Wednesday, October 24, 2018
A notice about an upcoming continuing legal education program struck me as an apt sign of the times in elder law planning. The Pennsylvania Bar Institute explains:
Many clients are members of "modern family" structures. Our experienced faculty — with different legal perspectives — will explore the issues and opportunities available when planning for the long term care needs of clients in blended and non-traditional families. At the intersection of family law and elder law, they will examine various techniques, including long term care planning for clients with children from previous marriages and planning for unmarried partners.
Receive practical guidance on counseling clients
• Representation and conflict issues
• Information gathering tips
Examine issues at the intersection of family law and elder law
• Pre and post nuptial agreements
• Cohabitation agreements
• Gifts to divorced or separated children, alimony & child support issues
Explore long term care planning tools and techniques
• To marry or not to marry for long-term care
• Use of irrevocable trusts
• High assets/income: private pay, life insurance, and long term care insurance
• Spousal refusal
• Transfers by the community spouse after Medicaid eligibility
• To gift or not to gift: single individual vs. community spouse
For more, see Long Term Care Planning for Blended and Non-traditional Families, scheduled for first airing on November 27, 2018.
October 24, 2018 in Current Affairs, Estates and Trusts, Ethical Issues, Health Care/Long Term Care, Housing, Legal Practice/Practice Management, Programs/CLEs, State Statutes/Regulations | Permalink | Comments (0)
Tuesday, October 23, 2018
In a perfect world, everyone will be able to handle all of their own affairs, right until the day they die. In a perfect world, even if that was not possible (or even desirable), there is always some trustworthy family member or friend to step in to help.
Alas, it isn't a perfect world. For a number of years, when I was supervising an Elder Law Clinic, our clients sometimes needed the assistance of a professional agent or guardian, someone who was experienced in providing fiduciary management services for people of modest means, and who had a track record and references to demonstrate competence. We also wanted to see their certificate of insurance or bonding.
Recently I was looking for a guest speaker for a Nonprofit Organization Law class and I reached out to a company in my address book. I learned it had ceased doing business. In contrast to the dramatic stories from locations such as New Mexico, where nonprofit entities failed to carryout their fiduciary duties, Neighborhood Services, based in Lancaster, Pennsylvania found it necessary to close their doors for 300 vulnerable clients because of gaps in charitable funding.
Some clients had behavioral health needs. Approximately 150 of the clients were incapacitated people living in nursing and personal care homes in a multiple county region. New representatives were needed for all of them. A 2017 news story explained:
Founded in 1964, nonprofit Neighborhood Services fell over $400,000 in debt after losing most of its United Way funding a couple of years ago and failing to secure key federal grants, said Stanley, who joined the agency in October 2015 as its woes were mounting.
The agency, which never prioritized fund-raising, has lost several staff members in recent months and currently employs five.
Neighborhood Services’ most visible role has been serving as the representative payee for more than 150 clients with intellectual disabilities, mental illness or addiction issues. The agency received the clients’ monthly disability checks and prioritized the payment of their rent and other basic needs.
"I'll miss all the staff," said Nathan Wilson, 57, who relied on Neighborhood Services to manage his finances. "Whenever I need extra, they always get it for me."
This history is a reminder that more than good intentions are needed to run a successful nonprofit organization.
October 23, 2018 in Consumer Information, Crimes, Current Affairs, Elder Abuse/Guardianship/Conservatorship, Estates and Trusts, Ethical Issues, State Cases, State Statutes/Regulations | Permalink | Comments (0)
Thursday, October 4, 2018
I teach contract law and I teach elder law, and often those silos overlap. But recently someone asked me whether a "power of attorney" was a contract. Somehow I had not not considered this topic before. My first reaction was "no, not usually," although certainly POAs have contract-like implications once the agent takes action using the POA as authority. I tend to think of POAs and similar appointments of an agent as bound by rather distinct "fiduciary law" obligations, as well as the limitations of the language in the POA itself and any statutory law, rather than traditional contract law principles. But perhaps my first instinct is wrong. One significance of categorization is when determining what statutes of limitation applies to any violation. It turns out the issue usually arises in the context of liability for allegations of misuse of authority.
What do you think? At least one court believes POAs are contracts, at least for purposes of applying principles of interpretation. A Court of Appeals opinion notes, when deciding whether family-member agents had authority to "self-deal" when handling real estate transactions in the name of the principal, that "Because a power of attorney is a contract, we interpret its provision pursuant to the rules of contract interpretation. . . . " See Noel v. Noel, 225 So. 3d 1114, 1117(Louisiana Ct. of Appeals, 2017).
For additional perspectives see the discussion of the Alabama Supreme Court, including the dissent, in Smith v. Wachovia Bank, 33 So. 3d 1191, 1202 (Ala. 2009).
October 4, 2018 in Consumer Information, Current Affairs, Elder Abuse/Guardianship/Conservatorship, Estates and Trusts, Ethical Issues, Property Management, State Cases, State Statutes/Regulations | Permalink | Comments (3)
Thursday, September 27, 2018
First the bad -- or at least frustrating -- news. On Thursday, September 27, we received word that Senate Bill 884, the long-awaited legislation providing key reforms of guardianship laws in Pennsylvania, was now "dead" in the water and will not move forward this year. Apparently one legislator raised strong objections to proposed amendments to SB 884, amendments influenced by recent high-profile reports of abuse by a so-called professional guardian who had been appointed by courts in multiple cases in eastern Pennsylvania.
The objections reportedly focused on one portion of the bill that would have required both law guardians (typically family members) and professional guardians to undergo a criminal background check before being appointed to serve. The amendment did not condition appointment on the absence of a criminal record, except where proposed "professional guardians" had been convicted of specific crimes. For other crimes or for lay guardians, the record information was deemed important to permit all interested parties and the court to make informed decisions about who best to appoint.
What is next? Pennsylvanians will look to new leadership in the 2019-20 session in the hope for a new bill that resolves differences and that can make it through both houses. In the meantime, the courts are already moving forward with procedural reforms, adopted in 2018 at the direction of the Pennsylvania Supreme Court.
And that leads us to a more positive note about guardianship reform in Pennsylvania. Pennsylvania Common Pleas Judge Lois Murphy testified this week during a Senate Judiciary Committee meeting about the Pennsylvania Courts' new Guardianship Tracking System (GTS). It is now operational in 19 counties (out of 67 total counties) in Pennsylvania, including coming online in the major urban counties for Philadelphia and Pittsburgh. Judge Murphy reported that GTS is "already paying dividends," and she gave the example of a case in which the reporting system triggered a red flag for an estate worth more than $1 million, much higher than originally predicted, making appointment of different guardian more appropriate.
Judge Murphy predicts that as the tracking system becomes operational statewide, it should generate valuable answers, such as how many persons are subject to guardianships at any point in time, how much in assets are under management, what percentages of the pointed guardians are family members (as opposed to professionals), and what percentages of those served are over or under age 60. The hope is that GTS will also permit coordination of information about appointed guardians in state courts with information in the federal system on those appointed as Social Security representative payees, thus, again, providing more comprehensive information about trustworthiness of such fiduciaries.
You can see Judge Murphy's testimony, and hear her reasons for criminal background checks and appointment of counsel to represent alleged incapacitated persons, along with the views of retiring Senator Greenleaf and Senator Art Haywood, in the recording of the September 24 hearing recording below.
Judge Murphy testifies from approximately the 35 minute mark to the 43 minute mark, and again from 1 hour 33, to one hour 44.
Bottom line for the week -- and perhaps the session? You can certainly grow old just waiting for guardianship reform in Pennsylvania.
September 27, 2018 in Consumer Information, Crimes, Current Affairs, Elder Abuse/Guardianship/Conservatorship, Estates and Trusts, Ethical Issues, Health Care/Long Term Care, Housing, Property Management, Social Security | Permalink | Comments (0)
Recommended reading! The Rhode Island Providence Tribute published a series of in August and September 2018 that flow from a student journalism project at Brown University in Rhode Island. The team of students conducted an investigation over the course of a year, looking for the outcome of elder abuse allegations in the state. What they found were plenty of arrests but very few successful prosecutions.
Over two semesters, four student reporters pulled hundreds of court files and police reports of people charged with elder abuse to explore the scope of the problem and the way law enforcement and prosecutors handle such cases. In addition, the reporters used computer data purchased from the Rhode Island judiciary to track every elder-abuse case prosecuted in Rhode Island’s District and Superior courts over the last 17 years.
The student project, sponsored by a new journalism nonprofit, The Community Tribune, was overseen by Tracy Breton, a Brown University journalism professor and Pulitzer Prize winner who worked for 40 years as an investigative and courts reporter for The Providence Journal.
As part of the year-long investigation, the students analyzed state court data to evaluate how effective Rhode Island has been at prosecuting individuals charged with elder abuse. This had never been done before — not even the state tracks the outcomes of its elder-abuse cases. The data, based on arrests made statewide by local and state police, was sorted and analyzed by a Brown University graduate who majored in computer science.
The investigation found that 87 percent of those charged with elder-abuse offenses in Rhode Island over the 17-year period did not go to prison for those crimes. Moreover, fewer than half of those charged were convicted of elder abuse. This left victims in danger and allowed their abusers to strike again and again.
The above excerpt is from the first article documenting the students' amazing investigation. I definitely recommend reading the following articles. Caution: there is a paywall that appears after you open some number of articles on the Providence Tribune website, so if you aren't in the position of being able to pay for all the articles, you may want to prioritize the order in which you "open" the individual parts.
Part 6 is somewhat different, as it tracks the "successful" prosecution of a court-appointed guardian who pled "no contest" in 2015 to charges of embezzling money from an 80-year old elderly client. The embezzlement scheme allegedly involved false claims for services and double-billing. According to other news sources, the guardian, an attorney who was eventually disbarred in connection with her plea, was required to pay more than $130k in restitution and serve 30 months of home confinement in lieu of a "suspended" sentence of seven years in prison.
September 27, 2018 in Consumer Information, Crimes, Current Affairs, Dementia/Alzheimer’s, Elder Abuse/Guardianship/Conservatorship, Estates and Trusts, Ethical Issues, Health Care/Long Term Care, Legal Practice/Practice Management, Property Management, State Cases, State Statutes/Regulations | Permalink | Comments (0)
Wednesday, September 26, 2018
Latest News on Pennsylvania's Adult Guardianship Reform Legislation - SB 884 is still lingering in the Senate
I was hoping to be able to report by today, the last of a three-day working session for the Pennsylvania Senate, that Senate Bill 884 on adult guardianship law reforms had passed the state's Senate, allowing the bill to move on to the House of Representatives. But no vote yet on the floor of the Senate. The next opportunity for movement is Monday, October 1.
For more on the history of the bill presenting several key items of reform for Pennsylvania's Adult Guardianship Laws and process, see our posts from last week, here, here, and here, or a memo I prepared earlier last week, here.
Will the Pennsylvania Legislature take action before the November elections? Stay tuned!
September 26, 2018 in Consumer Information, Current Affairs, Elder Abuse/Guardianship/Conservatorship, Estates and Trusts, Ethical Issues, Health Care/Long Term Care, State Statutes/Regulations | Permalink | Comments (0)
Monday, September 24, 2018
From The New York Times, a well-told tale from siblings who recently "joined the ranks of the 15 million or so unpaid and untrained family caregivers for older adults in this country," calling them the nation's invisible work force. As one son admits:
The work takes its toll. These sons, daughters, husbands and wives are at increased risk of developing depression, as well as physical and financial difficulties, including loss of job productivity. Being sick and elderly in this country can be terrifying. Having a sick and elderly loved one is often a full-time job.
As the workload increased, we hired help, as much for ourselves as for our parents. But after some items were stolen, we realized we had to be more careful about whom we allowed into our parents’ home. Older adults in this country lose almost $3 billion a year to theft and financial fraud. Nearly every week my father instructed us to donate money to someone who had sent him a generic email appeal. It fell on us to keep our parents from being exploited.
With millions of elderly adults requiring assistance with daily living, physicians should make it routine practice to ask family members whether they can provide the requisite care. Many of these potential caregivers, ill or stressed themselves, simply cannot.
For the full article, read When Family Members Care for Aging Parents.
My thanks to colleague Laurel Terry at Dickinson Law for sending the link to this article!
Friday, September 21, 2018
This is the third of three postings about adult guardianship reform, with an eye on legislation in Pennsylvania under consideration in the waning days of the 2017-18 Session.
Senate Bill 884, as proposed in Printer's No. 1147, makes basic improvements in several aspects of the law governing guardianships as I describe here. A key amendment is now under consideration, in the form of AO9253. These amendments:
- Require counsel to be appointed for all allegedly incapacitated persons;
- Require all guardians to undergo a criminal background check;
- Require professional guardians to be certified;
- Require court approval for all settlements and attorney fees that a guardian pays through an estate (reflecting recommendations of the Joint State Government Commission's Decedents’ Estates Advisory Committee).
Most of these amendments respond directly to the concerns identified in the alleged "bad apple" appointment cases in eastern Pennsylvania, where no counsel represented the alleged incapacitated person, where there was no criminal background check for the proposed guardian, and where the guardian was handling many -- too many -- guardianship estates.
A key proponent of the additional safeguarding language of AO 9253, Pennsylvania Senator Art Haywood, has been working with the key sponsor for SB 884, retiring Senator Steward Greenleaf. His office recently offered an explanation of the subtle issues connected to mandating a criminal background check:
The PA State Police needed to fix some technical issues for us regarding national criminal history record checks only to make sure that when we send the legislation to the FBI for approval, they won’t have anything with which to take issue. The FBI requires an authorized agency to receive these national background checks; DHS is an authorized agency, but the 67 Orphans’ Courts in PA are not. Further, the FBI prohibits us from requiring recipients of national background checks to turn them over to a third party for this purpose, so we can’t require DHS or receiving individuals to send the national background check to the court.
As such, we had to develop a procedure that would still get courts information about whether someone under this bill has a criminal background from another state that would otherwise prohibit them from serving as a guardian. We switched the language around a bit to require DHS to send a statement to the individual that verifies one of 3 things, either: (1) no criminal record; (2) a criminal record that would not prohibit the individual from serving as guardian; or (3) a criminal record that would prohibit the individual from serving as guardian. The individual would then have to bring this statement from DHS to the court when seeking to become a guardian. As in previous versions, the individual has an opportunity to respond to the court if there is a criminal record that would prohibit the individual from serving, and the response should assist the court in determining whether that person nevertheless is appropriate (for example, a person can voluntarily provide their own copy of their national background check – or other types of evidence – for the court to review).
The devil is in the details for any legislative reforms. It is often an "all hands on deck" effort to secure passage, especially in an election year.
Will the Pennsylvania Legislature pass Senate Bill 884 to make changes appropriate for safeguarding of vulnerable adults?
September 21, 2018 in Cognitive Impairment, Consumer Information, Crimes, Current Affairs, Elder Abuse/Guardianship/Conservatorship, Estates and Trusts, Ethical Issues, Health Care/Long Term Care, Property Management, State Cases, State Statutes/Regulations | Permalink | Comments (0)
Thursday, September 20, 2018
Continuing with the analysis from yesterday for why many jurisdictions are finally confronting the need to make changes in their adult guardianship policies and laws, here is my take on additional reasons. Will Pennsylvania enact Senate Bill 884 this session to get the ball rolling on reform?
Troubled histories have emerged across the nation. Public concern has grown around the need for more careful consideration of the roles played by guardians. For example, events in recent years have highlighted the following problems:
- In Las Vegas, Nevada, uncritical reliance on a few individuals to serve as appointed “professional” guardians was linked to manipulation and abuse of the incapacitated wards and misuse of the wards’ financial resources. Concerned family members alleged corruption and their advocacy drove a reluctant system to examine the history of appointments, leading to the indictment and arrests of a frequently appointed guardian, members of her staff and a police officer in February 2018.
- In New Mexico, two nonprofit agencies used for guardianship services were investigated; principals were indicted by the U.S. Attorney for thousands of dollars in theft from the estates of incapacitated individuals. This in turn triggered a massive call for emergency reform of New Mexico guardianship law, with the new laws coming into effect in July 2018.
- In Florida, complaints by family members and others presented to the Florida Legislature over several years, resulted in three successive years of reforms to Florida guardianship law. One dramatic example was a particular court’s uncritical reliance on “friends” of the court to be appointed as guardians and paid out of the wards’ estates. In some instances the court rejected appointment of available family members. In 2017, a jury awarded a verdict of $16.4 million against lawyers for breaching their fiduciary duties and charging unnecessary and excessive fees.
The New Yorker magazine published a feature article in October 2017 on the Las Vegas history, criticizing the state’s reluctance to investigate and make timely changes in its systems for appointment and monitoring of so-called professional guardians. The title of the article is eye catching: How the Elderly Lose Their Rights, by Rachael Aviv.
While location-specific news stories of scandals come and go, the persistence of guardianship problems points to systemic weaknesses that require modern, uniform standards. Thirty years ago, the Associated Press published a six-part national investigative series entitled Guardians of the Elderly: An Ailing System. The series revealed frequent failures to appoint counsel to represent an alleged incapacitated person and the lack of clear standards for guardians who serve as fiduciaries.
September 20, 2018 in Cognitive Impairment, Consumer Information, Current Affairs, Elder Abuse/Guardianship/Conservatorship, Estates and Trusts, Ethical Issues, Health Care/Long Term Care, Housing, State Cases, State Statutes/Regulations | Permalink | Comments (0)
Wednesday, September 19, 2018
Will Pennsylvania Pass Long-Awaited Adult-Guardianship Law Reforms Before End of 2017-18 Session? (Part 1)
For the last few years, I've been quietly observing draft bills addressing needed reforms of Pennsylvania's adult guardianship system as they circulate in the Pennsylvania legislature. Over the next few days, drawing upon a detailed update memorandum I prepared recently for interested parties, I will post reasons why the legislature can and, many would argue, should move forward in 2018.
Today, let's begin with background. First, here is the status of pending legislation and the timetable that could lead to passage:
Pennsylvania Senate Bill 884 (Printer’s No. 1147) presents an important opportunity to enact key reforms of Pennsylvania’s Guardianship Laws. The bill is based on long-standing recommendations from the Pennsylvania Joint State Government Commission. The Senate unanimously passed an earlier identical measure, S.B. 568, during the last legislative session (2015-16). The current bill was approved and voted out of Senate committee in June 2018, but then tabled. Although the schedule is tight, there is still time for action by both house before the end of the session in November. If not fully passed and signed this year, a new bill must be introduced in the next legislative session.
The Pennsylvania Senate has scheduled session days before the November election on September 24, 25, and 26 and October 1, 2, 3, 15, 16, and 17. The Pennsylvania House of Representatives also has scheduled session days for September 24, 25 and 25, and October 9, 10, 15, 16 and 17. If S.B. 884 is passed by the Senate in September, it appears there may be adequate opportunity for the House to move the legislation through the House Judiciary Committee and to the floor for final passage.
Second, let's review the steps taken most recently towards reform of existing Pennsylvania law:
In 2013-14, the Pennsylvania Supreme Court formed an Elder Law Task Force to study law-related matters relevant to the growing population of older persons in Pennsylvania. The team included members of all levels of courts in the Commonwealth, plus private attorneys, criminal law specialists, and perhaps most importantly, members of organizations who work directly with vulnerable adults, including but not limited to seniors. Guardianship reform quickly became a major focus of the study. I was a member of that Task Force.
Statistics available to the Task Force in 2014 show that some 3,000 new guardianship petitions are filed with the Pennsylvania Courts each year, of which approximately 65% are for alleged incapacitated persons over the age of 60. The number of new petitions can be expected to increase in the very near future. During the last six years, the cohort of Pennsylvania’s population between the ages 64 and 70 grew by a record 31.9%. Soon, that aging cohort will reach the years of greatest vulnerability with the increased potential for age-related cognitive impairments or physical frailty. Appointment of a guardian is usually a choice of last resort, sometimes necessary because of an emergency illness or because individuals have delayed using other means, such as execution of a power of attorney or trust, to designate personally-chosen surrogate decision-makers.
When a determination is made that an individual is incapacitated (as defined by statute) and in need of certain assistance (again, as defined by law), courts have the duty and power to appoint a person or an entity as the “guardian.” Once appointed by a court, guardians can be given significant powers, such as the power to determine all health care treatment, to decide where the individual lives, and to allocate how money can be spent. While Pennsylvania law states a preference for “limited guardianships,” in reality, especially if no legal counsel is appointed to represent the individual to advocate for limited authority, it is more typical to see a guardian be given extensive powers over both the “person” and the “estate.”
The Task Force began its work by undertaking a candid self-assessment of existing guardianship processes. Based on its review of the history of guardianships in Pennsylvania, the Task Force issued detailed findings as part of its final Report released in November 2014, including the following:
- Guardianship monitoring is weak, if it occurs at all.
- Training is not mandated for professional or non-professional guardians.
- Non-professional guardians are not adequately advised as to the duties and responsibilities of managing the affairs of an IP [incapacitated person].
- The quality of guardianship services varies widely, placing our most vulnerable citizens at great risk.
The Pennsylvania Supreme Court identified a need for better information about the actions of appointed guardians; such information would be central to all recommended reforms. The Task Force recommended a new system enabling statewide accountability and consistent oversight.
Following the Task Force Report and Recommendations, and under the leadership of the Supreme Court, the Administrative Office of the Pennsylvania Courts began working on procedural reforms, beginning with creation of an Office of Elder Justice in the Courts. The Courts developed a new, online Guardianship Tracking System, and in June 2018 the Supreme Court adopted new Orphans Court rules (14.1 through 14.14) that establish certain procedural safeguards for guardianships and require use of uniform, state-wide forms and reporting standards for all guardians. These rules are scheduled to become fully effective by July 2019.
Pursuant to a Judicial Administration Rule adopted August 31, 2018, the Supreme Court mandated a phased implementation of the tracking system, with workshops offering training for guardians on how to use the system to file inventory and annual reports. See Guardianship Tracking System Workshop.
Not all recommended reforms, however, can be accomplished by the Courts adopting procedural rules. Key substantive reforms require legislative action. Senator Stewart Greenleaf, the chair of the Senate’s Judiciary Committee and a frequent sponsor of child and adult protective measures, introduced Senate Bill 884 (and its predecessor). After many years of service and leadership in the Capitol, Senator Greenleaf is retiring this year; therefore, any necessary renewal of the legislation must attract new leadership.
September 19, 2018 in Consumer Information, Current Affairs, Elder Abuse/Guardianship/Conservatorship, Estates and Trusts, Ethical Issues, Health Care/Long Term Care, Property Management, State Cases, State Statutes/Regulations, Statistics | Permalink | Comments (0)
Tuesday, September 18, 2018
Do you read Robert Fleming's elder law newsletter? Tim Takacs' blog? I wanted to point out two recent blog posts I thought very useful. First is Tim's blog post, What To Do With Your Estate Planning Documents.Tim, in his blog post, discusses with whom to share your documents, discuss your plans with those affected by them, review joint ownerships and beneficiary designations, review your papers organize them and make sure they are current. Then comes Robert Fleming's newsletter where he writes in inspired response, What NOT to do With Your Estate Planning Documents..Here Robert offers these not to dos, such as: client, do not hide your documents, or write on them, or sign other documents, fail to take the documents to your next attorney, or fail to recall what you've done. I'd also like to suggest don't use your estate planning documents as a coaster or a napkin-in other words, keep them secure and in a safe place.
Monday, September 17, 2018
Jack Cumming, a California CCRC resident, frequently comments on Elder Law Prof Blog posts, bringing to bear his deep expertise in financial planning matters and his equally engaged commitment to historical accuracy in a wide variety of issues. Jack is a Fellow of the Society of Actuaries, and a Certified Aging Services Professional by Examination. During what I might call Jack’s “official career” as a professional actuary, he served as an independent consulting actuary for life and health insurance operations, and before that as a corporate officer and chief actuary for insurance companies.
I first came to know Jack during what I’ll call his “second” career. Jack helped many, including me, understand concerns about actuarial soundness issues in Continuing Care Retirement Communities. He came to his specialized expertise in CCRCs in a unique way, by moving to a California CCRC with his wife and discovering issues that can benefit from actuarial analysis. Over the last 12 years, Jack has advised CCRC residents and providers, as well as their organizations across the nation.
Jack recently commented on an item I posted on September 12, that described a particular history of poor actuarial decisions contributing to failure of a large Pennsylvania long-term care insurance company. In that post, I also reported on a new hybrid type of long-term care product, announced by New York Life Insurance Company. Jack’s response was, as usual, so insightful that, with Jack’s permission, I am posting his commentary here, elaborated by him, as a blog post in its own right.
A number of thoughts come to mind when reading the recent Elder Law Prof Blog post on long term care insurance (LTCi). The Elder Law post lists a perfect storm of what turned out to be foolhardy expectations. Morbidity was underestimated, so were contract lapse rates and mortality. Anticipated investment returns turned out to be overstated, medical and care costs escalated, and efforts to raise premiums without triggering shock lapses proved insufficient. The result for the industry has been devastating, as anyone who has been close to LTCi, is well aware. Fortunately, LTCi was a small part of the business of many insurers offering the product, so losses were absorbed. Penn Treaty, an LTCi specialist company, was not so lucky.
Now, with the benefit of hindsight, it thus appears that there were significant and material optimistic misjudgments made in bringing LTCi to the market. First, the data used for the initial pricing were not sufficiently vetted. Pricing actuaries used what data they could find but, for the most part, they failed to take into account the fact that the very existence of such insurance, then being introduced for the first time, would make it more likely that people would use the benefits.
Moreover, the opportunity for LTC providers to receive payments promoted the growth of the provider industry to deliver services that the insurance would cover. Thus, historical data from the time before there was insurance was misleading. Since the products lacked incentives for policyholders, or those offering services to them, to restrain their use, it was predictable that people would seek to make the most of their coverage. And they did and continue to do so.
Long Term Care Insurance developed originally to give the sales agents of the large life insurance companies a product that they could sell as part of a product portfolio centered on the sale of life insurance. Such a portfolio, in addition to life and long term care insurance, often included disability income and health insurance. Most of the pricing actuaries who were involved in the early development of LTCi products were life insurance specialists influenced by life insurance concepts. There’s little discretion or volunteerism about dying, so mortality data used in setting life insurance premiums tend to be relatively stable and predictable. The consequence is that underwriting and claims in large life insurance companies are principally administrative, e.g. for claims, confirm the death and send a check. More subjective risks, such as disability income (DI) insurance and LTCi, require active management over the duration of a claim by highly skilled executives experienced and specialized in those particular undertakings.
September 17, 2018 in Consumer Information, Current Affairs, Estates and Trusts, Ethical Issues, Health Care/Long Term Care, Property Management, State Statutes/Regulations, Statistics | Permalink | Comments (0)
Wednesday, September 12, 2018
Last week, students in my Elder Law class at Dickinson Law had the benefit of a fascinating, detailed presentation by Pennsylvania's Deputy Commissioner of Insurance Joseph DiMemo about the history of insolvency for Penn Treaty American Network and American Independent Insurance Company as sellers of long-term care insurance policies. In 2009, the State took the reins as the receiver for the two companies' administration of more than 126,000 policies sold nationwide.
From the history, I would summarize reasons for failure of long term care insurance in its "traditional" form as including the following:
- Selling products with a promise or at least a strong expectation of level premiums, especially in the early years of the industry. While contract language permitted companies to seek rate increases, the companies often delayed asking for increases or were frustrated by states that refused to grant requested increases;
- Assumptions made about "lapse" rates for policyholders that proved to be inaccurate;
- Assumptions made about "interest" rates for invested premiums that proved to be inaccurate, even before the 2008-10 financial crisis;
- Assumptions made about lower morbidity and higher mortality that proved not to be accurate for policyholders overall;
- The continued use of invalid assumptions about future premium rate increases.
In light of this tour through history, I was interested to read about New York LIfe Insurance Company's description of its "new and innovative long-term care insurance product" in its press release dated September 5, 2018:
A new long-term care solution announced today by New York Life, NYL My Care, promises to make the purchase of long-term care insurance simpler and more affordable. The innovative product features design concepts familiar to purchasers of other types of insurance, including a deductible and co-insurance, and offers the benefit of a dividend, which can help offset future premiums. NYL My Care clients will also benefit from the peace of mind that comes from working with a mutual life insurance company with the highest available financial strength ratings.
“New York Life is committed to helping people plan for the future, which includes protecting themselves and their loved ones from the financial burden of an extended health care event,” said Aaron Ball, vice president, New York Life Long-Term Care. “NYL My Care’s simpler, first-of-its-kind product design will help more people understand, access and afford the protection they need against the potential cost of long-term care.”
NYL My Care covers a wide range of long-term care needs, including home care, community-based care and facility care, and offers four pre-designed plan levels ... bronze, silver, gold and platinum.
For more on so-called "hybrid" or "asset" based products that couple long-term care benefits to annuities or life insurance polices, read New Life Insurance Brings New Innovations to Long-Term Care Insurance Market from Forbes.
September 12, 2018 in Consumer Information, Current Affairs, Estates and Trusts, Ethical Issues, Health Care/Long Term Care, Legal Practice/Practice Management, Retirement, State Cases, State Statutes/Regulations | Permalink | Comments (1)
Tuesday, September 11, 2018
I'm preparing for an upcoming program in North Carolina and residents of senior living communities have sent me questions in advance. The questions I've received are a reminder that "transparency" is a big issue. As one resident candidly explained, "No population is more vulnerable than seniors living in managed care.... I consider myself among the vulnerable." I've come to believe that lack of transparency impacts virtually all of the options for financing of senior living, including long-term care insurance and continuing care communities. The problem is that many prospective clients do not know who they can trust, and many end up trusting no one. They end up not making any advance plan.
For example, this week there is industry-sourced news that 33 facilities operated under the umbrella of Atrium Health and Senior Living, a New Jersey-based company, are going into receivership. These include 9 "senior living communities" and 23 "skilled nursing facilities" in Wisconsin, plus a skilled nursing facility in Michigan. Atrium is also reported as operating 3 senior living communities and 9 skilled nursing facilities in New Jersey that "are not part of the receivership." If you look at the company's website today, however, it won't be easy to find news that insolvency is already impacting this company's sites. At least as of the time of my writing this blog post, there's only "good news" on the company's website.
The public tends not to distinguish between different types of senior living options, at least not until individuals get fairly close to needing to make choices about moving out of their own homes. I can easily imagine anyone who has done enough advance research to know about troubled companies to simply make a decision to steer clear of all facilities operated under a particular company name. But, I suspect there is also a much larger population of prospective residents who view reports of troubled senior living companies or facilities as a reason to reject all of the options.
Some providers will say that the problem is that "bad news" is over-reported. I don't think that is actually true. Rather, I think that there in most states is it hard to distinguish between financially sound or unsound options. Certainly, I've known state regulators who decline to talk about troubled properties on a theory that bad news may make it harder for struggling operations to work out their problems as they cannot attract new customers. Lack of transparency is argued as an explanation for giving operators a fair chance to recover, and recovery helps everyone.
States, however, have unique opportunities to learn from their roles as receivers for troubled operations. Wouldn't it be helpful for states to publish accurate information about what factors they have discovered that contribute to success or lack of financial success? And if not the regulators, why not have the industry itself publish standards of financial health.
September 11, 2018 in Consumer Information, Current Affairs, Estates and Trusts, Ethical Issues, Health Care/Long Term Care, Housing, Legal Practice/Practice Management, Property Management, Retirement, State Cases, State Statutes/Regulations, Statistics | Permalink | Comments (0)
I've been reading articles for several weeks about a "troubled" nursing home in Connecticut where staff members were reportedly being paid late, and not receiving payments on related benefit claims (including health care and pensions).
The reports sound unusually mysterious, with indications of an executive's "loan" to a related charity from operating reserves. Suddenly more than $4 million was apparently restored to a key pension account:
As News 12 has reported, federal agents raided the center back in May. When the raid happened, that account was down to $800. For years, workers have complained about missing retirement money. In a lawsuit, the Labor Department claims the facility's owner illegally funneled their money into his own private charity.
Now, according to new court documents, the $4 million was unexpectedly deposited into the pension account last week. It's unclear where the money came from, and even the bankruptcy trustee running the facility was unsure.
"I don't truly know the source, but I do know that there's $4.1 million in this bank," bankruptcy trustee Jon Newton said at a court hearing yesterday.
But in a recent court hearing, owner Chaim Stern's lawyer said the money "was meant to represent the $3.6 million transferred from the (retirement) plan to Em Kol Chai." That's the charity authorities say Stern controls.
Workers may not get as much of that money as they think. Bridgeport Health Care has a long list of creditors, and they could potentially get a share.
News 12 reported back in July that part of the facility, called Bridgeport Manor, is shutting down. Lawyers say they hope to wrap that process up within a month.
September 11, 2018 in Consumer Information, Crimes, Current Affairs, Elder Abuse/Guardianship/Conservatorship, Estates and Trusts, Ethical Issues, Federal Cases, Federal Statutes/Regulations, Health Care/Long Term Care, Housing, Medicaid, Medicare | Permalink | Comments (0)
Monday, September 10, 2018
Abigail Kawananakoa, age 92 and the heiress of a legendary Hawaiian estate as the descendant of a family who once ruled the islands, is at the center of a court dispute about whether she is able to manage her own affairs -- and a $215 million trust.
The money should go toward helping Native Hawaiians, they [Foundation Board Members] said at a news conference Thursday in front of Honolulu’s Iolani Palace. They are asking a judge to appoint a guardian for the elderly heiress, whose riches come from being the great-granddaughter of James Campbell, an Irish businessman who made his fortune as a sugar plantation owner and one of Hawaii’s largest landowners.
Many Native Hawaiians consider Abigail Kawananakoa to be the last Hawaiian princess because she’s a descendent of the family that ruled the islands before the overthrow of the Hawaiian kingdom.
A key court hearing in a legal fight over the trust is scheduled for Monday.
Her longtime lawyer, Jim Wright, persuaded a judge to appoint him as trustee, arguing a stroke last year left her impaired. Kawananakoa says she’s fine.
As trustee, Wright appointed three prominent Native Hawaiian leaders to serve as board members for the $100 million foundation Kawananakoa created in 2001. The foundation has a right to participate in the court battle because it is a beneficiary of her trust.
Kawananakoa “has reached a point in her life where she needs us to stand up and fight for her and her legacy,” said foundation board member Jan Dill. Kawananakoa intended that the foundation serve the Hawaiian community in arts, language, culture and education, he said.
For more, read Foundation Board: Protect Hawaiian Heiress' Millions.
While the above article does not fully explain the family dynamics, a photo accompanying the article depicts Ms. Kawananakoa and her wife, Veronica Gail Worth, who appears to be younger. Another article describes Ms. Worth as a "longtime caregiver." See A Cautionary Story of Elder Financial Abuse. Still other new reports describe Ms. Worth as Kawananakoa's "partner of 21 years," prior to their October 2017 marriage ceremony, conducted before a retired Hawaii Supreme Court Justice. See Hawaiian Heiress, 91, Marries Longtime Partner Amid Court Battle.
September 10, 2018 in Cognitive Impairment, Crimes, Current Affairs, Dementia/Alzheimer’s, Elder Abuse/Guardianship/Conservatorship, Estates and Trusts, Ethical Issues, Property Management, State Cases, State Statutes/Regulations | Permalink | Comments (0)
Friday, August 31, 2018
Professors Adam Hofri-Winogradow (Hebrew University of Jerusalem) and Richard Kaplan (University of Illinois) have an interesting new article, addressing how different countries analyze property transfers to caregivers. They recognize that, broadly speaking, reviewing authorities tend to treat family members differently than they treat professional caregivers when it comes to questions about undue influence or other theories that may invalidate a transfer as unfair. Further, they recognize that policies may differ for live-in caregivers versus hourly helpers. Also, on a comparative basis, countries may differ on how a governmental unit provides employment-based public benefits for home carers, thus perhaps influencing how family members view pre- and post-death gifts to caregivers.
From the abstract:
In this Article, we examine how the United States, Israel, and the United Kingdom approach property transfers to caregivers. The United States authorizes the payment of public benefits to family caregivers only in very restricted situations. The U.K. provides modest public benefits to many family caregivers. Israel incentivizes the employment of non-family caregivers but will pay family caregivers indirectly when assistance from non-relatives is unavailable. All three jurisdictions rely on family caregivers working for free or being compensated by the care recipients. We examine the advantages and disadvantages of several approaches to compensating family caregivers, including bequests from the care recipient, public benefits, tax incentives, private salaries paid by the care recipient, and claims against the recipient's estate. We conclude that while the provision of public benefits to family caregivers clearly needs to be increased, at least in the United States, a model funded exclusively by public money is probably impossible.
For more, read Property Transfers to Caregivers: A Comparative Analysis, published in June by the Iowa Law Review.
Tuesday, August 28, 2018
While courts are most often called upon to appoint guardians or conservators in the absence of an authorized agent, another way in which courts may be required to act is when family members disagree about the course of care under private arrangements. High profile examples of how this can arise often involve celebrities. The latest example seems to involve comedian Tim Conway, where his wife and daughter are reportedly at "odds over his medical treatment." From People magazine's online site comes this sad report:
The 84-year-old Carol Burnett Show star’s daughter Kelly is asking to be appointed conservator of her father and be in charge of his medical treatments, according to court documents obtained by PEOPLE and first reported by The Blast.
Kelly, 56, filed the documents in Los Angeles on Friday, claiming Conway’s wife Charlene is “planning to move him out of the excellent skilled nursing facility he is currently at” and place him in one that won’t give him access to “registered nurses at all times and his 24-hour caregiver and speech therapist (to help with swallowing).”
Charlene is Conway’s second wife. He was previously married to Kelly’s mother Mary Anne Dalton from 1961-78. (In addition to Kelly, they share daughter Jackie and sons Jaime, Tim Jr., Pat, Corey and Shawn.)
Kelly also states that Conway cannot “properly provide for his personal needs for physical health, food, and clothing” and is “almost entirely unresponsive.”
Second marriages, where the families did not blend well, often seem to be a factor, especially if money becomes an issue. My thanks to my Dickinson Law colleague Laurel Terry for sharing this item for our Blog.
August 28, 2018 in Advance Directives/End-of-Life, Cognitive Impairment, Consumer Information, Current Affairs, Dementia/Alzheimer’s, Elder Abuse/Guardianship/Conservatorship, Estates and Trusts, Ethical Issues, Health Care/Long Term Care, State Cases | Permalink | Comments (0)
Thursday, August 16, 2018
On June 5, 2018, a Michigan Appellate Court issued an order demonstrating the tension between two concerns, respect for autonomy and a goal of protection, that can arise when a court is asked to determine who will be appointed a guardian or conservator. The case strikes me as a good vehicle for classroom discussion.
The appellate court concludes that the trial court abused its discretion by appointing a professional fiduciary, in lieu of the alleged incapacitated person's adult daughter, where there was a failure to make specific findings to explain why the state law''s "order of priority and preference" was not followed. The opinion for In re Guardianship of Gerstier notes:
While the probate court's focus on [the father's] welfare is commendable, the court missed a critical step in the analysis. When Milbocker [a private, professional guardian] resigned as [the father's] guardian and conservator, [the daughter] petitioned to be appointed to fill those roles. At that juncture, the probate court was required to reconsult the statutory framework before appointing another public administrator. The court never articulated any findings regarding [the daughter's] competence and suitability to serve. Absent those findings, the court erred by appointing [a new professional guardian].
The history recounted by the appellate court suggests that the man's daughter, living in Texas, and the man's sisters, living in Michigan, were both seeking control over the father's estate, with the sister making allegations that the daughter's personal and financial history made her an inappropriate choice. The daughter made counter allegations about the sister's motives and behavior. In addition, the father had signed conflicting POAs. In 2013 and again in 2015, the father identified the daughter in two powers of attorney as his preferred agent; however, in 2016, after being diagnosed with Alzheimer's disease and after his wife died, the father began living in Michigan with his sister, where he signed a new POA designating that sister as the agent.
Michigan law grants priority to "a person nominated as guardian in a durable power of attorney or other writing." Further, in the absence of an effectively designated individual, the statute provides an ordered list of preferences, beginning with the spouse and next with "an adult child of the legally incapacitated adult."
The Michigan appellate remanded the case to the trial court with directions to reconsider the appointment of a new guardian and conservator and to make "specific findings of fact" regarding the daughter's "competence, suitability and willingness" to serve. Further, the court directed that if the sister provided evidence during the remand, the court must "weight her credibility carefully in light of incorrect information she provided in her initial petition...."
Reading between the lines of the court history here, one can see how the trial court decided to go with a professional guardian, probably seeing appointment of a "neutral" professional as the safer option where money seemed to be the main focus of the control issues. (The father seemed to be comfortable traveling between his daughter in Texas and his sisters in Michigan.) State guardianship/conservatorship laws that have adopted lists of preferred individuals, however, require additional steps to explain why party autonomy will not be respected, or why the state's preference list will not control. Such laws significantly alter the discretion once accorded to the court under many state's older appointment laws. Will more careful adherence to the laws change the result in this case on remand? For the classroom exercise, ask students what they predict will be the trial court's next ruling.
Friday, August 10, 2018
Filial Friday: N.D. Nursing Home's Claim Against Adult Children for Father's Unpaid Bills Set for September Trial
According to news reports, here and here, three siblings are facing a September 2018 trial date after being sued by a North Dakota nursing home for more than $43,000 in unpaid costs of care for their father, incurred during a seven month stay at the facility. The children maintain they have no contractual obligation with the nursing home, and were not involved in their father's application for Medicaid, nor did they receive disqualifying gifts from their father. A denial of a Medicaid application can arise if there is an uncompensated transfer of assets within a five year look back period, or because of certain other unexplained failures to use the father's "available" resources to pay for his care.
A North Dakota's statute, N.D.C.C. Section 14-09-10, with language that can be traced back to filial support laws of Elizabethan England, provides:
It is the duty of the father, the mother, and every child of any person who is unable to support oneself, to maintain that person to the extent of the ability of each. This liability may be enforced by any person furnishing necessaries to the person. The promise of an adult child to pay for necessaries furnished to the child's parent is binding.
One news report quotes the executive director of the North Dakota Long Term Care Association, Shelly Peterson, as saying nursing homes use the law to go after adult children in only one circumstance: "When parents transfer income or assets to their children, and then the parents don't qualify for Medicaid." The director is reported as further contending that "facilities are 'legally obligated' under Medicaid to pursue every avenue possible to collect that debt, including suing, before they can get reimbursed from the state Department of Human Services for a debt that cannot be recovered."
According to some sources, local legislators, aroused by this suit, are looking at whether North Dakota should continue to permit nursing home collections under North Dakota's indigent support law. Such laws have been blocked or repealed in most other U.S. states. North Dakota and my own state, Pennsylvania, are the two most notable exceptions.
My reaction to the news articles on this case is "something doesn't add up here" and some key facts seem to be missing.
- First, if the father was in the nursing home for 7 months, who did the children think was paying for his care? I can't imagine no one in the family asked that question for that period of time (although certainly Medicaid applications can take time to process and perhaps the denial came in after the father's death).
- What was the basis for any denial for Medicaid? I've seen Medicaid denied for inability of the applicant (or applicant agent) to track down some old resource, such as a demutualized life insurance policy. Also, what is the source of the contention that Medicaid law "requires the facility to sue" to collect the debt? I'm not aware of any such rule at the federal level.
- Is there another member of the family involved in the application -- someone other than the three target children -- or is there another family member involved in any "transfers" causing an alleged ineligibility period? In the U.S., filial support laws don't prioritize collection, nor require recovery from so-called "bad" children, rather than more "innocent" children.
- Finally, why weren't there care planning meetings with the family that included discussions of costs of care? It always raises a red flag for me when the "first" alleged notice of such a claim arises after the death or discharge of a resident.
Perhaps we will hear the results of the trial or any settlement, and thus hear a more complete picture of how these bills came to accumulate.
August 10, 2018 in Consumer Information, Current Affairs, Elder Abuse/Guardianship/Conservatorship, Estates and Trusts, Ethical Issues, Federal Statutes/Regulations, Health Care/Long Term Care, Legal Practice/Practice Management, Medicaid, Medicare, State Cases, State Statutes/Regulations | Permalink | Comments (1)