Sunday, October 26, 2014

Filial Liability + Bankruptcy = Trouble

As regular readers of the Elder Law Prof Blog may recognize, I reside and work squarely in a zone where "filial support claims" are more than just theoretical propositions.  Pennsylvania continues to be Ground Zero for modern complications arising from use of a Colonial era law that permits adult children to be held liable for the cost of an indigent parent's long-term care. 

The latest example is In re Skinner, 2014 WL 5033258, decided by Bankruptcy Judge Madeline Coleman in the Eastern District of Pennsylvania on October 8, 2014.

The issue is whether one sibling can prevent another sibling from "discharging" any obligation to pay an assisted living facility for their mother's care.  Both brothers were sued by the facility, resulting in a default judgment against one brother (Thomas) for $32,225, who in turn sought discharge of that debt in bankruptcy court.  Brother William, probably facing the prospect of picking up the full tab for his defaulting brother, initiated an adversary proceeding, seeking to prevent the discharge.   The court concludes that Brother William "lacks standing" to prevent Brother Thomas' discharge of the debt to the assisted living facility.

In dismissing Brother William's claim, the Bankruptcy Judge addresses both the Uniform Fraudulent Transfer Act and Pennsylvania's filial support law.  According to the opinion, Brother William alleges that Thomas used a Power of Attorney executed by their mother in 2007, to access her bank accounts in a "scheme [with his wife] to use the Mother's assets, including her interest in long-term care benefits, to fund approximately $85,000 of their personal expenses." However, the court concludes that even accepting the truth of allegations that "suggest that the Mother was injured by the [Thomas'] conduct, that conduct was directed at the Mother and her property. The conduct was not directed at [William]."  The Bankruptcy Court also rejected any theory of "derivative standing."  

The Bankruptcy court does not mention the most recent appellate decision in Pennsylvania addressing the state's filial law.  In  Health Care & Retirement Corp. of America v. Pittas, 46 A.3d 719 (Pa. Super. Ct. 2012), one son attempted to avoid all or a portion of his own liability, arguing that the facility had not sued all potentially liable family members.  The court rejected this defense, but observed, "[W]hile sympathetic with Appellant's obligation to support his mother without the assistance of his mother's husband or other children, we note that if Appellant had desired to share his support-burden, he was permitted to do so by joining those individuals in this case. However, Appellant took no such action." 

Therefore, if one family member seeks to avoid the full financial burden of care for a parent, especially where there are concerns about another's financial exploitation of the parent, must he or she bring third-party claims or cross claims against the other suspected culprits for contribution? Would that be enough to give rise to a non-dischargeable debt in the bankruptcy court? Perhaps if there is a conversational lull with your family over Thanksgiving dinner, you can initiate debate of this issue....  (I'm joking, of course.)

Current Affairs, Elder Abuse/Guardianship/Conservatorship, Ethical Issues, Federal Cases, Health Care/Long Term Care, State Statutes/Regulations | Permalink

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