Friday, June 20, 2014
I'm at the mid-point in a three-week period of fairly intense focus on elder protection issues.
Last week, I accepted the invitations of Dickinson Law alum Bob Gerhard and Judge Lois Murphy to join them at the Montgomery County Elder Justice Roundtable to discuss practical concerns about elder abuse at the local level. Bob and I conducted two sessions on Powers of Attorney.
This week, I've had the privilege of being part of working sessions of the Pennsylvania Supreme Court's Elder Law Task Force. Judge Murphy, right, is also a part of this effort. A fascinating mix of trial and appellate level judges, district attorneys, legal aid specialists, solo practitioners, "big firm" lawyers, court administrators, state officials, protective service case workers, social workers (and a couple of us academic types) spent two intense days discussing a year's worth of research on how better to serve the interests and needs of adults who may be at risk of neglect or intentional harm, including financial abuse. Guided by the charge of Justice Debra Todd of the Pennsylvania Supreme Court, we're looking to issuance of a comprehensive report and recommendation for actions, probably in the early fall 2014.
Next week, I land in Belfast, Northern Ireland for several days of working group meetings on law and aging topics. On Tuesday, June 24, I am part of a research team's Roundtable discussion on recommendations regarding "social care" for older persons. hosted by the independent Commissioner of Older Persons in Northern Ireland (COPNI). Our team leader for that project is Dr. Joseph Duffy of Queen's University Belfast. The following day, I will attend the COPNI's launch of "Protecting our Elder People in Northern Ireland: A Call for Safeguarding Legislation in Northern Ireland." Commissioner Claire Keatinge and her team have been tireless in pursuing a full agenda of safeguarding, care and dignity goals for seniors. Last winter I worked on research findings and recommendations with team leader Dr. Janet Anand, also of Queens University Beflast, that served as a base for the Safeguarding Law proposals. These two projects have involved amazingly talented scholars from diverse backgrounds, including social work and law in Scotland, England, Wales, Australia and, of course, both the north and south of Ireland. The truth is that I've been an avid "student" during my opportunities in Northern Ireland, often facing the reality that those on the other side of the Atlantic are ahead of the U.S. in thinking about key concepts, especially "social care" goals. I look forward to more work, writing several follow-up articles in collaboration with team members as a result of the rich research environment of the last year.
Following this schedule, I'm probably going to take a break from "daily" blogging for a few weeks. I fear my brain may explode if I don't give it a bit of a rest, and I hear the green hills and fields of Ireland calling to me.
June 20, 2014 in Current Affairs, Elder Abuse/Guardianship/Conservatorship, Ethical Issues, Health Care/Long Term Care, Housing, Property Management, Social Security | 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)
Monday, June 16, 2014
Recently Artis Senior Living CEO Don Feltman joined CEOs from 10 other high profile corporate employers, such as Coca-Cola, Tyson Foods, and Loews Hotels & Resorts, to urge Congress to fix the "broken" immigration system, to permit expanded lawful avenues for foreign-born workers in the U.S. In their June 10 letter, they write in part:
All our companies rely on legal immigrants working alongside Americans to keep our businesses growing and contributing to the economy. This is a reality driven by demographics. In 1950, more than half of America’s workers were high school dropouts willing to do physically demanding, low-skilled work. Today, the figure is less than 5 percent. But our businesses still need less-skilled workers – and the need will only grow in years ahead. Baby boomers are retiring: 10,000 older workers are leaving the workforce every day. And after a long downturn, most of our operations are expanding and looking to hire workers.
The problem: there is virtually no legal way for less-skilled foreigners without family in the U.S. to enter the country and work in year-round jobs – effectively no temporary or permanent visas available for non-seasonal workers. Congress has an obligation to fill this gap – we need a visa program for less-skilled foreign workers seeking year-round jobs. Employers should have to try to hire Americans first. But if they can’t find enough U.S. workers, they should be able to hire foreign workers quickly, easily and legally.
Sunday, June 15, 2014
According to news reports, on June 10 Sears Methodist Retirement System, Inc. filed a voluntary petition in bankruptcy court in Texas, seeking relief under Chapter 11. Apparently the private company, organized as a nonprofit that currently operates eleven senior living properties in Texas, including Contining Care Retirement Communities (CCRCs), Assisted Living facilities and Veterans homes, is seeking to reorganize some $160 million in debts. The multi-company operation provides housing and services to some 1,500 residents. A detailed early report by Peg Brickley at Daily Bankruptcy Reports explains the initial relief sought:
The Texas nonprofit organization is asking the U.S. Bankruptcy Court in Dallas to authorize it to quickly borrow $600,000 from existing bondholders, warning that it would be forced to cease operations without access to the funds.
"Such an abrupt cessation of the...businesses would have devastating effects on the residents at the senior living facilities such debtors own and/or operate, including leaving many residents without food, medical supplies, and the health and support services that they require," Chief Restructuring Officer Paul B. Rundell said in court papers.
"In fact, many residents may be forced to immediately relocate, causing extreme hardship and putting both their lives and health at risk," added Mr. Rundell, of Alvarez & Marsal's Healthcare Industry Group.
Sears Methodist blamed the declining property market for some of its troubles. Older people are having trouble selling their homes and liquidating their stock portfolios to raise the money for the upfront payment to get into the senior-living communities, according to court papers.
I would expect some of the SMRS properties to be financially stronger than others, and thus could be spun off or taken over by other senior living operators, perhaps those with expertise in the specific type of property. When CCRCs are involved, residents have often paid very large "entrance" fees and must continue to pay substantial monthly service fees. Even when their entrance fees are described as "refundable," CCRC residents are usually treated under bankruptcy law as "unsecured" creditors and thus become especially nervous during the proceedings.
Over the last several years, I've seen growing recognition that reassurance of existing residents, if possible, is critical to the continuation of the CCRC as a viable operation once it emerges from bankuptcy. Fortunately, despite continuing ups and downs (downs and ups?) in senior living markets since the 2008 financial crisis, the market has seen fairly strong players emerging. There is also better appreciation for appropriate -- and inappropriate -- levels of risk and the importance of maintaining resident confidence over the long-term.
Friday, June 13, 2014
Dedham, Massachusetts, established as a town in 1636 just to the west and south of Boston, has a long history, including an interesting early debate on governance, as suggested by one protest. According to historian and University of Chicago Law School Professor Geoffrey R. Stone, a group of local Dedham citizens erected a "liberty pole" in protest of the evils of the Federalist government, with a placard reading:
"No Stamp Act, No Sedition Act, No Alien Bills, No Land Tax, downfall to the Tyrants of America; peace and retirement to the President; Long-Live the Vice President."
Wishing "happy retirement" to the then-president, John Adams, was not a message of good will or appreciation.
In light of this history, a modern debate in Dedham caught my eye, involving opposition to construction of a senior living community in a residential neighborhood of that town. As reported in a local Dedham news source:
"'Can you imagine waking up in the morning … there’s a house next door with 72 people in it with a very large staff and a whole lot of friends visiting?' Paul Reynolds said at a May 13 Dedham Zoning Board of Appeals meeting. 'If it could happen in this neighborhood where we can change the rules and change the definition of what single family is, where else could that happen?'
Artis Senior Living officials applied a month ago for a special permit that would allow the company to build an Alzheimer's and dementia care facility at 255 and 303 West Street—two residential properties on 7.71 acres that include conservation land. The ZBA decided to continue the hearing after several precinct one residents objected.
The Virginia-based company had initially proposed to build a 37,000 square foot, single story facility and about 21 feet tall. However, representatives presented a slightly different footprint last week after the board and residents raised concerns regarding the size of the property at an April 22 meeting."
In deference to the opposition, the developers changed the design, from a one story complex to a two story building centered on the 7 acre plot, thus allowing a greater buffer zone of more than 300 feet (that's a football field, right?) between the buildings and any of the closest neighbors.
The protests apparently continue, however, thus demonstrating that in additon to opposing prisons and half-way houses for drug treatment, Not-In-My-Back-Yard" or NIMBY movements can target seniors. John Adams would appreciate the history, perhaps.
Tuesday, June 3, 2014
Do you remember "separate" assisted living and nursing home operations with the names of Kindred, Sunrise, Brookdale, Holiday Retirement and Atria? Perhaps you haven't noticed, but Ventas has either acquired or taken significant ownership positions in all of these operations, as Ventas seeks to offset lower rates paid by Medicaid/Medicare with higher income from "private pay" operations. Here's Ventas' news release on its most recent acquisitions, and here's a McKnight News piece on the impact. While I don't teach M & A courses, for those of us interested in financing issues for long-term care, I have to think that it is a good idea to keep an eye on what is happening with consolidation of senior living providers.
Thursday, May 29, 2014
Law & Society Association's Annual Meeting is always a feast -- with hundreds of presentations and papers, often with cross-discipline themes and presenters. This year's four day program starts today in Minneapolis. On tap are three elder law-themed sessions hosted by Aging, Law & Society. The session on "Rethinking Elder Law's Rules & Norms" will be chaired by Nina Kohn, Syracuse University.
Scheduled paper presentations include:
- Adult Protective Services and Therapeutic Jurisprudence, by Michael Schindler, Bar-Ilan University;
- Age, Gender and Lifetime Discrmination against Working Women, by Susan Bisom-Rapp, Thomas Jefferson School of Law and Malcolm Sargeant, Middlesex University Business School;
- Effective Affective Forecasting in Older Adult Caregiving, by Eve Brank and Lindsey Wylie, University of Nebraska-Lincoln;
- Sexuality & Incapacity, by Alexander Boni-Saenz, Chicago-Kent College of Law;
- Beyond the Law: Legal Consciousness in Older Age Care Contexts, by Sue Westwood, Keele University
Nancy Knauer of Temple Law School is chairing the session on "Accessing and Experiencing Jusice in Older Age." Presentations include:
- From Vienna to Madrid and Beyond, by Israel Doron, University of Haifa;
- Lessons from Detroit: Retiree Benefits in the Real World, by Susan Cancelosi, Wayne State University Law School;
- Older Persons Use of the European Court of Human Rights, by Benny Spanier, Haifa University;
- Crossing Borders and Barriers: Assessing Older Adults' Access to Legal Advice in the Search for Effective Justice, by Katherine Pearson, Penn State University Dickinson School of Law, Joseph Duffy, Queens University Belfast, and Subhajit Basu, University of Leeds
A workshop on "Ethics of Care and Support in Law and Aging," to be chared by Sue Westwood, Keele University, includes:
- Aging with a Plan: What You Should Consider in Middle Age to Plan for Caregiving and Your Own Old Age, by Sharona Hoffman, Case Western Reserve University;
- An Ethic of Care Critique of the UK Care Bill/Act, by Sarah Webber, University of Bristol;
- Both Property and Pauper: Slaver, Old Age, and the Inverted Logic of Capitalist Exchange, by Alix Lerner, Princeton University;
- Responding to Financial Vulnerability: Advances in Gerotchnology as an Alternative to the Substitute Decision Making Model, by Margaret Hall, Thompson Rivers University and Margaret Easton, Simon Fraser University
An international cast of characters, yes? More soon, with details from the front.
Tuesday, May 27, 2014
Continuing Care Retirement Communities (CCRCs) utilize a variety of payment arrangements to attract potential residents. One option popular prior to the 2008 recession was a "100% refundable entrance fee" model, where the new resident was promised return of his or her upfront entrance fee upon "termination," subject to certain conditions, usually including re-occupancy of the unit in question by a new resident. During good financial times, this refund option benefited both parties. The company could rely on a quick "resale" of the unit, either for the same or a higher entrance fee. Thus the company often took the position it was able to "use" the original resident's entrance fee immediately, subject to any state regulations for mandatory reserves or other repayment guarantees or restrictions.
But who bears the risk of a downturn in the senior living market, especially the dramatic downturn that accompanied the 2008-2010 recession?
In Stewart v. Henry Ford Village, Inc., the issue was whether a departing resident must accept the company's offer of a lower refund, tied to what any new resident would pay as an entrance fee to reside in that unit. The difference was hefty, as the resident had paid $137k in 1998 when she moved in, but when she left the community in 2010, comparable units were reportedly going for $89k.
In a rare court decision analyzing a refundable fee, the Court of Appeals for Michigan ruled that the parties' contract language controlled, and in this contract the contract did not provide for a lower refund amount. Further, the company's obligation to comply with the contract terms was subject to an implied obligation of good faith (a Contract Law concept my students would, I hope, recognize!) to promptly market and "resell" the unit, thus suggesting a CCRC would not be in good faith for delaying a unit's resale as a negotiation tool. Here is the heart of the court's analysis:
"Given the totality of the circumstances, the status of the parties, and the rights and obligations as set forth in the Agreement, the Disclosure Statement, and the [state's Living Care Disclosure Act] we find no support for the conclusion that plaintiff should or is obliged to bear the risks of a declining real estate market. To the contrary, those risks would seem properly to fall to defendant. By way of example, when a lessee properly complies with his or her lease in vacating a rental property, the lessee bears no responsibility for the fact that the landlord may need to lower the rent to attract a subsequent tenant. Rather, it is the landlord alone who must bear the consequences of the existing market risks. Additionally, plaintiff notes that if the unit was subsequently reoccupied with a higher entrance deposit, defendant would not furnish additional monies to plaintiff. Defendant has not suggested otherwise.... It strikes us as incongruous, as unsupported contractually, and as of questionable good faith (without adequate disclosure), that plaintiff be held to bear the risks of a declining real estate market without the ability to reap the rewards of a booming one."
In the "unpublished" (and therefore nonprecedential) opinion, the Michigan appellate court remanded for an evidentiary hearing. The ruling demonstrates the importance of the contract language, state regulations, and, I suspect, the likelihood that future refundable fee CCRC contracts will provide clearly that refunds will be tied in whole or in part to "resale" amounts, at least for any so-called 100% refundable fee agreements.
It should also be noted that refundability of admission fees is potentially a separate issue from actuarially sound practices for CCRCs in the handling of such fees. Along that line, I note that one of the residents who pioneered concerns about financial soundness in CCRCs, Charles Prine of Pittsburgh, passed away recently. Mr. Prine's articulate advocacy included testimony before the Senate Special Committee on Aging. Chuck will be missed.
Friday, May 23, 2014
John Marshall Law School and Roosevelt University, both in Chicago, and East China University of Political Science and Law in Shanghai, are jointly sponsoring an International Elder Law and Policy Conference in Chicago on July 10-11.
Keynote speakers include Professor Israel Doron of the University of Haifa in Israel and Dr. Ellinoir Flynn and Professor Gerard Quinn, both from National Unviersity of Ireland, Galway School of Law.
Scheduled panel topics include:
- Dignity and Rights of the Elderly
- Elimination of Age Discrimination
- Caregivers and Surrogate Decision Makers
- Social Security, Pensions and Other Retirement Financing Approaches
- Prevention of Elder Abuse
- Access to Justice
Here's the link to the Registration website.
Friday, May 16, 2014
As readers may have noticed, I've been a long-time "student" of Continuing Care Retirement Communities (CCRCs), drawn to the industry because of its vibrancy and dynamic approach to senior living. Along the way, I've come to know the many strengths -- and occasional weaknesses -- of individual operations, and the importance of resident engagement to long-range success. One of my resident contacts shared with me a new PBS NewsHour spotlight on university-connected CCRCs, with a prime focus on Oak Hammock, a community developed under the auspices of the University of Florida. Universities can offer a unique draw for alums and other college grads, including retired faculty, who value continued educational opportunities.
Here's the link to "Why More Seniors Are Going Back to College -- to Retire."
Although short (about 8 minutes), I find the piece to be balanced, especially in that it hints at the financing terms often needed to make such communities attractive and therefore viable. Some of the people interviewed explain the need for sophisticated mangement to counsel university-based programs, as development of CCRCs can be quite different than simply building a senior's version of "dorms." My own university stumbled a bit at the starting gate in its early efforts to get a community fully occupied, with the 2008 recession added to the challenges.
Thanks, Karen, for sending us the link!
Thursday, May 15, 2014
Maryland Elder Law and Disability Law specialist Ron Landsman provides a thoughtful analysis of use of trusts, especially "special needs trusts," to assist families in effective managment of assets. His most recent article, "When Worlds Collides: State Trust Law and Federal Welfare Programs," appears in the Spring 2014 issue of the National Academy of Elder Law Attorneys (NAELA) Journal. Minus the footnotes, his article begins:
"'Special needs trusts,' which enable people with assets to qualify for Supplemental Security Income (SSI) and Medicaid, are the intersection of two different worlds: poverty programs and the tools of wealth management. Introducing trusts into the world of public benefits has resulted in deep confusion for public benefit administrators. . . . The confusion arising from the merger of trust law with public benefits is sharply drawn in the agencies' [Social Security Administration (SSA) and Centers for Medicare and Medicaid Services (CMS)] attempts to define what it means for a trust to be for the sole benefit of the public benefits recipient. Public benefits administrators have focused on the distributions a trustee makes rather than the fiduciary standards that guide the trustee. The agencies have imposed detailed distribution rules that range from the picayune to the counterproductive and without regard, and sometimes contrary, to the best interests of the disabled beneficiary."
Drawing upon his experience in drafting trusts for disabled persons, Ron takes on the challenge of explaining how and where he sees the agencies' focus on "distribution" as misguided. He contends, for example:
"The [better] task for CMS and SSA [would be] to use their authority to develop standards and guidelines that utilize, rather than thwart, competent, responsible, properly trained trustees as their partners in making special needs trusts an effective tool in serving the needs of people with disabilities. If this were done properly, capable trustees would be the allies of the federal and state agencies in the efficient use of limited private resources. Beneficiaries would live better, more rewarding lives to the extent that resources can make a difference, at a lower cost to Medicaid, with a greater possibility of more funds recovered through payback."
Ron is detailed in his critique of agency guidelines and manuals, and he provides clear examples of his "better" sole benefit analysis.
May 15, 2014 in Estates and Trusts, Federal Cases, Health Care/Long Term Care, Housing, Medicaid, Property Management, Social Security, State Cases, State Statutes/Regulations | Permalink | Comments (0) | TrackBack (0)
Wednesday, May 14, 2014
It occurs to me that what I'm about to write here is a mini-review of a mini-book. Slightly complicating this little task is the fact that I count both authors as friends and mentors.
The latest edition of Elder Law in a Nutshell by Professors Lawrence Frolik (University of Pittsburgh) and Richard Kaplan (University of Illinois) arrived on my desk earlier this month. (As Becky might remind us, both are definitely Elder Law's "rock stars.") And as with fine wine, this book, now its 6th edition, becomes more valuable with age. This is true even though achieving the right balance of simplicity and detail cannot be an easy task for authors in the intentionally brief "Nutshell" series. Presented in the book are introductions to the following core topics:
- Ethical Considerations in Dealing with Older Clients
- Health Care Decision Making
- Medicare and Medigap
- Long-Term Care Insurance
- Nursing Homes, Board and Care Homes, and Assisted Living Facilities
- Housing Alternatives & Options (including Reverse Mortgages)
- Alternatives to Guardianship (including Powers of Attorneys, Joint Accounts and Revocable Trusts)
- Social Security Benefits
- Supplemental Security Income
- Veterans' Benefits
- Pension Plans
- Age Discrimination in Employment
- Elder Abuse and Neglect
The authors describe their anticipated audience, including "lawyers and law students needing an overview of some particular subject, social workers, certain medical personnel, gerontologists, retirement planners and the like." Curiously, they don't mention potential clients, including family members of older persons. I suspect the book can and does assist prospective clients in thinking about when and why an "elder law specialist" would be an appropriate choice for consultation. This book is a very good starting place.
What's missing from the overview? Not a lot, although I find it interesting that despite solid coverage of the basics of Medicaid, and even though it is unrealistic to expect exhaustive coverage in a mini-book, the authors do not hint at the bread and butter of many elder law specialists, i.e., Medicaid Planning. Thus, there's little mention of some of the more cutting edge (and therefore potentially controversial) planning techniques used to create Medicaid eligibility for an individual's long-term care while also preserving assets that otherwise would have to be spent down.
Modern approaches, depending on the state, may range from the simple, such as permitted use of assets to purchase a better replacement auto, to more complex planning, as in states that permit purchase of spousal annuities or use of promissory notes, allow modest half-a-loaf gifting, or recognize spousal refusal. Even though the federal Deficit Reduction Act of 2005 succeeded in restricting assets transfers to non-spouse family members, families, especially if there is a community spouse, may still have viable options. Without appropriate planning the community spouse, particularly a younger spouse, may be in a tough spot if forced to spend down to the "maximum" permitted to be retained, currently less than $120,000 (in, for example, Pennsylvania). See, for example, a thoughtful discussion of planning options, written by Elder Law practitioners Julian Gray and Frank Petrich.
Perhaps the Nutshell omission is a reflection of the unease some who teach Elder Law may feel about the public impact of private Medicaid planning?
May 14, 2014 in Advance Directives/End-of-Life, Books, Cognitive Impairment, Dementia/Alzheimer’s, Discrimination, Elder Abuse/Guardianship/Conservatorship, Ethical Issues, Federal Statutes/Regulations, Health Care/Long Term Care, Housing, Medicaid, Medicare, Property Management, Social Security | Permalink | Comments (0) | TrackBack (0)
Friday, May 2, 2014
"The Facade of Stability in Assisted Living," an article by social scientists at University of Maryland Baltimore County, published in the May issue of the Journal of Gerontology (Series B: Social Sciences), takes a hard look at assisted living settings, using research from 17 different facilities. Key findings include:
"Our ethnographic research in 17 diverse AL settings (2004-to the present) has found evidence that what may appear to be quite stable is, in fact, a facade. First, our research indicates that stability -- in many senses -- is not the norm for ALs. . . . Changes occur at multiple levels of person (residents, family members, staff, or managers) collectives (groups or types of residents, staff or managers), organizations (owners or corporations) and external environments (economies or competitors). . . . Second, among these multiple levels and dimensions of change/instability, only a few have been examined substantially in research to date. . . . The changes in AL communities contradict their outward appearance or facade of stability and may profoundly affect the quality of life for residents."
The research, which the authors recognize has limitations because, for example, it was based on evaluation of AL facilities in a single state (Maryland), nonetheless is a reminder that families seeking reliable information about placements for aging loved ones should use caution about "old" data about any specific facility or provider "branding." The authors caution, "changes driven by new owners or managers and altered competitive pressures challenge contemporary ALs to provide services beyond the original intention of this sector under the social model of care that dominated its origins."
Tuesday, April 22, 2014
In some instances where a resident of a nursing home fails to qualify for Medicaid, the question may involve a transfer of a nonexempt asset by the resident or by someone (usually a family member) acting in place of the resident. If the nursing home is not then paid privately, a debt is incurred. Depending on the specific reasons for a ruling of ineligibility, the nursing home, as an unpaid creditor, may be motivated to challenge the transfer as "fraudulent." This in turn may trigger application of the Uniform Fraudulent Transfer Act (UFTA), as adopted in the specific state.
Along that line, there is a new article, "Reconsidering the Uniformity of Uniform Fraudulent Transfer Act," by Steven Boyajian, Esq., published this month in the American Bankruptcy Institute Journal. The article outlines proposed amendments to the UFTA currently under consideration:
"The UFTA has been adopted in 43 states, Washington D.C., and the U.S. Virgin Islands, and has not been specifically amended in the 30 years since it was drafted. Despite the UFTA's admonition that it 'shall be applied and construed to ... make uniform the law with respect to subject of [the UFTA] among states enacting it,' portions of the UFTA have been subject to conflicting interpretations by courts nationwide....
Amendments being considered by the Drafting Committee proposed to resolve the conflicting judicial interpretations of the following issues: (1) the effect of § 2's presumption of insolvency if a debtor was generally not paying its debts as they become due; (2) the standard of pleading and proof applicable to a claim that a transfer was made or obligation incurred 'with actual intent to hinder, delay, or defraud any creditor'; and (3) the allocation of burdens with respect to the elements of a claim to avoid a constructively fraudulent transfer or obligation."
In outlining the proposals, the author emphasizes the continuing nature of the discussions about UFTA proposals. One of the cases cited as part of the discussion is a nursing home collection case, Prairie Lakes Health Care System v. Wookey, 583 N.W. 2d 405 (S.D. 1998).
Pennsylvania also has a case involving intepretation of a UFTA claim in the context of a nursing home collection matter. In Presbyterian Medical Center v. Budd, 832 A.3d 1066 (Pa. Super. Ct. 2003), a nursing home plaintiff turned to Pennsylvania's filial support law as an alternative to a claim under UFTA, thereby permitting potential recovery against an adult child, without proof of fraud required.
Tuesday, April 8, 2014
Last September we noted the kick-off of the Stanford Center on Longevity's world-wide Design Challenge that encouraged teams to tackle the need for "solutions that help keep people with cognitive impairments independent as long as possible." In March, PBS News Hour had a nice piece on the partnership that launched the competition.
The latest news is that 7 teams are finalists from among 52 entries from 15 countries. The final phase of the competition will take place on April 10. As explained by Stanford's news release:
"They are coming to Stanford to make their final pitches for a $10,000 first prize and connections to industry leaders and investors. There will be talks by a number of distinguished speakers, a panel of Silicon Valley investors, and the announcement of next years’ challenge. Join us for what should be a great day of learning and networking."
Monday, April 7, 2014
Causation Proof Needed for Breach of Contract Claims Against "Responsible Parties" in Nursing Home Cases
We have another interesting appellate decision from Connecticut on the question of personal liability of an individual who signed an agreement as a "responsible party" when admitting his parent to a nursing home. The opinion is in Meadowbrook Center, Inc. v. Buchman, issued by the Connecticut Court of Appeals with a decision date of April 8, 2014.
The majority of the three judge panel concludes that the son who signed the agreement cannot be held liable, based on the evidence -- or rather lack of evidence -- in the record. Although the evidence establishes the son failed to provide all information requested by the state Medicaid department following his mother's application for Medicaid, and therefore breached duties he assumed as a "responsible party" under Section IV of the nursing home agreement, the majority concludes he cannot be held liable because there "is no evidence in the record...indicating that, had the defendant [son] complied with his obligations under the agreement, [the nursing home] would have received any Medicaid payments."
In other words, the nursing home proved breach, but not causation of damages, even though "the parties stipulated...that if the department granted Medicaid benefits to the defendant's mother, the department would have paid the facility $47,561.18." The ruling focuses on that "if," noting:
"The testimonial evidence submitted to the court demonstrated, on the one hand, that submitting the proper information to the department merely triggered a review of the resident's eligibility and, on the other hand, the submission of such information was not a guarantee of approval to receive such benefits.... [A]n eligibility services supervisor at the department...testified that the department could not determine whether an applicant qualified for Medicaid absent a review of the applicant's financial information, which was not furnished to the department in the present case. As the defendant notes in his appellate brief, the plaintiff did not ask Leveque 'if, based upon the defendant's testimony regarding the assets maintained by [his mother], he had an opinion regarding whether ... [she] would have qualified for [such] benefits.' In addition, the record before us does not indicate that the plaintiff was prevented from presenting the proper financial documentation, expert testimony, or other evidence that would have otherwise established the resident's likelihood of approval, nor has the plaintiff in this appeal directed our attention to any such evidence."
There is a complicated history to third-party liability issues in nursing home contracts, especially in Connecticut. As readers of our Blog may recall, last year the Connecticut Supreme Court declined to hold a signing family member liable for costs of the parent's care, where that individual did not have a Power of Attorney or other authority to apply for Medicaid. See "Nursing Home Contracts Revisited: The Nutmeg State Adds Spice," commenting on Aaron Manor, Inc. v. Irving, 57 A.3d 342 (Conn. 2013). Further, as we note in that post, Connecticut made significant changes to its Medicaid laws effective in October 2013, as a result of a series of nursing home cases involving third-parties. In certain circumstances, Connecticut now seeks to impose statutory liability on individuals who are either transferors or transferees, connected to the resident's ineligibility for Medicaid because of disqualifying transfers.
The Meadowbrook decision is also well worth reading for anyone interested in the related but separate concepts of contract law and promissory estoppel.
Further, in a separate concurring opinion, a third judge concludes that the nursing home agreement should not be construed as imposing liability unless the "responsible party" has been shown to have misappropriated the resident's resources, because without that personal fault, the responsible party agreement becomes a "guaranty," prohibited by federal Medicaid law. The majority, however, "strongly" rejects that analysis. We'll keep our eyes open to see if the Meadowbrook case goes to the Connecticut Supreme Court.
When I first began analyzing "responsible party" liability in nursing home contracts, I became convinced the contracts drafted by many facilities created a minefield of problems. In some instances, the providers seem to intentionally blur the lines of responsibility for third-parties. On the one hand, facilities "need" agents to sign for new residents who are often lacking capacity to contract. So the admissions office points to the "no personal liability" language in the agreement signed by the third-party. On the other hand, if something does go wrong with the Medicaid application, that same facility will often be quick to point out that it is the third-party signer's obligation to fix the problem, or face potential personal liability.
The nursing homes, of course, whether for profit 0r nonprofit, are not in the business of providing free care.
The last ten years of litigation have only increased the importance for individuals to understand the significance of nursing home agreements. Individuals may want legal advice from specialists in state Medicaid law before signing the agreement; further they may need to seek legal help again if there is any hiccup in the Medicaid application process. After the Meadowbrook case, I think it is safe to say care facilities will be better prepared to prove causation of damages.
Thursday, April 3, 2014
Here's an excerpt from a recent Blog posting at the Special Needs Alliance:
This is the first in a series of articles addressing scarce housing for people with disabilities.
The shortage in housing for individuals with disabilities has reached crisis proportions, with some special needs attorneys citing it as their clients’ number one issue.
“Pricing Out in 2012,” a joint study by CCD (Consortium for Citizens with Disabilities) and the Technical Assistance Collaborative (TAC), found that “as many as two million non-elderly people with disabilities reside in homeless shelters, public institutions, nursing homes, unsafe and overcrowded board and care homes, at home with aging parents or segregated group quarters-often due to lack of affordable housing in the community.”
The situation results from a perfect storm of demographic trends, failed promises and budget tradeoffs. Prior to the 1970s, most people with significant disabilities lived in public institutions or at home with family caregivers. The history of institutionalization predates the nation’s founding, with the 1773 establishment of the first Public Hospital for Persons of Insane and Disordered Mind in Williamsburg, Virginia.
Saturday, March 29, 2014
The Department of Labor recently posted a Final Rule that changes how the Fair Labor Standards Act is interpreted for domestic service. Of special interest is how the Rule impacts shared living programs under Medicaid.
The Department of Labor has also created guidance to assist stakeholders in determining whether an entity paying a direct care worker through a shared living arrangement is required to comply with the FLSA’s minimum wage and overtime requirements. The guidance also describes how certain FLSA principles apply to shared living arrangements.
These changes become effective January 1, 2015.
Friday, March 28, 2014
This semester I'm teaching Contracts, which always provides interesting opportunites to introduce "Elder Law" concerns in a traditional course.
This week I offered a not-so-hypothetical fact pattern, where Grandmother deeds house to Grandchild, in exchange for Grandchild's "promise to care for Grandma for the rest of her life." Whenever I use this hypo, I pick one of a number of reasons the agreement does not work out as planned, such as the individuals don't get along with each other, grandchild gets pregnant or ill, etc. This week's reason was "Grandma needs more specialized care" but cannot afford it because she's given away her primary resource. Grandchild doesn't want to sell the house, now that it is "hers," and she doesn't want to take out a mortgage.
I ask the students to brainstorm Grandmother's options. Almost always, someone suggests Medicaid, and we talk about whether Medicaid will provide adequate assistance and whether there are potential barriers to eligibility for public benefits, such as the five-year look back period.
Students sometimes suggest Grandmother is subject to "undue influence," which if proven would be grounds for potential rescission. Good job! Except that I am usually careful in my hypo not to make Grandchild overtly manipulative. And in truth, many of these arrangements begin more because of the desires of the aging individual, than because of any greed on the part of the younger person. We also explore "incapacity" and "duress" as possible grounds for rescission.
This week, students also suggested "failure of consideration" as grounds for rescission. There is an interesting line of cases, perhaps a hybrid of Property and Contract law, that treats "support deeds" as a specific analysis, potentially justifying relief. Examples include:
- Gilbert v. Rainey, 71 SW. 3d 66 (Ark. Ct. App. 2002), permitting mother to rescind deed for failure of consideration, and admitting mother's parol evidence to show daughter promised life care in exchange for the conveyance of the home, to show that conveyance was not a completed gift;
- Frasher v. Frasher, 249 S.E. 2d 513 (W.Va. 1978), granting cancellation of deed from grandparents to grandchildren, on the grounds that where discord arises between the parties to a "support deed" between an aged grantor and a younger family member, the property should be restored "if it can be done without injustice" to the younger family member.
After class was over, some of my students stopped by to chat, offering variations on the hypothetical, sometimes from examples within their own extended families. In both of the sample cases above, the court attaches special meaning to the concept of "support deeds" going from older to younger generation, but most of the cases along this line are fairly old. The fact that my students were offering modern variations on the fact pattern suggests there may be good reason to revisit this area of the law.
Perhaps any resurgence in this topic is another sign of our "aging" times. So, that leads to my question, does your state recognize failure of consideration, tied to "support deeds," as grounds for rescission of a conveyance?
Wednesday, March 26, 2014
Tough Question: Evidence Demonstrates Potential for Unsatisfactory Care in Nursing Homes, So Why Expect Better Care at Home?
Howard Gleckman at Forbes writes about the elephant in the room of home and community-based care. Will it really be better than the care in a nursing home?
Hat tip to ElderLawGuy Jeff Marshall for pointing the way to this thoughtful piece.