Future of Aging Services Conference

Assisted Living & CCRC Update

April 20, 2009

Stephen J Maag J.D.Director, Assisted Living and Continuing Care

AAHSA

Introduction

• This will be an overview of several topics

• Issues that I have had significant number of calls/questions or that are updates of issues we’ve been dealing with for a while

IRS Tax Exempt Bond Audit

• Ongoing, no resolution yet• History, Mission Ridge 501(c)(3) $14 million

VRDB in 2002• Entrance fee model, refundable when new

resident moves in or (rarely) hardship• Fees held in unrestricted fund, commingled.

General security pledge of funds, NOT perfected

IRS Audit

• Audit started in 2007, very contentious, numerous requests for info

• Notice of Proposed Issue (NOPI) Oct 08• Entrance fees are replacements proceeds for

bonds, yield restricted under arbitrage rules • Potential of bonds becoming taxable or

excess interest income refunded to IRS

NOPI

• Asserted that: 1. Entrance Fees were “pledged” to secure bond debt: 2. MR expected a shortfall and anticipated using fees based on financials

• Response, Not pledged, no reasonable assurance they will be available (RR-78-348) Misread financials, no shortfall

Proposed Adverse Determination

• Issued Jan 22 despite detailed response to show why IRS was in error

• Continued to assert pledge argument• Dropped shortfall, and argued “sound

business practice” something they had orally mentioned, fees are kept for refunds as a practice so they are “replacement proceeds”

Appeal Filed

• Filed March 16, argues:• No pledge under IRS rules or state law• Sound business practice erroneous: refunds

only when new resident; how does IRS know what that is; Bond doc don’t restrict fees; assumes preserving fees if financial position deteriorates fees will be used; conflicts with IRS principles and creates confusion

• Entrance fees were expended, $5.1 million difference

Current Status

• AAHSA was asked to participate, has voluntary contributions from members

• Appeal will take several months

• Meeting has been requested to seek resolution

• Another CCRC, Dow Rummel in S.D., has been audited by same auditor

Disabled Children of Seniors-Fair Housing Implication

• 1988 Amendments added a prohibition against discriminating against families

• 2 exceptions added• Over 62 exception, simple• Over 55 exception, more complicated• Issue is growing because of children/family

members moving in with Resident

Over 55 Exception

• Housing includes significant facilities and services designed to meet physical and social needs of over 55

• Policies and procedures of owner show intent to operate for people over 55

• At least 80% of units are occupied by one person over 55

Update on Channing House

• Case began 3 years ago, in 2006 Ms Herriot was assessed as needing more care than provided in Apt., request made to move to assisted living

• Ms Herriot refused, asserted she could hire help to allow her to remain in apt. safely

• Ms Herriot filed suit Oct., 2006.

Herriot claims

• Ms Herriot claimed that the request to move to assisted living was discrimination based on disability and Channing House failed to reasonably accommodate her request to stay in her apt.

• She could meet the essential requirements of tenancy (i.e. live safely) and the private duty aides wouldn’t interfere with operation of community

Channing House position

• Channing House asserted that it had a right under the contract to request the move when it was clear she could no longer care for herself

• CA. Law also prohibits retaining a resident in an apt. who needs that level of care

Court actions

• Both sides moved for summary judgment in late 2007

• Hearing was held Feb 2008, no decision, court ordered and independent medical examination

• Report issued on May 29 with both parties commenting

First Court Decisions

• In August, 2008 Court entered an order granting Channing House’s motion for partial summary judgment

• Court held that Ms. Herriot’s request to stay in her apt. was not a reasonable accommodation because to do so violated state law.

First Court Decision

• Decision was narrow and a footnote acknowledged the contract defense of Channing House, but did not rule on it

• Ms. Harriot moved for reconsideration

Second Court Decision

• Court reiterated that state law makes Herriot’s request unreasonable

• Court further found that her request her understanding when she signed agreement that a move to higher level of care might be necessary

• Request was an “unreasonable” accommodation in light of law and contract

• To allow private aides to provide all the assistance necessary would fundamentally alter the business of Channing House

Lesson’s from Channing House?

• It is under appeal, no legal value yet• Does clearly support the concept of

moving through the continuum of a CCRC as set forth in contract

• As always FACTS are critical, different circumstances, different CCRC programs and different contract terms could make a difference in decision

Transfer/Discharge Issues

• Language of contract important, consistent application critical, don’t change “nature of your program”

• Potential waiver of contract

• “Safety” is key, independent assessment may be necessary

• Intervene early and communicate

Update on Status of Mobility Aids

• Another topic which continues to be an issue• These are walkers, wheelchairs, canes, and

motorized carts etc.• Number of cases challenging restrictions and

limitations on mobility aides• Typically apply mostly to

prohibiting/restricting motorized devices• Also cases of limits on access to areas of

community

Settlements

• Few of these have gone to trial

• In settlements, communities generally are found to have discriminated based on disability, but placing undue restrictions or conditions on use of mobility aids

• Communities limited in restrictions

Restrictions/Limitations to Avoid

• Competency testing, no required “drivers license”

• Damage deposits beyond standard ones• Insurance requirements/ indemnity clause • Rental premiums• Medical screening• Restricting/limiting access to common areas

Appropriate Policies

• OK to limit to disabled• Direct threat exception “dangerous

drivers”• Reasonable “rules of the road”• Limited time, place and manner

exceptions are permissible• Request to pay for damage allowed

Service AnimalsWhen is a pet not a pet?

• Well known example is seeing eye dogs

• Many new examples, assistance animals (dogs, monkey’s) alert animals (sense epilepsy/diabetes)

• More controversial are “emotional support” animals

Service Animals

• Case by case determination

• Must be permitted even if “No Pets”

• Resident must be disabled

• Nexus between disability and animal

• No limit on type/size

• Certification is questionable issue

Service Animals

• Can have reasonable rules of behavior for service animal

• Resident is required to care for and supervise animal

Negotiated Risk vs. Service Agreements

• Negotiated Risk Agreement (NRA) also known as (Shared Responsibility) addresses:

• Behaviors or preference of concern• Potential or actual risk• Suggested alternatives to reduce risk• Negotiated resolution• Resident acknowledgment of potential

negative consequences

Negotiated Risk Agreements

• Intended to meet goals of resident directed care, optimize privacy independence, choice

• No state prohibits, many have something similar, WI requires in certain settings

Advantages

• Tool for identifying and reducing risk

• Communication tool to facilitate discussions and setting expectations

• Support resident’s right to accept risk and have choices

Disadvantages

• Creates unreasonable expectations• Places Residents at unnecessary risk• Does not always account for capacity• Allows communities to “cop out” and

provide less care• Creates risk of deficiencies• Viewed as liability avoidance

Service Agreements

• In use in virtually every state, sometimes viewed as similar to NRA

• Most states have regular assessment and upon significant change in condition

• Not necessarily the same purpose

Service Agreements

• Required by law, concept is to assess to determine needs

• Used to determine appropriate placement, not avoid care obligation

• Can function very much like a NRA, but key difference is doesn’t attempt to relieve community obligations

• Issues/risks can still be documented as can choice not to follow, but community continues to monitor/assess

What Do You Do?

• Most important, always document• Choice of how to approach, differing views• Likelihood of avoiding liability low• Concept of independence and choice is

favored• Have some policy and procedure to follow for

dealing with risk and when you will NOT accept risk.

QUESTIONS?