2009-09-01 POLST FORMS: COMING SOON TO ALL SKILLED NURSING FACILITIES NEAR YOU!
1. POLST Forms Generally

California has recently enacted legislation authorizing a new health care orders called a “POLST”. POLST refers to “Physician Orders for Life Sustaining Treatment”. A POLST is produced on a bright pink form, must be signed by both a patient and a physician, and is designed to specify the types of medical treatment a patient wishes to receive towards the end of life.
The goals are to encourage communication between a doctor and a patient, to allow for a more informed patient decision, and to clearly “forward” or communicate patient end-of-life decisions to health care providers.
Use of a POLST provides criminal and civil immunity to health care providers who comply in good faith with the patient’s POLST instructions.
The POLST form will be marketed as involving “a meaningful dialogue between patients and physicians”. Though other health care professionals may be part of the process, the doctor is ultimately responsible for the completion and content of the form, and must sign the POLST form itself.
Once signed, the POLST is part of the patient’s medical record. The POLST can be modified or revoked only by the patient.
One clear and compelling use of a POLST is to help Emergency Medical Services, (EMS) providers make those challenging and urgent split-second decisions regarding identifying a patient’s wishes and their doctor’s orders.
Another common use will be in settings where patients move from a residential (RCFE) or custodial (SNF, or skilled nursing facility) to a different medical setting.

2. POLST Basics

The “hot pink”, one page, POLST form essentially has three “care” components and a “signature” component.
Section A deals with Cardiopulmonary Resuscitation (CPR) and is meant to have a “check” in a box labeled “Attempt Resuscitation/CPR”, or in a box labeled “Do Not Attempt Resuscitation/CPR.”.
Section B deals with Medical Interventions and has three boxes that can be checked: (1) “Comfort Measures only”, covering medicine and care designed to relieve pain and suffering only; (2) “Limited Additional Interventions”, which also permits other medical treatment and care which is non-invasive (prohibits intubation); or (3) “Full Treatment”, which also allows intubation and more advanced intensive care.
Section C deals with “Artificially Administered Nutrition” and provides has three boxes, one of which can be checked: (1) No artificial nutrition by tube; (2) long-term artificial nutrition by tube; or (3) a defined trial period of artificial nutrition by tube.
Section D covers “Signatures and a Summary of Medical Condition”. The doctor must check a box to set forth the identity of the person the doctor has talked to, whether it be the “patient”, “healthcare decision maker”, “Parent of Minor”, “Court Appointed Conservator”, or “other” person.
The doctor then dates and signs the POLST form, and by doing so “indicates to the best of my knowledge that these orders are consistent with the person’s medical condition and preferences”.
Finally, the person with whom the doctor has discussed the POLST (the patient, healthcare decision maker, parent of minor, etc.) signs and “acknowledges” that the requests are “consistent with the known desires of and best interests of the person named” in the form.

3. POLST Versus Advanced Health Care Directives

POLST forms are marketed as suitable for seriously ill persons who wish to ensure that their specific wishes and doctor’s orders will travel with the patient across various medical settings (e.g. from a SNF to an acute care hospital).
Proponents of POLST forms refer to Advanced Health Care Directives as documents that provide a “broad outline” of a person’s wishes regarding end-of-life care, and which all adults should fill out without regard to a person’s health status. POLST proponents stress that the POLST is designed for the seriously ill only.
It is important to be aware that if an Advanced Health Care Directive and a POLST come into conflict in an end-of-life setting, the most recent document will prevail!
POLST forms are increasingly being presented to patients in skilled nursing facilities. The SNF typically has a staff person who serves as a liaison between the patient and the patient’s physician. The pink, one page, POLST form is designed to catch the eye, so that it is easily seen when the medical file transfers to a new facility.

4. So, What’s Not To Like?????

I like the POLST form, and am confident that it will be very useful tool for sick and terminal folks to avoid unnecessary, painful and unwanted end-of-life care.
I have one very significant concern, however, regarding the use of POLST forms with patients in skilled nursing facilities. The problem as I see it, lies in the conflicting purposes and intents behind the POLST and Advanced Health Care Directives.
When the State Legislature created Advanced Health Care Directives in 1999, it recognized that there would be occasions when more procedural protections (beyond the requirement of a Notary or two independent witnesses) would be required.
Thus, under Probate Code Section 4675, the State requires all Advanced Health Care Directives executed by patients in skilled nursing facilities to be witnessed by a Department of Aging patient advocate or ombudsman. Otherwise, the directive is “not effective”. The legislature even went so far as to incorporate within the statutory language a specific statement of its intent behind this requirement:
“It is the intent of this subdivision to recognize that some patients in skilled nursing facilities are insulated from a voluntary decision-making role, by virtue of the custodial nature of their care, so as to require special assurance that they are capable of willfully and voluntarily executing an advance directive”.

No such language is found within the enabling POLST legislation, nor is such a requirement found in the POLST form itself.
On the one hand, we have a legislative recognition that some patients in skilled care require special assurance that they are capable of willfully and voluntarily executing an advance directive. In fact, it is so important to protect these potentially few patients that all SNF patients must sign the directive in the presence of an ombudsman. Talk about a “protected class” of people!
On the other hand, when skilled care patients sign a POLST there is no need of a witness at all, whether ombudsman or not. Only the doctor’s signature is required, along with the patient’s. Presumably, the doctor’s presence satisfies the legislature’s special concern for skilled care patients is satisfied. Should we have any problems with this?
My initial response is probably not, in cases where the doctor is the long time treating physician visiting his or her patient in the skilled nursing facility… Ok, quit laughing, we all know that in most cities the facilities have an assigned or hired doctor who visits all patients every 30 to 45 days or so. This doctor typically sees the person on rounds through the facility, and usually had no contact with the patient prior to institutionalization.
Is this enough “procedural protection” for the patient? Should we worry, in the words of the legislature “that some patients in skilled nursing facilities are insulated from a voluntary decision-making role, by virtue of the custodial nature of their care”? Should we make sure that these patients “get special assurance that they are capable of willfully and voluntarily executing” the POLST? Can we rely on the facilities and their “staff” doctors to do this?
On the one hand, as I ask these questions I think about all the talented and committed facility care workers and staff, and the visiting doctors, all of whom are resolutely committed to the best interests of their patients;
On the other hand, I recall that the State in the past has been forced to act against facilities regarding care for Medi-Cal patients:
- We have had to enact laws to prevent facilities from “dumping” patients who convert to Medi-Cal status.
- We have had to enact laws to prevent facilities from gathering all Medi-Cal patients and sequestering them in Medi-Cal “wings”.
- We have had to enact laws to ensure that facilities give Medi-Cal patients the same quality of care as private pay patients.
Even now, there is no law compelling a skilled facility to admit a patient if Medi-Cal is the source of payment. The facility can legally put everyone on a waiting list, inquire about assets, and admit only private pay patients.
In this time of budgetary crisis, in this time of low Medi-Cal reimbursement (to great facilities who deserve better pay!), and in this time of increased emphasis on avoiding the trauma (and costs!) of end-of-life care, are we so confident that every patient in skilled care who signs a POLST knows precisely what he or she is doing?
The legislature has already recognized the inherent risk involved here, and has responded by requiring ombudsmen to witness Health Care Directives. Why not require similar procedural protections with a POLST?

5. Proposed Changes To POLST Forms

Proponents of POLST forms have argued that it is too inefficient and impractical for the doctor to coordinate with an ombudsman, and that there are not enough ombudsmen to satisfy such a criteria.
Fair enough. So why not require that all POLST forms signed by a patient in a skilled nursing facility be witnessed either by (1) a Department of Aging advocate or ombudsman; (2) the designated agent under a durable power of attorney for health care or advanced health care directive; or (3) a spouse , child or other family member of the patient.
This will ensure that the patient (who by definition, under California law, is deserving of special protection) has an advocate in his or her corner when these end-of-life measures are discussed. Why? Because these are END-OF-LIFE discussions!
I believe that if a patient in skilled care is deserving of protection when signing a Health Care Directive, he or she also deserves protection when signing a POLST. I believe that the burden of having one of the above witnesses present is slight and, even if cumbersome, is worth it.
In the long run the use of a POLST form by patients in skilled care settings will be enhanced if we act to preserve the dignity of the process.

2009-08-01 LODI RESIDENTS FALL PREY TO SENIOR CENTER PONZI SCAM
“Suspects accused of taking $200 million from investors”.
Bold words in the June 12, 2009 Lodi News Sentinel headlines. The two Lodi investors are embarrassed and angry. The Sentinel’s respectable response is to encourage those who think they may be the victims of a scam to contact the State Attorney General or the local District Attorney’s Office.
I have a different approach: let’s make it harder for criminals to defraud seniors in the first place! It is time to take steps to discourage financial elder abuse by denying the scam artists their “safe havens” from which they lay their traps. It is time to put safeguards into place at senior centers and other venues where seniors gather.
The problem is straight forward: Marketers of abusive products and services usually reach their target audience via senior centers or other “rented” venues. They promote themselves by offering “free seminars” and promises of valuable educational information. Steven Riess, one of California’s leading consumer attorneys in the area, explains it like this:
“Senior centers provide a familiar and ostensibly safe environment for seniors to gather. Both consciously and unconsciously, seniors may feel that the marketer and the products and services offered have been evaluated and endorsed by the senior center and therefore must be reasonable and appropriate.”
The whole point of the “pitch” at the presentation is not to make a sale. It is designed to build trust and obtain contact information to set up future individual sale pitches. Remember, these marketers are pushing products and services that may be very hard for the senior to comprehend.
Mr. Reiss has authored “Facilities Guidelines for Marketers Targeting Seniors”. The guidelines are not designed to distinguish between abusive and legitimate marketers. The guidelines are not designed to exclude applicants. The guidelines are designed to require disclosure of information and to impose certain conditions which legitimate applicants will not find objectionable but which will discourage abusive marketers:
- Disclosure of information such as advertising materials, websites and litigation history to allow facility management to easily and quickly check backgrounds.
- Retaining authority to attend and record the event or to invite an elder rights advocate to provide additional information will discourage many unscrupulous marketers.
- Requiring that the application be signed under penalty of perjury discourages false information and sets up criminal sanctions where false or misleading information is provided.
Hopefully, the presence of these requirements and conditions will provide a sufficient deterrent such that their actual use will be unnecessary:
I have provided The Lodi City Council with a copy of the Code language championed by Mr. Riess. Entitled “Protection of Seniors from Unscrupulous Marketers”.
Incidentally, I have also provided The Council with a copy of Mr. Riess’ memorandum presented to a Bay Area city responding to the question: “Can a Senior Center incur civil liability for elder financial abuse if it permits its facility to be used by an attendee?”
Mr. Riess’ answer: “Yes. By permitting an abuser to use its facilities for a presentation, a senior center is increasingly likely to be named as a co-defendant in an elder financial abuse lawsuit based upon direct, vicarious, and joint enterprise theories of liability.”
This risk of liability will worsen in cases where the scam artists have squandered their ill-gotten gains, leaving the senior centers (and The City, and the local tax payers) potentially on the hook for substantial damages.
I urge The Lodi City, and all local City Councils to adopt the Code Section “Protection of Seniors From Unscrupulous Marketers.”

2009-04-01 MEDI-CAL RECOVERY FORM AND REHAB IS OVER
1. THAT "YELLOW" MEDI-CAL RECOVERY FORM

Every 6 months or so Medi-Cal sends out a yellow form to all Medi-Cal beneficiaries entitled “Important Notice regarding the Medi-Cal Estate Recovery program.” The form is dated 2008, but it includes old and inaccurate language and is aimed at scaring people. Fear not, there are not any changes in the law.

Life Estates: The state can make a claim on revocable “Life estates” but they cannot claim on tranditional irrevocable life estates, i.e., where a decedent made an irrevocable transfer of a remainder interest in property with a retained life estate. Property that has been transferred irrevocably with a retained life estate or an occupancy agreement is exempt from recovery. Don’t worry!

Recovery from Surviving Spouse’s estate: The form indicates that the Department can seek repayment upon the death of the surviving spouse, but fails to include that they can only recover what that spouse received by distribution or survival from the Medi-Cal spouse. They cannot recover if the property has already been transferred during the life of the Medi-Cal spouse. Typically, such property is transferred as soon as possible, when a spouse goes into long-term care, either by consent (with a competent spouse), or court order (with an incompetent spouse). Don’t worry!

Retirement Accounts & Insurance Policies: These accounts can only be recovered if they do not name a beneficiary or if they revert to the Medi-Cal beneficiary’s estate. Since most such accounts and policies name a beneficiary, this is not usually a problem. Don’t worry!

The only good thing about these notices is that I am getting a lot of calls from people and am able to let them know how to avoid recovery in the first place.

2. REHAB IS OVER…CAN THE NURSING FACILITY MAKE YOU LEAVE?

We all know that a skilled nursing facility (SNF) makes a lot of money providing short-term rehab services under Medicare’s lucrative fee schedule. The SNF typically wants to discharge a resident once the Medicare “rehab” coverage ends (usually within 100 days of admission), to make room for new Medicare rehab customers.

The goal is to keep the Medicare “rehab” beds occupied at the expense of less profitable ‘custodial” or long-term care patients who often are on Medi-Cal. However, the completion of Medicare covered therapy (and subsequent conversion to Medi-Cal custodial care) is not a permissible reason for discharge from a SNF.

California Welfare and Institutions Code Section 14124.7 provides that no Medi-Cal certified SNF can evict a patient who changes the manner of paying from private pay or Medicare to Medi-Cal. This is one reason why it is critical to ensure that Medicare “rehab” is done in a “Medi-Cal certified” SNF!

Recently, a facility tried argue that it operated two “separate” units, one for short-term Medicare rehab and one for long-term custodial care. The facility argued that each “unit” had separate admissions and discharge procedures, and required discharge once short term rehab services were completed.

A complaint against the facility was brought by CANHR, and the State Department of Public Health made the following response:

“We agree with your contention that the Nursing and Rehabilitation Center is violating resident’s transfer and discharge rights by requiring patients to sign this form in agreement that they will be discharged after completing short term therapy. The fact that a skilled nursing facility chooses to focus on more intense rehabilitation does not allow the facility to ignore the state and federal limitations on grounds for transfer or discharge of a facility.”

Department of Public Health directed the facility to stop using this agreement and to comply with residents’ transfer and discharge rights.

Bottom line:
Transfer and discharge protections apply when Medicare “rehab” coverage ends. Medicare and Medi-Cal certified nursing homes that focus on providing short-term rehabilitation services cannot require residents who need longer term care to leave when their payment source changes.

2009-02-01 MEDI-CAL PLANNING SCENARIOS UNDER THE SPOUSAL IMPOVERISHMENT PROTECTION ACT
1. Husband and wife own following assets: (1) home (fmv $750,000); (2) various qualified retirement plans ($500,000, held in names of both spouse); (3) other non-qualified investments in various banks, brokerage companies and deferred annuities ($100,000). Husband's income from pensions and Social security is $3,000 per month. Wife's income is $1,000 per month.
Problem: either spouse enters long-term care in a skilled nursing facility (cost of $6,000 to $7,000 per month).
Result: The institutionalized spouse will be immediately eligible for Medi-Cal, with share of cost issues which can be handled via a court order of support.

2. Husband and wife own following assets: (1) home (fmv $750,000); (2) various qualified retirement plans ($500,000, held in names of both spouse); (3) rental properties with combined "net values" that do not exceed $100,000 ("net value" is defined as the property tax appraised value, minus all debts or encumbrances... fair market values may be much more valuable!). Husband's income from pensions and Social security is $3,000 per month. Wife's income is $1,000 per month.
Problem: either spouse enters long-term care in a skilled nursing facility (cost of $6,000 to $7,000 per month).
Result: The institutionalized spouse will be immediately eligible for Medi-Cal, with share of cost issues which can be handled via a court order of support.

3. Husband and wife own following assets: (1) home (fmv $750,000); (2) various qualified retirement plans ($500,000, held in names of both spouse); (3) other non-qualified investments in various banks, brokerage companies and deferred annuities ($400,000). Husband's income from pensions and Social security is $4,000 per month. Wife's income is $2,800 per month.
Problem: either spouse enters long-term care in a skilled nursing facility (cost of $6,000 to $7,000 per month).
Result: The institutionalized spouse will be not be eligible for Medi-Cal until the non-qualified assets are "spent down" to a standard resource allowance (currently $109,560). Various planning techniques can cause institutionalized spouse eligible to be eligible for Medi-Cal, with share of cost issues which can be handled via a court order of support.

4. Husband and wife own following assets: (1) home (fmv $750,000); (2) various qualified retirement plans ($200,000, held in names of both spouse); (3) other non-qualified investments in various banks, brokerage companies and deferred annuities ($200,000). Husband's income from pensions and Social security is $1,500 per month. Wife's income is $800 per month.
Problem: either spouse enters long-term care in a skilled nursing facility (cost of $6,000 to $7,000 per month).
Result: The institutionalized spouse will be initially denied Medi-Cal eligibility, but if the case is appealed to "Fair Hearing" before an Administrative Law Judge (assuming current "reasonable" certificate of deposit yields) the institutionalized spouse will acquire retroactive Medi-Cal eligibility to the date of entry and application.

MEDI-CAL ESTATE RECOVERY AVOIDANCE SCENARIO

Single person is institutionalized in a skilled nursing facility, on Medi-Cal. The only asset is the family residence (which was "exempt " for eligibility purposes).
Problem: How to avoid a Medi-Cal recovery claim at the death of the institutionalized person.
Solution: Get the residence removed from the institutionalized person's name before death occurs, either by: (1) quitclaim deed if the person is still mentally competent; (2) use of "express" authority for the transfer, if such express language is contained in a Trust or power of attorney; (3) court order authorizing the transfer if the person is no longer mentally competent or lacks "express authority" under a valid power of attorney or Trust for such transfer. The transfer should contain language reserving a life estate in the name of the institutionalized person.
Result: There will be no estate recovery claim for Medi-Cal expenses during the life of the institutionalized person, and the house may be sold after that person dies without any capital gains problems.

You can get more detailed analysis of the above scenarios from either The California Advocates For Nursing Home reform (CANHR.org), or my own website (rosalawoffices.com)

2008-10-01 MEDICARE LISTS 10 MEDICAL MISTAKES IT WON'T PAY FOR (AND NEITHER WILL YOU!)
1. MEDICARE LISTS 10 MEDICAL MISTAKES IT WON’T PAY FOR (AND NEITHER WILL YOU!)

Medicare has recently announced it will quit paying hospitals for added costs of treating patients who are injured by the hospital. The federal government has concluded that hundreds of thousands of hospital stays every year will be covered by new regulations covering the top 10 “reasonably preventable” medical conditions. The regulations also prevent the hospital from billing you for costs caused by medical errors!

What are the “top ten” medical errors that Medicare has focused on? They are:

1. Falls and trauma
2. Vascular catheter – associated infections
3. Manifestations of poor blood sugar control
4. Catheter – associated urinary tract infections
5. Deep vein thrombosis and pulmonary embolism following total hip or knee replacement
6. Foreign object retained after surgery
7. Surgical site infection following coronary artery bypass, and certain orthopedic and bariatric procedures
8. Air embolism
9. Blood incompatibility
10. Stage 3 and stage 4 pressure ulcers.

Medicare is acting to save an estimated $21 million per year. However, the real significance of this list goes much deeper. Essentially, this is a check list of medical malpractice! If you, or anyone you know has suffered from the consequences of these “preventable conditions”, get legal representation immediately. You are probably entitled to significant compensation for the consequences of the hospital’s negligence.

Many of my clients are reluctant to consider legal claims against health care providers. I respond with two points:

(1) We have all run a stop light or a stop sign at some point in our lives. Hopefully, we never hurt anyone as a result of such a mistake… but if we had, we had insurance to compensate others for the consequences of our mistakes. The mistake doesn’t mean we are bad people, we are just good people who made a mistake. The people we accidentally hurt are not “bad” people when they seek compensation for the injuries our mistake caused. The same is true for the doctors and hospitals who care for us!

(2) The only reasonable way to ensure mistakes don’t happen is to hold those who commit the mistake accountable for the consequences of the mistake. The medical industry will respond more efficiently when mistakes are recognized and addressed.

2. GOVERNOR’S SEVERE CUTS TO OMBUDSUMAN PROGRAM EXPOSE ELDERS TO ABUSE AND NEGLECT!

I present the following press release from the California Advocates For Nursing Home Reform:

“With the stroke of his pen, Governor Schwarzenegger has imperiled 250,000 nursing home and assisted living residents by eliminating all state funding for California’s long term care ombudsman program. The Governor recently cut $3.8 million (100 percent of California state funds), which represents about half of all funding for ombudsman
services.

For 30 years, the ombudsman program has investigated elder abuse and other complaints on behalf of residents of California’s 1,300 nursing homes and more than 8,000 assisted living facilities. Many of the extraordinarily vulnerable people living in long term care facilities have no family or friends who visit or advocate for them. Ombudsman staff and hundreds of state-certified volunteers fill this void by making regular visits to facilities and responding to residents’ complaints and concerns. Their frontline work has exposed countless incidents of neglect and abuse and often helps residents protect important rights that might otherwise be ignored.

Lack of money is not the problem. The new budget authorized another lavish Medi-Cal rate increase for California’s nursing homes, whose annual payments from Medi-Cal have increased by more than $1 billion since he took office. He sought and signed a multi-hundred-million dollar nursing home rate increase this year, and signed legislation calling for 5 percent rate increases in each of the two following years.

California’s worst nursing homes – some of them operated by convicted criminals – are guaranteed profits due to an unprecedented profit component that pays nursing homes 8 percent of their labor costs to spend or pocket as they wish.

These appalling cuts speak volumes about a lack of concern for residents who are suffering from infected bedsores, malnutrition, physical and chemical restraints, and many other types of mistreatment,” said Patricia McGinnis, CANHR’s Executive Director. We call on him to restore local ombudsman funding immediately and strengthen oversight of all California long term care facilities.”

Call Pat McGinnis at (415) 974-5171, if you want to be heard!

2008-08-01 SALE OF PRINCIPAL RESIDENCE
1. SALE OF PRINCIPAL RESIDENCE:
Section 121 of the Internal Revenue Code provides that, under certain circumstances, the gain realized on the sale or exchange of property that was owned and used by a taxpayer’s as principal residence, will not be treated as gross income. Generally speaking a taxpayer will exclude gain only if during the five-year period ending on the date of the sale or exchange, the taxpayer owned and used the property as his or her principal residence for periods totaling two years or more.
In the case of a taxpayer who is incapable of self-care and who resides in a licensed care facility (an RCFE or a SNF), during the five year period, there is only a one year ownership and use requirement.
A single taxpayer is entitled to $250,000 of gain from the sale or exchange of the taxpayer’s principal residence. If taxpayers jointly own a principal residence but file separate returns, each taxpayer may exclude from gross income up to $250,000 of gain that is attributable to each taxpayer’s interest in the property, if the requirements of Section 121 have otherwise been met.
A husband and wife who make a joint return for the year of the sale or exchange may exclude up to $500,000 of gain if:
Either spouse meets the two-year ownership requirement;
Both spouses meet the two-year use requirement; and
Neither spouse excluded gain from a prior sale or exchange of property under Section 121 within the last two years.
This is very useful in cases where, for Medi-Cal planning purposes, it has become necessary to remove an institutionalized spouse’s name from title to avoid a potential Medi-Cal recovery claim.
Effective January 1, 2008, the sale of a residence that had been jointly owned and occupied by the surviving and deceased spouse is entitled to the $500,000 gain exclusion provided the sale occurs no later than two years after the date of death of the individual’s spouse. This is true even if he or she died in a SNF after title had been conveyed to the at- home spouse.
The surviving spouse in the case of a community property owned residence continues to be allowed a complete 100% step-up in basis in the residence. The $500,000 exclusion for surviving spouses is in addition to the benefit.

2. DRA UPDATE: SB 483 PASSES ASSEMBLE HEALTH:
An update from our friends at CANHR:
SB483 (Kuehl), which incorporated the Department of Health Care Services provision for implementing the Deficit Reduction Act of 2005 changes to the Medicaid rules, passed the Assembly Health Committee on June 24, 2008 on a vote of 10-4. Although several Republican members expressed their concern that increasing the equity limit to $750,000 would cost the state money, it is clear that since the state does not now impose any equity limits, any imposition of equity limits would, in fact, result in cost savings. The bill will next go to Assembly Appropriations, then to the Governor’s desk. Note that the bill’s provisions will not be implemented until non-emergency regulations are filed with the Secretary of State. The DRA will probably take effect in 2009.

3. INTERNET SITES FOR ELDER LAW INFORMATION:
One of the best sources of information regarding long term care are The California Advocates For Nursing Home Reform. Their website is CANHR.org.
From their site you can link to other sites in the following areas:
- Nursing Home Information
- Residential Care Information
- Legal Services Providers
- In-Home Supportive Services
- Other In Home Care
- Medicare, Medicare Part D & Long Term Care Insurance
- Disability Resources
- Professional Resources

On my web site, ROSALAWOFFICES.COM, I have a lengthy article on Medi-Cal planning, and have started posting these “Randy Says” articles.

2008-06-01 AGGRESSIVE RESPONSES TO ANNUITY SCAMS
In addition to criminal prosecution by the State, unscrupulous annuity and “Trust Mill” salesman now face civil suits from their victims. In recent months I have seen civil lawsuits arise from the following:

- One trust mill convinced an elderly couple to sign an “irrevocable trust”, so that their home could be “protected” from pending changes in the Medi-Cal laws. Never mind that neither person was facing potential Medi-Cal eligibility, because they were not in a Convalescent Hospital. When both went to an assisted care facility, and needed to get money from the irrevocable trust to prevent their eviction from the facility (the house had been sold), they were told by the drafters of their “irrevocable trust” that the only way to get money out of the trust was for their granddaughter (who was the trustee) to “loan” them their own money under phony-baloney promissory notes!

Needless to say, we helped these folks get their money, so they could stay in their facility (because Medi-Cal would never pay for such “assisted” care!), and have referred the case to a Bay Area litigator who will be sure to get the $5,000 back that they paid for their nonsensical “irrevocable” trust!

- An elderly couple went to an attorney, who advertised himself as a specialist in “Elder Law”, for help when one spouse was forced to go into a skilled nursing facility. The “Elder Law” attorney referred them to an insurance salesman, saying that he always referred such cases to the insurance salesman. The salesman told the couple they had to sell a rental property that they owned and take the proceeds, along with all the rest of their money and purchase a special annuity from the salesman, or else they could not qualify for Medi-Cal. As it turns out. These folks were already able to qualify for Medi-Cal. The rental house would have been valued by Medi-Cal at the “tax-assessed” value, less encumbrances…. not the “fair market” value as the salesman represented. The “value” of the rental would have fit within the standard community spousal resource allowance of $101,640, and need not have been sold. The couple had to pay over $125,000 in costs, expenses and capital gains taxes… not to mention the large commission that went to the insurance salesman when he sold them the annuity! A lawsuit has been filed by the same Bay Area lawyer, against both the “Elder Law” Attorney and the insurance salesman.

- Several cases have arisen over the failure of annuity salesman to properly disclose how Medi-Cal works. State law requires that when an annuity salesman markets a “Medi-Cal” planning annuity, he or she must produce a two or three page disclosure form that explains how Medi-Cal works, and have the customer date and sign it, to show that proper disclosure occurred. Annuity salesmen often fail to do such a disclosure, and I can understand why. If consumers actually knew what their rights were, they would never buy such products without advice of competent counsel.

“MEDI-CAL BEDS”

Can a skilled nursing facility (SNF) tell the family of an institutionalized person that the person must be moved to another facility because there are no more “Medi-Cal beds’? This typically happens when Medicare Rehab payments end and the facility wants to free up the bed. The answer is very clear: No!

Residents of a skilled nursing facility cannot be evicted or transferred because of change in status from private pay or Medicare to Medi-Cal. California Medi-Cal rules are very clear that in a Medi-Cal certified SNF every bed is a “Medi-Cal” bed. Under Welfare & Institutions code Section 14124.7 transfers and evictions based on change in status of payment are blatant violations of State and Federal laws and constitute discrimination and a violation of patient rights.

SENIOR CENTERS MAY BE LIABLE FOR AIDING ELDER FINANCIAL ABUSE!

Elder Law attorneys have for some time been a bit irritated at the way Senior Centers allow themselves to be used as presentation sites for the sale of financial services and “trust mills”. Turns out, these Senior Centers may have their own worries.

Of course, I am talking about the “free lunch” seminars sometimes put on by sales agents who purport to offer information about estate planning. There is increasing evidence that some of these seminars may turn out to be unscrupulous efforts to sell financial products under the guise of a ‘free” seminar.

A recent lawsuit in San Francisco has been filled against several entities; including California based AmeriEstate Legal Plan, Inc. and Estate Preservation, Inc, who have been sued for elder abuse, false advertising and violations of California’s Unfair Business Practices law.

A new concept has, however, been emerging: can the Senior Center that hosted the event be liable too? Steve Reiss, a Bay Area attorney who specializes in elder financial abuse litigation, has sent a memorandum and legal support to cities in Santa Clara county advising them that: “By permitting an abuser to use its facilities for a presentation, a senior center is increasingly likely to be named as a co-defendant in an elder financial lawsuit based upon direct, vicarious, and joint enterprise theories of liatulity”.

Simply put, California’s definition of elder financial abuse appears to apply to organizations that merely enable the exploitation to take place.

Shortly after Mr. Reiss sent out his memorandum, the cities involved instructed local Senior Centers to deny access to suspect commercial enterprises. None of the Santa Clara county Senior Centers admit that liability concerns motivated them to take action (though the timing was interesting).

Maybe this will be a wake up call for those Senior Centers, hotels and city libraries that allow these types of programs…the “liability” bell tolls for thee!

TRANSFERS UNDER POWER OF ATTORNEY

Some thoughts on transfers under powers of attorney:
If the power of attorney is a “statutory power of attorney”, under Probate Code Section 4451 there is no authority to make such a gift, so gifting of real property is not authorized.
If the power of attorney is not a uniform statutory power of attorney, under Probate Code Section 4264 the possibility of gifting depends on whether such a gift is “expressly authorized” in the language of the document.
Under PC Section 4266, “the grant of authority to an attorney-in-fact…by the power of attorney…does not in itself require or permit the exercise of the power. The exercise of authority by an attorney-in-fact is subject to the attorney-in-fact’s fiduciary duties”.
Under Civil Code Section 2306, “an agent can never have authority, either actual or ostensible, to do an act which is…a fraud upon the principal”.
Under P.C. Section 4242, “an attorney-in-fact has a duty to act solely in the interest of the principal and to avoid conflicts of interest”.
Under Penal Code Section 503, embezzlement where the victim was an elder or dependent person constitutes a fact that shall be considered an aggravating circumstance for imposing punishment.
There is a famous quote from Cardozo: “Uncompromising rigidity” is the attitude of the courts regarding the duty of loyalty…it is the only way to preserve the level of conduct of a fiduciary.
The transfer of a principal’s property without proper authority is a violation of the agent’s fiduciary duty of loyalty, and violates the elder abuse prevention act. The logical “safe harbor” is to seek an order authorizing the proposed transaction under Probate Code Section 4541(b).

TRANSFERS UNDER TRUST AUTHORITY BY SUCCESSOR TRUSTEES

Some thoughts on transfers from trust by a successor trustee:
PC 16002 places the highest fiduciary duty on trustees, to act “solely” in the interest of the beneficiaries.
PC 16004 deals with conflicts of interest.
Restatement of Trusts 2d, sec 170 (1), comment clearly allows self dealing where the trust instrument authorizes the transaction. One court said that the duty of loyalty and the prohibitions against self dealing give way to directions contained in the trust instrument. However, the courts are very clear that the actual breach of the duty of loyalty can occur regardless of the good faith of the trustee. As one court put it, the good or bad faith of the trustee is irrelevant, if he breaches his duty of loyalty.
If the power of attorney statute requires “express authorization” for self dealing (PC sec. 4264) then it seems clear that there is an even higher duty under PC Section 16002 in place for trustees. Unless the authorization is VERY express (I would not want to cherry pick out the word “gift” from a paragraph regarding powers and strain to infer authority to self deal). I would tend to take it to court under the “safe harbor”, PC section 17200 (b)(2), to determine the existence of or non existence of the power to gift without violating fiduciary duties of loyalty, based upon express authorization in the trust.

BOTTOM LINE: The interesting issue then becomes, would it make sense to authorize this gift from the principal’s point of view. Is he already in a SNF, or is he in some form of community based care (which of course Medi-Cal will NOT pay for)? We often hesitate to take these kinds of cases to the court for authorization because we fear we will not get a positive response…which begs the question of why we thought it was a good idea in the first place. If a court won’t approve it, then it probably should not happen.

GOOD NEWS: LIFE ESTATE ARE BACK!

Protecting the family home has always been tricky business fin California. On the one hand, “inheriting” the house means the kids can sell it without any capital gains issues, or keep it with the parent’s property 13 property taxes intact. Yet, we all now are aware that waiting to “inherit” the house puts it at risk of a Medi-Cal recovery claim if Mon or Dad end up on Medi-Cal in a skilled nursing facility.

On the other hand ‘giving” the house to the kids during mom or dad’s life certainly avoids a Medi-Cal recovery claim, but exposes the proceeds of any sale of the house by the kids to potentially huge capital gains.

Thus, the “Holy Grail” among Elder Law attorneys has been to find a way to have our cake and eat it too! There have emerged three basic strategies to arrange a transfer of the home which would avoid both capital gains issues and Medi-cal recovery issues:

A. Life estates. A life estate is defined by California Civil Code Section 766 as “an estate during the life of a third person”. Parents may deed property to their children, subject to the parent’s exclusive right to use and enjoy the property during their lifetimes. The result is a “life estate” owned by the parents and a “remainder interest owned by the children.

The beauty of a life estate has been that under the Internal Revenue Code at the death of the life tenants there is a “stepped-up basis for the benefit of the remaindermen, who can then immediately sell the property without any exposure to capital gains taxes. Moreover, because the parents owned only a “life estate” in the property there was no possibility of a Medi-Cal recovery claim.

Life estates became unsustainable when Department of Health Services announced a couple years ago that pursuant to changes in federal law they would start putting recovery claims on life estates (Ah, but read on below for good news!)

B. Unrecorded Rights of occupancy. Unease with life estates led many Elder Law Attorneys to help parent’s gift homes to their children subject to unrecorded rights of occupancy. There is some authority under tax cases that this arrangement would also qualify for “stepped-up” capital gains protection after the parents’ death. Also, Medi-Cal could not recover because the parents did not “own” the home when they died (they owned only an unrecorded right to occupy the home).

Also, Medi-Cal defined recoveries on life estates so broadly that the regulations could be construed so as to also apply to “right of occupancy” cases. The result was a recent movement away from this strategy as well.

C. Transfers To Intentionally Defective Grantor Trusts. A third option was embrace by some Elder law Attorneys, the transfer of the parents’ interest in their home to an “irrevocable” , but intentionally “defective “Grantor’s Trust.

The irrevocability of the trust meant that the parents no longer “owned” the home. Meanwhile, the intentional “defects” of the trust meant that certain powers of ownership were retained by the parents, which meant that there would be a stepped-up tax basis when the parents died. Thus, in theory, there would be no potential Medi0Cal recovery and no potential capital gain upon sale by the children.

Many Elder Law Attorneys have been reluctant to adopt these irrevocable trusts because of perceived complexity and long-term uncertainty as to how Medi-Cal would react to them.

D. Life Estates are Reborn! The Department of Health Services has recently thrown in the towel, and stated that there will be no Medi-Cal recoveries on irrevocable life estates! The State balanced “the anticipated small dollar value associated with recovery…against information obtained from advocates that the legality of life estate only interest recoveries would be challenged in the courts”.

A big “Shout-Out” for the California Advocates For Nursing Home Reform (CANHR) for being, as always, the champion of the rights of Californian’s who face long-term care. Thanks to CANHR, this incredibility valuable tool of Medi-Cal planning has been returned to us. Life Estates are back.

MEDI-CAL RECOVERY: ANNUITIES PLUS WORK-RELATED PENSIONS.

Hot off the presses from CANHR: There has been a great deal of confusion regarding the treatment of annuities versus the treatment of IRAs, work related pension funds, and other periodic payment plans under the Medi-Cal program. Some consumers and claims representatives from the Department of health Services recovery unit are under the impression that all periodic payment plans are subject to recovery. However, this is simply not the case.

The Department cannot recover from an IRA, 401k or other work-related pension plans or annuities, as they are currently exempt from Medi-Cal recovery. The Department published emergency regulations in 2004 allowing DHS to recover from “annuities purchased on or after September 1, 2004.” (Title 22, Article 19, §50960 (d)(1))

IRAs and 401ks are retirement plans, not annuities ”purchased on or after September 1, 2004;” thus, the Department is prohibited from recovering from the remainder of these plans.

If a claims representative attempts to place a claim against on IRA or work related annuity of someone you know, please contact CANHR they provide you with information and resources to clarify the issue to the Department.

2008-04-01 PRE-PLANNING FOR POSSIBLE MEDI-CAL ELIGIBILITY

For many years I have helped families find their way through the maze of Medi-Cal regulations and laws when a loved one enters a skilled nursing facility. There are two typical scenarios that often require me to go to court.

1. When an incompetent spouse enters long-term care we usually want a court ordered transfer of assets (including the home) into the name of the at-home spouse. We do this to defeat the possibility of a Medi-Cal claim on the estate of the surviving at-home spouse, for the money Medi-Cal spent on the institutionalized spouse.

2. When a single person enters long-term care we often need to arrange for a court order allowing the transfer of the person’s residence to the children or other family members. Otherwise there will be a Medi-Cal recovery claim placed on the home when the person dies.

Going to court is expensive and somewhat risky, because these transfers are always in the discretion of the judges. On the other hand, clients are legitimately concerned about prematurely transferring their homes and assets to the children because of their fear of “potential” Medi-Cal recoveries if they end up in long-term care.

I am suggesting too many of my clients that they amend their existing estate plans by adding, “Medi-Cal planning” language to their family trust and powers of attorney.

In a nutshell, these changes make it possible to transfer the residence and other assets out of your name to your spouse or children if, and only if, certain conditions occur:

1. You are in a skilled nursing facility for a continuous period of at least three months (which correlates to the 100 day Medicare period.

2. Your treating physician states in writing that you are no longer mentally competent and are unlikely to be able to return to your home.

3. Your agents work with an elder law attorney who certifies in writing that the transfers won’t impair your Medi-Cal eligibility (an increasingly challenging task, given complex transfer restriction in Medi-Cal laws).

4. Any transfers made must be made proportionately to the then-existing beneficiaries of your estate plan.

MEDI-CAL ESTATE RECOVERY RULES

Existing federal law requires that California seek reimbursement from the estates of deceased Medi-Cal beneficiaries for certain Medi-Cal paid services provided on or after the individual’s 55th birthday, unless the certain specific exemptions apply.

Medi-Cal defines an estate to include assets owned by the Medi-cal beneficiary at the time of death, including assets distributed through joint tenancy, tenancy-in-common, survivorship, life estate, living trust, or annuities purchased after September 1, 2004.

Medi-Cal seeks estate recoveries for expenditures related to skilled nursing facilities, home and community-based services, hospital and prescription drug services, health care premiums and any other services provided by Medi-Cal.

Medi-cal’s claim against the estate of a deceased Medi-Cal beneficiary is limited to the value of the decedent’s assets or the amount of the Medi-Cal services paid by Medi-Cal, whichever is less. Medi-Cal is required to provide criteria for the application of a hardship waiver of the Medi-Cal claim. Family members can pay, contest or claim hardship.

In the past, Medi-Cal has not pursued estate recoveries on “life estates” held in the name of the Medi-Cal beneficiary. After much debate and public comment, Medi-Cal has now determined it will continue the policy of no estate recovery claims on the life estate interest held by a Medi-Cal beneficiary.

2008-02-01 TRANSFERS UNDER POWER OF ATTORNEY
Some thoughts on transfers under powers of attorney:
If the power of attorney is a “statutory power of attorney”, under Probate Code Section 4451 there is no authority to make such a gift, so gifting of real property is not authorized.
If the power of attorney is not a uniform statutory power of attorney, under Probate Code Section 4264 the possibility of gifting depends on whether such a gift is “expressly authorized” in the language of the document.
Under PC Section 4266, “the grant of authority to an attorney-in-fact…by the power of attorney…does not in itself require or permit the exercise of the power. The exercise of authority by an attorney-in-fact is subject to the attorney-in-fact’s fiduciary duties”.
Under Civil Code Section 2306, “an agent can never have authority, either actual or ostensible, to do an act which is…a fraud upon the principal”.
Under P.C. Section 4242, “an attorney-in-fact has a duty to act solely in the interest of the principal and to avoid conflicts of interest”.
Under Penal Code Section 503, embezzlement where the victim was an elder or dependent person constitutes a fact that shall be considered an aggravating circumstance for imposing punishment.
There is a famous quote from Cardozo: “Uncompromising rigidity” is the attitude of the courts regarding the duty of loyalty…it is the only way to preserve the level of conduct of a fiduciary.
The transfer of a principal’s property without proper authority is a violation of the agent’s fiduciary duty of loyalty, and violates the elder abuse prevention act. The logical “safe harbor” is to seek an order authorizing the proposed transaction under Probate Code Section 4541(b).

2008-01-01 TRANSFERS UNDER TRUST AUTHORITY BY SUCCESSOR TRUSTEES
Some thoughts on transfers from trust by a successor trustee:
PC 16002 places the highest fiduciary duty on trustees, to act “solely” in the interest of the beneficiaries.
PC 16004 deals with conflicts of interest.
Restatement of Trusts 2d, sec 170 (1), comment clearly allows self dealing where the trust instrument authorizes the transaction. One court said that the duty of loyalty and the prohibitions against self dealing give way to directions contained in the trust instrument. However, the courts are very clear that the actual breach of the duty of loyalty can occur regardless of the good faith of the trustee. As one court put it, the good or bad faith of the trustee is irrelevant, if he breaches his duty of loyalty.
If the power of attorney statute requires “express authorization” for self dealing (PC sec. 4264) then it seems clear that there is an even higher duty under PC Section 16002 in place for trustees. Unless the authorization is VERY express (I would not want to cherry pick out the word “gift” from a paragraph regarding powers and strain to infer authority to self deal). I would tend to take it to court under the “safe harbor”, PC section 17200 (b)(2), to determine the existence of or non existence of the power to gift without violating fiduciary duties of loyalty, based upon express authorization in the trust.

BOTTOM LINE: The interesting issue then becomes, would it make sense to authorize this gift from the principal’s point of view. Is he already in a SNF, or is he in some form of community based care (which of course Medi-Cal will NOT pay for)? We often hesitate to take these kinds of cases to the court for authorization because we fear we will not get a positive response…which begs the question of why we thought it was a good idea in the first place. If a court won’t approve it, then it probably should not happen.