Elder Financial Abuse and Escrow Agents – Proposed Oregon House Bill 2780 (HB 2780)

Oregon’s recent House Bill 2780, sponsored by Rep. Julie Parrish of West Linn, seeks to diminish the potential for elder financial abuse by brokers with modifications to real estate regulations that govern property sales for older Americans.

At first glance it might seem like the bill complicates sales for homeowners ages 65 and older, but the extra check serves to protect older sellers from unknowingly vending their property for less than its value.

House Bill 2780 simply adds a ‘pause button’ to any transaction with both of the following conditions:

• A seller ages 65 or older
• A sale price more than 20% below the property’s appraised or assessed value

As heinous as it might seem, older property owners are victimized by greedy brokers across the nation. People 65 and older are sometimes targeted because it is more likely that they have reduced cognitive functioning, marked by trouble remembering, difficulty learning new things, concentrating, and making decision that affect their everyday life. The Center for Disease Control reports that the number of Americans ages 65 years and older who suffer from cognitive impairment may surpass 13.2 million by the year 2050. Dishonest financial advisers know these statistics just as well as the healthcare professionals.

Read more about how Salem is working to help seniors with House Bill 2780 on OregonLive.

Investor Defender attorneys at Samuels Yoelin Kantor have focused on protecting investors from financial fraud and abuse for more than 32 years. Securities attorney Darlene Pasieczny states, “ We have experience with unscrupulous brokers convincing owners to sell their homes or to take second mortgages in order to purchase risky financial products for the benefit of the commissioned broker.” If you or a loved one has reason to be concerned with a sale or transfer of funds to purchase alternative or illiquid securities, or swing of more than 10% of reported portfolio value in any account statement, please contact us to understand your potential options for recovery.

Oregon Decides that Attorneys, Dentists, Optometrists, Legislators, and Chiropractors Will Be Mandatory Elder Abuse Reporters as of January 1, 2015

In House Bill 2205 (HB 2205), the Oregon Legislature expanded the list of those professions whose members are required to report suspected elder abuse. Governor Kitzhaber signed HB 2205 into law on June 11, 2013. Under ORS 124.050, an elderly person is defined as anyone 65 years of age or older and abuse includes, but is not limited to, neglect, physical injury and financial exploitation.    

Attorneys will be required to take mandatory abuse reporting continuing legal education classes (CLEs), that will cover elder abuse. Presently, attorneys are mandatory child abuse reporters and are required to take CLEs covering that mandatory reporting obligation. An attorney is not, however, required to breach a client confidence in order to meet this reporting requirement, nor is an attorney required to report if disclosure of this information will be detrimental to his or her client.

The expanded mandatory reporting obligations take effect on January 1, 2015. The bill can be found at the following link: http://www.leg.state.or.us/13reg/measpdf/hb2200.dir/hb2205.en.pdf

Cruze: Elder Case

Oregon’s Court of Appeals recently made a step towards clarifying Oregon’s statute prohibiting financial abuse of “vulnerable persons” (which includes persons age 65 and older) under ORS 124.110. However, the broad contours of the elder abuse laws in ORS Chapter 124 remain far from certain.

In Cruze v. Hudler, 246 Or App 649 (November 23, 2011), the court addressed various fraud claims alleged against Markley in an investment scheme. While not discussed in depth by the court, one of these claims was for financial abuse of an elderly person under ORS 124.110(1)(a) where an action may be brought under for financial abuse in the following circumstances:

When a person wrongfully takes or appropriates money or property of a vulnerable person, without regard to whether the person taking or appropriating the money or property has a fiduciary relationship with the vulnerable person.

Cruze, 246 Or App at 649. The court referred to another Oregon case, Church v. Woods, 190 Or App 112 (2003), and paraphrased it to mean that “conduct is ‘wrongful’ under ORS 124.110 if it is carried out by improper means, including deceit and misrepresentation.” Id.

This phrase “wrongfully takes or appropriates” is a slippery one. In Cruze, the alleged abuse was wrongful taking through fraudulent misrepresentation – a tort claim that requires showing, among other things, that the party subjectively intended to deceive the victim.These cases suggest that, at least for the purposes of ORS 124.110(1)(a), a person who mistakenly but incorrectly takes money or property from an elderly person in an otherwise lawful context should not create elder abuse liability.  But as with many legal issues, guarantees are tough to come by.   

California Attorney Disbarred for Sham Marriage to 85 Year Old Client

A California attorney is facing disbarment for her allegedly sham marriage to her 85-year-old client (she’s 54), where she got $339,000 and he was cremated after his death – in direct contradiction to his intentions as set forth in his will.

The Judge reported the attorney "took advantage of a lonely, sick old man" and thwarted his intent to transfer his estate to his nieces.

Financial elder abuse comes in all shapes and sizes. 

WA: Financial Institutions and Vulnerable Adults

The State of Washington recently provided more protection through ESSB 6202 to vulnerable adults – and more incentive for financial institutions to be proactive – wherein financial institutions are allowed to refuse transactions when there is a reasonable belief that financial exploitation of a vulnerable adult may have occurred or was or is being attempted.  The financial institution, without liability, may notify in writing all depositors, beneficiaries, or other persons claiming an interest and withhold payment until written consent from all interested parties is obtained or the court directs payment.   

Financial institutions must provide employee training on financial exploitation of vulnerable adults and the institutions and employees are immune from civil liability for certain good faith acts in response to suspected abuse. 

"Financial institutions" includes broker-dealers and investment advisers.

Contact Info for Mandatory Elder Abuse Reporters in Oregon

Oregon law ORS 124.040 requires certain people report suspected elder abuse:

(a)  Physician, naturopathic physician, osteopathic physician, chiropractor, physician assistant or podiatric physician and surgeon, including any intern or resident.
(b) Licensed practical nurse, registered nurse, nurse practitioner, nurse’s aide, home health aide or employee of an in-home health service.
(c) Employee of the Department of Human Services or community developmental disabilities program.
(d) Employee of the Oregon Health Authority, county health department or community mental health program.
(e) Peace officer.
(f) Member of the clergy.
(g) Regulated social worker.
(h) Physical, speech or occupational therapist.
(i) Senior center employee.
(j) Information and referral or outreach worker.
(k) Licensed professional counselor or licensed marriage and family therapist.
(l) Any public official who comes in contact with elderly persons in the performance of the official’s official duties.
(m) Firefighter or emergency medical technician.
(n) Psychologist.
(o) Provider of adult foster care or an employee of the provider.
(p) Audiologist.
(q) Speech-language pathologist 

Contact information to report suspected abuse in Oregon:

  • Multnomah County Adult Protective Service:  503.988.4450
  • Multnomah County APS after hours:  503.988.3646
  • APS:  1.800.232.3020
  • Senior Helpline and Elder Abuse Reporting Hotline:  503.988.3646
  • Benton County:  1.800.638.0510
  • Clackamas County:  503.655.8640
  • Clatsop County:  1.800.442.8614
  • Columbia County:  503.397.3511
  • Coos County:  1.800.858.5777
  • Deschutes County, Bend:  1.800.452.5684
  • Dechutes County, La Pine:  541.536.8919
  • Deschutes County, Redmond:  541.548.2206
  • Douglas County, Reedsport:  541.271.4835
  • Douglas County, Roseburg:  1.800.234.0985
  • Jackson County:  541.664.6674
  • Josephine County:  1.800.633.6409
  • Lane County, Cottage Grove:  541.682.7800
  • Lane County, Eugene:  1.800.441.4038
  • Lincoln County:  1.800.638.0510
  • Linn County:  1.800.638.0510
  • Marion County, North:  1.800.469.8772
  • Marion County, South:  503.373.7380
  • Marion County, Woodburn:  503.981.5138
  • Multnomah County:  503.988.5480
  • Polk County:  1.800.469.8772
  • Tillamook County:  1.800.584.9712
  • Washington County:  503.693.0999
  • Yamhill County:  866.333.7218

 

Who Takes Care of Mom’s Money?

Francine Russo wrote a recent Times article called "Who Takes Care of Mom?," addressing the challenges of sibling dynamics when providing care for aging parents.  She wrote a personal account of making the wrong choices in allowing her sister to take on the burden of caring for their aging parents. 

 

Russo writes that an estimated 43.5 million adults in the U.S. are caring for an older relative or friend, and 43% of those people said they felt as though they had no choice.  Such frustration not only leads to discontent within the family, but also can lead to a sense of entitlement that perhaps mom or dad’s money should be given to the caretaking child – and sooner rather than later.  As a fiduciary litigator, I see too often that frustration and burn out manifests itself as financial elder abuse.

So when deciding "Who Takes Care of Mom?" you should also decide who is taking care of mom’s money.  Ignoring either leads to trouble.     

 

Financial Abuser = Slayer: Good Law or Litigation Minefield?

Washington State Substitute House Bill 1103 – 2009-10, effective July 26, 2009, prevents an abuser from inheriting property or receiving any benefit from the estate of a vulnerable adult who was the victim of financial exploitation by the abuser.

This may be a trend other states are keen to follow.

Generally speaking, “no slayer or abuser shall in any way acquire any property or receive any benefit as the result of the death of the decedent.” That is, an abuser is treated the same as a slayer with respect to the distribution of the decedent’s estate, although the court has equitable discretion and may consider, among other things:

  • Elements of decedent’s dispositive scheme;
  • Decedent’s likely intent given the “totality of the circumstances”; and
  • The degree of harm.

A criminal conviction conclusively determines an abuser, but civil conviction must be by clear, cogent, and convincing evidence.

In many sad cases, financial exploitation is obvious, and the punitive impact of this new law certainly should apply. However, how will this impact other cases where the facts are not so easy to resolve? If there is insufficient evidence for a criminal conviction, but the fact finder proceeds to a determination in civil court, could this new law unnecessarily punish those that failed to have the foresight to properly document every gift from the dearly departed? How many keep written documentation of a gift, particularly from a family member? And when that elderly person becomes more mentally and physically frail, at what point does the average person have the medical or other specialized training to determine whether there is exploitation? The often dysfunctional response to grief and inheritance can lead to unwarranted allegations of who loved the decedent more and who sucked the funds (and life) right out of dear ol’ mom or dad. It can turn ugly, quickly. Is it “financial exploitation” or is it “but Mom always paid for everything, because I’ve never stood on my own two feet in my life?”

The new Washington law provides an escape in that a defendant may avoid liability if the court finds by clear, cogent, and convincing evidence that the decedent knew of the financial exploitation and subsequently ratified it. Maybe that’s enough room for those unjustly charged to avoid liability. Maybe not.

“The Only Thing Is, I Didn’t Die In Time”

Two recent and sad stories involving financial abuse of the elderly have come to light locally. The first story is the tale of Evelyn Roth, an 83-year-old esophageal cancer patient who signed a power of attorney for her cousin and niece, who then liquidated her assets. The now-indicted relatives, Virginia Kuehn and Kathleen Jingling, told investigators the “doctors guaranteed us she would die by August.” (Another example of the problem with medical care in America? You can’t rely on the doctors’ guarantee? I think not.) As poor Roth stated, “The only thing is, I didn’t die in time.

 

What is it about people that when they are given a little bit of power (through a legal document like a power of attorney, through a joint bank account set up just to “help” with paying bills, or through a fiduciary position like a trustee), and a little bit of money, that their brains short-circuit and they start spending it as if it were their own? It’s not their money! There is no entitlement! There is no “well, nobody is going to know, so I’ll just take a bit from here or there!” As Roth’s cousins are learning, it’s not only unethical, it’s also illegal.

Gayla Ross just learned from a jury verdict in Washington County, Oregon, that she may have time in prison to contemplate her bad acts in taking $1 million from her 87-year-old mother, Clara Philpot, to finance Ross’ luxury home – and Philpot has been diagnosed with Alzheimer’s disease since 2002. As the court-appointed guardian stated, ‘It took Gayla less [than] two months to squander a lifetime of work.”  

Now the mortgage company is also in the cross-hairs, as the guardian proceeds with a lawsuit on behalf of Philpot. 

Be alert. With the aging population and an economy that may well bring out the worst in some people, financial elder abuse is a serious concern. 

Seek protection:

  • Get an attorney to prepare for estate planning, power of attorney, trust, or other legal needs well in advance of it ever becoming a problem;
  • Hire a criminal or civil attorney to recover losses;
  • Call the Oregon statewide hot line to report abuse: 1.800.232.3020;
  • Report abuse at  Aging and Seniors and People With Disabilities.

Beware Liability For Financial Elder Abuse

As a civil fiduciary litigator – I handle trust disputes, will contests, civil financial elder abuse claims, undue influence claims, capacity cases, etc. – I read Janine Robben’s article in the Oregon State Bar Bulletin with keen interest: Keeping an Eye Out for Elders.

What wasn’t addressed is that Oregon has one of the most broadly written statutes for civil financial elder abuse in the nation and bystander liability can occur when a person “knowingly acts or fails to act under circumstances in which a reasonable person should have known” that another person was permitted to financially abuse a vulnerable adult. ORS 124.100(5).

With this language, plus a seven year statute of limitations from discovery and the opportunity of an award of treble damages and attorneys’ fees, it is likely more and more people will be hauled into court, because proving that someone did not “know or should have known” can be a difficult task and often is a question to be resolved by the fact finder. This increases potential liability for those who routinely deal with “vulnerable adults” (which by definition in ORS 124.100(1)(a) includes anyone 65 years of age or older – regardless of their mental or physical health) as well as those that happen upon a situation in which they knew or should have known that another is taking advantage of a vulnerable adult.

So proceed with caution.