Father May Evict Based on Allegations of Elder Abuse

A New York housing court has ruled that a 72-year-old man may evict his son and his son’s girlfriend from his apartment because of the man’s fear of elder abuse. Huggins v Randolph (N.Y. Civ. Ct., Kings Cty., No. 91343/13, July 10, 2014).

Norris Huggins, the tenant of record in a Brooklyn apartment, sought to evict his son, Julian Randolph, and his son’s girlfriend, Ashley Richmond, alleging that he had been forced to flee his apartment because he was afraid of Mr. Randolph.  In an affidavit, Huggins said that "my son has in the past threatened my health and safety, forced me to sign a power of attorney and taken other steps to put me in fear of him."

Earlier this year the court granted Mr. Huggins’ motion for summary judgment against Mr. Randolph and Ms. Richmond.  Mr. Randolph subsequently moved out and Ms. Richmond tried to stay the eviction, arguing that Mr. Huggins lied in saying he feared his son, and that in any case he is free to return to the premises because his son is no longer there.

In rejecting Ms. Richmond’s motion, housing court judge Susan Avery finds that “in light of the many forms of elder abuse,” Ms. Richmond’s argument that Mr. Huggins no longer has anything to fear is “quite disturbing.” 

“[I]t is incumbent upon judges and court personnel to recognize the signs of possible elder abuse and act to protect society's vulnerable seniors," Judge Avery writes.  ". . . Mr. Huggins has the right to live in his home with the occupants of his choosing, or if he so chooses, no other occupants at all. Mr. Huggins is entitled to be the sole decision maker as to which guests, if any, are invited into his home."

For the full text of this decision, go to: http://law.justia.com/cases/new-york/other-courts/2014/2014-ny-slip-op-24184.html

SSA's Guide for Evaluating Special Needs Trusts Problematic

The Social Security Administration (SSA) recently instituted a nationally uniform procedure for review of special needs trusts for Supplemental Security Income (SSI) eligibility, routing all applications that feature trusts through Regional Trust Reviewer Teams (RTRTs) staffed with specialists who will review the trusts for compliance with SSI regulations. 

The SSA has also released its Trust Training Fact Guide, which will be used by the RTRTs and field offices when they evaluate special needs trusts.  In an article in the July/August 2014 issue of The ElderLaw Report, New Jersey attorney Thomas D. Begley, Jr., and Massachusetts attorney Neal A. Winston, both CELAs, discuss the 31-page guide in detail and caution that while it is a significant step forward in trust review consistency, it contains “a few notable omissions or terminology that might cause review problems.”  Following is the authors’ discussion of the problematic areas:  

• Structured Settlements. The guide states that additions/augmentations to a trust at/after age 65 would violate the rule that requires assets to be transferred to the trust prior to the individual attaining age 65. It does not mention that the POMS specifically authorizes such payments after age 65, so long as the structure was in place prior to age 65. [POMS SI 01120.203.B.1.c].

• First-/Third-Party Trust Distinction. Throughout the guide, there are numerous references to first-party trust terms or lack of terms that would make the trust defective and thus countable. These references do not distinguish between the substantial differences in requirements for first-party and third-party trusts.

• Court-Established Trusts/Petitions. This issue is more a reflection of an absurd SSA policy that is reflected accurately as agency policy in the guide, rather than an error or omission in the guide itself. This section, F.1.E.3, is titled “Who can establish the trust?” The guide states that creation of the trust may be required by a court order. This is consistent with the POMS. It would appear from the POMS that the court should simply order the trust to be created based upon a petition from an interested party. The potential pitfall described by the guide highlights is who may or may not petition the court to create a trust for the beneficiary. It states that if an “appointed representative” petitions the court to create a trust for the beneficiary, the trust would be improperly created and, thus, countable. Since the representative would be considered as acting as an agent of the beneficiary, the beneficiary would have improperly established the trust himself.

In order for a court to properly create a trust according to the guide, the court should order creation of a trust totally on its own motion and without request or prompting by any party related to the beneficiary. If so, who else could petition the court for approval? The plaintiff’s personal injury attorney or trustee would be considered an “appointed representative.” Would a guardian ad litem meet the test under the guardian creation authority? How about the attorney for the defendant, or is there any other person? If an unrelated homeless person was offered $100 to petition the court, would that make the homeless person an “appointed representative” and render the trust invalid? The authors have requested clarification from the SSA and are awaiting a response.

Until this issue is resolved, it might be prudent to try to have self-settled special needs trusts established by a parent, grandparent, or guardian whenever possible.

• Medicaid Payback/Administrative Fees and Costs. Another area of omission involves Medicaid reimbursement. The guide states that “the only items that may be paid prior to the Medicaid repayment on the death of the beneficiary of the trust are taxes due from the trust at the time of death and court filing fees associated with the trust. The POMS, [POMS SI 01120.203.B.1.h. and 203B.3.a], specifically states that upon the death of the trust beneficiary, the trust may pay prior to Medicaid reimbursement taxes due from the trust to the state or federal government because of the death of the beneficiary and reasonable fees for administration of the trust estate such as an accounting of the trust to a court, completion and filing of documents, or other required actions associated with the termination and wrapping up of the trust.

While noting that the guide, in coordination with training, “is a marked improvement for program consistency for trust review,” Begley and Winston caution advocates that “the guide should be considered as a summarized desk reference and training manual and not a definitive statement of SSA policy if inconsistent with the POMS.”

Annuities Purchased by a Medicaid Applicant Must Name State as Remainder Beneficiary

The Georgia Supreme Court recently issued an opinion regarding the requirement that an annuity purchased by a Medicaid applicant must name the state as a remainder beneficiary.  The opinion, though, is instructive as much for its deference to CMS and state agency statutory interpretations, as it is for its holding. Reversing an appeals court decision, the court ruled that, because it finds that the federal statute is ambiguous, annuities benefitting a Medicaid applicant need to name the state as a remainder beneficiary in order to avoid a transfer penalty. Cook v. Glover (Ga., No. S13G1127, July 11, 2014).

Jerry Glover purchased an annuity for himself shortly before applying for Medicaid. He later refused to name the state as a remainder beneficiary on the annuity, the state approved his application but assessed a seven-month transfer-of-assets penalty against him.

Mr. Glover appealed, arguing he wasn’t required to name the state as a remainder beneficiary. After a hearing, an administrative law judge upheld the penalty, and a trial court affirmed the decision. The Georgia Court of Appeals reversed. Although agreeing that a plain reading of 42 U. S. C. § 1396p (c) (1) (F) standing alone clearly required that the state be named a remainder beneficiary of any annuity, the Court of Appeals interpreted subsection (G) to unambiguously remove actuarially sound annuities benefitting Medicaid applicants from the requirements of subsection (F) by removing them from the definition of “assets” with respect to a transfer of assets.  

The Georgia Supreme Court reversed, holding that the penalty period is valid. The court examined the statutory language regarding annuities and found that the relationship between the two subsections is not clear and unambiguous.  Because the federal law was vague and ambiguous, the court ruled that the state Medicaid agency's interpretation, which is consistent with the Centers for Medicare and Medicaid Services' interpretation of the statute, is "reasonable and entitled to deference."

For the full text of this decision, go to: http://www.gasupreme.us/sc-op/pdf/s13g1127.pdf

California Heir Liable to Reimburse State for Mother's Medicaid Benefits

A California appeals court has ruled that the heir of an estate who sold her interest in her mother’s house to her brother is liable to the state for reimbursement of her mother’s Medicaid expenses. Estate of Mays (Cal. App., 3d, No. C070568, June 30, 2014).

Medi-Cal (Medicaid) recipient Merver Mays died, leaving her house as her only asset. Ms. Mays’ daughter, Betty Bedford, petitioned the court to be appointed administrator of the estate, but she was never formally appointed because she didn’t pay the surety bond. The state filed a creditor’s claim against the estate for reimbursement of Medi-Cal expenses, and the court determined the claim was valid.  A dispute arose between Ms. Bedford and her brother, Roy Flemons, over ownership of the house. After the court determined Mr. Flemons owned a one-half interest in the property, Ms. Bedford and Mr. Flemons entered into an agreement in which Mr. Flemons paid Ms. Bedford $75,000 and transferred the house to his name.

The state petitioned the court for an order requiring Ms. Bedford to account for her administration of Ms. Mays’s estate. The court determined Ms. Bedford was liable to the state for the amount she received from Mr. Flemons because although she wasn’t formally appointed administrator, she was acting as administrator. Ms. Bedford appealed.

The California Court of Appeal, 3rd Appellate District, affirmed on different grounds. The court ruled that Ms. Bedford cannot be held liable due to her failure as administrator of the estate because she was never formally appointed administrator. The court held, however, that Ms. Bedford is liable as an heir of the estate who received estate property. According to the court, Ms. Bedford’s settlement with Mr. Flemons was “essentially an end-run around the creditor’s claim and the estate process” and “the $75,000 payment represented proceeds of the estate that would otherwise be available to satisfy creditors’ claims.” 

For the full text of this decision, go to:http://www.courts.ca.gov/opinions/nonpub/C070568.pdf

Caregiver Payroll Service

More and more families are hiring private-duty caregivers, meaning that an increasing number are facing a new dilemma – how to deal with the payroll, tax, and labor law aspects of household employment.  While everyone wants to follow the law and do the right thing for the caregiver, it’s a tall task because of the complexities and administrative burdens of being an employer.

Luckily, there is a service -- Care.com® HomePaysm, Provided by Breedlove -- that can guide busy families through all the complex tax and payroll requirements of hiring outside help while eliminating every piece of tedious paperwork.  For more than 20 years, HomePaysm has been handling payroll, tax and Human Resources (HR) obligations for families -- more than 55,000 families to date -- with guaranteed accuracy.  From paydays to tax time and all points in between, these folks take care of—and assume full accountability for—every payroll obligation, including, but not limited to:

• Manage payroll calculations, prepare paystubs, and process Direct Deposit payroll each payday;
• Prepare and file state and federal employment tax returns;
• Prepare and distribute Form W-2;
• Prepare and file Form W-2 Copy A/Form W-3 each January;
• Prepare Schedule H to be filed with Form 1040.

If you would like more information, or would like to receive one of a limited number of coupons that my office received so that clients can start using HomePaysm and receive a waiver of the registration fee (a$100 value), please email us.

There are also many fine bookkeepers, accountants, and payroll services locally.  If you would like a local referral, please let us know! 

Inherited IRA's are not Exempt from Creditors in Bankruptcy

In a unanimous opinion, the U.S. Supreme Court has ruled that funds held in an inherited individual retirement account (IRA) are not exempt from creditors in a bankruptcy proceeding because they are not retirement funds. Clark v. Rameker (U.S., No. 13-299, June 13, 2014).

Heidi Heffron-Clark inherited an IRA from her mother. Her inherited IRA had to be distributed within five years, and Ms. Heffron-Clark opted to take monthly distributions. During the five-year period, Ms. Heffron-Clark and her husband filed for bankruptcy and claimed that the IRA, worth around $300,000, was exempt from creditors because bankruptcy law protects retirement funds.

The bankruptcy court found that the IRA was not exempt because an inherited IRA does not contain anyone's retirement funds. Ms. Heffron-Clark appealed, and the district court reversed, ruling that the exemption applies to any account containing funds originally accumulated for retirement. The Seventh Circuit Court of Appeals reversed, holding that the money in the IRA no longer constituted retirement funds, while the Fifth Circuit Court of Appeals decided in In re Chilton (674 F.3d 486 (2012)) that funds from an inherited IRA should be exempt. The U.S. Supreme Court agreed to resolve the conflict.

The U.S. Supreme Court affirmed the Seventh Circuit's decision in Clark, holding that the funds held in inherited IRAs are not "retirement funds." In a unanimous opinion delivered by Justice Sotomayor, the Court finds that funds in an inherited IRA are not set aside for retirement because the holders of inherited IRAs cannot invest additional money in the account, are required to withdraw money from the account even though they aren't close to retirement age, and may withdraw the entire balance of the account at one time.

If you want to ensure that your IRA's are inherited by your heirs and remain exempt from their creditors, see an elder law attorney.  

For the full text of this decision, go to: http://www.supremecourt.gov/opinions/13pdf/13-299_mjn0.pdf

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. 

Bankruptcy Court Refuses to Discharge Granddaughter’s Debt to Nursing Home- Lessons for Caregivers

A U.S. bankruptcy court refused to discharge an Ohio woman's debt to a nursing home for the cost of her grandmother's care, finding there exist questions regarding whether the woman knew a gift she had received from her grandmother was an improper transfer of assets for Medicaid purposes and whether the woman intended to defraud the nursing home. In re Donley (Bankr. N.D. Ohio, No. 13-60758, April 17, 2014).

On October 6, 2011, Michele Donley signed an agreement admitting her grandmother, Virginia Carnes, to a nursing home.  She signed a second agreement accepting personal liability for the cost of services provided.  In the admissions agreement, and in two subsequent Medicaid applications, Ms. Donley denied that her grandmother had transferred any assets that might affect her grandmother's eligibility for Medicaid benefits.

Ms. Carnes, however, had gifted $50,000 to Ms. Donley in 2007, which Ms. Donley used as a down payment on a home. The gift  was determined to be an "improper transfer" thereby resulting in a transfer penalty which made Ms. Carnes' ineligible for Medicaid benefits until February 2013. Ms. Donley was unable to keep up with payment for her grandmother's care due to the period of ineligibility, and the nursing home filed an eviction action and later obtained a judgment of $17,441.50 against Ms. Donley for unpaid services.

Ms. Donley filed for bankruptcy protection, and sought to have the debt discharged.  The nursing home opposed the discharge of the judgment ostensibly on the grounds that Ms. Donley acted willfully or maliciously in causing the nursing home's loss.  Section 526 of the Bankruptcy Code excepts from discharge debts that are willfully or fraudulently procured, or resulting from willful or malicious conduct.    

Ms. Donley filed a motion for summary judgment, arguing that the nursing home lacked evidence to establish the elements of a claim, which she argued required a showing of fraud. The nursing home countered that considering Ms. Donley's multiple misrepresentations regarding her grandmother's transfer of assets, questions of fact existed about Ms. Donley's state of mind, making summary judgment inappropriate.

The United States Bankruptcy Court, N.D. Ohio, agreed with the nursing home and denied Ms. Donley's motion for summary judgment. The court determined that there existed a genuine question of fact whether Ms. Donley knew the $50,000 gift from her grandmother was an improper transfer at the time she signed the agreement and whether her misrepresentation was intentional or reckless.

There are several important lessons to take away from the Donley case.  First, Medicaid planning is an important consideration any time that a person wants to make a gift to another.  It is possible, even likely, that Ms. Donley's grandmother did not intend to make her granddaughter financially responsible for her long term care when she made the gift that permitted her granddaughter to purchase her home, but that is exactly the resulting legal and financial consequence.

Second,  caregivers, family members, and/or fiduciaries should have nursing home admission agreements reviewed by counsel before signature.  It is likely that an advising attorney would have explained the consequence of signing a personal guarantee, and absent such a guarantee, the nursing home's case would have been more difficult to prosecute.

Third, When applying for Medicaid, disclosure of all gifts must be made, regardless whether the parties intended the gifts as long-term care planning gifts, or whether the gifts might be overlooked.  The State is quite proficient at discerning improper transfers, and financial transactions, regardless the value, leave a footprint.

Fourth, counsel should be retained by caregivers, family members, and/or fiduciaries prosecuting any application for Medicaid.  Family members often reason that, since there is no value to the applicant's estate, the cost of counsel is unwarranted.  Counsel should be retained for the purpose of advising the person assisting in preparing or otherwise prosecuting the application  in order to protect his or her estate.  It is unclear what options might have been available to Ms. Donley had counsel been fully apprised of the situation (non-institutional care, mortgage, reverse mortgage, establishing residence of the grandmother in daughter's home and qualifying her care as necessary to avoid nursing home care, as examples),  but it is apparent that proceeding without regard for the ultimate possible consequence was an expensive, and possibly financially disastrous strategy.

Finally, nursing homes do evict residents.  There is a common misconception that nursing homes will always bear the financial burden of an indigent resident.  Nursing homes are not hospitals, many of which are required by federal law to provide care to indigents.  A nursing home will protect itself legally and financially, as it should for its own financial health, and ultimately for the health and safety of its residents.

Nursing homes have excellent lawyers representing their interests.  Likewise, caregivers and fiduciaries should have excellent lawyers representing their interests.  

For a full text of the decision, click here.     

ODI Assists Families Locate Lost Life Insurance Policies

If you suspect a deceased loved one has a life insurance policy that you cannot locate, there is a service through the Ohio Department of Insurance (ODI) that can assist in identifying and locating the policy. ODI’s missing life policy search service is a comprehensive search service that assists Ohio residents, and the families of deceased Ohio residents, in locating lost insurance policies purchased in the state. The search identifies the existence of any life insurance policies or annuity contracts purchased in Ohio and issued on the life of, or owned by, a deceased person.

Since its implementation in September of 2009, the missing life policy search service has had 682 valid search requests, and have matched 442 polices with their rightful owners. Executors, legal representatives, or members of the deceased person’s immediate family may file a search request with the Department. To submit a request, visit the Missing Life Policy Search Service, page of ODI's website.  Go here to print out a request form.  Have the form notarized, attach a copy of the certified death certificate, and mail it to the Department.

The Department forwards the search requests and supporting documentation to all Ohio-licensed life insurance companies within 25 business days of submission. If an insurance company has information about an in-force individual insurance policy on the life of the deceased person or an individual annuity contract where the deceased person is an annuitant, the insurer is required to take action to administer the policy and/or contract according to its terms. If any money is to be paid to a beneficiary, the insurance company will contact the beneficiary directly. In this case, the company has 21 days to notify the consumer after contacting the Department.

Ohioans with questions about life insurance can call the Department's toll-free consumer hotline at 1-800-686-1526. A life insurance informational toolkit is also available on the Department's website. The toolkit provides tip sheets, publications, and links to other helpful web sites.

Using Your Social Security Benefits as an Interest-Free Loan

One little-known Social Security retirement benefits rule is the so-called “do-over rule.” Under this rule, an individual 62 years or older can start collecting benefits but stop the benefits within 12 months of the start, repay the benefits collected, and then still be eligible for their higher benefit amount when they collect at full retirement age or older.

What’s the advantage if the benefits must all be immediately repaid? The strategy can work as a short-term interest fee loan. It makes sense, for example, in cases where an individual has a need for income in the immediate short term, due to an emergency such as a sudden loss of employment, but they anticipate income, i.e. finding a new job or collecting a pension, within the year which would allow for full repayment. For many individuals in the their early 60s, a majority of their assets are tied up in retirement and investment accounts and withdrawals from these accounts would trigger hefty penalties. After “emergency” liquid funds run out, the do-over rule offers a short-term solution. In addition, by drawing on a Social Security “loan” instead of investments, you allow your investments to continue growing.

What if you are unable to pay back the benefits after the 12 months are up? You may still be able to suspend your benefits and increase your ultimate pay-out amount. For example, if you start collecting at 62 but no longer need the income at 66, you could suspend benefits until 70. Then, between the ages of 66 and 70, you would earn delayed retirement credits which would increase the ultimate benefit amount when you collect at age 70.

(Note that up until December 2010, it was possible for you to collect benefits and repay at any time. The law has since changed so that you are limited to a 12-month pay back period. You are also only allowed one “do-over.”)

For more information on how to collect, suspend and pay-back benefits, contact or visit your local Social Security district office. You can click here to find your local office.

Religious Music Aids the Dying

Listening to religious music helps seniors increase their life satisfaction and self-esteem, and decreases anxiety around death, according to new analysis published in the Journal of Gerontology.  Music also helped seniors appreciate a sense of control, according to researchers at Baylor University, University of Texas- San Antonio, Bowling Green State University and Duke University. The research suggests that long-term care residents may benefit from listening to religious music. Responses were collected among more than 1,000 adults, all over age 65, who were either practicing Christians, identified as Christian in their past, or who were unaffiliated with a specific faith.

"Given that religious music is available to most individuals — even those with health problems or physical limitations that might preclude participation in more formal aspects of religious life — it might be a valuable resource for promoting mental health later in the life course,” the authors concluded. Results appeared in The Journal of Gerontology.  

According to McNights Long-term Care News, a  2013 study, also published in the Journal of Gerontology, considering the use of religious songs in helping older African Americans cope with stressful life events, also found that songs evoking themes of thanksgiving, communication with God, and life after death improved the mental health of those studied.  These join a growing amount of research literature that associates various religious factors with positive mental and physical health, and even suggests that aspects of religious involvement may reduce mortality risk. 

Go here for an article discussing the broader Family and Psycho-Social Dimensions of Death and Dying in African Americans.

IRAs Can Affect Medicaid Eligibility

For many Medicaid applicants, individual retirement accounts (IRAs) are one of their biggest assets. If you do not plan properly, IRAs can count as an available asset and affect Medicaid eligibility.

Medicaid applicants can have only a small amount of assets in order to be eligible to receive benefits ($2,000 in most states). Certain assets -- i.e., a house, car, and burial plot -- are exempt from eligibility determinations. Whether your IRA counts as an exempt asset depends on whether it is in "payout status" or not.

At age 70½, individuals must begin taking required minimum distributions from their IRAs, which means the IRA is in payout status. You may also be able to choose to put your IRA in payout status as young as age 59 ½ if you elect to take regular, periodic distributions based on life expectancy tables. If an IRA is in payout status, depending on your state, it may not count as an available asset for the purposes of Medicaid eligibility, but the payments you receive will count as income. Medicaid recipients are allowed to keep a tiny amount of income for personal use and the rest will go to the nursing home.

If the IRA is not in payout status, the IRA is a non-exempt asset, which means the total amount in the IRA will probably be counted as an asset, affecting your Medicaid eligibility. In order to qualify for Medicaid, you will need to cash out your IRA and spend down the assets. Alternatively, you could transfer the money to your spouse or someone else, although there will likely be an income tax penalty for doing this.  

Note that the rules for a Roth IRA may be different. If you have a Roth IRA, depending on the rules in your state, it may not be exempt at all because Roth IRAs do not require minimum distributions.

The rules regarding IRAs and Medicaid are complicated and vary from state to state. You should talk to your attorney about your IRA to determine the best course of action for you. 

For more information on retirement planning, click here.

For more on Medicaid's rules, click here.

CNA's Face Prison for Stealing Nursing Home Residents' Identities and Defrauding Government

Three former nursing home aides face prison time for stealing residents' identities and conning the government. The Georgia women obtained residents' personal identification information from the nursing home where they worked as certified nursing assistants, and they used the information to file fraudulent tax returns, according to court papers and evidence introduced at trial. The DOJ did not name the facility where the women worked.

One of the defendants, Kimberly Banks, was convicted after a one-week trial in January. She received a 192-month prison sentence on Thursday, announced Assistant Attorney General Kathryn Keneally of the Justice Department's Tax Division and U.S. Attorney Michael J. Moore for the Middle District of Georgia.

The other two defendants, Donalene Mosely and Arneshia Austin, entered guilty pleas to conspiracy prior to trial, according to the prosecutors. They received 37-month and 21-month prison sentences, respectively. The three former CNAs also have been ordered to pay about $275,000 in restitution.

Of course, repayment may not be forthcpming. The women used refunds from the fraudulent returns to make car and mortgage payments, buy products online, and throw a “red carpet party,” the Department of Justice stated in a news release. They raised more than $600,000 by filing nearly 200 false returns.

This is the second nursing home identification theft case to come out of Georgia recently. In January, Yolando Blount received a 27-year prison sentence for her role in a similar but unrelated scheme.