Over the last decade, numerous non-attorney controlled entities have cropped up nationwide offering Medicaid and elder law planning services. Many of these entities have branched into these services from traditional home care and geriatric care management services, while others are newly created. The services offered by these providers are varied, often including the preparation and filing of Medicaid nursing home and home care applications, drafting of personal service contracts and qualified income trusts (in some states), as well as rendering advice regarding Medicaid eligibility and how to obtain benefits.
When a non-attorney provides the aforementioned services the consequences are, in many cases, financially disastrous. Although the preparation and filing of a Medicaid application by a non-attorney is not considered the unauthorized practice of law, doing so without weighing all relevant legal factors and issues can be quite dangerous. All too often the services provided by non-attorney entities have pushed the envelope towards the unauthorized practice of law, and have resulted in non-attorneys providing what is legal advice in areas which they lack any knowledge or training.
For example, when filing a Medicaid application for a spouse, there are a number of issues that a non-attorney should not, in my opinion, provide advice about, such as the potential financial liability resulting from a spouse executing a spousal refusal or the estate and income tax consequences resulting from the transfer and restructuring of assets. He or she would also not be qualified to advise on a client's ability to engage in a Medicaid crisis plan.
On January 15, 2015, in response to a petition by The Florida Bar's Elder Law Section, the Florida Supreme Court ruled that non-lawyers who engage in various Medicaid planning activities are engaging in the unauthorized practice of law. The three specific activities included in the ruling are:
Drafting of Personal Service Contracts: Personal service contracts are agreements generally by and between an individual (applicant for Medicaid) and a third party (generally a family member) delineating specific care services to be provided and the compensation thereof. They are generally utilized so that the transfer of funds for the purported care to be provided is not deemed an uncompensated transfer gift, which creates the sixty-month look back period for Medicaid nursing home eligibility.
Preparation and Execution of Qualified Income Trusts: Qualified Income Trusts are utilized in Florida when an applicant for Medicaid has income over the limits permitted to qualify for Medicaid long-term care services (including nursing home care). These trusts must contain specific terms and must be irrevocable. The funds remaining in a Qualified Income Trust will be turned over to the state upon the applicant's death. The income deposited into these trusts allows the applicant to retain income outside of the trust so that he or she can qualify for services.
Rendering of Legal Advice: The Florida Supreme Court has ruled that the rendering of legal advice regarding the implementation of Florida law to obtain Medicaid benefits is an unauthorized practice of law. This includes advising an individual on the legal strategies available for spending down and restructuring assets and/or the need for a personal service contract or Qualified Income Trust.
Although the preparation by a non-lawyer of a Medicaid application does not constitute the unauthorized practice of law, it would be extremely difficult to do so without rendering some legal advice regarding the implementation of Florida law to obtain Medicaid benefits. In essence, all that may be permitted by the non-attorney is the ministerial act of completing and filing the application.
Additionally, the court opined that non-lawyer entities that claim to have relationships with a lawyer are engaging in the unauthorized practice of law unless the client has established an independent attorney-client relationship with the attorney, and that the payment for services is made directly to the attorney. Furthermore, the court required that the legal documents or Medicaid planning recommended to the client was determined by the attorney and not by a non-lawyer.
The advent of non-attorney document production mills presents an insidious danger to the general public who unknowingly are misguided by these untrained entities. I urge all those who seek the aforementioned services to do so only with a qualified attorney and I am hopeful that similar regulations will soon be implemented in New York.