Aging Options

Why that CCRC contract requires an expert opinion before you sign

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At the end of December, a New York trial court ruled that residents of a continuing care retirement community (CCRC) breached their contract when they applied for Medicaid before spending down their assets.  Good Shepherd Village at Endwell v Yezzi (NY Slip Op 51900 – NY: Supreme Court, Broome 2014).

In 2009, Peter and Hazel Yezzi moved into Good Shepherd Village at Endwell.  In their contract agreement they agreed to spend down their own resources before applying for Medicaid.  In 2012, Hazel Yezzi moved into a skilled nursing facility where she remained until her death.  At the time of her move, she transferred some of her assets to her husband and applied for Medicaid, which approved the application but Good Shepherd refused the Medicaid payment claiming breach of contract and fraudulent transfer.  (The transfer of assets to a spouse and the subsequent application for Medicaid is allowed for traditional skilled nursing facilities and is not in dispute in this case.)  The New York Supreme Court, Broome County granted summary judgment to the CCRC holding that the Yezzi’s had violated a valid contract.  The court also ruled that the assets transferred from Hazel Yezzi to Peter Yezzi must be returned to Hazel Yezzi’s estate.

CCRCs are an alternative residential facility that provide services for moderate to high net worth and/or income individuals.  The continuum of care in such facilities runs the gamut from independent living on one end to skilled nursing care on the other end all dependent on the resident’s changing care needs.  Individuals that choose CCRCs as a housing alternative do so with the idea of protecting their assets from future long-term care needs while enabling them to reside in the same community.  As this case illustrates, the contracts for CCRCs are complicated and shouldn’t be entered into without the advice of a skilled elder law attorney familiar with CCRC contracts.  For more information on CCRCs, please download the white paper on CCRCs.

CCRCs are virtually unregulated.  There are no federal laws or regulations concerning CCRCs and depending upon the state, they may have few consumer protections even at the state level.  Seniors don’t always consult with an attorney and so they may miss important requirements.  One thing Elder Law Attorney Rajiv Nagaich is seeing more frequently in his own practice is an uptick in the number of CCRCs and Nursing Homes petitioning the court for guardianships.  According to a major investigative report in the New York Times, data collected by researchers looking at guardianship cases in New York found that the practice of applying for guardianship had become a routine aspect in their collection process.   Researchers found that 12 percent or more of guardianship cases were brought by nursing homes.  Guardianship provides the institutions with full legal control of a person’s money.  One lawyer quoted in The Times report estimated that he had brought 5,000 guardianship cases in 21 years of practice.

A guardianship is intended to protect people unable to manage their own affairs and legally can supplant a power of attorney and a health care proxy.  Attorneys for nursing homes claim that using guardianships to secure payment is better than suing an incapacitated resident but the resident and family members certainly may not agree.  Guardianship cases are often difficult to access once a guardianship is awarded to someone outside of the family.  Many guardianship cases never come to light.  A 2010 Seattle Times investigation found that in Washington, judges often failed to apply the correct legal standard (in as many as 97 percent of guardianship cases).  That lack of transparency can be found throughout the country.  According to The Times article, it’s difficult to know even something as trivial as how many guardianships there are.

A petition for guardianship is only supposed to be brought by someone with the individual’s welfare at heart and tailored to that individual’s needs.  Instead, Nagaich said that if the judges have to listen to a well-heeled guardian coming up against a family member—the professional will come out ahead.

Since residents may be able to negotiate over the contract terms and at the very least they need to be aware of what those terms mean to they can make an informed decision before signing an agreement, people with questions about CCRC or nursing home contracts or guardianships should call the law firm and speak with an Elder Law Attorney.

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