New Guides Help Those Appointed to Manage Someone Else's Money

Have you been officially asked to manage someone else's money? For example, have you been named as an agent under a power of attorney or appointed trustee of a trust? As our society ages, more and more people are being asked to take on these roles, but they come with both powers and responsibilities, and problems can arise.

If you're not a lawyer (and even if you are), the responsibilities of these positions can seem daunting. Luckily, the federal Consumer Financial Protection Bureau – the only federal office dedicated to the financial health of Americans age 62 and over -- recently released four guides for people who have been given the responsibility of managing money or property for someone else. The guides, which are free, are collectively called “Managing Someone Else's Money.”

The Managing Someone Else's Money guides are designed to help non-lawyers; they walk you through your new responsibilities, teach you how to protect the person in your care from financial exploitation, and give you links to additional resources. For example, the guides tell you, the agent, what to do to avoid problems with family and friends who think you are doing a bad job. The guides also help you coordinate with other agents who may have been assigned to work with you and any outside professionals whose help you may need (such as lawyers, brokers, and financial planners).

The guides include help for agents under a power of attorney, court-appointed guardians of property and conservators, trustees under a revocable living trust, and representative payees and VA fiduciaries (a person who manages someone else's government benefit checks). All four types of agents are fiduciaries, which means they owe four special duties to the people for whom they are managing money or resources: the duty to act in the individual’s best interest, the duty to manage the individual’s money and property carefully, the duty to keep the individual’s money and property separate from their own, and the duty to keep good records. Every guide includes detailed information about these four duties.

If you have been assigned to be an agent for someone, that assignment should come with a document (power of attorney, trust document, court order, etc.) that will tell you what you can and cannot do. It is important to stay within the limits that document sets for you. These four guides, which were developed for the Bureau by the American Bar Association Commission on Law and Aging, are not a substitute for legal counsel, but they can help keep you on the straight and narrow.

To download one or more of the guides, go to:
 http://www.consumerfinance.gov/blog/managing-someone-elses-money/

The Obligations of a Fiduciary

When you need someone else to care for money or property on your behalf, that person (or organization) is called a fiduciary.  A fiduciary is a person or entity entrusted with the power to act for someone else, and this power comes with the legal obligation to act for the benefit of that other person.

Many types of positions involve being a fiduciary, including that of a broker, trustee, agent under a power of attorney, guardian, executor and representative payee. An individual becomes a fiduciary by entering into an agreement to do so or by being appointed by a court or by a legal document.

Being a fiduciary calls for the highest standard of care under the law. For example, a trustee must pay even more attention to the trust investments and disbursements than for his or her own accounts. No matter what their role is or how they are appointed, all fiduciaries owe four special duties to the people for whom they are managing money or resources. A fiduciary’s duties are:

• to act only in the interest of the person they are helping;
• to manage that person's money or property carefully;
• to keep that person's money and property separate from their own; and
• to keep good records and report them as required. Any agent appointed by a court or government agency, for example, must report regularly to that court or agency.

Remember, your fiduciary exists to protect you and your interests. If your fiduciary fails to perform any of those four duties or generally mismanages your money or affairs, you can take legal action. The fiduciary will probably be required to compensate you for any loss you suffered because of his or her mismanagement.

Medicaid Applicant's Retirement Benefits May Be Counted as Available Income Despite Contrary Court Ruling

A New York trial court upheld a Medicaid agency's finding that an applicant's Social Security and pension benefits should be included in the applicant's available income even though the court had ruled in a guardianship proceeding that the benefits were unavailable for Medicaid eligibility purposes. Freedman v. Commissioner of the State of New York Dept. of Health (N.Y. Sup. Ct., Richmond Cty., No. 85037/13, March 6, 2014.

The court appointed Gay Lee Freedman as guardian of the person and property of her sister, Mary Backer. The court ordered that the funds in the guardianship account and any income the guardian received, including Social Security and pension benefits, would be "deemed" unavailable for purposes of Medicaid eligibility.

Ms. Freedman applied for Medicaid benefits on Ms. Backer's behalf. The state determined she was eligible subject to a net available income that included her Social Security and pension benefits. Ms. Freedman appealed, arguing her net available income should not include those benefits. After a hearing, the state upheld the decision, and Ms. Freedman appealed.

The New York Supreme Court, a trial court, affirmed the decision, holding that the court must show deference to the state's interpretation of its rules. According to the court, as long as the agency's decision is neither legally impermissible nor violates "the petitioner's constitutional rights and protections, the court is powerless to alter that determination on the strength of what...the court might do in a similar situation."

For the full text of this decision, click here.

Elderly Couple Awarded $1.6 Million over Failed Investments

A financial arbitration panel has ordered  a subsidiary of John Hancock Financial Network to pay nearly $1.6 million to an elderly California couple and the estate of their now-deceased mother.  The sum includes a $454,000 award for attorneys’ fees under California’s elder abuse statutes.

Edward Blank and Doreen Baker Blank, along with Della Baker, who died in 2012 at age 103, placed their entire retirement savings in the hands of James Glover, a broker with Signator Investors, owned by John Hancock. Glover invested $1 million of the money in a Texas real estate venture that Glover said would generate a steady income but that suspended payments in 2012.  Glover did not disclose that he was a managing member of the venture. 

The Blanks are among more than 40 clients who claimed they were hurt financially by Glover. Signator has maintained that it was unaware that Glover was investing in securities not held or offered by them, a practice called “selling away,” and that it was not responsible for his actions.

In March, an arbitration panel of the Financial Industry Regulatory Authority (FINRA) awarded the Banks $954,000 in compensatory damages and $181,000 in interest, plus the legal fee award. The binding award also granted Signator's cross-claim against Glover for breach of contract, fraud and negligence and ordered him to pay Signator $1.35 million.

“The FINRA arbitration panel awarded our clients almost $1.6 million for the losses they suffered in this selling-away case,” said the Banks’ attorney, Lance McCardle, as reported in Investment News. “Our clients lost all of their retirement savings as a result of Glover's breach of fiduciary duty and fraud and Signator's failure to supervise Mr. Glover during the 14 years he worked at Signator in the Towson, Md., office.”

To read the arbitration panel’s ruling, Docket No. 13-00579, click here.

For a Wall Street Journal article on the award, click here.

For a discussion of the award by Prof. Katherine Pearson of Penn State Dickinson Law School, click here.

CMS to Force the Dying to Spend Their Final Days Jumping Through Hoops to Get Needed Medications

To spare Medicare Part D insurance companies the risk of initially paying for prescriptions they don't have to cover, the Centers for Medicare and Medicaid Services (CMS) has designed a protocol that forces dying Medicare beneficiaries to navigate an onerous appeals process just to get medically necessary medications.  “This burden-shifting to the dying patient is illogical and immoral,” concludes the Center for Medicare Advocacy, which broke the story.

The protocol stems from an oversight in how Part D interfaces with Medicare’s hospice benefit.  When a Medicare beneficiary elects the program’s hospice benefit, the hospice provider, not the Medicare Part D insurer, becomes responsible for covering medications related to the patient’s terminal illness.  The Part D insurer continues to cover drugs the patient is taking that are not related to the terminal illness – for example, blood pressure medications to prevent a stroke.

The problem is that when Medicare Part D was created, no process was set up to inform the insurance companies when Medicare beneficiaries elected hospice.  This means that sometimes a Part D insurer could inappropriately pay for a drug that the hospice provider should be covering.

CMS’s solution? According to the agency’s memorandum to Part D Plan Sponsors and Medicare Hospice Providers entitled, "Part D Payment for Drugs for Beneficiaries Enrolled in Hospice – Final 2014 Guidance," all prescribed medications for hospice patients billed to Medicare Part D will initially be denied coverage as of May 1, 2014.  Pharmacies will need to check to make sure that a prescription is related to the patient’s terminal illness, and if it is not, the pharmacist can’t fill it. Instead, hospice patients will have to file a Medicare appeal, triggering a protracted bureaucratic dance, detailed in a recent Alert by the Center for Medicare Advocacy, involving the dying patient and his or her pharmacist and medical provider.  

The Center points out that it is not necessary to force dying patients to jump through bureaucratic hoops just to get necessary medications.  “The insurance companies that administer Medicare Part D plans can easily design a system to retroactively review medications covered for hospice patients,” the Center writes.  “If appropriate, the Part D plans can seek reimbursement from hospice providers.” 

The Center plans a second Alert on the protocol’s implications for beneficiaries.  Keep an eye out for it here.

Many Skilled Care Providers Still Unaware of New Medicare Rules

Even though Medicare is now covering skilled care for beneficiaries who are not improving, many are still being denied coverage, according to Judith Stein, director of the Center for Medicare Advocacy.  Stein told Reuters columnist Mark Miller that despite a nationwide educational campaign mandated by the recent settlement of a lawsuit, many providers don't have information about the settlement or understand the new rules.

Under the settlement agreement in Jimmo v. Sebelius, the federal government agreed to end Medicare’s longstanding practice of requiring that beneficiaries with chronic conditions and disabilities show a likelihood of improvement in order to receive coverage of skilled care and therapy services. The new rules require that Medicare cover skilled care as long as the beneficiary needs skilled care, even if it would simply maintain the beneficiary's current condition or slow further deterioration. 

As part of the implementation of the settlement, the Centers for Medicare & Medicaid Services (CMS) has posted online resources and updated its Medicare manual to reflect the changes. CMS launched an educational campaign in January to explain the settlement and the revised manual provisions to providers, but many providers remain unaware of what is covered or how to bill Medicare for the services. The campaign was not aimed at beneficiaries, so few are aware of the rules and that they can fight a denial of coverage.

Miller focuses on one beneficiary, Robert Kleiber, 78, who receives weekly visits from a physical therapist to alleviate symptoms of his Parkinson’s disease.  Kleiber’s wife recently learned that the treatments should be covered under Medicare’s new rules but so far she has been unable to convince the home health care provider of this.

Stein said she is getting "a lot of inquiries from people who have had problems getting access to care. There’s still a great deal of education that healthcare providers need to get on this. Many of them just aren’t aware of what they need to do to proceed."

For Miller’s column, click here.

For the Center for Medicare Advocacy’s page of self-help packets for improvement standard denials and appeals, click here.

Personal Care Agreement Payments Made by Medicaid Applicant Are Subject to Penalty Period

A New Jersey appeals court holds that transfers made from a Medicaid applicant to her daughter pursuant to a care agreement were not made in exchange for fair market value.P.W. v. Division of Medical Assistance and Health Services (N.J. Super. Ct., App. Div., No. A-4756-11T3, April 29, 2014).

M.Y. signed a care agreement with her daughter, Paula, in which Paula would provide room and board in return for $2,000 a month, which included $800 for rent and $1,200 for services. The services included preparation of meals, cleaning, and assistance with bathing and dressing. M.Y. lived with Paula for two years. During this period, M.Y. also transferred $16,000 to Paula's daughter.  M.Y. briefly entered an assisted living facility before moving in with her other daughter, Gina, for two years, transfering $46,595 to Gina.

M.Y. entered a nursing home and applied for Medicaid benefits. The state determined the $1,200 monthly payments were transfers for less than market value and imposed a penalty period. When M.Y. appealed, an administrative law judge ordered that the $1,200 payments be excluded from the penalty period, but the state rejected the ALJ's decision. M.Y. appealed to court.

The New Jersey Superior Court, Appellate Division, affirms the imposition of the penalty period, holding there was no evidence M.Y. received fair market value in exchange for the assets transferred to her daughters and granddaughter. The court notes that there was no explanation of how the $1,200 rate was reached and there was no agreement between M.Y. and her granddaughter or Gina. According to the court, "in evaluating whether [M.Y.] had overcome the presumption that assets were transferred to establish Medicaid eligibility, all of the transfers to family members made during the look-back period must be scrutinized."

For the full text of this decision, go to: http://www.judiciary.state.nj.us/opinions/a4756-11.pdf

Nursing Home Sues Resident's Daughter with Impunity Since Admissions Agreement Did Not Give Nursing Home The Right to Sue the Daughter

New Jersey's highest court has ruled that an admissions agreement signed by a nursing home resident's daughter did not violate federal law because it did not require the daughter to use personal funds to pay for her mother's care, notwithstanding that the nursing home actually sued the daughter personally for her mother's nursing home debt.  Manahawkin v. O'Neill (N.J., No. A-17 SEPT.TERM 2012, 071033, March 11, 2014).

Frances O'Neill admitted her mother, Elise Hopkins, to a nursing home. As her mother's agent under a power of attorney, Ms. O'Neill signed the admissions agreement, which named her as the responsible party for the purposes of paying her mother's bills. Ms. O'Neill did not sign the portion of the agreement that required the responsible party to guarantee the resident's costs. She also received a copy of the resident's bill of rights, which stated that she was not required to guarantee payment as a condition of admission.

When Ms. Hopkins died, she left an unpaid balance of $878.20. The nursing home sent Ms. O'Neill a collection action, stating that she, as the responsible party, had the obligation to pay any debts. When Ms. O'Neill didn't pay, the nursing home sued her in her personal capacity. Ms. O'Neill counterclaimed, arguing the nursing home was violating New Jersey’s Nursing Home Act, which incorporates relevant portions of the federal Nursing Home Reform Act, by asking for payment from her directly. The nursing home dropped its claim, but Ms. O'Neill asked for summary judgment on her counterclaim. The trial court denied summary judgment, and the appeals court affirmed. Ms. O'Neill appealed.

The New Jersey Supreme Court affirmed the lower courts rulings, holding that the admissions agreement did not violate the Nursing Home Act.  The Court reasoned that the admissions agreement specifically limited Ms. O'Neill's obligation to that of paying her mother's bills with her mother's assets. The court noted that while the nursing home's collection letter was "inartfully drafted" it "did not attempt to impose on [Ms.] O'Neill an obligation to use her personal assets on her mother's behalf." Similarly, the court ruled that the nursing home's lawsuit was "lacking in detail" and "improperly pled," but it did not violate federal law because it did not allege that Ms. O'Neill was required to use her personal assets.   

So, a nursing home sues a daughter, personally, for less than a thousand dollars, and when the daughter actually counterclaims, the nursing home dismisses its action, but the daughter does not prevail on her claim since the nursing home technically did not have the right to make the claim that, if the claim actually existed, would have violated federal and state law.  Clearly. 

For the full text of the decision, go here.