General Practice, Solo & Small Firm DivisionMagazine
American Bar Association
General Practice, Solo, and Small Firm Division The Compleat Lawyer
Spring 1998 © American Bar Association. All rights reserved.
Health Law and The Elderly Client
Medicaid, Living Wills, Powers of Attorney, and Guardianship
BY DONNA G. KLEIN
Donna G. Klein is head of the Health Care Section at McGlinchey Stafford, a PLLC in New Orleans, Louisiana. Her practice includes advising clients in the areas of fraud and abuse, anti-self-referral laws, civil and criminal investigations, medical staff credentialing, managed care, risk management, contracts, and reimbursement.
They're calling it "the greying of America." People over the age of 65 constitute the largest growing segment of America's population. Health care expenditures for older Americans has greatly increased in tandem.
In 1955, expenditures were approximately 4.5 percent of the gross national product; by 1993, that figure had risen to approximately 14 percent.1 The problems associated with this increase in health care expenditures have been compounded by the limited benefits available to senior citizens for long-term health care needs.
As a result of the growth of the older population, the increase in health care expenditures, and the limited availability of health care benefits, more and more lawyers are now being asked to provide practical advice to elders on a variety of health-related issues.
The government's basic health care system for the elderly is the Medicare program. However, Medicare does not cover the cost of long-term or custodial care. It is designed to pay only for acute and skilled care expenses. Therefore, qualifying for the Medicaid program is often important to elders because Medicaid pays for long-term care not covered by Medicare.
Medicaid is the federal-state health insurance program for the poor. However, an applicant for Medicaid assistance must meet strict income and resource requirements, which vary from state to state. For instance, many states limit Medicaid eligibility by income, denying Medicaid to persons above the federal poverty level ($9,780 per year for single individuals). When an elder with more than such income wishes to qualify for Medicaid, the income must somehow be reduced to an amount below the income cap.
An elder with too many resources must also deplete these resources before qualifying for Medicaid. For example, an elder is only allowed to retain $3,500 in cash, $1,500 of which must be used for burial upon death. Therefore, Medicaid applicants often deplete assets by "spending down," i.e., buying exempt items (medical equipment, adapted van, new car, television set, pre-paid health insurance, etc.) and by transferring funds to a spouse or disabled person.
However, states impose a penalty if funds are gifted to a person other than a spouse or disabled person. On Medicaid applications, the applicant is asked to disclose all transfers to others for less than market value in the prior 36 months and to disclose transfers to and from a trust in the prior 60 months. Failure to make full disclosure may be considered Medicaid fraud, and unauthorized transfers result in Medicaid ineligibility for a given time period.
Not only are Medicaid applicants threatened with Medicaid ineligibility, but also a provision of the Balanced Budget Act of 1997 threatens lawyers and other financial advisors with imprisonment and fines if they advise senior citizens to transfer financial assets to qualify for Medicaid assistance. The provision replaced a controversial provision of the Health Insurance Portability and Accountability Act of 1996 that made it a crime for seniors to artificially impoverish themselves to qualify for Medicaid in certain situations. The so-called "Granny Goes to Jail" law prompted such an outcry from senior citizen groups and elder-law attorneys that the federal government lifted the criminal sanctions against seniors but left them in place against lawyers and other financial advisors.
Most lawyers believe that the practice of transferring assets is perfectly legal, and that seniors already incur civil penalties when those transfers are done improperly. Lawyers also say that the new federal law amounts to a virtual gag order on attorney-client discussions and already has had a chilling effect on lawyers, who are afraid to give advice on any matters of Medicaid eligibility for fear that they could be criminally prosecuted. Thus, the new federal law arguably violates the First Amendment right to free speech.
On December 4, 1997, the New York Bar Association filed a lawsuit in the federal court for the Northern District of New York challenging the new federal law. Pending before the court is the New York Bar Association's motion for preliminary injunction, which seeks to prohibit Attorney General Janet Reno from enforcing the law until a decision has been rendered on the merits.2
On a more positive note, many lawyers interpreting the 1996 provision concluded that transfers not creating periods of disqualification would not subject an applicant to criminal sanctions.3 These transfers include inter-spousal transfers, transfers to minor/blind/disabled children, transfers to care-giver children, and transfers to siblings with an equity interest.4 Presumably, these transfers are authorized under the 1997 federal law, as well. However, to be certain of the meaning of the new law, lawyers and the public will have to wait to see how the courts will interpret and enforce it.
Long-term care insurance. Lawyers also should advise their clients to consider long-term care insurance. Many long-term care policies will pay for hospital, skilled, and some home care. While "stand-alone" home health insurance is available, generally the applicant must be healthy and able to afford the premiums. Long-term care insurance, although available when the client is healthy, is expensive. Nonetheless, clients should be advised of this option in making their health care plans.
Living Wills and Powers of Attorney
Other important issues to be addressed in an elderly client's overall health care plan are living wills and powers of attorney. A living will is a document governing the withholding or withdrawal of life-sustaining treatment from an individual in the event of an incurable or irreversible condition, when such person is no longer able to make decisions regarding his medical treatment. Living wills advance the constitutionally protected liberty interest to refuse treatment recognized by the Supreme Court in Cruzan v. Director, Missouri Dept. of Health.5
The Supreme Court decision left to each state the task of establishing rules regarding treatment decisions for incapacitated individuals. The laws in many states specifically recognize that all persons have the fundamental right to control the decisions relating to their own medical care, including the decision to have life-sustaining procedures withheld or withdrawn in instances where such persons are diagnosed as having a terminal and irreversible condition.
Thus, these laws allow any adult to make a written declaration directing the withholding or withdrawal of life-sustaining procedures in the event that he should have a terminal and irreversible condition (a condition or state that would produce death and for which the application of life-sustaining procedures would serve only to postpone the moment of death). The written declaration may designate another person to make the treatment decision for the declarant should he be diagnosed as having a terminal and irreversible condition and be comatose, incompetent, or otherwise mentally or physically incapable of communication. Many laws also allow for an oral or non-verbal declaration to be made by an adult in the presence of witnesses at any time subsequent to the diagnosis of a terminal and irreversible condition.
Lawyers advising elder clients should recommend that they execute living wills and, most importantly, that they inform their family members and health care providers of the existence of their living wills. A 1990 federal law requires all hospitals to inquire on admission of a patient about the existence of a living will. The living will should be made a part of the medical record. Some states even have a formal registry for individuals to register their living wills, to which health care providers have access.
A health care power of attorney is another tool for lawyers with elderly clients. Health care powers of attorney allow a trusted friend or family member to make health care decisions. A health care power of attorney can authorize the chosen agent to make decisions regarding medical treatment, surgery, medical expenses, nursing homes, medications, choice of physicians, etc. In most states, health care powers of attorney must be express and in writing.6
In advising elderly clients, it is important to stress the significant difference between a living will and a power of attorney for health care decisions. Living wills relate only to the withholding or withdrawal of life-sustaining treatment in the event that a person should have a terminal and irreversible condition. In contrast, powers of attorney permit the agent to make decisions with respect to other health care matters, including those situations where the patient does not have a terminal and irreversible condition. In most states with a living will law, these powers of attorney for health care decisions must specifically exclude the power to withhold or withdraw life-sustaining treatment in the event of a terminal and irreversible condition. Thus, elder clients should be advised of the wisdom of executing both documents.
It is also important to distinguish a Do Not Resuscitate (DNR) order from a living will. Cardiopulmonary arrest may occur during the hospitalization of any elderly patient. Because a living will generally is only operative in the event of a terminal and irreversible condition, elderly clients should separately consider the issue of a DNR order. DNR orders should never be issued without consultation with the patient or agent and specific consent for the order. Clients should be advised to speak to their physicians about the future course of medical treatment so that the patient or agent may make specific choices at each level of care.
Living wills and health care powers of attorney may avoid the more complicated, more expensive, and less dignified guardianship proceeding. Guardianship is a legal arrangement under which one person has the legal right and duty to provide for the care for another and her property. A guardianship proceeding generally begins when a person files a petition asking the court to determine whether another person is able to care for herself or handle her affairs.
The majority of the jurisdictions allow "any interested person" to file this petition with the court. The constitutional requirements of due process require the alleged incompetent to be given notice of the proceeding, and the alleged incompetent has the right to representation by counsel. The court generally appoints another party, often called a guardian ad litem, to advise the court with respect to the person's physical condition and mental abilities.
Where applicable, living wills and health care powers of attorney are preferred over the guardianship proceeding because once a person is declared incompetent and a guardian is appointed, the elder loses many rights, including the right to marry or divorce; the right to vote; the right to make or revoke a will; the right to manage his own money; the right to drive; the right to buy, sell, or lease property; the right to consent or to refuse medical treatment; and the right to decide where to live.7
Moreover, a 1987 Associated Press article examined, with alarming results, more than 2,000 guardianship cases nationwide. According to the article, one third of the wards were moved from their homes during guardianship, 13 percent had no notice that a guardianship petition was pending, nearly 50 percent of the wards did not have the benefit of legal representation, and 25 percent of cases did not involve a hearing.
When there was a hearing, the person alleged to be incapacitated was present only 8 percent of the time and judges approved the guardianship proposal 97 percent of the time. One-third of all wards had guardians appointed without a doctor's opinion prepared or presented to the court. Forty-eight percent of the files did not contain an annual accounting of money, and the article suggested that the elderly's rights were not being monitored fairly or openly.8
Although President Clinton called for a Conference on Aging in May of 1995, the proposed National Guardianship Rights Act, which would standardize guardianship proceedings, repeatedly stalls in Congress. The proposed act would require all persons facing guardianship to receive adequate notice of the proceeding, to have counsel, to be examined by a professional before a final determination of incapacity, to have the right to a jury trial, and to have the right to an immediate appeal. All guardians would be required to be of good character, receive training, submit annual reports, and be subject to judicial oversight. The U.S. Attorney General would be charged with enforcing this law.9 However, until the act is passed, elder clients face possible deprivation of their constitutional rights.
- Peter J. Strauss, Elder Law in the Nineties, 1 Elder L.J. 19, 19-20 (1993).
- New York State Bar Association v. Janet Reno, Civil Action No. 97-CV-1768.
- Id. at 1383.
- 42 U.S.C. § 1396p(c)
- 110 S.Ct. 2841 (1990).
- Teanna W. Neskora, Living Wills and Health Care Powers of Attorney, 44 La. B.J. 512, 514-15 (1997).
- Mark D. Andrews, The Elderly and Guardianship: A Crisis of Constitutional Proportions, 5 Elder L.J. 75, 76 (1997); Associated Press, Guardians of the Elderly: An Ailing System (1987).
- Id. at 80-81.
- Id. at 83-84.