Nursing Home Abuse of Agents: Creditor Misuse of New York’s Revised Durable Power of Attorney.

Mary is eighty-two years old and lives at Spring View, a skilled nursing home facility near Syracuse, New York. Mary's husband, Walter, died three years ago after a prolonged battle with Parkinson's disease. After Walter's death, Mary's health slowly deteriorated and her doctor determined that she needed skilled nursing care. Mary's son, Richard, moved into Mary's home shortly after Walter's death to care for his mother. Walter works as a part time bus driver. Following Walter's death, Mary executed a Health Care Proxy, Statutory Short Form Power of Attorney, and Statutory Major Gifts Rider appointing Richard as her agent. Richard has been handling Mary's day-to-day medical and financial affairs for the past year. Six months ago, based upon Mary's doctor's recommendation, Richard moved Mary to Spring View. As Mary's agent, he signed all the various applications, financial disclosures and documents requested by the nursing home to allow Mary to be a full time resident. At the same time, Richard applied for nursing home assistance through the Chronic Care Unit of Medicaid in Onondaga County. Richard advised Spring View of the application for Medicaid. A month after Mary moved to Spring View, Richard received a bill for services in the amount of $10,500 ($350 per day). Richard contacted the Medicaid worker assigned to Mary's case and was told not to pay the Spring View bill because Mary's application was pending and Medicaid would pay the bill once Mary's application had been approved. Richard called the Spring View business office and explained what he had been told by the Medicaid worker. Four months later, with an outstanding bill of $42,000 for Mary's care, Spring View filed a Petition for a Special Proceeding naming Richard individually and as the agent under a power of attorney for Mary. The Petition alleged that Richard had violated his fiduciary duty as Mary's agent by not acting in her best interests by failing to pay the outstanding bill from Spring View, causing her possible eviction. In the Petition, Spring View demanded that Richard give a full accounting of all of Mary's assets as well as an explanation of his actions. The Petition also demanded the removal of Richard as the agent for Mary, required that he pay the attorney's fees of Spring View, and asked the judge to hold Richard personally responsible for Mary's $42,000 nursing home bill. Richard did not have the means to hire an attorney to defend him. On the return date of the Petition, Richard appeared pro se before the Supreme Court. The attorney for Spring View offered to settle the case if Richard immediately paid the outstanding bill. Fearing that he would be held personally liable and lose his ability to care for his mother, Richard agreed to pay the outstanding bill of $42,000. As Richard didn't have the funds available, he was forced to take out a home equity loan on the house to pay the nursing home, even though Medicaid would have eventually paid the entire bill. (1) I. INTRODUCTION According to the Third Restatement of Agency, "[a] written instrument may make an agent's actual authority effective upon a principal's loss of capacity, or confer it irrevocably regardless of such loss." (2) A commonly used device that confers agency, and does not terminate upon incapacity, is known as a Durable Power of Attorney ("DPOA"). (3) While such a device can be useful to avoid government and court involvement in the event of incapacity, it can also be dangerous. Without proper safeguards, the agent under a DPOA can use the device to exploit an elderly principal. (4) Due to the danger of abuse of the principal at the hands of the agent, state legislatures have enacted various measures to protect principals. (5) However, as this paper sets out, some reforms that combat DPOA abuse may be contrary to the purpose of the device. One of these reforms is the Special Proceeding available to third parties pursuant to the New York General Obligations Law section 5-1510(3), which in its current form allows creditors to bypass the protections offered by New York Debtor Creditor law. …