THE LAW OF FINANCIAL ABUSE

AND EXPLOITATION ____

A PENNSYLVANIA GUIDE FOR

OLDER ADULTS, FAMILIES, COUNSEL AND COURTS

by

Katherine C. Pearson

and

Trisha E. Cowart

GEORGE T. BISEL COMPANY, INC. 710 WASHINGTON SQUARE

PHILADELPHIA, PA

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COPYRIGHT 2011

BY

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ISBN: 978-0-9820154-8-3

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DEDICATION ______________________

We dedicate this book to the talented students who have served as Certified Legal Interns at the Elder Law and Consumer Protection Clinic at The Dickinson School of Law at The Pennsylvania State University, to the many inspiring clients at our clinic, to the hard-working attorneys who have served as visiting supervisors, and to members of the faculty at the School of Law who have patiently listened to our hypothetical fact patterns and shared their expertise.

We also dedicate this book to our own families, especially our parents.

ACKNOWLEDGMENTS ______________________

We have many to be grateful to, including Visiting Supervising Attorney Nichole Walters, Professor Laurel Terry, Dorothy Morse, the members of the Elder Law Council and Elder Law Section at the Pennsylvania Bar Association, private attorneys David Jaskowiak, Esq., Timothy Hoy, Esq., and Joseph K. Goldberg, Esq., the hard-working District Attorneys in Dauphin and Cumberland Counties, Researchers-Extraordinaire Elijah Veenendael, Matthew Noumoff, Joshua Wilkins and Chad Zimmerman, and the inspiring staff at the Dauphin County Area Agency on Aging, especially Dganit Shefet and Dan Gemmer.

We appreciate the support and resources provided by George T. Bisel Co., and especially Tony DiGioia, Editor-in-Chief.

We acknowledge and thank our colleagues and administrators at The Dickinson School of Law of the Pennsylvania State University.

ABOUT THE AUTHORS _____________________

Katherine C. Pearson is a Professor of Law at Penn State University’s Dickinson School of Law and the founder of the Elder Law and Consumer Protection Clinic at the School of Law. She began teaching law in Pennsylvania after more than a dozen years of experience as a practitioner in the southwestern part of the United States. She has served as the chair for the Elder Law Section of the Pennsylvania Bar Association, and is a member of the National Academy of Elder Law Attorneys. In 2009, she was the Peterson Visiting Scholar in Gerontology and Family Studies at Oregon State University, and was in residence at OSU for the Fall term of 2009. In 2010, she was a visiting Fulbright Scholar at Queens University Belfast in Northern Ireland, where her focus was on international and comparative policies on law and aging. She has lectured on policies and laws affecting older adults and their families in Europe, Mexico, Canada, and throughout the United States and is the author of numerous articles on aging policy topics.

Trisha E. Cowart is a Visiting Assistant Clinical Professor at the Elder Law and Consumer Protection Clinic at the Penn State University’s Dickinson School of Law. Prior to becoming a Visiting Assistant Clinical Professor, Ms. Cowart held the role of Elder Protection Clinical Fellow at Dickinson and the primary focus of her fellowship was examination of financial exploitation of older adults. She served as the Acting Co-Director of the Clinic during 2009-2010. She is also involved in outreach to families on a variety of legal and practical issues facing older adults. Ms. Cowart is a member of the Pennsylvania Bar Association and the PBA Elder Law Section. She received her B.A. (Accounting and Journalism) from the Pennsylvania State University and her J.D. from Penn State University’s Dickinson School of Law.

FOREWORD

_______________

My awareness of a need for better understanding of the laws of financial abuse and exploitation has been gradual, but increasing, over the course of my thirty year legal career. One of the first examples was presented to me while I was serving as a visiting assistant clinical professor at the University of New Mexico School of Law, a supportive place to make the transition from full-time practitioner to full-time law professor, thereby gaining the time to write about these topics.

The victim was an elderly Hispanic man who spoke only Spanish. After his English-speaking wife passed away, he turned to a bi-lingual neighbor for help. The neighbor escorted him to her own attorney, and she translated for him with the attorney, who spoke only English. Soon the elder was signing documents—and within a few weeks he learned he had signed documents that permitted the neighbor unfettered access to his bank accounts and his home equity, all to a devastating result. UNM’s Clinic worked with a wonderful resource, the Senior Citizen Law Center in Albuquerque, to save the gentleman’s home.

At first I thought the problem was a “translation” problem—but after more than fifteen years of witnessing similar fact patterns, I have come, reluctantly, to the conclusion that seemingly well-meaning friends and family members can often be the source of financial abuse and exploitation. Sometimes the relationship begins innocently and with good intentions, sometimes not. During the ten years that I have served as the educational director of Penn State’s Elder Law and Consumer Protection Clinic, I have had all too many opportunities to witness the consequences of problematic behavior. Further, in my travels I have seen coast-to-coast examples of the need for proactive legal advisors and similar professionals, including bankers, as well as the need for judges and protective service agency staffers who do not hesitate to intervene when abuse is suspected.

In October of 2010, just as this book was going to press, Pennsylvania’s Governor signed Act 70 to expand the availability of protective services, including assistance in preventing “exploitation,” to “younger” disabled adults, those aged 18 to 59. This is a reminder that the concerns addressed in this book are not uniquely the concerns for older adults. The laws addressed here have parallels in every state, as we demonstrate in a national, comparative chart of state laws in Appendix A, and the approaches suggested here may provide relief for victims of any age. We have written the book with an eye to helping people both in and outside of Pennsylvania. In our final chapter, for example, we talk about the important roles for the courts in monitoring guardianships, conservatorships, and in responding to instances of suspected abuse. We highlight an exciting approach, a volunteer monitor project for guardianships, adopted by Dauphin County’s Orphans Court. Such innovation is in sharp contrast to devastating reports of nation-wide abuse by court-appointed guardians in the General Accountability Office (GAO)’s Report to the Chairman of the U.S. Senate Special Committee on Aging on Guardianships: Cases of Financial Exploitation, Neglect, and Abuse of Seniors, issued in September 2010.

For more than four years, first as a student and then as an attorney in our Clinic, Trisha Cowart, Esq., has been my cherished colleague. While working on this book, we have often been contacted by members of the public and by practicing attorneys who have questions or suggestions about how to respond to instances of suspected financial abuse. Often the concerns are revealed during the probate process, after the death of the elder. While many of the concepts and strategies presented in this book will be relevant to disputes about inheritance rights, we write this book in the hope that older adults, disabled adults and dependent persons will be better represented and counseled while they are still alive. We want to help prevent financial abuse and exploitation and not simply respond to the civil or criminal wrongs after offending actions take place.

We welcome comments and suggestions from our readers on how to improve this book for the future.

I have a final set of people to thank. During the 2009–10 academic year, I was privileged to take an extraordinary sabbatical leave from my usual role as a teacher and clinician. Oregon State University hosted me in the fall of 2009 as the Peterson Visiting Scholar in Gerontology and Family Studies. Under the auspices of the Fulbright Scholarship program, I spent the winter and spring months of 2010 at Queen’s University Belfast in Northern Ireland. These opportunities allowed me to conduct comparative research into national and international aspects of the needs of families and aging adults. My colleagues in Oregon, Ireland and the United Kingdom also kindly fed me, encouraged me, entertained me and inspired me while I worked on this book. My very deepest thanks to all.

October 20, 2010 Katherine C. Pearson Professor of Law Email: kcp4@psu.edu

CONDENSED TABLE OF CONTENTS ______________________

Dedication

Acknowledgments

About the Authors

Foreword

Chapter

1. The Public and Private Challenges of Financial Abuse

2. The Importance of Protective Service Authorities

3. Criminal Causes of Action

4. Civil Causes of Action

5. Unfair Trade Practices and Consumer Protection Laws

6. The Role of Filial Support Laws in Cases of Suspected Financial Abuse

7. Reporting Suspected Financial Abuse: Mandatory Versus Voluntary Obligations

8. The Importance of Attorneys as Counselors

9. The Importance of the Courts

APPENDICES

TABLE OF CASES

INDEX

DETAILED

TABLE OF CONTENTS ______________________

Dedication Acknowledgments About the Authors Foreword

Chapter 1 THE PUBLIC AND PRIVATE CHALLENGES OF FINANCIAL ABUSE

§ 1.1 Introduction § 1.2 The Importance of Asking Tough Questions § 1.3 Pennsylvania Takes Financial Abuse Seriously

Chapter 2 THE IMPORTANCE OF PROTECTIVE SERVICE AUTHORITIES

§ 2.1 Introduction § 2.2 Overview of Service Providers Under Pennsylvania’s Older Adults Protective Services Act § 2.3 Triggering Protective Services: Pennsylvania’s OAPS Act Definition of Exploitation § 2.4 Protective Services: Reports and Investigations § 2.5 Protective Services: Interventions § 2.6 Protective Services: Individual Rights - § 2.7 Other Public Investigations of Suspected Financial Abuse or Exploitation

Chapter 3 CRIMINAL CAUSES OF ACTION

§ 3.1 Introduction § 3.2 Paving the Way for Criminal Prosecution of Exploitation: The Bertha Trout Case § 3.3 Initiating a State Criminal Action Arising Out of Elder Exploitation § 3.4 Pennsylvania Criminal Provisions

§ 3.4.1 Theft by unlawful taking or disposition, 18 Pa.C.S. § 3921 § 3.4.2 Theft by deception, 18 Pa.C.S. § 3922 § 3.4.3 Receiving stolen property, 18 Pa.C.S. § 3925 § 3.4.4 Theft by failure to make required disposition of funds received, 18 Pa.C.S. § 3927 § 3.4.5 Access device fraud, 18 Pa.C.S. § 4106 § 3.4.6 Misapplication of entrusted property and property of government or financial institutions, 18 Pa.C.S. § 4113 § 3.4.7 Securing execution of documents by deception, 18 Pa.C.S. § 4114

§ 3.4.8 Identity theft, 18 Pa.C.S. § 4120 § 3.5 Federal Criminal Provisions § 3.6 Crimes Involving Joint Bank Accounts and Powers of Attorney and the Issue of Consent

§ 3.6.1 Joint Bank Accounts and the Issue of Consent § 3.6.2 Powers of Attorney and the Issue of Consent

§ 3.7 Practical Considerations: The Incapacitated or Unavailable Victim § 3.8 Penalties, Fines and Restitution Under Pennsylvania Law

§ 3.8.1 Grading of Offenses § 3.8.2 Imprisonment Based on Grading § 3.8.3 Fines and Restitution

§ 3.9 Elder-Victim Crimes: Should Pennsylvania Adopt Elder-Specific Criminal Provisions for Financial Exploitation?

Chapter 4 CIVIL CAUSES OF ACTION

§ 4.1 Introduction § 4.1.1 Hypothetical: Agatha Albright’s Case

§ 4.2 Preliminary Steps with Agents: Termination of Authority and Seeking Accounting

§ 4.2.1 Standing to Seek Judicial Relief § 4.2.2 Application to Hypothetical

§ 4.3 Jurisdiction in Civil Suits § 4.3.1 Personal Jurisdiction § 4.3.2 Subject Matter Jurisdiction § 4.3.3 Tactical Considerations and Right to Jury Trial § 4.3.4 Application to Hypothetical

§ 4.4 Preliminary Injunctive Relief § 4.4.1 Application to Hypothetical

§ 4.5 Confidential Relationships and Breaches of Fiduciary Duty: An Overview § 4.5.1 Application of Theory of Breach of Fiduciary Duty Arising Out of

Confidential Relationship to Hypothetical § 4.5.2 Fiduciary Duty Under Common Law Agency

§ 4.5.2.1 Application of Theory of Breach/Common Law Agency to Hypothetical

§ 4.5.3 Fiduciary Duty Under Powers of Attorney § 4.5.3.1 Application of Theory of Breach/Power of Attorney to Hypothetical

§ 4.6 Undue Influence § 4.6.1 Elements and Burdens of Proof § 4.6.2 Remedies Arising from Undue Influence § 4.6.3 Application of Undue Influence Theory to Hypothetical

§ 4.7 Lack of Capacity § 4.7.1 Application of Lack of Capacity Theory to Hypothetical

§ 4.8 Conversion § 4.8.1 Elements and Burdens of Proof § 4.8.2 Damages for Conversion § 4.8.3 Proper Subject Matter for a Conversion Action § 4.8.4 Application of Conversion Theory to Hypothetical

§ 4.9 Common Law Fraud § 4.9.1 Pleading Fraud § 4.9.2 Elements and Burdens of Proof

§ 4.9.3 Fraud and Real Property Conveyances § 4.9.4 Damages for Fraud § 4.9.5 Application of Fraud Theory to Hypothetical

§ 4.10 Contractual Theories § 4.10.1 Application of Contract Theories to Hypothetical

§ 4.11 Unjust Enrichment (Quasi-Contract) § 4.11.1 Application of Theory of Unjust Enrichment to Hypothetical

§ 4.12 Common Defenses to Civil Causes of Action § 4.12.1 Gifts § 4.12.2 Statutes of Limitation and Laches § 4.12.3 Statute of Frauds

§ 4.13 Attorneys’ Fees

Chapter 5 UNFAIR TRADE PRACTICES AND CONSUMER PROTECTION LAWS

§ 5.1 Introduction § 5.2 Complaint Investigation by the Bureau of Consumer Protection and the Attorney General § 5.3 Private Causes of Action Under the UTPCPL

§ 5.3.1 Discussion of the Catch-All Provision in the UTPCPL § 5.4 Right to Cancel (Rescission) § 5.5 Remedies Under the UTPCPL § 5.6 Home Improvement Consumer Protection Act

Chapter 6 THE ROLE OF FILIAL SUPPORT LAWS IN CASES OF SUSPECTED

FINANCIAL ABUSE § 6.1 Introduction § 6.2 Elements and Application § 6.3 Practical Concerns

Chapter 7 REPORTING SUSPECTED FINANCIAL ABUSE: MANDATORY VERSUS

VOLUNTARY OBLIGATIONS § 7.1 Introduction § 7.2 Pennsylvania’s OAPS Act Provisions on Voluntary Reporting § 7.3 Pennsylvania’s OAPS Act Provisions on Mandatory Reporting by Facility

Employees or Administrators § 7.4 Federal Law on Mandatory Reporting of Crimes by FacilityEmployees or Administrators § 7.5 Pennsylvania’s Industry-Specific Regulation of Financial Accountability § 7.6 Banks and Financial Institutions § 7.7 Comparison with Reporting Laws in Other States

Chapter 8 THE IMPORTANCE OF ATTORNEYS AS COUNSELORS

§ 8.1 Introduction § 8.2 The Importance of Independent Legal Advice for Older Adults § 8.3 Who Is My Client?

§ 8.3.1 Identifying Conflicts of Interest § 8.3.2 Dealing with Unrepresented Persons § 8.3.3 -Does Limiting Representation to the “Donee” Shield Attorney from Liability for Harm to Donor?

§ 8.4 What Challenges Exist in Representing Clients with Diminished Capacity? § 8.5 As Long-Term Care Planning Becomes More Complicated, Are There

Increased Demands on Lawyers to Have Specialized Competence? § 8.6 A Final “Tough” Question: Is “Medicaid Planning” the Equivalent of

Financial Abuse or Exploitation?

Chapter 9 THE IMPORTANCE OF THE COURTS

§ 9.1 Introduction § 9.2 Families and Professional Fiduciaries § 9.3 Court Supervision of Fiduciary Roles § 9.4 Conclusion

APPENDICES Appendix A: Financial Abuse or Exploitation in Protective Service Laws: National Comparison Appendix B: Contact Information for All of Pennsylvania’s Area Agencies on Aging Appendix C: Attorney General Elder Abuse Complaint Form Appendix D: Eileen Bingaman Criminal Charging Document Appendix E: Bertha Trout—Superior Court Decision Appendix F: Mail Fraud Complaint Report Appendix G: Sample Letter of Instruction to POA Agent Appendix H: Sample POA Termination and Demand for Accounting Letter Appendix I: Sample Motion to Disallow Further Encumbrances and a Temporary

Ex Parte Preliminary Injunction Order Appendix J: Sample Civil Complaint 1 (involving loss of savings, home and physical threats) Appendix K: Sample Civil Complaint 2 (involving property transferred to joint

names with right of survivorship) Appendix L: Sample Agatha Albright Complaint Appendix M: Attorney General Consumer Complaint Form table of cases INDEX