Skip to main content

Attorney-Fiduciary Relationships

A new published circuit court case addresses the often confused issue of who an attorney hired by a fiduciary represents and is accountable to. This is technical stuff, so if you’re not in the mood or you don’t do this type or work, spare yourself and read no further.

In Estate of Tyler Jacob Maki (click on the name to read the case); the Court of Appeals affirms the trial court, and in doing so, holds that an attorney who is hired by a conservator cannot be sued for negligence by a subsequently appointed conservator. This is true because there is no attorney-client relationship between the subsequent conservator and the attorney, and also because the ward is not a third-party beneficiary of the contract between the first conservator and the attorney.

This issue comes up periodically. It is not unimportant.  At times appellate courts generate decisions that feed into the confusion.  However, this Court reaches the conclusion that I think most probate practitioners believe is the right result, and the result intended by MCR 5.117(A).  Presumably, this decision can be extended to cases in which other types of fiduciaries retain lawyers.

A lot more could be said about this issue and this case. I will limit my thoughts to these few additional points:

In a footnote the COA recognizes the apparent injustice in the result – the result being that if a person who is under the protection of the court has a fiduciary, and that vulnerable person is injured as a result of the bad acts of their court-appointed fiduciary, and that harm could have been avoided if the lawyer representing the fiduciary (and being paid by the ward) had taken steps to protect the ward, a subsequent fiduciary appointed to clean up the mess can’t seek recovery from the lawyer even if they could show that the lawyer’s conduct was negligent. The COA says, that may not be good public policy, but public policy is not their job.  Take it up with the legislature.

Second point, the COA glosses over the fact that the conservator, who stole money from the ward, was apparently not sufficiently bonded. I don’t know the facts and there is very little in the opinion to go on.  But when you read this opinion you can’t help but wonder: How did this ever turn into a malpractice action against the lawyer? Or, said another way: Why didn’t the bonding company make the ward whole?  As best I can make out from the opinion, the reason that the conservator was apparently not sufficiently bonded is because the lawyer didn’t report the money from a personal injury settlement paid to the ward on the inventory or accountings because the lawyer, knowing that the settlement was subject to a confidentiality provision, didn’t think he had to.  Well, if that is what happened, there’s something very wrong with this picture.  Clearly the Trial Court would have been informed of the settlement, and clearly there are ways to set a sufficient bond without putting the amount of the settlement in the record.

Finally, in its decision, this Court spends time distinguishing between “standing” and the “real party in interest” rule which, for litigators, may be worth a read.

Medicaid Block Grants – What If?


The news over the weekend is hardly new at all.  President Trump’s plan for fixing Medicaid is to send a set amount of money to each state and let them figure out how to run their own Medicaid programs.  It’s called “block grants” and the idea has been tossed around for years. Click here for a NYT article on the subject.

Currently, the federal government pays a portion of the Medicaid budget for each state, and the state pays the rest. In return for the federal funds, the states agree to operate their Medicaid programs in accordance with federal rules.  States have some flexibility within the broad umbrella of rules that the feds impose, and states can ask for waivers (permission to deviate further), if they think they have a way of managing their Medicaid program that makes sense in their state.

With block grants, each state would get a flat amount of money, and they would assume responsibility for operating their own Medicaid programs. There would be no federal rules, and states could (theoretically) craft their own rules from scratch.

While the idea of block granting Medicaid has been around, there has never been any realistic prospect that such a radical approach was politically feasible. For better or worse, it may be politically feasible now; or at least sufficiently feasible to consider what Medicaid block grants could mean to that population of older Michiganders who rely on Medicaid for long-term services and supports.

The LTSS Mess

When politicians talk about Medicaid, they rarely dissect it into the various programs that make it up. In most conversations, the term “Medicaid” is used to simply mean health insurance for poor people.  But Medicaid is a lot of things to a lot of different people.  And, of all the components of Medicaid, the one the politicians and the press seem least interested discussing are those Medicaid programs that help older people, particularly older people with cognitive impairments, pay for care in assisted living facilities, nursing homes, and in their own homes with assistance – the so-called “long-term services and supports” (LTSS) Medicaid programs.

But these programs are massive. More than half of all LTSS costs in our country are paid by Medicaid; and LTSS makes up about 28% of the total Medicaid budget.  Click here for a helpful Kaiser Foundation Report.

While all Medicaid programs are needs-based programs, that is, to qualify you have to meet various assets and/or income eligibility rules; the rules for LTSS Medicaid programs are unique. Eligibility rules for Medicaid LTSS programs have evolved over decades to address the particular challenges of older people who can no longer take care of themselves, but who, because of a historical quirk that distinguishes “skilled care” from other forms of healthcare, can expect to have little or none of these types of healthcare costs covered by Medicare or their private supplemental healthcare insurance policies.

Among the unique eligibility rules that apply exclusively to the Medicaid LTSS programs are the “divestment rules” (you can’t give things away during the five year “lookback period” prior to applying), spousal income and asset protections (the “snapshot date” and the calculation of how much a married person who has a disabled spouse can keep), and estate recovery (the prospect that once you die, the state can come back and recoup their costs by taking your house).

Not surprisingly, these bizarre and seemingly punitive rules have caused many older people to fear the idea that they might need long-term care. These fears, and the vulnerability they create in the older population, have spawned an entire industry of sales programs, typically promoted as “educational seminars” and built around a free dinner, at which seemingly professional people will wax eloquent about snapshot dates, divestment rules and estate recovery – offering just enough factual information to shove their high-pressure sales pitches down the throats of the trusting audience members.  In the end, the presenters will offer relief to these traumatized audience members in the form of magical (and high commission) legal and/or financial products that will “protect their assets” from the threat of long-term care costs.

Meanwhile, the confusing nature of these Medicaid rules and this fear of long term care costs, has given rise to “Medicaid planning,” a practice area of the law, in which regular folks pay lawyers to figure out how to get help with their care costs and avoid financial ruin.

It’s a terrible system.

Better or Worse?

So, would block grants make it any better?

Hard to say of course.

What would seem to be clear is that the whole structure of federal rules that exists now, spousal protections, divestment, countable and exempt assets, estate recovery, etc., could go by the wayside. As bad as they may be, those federal rules now serve as protections against even more draconian eligibility requirements that states could theoretically impose.

One would also assume that some states would use the new funding arrangement to improve their Medicaid programs, while other states would simply see it as an opportunity to cut benefits and make eligibility more difficult. There are currently several states that voluntarily provide more than the federal government requires (i.e., the wealthier states).  But Michigan, like the rest of the rust belt, struggles each year just to meet the minimum federal requirements.  So, unless the formula by which the block grants are handed out takes into account the economic health of each state (as opposed to, for instance, the population), things in Michigan could easily get worse under a block grant scenario.


This world of LTSS Medicaid benefits is a mess, and has been for a long time. That said, it could get worse.

Whether block grants, if that happens, will make things better or worse will depend on any number of variables, most obviously, how much money states like Michigan would get as compared to what they get now.

The real fix will come when all forms of healthcare are treated the same. But no one is proposing that.

Estate Recovery – Last Gasp or Second Wind

Thursday, January 12, the Michigan Supreme Court is scheduled to hear oral arguments in several combined matters all relating to the issue of Medicaid estate recovery. The main issue in these cases is whether the manner in which the State implemented the estate recovery program gave those Medicaid beneficiaries who were subject to recovery sufficient notice of their rights and responsibilities – i.e. Was it fair? To read the briefs that have been filed in this matter, click here and follow the links.

This hearing is the culmination of years of litigation in local courts throughout Michigan, followed by several of those cases being appealed to the Michigan Court of Appeals.   While many local judges ruled in favor of the elder law attorneys who fought these cases, to date, as readers of this blogsite know, the appellate courts have not been nearly as friendly.  But those have all been COA cases. Perhaps the MSC will be kinder.

The State Bar Elder Law and Disability Rights Section has funded the Appellant’s case. They’ve invested a lot and have a quality product to show for it.  But one wonders what they expect to come of it.  While it’s possible the MSC could decide that every case in which the State has collected money under the estate recovery program was defective and the money should be refunded, that seems highly unlikely.  At best, perhaps, relief for the named plaintiffs and some instruction to the State to do better in the future. At worst, a stamp of approval on the process as it was followed.

In any event, one can’t knock the advocates for pushing back. The implementation of estate recovery in Michigan has been a long and curious process.

And in other news: dower is dead. The lame duck session of the Michigan legislature passed laws abolishing this relic of the common law.  No surprise here.  To read more on dower, click here.