August 2005

Reversing lower courts, the Alabama Supreme Court rules that an elderly man's diagnosis of Alzheimer's disease and severe short-term memory loss do not necessarily mean he lacked the capacity to execute a deed. Ex parte Chris Langley Timber & Management, Inc.(Ala., No. 1031478, July 22, 2005.

Two days after being released from a long-term-care hospital to recover from heart surgery, Clayton M. Reynolds was evaluated by a clinical psychologist, who concluded that Mr. Reynolds was suffering from Alzheimer's disease. The psychologist administered a memory test that revealed that Mr. Reynolds could not retain new information for 30 minutes. Some months later, Mr. Reynolds contacted Chris Langley Timber & Management, Inc., about harvesting timber from land he owned. Mr. Reynolds provided Mr. Langley with copies a power of attorney held by one of his daughters and the psychologist's report, but assured Mr. Langley that he owned the timber and that he wanted to sell it.

After Mr. Reynolds executed the timber deeds, his two daughters sought to have them set aside on the ground that he lacked capacity. Mr. Reynolds died while the case was pending and a special administrator for his estate was substituted. Finding that Mr. Reynolds was mentally incompetent when he executed the deeds, the trial court entered a summary judgment in favor of the estate and set aside the deeds. The Court of Civil Appeals affirmed and Langley appealed.
The Supreme Court of Alabama reverses and remands. "It is not clear how severe short-term memory loss, which is all that [the psychologist's] testimony appears to establish Reynolds suffered from," the court writes, "demonstrates that Reynolds was unable to 'understand in a reasonable manner the nature and effect of' executing the timber deeds." The court rules that the estate failed to prove that a diagnosis of Alzheimer's disease equals permanent insanity, and that therefore the appellate court erred in shifting to the timber company the burden of proof of Mr. Reynolds's capacity to execute the deeds.

In 1993, Congress passed a law requiring that states try to recover from the estates of deceased Medicaid recipients whatever benefits they paid for the recipient's care. In recent years, states have been stepping up their estate recovery efforts in an attempt to bolster distressed Medicaid budgets.

But a new study reveals that estate recovery programs have so far collected at most only pennies on the Medicaid long-term care dollar and in most cases, less than a penny. The nationwide study of state Medicaid estate recovery practices by the American Bar Associations Commission on Law and Aging questions whether, given the small amount of money recouped, estate recovery is worth the human cost.

The study, conducted in 2004 and supported by AARP, found that estate recovery revenues as a percentage of state Medicaid long-term care expenses ranged from .01 percent (Louisiana) to 2.2 percent (Oregon), with only eight states above 1 percent. The average amount of Medicaid costs that states recovered per estate in 2003 was $8,116 nationwide and ranged from a low of $93 per estate in Louisiana to $25,139 in Hawaii.

In addition, investigators found that a number of states appear to be violating federal Medicaid law in trying to raise even these modest amounts.

The authors note that their survey focused on the dollars and cents impact of estate recovery, and did not seek to answer the human questions that arise in connection with estate recovery, such as whether it keeps people from applying for Medicaid benefits when they need them or impoverishes the spouses of nursing home residents. These, the authors maintain, are questions that must be answered.

"It is still an open question whether the costs justify the financial benefit to the states," they conclude.

To download the full report, "Medicaid Estate Recovery: A 2004 Survey of State Programs and Practices," or read a summary of it, click here.

The study was featured in a front-page article on estate recovery in the June 24 edition of The Wall Street Journal. To read the article reprinted in the Pittsburgh Post-Gazette, "Some Heirs Find A Costly Surprise: Medicaid Bill," click here.

Aug. 12, 2005- A study of senior citizens says those who eat the daily recommended allowance of folates B vitamin nutrients found in oranges, legumes, leafy green vegetables and folic acid supplements significantly reduce their risk of developing Alzheimers disease.

The study, a long-term look at diet and brain aging by the National Institute on Aging, also found that folates appear to have more impact on reducing Alzheimer's risk than vitamin E, a noted antioxidant, and other nutrients considered for their effect as a brain-aging deterrent.
Ultimately, 57 of the original 579 participants in the study developed Alzheimer's disease. But the researchers found that those with higher intake of folates, vitamin E and vitamin B6 shared lower comparative rates of the disease. And when the three vitamins were analyzed together, only folates were associated with a significantly decreased risk.

In turn, no association was found between vitamin C, carotenoids (such as beta-carotene) or vitamin B-12 intake and decreased Alzheimer's risk.

Maria Corrada and Dr. Claudia Kawas of UC Irvine's Institute for Brain Aging and Dementia led the effort, which analyzed the diets of non-demented men and women age 60 and older.
"Although folates appear to be more beneficial than other nutrients, the primary message should be that overall healthy diets seem to have an impact on limiting Alzheimer's disease risk," said Corrada, who like Kawas started with the study while at Johns Hopkins University in Baltimore.

They compared the food nutrient and supplement intake of those who later developed Alzheimer's disease to the intake of those who did not develop the disease. It is the largest study to date to report on the association between folate intake and Alzheimer's risk and to analyze antioxidants and B vitamins simultaneously.

Results appear in the inaugural issue of the quarterly peer-reviewed research journal, Alzheimer's & Dementia: The Journal of the Alzheimer's Association.

The researchers used data from the Baltimore Longitudinal Study of Aging to identify the relationship between dietary factors and Alzheimer's disease risk. Between 1984 and 1991, study volunteers provided detailed dietary diaries, which included supplement intake and calorie amounts, for a typical seven-day period.

"The participants who had intakes at or above the 400-microgram recommended dietary allowance of folates had a 55-percent reduction in risk of developing Alzheimer's," said Corrada, an assistant professor of neurology. "But most people who reached that level did so by taking folic acid supplements, which suggests that many people do not get the recommended amounts of folates in their diets."

Folates have already been proven to reduce birth defects, and research suggests that they are beneficial to warding off heart disease and strokes.

Although folates are abundant in foods such as liver, kidneys, yeast, fruits (like bananas and oranges), leafy vegetables, whole-wheat bread, lima beans, eggs and milk, they are often destroyed by cooking or processing. Because of their link to reducing birth defects, folates have been added to grain products sold in the U.S. since 1998. But even with this supplement, it is thought that many Americans have folate-deficient diets.

Recent research is beginning to show relationships between folates and brain aging.
Earlier this year, Dutch scientists showed that adults who took 800 micrograms of folic acid daily had significant improved memory test scores, giving evidence that folates can slow cognitive decline.

"Given the observational nature of this study, it is still possible that other unmeasured factors also may be responsible for this reduction in risk," said Kawas, the Al and Trish Nichols Chair in Clinical Neuroscience. "People with a high intake of one nutrient are likely to have a high intake of several other nutrients and may generally have a healthy lifestyle. But further research and clinical studies on this subject will be necessary."

Judith Hallfrisch of the U.S. Department of Agriculture, Denis Muller with the National Institute on Aging and Ron Brookmeyer with Johns Hopkins collaborated on the study, which was originally undertaken at the Gerontology Research Center of the NIA and the Department of Neurology at Johns Hopkins. Study funding came from the Extramural Programs of the NIA.
Begun in 1958 by the NIA, the Baltimore Longitudinal Study of Aging is America's longest-running scientific study of human aging. BLSA scientists are learning what happens as people age and how to sort out changes due to aging from those due to disease or other causes. More than 1,400 men and women are study volunteers. For more information, see: www.grc.nia.nih.gov/branches/blsa/blsa.htm.

The new law: Imposes fractional penalties for asset transfers. Long-term care services applicants or recipients will now be ineligible based on any partial months resulting from transfers, rather than the previous practice of rounding down to the nearest whole month.
Limits the use of the "resource-first" approach in boosting a community spouse's income. Under the new law the community spouse will be allowed to keep only enough additional resources to purchase an immediate annuity that names the state as a beneficiary.

Attempts to deal with Life Estate with Retained Powers (LERP) arrangements. Under Pennsylvania's current law, estate recovery is limited to the probate estate of the deceased recipient of Medical Assistance benefits. The new law allows the state to require applicants to exercise any powers they retain in life estate ownership arrangements in order to limit Medicaid costs, such as exercising a power to revoke a remainder interest and return a home to the sole ownership of the applicant, where it could later be subject to estate recovery.

Restricts the use of annuities. The new law voids restrictions on the marketability of immediate annuities so that the payment stream can be sold by the owner and thus converted from income into a lump sum resource available to pay for care. These marketability rules will not apply to commercial annuities that meet certain safe harbor provisions, including that the state be named as the residual beneficiary of any remaining funds.

Requires that Medicaid's spousal resource attribution and impoverishment rules be applied to Medicaid-funded home care. Previously, the assets of the community spouse were disregarded in determining qualification for Medicaid-financed home care.

Places new limits on the deductibility of unpaid medical expenses. Only medical expenses incurred on or after the first day of the third month before the month of application may be deducted from countable income, and the law places a $10,000 lifetime limit on the deduction of medical expenses not paid by Medicaid from a recipients income.

Creates new rules for special needs trusts, including that the state be reimbursed from any remaining funds.

"Act 42 places complicated new restrictions on eligibility for Medicaid financed long-term care services," says Williamsport, Pa., Jeffrey Marshall. "It reduces the resources that can be protected by low-income community spouses, and will make it much more difficult for married seniors to qualify for Medicaid-funded home care benefits."

"The act's changes are complex and ambiguous," Marshall adds. "They will raise administrative and legal barriers and costs for seniors who are seeking Medicaid. Some of the new provisions appear to conflict with federal law."

Here is a link to the new provisions:

http://www2.legis.state.pa.us/WU01/LI/BI/BT/2005/0/HB1168P2560.pdf

A conservative policy group has released an issue brief proposing that states begin enforcing filial responsibility laws in order to reduce long-term care costs. Thirty states have filial responsibility laws that require adult children to care for their indigent parents. The National Center for Policy Analysis claims that if these statutes are enforced, adult children would have to reimburse the state programs that provided care for their indigent parents.

Filial responsibility laws have traditionally not been enforced, possibly because federal law prohibits state Medicaid programs from looking at the finances of anyone other than the applicant or the applicant's spouse. The NCPA, a group whose goal is to develop and promote private alternatives to government regulation and control, cites a 1983 report by the Health Care Financing Administration that says enforcing these statutes would have reduced Medicaid long-term care spending by $25 million, and argues that today the figure would be much higher.
To read the full brief, click here.

In November 2001, Ruth and Sherwood Murphy moved to Oak Crest Village, a CCRC. Mrs. Murphy, then 81, moved into an independent living apartment, while her husband, then 94, was admitted directly into a Medicaid-certified nursing facility that is part of the CCRC. As a condition of their acceptance into the CCRC, the Murphys had to sign a Residence and Care Agreement that included an anti-alienation provision requiring the Murphys not to sell or transfer, without prior consent of Oak Crest, any assets if the sale or transfer would result in their net worth falling below the minimum necessary to become an Oak Crest resident.
Shortly after their move to Oak Crest, Mrs. Murphy used nearly $300,000 of the couple's assets to purchase annuities payable to her. Mr. Murphy subsequently applied for and became eligible for Medicaid benefits. Oak Crest sued the Murphys, alleging a violation of the anti-alienation provision of its Residence and Care Agreement. Mr. Murphy moved to dismiss the complaint, asserting that Oak Crest's agreement violated state and federal statutes precluding a Medicaid-certified facility from requiring residents to pay the private pay rate when they are eligible for Medicaid benefits. The circuit court agreed with Mr. Murphy and held that the agreement's anti-alienation provision was invalid.

The Court of Appeals of Maryland, the state's highest court, affirms. The anti-alienation provision, the court writes, "effectively requires that [Mr. Murphy] continue to pay at the private pay rate even when he would be or could lawfully become eligible for Medicaid benefits, contrary to [the relevant state Medicaid statute], and permits him to be discharged from a Medicaid certified nursing facility because he is a Medicaid recipient, contrary to [the relevant state statute]." The court rejects Oak Crest's argument that the relevant statute applies only to nursing facilities and that Oak Crest, as a continuing care community, is not a nursing facility. However, the court holds that the anti-alienation provision is permissible in a contract for independent or assisted living. The court does not address whether a resident's move from a CCRC's independent or assisted living unit to its nursing unit would require temporary suspension of the anti-alienation provision.

To download the full text of this decision in PDF format, go to:http://www.courts.state.md.us/opinions/coa/2004/27a03.pdf.