Friday, March 7, 2014
In MetLife Home Loans v. Vareen, decided in Kings County, New York on February 11, the mortgage company attempted to foreclose on a reverse mortgage, apparently because of unpaid water bills for the property. The case was "conferenced extensively with the defendant homeowner's family in the court's Foreclosure Settlement Conference Part," with no resolution of the dispute, but the homeowner did not file a formal answer in the lawsuit. Eventually the mortgage company sought an "ex parte" default ruling.
In denying the requested relief, the judge noted that the homeowner had a contractual obligation to stay current on all items which could become charges against the property. However, the mortgage company also had the contractual option to "make the payment for the mortgagor and charge the mortgagor's account. If a pattern of missed payments occurs, the [mortgage company] may establish procedures to pay the property charges from the mortgagor's funds as if the mortgagor elected to have the mortgagee pay the property charges under this section." It appears the homeowner was receiving monthly "reverse mortgage payments," rather than a single lump sum.
This history of the case is a reminder that reverse mortgages may not be the best solution for some older homeowners, especially if the cost to maintain the house is substantial, or if the elderly homeowner (or a volunteer in the family) is unable to handle payment of bills as they come due.
Here the court stepped in to prevent loss of the home, citing the lender's contract options. The court quoted the rosy language of a HUD-approved consumer guide, appearing to assure borrowers they can "continue to live at home as long as you want," and concluded:
"As such, plaintiff cannot foreclose on defendant's reverse mortgage because of her default in paying the NYC water bill. Furthermore, serving a senior citizen holding a reverse mortgage with a complaint that fails to specify what the default is can only be described as unconscionable."
Other court challenges to attempts to foreclose on reverse mortgages where there is a "surviving" spouse, but that individual is not an owner of record, are detailed here, with the potential class of plaintiffs represented by an AARP Foundation Litigation team. Thanks to ElderLawGuy Jeff Marshall for tweeting on AARP's efforts.
Tuesday, March 4, 2014
The official press release issued on February 20 confirmed big news in the senior care industry about the merger of Brookdale Senior Living, based in Tennessee, and Emeritus Senior Living, originally headquartered in Seattle. Here are some of the details, as reported in the Nashville Business Journal:
"The company's corporate headquarters will remain in Nashville, and members of Emeritus' senior management team are expected to stay on board at the combined company. The merger will expand Brookdale's unit capacity by two-thirds, pushing the company into 10 new states. In total, the combined company will have operating capacity of approximately 112,700 units in 1,161 communities in 46 states. Following the merger, a Brookdale community will be within 10 miles of 6.5 million seniors 80 years or older, according to the release."
Emeritus earlier attracted high-profile press when it became one of the subjects of a Frontline series on "Life and Death in Assisted Living," by Pro-Publica. According to the Nashville Business Journal, as reportedly confirmed after news of the merger, "federal investigators are investigating Emeritus' business dealings, including its Medicaid billing practices."
It would seem this merger will continue to generate news for some time to come, as suggested by this press release from securities lawyers Deans & Lyons.
Wednesday, February 26, 2014
Last week I blogged about tax questions facing some nonprofit senior living operations, especially nonprofit Continuing Care Retirement Communities (CCRCs). This week, we pass on news of a federal court suit filed by residents of a for-profit CCRC, challenging the company's accounting and allocation of fees, especially entrance fees, paid by the residents.
Residents of Vi of Palo Alto (formerly operating in Palo Alto as "Classic Residences by Hyatt") in California are challenging what could be described as "upstream" diversion of corporate assets to the parent company, CC-Palo Alto Inc. They contend the diversion includes money which should have been protected to fund local operations or to secure promised "refunds" of entrance fees. Further, the residents allege the diversion of money has triggered a higher tax burden on the local operation, a burden they allege has improperly increased the monthly maintenance fees also charged to residents. According to the February 10, 2014 complaint, Vi of Palo Alto is running a multi-million dollar deficit and the residents point to the existence of actuarial opinions that support their allegations. The complaint alleges breach of contract, common law theories of concealment, misrepresentation and breach of fiduciary duty, and statutory theories of misconduct, including alleged violation of California's Elder Abuse laws.
Representatives of the company deny the allegations, as reported in detail in Senior Housing News on February 23. A previous resident class action filed in state court against a Classic Residence of Hyatt CCRC, now called Vi of La Jolla, also in California, settled in 2008.
Tuesday, February 25, 2014
One of my frequent travel routes is to drive between Carlisle and Baltimore, in order to take direct flights from BWI to Phoenix, where my parents live. Usually these drives are in the middle of the night, as I try to avoid traffic by scheduling very early or late flights. One positive aspect of this travel is the time to discover interesting radio programs; there is something about listening to radio in the dark that allows one to hear more clearly. Last week, I lingered in the car after reaching the long-term airport parking, to listen to the end of an especially effective interview.
On Point with Tom Ashbrook, was hosting Kimberly Williams-Paisley who spoke movingly about her family as they coped with her mother's early onset of a form of dementia, diagnosed at age 61. For those of you who enjoy either movies or music, you might recognize Kimberly as an actress from Father of the Bride (she was the daughter driving Steve Martin to wit's end) and Nashville, or as the wife of country music star Brad Paisley. Also featured on the program was a clinical social worker, Darby Morhardt, who is an associate professor at the Cognitive Neurology and Alzheimer’s Disease Center at Northwestern University’s Feinberg School of Medicine.
The program was very thoughtful and emotional, but for me the most compelling words came from Kimberly's father, Gurney Williams.
This is a man deeply in love with his wife and also deeply affected by her condition. At first he tried to hide her diagnosis, but over time, this became more and more difficult. Mr. Williams describes how he finally came to terms with the need for help -- and the need for more than family help -- when his children staged a bit of an intervention. They asked him to recognize that his wife's condition, which in her case included confusion, mood swings, anger and -- at times -- violence, was more than they could cope with in the home. They were worried about their mother, but even more devastated by "losing" their father as he struggled to care for her. With the family's help, he finally made the difficult decision to place his wife in a formal care setting.
And it was during his description of the journey, that I heard the words I've also heard many times from friends, family, students and clients. "I promised my loved one I would never put her in one of those places." I have come to recognize this promise as completely well-intentioned, but also potentially dangerous for all involved.
Listening to Mr. Williams and Kimberly, you could tell formal care was the right decision and they were able to find the right kind of care facility for their loved one. And it was a decision that allowed all of them to find a new way to express their love and devotion to her, while also providing her with a supportive, safe environment. Kimberly talks about how she stopped talking about her mother in the past tense, rediscovered her and how they created a new, valuable relationship. Their story has a happy evolution, which, of course, is different than a happy ending.
One of the reasons I was so affected by listening to Mr. William's words, was that I was on my way to the airport to visit my father -- to see him for the first time -- after his transfer to a dementia-care community. All of my fears and hopes were bound up in my listening. On arriving in the airport I went directly to a shop and bought a copy of the March issue of Redbook Magazine, which carried the story by Kimberly Williams-Paisley that led to the invitation for her and her father to be guests on the On Point program. I read and re-read "How I Faced My Mother's Dementia" on the plane -- and shared her words with my mother when I arrived.
I suspect I might write more about my own evolution with my father. Right now it is easier for me to recommend the article, and to say the podcast of the On Point show is even better than the article.
Monday, February 24, 2014
"New construction is picking up in some markets after the near standstill caused by the recession, although developers seem more favorable to building needs-driven models of seniors housing—assisted living and memory care facilities—rather than independent living communities. Yet, there's also an interest in niche development—university partnerships, for example."
On a seemingly related note, Erickison Living announced earlier this month the start of construction of "Lantern Hill," a new CCRC community in Union County, New Jersey. The plan is to open in the second half of 2015, which would appear to be one of Erickson's first new starts since it emerged from bankruptcy court in 2010 with new owners.
The Levin Associates webinar is set for March 13 at 1 p.m. ET, with developers and architects, brokers and financers scheduled to speak, including individuals from Greystone, Perkins Eastman, and CBRE, Inc.
Friday, February 21, 2014
As introduced in an earlier post, Continuing Care Retirement Communities (CCRCs, also sometimes operating as Life Care Communities or LCCs) are frequently organized and operated as 501(c)(3) entities, exempt from federal income taxes. However, in several states, authorities have opposed exemption from state or local taxes, especially real estate taxes. The campuses of high-end CCRCs can be tempting targets for revenue-hungry local governing units.
Pennsylvania has been a hotbed of such challenges, with the latest ruling issued in Albright Care Services v. Union County Board of Assessment, decided by the Commonwealth Court, an intermediate court of appeals, on January 29, 2014. In Pennsylvania, the question of exemptions from real estate taxes depends on at least two sets of criteria, including (A) proof of operation as an "Institution of Purely Public Charity" or IPPC, and (B) "parcel reviews," to determine whether individual components of property are "actually and regularly used for the identified charitable purposes."
The irony is an operation can be sufficiently "charitable" in nature to qualify for exemption from federal income taxes (and thus usually state income taxes) but not so "charitable" as to qualify for state exemptions that demand more rigorous proof of allegiance to mission.
In Albright, the Commonwealth Court affirmed findings that the company, operating two CCRCs, qualified as an IPPC, thus distinguishing recent rulings that denied real estate exemptions for two other nonprofit continuing care operations, Dunwood Village (2012) and Menno Haven (2007). The Court credited testimony by Albright's accountant on the question of whether the company donated a substantial portion of its services to residents, rejecting the county's argument the CCRCs were reaping a Medicaid "windfall."
The Court also affirmed the finding that several of Albright's real estate parcels was used to support the charitable mission. It called the independent living facilities a "closer question," but ultimately concluded such units were operated as part of a "comprehensive care scheme" that advanced a unified charitable purpose, citing a 2007 Pennsylvania Supreme Court decision in Alliance Home of Carlisle v. Board of Assessment Appeals. It remanded for further findings on whether parcels containing a museum and flood plain properties were used to advance the CCRC's charitable purpose.
The Albright decision was released as an "unreported panel decision" that may be "cited for its persuasive value, but not as binding precedent." The Albright decision on CCRCs follows a series of Pennsylvania cases arguing state constitutional implications of exemptions for real property, affecting everything from summer camps to hospitals and universities, including the 4-3 ruling by the Pennsylvania Supreme Court in Mesivtah Eitz Chaim of Bobov v. Pike County Board of Assessments (2012). In some counties, nonprofits may feel under pressure to enter into "PILOTS," or negotiated agreements for "Payments in Lieu of Taxes," to avoid litigation over exemptions.
Thursday, February 13, 2014
The National Senior Citizens Law Center, with offices in California and D.C., has used its close observation of laws regulating "assisted living" across the U.S., to call for stronger rules in California, on the ground that "California lags far behind" in adopting moderns standards for quality of service and care.
NSCLC's latest report, "Best Practices in Assisted Living: Considering Potential Reforms for California, coauthored by Eric Carlson and Gwen Orlowski, is available on their website, along with the latest news on hearings before California legislative bodies on assisted living regulatory issues.
Sunday, February 9, 2014
Recently an individual contacted me with a fact pattern to present on our Blog, a variation on what we've written about in the past. Here are the basics. I've assigned some gender roles to make the fact pattern easier to follow:
The daughter of an older parent wants to know whether she has a legal "duty" to interfere with her brother's role in the life of their parent, where it appears the brother is failing to either apply for Medicaid or otherwise pay the parent's rehabilitation facility. The parent is not unhappy with the son's actions (or rather, inaction), and in fact declined to give power of attorney to the daughter, even when told of a likely "eviction" for nonpayment of the bill. The parent has mostly recovered from the medical crisis that triggered the need for care -- and just wants to go home. Parent has made it clear to daughter that her help is "unnecessary."
The complication is the size of the unpaid bill, more than $100,000. Apparently the care facility, approved to receive Medicare and Medicaid, is now demanding that the daughter pay the bill. Apparently no one applied for Medicaid and it is unclear whether Medicare ever paid. Daughter doesn't know much about her parent's income, but assumes it is limited and probably the only asset is a house, where the widowed parent lives when not in a hospital or in a care facility, and where the brother also resides.
The rehab facility is in Pennsylvania, home to "filial support" laws that have been enforced against adult children, with or without evidence of fault on the part of the child who is sued. Under Pennsylvania's law, those with statutory standing to pursue a support claim include a "person" who has provided care or maintenance, and that has been interpreted to include residential care facilities. We've discussed tough filial support decisions before on this Blog, including Health Care & Retirement Corp. of America, v. Pittas, (Pa. Super. Ct. 2012).
Thus, a lawyer is probably going to have to break the bad news to the daughter that the facility arguably has a potentially viable claim under 23 Pa.C.S.A. Section 4603. Daughter would appear to have some equitable defenses, including laches, but nothing that is expressly provided in the Pennsylvania statute. But who can afford to defend such a case? The facility appears to be using the child's potential liability under filial support laws to insist the daughter take action, either to obtain a guardianship or other order that would permit her (force her?) to apply for Medicaid -- and the threat may work. The longer she waits, the tougher it will be to get sufficient retroactive coverage. But in this instance, it is not clear whether the parent's capacity is impaired, or whether the parent is simply following a long pattern, even if unwise, of preferring one child's "help" over the other.
The moral question of "Am I my brother's keeper," becomes a Family Keeper's Dilemma, when you add in the third part of the triangle, a parent in need of care or protection, against their will. And the moral question becomes a legal liability question, when a filial support law that permits third-party suits is involved.
For another Family Keeper's Dilemma, see the Washington Court of Appeals' January 14 decision, "published in part," in the case of In re Knight, addressing the level of proof required for one son to obtain a Vulnerable Adult Protection Order, to prevent his brother, with a mental health history and a criminal record, from continuing to live with or near their 83-year-old mother. The mother opposed the protection order.
Wednesday, January 29, 2014
In recent years, a number of operators of Continuing Care Retirement Communities (CCRCs) have adopted the concept of Continuing Care at Home (CCaH) or LifeCare at Home, as a way to expand their client base and utilize existing resources in a cost-effective manner. This has been especially important since the 2008-10 crash in home sales prevented many seniors from cashing in on accrued equity to finance a move to a CCRC.
On February 13, Irving Levin Associates is hosting a webinar on Continuing Care at Home, with leaders in the movement speaking on their experiences with this still-new product. The program will address:
|What is the CCaH business model? Can it be a stand-alone business?|
|What services are offered? What are the member fees?|
|What are the start-up and operating costs?|
|What are the challenges?|
|What is the response from participating seniors?|
The hosts advise the program is designed to address the interests of owners, operators and developors of senior housing and long-term care facilities, appraisers, institutional investors bankers, venture capitalists, and others on the industry-side of senior care. To that list, I would add elder law attorneys -- and law students -- who may be called upon to answer families' questions about this product.
The one and a half hour webinar is scheduled to begin at 1 p.m. Eastern time, with a $50 savings with early registration through January 30. On-line registration is here.
Tuesday, January 7, 2014
Monday, January 6, 2014
Catching up after a busy weekend at the Association of American Law Schools (AALS) Annual Meeting 2014 in New York City, I'm happy to report the presentations at the Section on Aging and the Law seemed to go smoothly and were well received, with a very engaged audience. While the weather made travel to and from NYC a bit tricky, it also seemed to "encourage" strong attendance at sessions. (I found myself skating even when not visiting the rink at Rockefeller Plaza!)
Section Chair Susan Cancelosi (Wayne State) was snowed out -- but I suspect Susan would be pleased by the reaction to the program she planned. Thank you, Susan, for putting together the theme, securing speakers, making sure we were all on track, and creating a back-up weather plan. We've decided you should be the moderator next year, if you don't mind!
Dick Kaplan (Illinois) led off the panelists, using his best "Dr. Phil" style to walk us through (both literally and metaphorically) the latest changes to Medicare triggered by the Affordable Care Act and other recent legislation. Recognizing that many in our audience do not teach elder law or health care law, Dick offered information useful to all academics who "expect" to retire. For example, recent information from the Employee Benefit Research Institute supported his forecast that a 65-year old person retiring in 2012 would need substantial saving just to cover out-of-pocket medical expenses, in the range of $122,000 -$172,000 for men and between $139,000 - $195,000 for women (with projections also affected by prescription drug usage). Dick reminded us that this figure does NOT include any costs for long-term care.
Next on the panel was Laura Hermer (Hamline), who is new to our Section -- and a very welcome addition. Using her health law background, Laura outlined the maze of programs, including state plan innovations and waiver programs under Medicaid, that may provide "long-term services and supports" (or LTSS -- the latest acronym that seems to be an intentional step away from a "care" model) for older persons. Her presentation emphasized the shift to home or community based care, but Laura made clear that this shift depends heavily on unpaid care by family members.
Incoming Section Chair Mark Bauer (Stetson) made effective use of visual images of 55+ communities in Florida to demonstrate his concern that exemptions from civil rights protections that permit age-restricted communities may not be matched by actual benefits for the older adults targeted as residents. Mark stressed the percentage of housing that is not designed to match predictable needs for an aging population. Examples included multi-story designs without elevators, steps into even ground-level units, and bathrooms without wheel-chair accessibility. Mark's presentation expanded on his recent article in the University of Illinois' Elder Law Journal.
Speaking last, my topic was the latest state law developments tied to federal laws that authorize nursing homes to compel a "responsible party" to sign a prospective resident's nursing home contract. States are creating potential personal liability for costs of care for family members, agents or guardians, or transferors or transferees of resources, if the resident is deemed ineligible for Medicaid. Here are links to a copy of the slides I used for my presentation on "Revisiting Nursing Home Contracts," as well as to a related short article I was invited to write for the Illinois State Bar Association's Trusts & Estates Section in December 2013.
The panel presentations were followed by great questions and observations from the audience, further highlighting the financial challenges of aging. Plus, it was wonderful to see several new members volunteering to join the planning committee for future programs for the Aging and Law Section of AALS. And welcome back to the board to Alison Barnes (Marquette Law).
January 6, 2014 in Consumer Information, Ethical Issues, Federal Statutes/Regulations, Health Care/Long Term Care, Housing, Medicaid, Medicare, Programs/CLEs, Retirement, State Statutes/Regulations | Permalink | Comments (0) | TrackBack (0)
Tuesday, December 31, 2013
Mark Bauer at Stetson University Law will make a presentation on the role of 55+ housing at the upcoming AALS Annual Meeting in New York City. In describing his topic, Professor Bauer comments: "Such housing communities are exempt from civilian rights laws and almost any substantive rules. Yet it is questionable whether strong benefits really accrue to elders."
His presentation will likely draw upon his recent scholarship, including "'Peter Pan' as Public Policy: Should Fifty-Five-Plus Age-Restricted Communities Continue to be Exempt from Civil Rights Laws and Substantive Federal Regulation," recently published in University of Illinois' Elder Law Journal.
Professor Bauer has broad scholarship interest, including antitrust, administrative law, property and financial advocacy. He has also served as the supervisor of Stetson's Elder Consumer Protection Law internship program. His presentation will be part of the Aging and Law Section meeting for the American Association of Law Schools' Annual Meeting to be held in New York City from January 3-5. Professor Baur is the incoming chair-elect for the Section, with duties to include planning the program for 2015.
Thursday, December 26, 2013
Hard to believe, but AALS Annual Meeting 2014 is just around the corner. Aging & Law Section Chair Susan Cancelosi (Wayne State Law) has planned a great program, and we look forward to the interaction between panel members and the audience.
The theme is "From the Affordable Care Act to Aging in Place: What You Need to Know as You Grow Older."
Mark Bauer (Stetson Law) on "Aging and 55+ Age-Restricted Housing."
Laura Hermer (Hamline Law) on "changes to Medicaid under the Affordable Care Act that impact the elderly, with particular attention to several state implementations of relevant state plan options and demonstration projects involving dual eligibles and others."
Richard Kaplan (Illinois Law) on “the very different world of financing health care that awaits retirees, including how to navigate the various Parts of Medicare and their attendant problems.”
Katherine Pearson (Penn State Law) will discuss "the emerging trend of states adopting laws authorizing nursing homes to collect unpaid debts from family members or fiduciaries."
I'll provide more details about the individual speakers' programs, both before and after the event. But remember to mark your calendar for New York City, on Friday, January 3, at 3:30-5:15. As always, there will be a short business meeting following the presentations and discussion.
Monday, December 23, 2013
On the front page of the Sunday edition of the Arizona Republic, is a feature story on the "evolution" of Sun City, by writers Catherine Reagor and Lesley Wright. Even though I grew up -- and rode horses -- on the edge of the original Sun City, one of the earliest, and arguably the most successful age-restricted retirement communities, I didn't know the history. Some interesting details:
- The original Sun City opened in 1960, the brainchild of developer Del E. Webb, who at first thought it might be challenging to sell homes to "older" adults, given the tradition of 30-year mortgages, as people thought " they might not live that long." But, on opening day, "thousands of people showed up to see the modest block-wall homes with carports that sold for $8,500 to $11,700, $600 more for air-conditioning." (If you have ever visited the Valley of the Sun in August ... you can guess that added $600 was an easy sell.)
- Today there are three Sun Cities in the Phoenix region. The median home price in the original community is still comparatively modest at $128,750, while Sun City Grand's median price is $240,000. The median income for residents in the original community is $36,903, and for the "newer" community, median income is $55,000.
- The communities have staved off attempts (and lawsuits) to open residence to younger individuals. At least one half of a couple must be 55 or older.
- In some instances, the residents of the first Sun City are now the granchildren of earlier residents. And the legacy of homes may continue. One resident was quoted as saying, "We plan to live here until the end and leave the house to our children...."
Sunshine and golf were highlighted in the original marketing, especially to snow birds from North Dakota, Minnesota and Wisconsin. But the community has had to change to keep up with expectations, and the "community's improvement fund, started in 1999, pays for new amenities. Pickleball course recently were added, and gym were updates with new equiptment," thus pointing to the wider range of interests (and sun-awareness) of today's retirees.
Thursday, December 12, 2013
Lemington Home for the Aged was a nonprofit nursing home in Pittsburgh with a long history, beginning, as one court described, with its "first incarnation [as] 'The Home for the Aged and Infirm Colored Women,' incorporated and dedicated on July 4 1883." The Home was founded by the daughter of an African-American abolitionist from the area, in recognition of the care needs of "Aunt Peggy," an aging friend and former slave.
Unfortunately, by the late 1980s, the Home's finances were in trouble, triggering attempts to modernize, move to a larger facility, and other steps taken in an effort to get the Home back on sound footing. Some of the Home's financial history is captured in a early dispute over Medicaid with the state department of welfare in the '90s. In 2005, however, the Home filed a "voluntary Chapter 11 petition in the United State Bankruptcy Court for the Western District of Pennsylvania." The court approved closure of the Home and transfer of its residents to other facilities.
In the ongoing bankruptcy case, unsecured creditors initiated an adversary proceeding against several of the Home's former officers and directors. In 2010, the District Court granted the defendants' motion for summary judgment, finding that the "business judgment rule" and the "doctrine of in pari delecto" precluded liability on the facts alleged. The case seemed to be over, resolved by deference often accorded to nonprofit operations, especially as to "volunteer" directors or trustees.
The Third Circuit disagreed, however, and, in a precedential ruling, remanded for trial. The Circuit found that genuine issues of material fact existed as to whether the defendants, by continuing to operate the Home once bankruptcy was recognized as inevitable, breached fiduciary duties. The appellate court focused on allegations the individuals:
- failed to exercise requisite care,
- failed to be reasonably diligent, or
- "fraudulently contributed to the deepening of the debtor's insolvency."
The application of the deepening insolvency theory was a matter of first impression for Pennsylvania.
As reported by TribLive, in March 2013 an 8-person jury awarded the Home's unsecured creditors a total of $5.75 million in damages. The award included compensatory damages in the amount of $2.25 million against 15 of the 17 defendants, plus individual allocations of punitive damages against 2 former officers and 5 of the 13 individual former directors.
In May 2013, the District Court denied the defendants' post-trial motions for judgment as a matter of law, new trial or remittitur. In concluding there was sufficient evidence to support punitive damages against the Board members, the District Court observed in part:
"As to the five Director Defendants against whom punitive damages were levied, all of them were responsible for the Home's oversight. Evidence was presented that they were aware that Defendant Causey [a corporate officer] was not sufficiently performing her job as nursing home administrator but none of the Directors took any action to remove her from that position.... The jury heard testimony that the Board never chose to seek bids on the Home from organizations that specialized in nursing home turnaround and that no due diligence book was ever created for potential buyers.... The Home continued to accrue debts after these actions were taken, which Defendants reasonably should have known would damage the Home's prognosis."
The defendants' latest appeal to the Third Circuit is now pending (Docket No. 13-2707).
The outcome of In Re Unsecured Creditors of the Lemington Home for the Aged would appear to have potentially interesting implications for other sectors of the long-term care industry. For example, elderly residents of CCRCs, who have often paid large fees to cover future care or have paid "refundable" entrance fees, are usually unsecured creditors. The question of "deepening insolvency" and fiduciary duties to creditors might, therefore, affect the interests of a group that could appear particularly sympathetic to a jury.
This is an interesting case that bears watching for the outcome on appeal.
Sunday, December 8, 2013
Recently I was invited to give the keynote address for an annual meeting of MaCCRA, the Maryland Continuing Care Residents Association, held at Vantage House in Columbia, Maryland. As always happens, I learned a great deal from the opportunity to meet with individuals who care deeply about their communities and want to see them continue to succeed. Maryland is home to some 37 Continuing Care Retirement Communities (CCRCs), with close to 20,000 residents.
MaCCRA has a long and especially interesting history of advocating for appropriate protections for current and future residents of Continuing Care Retirement Communities. Most recently, between 2008 and 2012, MaCCRA supported a series of legislative efforts, including some that were ignored or soundly defeated, but culminating in passage of Senate Bill 485 and House Bill 556 in 2012 that amended of Maryland's CCRC oversight laws (Md. Code. Ann. Hum. Serv. Sections 104-1 et seq.). For example, the amendments require:
- greater disclosure of how entrance fees will be used or held, including a requirement of express disclosure about whether fees will or can be used for purposes unrelated to the community;
- greater disclosure of ownership interests in the community;
- disclosure of annual budgets (not just financial statements);
- increase of operating reserves from 15% of net operating expenses to 25%, with a ten-year phase-in; and
- certain restrictions on encumbrances of operating reserves
Such successes have required perseverance, with MaCCRA playing an important role in educating residents across the state as well as legislators. Indeed, MaCCRA understands that grass root movements alone may not be enough, and the organization has worked for twenty years with an experienced lobbyist, thus helping to assure institutional memory while working in small and large ways to urge greater accountability by providers.
One of the questions I frequently am asked during interactions with CCRC resident groups around the country is whether the most appropriate administrative unit of state government to provide oversight is the department of insurance. My response is that the name on the door is not as important as the state's commitment to hiring knowledgeable individuals with finance-specific training and who are not captives to the industry, regulators who are willing to take a balanced approach to oversight. The current operation of the unit of Maryland's Department of Aging charged with oversight of CCRCs strikes me as providing a good example of that commitment.
MaCCRA is a chapter of the National Continuing Care Residents Association (NaCCRA); during my visit to Maryland I learned that a MaCCRA member was an early leader in forming NaCCRA.
Tuesday, December 3, 2013
USA Today continues reporting on criminal misuse of resident funds held in accounts at nursing homes, pointing to the lack of clear laws requiring faculities to conduct audits or other oversight systems for resident accounts:
"Federal law provides the regulatory framework for the nation's 16,000 nursing homes, which have to meet an array of standards to participate in Medicare and Medicaid. Federal rules do not require audits for resident trust fund accounts, and most states take the same approach.
The U.S. Centers for Medicare and Medicaid Services, the federal agency responsible for nursing home regulation, is considering whether additional oversight is needed to address theft and mismanagement of residents' funds.
'We are aware of this situation and are reviewing the (inspection) procedures used to detect these kinds of problems,' agency spokesman Aaron Albright said when asked about USA TODAY's findings. 'CMS takes safeguarding nursing home patients very seriously.'"
Thursday, November 28, 2013
Devolution, the process in the United Kingdom by which Scotland, Wales and Northern Ireland are enacting domestic laws and policies separate from the laws of England, has opened important opportunities to consider the needs of older persons.
Over the Thanksgiving weekend, I'm in Northern Ireland, working with great colleagues at Queen's University Belfast, on two projects commissioned by the Commissioner of Older People Northern Ireland (COPNI). One team is working on elder abuse and the other project focuses on social care, with each team employing comparative analysis from the U.S., Canada, Ireland, India and other nations in framing proposals for future laws or policies to be recommended for adoption in Northern Ireland.
Wednesday, November 27, 2013
About 80% of Continuing Care Retirement Communities (CCRCs) in the U.S. operate as 501(c)(3) tax-exempt organizations. Over time, what were once fairly humble establishments with strong church or fraternal organization ties, have expanded to serve the needs and interests of their clientele. In some instances, the facilities and amenities are now distinctly "high end," operating with lighter affiliations to religion or other charitable groups. Increasingly, for-profit management companies are hired to provide the day-to-day services.
Understanding the reasons to exempt CCRCs from federal income taxes takes a bit of history. For example, in 1972, the IRS issued Revenue Ruling 72-124, noting that providing for the "special needs of the aged has long been recognized as a charitable purpose" for Federal tax purposes. As such, a CCRC was viewed as relieving the distress of aged persons by providing for the primary needs of such individuals for housing, health care, and financial security. Thus, a CCRC could be treated as tax exempt under Section 501(c)(3) of the Code as an entity organized and operated exclusively for charitable purposes.
State and local tax authorities, however, may employ a more exacting standard on CCRCs in order to qualify for charitable tax exemptions, including property tax exemptions. For a thoughtful analysis of the different standards, see "The Commerciality Doctrine as Applied to the Charitable Tax Exemption for Homes for the Aged - State and Local Perspectives," by Professor David Brennan (Kentucky Law), published in Fordham Law Review in 2007, and still very relevant.
Saturday, November 23, 2013
After P.S. Ramachandran turned 80, he and his wife decided it was time to stop living alone. Rather than take the traditional path of moving in with their son, the Ramachandrans chose an option once rare in India: a retirement community. “We wanted to be independent,” said Ramachandran, now 85, a former government official who moved to the Brindavan Senior Citizen Foundation’s retirement village overlooking the Nilgiri hills near Coimbatore city in southern India. “We have company and everything we need here, and activities to keep us busy as long as we’re physically able.”
Rising wealth from the region’s rapid growth in recent decades is changing the way many Asians grow old, breaking up the traditional family unit as children move to the cities or go abroad in search of better-paid jobs. The change is a new source of business for companies from India’s Tata Housing Development Co., Malaysia Pacific Corp. and Singapore’s ECON Healthcare Group, which are constructing retirement villages for the wealthy that offer cafes, tennis courts and yoga. The developers are following companies from adult-diaper makers to holiday operators that have swooped in on Asia’s silver economy, catering to the region’s growing cohorts of over-60s.
Excluding Japan, the market will be worth about $2 trillion by 2017 -- more than the current Indian economy -- according to Singapore-based market researcher Ageing Asia Pte. Filial Piety “Filial piety is still big in Asia, but it has less of a role now,” said Janice Chia, founder and managing director at Ageing Asia. “My grandparents were satisfied with staying home, watching a bit of TV, walking in the park and looking after the grandkids. But my parents want to travel, keep their minds active and don’t necessarily want to live with their children.”