.
Marhsall offers a bit of history as to why we have so many laws and regulations for nursing homes and suggests that now is "the time to seriously contemplate smarter, rather than just bigger, regulation...." (review at page 2). He notes that the author provides examples of when the regulations don't end up benefitting the residents, with current regulations stifling innovation. (review at 3). Marshall concludes his review with this summary
[T]he Rule of Nobody is noteworthy for the nation generally and for long-term care policy-makers particularly... Settling for being “in the ball park” is damning with faint praise, indeed. The only option for many vulnerable individuals is dependence on the benevolence of nursing home owners and workers and lawmakers’ careful guidance. Society owes them a system of oversight and influence that not only aspires to, but effectively achieves, a much loftier standard.
Another one to add to the reading list.
Thursday, September 11, 2014
Judge Geraci of the U.S. District Court, Western District of New York, is the latest judge to address an important topic in Elder Law regarding eligibility for long-term care benefits under Medicaid. The court defines the issue as follows: "When an uncompensated transfer of assets has been made and a [Medicaid] penalty period imposed, how does a partial return of the transferred funds affect the beginning of the penalty period?"
In its August 2014 decision in Aplin v. McCrossen, the court addresses summary judgment motions in two separate cases that were filed on behalf of 80-year-old Florence Aplin and 85-year old Sergio Ciardi, both residents of nursing homes. In one case, for example, the Aplin case, the transfers totaled approximately $450,000; however, approximately $76,000 was later returned by the donees. The hope of the plaintiffs was that "return" of the money would permit them to shorten their penalty periods tied to the original transfers. This approach, when planned in advance, is a post-Deficit Reduction Act technique sometimes known in Elder Law circles as a "partial cure" (as part of "reverse half-a-loaf" gifting).
Judge Geraci denied the relief sought by the plaintiffs. He followed the hardline approach of "nonprecedential" rulings on New Jersey disputes about partial cures, ruling that "return" of money permits the state agency to recalculate the start of the penalty period. The court decided that NY administrative rules do not conflict with federal policy and not only permit but require the state agency to, in effect, restart the penalty period on the ground that the later date is when the "applicant becomes otherwise eligible for Medicaid." This phrase is a key concept in federal Medicaid law. The plaintiffs had argued that phrase applied only to an earlier date, from their original application. Judge Geraci concluded:
"I find no circumstances in this case which indicated that Defendants' interpretation and application of the provisions of [New York administrative directives] contravene Congress' articulated purpose in enacting the Medicaid Act -- to provide medical care, services and supplies for the financially needy. Essentially, the assessment of an applicant's income and resources which results in a determination that such applicant has transferred resources for less than fair market value during the statutory look-back period and that an appropriate penalty period must be imposed, ensures that the applicant has not falsely impoverished himself or herself in order to qualify for medical assistance at public expenses which, by law, is undeserved."
While it is apparent that the New York federal judge was not eager to give applicants any benefit tied to partial cures on transfers, the decision also appears to approve or at least ignore what some would describe as a "perverse effect" of the New York policy. By imposing a new, later "start date" for the ineligibility period following the return, New York can actually impose a penalty that is longer than the original penalty period for the full transfer.
Also at issue in the case was the effect of a series of statements on the federal government's side, including the so-called "McGreal Letter" from CMS that was relied on by the plaintiffs in making the returns. (The court did not expressly address a May 2014 GAO study, where it was reported at page 28 that "[a]ccording to CMS, states can choose whether or not to consider a partial return of transferred assets on Medicaid planning.")
Should there be uniformity among the states, not just on whether but how families can seek any relief from "resource" limits set by federal law? (The GAO study linked above indicates a range of different state-specific options are in play.) The answer to that question may depend on one's point of view.
For more background on the complex interaction between Medicaid applications, ineligibility periods triggered by uncompensated transfers, partial cure attempts and penalty start dates, see ElderLawGuy Jeff Marshall's blog post from 2011.
Wednesday, September 10, 2014
The U.S. Department of Justice recently established an on-line Elder Justice Initiative, intended to assist the public, practitioners, and prosecutors with identifying and responding to all types of elder abuse. Here are some of the highlighted resource links from the website:
|Here, victims and family members will find information about how to report elder abuse and financial exploitation in all 50 states and the territories. Simply enter your zipcode to find local resources to assist you.|
|Federal, State, and local prosecutors will find three different databases containing sample pleadings and statutes.|
|Researchers in the elder abuse field may access a database containing bibliographic information for thousands of elder abuse and financial exploitation articles and reviews.|
Practitioners -- including professionals of all types who work with elder abuse and its consequences -- will find information about resources available to help them prevent elder abuse and assist those who have already been abused, neglected or exploited.
Thursday, August 21, 2014
Wow! Medicaid transfer rules argued in prime time! (Well, almost...)
On August 20, the Ohio Supreme Court heard oral argument on Estate of Atkinson v. Ohio Dept. of Job & Family Services, Case No. 2013-1773. Video of the presentations (including the very interesting questions from the bench) can now be viewed here on the Ohio Channel.
This strikes me as a great opportunity for Elder Law course students to read briefs and observe lawyers in oral argument tackle technical, challenging legal issues (listen to the Court ask one attorney to slow down and explain his use of pronouns). Can you predict the outcome? Note: The Supreme Court's arguments on Ohio Channel appear as high quality productions, well edited, with subtitles indicating the names of the speakers and the identity of the issues on appeal, and the website is searchable for other appellate cases for faculty members looking for examples to use in other classes.
As framed in the appeal, the issue is whether the community husband's actions triggered a period of ineligibility for Medicaid benefits for his wife in the nursing home. The record showed the husband transfered the couple's home "out" of the couple's long-standing revocable trust to the name of the institutionalized spouse, and then in turn, the same day, to the community spouse. As described in one news account:
"The county department of job and family services found that the transfer of the home, valued at $53,750, was improper because it violated federal and state Medicaid rules. While Mrs. Atkinson’s Medicaid benefits were approved, the agency temporarily excluded nursing-home care from her coverage because of the transfer."
The state has been successful with its arguments before state agencies up to this point. The Ohio Supreme Court, however, asked the attorneys about the applicability and relevance of the 6th Circuit's 2013 decision in Hughes v. McCarthy regarding permitted use of spousal annuities in Medicaid planning in Ohio. During the oral argument, one Justice also asks whether the state should be bound by the position taken by the federal agency, Health and Human Services (apparently in an amicus brief), in support of the family's argument.
There are also opportunities here to think about whether -- and how -- this particular transfer issue might have been avoided with different planning.
Recent Duke Law graduate Whitney Bosworth Blazek is the author of a timely, interesting note, "Combating Privatization: Modifying Veterans Administration Fiduciary Program to Protect Incompetent Veterans" in a recent issue of the Duke Law Journal. The abstract explains:
"Created to supervise the distribution of Veterans Administration benefits, the Veterans Benefit Administration Fiduciary Program was designed to help thousands of incompetent veterans handle their finances. Rather than directly managing each veteran's funds, the Fiduciary Program employs a privatization model whereby a private individual or institution is appointed to manage a veteran's assets. The Fiduciary Program then monitors these fiduciaries to ensure the veteran's funds are properly expended.
This Note argues that in practice this privatization model is seriously flawed and that it exposes some of the most vulnerable portions of the veteran population's funds to misuse. In support of this conclusion, this Note compares the federal statutes, regulations, and internal directives that govern the Fiduciary Program--paying special attention to the Fiduciary Program Manual-- with audits performed by the Veterans Affairs Office of Audits and Evaluations and the U.S. Government Accountability Office. Relying on these audits, this inquiry rejects total reliance on substantive statutory reform in light of legislative and judicial barriers. Instead, this Note advocates for critical internal reforms designed to improve the Program's efficiency and functionality, the adoption of a state enforcement mechanism, and reliance on principles of cooperative federalism and interagency cooperation."
Friday, August 15, 2014
Friday, August 8, 2014
President Obama traveled to Fort Belvoir, Virginia to sign a reform bill giving the Department of Veterans Affairs the necessary resources to improve access and quality of care for the men and women who have served our country in uniform. In remarks before the bill signing, President Obama addressed the misconduct that has taken place at some VA facilities across the country —
We’ve already taken the first steps to change the way the VA does business. We’ve held people accountable for misconduct. Some have already been relieved of their duties, and investigations are ongoing. We’ve reached out to more than 215,000 veterans so far to make sure that we’re getting them off wait lists and into clinics both inside and outside the VA system.
We’re moving ahead with urgent reforms, including stronger management and leadership and oversight. And we’re instituting a critical culture of accountability -- rebuilding our leadership team, starting at the top with Secretary McDonald. And one of his first acts is that he’s directed all VA health care facilities to hold town halls to hear directly from the veterans that they serve to make sure that we’re hearing honest assessments about what’s going on.
The VA reform bill -- officially the Veterans’ Access to Care through Choice, Accountability, and Transparency Act of 2014 -- passed Congress with overwhelming bipartisan support, and will expand survivor benefits and educational opportunities and improve care for victims of sexual assault and veterans struggling with traumatic brain injuries. But the main focus of the new law is to ensure that veterans have access to the care they’ve earned.
Wednesday, July 30, 2014
John Washlick, a shareholder with Buchanan Ingersoll & Rooney in Philadelphia and Princeton, provides a concise and useful overview of laws that form the basis for claims of "fraud" or "abuse" associated with Medicare and Medicaid in the most recent issue of Pennsylvania Bar Quarterly (April 2014, available also on Westlaw). The abstract to his article, "Health Care Fraud and Abuse," provides:
"Medicare and Medicaid combined comprise the largest payer of health care services in the world, and account for over 20 percent of all U.S. government spending. As a result, efforts to combat fraud and abuse in these programs have become a congressional and administrative priority. This article will address four significant federal fraud and abuse laws: (i) Anti-Kickback Statute, (ii) "Stark" Anti-Referral Law, (iii) Civil Monetary Provisions, and (iv) False Claims Act (Civil and Criminal). The Patient Protection and Affordable Care Act, more commonly referred to as the "Affordable Care Act" significantly strengthened each of these laws, including increased funding to step up enforcement actions. There are other federal and state statutes that are aimed at curbing fraud and abuse and they should not be ignored when reviewing a financial arrangement between or among potential referral sources."
A useful guide, especially when reading about multi-million dollar settlements in whistleblower cases growing out of nursing home care, home care, hospice care, and pharmaceutical sales, such as the Omnicare settlement reported on the Elder Law Prof Blog today.
From the Department of Justice, news of the False Claims Act settlement reached with Omnicare Inc., "the nation's largest provider of pharmaceuticals and pharmacy services to nursing homes." The company has agreed to pay $124.24 million "in return for their continued selection" as the supplier of drugs to elderly Medicare and Medicaid beneficiaries. The claims related to improper discounts allegedly given by Omnicare as incentives for doing business with the company.
According to the DOJ press release, the settlement resolves two lawsuits filed by whistleblowers under the qui tam provisions of the False Claims Act. "The first whistleblower, Donald Gale, a former Omnicare employee, will receive $ 17.24 million."
DOJ states that since January 2009, it has "recovered a total of more than $19.5 billion through False Claims Act cases," including more than $13.9 billion in cases alleging fraud associated with health care programs.
Sunday, July 20, 2014
The growing significance and scope of "elder law" is demonstrated by the program for the upcoming 2014 Elder Law Institute in Philadelphia, Pennsylvania, to be held on July 24-25. In addition to key updates on Medicare, Medicaid, Veterans and Social Security law, plus updates on the very recent changes to Pennsylvania law affecting powers of attorney, here are a few highlights from the multi-track sessions (48 in number!):
- Nationally recognized elder law practitioner, Nell Graham Sale (from one of my other "home" states, New Mexico!) will present on planning and tax implications of trusts, including special needs trusts;
- North Carolina elder law expert Bob Mason will offer limited enrollment sessions on drafting irrevocable trusts;
- We'll hear the latest on representing same-sex couples following Pennsylvania's recent court decision that struck down the state's ban on same-sex marriages;
- Julian Gray, Pittsburgh attorney and outgoing chair of the Pennsylvania Bar's Elder Law Section will present on "firearm laws and gun trusts." By coincidence, I've had two people this week ask me about what happens when you "inherit" guns.
Be there or be square! (Who said that first, anyway?)
July 20, 2014 in Advance Directives/End-of-Life, Elder Abuse/Guardianship/Conservatorship, Estates and Trusts, Ethical Issues, Federal Cases, Federal Statutes/Regulations, Health Care/Long Term Care, Housing, Legal Practice/Practice Management, Medicaid, Medicare, Programs/CLEs, Property Management, Retirement, Social Security, State Cases, State Statutes/Regulations | Permalink | Comments (0) | TrackBack (0)
Wednesday, June 18, 2014
Last week's news of a Chapter 11 Bankruptcy proceeding in the Texas-based senior living company Sears Methodist Retirement Systems, Inc. (SMRS) has once again generated questions about "entrance fees" paid by residents at the outset of their move to a Continuing Care Retirement Community (CCRC). CCRCs typically involve a tiered system of payments, often including a substantial (very substantial) upfront fee, plus monthly "service" fees. The upfront fee will carry a label, such as "admission fee" or "entrance fee" or even entrance "deposit," depending on whether and how state regulations require or permit certain labels to be used.
As a suggestion of the significance of the dollars, a resident's key upfront fee at a CCRC operated by SMRS reportedly ranged from $115,000 to $208,000. And it can be much higher with other companies. So, let's move away from the SMRS case for this "blog" outline of potential issues with upfront resident fees.
Even without talking about bankruptcy court, for residents of CCRCs there can be a basic level of confusion about upfront fees. In some instances, the CCRC marketing materials will indicate the upfront fee is "refundable," in whole or in part, in the event the resident moves out of the community or passes away. Thus, residents may assume the fees are somehow placed in a protected account or escrow account. In fact, even if the upfront fee is not "refundable," when there is a promise of "life time care," residents may assume upfront fees are somehow set aside to pay for such care. How the facility is marketed may increase the opportunity for resident confusion. Residents are looking for reassurances about the costs of future care and how upfront fees could impact their bottom line. That is often why they are looking at CCRCs to begin with. "Refundable fees" or "life care plans" can be important marketing tools for CCRCs. But discussions in the sales office of a CCRC may not mirror the "contract" terms.
One of the most important aspects of CCRCs is the "contract" between the CCRC and the resident. First, smaller "pre move-in" deposits may be paid to "hold" a unit, and this deposit may be expressly subject to an "escrow" obligation. But, larger upfront fees -- paid as part of the residency right -- are typically not escrowed. It is important not to confuse the "escrow" treatment of these fees. Of course, the "hold" fee is not usually the problem. It is the larger upfront fees --such as the $100k+ fees at SMRS -- that can become the focus of questions, especially if a bankruptcy proceeding is initiated.
The resident's contract requires very careful reading, and it will usually explain whether and how a CCRC company will make any refund of large upfront admission fees. In my experience of reading CCRC contracts, CCRCs rarely "guarantee" or "secure" (as opposed to promise) a refund, nor do they promise to escrow such upfront fees for the entire time the payer resides at the CCRC. In some states there is a "reserve" requirement (by contract or state law) for large upfront fees whereby the CCRC has a phased right to release or use the fees for its operation costs. Thus, the contract terms are the starting place for what will happen with upfront fees.
Why doesn't state regulation mandate escrow of large upfront fees? States have been reluctant to give-in to pressure from some resident groups seeking greater mandatory "protection" of their upfront fees. There's often a "free enterprise, let the market control" element to one side of regulatory debates. On the other side, there is the question of whether life savings of the older adult are proper targets for free enterprise theories. Professor Michael Floyd, for example, has asked, "Should Government Regulate the Financial Management of Continuing Care Retirement Communities?"
My research has helped me realize how upfront fees are a key financial "pool" for the CCRC, especially in the early years of operation where the developer is looking to pay off construction costs and loans. CCRCs want -- and often need -- to use those funds for current operations. and debt service. Thus, they don't want to have those fees encumbered by guarantees to residents. They take the position they cannot "afford" to have that pool of money sitting idle in a bank account, earning minimal interest. This is not to say the large entrance fees will be "misspent," but rather, the CCRC owners may wish to preserve flexibility about how and when to spend the upfront fees.
The treatment of "upfront fees" paid by residents of CCRCs also implicates questions about application of accounting and actuarial rules and principles. That important topic is worthy of a whole "law review article" -- and frankly it is a topic I've been working on for months.
In additional to looking for actuarial soundness, analysts who examine CCRCs as a matter of academic interest or practical concern have looked at whether CCRC companies and lenders may have a "fiduciary duty" to older adults/residents, a duty that is independent of any contract law obligations. Analysts further question whether a particular CCRC's marketing or financial practices violate consumer protection or elder protection laws.
There can also be confusion about what happens during a Chapter 11 process. First, during the Chapter 11 Bankruptcy process, a facility may be able to honor pre-bankruptcy petition "refund" requests or requests for refund of fees for a resident who does not move into the facility. Second, to permit continued operation as part of the reorganization plan, a facility will typically be permitted by the Court to accept new residents during the Chapter 11 proceeding and those specific new residents will have their upfront fees placed into a special escrow account, an account that cannot be used to pay the pre-petition debts of the company.
But what about the upfront fees already paid pre-petition by residents who also moved in before the bankruptcy petition? Usually those upfront fees are not escrowed during the bankruptcy process. Indeed, other "secured" creditors could object to refunds of "unsecured" fees. The Bankruptcy Court will usually issue an order -- as it did in SRMS's bankruptcy court case in Texas last week -- specifying how current residents' upfront fees will be treated now and in the future. A bit complicated, right? (And if I'm missing something please feel free to comment. I'm always interested in additional viewpoints on CCRCs. Again, the specific contract and any state laws or regulations governing for handling of fees will be important.)
Of course, this history is one reason some of us have been suggesting for years that prospective residents should have an experienced lawyer or financial consultant help them understand their contracts and evaluate risks before signing and again in the event of any bankruptcy court proceeding. "Get thee to a competent advisor." See also University of New Mexico Law Professor Nathalie Martin's articles on life-care planning risks and bankruptcy law.
As I mentioned briefly in writing last week about the SMRS Chapter 11 proceeding, CCRC operators have learned -- especially after the post-2008 financial crisis -- that the ability of a CCRC to have a viable "second chance" at success in attracting future residents will often depend on the treatment of existing residents. Thus, one key question in any insolvency will be whether the company either (a) finds a new "owner" during the Chapter 11 process or (2) is able to reorganize the other debts, thereby making it possible for the CCRC company to "honor" the resident refund obligations after emerging from the Chapter 11 process.
During the last five years we have seen one "big" default on residents' upfront. refundable entrance fees during the bankruptcy of Covenant at South Hills, a CCRC near Pittsburgh. A new, strong operator eventually did take over the CCRC, and operations continued. However, the new operator did not "assume" an obligation to refund approximately $26 million in upfront fees paid pre-petition by residents to the old owner. In contrast, Chapter 11 proceedings for some other CCRCs have had "gentler" results for residents, with new partners or new financial terms emerging from the proceedings, thereby making refunds possible as new residents take over the departed residents' units.
For more on how CCRC companies view "use" of upfront fees, here's a link to a short and clear discussion prepared by DLA Piper law firm, which, by the way, is the law firm representing the Debtor SMRS in the Texas Chapter 11 proceeding.
June 18, 2014 in Consumer Information, Federal Cases, Federal Statutes/Regulations, Health Care/Long Term Care, Housing, Retirement, State Cases, State Statutes/Regulations | Permalink | Comments (1) | TrackBack (0)