As discussed in that prior post, as a result of the passage of the law, State regulators were tasked with creating a uniform POST form. They have done that. It has been published, and yesterday was the deadline for comments. I don’t know if any comments were submitted, or if any changes will be forthcoming. But for now, I think it is safe to assume that the following document is either exactly what will be used, or very close to what will be used: MI-POST Form (click on name to see the form). I will post more in the future if significant changes are made as a result of comments.
Lawyers won’t be preparing MI-POST forms for clients, but estate planning lawyers need to be aware of these forms and understand their place. Clients may have questions about them, and patient advocate designations should probably be updated to include POST powers.
The question is this: When a person who is the subject of a petition for guardianship or conservatorship nominates an individual they want to serve in those capacities, to what extent is the court required to grant the nominated individual a priority of appointment? A new unpublished opinion discusses that question, and while I think the opinion falls short in some respects, the issue comes up routinely in contested guardianship and conservatorship matters and this case offers the opportunity to delve into the law. So here we go:
Let’s start with the law.
MCL 700.5313(2) provides the order of appointment for a guardianship. Its relevant provisions say:
(2) In appointing a guardian under this section, the court shall appoint a person, if suitable and willing to serve, in the following order of priority:
(a) A person previously appointed, qualified, and serving in good standing as guardian for the legally incapacitated individual in another state.
(b) A person the individual subject to the petition chooses to serve as guardian.
(c) A person nominated as guardian in a durable power of attorney or other writing by the individual subject to the petition.
(d) A person named by the individual as a patient advocate or attorney in fact in a durable power of attorney.
(1) The court may appoint an individual, a corporation authorized to exercise fiduciary powers, or a professional conservator described in section 5106 to serve as conservator of a protected individual’s estate. The following are entitled to consideration for appointment in the following order of priority:
(a) A conservator, guardian of property, or similar fiduciary appointed or recognized by the appropriate court of another jurisdiction in which the protected individual resides.
(b) An individual or corporation nominated by the protected individual if he or she is 14 years of age or older and of sufficient mental capacity to make an intelligent choice, including a nomination made in a durable power of attorney.
These provisions are similar, but importantly different:
While both statutes provide that, unless someone has already been appointed to serve as guardian or conservator by another state, the highest priority goes the person nominated by the proposed ward. But in the guardianship context, the law provides that the court “shall appoint” the person with priority if they are suitable and willing to serve. In a conservatorship proceeding, the court “may appoint” and having a priority merely provides that such persons “are entitled to consideration.”
Interestingly, the conservatorship statute says that before considering a person nominated by the proposed ward, the court must find that the proposed ward “is of sufficient mental capacity to make an intelligent choice.” In the guardianship context there is no requirement that the proposed ward be capable of making a good choice.
The guardianship law also elevates the person nominated by the proposed ward at the hearing above a person previously nominated in a power of attorney or patient advocate designation. In the conservatorship context, those two forms of priority are equal.
For the record, both statutes are further buttressed by MCL 700.5106 which more specifically addresses the limitations placed on a court with respect to the appointment of a public fiduciary.
All three cited statutes are linked to the law, which can be read in their entirety by clicking on the statute.
In this case, the proposed ward (“David”) nominated June to be his guardian and conservator. He did so both in his power of attorney and patient advocate designation, and he did so when he was questioned by the court-appointed guardian ad litem. But the trial court bypassed June by finding that the David was not competent to execute the patient advocate designation and power of attorney when they were executed, and further, the court says “He was similarly incompetent to informally select his fiduciary.”
So my complaint with this holding is that while I think the court was certainly within its power to invalidate a power of attorney and patient advocate designation based on a finding of lack of capacity at the time of execution; and to bypass June as conservator by finding, in accordance with MCL 700.5409, that David lacked the ability to “make an intelligent choice” at the time of his verbal nomination; because MCL 700.5313 (the guardianship law) does not include a provision that allows the court to make a verbal nomination contingent on the existing mental capacity of the proposed ward, to my thinking, June should have been given the priority in the guardianship matter.
In conclusion, although I think this court provided an imperfect analysis, I appreciate the opportunity to review the law as it relates to this important question.
Henry Ford Village is a large senior housing provider in the metro Detroit area. At least some of their residents enter into continuing care contracts that require an up front entrance fee, some or all of which fee can later be refunded in accordance with the terms of the admissions contract.
In the case of Reginald Smith, he paid $152,000 when he entered. When he died, the trustee of his trust and the personal representative of his estate recovered only about $127,000. The Trustee/P.R. did not dispute that the refund would appropriately be reduced by about $10,000, but did contest the reduction of the other approximately $15,000. That difference arose because of a provision in the contract that said that the refund would be contingent on the admission of a new replacement resident, and the payment by the new resident of a new entrance fee. After Mr. Smith died and some time passed during which no new resident was found who was willing to pay the full entrance fee, the Trustee/P.R. entered into a modification of the contract to allow the space to be filled by a new resident who paid a reduced entrance fee – reduced by the disputed $15,000.
The Trustee/P.R. sued Henry Ford Village and various related entities for the $15,000 difference, and lost in the trial court level on summary disposition. The appeal followed from that decision.
In the second paragraph of the COA opinion, the panel notes that: “At oral argument, plaintiff conceded that HFV violated none of the terms of its contract with the decedent or agreement with plaintiff, as those documents are actually written.”
And, for Plaintiff/Appellant, it goes downhill from there. Downhill even to the point of the COA becoming insulting toward the work of Appellant’s legal counsel. Among other things, the COA characterizes the Appellant’s brief as “exceedingly loquacious and difficult to comprehend.” Loquacious means wordy. The COA affirmed the trial court’s dismissal of the lawsuit.
I report on the opinion because it is published (although I don’t know why), and many people who practice in this area of law no doubt intersect with Henry Ford Village and advise clients about continuing care community contracts. If there’s a lesson here (and I’m not sure that there is), I believe the lesson might be that continuing care community contracts are complicated and are likely drafted in a way that favors the financial interests of the people managing the facility.
When it comes to Medicaid planning, truly the devil is in the details; and the “details” are found in the Michigan Department of Health and Human Services (MDHHS) policy manuals, most often the Bridges Eligibility Manual (the “BEM”). MDHHS has announced several language revisions to a variety of BEM items, all taking effect October 1. Folks that have been in this game long enough know that such revisions often mean mischief and that, especially during this haunted season, odds are high that there will be more tricks than treats in this bag of goodies.
Waiver Rewrite (BEM 106)
The Medicaid Waiver program (aka “the MI Choice Program”) allows persons qualified for long term care Medicaid benefits to receive services in their homes. Waiver benefits have been around awhile now, but the way the eligibility rules apply to Waiver have remained uncertain. As of October 1, the Waiver eligibility rules will be much better organized and laid out in much more detail in the new BEM 106. That’s a treat.
Among the clarifications are the rules for how an initial asset assessment (the “IAA”) is triggered for Waiver applicants, and how a divestment penalty is triggered. These clarifications raise concerns.
The IAA is important because it provides the date which is used for a married person to calculate their protected spousal amount (aka “community spouse resource allowance”). For traditional Medicaid long term care programs, the IAA is triggered when someone enters the hospital or a long term care facility for at least 30 days. Now, for Waiver applicants, the IAA can also be triggered when the Medicaid applicant has begun:
Receiving appropriate home and community based services specified under the approved state waiver; see Exhibit I in this item. They do not have to receive these services from a waiver agent listed below, but the services must be received from a person or entity certified (or licensed) by the state to provide the services. See below for verification of services received.
So, it seems that a person can now trigger their own Medicaid Waiver IAA date by hiring in-home caregivers (or perhaps it will have to be nurses) that are licensed by the State. That seems to give people, and perhaps planners, more control over the IAA trigger date and may be a treat. We’ll see. Cautious optimism here.
Of greater concern in the new BEM 106 is the language that relates to the trigger for the divestment penalty and the way that intersects with the language defining “approved for waiver.” What is says is that the divestment penalty begins “on the date which all criteria listed under the approved for waiver section in this item has been confirmed.” The “Approved for Waiver” section provides the following:
Approved for the waiver means:
The agent conducted the assessment, and
There is an available wavier slot for the individual’s placement and
A person-centered plan of service has been developed and
The participant received, or expects to receive, supports coordination services from the agent with appropriate waiver services for at least 30 consecutive days.
The agent determines the waiver approval date and termination date. The agent is responsible for advising the appropriate local Michigan Department of Health and Human Services (MDHHS) office of these dates. The agent is responsible for advising the appropriate local MDHHS office the dates of enrollment and disenrollment information in CHAMPS.
This seems to leave all control in the hands of the Waiver Agent, and will also depend on slot availability. This will make divestment planning strategies for Waiver clients much less predictable. Definitely room for mischief here. Call this a trick.
Assets (BEM 400)
As of October 1, the language in BEM 400 that allows real estate to be considered unavailable during periods in which the property is listed for sale has been tweaked in three respects.
First, the policy has been modified by the addition of the following sentence: “If after a length of time has passed without a sale, the sale price may need to be evaluated against the definition of fair market value.”
Second, it now says “The asset becomes countable when a reasonable offer is received.”
Third, the non-salable exemption will not be applied to the initial asset assessment (IAA).
While none of these changes seem particularly egregious, one always wonders why DHHS would go through the trouble to include them if there isn’t some hidden agenda. But then maybe I’ve become too cynical.
The October 1 changes to BEM 400 also include beefed up language to clarify that assets remains an available resources during periods in which the applicant is waiting for a conservator (or guardian) to be appointed. So even though you may have no power of attorney or other legal ability to spend down or otherwise qualify for Medicaid, the fact that the assets exist is all that matters. The cost of the delay of obtaining court authority falls on the applicant. That has always been the rule. So, again, one is curious about the need for these clarifications.
Divestment (BEM 405)
BEM 405 now includes an eerily vague and portentous provision that says: “purchasing an asset which decreases the group’s net worth and is not in the group’s financial interest” is a transfer of assets, and apparently also per se “divestment.” Definitely an invitation to mischief and definitely a trick.
Divestment policy will now define “putting assets or income into a Limited Liability Company (LLC)” as a transfer of assets which presumably means it can be analyzed as possible divestment. A trick.
BEM 405 policy has been clarified to address situations where past divestment activity is subsequently discovered and reported. The new language provides that the penalty period starts on the “first day after timely notice is given.” Maybe not a treat, but I’m ok with this.
A policy bulletin has been issued by the Michigan Department of Health and Human Services which provides additional direction on when and how a divestment penalty period runs for persons otherwise eligible of Medicaid Home and Community Based Waiver services (aka the ”MIChoice” program).
The point of the policy seems to be that under federal law there was uncertainty about how to start a divestment penalty period running for persons in waiver programs, like MIChoice. The source of this clarification is a federal directive to state Medicaid directors that explains why there is perceived confusion about this issue. In fact, I think the federal letter does a better job of explaining the issue than the State Policy Bulletin. Click here to read that letter.
In any event, the powers that be have decided that the penalty period begins to run when the person applying for MIChoice services is deemed otherwise eligible for the program, which is a four part test:
determined that the applicant meets financial and non-financial requirements for Medicaid;
determined that the applicant meets the level of care criteria for the 1915(c) waivers;
determined that the applicant has an individual person-centered service plan in place; and
confirmed there is an available waiver slot for the applicant’s placement.
Well, BEM 405, page 14, already says:
The penalty period starts on the date which the individual is eligible for Medicaid and would otherwise be receiving institutional level care (LTC, MIChoice waiver, or home help or home health services), and is not already part of a penalty period.
As far as I can tell, this current Michigan policy seems to be in line with the new proposed policy. It certainly seems consistent with the federal directive, which simply says:
the penalty period start date for a 217 applicant is no later than the point at which a 217 applicant would otherwise be receiving HCBS waiver coverage based on an approved application for such care but for a penalty
If you want to worry about something, you might look to the State’s decision to include the requirement that there be an open slot to start the penalty running. That might prove challenging for planners in the future.
So, in the end, I’m not sure how things change with this new policy, or if they really do. Nonetheless BEM 405 will presumably be rewritten to conform with the bulletin and those who practice in this area may run into snags, or avoid snags, as a result.
The Michigan Court of Appeals has issued an opinion regarding the appropriateness of using probate court protective orders to obtain spousal support orders in situations where such orders impact the calculation of a nursing home resident’s Medicaid “patient pay amount.” The outcome is 80% good for planners, and as such is a refreshing break from the series of punishing COA opinions that have been issued in recent years with respect to Medicaid planning cases.
For the uninitiated, a “patient pay amount” is the portion of a person’s income that is required to be paid to toward their care when they are in a nursing home receiving long term care Medicaid benefits. The exact amount is a function of Michigan Department of Health and Human Services (DHHS) policy, which provides a formula for calculating the patient pay amount. When the nursing home Medicaid beneficiary is married, that formula allows for diversion of income to the “community spouse.” DHHS policy also provides that where a court order directs payment from the nursing home resident to the community spouse, that court order supersedes the formula for determining the amount of income diverted.
In both of the cases before the COA, the local probate court ordered that 100% of the income of the nursing home resident would be paid to the community spouse for their support. These two decisions were appealed by DHHS, represented by the Michigan Attorney General, and the two cases were combined by the Court of Appeals.
The main argument of DHHS was that the probate court lacked jurisdiction to hear these cases. That argument was made on several grounds, all of which failed. In this decision, the COA holds that probate courts have the authority to grant these orders and that in doing so those courts are not engaged in making DHHS eligibility determinations even though the clear purpose of obtaining such orders may be for that reason. That’s a big win for the planners.
The COA also holds that the fact that these individuals may have had power of attorneys in place at the time of the petition does not preclude the probate court from getting involved. The COA reasons that the specific form of relief desired (a court order of support) would not be something that an agent acting under a POA could provide, and therefore the court does have jurisdiction to hear these matters. This holding has potential applications beyond Medicaid planning matters.
After dismissing the primary jurisdictional challenge, the COA ventures into a discussion about how a probate court should decide these cases. The COA holds that in the two cases giving rise to the appeal, the probate courts erred in awarding 100% of the nursing home resident’s income to the community spouse, and vacates both orders and remands the cases.
The COA instructs Michigan’s probate courts that the burden is on the party seeking the order of support to show, by clear and convincing evidence, that the community spouse “needs” the additional income, that it is more than a “want,” and that in deciding whether or how much to award, the probate judge must consider the interests of the institutionalized Medicaid beneficiary and their obligation to contribute toward the costs of their own care. The discussion of this process goes on for several paragraphs, and includes several lengthy footnotes, using, at times, vague and clouded statements to explain how this balance should be struck. In the end, the opinion seems to intentionally avoid the obvious conclusion that the institutionalized spouse has no real interest in paying anything more than they have to toward their care, as their care remains the same notwithstanding, and that in almost every case the interest of institutionalized spouse would be to divert as much income to support their spouse as possible. The COA seems to want to direct the probate judge to consider public policy and the interest of the DHHS in making its decision – but they never say that – presumably because there would be not legal basis for doing so.
Importantly, the COA rejects the standard requested by DHHS of “exceptional circumstances resulting in significant financial duress.” But in the same footnote discussion, the COA goes on to say:
… as a matter of common sense, when an incapacitated person needs to be institutionalized to receive full-time medical care, it would be an unusual case for a community spouse’s circumstances to trump the institutionalized spouse’s need for use of his income to pay his medical expenses, particularly when the community spouse has the benefit of the CSMIA. In other words, an institutionalized spouse’s receipt of Medicaid, and a community spouse’s protection under the spousal impoverishment provisions, generally weighs against the entry of a support order.
The result of this case will require more effort in bringing these matters to probate courts in the future. Practitioners will want to establish a record that the probate judge can rely upon to conclude that the burden has been met. As evidenced by the orders vacated in this appeal, a judge simply concluding that the request was “reasonable” is not good enough.
We should also recognize that while this case is about protective orders used to establish income diversion orders to benefit the community spouse, many of the same rules and standards would presumably apply to the other common use of protective orders in Medicaid planning: orders to establish a protected spousal amount.
In the end, these important planning tools (probate court protective orders) survived the COA and planners should celebrate this decision. It isn’t perfect, but in light of the COA’s prior decisions in this arena, it’s a lot more than might have been expected.
Representing the interests of the elder law bar (as appellees) in these two matters were two renowned elder law practitioners: CT’s own David Shaltz, and my friend and colleague Don Rosenberg.
A rant this morning. Something to think about over your Sunday morning coffee (or tea).
Our firm starts lawsuits involving vulnerable adult exploitation as much as anyone I suppose. And we almost always plead two things: incapacity and undue influence. While in some cases the evidence may support the proposition that the person really was so cognitively impaired that they didn’t know what they were doing, most often that is not the case. Most often we plead incapacity in order to introduce the idea that this person’s capacity was impaired to the point that it reduced the level of persuasion that would be necessary to overcome their volition = undue influence.
For those who practice in this area, they know how difficult it is to win a case on undue influence. You have to show that the victim was essentially a conduit through which the bad actor achieved their objective – that the free will of the victim was completely overwhelmed by the power of the undue influencer. The so-called “presumption of undue influence” can be a help, but most court cases hold that the presumption, even where it is established, can be rebutted with nominal evidence. In any event, the presumption is not the topic today.
My point (or argument) today is that we rely on undue influence because we don’t have anything better. We don’t have law that reflects the reality of the aging process today.
I have discussed the research of Dr. Lichtenberg before (see Peter’s Principles and Our Evolving Understanding of Exploitation). His work, and the experience of those of us who handle these cases, informs us that older people can be exploited because of circumstances that have nothing to do with cognitive impairment – that exploitation can occur simply because an older person loses their sense of control, dignity and/or empowerment.
These cases don’t fit well into any current legal theory. But the best we have is undue influence. Other legal theories like unconscionability, mistake, fraud and constructive trust are available, but like undue influence, these theories are imperfect for our purposes.
The most promising development is the concept of a “vulnerable adult,” which recently entered the legal lexicon. It now appears in the criminal code and in policy for adult protective services workers. But it has yet to find its place in the civil and probate world. Perhaps the concept of vulnerable adult exploitation will lead to new civil theories and remedies. But we have to be mindful of what that would mean.
If we move the goalpost, as it were, from incapacity to vulnerable adult, are we going too far? There are good reasons that incapacity has served as the bright line for (1) court jurisdiction to invade the rights of an individual through a guardianship or conservatorship, and (2) as grounds for setting aside estate planning documents, deeds, beneficiary designations and contracts entered into by adults who are presumed to have the ability to understand what they are giving up and what they are getting in return. Is it a good idea to reduce the proofs necessary for either or both of these outcomes?
Societal changes triggered by modern medicine and the resulting explosion of people living to an advanced age have come upon us quickly. The law evolves slowly, but evolve it must. Elder law attorneys and probate litigators are struggling to find legal theories to adequately address the civil injuries impacting our clients and their family members. Undue influence is an imperfect bandage, but for now, it’s the best we’ve got.
It seems to me that we are living through what could be a case study on the way the law evolves to address a rapidly changing social environment. More people are living longer. More people are experiencing age-related cognitive impairments. At the same time family dysfunction seems to be the rule, not the exception.
As a result, the law in the arena of adult guardianships and conservatorships is experiencing stress and litigants are experiencing a high degree of instability with respect to the process and outcomes in the trial courts. Trial courts hardly know what to do with these cases. They need clearer direction. The issues that are coming up are difficult and deeply personal, factually unique in each case. The laws only offer general guidelines about how to resolve these conflicts. It is time for our appellate courts to figure out how these laws can best be construed to provide just results notwithstanding the complex issues, and to make practical compromises to allow the system to work in larger counties. More laws, I think, are not the answer.
What does a Court have to do before passing over a family member with priority and appointing a professional fiduciary?
What role does family dysfunction play in this decision? Is it good enough for the trial judge to say: “You all can’t get along, so I’m appointing someone from outside the family”?
What role does alienation of affection play? Where a family member keeps other family members away, is that per se a basis for passing over that family member, or must a court look into whether that decision is rationally based? [On this point it is interesting that legislation is being proposed to create a process to address family visitation rights for vulnerable adults. Click here to read that proposed legislation. I personally see this effort as well-meaning but misguided. We don’t need more laws, and the process proposed by the legislation is, to my mind, unworkable. Trial courts have this power now (click here to see blog post Seeing Redd, for instance).]
What role do existing estate planning documents play? In this new Kapp case we see the trial court simply blowing past the existing documents, based on a Guardian ad Litem’s conclusion that the older adults were probably impaired when they were signed. Is that ok?
How much discretion do trial courts have in this context to avoid holding an evidentiary hearing?
In numerous unpublished opinions, the Court of Appeals has been all over the board on all of these issues. As for published opinions, in the last three years alone we have seen wild fluctuations from, for instance, the Bittner case (click here to read Bittner’s Bite) to the rather incredible legal conclusions reached in Brody (click here to read Another Brody Bombshell). Trial courts need guidance, but we need to appreciate this guidance has to allow for practical implementation – a workable system. It is one thing for an experienced and engaged trial judge in a small county to hold a two day (or more) trial on the issue of suitability, and another thing to tell larger counties with busy dockets and a high percentage of pro per litigants to do the same.
Some help may be coming. The Michigan Supreme Court has agreed to take up Brody, and the Probate Section of the State Bar has been approved to file an Amicus Brief (proud to say that Chalgian and Tripp has been retained by the Section to prepare that brief). But I wouldn’t expect too much. While this case opens the door to the MSC to address many of these issues, they are likely to offer only some direction on the narrow issues in the appeal.
Finally, there’s an old saying: “May you live in interesting times,” and I’ve always felt that one of the things I enjoy about my chosen practice area is that it’s changing so rapidly, and the law is struggling to keep up – which makes for interesting times indeed for those of us who work with aging issues and vulnerable adult exploitation in particular. But when I looked up the saying on Wikipedia, I found this explanation of the saying, which suggests I may want to temper my enthusiasm:
“May you live in interesting times” is an English expression purported to be a translation of a traditional Chinese curse. While seemingly a blessing, the expression is always normally used ironically, with the clear implication that ‘uninteresting times’ of peace and tranquillity are more life-enhancing than interesting ones, which from historical perspective usually include disorder and conflict.
When it comes to medical care advance directives, we Michiganders have patient advocate designations, advance directives, and do not resuscitate orders. Soon, it appears, we will also have POST forms. Laws requiring the development of, and allowing for the use of, POST (or Physician’s Order for Scope of Treatment) forms in Michigan have now been passed by both houses and are awaiting the anticipated signature of Governor Snyder. UPDATE: The Governor has approved these bills. The law has an effective date of February 6, 2018.
A POST form is a document that would be signed by a patient and their doctor which would provide direction for the treatment of a specific condition, which direction could include end-of-life choices. The expressions in the form would continue to have effect even if the patient subsequently becomes unable to make their own medical decisions.
A POST form differs significantly from a patient advocate designation or advance directive in that a person may not unilaterally create them. They are created by the patient in consultation with their medical care provider.
Waiting for It. Once these new bills are signed into law, State agencies will initiate a process to develop a standardized form. The use of POST forms will be delayed until that process is complete. This process could take years.
Let’s look at the soon-to-be new law:
A guardian and a patient advocate will have authority to create a POST form for a person who is unable to make their own healthcare choices.
A POST form remains revocable by the patient or their representative (PAD or Guardian). A patient may revoke a POST form orally or in writing.
If a patient has a pre-existing patient advocate designation that includes an advance directive regarding end-of-life care that is inconsistent with the expression in a POST form, the POST form will take precedence, being treated as a more current expression. Likewise, to the extent inconsistent, a POST form would trump a previously executed do-not-resuscitate order.
A POST form expires in one year from the date of creation, or sooner if there is an “unexpected change” in the patient’s medical condition, if the patient moves to a new facility or to a new care level, and if the patient gets a new attending health professional. They may be continued beyond one year upon agreement of the patient or their representative (PAD or Guardian) and the attending medical provider.
POST forms would be controlling in institutional care settings, including adult foster care homes; and in the case of an EMS event, outside of institutional care.
The probate court has jurisdiction to determine the validity of a POST form. The basis for challenging a POST form would be that the POST form expressions are contrary to the patient’s wishes or best interests.
To read the law, you will want to look at the four House Bills that make up the package of legislation. Most of the law is in House Bill 4070. Additional changes are in House Bills 4171, 4173 and 4174. Click on the numbers to read the bills. What you will see is that the law is mainly in the public health code, with a few conforming changes to EPIC and the Adult Foster Care Licensing Act.
POST forms have been used in some parts of Michigan (without legal authority) for many years. For the record, Jackson County seems to have been the first to implement their usage some 15 years ago. Other counties have used them for the past few years as part of a pilot program.
POST forms, sometimes referred to as POLST forms (Physician’s Order of Life Sustaining Treatment), are currently in use in several other states. For a good discussion of POST/POLST forms, go to the National POLST Paradigm website by clicking on the name.