Future of Aging Services Conference Assisted Living

1
Future of Aging Services ConferenceAssisted
Living CCRC Update

• April 20, 2009
• Stephen J Maag J.D.
• Director, Assisted Living and Continuing Care
• AAHSA

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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
  weve been dealing with for a while

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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

4
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

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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

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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

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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 dont 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

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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

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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

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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

11
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.

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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 wouldnt interfere with operation of
  community

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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

14
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

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First Court Decisions

• In August, 2008 Court entered an order granting
  Channing Houses motion for partial summary
  judgment
• Court held that Ms. Herriots request to stay in
  her apt. was not a reasonable accommodation
  because to do so violated state law.

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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

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Second Court Decision

• Court reiterated that state law makes Herriots
  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

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Lessons 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

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Transfer/Discharge Issues

• Language of contract important, consistent
  application critical, dont change nature of
  your program
• Potential waiver of contract
• Safety is key, independent assessment may be
  necessary
• Intervene early and communicate

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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

21
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

22
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

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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

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Service AnimalsWhen is a pet not a pet?

• Well known example is seeing eye dogs
• Many new examples, assistance animals (dogs,
  monkeys) alert animals (sense epilepsy/diabetes)
• More controversial are emotional support animals

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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

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Service Animals

• Can have reasonable rules of behavior for service
  animal
• Resident is required to care for and supervise
  animal

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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

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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

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Advantages

• Tool for identifying and reducing risk
• Communication tool to facilitate discussions and
  setting expectations
• Support residents right to accept risk and have
  choices

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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

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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

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

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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.

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QUESTIONS?