Pocket Deeds Are Horrible Planning Instruments

I recently discussed with an estate planner the advisability of using a “pocket deed” to fund a revocable trust.  A pocket deed is a deed that is signed during a person’s life, but "pocketed," that is, not recorded, until after the person dies. Pocket deeds were traditionally used to transfer proper to heirs, but apparently in a more modern approach, it is now sometimes used to transfer property to a trust.  

This technique is usually intended to accomplish two goals:

1. Control – Unrecorded deeds allow the property owner to retain control of the property during his or her lifetime. Since the unrecorded deed is not a matter of public record, the owner remains the record owner of the property.  If the deed stays in the owner's possession )a bid assumption), the owner can destroy the deed if the owner changes his or her mind.
2. Probate – The recording of the deed after the owner's death is usually intended to avoid probate.  If it works (a big assumption), the transfer is treated as being effective when the deed was signed and the property won’t be included in the owner's probate estate.

The biggest objection I have to the modern approach is that it fails to appreciate the advantages of the trust.  In fact, advising a person not to record the deed  suggests that there is some disadvantage to transferring the property to the trust. If the trust is a revocable trust, and you are the trustee, you control the property before and after the transfer.  Since the purpose of the trust is to avoid probate, and transferring the property during your life accomplishes that, why not record the deed?

Pocket Deeds Frustrate Good Planning

Regardless, unrecorded pocket deeds are just a bad idea.  They are inconsistent with the fundamental bases of good planning, which assumes the worst, and on that basis implements a plan before the worst happens to derail the plan.  Worst cases include house fires, lost documents, improperly executed or authenticated documents, scrivener (drafting) errors, and the like. Implementing your plan today means that you will solve and resolve these problems.  Pocketing a deed for recording after your death means that these risks may frustrate your plan.  

Consider the following examples:

• A deed is prepared based upon the prior deed.  The County Engineer subsequently changes property description rules, and refuses to accept for recording property descriptions using historic references.  Years later the owner dies, leaving a signed deed that is not recordable given the subsequent changes.  The property must be probated. If the deed had been recorded when prepared, it would have been owned by the trust at the owner's death, and there would be no probate.  

• The result in the previous situation would be the same if there was an error in the title owner's name, or if the notary forgot to affix a seal, or the signature of the owner was defective, or the property description was defective.  If the deed is presented for recording and rejected by either the County Engineer or County Treasurer while the owner is alive, the owner simply corrects the deed and submits the corrected deed for recording.  If the deed is rejected after the owner has died, there is no one but the executor of the owner's estate that has authority to fix, correct, or amend the deed.  

• A deed is prepared and pocketed by placing the deed in a drawer.  After the owner's death, the family cannot find the deed, or inadvertently disposes of it when cleaning the drawer of other miscellaneous unnecessary paperwork.  Perhaps the person who finds the deed destroys it intentionally, in order to create mischief or opportunity (read on for an example how this might create opportunity).  A lost or destroyed pocket deed is unable to serve any purpose. The property must be probated. 

• A deed is prepared transferring several properties, each to a different child.  The deeds are placed in the family's home safe.  Several years later, one child finds the deeds while retrieving other paperwork from the safe.  He removes the deed transferring the property to himself and records it.  At a minimum the owner no longer controls the property.  More, the owner suffers the risk of loss realized by the child.  If the child declares bankruptcy, for example, the property may be lost to satisfy creditors.     

The foregoing examples simply describe how use of a pocket deed can result in the frustration of your estate plan.   But, that isn't the worst of the pocket deed story; pocket deeds can have significant adverse consequences.  The last example demonstrates how conveying property can create risks.  By the way, none of the examples are problems for an owner who simply conveys his or her real property to his or her trust.

Unrecorded Deeds Can Create a Cloud on Title

Under the laws of most jurisdictions, a deed is not effective until it has been properly signed and delivered.  The delivery requirement is important. Just signing the deed is not enough to complete the transfer.  Delivery of the property is presumed if the deed is publicly recorded.

In ordinary real estate transfers, the deed is delivered and recorded at the time of the conveyance.  But with pocket deeds, the deed is not recorded. There is no proof of delivery during the life of the owner.  This raises a number of questions.  Was the deed delivered to the transferee at all? Can delivery be proved? If delivery was not made, is the failure evidence that the owner changed his or her mind?  If the property is not delivered before the death of the owner, the transfer may be void or voidable.  If the transfer was a gift, meaning that no consideration changed hands, the transfer is not legally enforceable by the transferee.

Questions like these can create a cloud on title, meaning that title insurers will not write a policy on the property without some legal action to clear the title. The transferee would have every incentive to claim that the deed was delivered before the owner died, and the owner is not able to say otherwise. In these circumstances, title companies may be reluctant to simply accept the transferee’s word that the deed was properly delivered prior to the owner's death.  This is especially likely if the deed has remained in pocket (unrecorded) for years before the owner's death.

If the deed recording occurs shortly after execution of the deed, a title company will simply presume that there was valid delivery. But a conservative title company may require a declaratory action to quiet title before it will issue a policy on the property.  An action to quiet title will convert statements regarding delivery to legal testimony in a legal proceeding, after publication and notice to anyone who may claim otherwise. A title company can then be sure that there aren’t any competing claims to the property.

If a title company will not write a policy on the property without a declaratory action, the title to the property is unmarketable. The trustee or new owner will be unable to sell, mortgage, or otherwise deal with the property until the title issue is resolved.  The legal fees for bringing an action to quiet title are usually more expensive and time consuming than proper planning on the front end, and may result additionally in probate.

Unrecorded Deeds Can Give Creditors a Lien on the Property

An unrecorded deed does not put third party creditors on notice that the property has been transferred. This means that the transferor’s creditors (including creditors of his or her estate) may put a lien on the property. This leaves the transferee open to a claim by the transferor’s creditors. If that happens, the transferee would need a legal action to deal with the lien.

Unrecorded Deeds Can Create Tax Issues

Assuming that the owner does not have an estate that is taxable for Federal Estate Tax purposes (i.e., assuming the owner’s estate is worth less than $5.25 million under current law), it is usually better from a tax perspective for the owner to hold onto the property until death. This will give the new owner a full stepped-up basis in the real estate, effectively erasing any appreciation that accrued while the owner was alive. This can result in a significant income tax savings upon sale of the property. This tax planning opportunity is forfeited when a pocket deed is signed during the owner's lifetime.

Property gifted during the owner's life does not receive a step-up in basis.  The transferee would be forced to pay capital gains taxes on the sale of the property using the owner's original basis to determine the taxable gain.

In addition, the transferor is required to file a federal gift tax return (Form 709) for any transfer of property that exceeds the annual exclusion amount (currently $14,000). Since most real estate is worth more than $14,000, the transferor is usually required to file this return when the pocket deed is actually signed. The hassle and expense of filing the Form 709 can be avoided by holding the property until death.

The proponents of the modern version will correctly note that none of those opportunities apply when the property is transferred to a revocable trust.  But, the real nature of the transfer is nonetheless concealed until after the owner's death.  What if a taxing authority argued that the concealment suggested fraud (concealment is an indicia of fraud), and suggested the property was also actually conveyed to the heirs by an alternate pocket deed, which deed was destroyed upon the owner's death.  In this instance the parties conspire to structure a transaction so that it can be characterized in the most favorable way possible after the occurrence of one of several possible events.  In this way, the parties can "have their cake and eat it too."  This can result in the transfer being characterized so as to create a taxable event, and corresponding tax consequence, prior to death.  In other words, what would not have been taxable, can be made taxable by constructing the transaction is a suspicious way.

This danger is precisely why an Ohio senior should never prepare a pocket deed conveying the  home to a child.  The senior will likely claim a homestead exemption reducing the property taxes.  The homestead exemption is not available to the child, especially if the child is not living in the home.  When the the pocket deed is recorded after death, the child will be responsible for repaying the homestead exemption, since the senior was not entitle to the exemption after conveying the property to his or her child, together with interest and penalties for the unpaid taxes.      

Unrecorded Deeds May Invite Legal Challenge

Unrecorded deeds will not necessarily  avoid probate.  As explained above, anything that happens that prevents recording of the deed will necessitate probate of the property.  In addition, a pocket deed may create the opportunity for legal challenge or contest.

I once represented a child that was disinherited by his father's trust.  Of course, upon reviewing the trust, I advised my client that normally there would be little opportunity to contest the trust, and suggested he resign himself to the fact that the trust would be administered according to his father's wishes.  This was particularly unfortunate under the circumstances, because, although the son was once estranged from his father, the father and son had in the intervening years reconciled, and were for several year's before the death of the father on good terms.

Shortly after the father's death, a sibling shared the harrowing work the siblings were forced to perform in days before and after the father's death.  Apparently the deed was just one of many assets that were left out of the trust, until the father fell unexpectedly ill.  The new information breathed life into the son's claim under the trust.  Was it possible that the father has refused to fund the trust given reservations regarding the disinheritance?  If the trust was not an expression of the father's wishes through mistake or change in circumstances, the son would have a viable claim.  Although the matter could easily have been resolved in an expensive court action, it was resolved by settlement.  The settlement, regardless of the circumstances compromised the father's wishes; the son was neither disinherited nor treated the same as his siblings.  It is unlikely that is how the father intended his estate to be resolved.

A Last Will and Testament is more susceptible to challenge than is a trust.  If it is determined that the property is not owned by the trust, and the Will is successfully challenged, the distribution of the estate can be altered from what the owner intended.  If the probate estate is distributed intestate, i.e., without a Will, the estate is distributed according to the heirs at law.  Who the beneficiaries of the trust are is irrelevant to property being probated where there is no Will pouring the estate over into the trust.

In Ohio, perhaps the most famous case arising from a  contest to a deed recorded after death is the case Schueler v. Lynam, 80 Ohio App. 325, 75 N.E.2d 464 (App. 2 Dist. 1947). In that case, the court held that the pocket deed was null and void, in part because partys of the deed required completion after the death of the owner. 

But other states, too, have invalidated pocket deeds as perpetuating fraud. 

Unrecorded Deeds Surrender Intended Benefits of a Trust

Among the possible intended benefits of a trust are protection of the assets from court-appointed guardianship, protection from certain creditors after death, seamless management of the assets during periods of unavailability, incompetency, or incapacity.  These, and many other benefits of trust management are lost when assets are retained in the owner's individual name.  Quite simply, pocket deeds surrender any of the lifetime planning benefits of a trust.  Usually, this means that either the individual was not properly apprised of the benefits of trust planning, or if being directed by a professional representative (agent, financial planner, or attorney), the representative is unaware of the benefits, or is seeking to obtain some other objective.

Because pockets deeds don't always work, almost always take risks that could be avoided by simply implementing a plan, and have unintended consequences, like most attorneys, I do not recommend their use.  

Finally, if you  find an article written by an attorney concluding that pocket deeds are recommended and advisable, please send it to me.  If you are interested, there are many suggesting that pocket deeds should be avoided.  For example, go here, here, here, here, and/or here. 

  

Major Long Term Care Insurance Company Declared Insolvent

Clients have heard me say many times that the long term care insurance industry is the canary struggling in the mine pointing to greater complications with the current health care system's reliance upon skilled nursing facilities to reduce more expensive  hospitalizations. Long-term-care insurance is designed  to shield families from crushing nursing home costs. But, the industry has reeled in recent years as health care policy encourages more, not less, institutional care for the elderly. 

Among the reasons consumers reject these policies is that the already expensive premiums are likely to increase. The increases are necessary, according to the industry, because claims made on the policies are increasing at unpredictably high rates, threatening the solvency of the policies.   Because the health care system encourages more, not less, long-term institutional care, the policies become economically unsound for both the insurance company and consumers Last year, the entire LTCI industry sold only about 100,000 policies, a stunningly low number at a time when more than 8,000 Americans turn 65 each day.  In 2000, Americans purchased 750,000 policies.  

Unexpected evidence that the industry may be faring even worse than previously imagined comes with the announcement that Penn Treaty of Allentown, Pennsylvania was recently ordered to liquidate and wind down its affairs, orphaning tens of thousands of policyholders. Big insurance companies rarely fail in the United States due to incentives created by state regulations encouraging healthy insurance companies to purchase an ailing insurer after which the troubled business simply vanishes  into the rescuer’s business. Policyholders may not even know what happened, or care, as long as claims are paid.  It is troubling that either Penn Treaty was so economically unsound that no buyer was interested, or that the industry is suffering so much that no other company or group of companies could rescue Penn Treaty.

According to the New York Times,  Penn Treaty’s failure may be a signal of more trouble to come in the long-term-care sector: 

“Liquidation is rare, but it does happen in bunches sometimes,” said Robert Hunter, director of insurance for the Consumer Federation of America. The organization has been warning about problems with long-term-care insurance since the early 1990s. In essence, companies underestimated the true cost of coverage and are struggling now to make good on all their promises.  “There is definitely talk in the street that it’s still a high-risk situation for quite a few companies,” he said. “It’s not a healthy situation.”

Each state has a  guarantee fund to rescue policyholders when an insurance company failures. The funds pay people’s claims, up to a predetermined limit that varies by state. The limit is $300,000 in Ohio, Florida, and Pennsylvania.  A few states cap guarantee-fund relief at $100,000. Others, like California and Connecticut, guarantee $500,000 and more. New Jersey is said to have no limit at all, but some analysts question that promise, especially if another big long-term-care insurer fails.  You can check every state's fund limit here.    

Regardless, in most states the fund only pays a claim to the reserve limit.  Many long term insurance policies have potential claims values two or three times that value.  If a policyholder experiences a loss in excess of the $300,000 limit, the policyholder has no recourse for the remainder of the insurance benefit the policyholder purchased.    

Summit County Probate Court Conducts Clothing Drive for Indigent Seniors

The Summit County Probate Court is seeking gently used clothing for indigent wards of the court in long-term care facilities.  The Probate Court will collect gently used, clean clothing from April 17 through May 19 during  court hours.

Probate Court Judge Elinore Marsh Stormer said in a news release reported by the Akron Beacon Journal: 

“The Probate Court is guardian over nearly 900 indigent senior wards in Summit County. Some of our wards enter nursing homes without a decent change of clothes and no funds to buy clothing. Since it’s time to go through our closets, please consider helping some of our most vulnerable citizens.

The court is seeking to follow up on its successful holiday clothing drive when more than 1,000 pieces of clothing were collected and distributed.  All donations are welcome with a special need for larger sizes. Donated clothing will be distributed to seniors residing in nursing homes in the area who need these very basic items.

“We will accept any clothing such as coats, sweaters, jackets, shirts, pants, gloves/mittens, hats and scarves, socks, slippers, et cetera,” said Mary Ann Freedman, community outreach coordinator for the court. “Items can be dropped off to the Human Services Department, located in the basement level of the court house.”

The Probate Court, at 209 S. High Street in Akron, is open 8 a.m. to 4 p.m. Monday through Friday.

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For more information, contact Mary Ann Freedman, community outreach coordinator at 330-643-2332 or Lisa Mansfield, community outreach specialist at 330-643-7346.

"SICK, DYING AND RAPED IN AMERICA'S NURSING HOMES" - CNN Exposes Sexual Abuse in Long Term Care Institutions

Nursing home residents are among the nation's most vulnerable.  Many suffer from illness, disabilities, Alzheimer’s or dementia,  mobility limitations, and speech or hearing impairments.  They are often weak, fragile, and unable to defend themselves. A CNN investigative report has exposed  that, rather than protecting these vulnerable seniors, many long term care facilities expose them to sexual assault, abuse, and rape.  Worse, the abusers are often protected by the facilities, regulators, and legal systems. Although elder sexual abuse can occur anywhere, it ragically occurs most often in nursing homes.

In the explosive exposé, the first installment of which is entitled "Sick, Dying, and Raped in America's Nursing Homes," CNN reported  “this little-discussed issue is more widespread than anyone would imagine. Even more disturbing, in many cases, nursing homes and the government officials who oversee them are doing little -- or nothing -- to stop it.” 

More specifically, “more than 16,000 complaints of sexual abuse have been reported since 2000 in long-term care facilities.” This number wholly fails to reflect the  true extent of the problem because it includes “only those cases in which state long-term care ombudsmen (who act as advocates for facility residents) were somehow involved in resolving the complaints.”  As might be expected, ombudsmen are only rarely involved in such incidents, and as a result, the statistic only serves to illustrate a far greater underlying problem.  

Regardless, whatever statistics or surveys one is able to ferret from which to create data, sexual abuse in nursing homes and other long term care institutions is vastly under-reported.  According to a report prepared by the  National Research Council, “a vast reservoir of undetected and unreported elder mistreatment in nursing homes" exist precisely because the population is vulnerable.  "Because nursing home residents as a class are both extremely physically vulnerable and generally unable either to protect themselves or report elder mistreatment they experience, the physical and emotional costs of elder mistreatment in such environments are likely to be very high."

Further frustrating appreciation of the problem is wanton concealment by the industry.   CNN  found, “the federal government has cited more than 1,000 nursing homes for mishandling or failing to prevent alleged cases of rape, sexual assault and sexual abuse at their facilities during this period...[a]nd nearly 100 of these facilities have been cited multiple times during the same period.”  CNN interviewed family members who believed their loved ones were being violated as well as nursing home employees who claim to be forced from their jobs for disclosing sexual abuse suspicions. They also spoke to advocates for the elderly and to industry insiders who agreed that immediate change is needed in regard to how alleged sexual abuse reports are handled.

Shockingly, the federal and state regulatory agencies make identification of even reported cases difficult, because, despite the frequency and extent of the problem:

"Despite the litany of abuses detailed in government reports, there is no comprehensive, national data on how many cases of sexual abuse have been reported in facilities housing the elderly."

State health investigators examine all types of abuse reported at nursing homes and assisted living facilities, whether reported by the facilities or flagged by complaints to the state from witnesses, family members or victims. In the case of nursing homes, state officials typically conduct these investigations, as well as routine inspections, on behalf of the federal Centers for Medicare & Medicaid Services (CMS), which regulates the more than 15,000 facilities that receive government reimbursements that pay for many residents' care. Both state health agencies and the federal government then use the information to rate facilities and issue financial penalties for the worst offenders.

CNN surveyed the health departments and other agencies that oversee long-term care facilities in all 50 states. Of the states that could provide at least some data, the responses varied widely.   Wisconsin, for example, reported it didn't have a single substantiated report of abuse in the last five years!  Worse than the unbelievable, is that most states were wholly unable to say how frequently abuse investigations involved sexual allegations, often stating that sex abuse allegations are not categorized separately from other forms of abuse.

The federal government doesn't specifically track all sexual allegations either. CMS lumps sexual allegations into a category that includes all kinds of abuse, such as physical or financial. CMS told CNN that it did not segregate sexual abuse because it takes all forms of abuse seriously.  It is unclear whether CNN asked CMS why, then, it tracks some incidents, rather than others?  When asked by CNN, the agency conducted a specialized search using sex-related keywords, but because not every case was sexual in nature, CNN had to review each case individually to filter out any irrelevant citations.

According to CNN, "the reports show that 226 nursing homes have been cited for failing to protect residents from instances in which sexual abuse was substantiated between 2010 and 2015." Of these cases, "around 60% resulted in fines, which totaled more than $9 million -- though only 16 facilities were permanently cut off from Medicare and Medicaid funding."  Because the federal government only regulates nursing homes, CNN's analysis did not include assisted living facilities.

In the installment entitled, "Six Women. Three Nursing Homes. And the Man Accused of Rape and Abuse," CNN followed the trail of a nursing aide who was a serial sexual offender, and despite having demonstrated an obvious and discoverable pattern of sexual abuse and rape, was able to move from one facility to another.   With a history of sexual abuse allegations, the aid continued to find employment in the nursing home profession.   CNN found that nursing home officials are quick to dismiss a resident’s sexual abuse claims as "hallucinations" or "fantasies."  CNN also discovered that state labor laws often protected abusers, and discouraged administrators from properly disciplining serial abusers.  

Although women are, by far, the most common victims of sexual abuse in long term care institutions, men, too, are often victimized. Sexual abuse of older men in nursing homes crosses traditional gender, cultural, and role boundaries for both victims and perpetrators.

Worse, although most offenders are "loners," who commit their abuse secretly and alone, CNN discovered a frightening number of examples in which abusers conspire to commit sexual abuse of the most vulnerable, spurred in part by a form of dehumanizing "mob mentality:"  

For months, a group of male nursing aides at a California facility abused and humiliated five male residents -- taking videos and photos to share with other staff members. One victim, a 56-year-old with cerebral palsy, was paraded around naked. Another, an elderly man with paralysis who struggled to speak was pinched on his nipples and penis and forced to eat feces out of his adult diapers. He was terrified his abusers would kill him. While the aides lost their certifications, an investigation by Disability Rights California found that many of them never faced charges.

Another group of nursing aides, teenagers in Albert Lea, Minnesota, tormented at least 15 male and female residents, many of whom suffered from Alzheimer's. The female aides struck, poked and rubbed the residents and touched their breasts. They inserted their fingers into one resident's rectum. They rubbed the residents' crotches and laughed. One aide pulled down her own pants and sat on a female resident's lap -- humping and groping her. "I was basically appalled by the callous disregard for human decency," a judge later said. Two of the abusers, who were 18 at the time and convicted of disorderly conduct by a caregiver, served 42 days in jail. The other teens were tried in juvenile court and faced no jail time at all. (emphasis added).

Detection of the crime can be difficult, if not impossible.  Residents often are unable to complain or report details of attacks.  Physical evidence is often scant.  Even when combined with strangulation, which is occurs in as many as one quarter (25%) of reported sexual assault cases, there may be no obvious physical signs or marks of the assault.  Strangulation requires less pressure than the pressure of an average handshake; it is possible to strangle a person to death and leave no  marks or signs.  

The psychological and emotional trauma is too easily ignored when exhibited by the elderly.  Sexual assault can cause  anxiety, depression, suicidal thoughts, PTSD, memory loss, and when combined with strangulation or use of force, even stroke. Victims may have lost consciousness during the assault,  and may have trouble recalling details of the sexual assault. They may also be embarrassed by some of their symptoms, such as urinary or fecal incontinence.  These effects are often attributable to other causes or conditions suffered by the elderly.  Sadly, CNN found that workers often lacked specific training needed to spot sexual abuse -- keeping reports of abuse from ever reaching authorities.

Certainly, many nursing home employees promptly report abusers to authorities as required by federal law and assist in the investigations. But in numerous examples of abuse uncovered by CNN, the facilities themselves made it possible for violent rapes and sexual assaults to go unchecked, unreported, and poorly or incompetently investigated.  Allegations are routinely questioned or dismissed because victims have cognitive conditions such as Alzheimer's.  According to CNN, "the reputation and safety of the facility may take priority: There's often a fear that bringing investigators into a cash-strapped facility may expose other issues, threaten a nursing home with closure or open the door to costly lawsuits."

CNN reported on one such case:

When the chef at an assisted living facility, was arrested in Louisiana last year in the alleged rape of a 78-year-old resident, a director at the facility, Julie Henry, was quick to issue an emotional statement to local media -- claiming the company was "shocked and disheartened." But not long after, Henry was arrested, accused of orchestrating an elaborate cover-up of the abuse. According to police, she had tried to prevent an investigation by instructing staff not to report the incident. She asked employees at the assisted living facility, Beau Provence Memory Care, to hand over all evidence to her, which she then allegedly destroyed. The chef, Jerry Kan, was indicted on a first first-degree rape charge and has pleaded not guilty. The case is ongoing and his attorney declined to comment.  

CNN reported that at the time of publication, "Henry has not been indicted."

The National Association of Health Care Assistants responded with a pledge to act. They stated its members are “saddened and sickened by the CNN investigative report” and planned to increase training and education within its membership. They said this includes ensuring that nursing assistants know how to identify warning signs of potential abuse and the proper mechanism for reporting it to higher authorities.

AMDA – The Society for Post-Acute and Long-Term Care Medicine, also responded:

AMDA emphatically condemns any type of abuse of post-acute and long-term care (PALTC) residents, and stands by its mission to promote and enhance the development of competent, compassionate, and committed medical practitioners and leaders to provide the highest quality, goal-centered care to patients and residents across all PALTC settings.

Adequate education, training, and leadership is vital to ensuring the safety, comfort, and quality of life of PALTC residents and patients. For 40 years, the Society has worked to:

• Train practitioners to identify and report elder abuse – Society educational programs including the Annual Conference, and the Core Curriculum on Medical Direction in PALTC provide education on residents’ rights, elder mistreatment, and more.

• Train practitioners to provide high-quality care to all patients, and to be aware and able to properly deal with issues made more complicated when treating patients with cognitive impairments. Sexual activity among residents in PALTC settings is a challenging topic for all parties. The Society continues to work on educational and policy initiatives to protect and better care for patients with cognitive impairments.

The Society believes that it is vitally important to provide patient-centered care in all circumstances, to all patients, listening to and investigating all complaints, concerns, and other comments by patients and family members. The Society will continue to train health care practitioners, advocate for them, their patients and family members, and educate the public, to advance its mission: A world in which all PALTC patients and residents receive the highest-quality, compassionate care for optimum health, function, and quality of life.

Legislative solutions are often proposed, but provide a mix of possible solutions.  On one hand, the State of Missouri is taking measures to allow hidden cameras within nursing homes to catch offenders. Other legislation, however, is aimed at making it much harder to take legal and punitive action against nursing homes that have a problematic past.

Iowa is considering legislation aimed at limiting the legal liability of nursing homes as well as doctors and facilities in the medical industry, in order to cut health care costs affected by huge lawsuit amounts.  Advocates for nursing home abuse victims are strongly opposed to such legislation, but they also often oppose on worker and resident privacy grounds remedial efforts, such as cameras.  . Some suggest that without the threat of litigation, nursing home companies are free to operate without accountability, notwithstanding that large lawsuit recoveries don't appear to be effective currently in creating accountability.  

Looking for legislative solutions, however, is likely a fools errand.  The problem is not new. As a 2003 National Academies Press Report lamented: 

We are not the first to lament the poor state of knowledge about elder mistreatment. In 1986, a consensus conference of leading researchers (including two of our panel members) was convened at the University of New Hampshire to point the way toward advancing knowledge. The conclusions and recommendations reached at that conference are strikingly similar to those appearing in this report. (emphasis added).

The best solution to institutional care risks remains avoiding institutional care.  "Aging in Place" should be a significant discreet objective of your estate and financial plan. 

Facial Injuries in Nursing Homes Underappreciated and Contribute Significantly to Healthcare Costs

A recent study illustrates yet another reason that consumers should plan to "Age in Place," and avoid unnecessary and avoidable institutional care.  The incidence of facial injuries suffered by nursing home residents may be underappreciated and therefore missing from coordinated efforts to prevent the injuries resulting in “substantial amount of costs” to the U.S. healthcare system, the  recent study suggests.

A research team from Wayne State University in Michigan conducted the first-ever population-based analysis of facial trauma in the skilled nursing setting, with the goal of shedding light on the “significant clinical issue.”  “Because [facial trauma] has been largely neglected in the literature, characterization of facial injury patterns among the elderly population, including the extent to which this affects our health care system, may be exceedingly invaluable,” the study's authors wrote.

Analysis of data from the National Electronic Injury Surveillance System found that nearly 110,000 nursing home residents required emergency department care for facial trauma between 2011 and 2015. While residents in their 60s had relatively equal facial injury rates, the number of injuries increased with age for female residents.

The most common facial injury among nursing home residents were lacerations and other soft-tissue injuries, such as contusions or hematomas. The study estimated that nearly 3,000 facial fractures occurred in skilled nursing residents each year.

The analysis discovered that 22.7% of facial fractures occurred as a resident was transferring in and out of bed, suggesting an area of targeted interventions from providers, healthcare researchers and policymakers.

Results of the study were published last Thursday in JAMA Otolaryngology - Head & Neck Surgery.

Handy Link- Reporting Ohio Adult Abuse or Exploitation

Ohio publishes a handy fact sheet for Adult Protective Services.  For a directory of County agencies, go here.  

Aging In Place- Pre-hospice Care Helps Patients Stay Home

Among the growing number of tools and resources aiding consumers to "age in place" is "pre-hospice." Kaiser Health News recently published an encouraging article, Pre-Hospice" Saves Money By Keeping People At Home Near The End Of Life, that well explains the concept and its promise. 

The article first discusses the practical impediments consumers face in an effort to age in place:

"Most aging people would choose to stay home in their last years of life. But for many, it doesn’t work out: They go in and out of hospitals, getting treated for flare-ups of various chronic illnesses. It’s a massive problem that costs the health care system billions of dollars and has galvanized health providers, hospital administrators and policymakers to search for solutions."

According to the article, Sharp HealthCare, a San Diego health system, devised the pre-hospice program called Transitions as a way to fulfill patients' desire to stay home, keep them out of the hospital, provide necessary care in their home, and reduce the costs of care. Social workers and nurses from Sharp regularly visit patients in their homes to explain what they can expect in their final years, help them make end-of-life plans, and teach them how to better manage their conditions, illnesses, and diseases. Physicians track their health, and eliminate unnecessary medications and treatments.  Unlike hospice care, patients don’t need to have a prognosis of six months or less to live, and they receiving curative treatment for their illnesses - not just relief from symptoms.

Transitions was among the first of its kind, but now there are several such "home-based palliative care" programs around the country. They are part of a broader push to improve people’s health and reduce spending through better coordination of care and more treatment outside of hospitals. Palliative care focuses on relieving patients’ stress and pain as their health declines, and aims to maintain quality of life. For people with serious illnesses, such as cancer, dementia, and pulmonary and heart failure, the plan is to provide patients palliative care and then transition naturally to hospice care when necessary.  The 2014 report “Dying in America,” by the Institute of Medicine, recommended that all people with serious advanced illness have access to palliative care. 

Transitions is one of the many good ideas that has come from Kaiser Permanente. Nearly 20 years ago, Kaiser created a home-based palliative care program in California and later in Hawaii and Colorado. Studies by Kaiser and others found that participants were far more likely to be satisfied with their care and more likely to die at home than those not in the program. One of the studies found that 36 percent of people receiving palliative care at home were hospitalized in their final months of life, compared with 59 percent of those getting standard care. The overall cost of care for those who participated in the program was a third less than for those who didn’t. A more recent study confirms these conclusions. 

The article also discusses that although the need for such services is increasing, "not enough trained providers are available. And some doctors are unfamiliar with the approach, and patients may be reluctant, especially those who haven’t clearly been told they have a terminal diagnosis." 

Of course hanging over ever the entire health care industry is what becomes of the Affordable Care Act.  The Affordable Care Act  established new rules and pilot programs that reward the quality rather than the quantity of care, such as “accountable care organizations,” networks of doctors and hospitals that share responsibility for providing care to patients. These organizations also share the savings when they rein in unnecessary spending by keeping people healthier. Innovations such as these are helping to make pre-hospice and home-based palliative care a more viable option.

Can Aging be Stopped and/or Reversed?

An intriguing article, "Purging the body of 'retired' cells could reverse ageing," published in the Guardian, reconsiders the question: "Can aging be stopped and or reversed?  The articles suggest that recent scientific advances suggest that purging retired cells from the body can reverse the ravages of old age.  New research raises the prospects of new life-extending treatments, and preventative therapies resulting from sweeping away dormant cells, :senescent cells" that  fail to divide genetically due to age, but create mischievous and malicious health impacts as they persis and build-up in an aging body.

The article reads as follows: 

When mice were treated with a substance designed to sweep away cells that have entered a dormant state due to DNA damage their fur regrew, kidney function improved and they were able to run twice as far as untreated elderly animals.

The team are now assessing whether the mice also live longer and are planning a series of safety studies in humans with the ultimate goal of testing whether getting rid of so-called senescent cells could help reverse a range of age-related disorders.

The discovery adds to a wave of new findings hinting at the possibility of a future in which doctors can treat ageing itself, rather than trying to combat the host of diseases that come along with it.

Such a scenario is now supported by science, according to Peter de Keizer, the 36-year-old scientist who led the latest work at Erasmus University Medical Center in the Netherlands. “Maybe when you get to 65 you’ll go every five years for your anti-senescence shot in the clinic. You’ll go for your rejuvenation shot,” he said. “That I can envision when we reach that age.”

Go here to read the rest of the article.  

Man Transported to SNF But Dropped Off at Wrong Location Found Alive Three Days Later

Among the inherent risks of institutional care is transport error.  An object lesson comes in the recent story of an Illinois man  who was dropped off at an intersection nearly ten 10 miles from the nursing home where he was supposed to be admitted.  He was found nearby in a ditch in a three days after.

Michael Bennett, 66, was in the process of being transferred from the Chicago Behavioral Hospital in Des Plaines, IL, to Westwood Nursing Home in Chicago. He was left at an intersection in Des Plaines approximately 10 miles away from the nursing home, according to authorities.  Illinois State Police issued a missing and endangered alert for Bennett. After seeing the alert, a citizen spotted Bennett curled up in a ditch three days later. Bennett was taken to a local hospital for evaluation.

The behavioral hospital is responsible for transporting discharged patients,  An administrator at Westwood told local reporters he was “mystified” that the driver didn't attempt to escort Bennett inside the nursing home, or notice that the facility was not located at the intersection.

The hospital had no comment on the incident.

To read other articles regarding the risks of transport, go here and here.

Aging in Place: Home Health Care Gets Best Outcomes for Knee and Hip Replacement Recovery

Aging in Place continues to be supported by scientific research and surveys.  The most recent research demonstrates that patients who go straight home from the hospital following hip or knee replacement surgery recover as well as, or better than, those who first go to a skilled nursing facility or rehabilitation center. Importantly, the research demonstrates that these health outcomes include those who live alone without family or friends.  

The research was reported in HealthDay, in an article appropriately entitled, "Home Beats Rehab for Knee, Hip Replacement Recovery."  According to the article, 

"We can say with confidence that recovering independently at home does not put patients at increased risk for complications or hardship, and the vast majority of patients were satisfied," said that study's co-author, Dr. William Hozack. He is an orthopaedic surgery professor with the Rothman Institute at the Thomas Jefferson University Medical School in Philadelphia.

 *                *               *

"Considerable evidence has now shown that most patients do just as well at home," he noted.

Hozack and his colleagues are presenting their findings in San Diego at a meeting of the American Academy of Orthopaedic Surgeons (AAOS).  Two other studies being presented at the meeting also found that recovering at home may be the better option.

One study found that patients who are discharged directly home following a total knee replacement face a lower risk for complications and hospital readmission than those who first go to an inpatient rehab facility. The study was led by Dr. Alexander McLawhorn, an orthopaedic hip and knee surgeon at the Hospital for Special Surgery in New York City.

McLawhorn was also part of a second Hospital for Special Surgery study, led by Michael Fu. That study found that hip replacement patients admitted to an inpatient facility rather than being sent home faced a higher risk for respiratory, wound and urinary complications, and a higher risk for hospital readmission and death.

Dr. Claudette Lajam is chief orthopaedic safety officer with NYU Langone Orthopaedics in New York City. She was not involved with the studies, but agrees that home recovery is the best option for most patients.  "The home setting is the single best way to get people back into their routines as quickly as possible after surgery," she told HealthDay.

"In some cases, this cannot be done," Lajam acknowledged. "Some patients live in settings that are inaccessible, [such as] a 5th-floor walk-up apartment where the patient would need to go downstairs to let the visiting nurse and therapist in the door." For some patients, anxiety about the recovery process could also pose a challenge, she added.

But "being in an institutional setting after surgery only reinforces the idea that the patient is 'sick,' " Lajam added. "We have learned that this type of thinking slows down recovery. We want our total joint patients to start using their new joints as quickly as possible, and staying in bed at a nursing facility is not the way to do this."

Because home environments vary, Hozack and his colleagues set out to see whether patients who live alone fare as well as those who live with others.  All 769 patients enrolled in the study by Hozack's team went home following either a total hip replacement or a total knee replacement. Of those, 138 lived alone (about 18 percent).

Once home, all were assessed on multiple levels, including functionality (ability to move); pain levels; hospital readmissions; emergency department visits; unscheduled doctor visits; dependency on assisted-walking devices; and time before returning to work or being able to drive again.  Hozack's team observed no differences by any measure. And while those who lived with others indicated relatively higher satisfaction levels at the two-week mark, by the three-month point there was no appreciable difference between the two groups.

"We feel that giving patients back their independence early on is the best way to promote a safe and effective recovery," said Hozack. His team concluded that single-household patients who go straight home can expect to fare as well as those who have live-in support.

According to HealthDay, a recent Mayo Clinic study calculated that between 2000 and 2010, the number of Americans who underwent hip replacement surgery more than doubled, rising from just under 140,000 to more than 310,000 per year.  Meanwhile, AAOS figures indicate that in 2010 more than 650,000 knee replacement procedures were performed, with about 90 percent involving total knee replacement.  AAOS estimates from 2014 show that 4.7 million Americans now live with an artificial knee and 2.5 million have an artificial hip.

Findings presented at the upcoming meetings are considered preliminary until published in a peer-reviewed journal.

Lawsuit Claims New York's Largest For-profit SNF Operator Kept Nurses in 'Indentured Servitude'

As the consequences of institutional health care for the elderly come to light, so do the consequences to those who work in the institutional elderly care industry. This blog has not before focused on the plight of workers in the industry, but will do so on a going forward basis.  The reason?  One can't expect quality health care from an industry that does not seek, keep, and maintain the highest quality personnel. There is, unfortunately, mounting anecdotal evidence that some in the industry often compromise in staffing decisions in ways one might expect would adversely affect health care outcomes.  

A newly filed class action lawsuit claims that New York's largest for-profit nursing home group allegedly kept more than 350 Filipino nurses in “indentured servitude” and sued those who tried to quit.  The lawsuit was reported in an article published in McKnight's.

The complaint was filed against SentosaCare by former employee and registered nurse Rose Ann Paguirigan. She said she was recruited from the Philippines to work for SentosaCare and eventually signed a contract to work for a Staten Island facility operated by the provider.

The contract stated that Paguirigan would be employed full time as a registered nurse and paid a base salary; instead, she was employed as an RN manager, given 35 hours of work each week and paid less than the wage stated in the contract.

Similar contracts were signed by hundreds of other foreign nurses recruited by the company, although SentosaCare and its recruiter, Prompt Nursing Recruitment Agency, have “policies and practices” to not give foreign nurses full time work or pay them the prevailing wage, Paguirigan's complaint states.

The filing also claims that the provider maintains a “deliberate scheme, pattern and plan” meant to convince foreign nurses that they would “suffer serious harm” if they quit the company or tried to find work elsewhere. This scheme included a reported $25,000 penalty placed in the nurses' contracts that they must pay if they left SentosaCare before the end of their contract term.

Paguirigan argues that a local court found the $25,000 “Indentured Servitude Penalty” unenforceable in 2010, but that SentosaCare, Prompt Nursing and its owners continue to use the penalty in its foreign nursing contracts.

The provider has filed lawsuits against at least 30 nurses since 2006 to collect the penalty, and has sought criminal indictments against at least 10 nurses and a lawyer retained to advise them, according to the complaint.

“The purpose of these lawsuits against plaintiff and other foreign nurses was not to recover actual losses, but to send a message to all foreign nurses that they will face civil litigation and incur substantial attorneys' fees if they stop working for the defendants,” the complaint reads.

The suit seeks compensatory and punitive damages or Paguirigan and other foreign nurses, as well as an injunction barring SentosaCare from threatening to enforce Indentured Servitude Penalties in their contracts, and a declaration that Indentured Servitude Penalties are unenforceable.

SentosaCare has previously been criticized in a ProPublica report for its rapid growth amidst fines and violations.

Developing an "Aging in Place" Guidebook for Your Final Years

Although it is difficult for seniors to plan for their final years, it is foreseeable that a senior may confront some health care issues. According to an article in Kaiser Health News, "A Playbook For Managing Problems In The Last Chapter Of Your Life," there is an interesting website," which helps older adults plan for predictable problems.  The website offers a "guidebook" for the final years.  

 “Many people plan for retirement,” the energetic physician explained in her office close to Lake Michigan. “They complete a will, assign powers of attorney, pick out a funeral home, and they think they’re done.”...What doesn’t get addressed is how older adults will continue living at home if health-related concerns compromise their independence." The focus isn't on end of life planning, according to the article, it's the time before. "Investigators wanted to know which events might make it difficult for people to remain at home. Seniors named five: being hospitalized, falling, developing dementia, having a spouse fall ill or die, and not being able to keep up their homes."

The result of the work is an interactive website that deals with issues such as falls, hospitalization, dementia, finances, and conversations. The website offers that "Plan Your Lifespan will help you learn valuable information and provide you with an easy-to-use tool that you can fill in with your plans, make updates as needed, and easily share it with family and friends." 

Account Transcripts Can Function As Estate Tax Closing Letters

On Jan. 6, the IRS announced that executors, probate courts, state tax departments, and others who rely on estate tax closing letters for confirmation that the IRS has closed its examination of an estate tax return can rely on an account transcript issued by the IRS in place of an estate tax closing letter (Notice 2017-12).

An estate tax closing letter confirms that the IRS has accepted the estate tax return, either as filed or after an IRS adjustment that the estate has agreed to, and the receipt of the letter generally indicates that the estate tax return examination has been closed.

The IRS had issued a closing letter for every estate tax return filed, except for those returns filed only for the purpose of electing portability under Sec. 2010(c)(5)(A) when the portability election was denied. However, since June 1, 2015, the IRS has issued estate tax closing letters only when the estate requests one, and that request must be made at least four months after the estate tax return is filed. Estates and authorized representatives can request an estate tax closing letter by calling the IRS at 866-699-4083.

Because it no longer automatically issues an estate tax closing letter, the IRS has announced that an account transcript can substitute for a closing letter (and is available at no charge). Data in an account transcript include the return-received date, payment history, refund history, penalties and interest assessed, balance due, and the date the examination was closed. According to the IRS if an account transcript includes a transaction code 421 and the explanation "Closed examination of tax return," this means that the Service has closed its examination of the return, and this account transcript can serve as the functional equivalent of an estate tax closing letter.

Estates and their authorized representatives can request an account transcript by filing Form 4506-T, Request for Transcript of Tax Return. The IRS's online Transcript Delivery Service is not available for this purpose; Forms 4506-T must be mailed or faxed to the IRS. The AICPA Trust, Estate & Gift Tax Technical Resource Panel continues to discuss the issue of the unavailability of online estate tax return account transcripts with the IRS.

The IRS's notice comes almost one year after Troy Lewis, CPA, then the chair of the AICPA Tax Executive Committee, sent a letter on behalf of the AICPA to the IRS requesting that the Service formally announce its policy regarding estate tax closing letters and that the IRS consider providing closing letters (and not just account transcripts) through its Transcript Delivery Service (the letter is available at www.aicpa.org). The AICPA also requested the IRS revise Form 706, U.S. Estate (and Generation-Skipping Transfer) Tax Return, to add a box to check to request a closing letter, or allow estates to request a closing letter by adding a handwritten request on top of the first page of the Form 706 or attaching a closing letter request to the Form 706 when it is filed.

- See more here. 

Nursing Homes Cannot Hold Residents' Family Members Who Signed Admission Agreements Personally Responsible for Cost

Courts continue to protect family members of nursing home residents from efforts by institutions to hold family members personally responsible for residents' expense.  These actions are becoming more prevalent as States tighten Medicaid restrictions, leaving more residents with outstanding obligations to the nursing home.  

An Ohio appellate court recently reversed the decision of a trial holding that a son is not personally liable for breach of contract after his father was discharged from a nursing home for non-payment even though the son breached his duty to his father as agent under a power of attorney. Extendicare Health Services v. Dunkerton (Ohio Ct. App., 11th Dist., No. 2015-P-0004, Feb. 6, 2017).

Herbert Dunkerton entered a nursing home after he broke his leg. His son, Michael, signed the admission agreement as his agent under a power of attorney. After Herbert's Medicare coverage was terminated, the nursing home asked that Michael apply for Medicaid on his father's behalf. Michael never applied for Medicaid, and the nursing home eventually discharged Herbert for nonpayment.

The nursing home sued Michael for breach of contract and fraudulent conveyance of Herbert's funds. The trial court ruled that Michael breached his duty as his father’s attorney-in-fact when he refused to apply for Medicaid for his father and entered judgment in the amount of $25,228.43. Michael appealed, arguing that he was not a guarantor of his father's debt.

The Ohio Court of Appeals, Eleventh District, reversed, holding that even though Michael breached his duty as attorney-in-fact, Michael did not breach the admissions agreements with the nursing home. According to the court, Michael "signed the admission agreement and the payor confirmation as his father’s attorney-in-fact, and neither document provides that appellant was Herbert’s voluntary guarantor," so Michael was not responsible for his father's debt pursuant to these agreements. The court notes that under state law an attorney-in-fact can be personally liable under certain circumstances, but the nursing home did not raise the state law in its complaint.


For the full text of this decision, go here.

A North Carolina appellate court recently dismissed a breach of contract lawsuit against a nursing home resident's daughter even though the daughter signed the admission agreement on the grounds that the resident was named as representative in the agreement. Wrightsville Health Holdings, LLC v. Buckner (N.C. Ct. App., No. COA16-726, Feb. 21, 2017).

When Sharon Buckner entered a nursing home, her daughter, Melissa, signed the admission agreement on her behalf. The agreement stated that Sharon was the "resident" and the "representative," but Melissa signed the agreement and initialed the portion stating that the representative agreed to personally guarantee payment in the event the resident's Medicaid application was denied. The nursing home demanded that Melissa pay Sharon's unpaid bill.

After Melissa refused to pay, the nursing home sued her for breach of contract. Melissa filed a motion to dismiss, and the trial court granted the motion. The nursing home appealed.

The North Carolina Court of Appeals affirmed, holding that Melissa was not liable for breach of contract. The court ruled that because Sharon is named as resident and representative under the admission agreement, Melissa's signature at the bottom of the document "must be read as" Melissa signing on behalf of Sharon and "her signature and initials on the document merely obligated her mother to comply with the terms of the Admission Agreement."

For the full text of this decision, go here.  

Both cases underscore the importance of family members distinguishing their role as "agent" or "attorney-in-fact" when signing nursing home admissions agreements.