members in the news naela news...naela news • june/july 2005 april 2005 33president’s message by...

Advocacy/Litigation SIGNew DevelopmentsOf Elder AbuseBy John B. Stutt, Esq.

In this issue...President’s Message ............... 3

Executive Director’s Report ...... 5

Incoming President’sMessage ................................... 9

Understanding TheMedicare SecondaryPayer Program........................ 14

Commissioner of InternalRevenue v. Banks, andCommissioner of InternalRevenue v. Banaitis ................ 17

Estate Tax Repeal BenefitsFew Taxpayers but PenalizesA Larger Population by TakingFunds from Charities ............. 19

V O L U M E 1 7 � I S S U E 3

JUNE/JULY 2005

N A T I O N A L A C A D E M Y O F E L D E R L A W A T T O R N E Y S

NEWSNEWSNAELANAELA

Many different forms of elderabuse exist. They seem to mutate overtime. We will discuss them in two cat-egories: Financial and Physical.

We offer significant trouble spotsfor an elder in today’s world.

I. Financial AbuseA. Abusive Pay-off of

Personal InjurySettlements.Consider the following facts:

elder is the recipient of a personal in-jury settlement. Consumer sees TVadvertising of an out-of-state settle-ment company that wishes to give hima lump sum payment. Consider thatan annuity has 360 monthly paymentsin the amount of $1,663.00 commenc-ing April of a certain year and a lumpsum payment of $35,000.00 at the endof income the stream. The aggregateamount of payments was $240,000.00the discounted present value of the

payments was determined to be$174,000.00 at a discount rate of 4.4%.

By an assignment of these paymentsto the TV advertiser, the company wishesto make a lump sum payment of$77,524.00 after payment of attorney andprocessing fees, and other potential ex-penses. Consumer had signed an abso-lute assignment of lump sum payment anda UCC Article 9 Security Agreement. Hehad also signed an Affidavit asserting heunderstood that he voluntarily enteredinto such an agreement.

The Company files a petition in courtrequesting court approval. Federal lawrequires that in order to avoid the impo-sition of a 40% excise tax, the transfer ofa structured settlement payment rightmust be approved by a qualified order.Federal law further provides for the trans-ferability of said rights if the court is sat-isfied that it is in the best interest of theconsumer.

NAELAMembersin the NewsNAELA was mentionedas a resource in:

� “Post-life Concerns WorryBoomers,” which was pub-lished in the April 14, 2005issue of the San FranciscoExaminer.

� “Schiavo Case TriggersAvalanche of Interest inAdvance Directives,” whichwas published in the April 11,2005 issue of Lawyers Weekly.

(continued on page 22)


2 NAELA News • June/July 2005

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NAELA News • June/July 2005 3NAELA News • April 2005 3

President’s MessageBy Stuart D. Zimring, Esq.


Albert Einstein sup-posedly once explained hisTheory of Relativity to a layaudience by asking them toimagine two fifteen-secondspans of time: The first seg-ment was spent kissingone’s lover and the secondwas spent holding one’shand over a flame. It’s thesame 15 seconds, he explained, but itcertainly doesn’t feel that way - time(or at least our perception of time) isrelative.

As my year as your Presidentcomes to an end, I’ve been thinking alot about the passage of time, passagesin general and how true JonathanSwift’s observation is that “there isnothing in this world constant, but in-constancy.”

NAELA has continued to grow andmature. The public relations effort webegan last July has begun to bear fruit;the results of our initial surveys show-ing us where and how we can increaseour impact in educating the public andour political leaders regarding those is-sues that concern our clients. The me-dia and public’s awareness of elder lawattorneys in general, and NAELA inparticular, was borne out during thetragic saga of Terri Schiavo. With the

guidance of Stan Samplesand Anne Krauss of ourKellen Company public re-lations team, NAELA mem-bers around the countrywere ready to respond tomyriad inquiries on all as-pects of this tragic case. Theresult was a wealth of accu-rate information regarding

advance directives, end-of-life planningand elder law issues in general, the likesof which we have never seen before.

This year saw the launch of ourSenior Rights PAC which has raised al-most $94,000 since its inception and bythe end of this year will have distrib-uted approximately $69,000. My thanksto Mary Alice Jackson, President of thePAC, Brian Lindberg, our Public PolicyConsultant, and the entire Board of theSR-PAC for getting us off to such a greatstart.

This year also saw the launch ofthe new NAELA Journal, replacing theNAELA Quarterly. My copy of Volume1, Number 1 arrived yesterday (April 14,2005), and although I had seen the draftsand galley proofs, I was still very im-pressed by what Ed Boyer, the Chair ofour Publications Committee, AndyHook, our Editor-in-Chief, and Jonathan

Board of Directors2005-2006

P R E S I D E N TLawrence E. Davidow, CELA

Islandia, NYP R E S I D E N T - E L E C TDonna R. Bashaw, CELA

Laguna Hills, CAV I C E P R E S I D E N T

G. Mark Shalloway, CELAWest Palm Beach, FL

T R E A S U R E RCraig C. Reaves, CELA

Kansas City, MOS E C R E T A R Y

Ruth A. Phelps, CELAPasadena, CA

P A S T P R E S I D E N TStuart D. Zimring, Esq.North Hollywood, CA

E X E C U T I V E D I R E C T O RLaury A. Gelardi

Tucson, AZA S S O C I A T E D I R E C T O R

Susan B. McMahon, Esq.Tucson, AZ

M A N A G I N G D I R E C T O RDeborah J. Barnett

Tucson, AZ

D I R E C T O R SEdwin M. Boyer, Esq.

Sarasota, FLWilliam J. Brisk, CELA

Newton Center, MAMartha C. Brown, CELA

Saint Louis, MOGregory S. French, CELA

Cincinnati, OHBradley J. Frigon, Esq.

Englewood, CODoris E. Hawks, Esq.

Los Altos, CAAndrew H. Hook, CELA

Portsmouth, VABarbara S. Hughes, Esq.

Madison, WIMichael F. Loring, Esq.

Scituate, MAKerry R. Peck, Esq.

Chicago, ILStephen J. Silverberg, CELA

East Meadow, NYTimothy L. Takacs, CELA

Hendersonville, TNLauchlin T. Waldoch, CELA

Tallahassee, FLWesley E. Wright, CELA

Bellaire, TX

C O N S U L T A N T SBrian W. Lindberg, Public Policy

Washington, D.C.Hugh K. Webster, Legal Counsel

Washington, D.C.

Stuart D. Zimring

2005 – 2006 NAELA Board of Directors at the annual meeting.


those challenges disappeared during myterm; I had no expectation that theywould. But we faced many of them witha strength that would have been un-thinkable just a few years ago and weare more prepared than ever to face theones ahead.

For that, I have to thank a numberof people: first and foremost, LauryGelardi, our Executive Director, residentNAELA historian and dear friend. Then,(in alphabetical order), Terri Anthony,Debbie Barnett, Lori Barbee, JonathanBoyle, Pam Carlson, Bob Gelardi,Anabel Gray, Bridget Jurich,Vicki Kanarr, Anne Krauss,Jenifer Mowery, DonnaRainville, Stan Samples and “thevoice of NAELA”-“NationalAcademy...This Is FrancisSmith.” I could devote an entirecolumn to each of these wonder-ful professionals who, in additionto help making NAELA a greatorganization, have given me, theExecutive Committee, the Boardand all of you an incredibleamount of support. Thank youall, especially Bridget, who neverlet me miss a deadline, a meetingor a presidential commitment - youare a treasure.

I also want to thank Bernie Krooksand his nominating committee for giv-ing me (and us) a spectacular ExecutiveCommittee and Board. My ExecutiveCommittee, Craig Reeves, MarkShalloway, Donna Bashaw, LawrenceDavidow and Bill Browning, have beena steadfast and loyal crew as we guidedthe organization into new and excitingterritory.

And we have a new member of theteam: Susan McMahon, our new Asso-

President’s Message(continued from page 3)

Boyle, our Publications Coordinator,had accomplished - not to mention thecontributing authors. On the academicfront, it certainly continues our tradi-tion of leadership in this area.

And speaking of publications, thisyear saw our first book publishing ef-fort with the release of Selma’s Cat...and other Things That Matter, a collec-tion of some of Clifton Kruse’s bestcolumns. It is a wonderful “read,” asthey say, and I think it makes a perfectintroduction to the world of elder lawfor those who have trouble figuring outwhat we are “all about.”

And this was also the year that sawNAELA establish its Aspirational Stan-dards for the Practice of Elder Law - myprimary goal for my presidency. Yoursupport of this effort has been heart-warming and encouraging. As GregoryFrench and the Professionalism andEthics Committee complete their workon the Commentaries to the AspirationalStandards, I am looking forward to see-ing us all embrace this elevation of ourspecialty.

It is impossible for me to look uponthe conclusion of my presidency as an“ending” for, in reality, as you can seefrom just the two examples I cited above,my term has really been the beginningof all kinds of new and wonderful thingsthat I know my successors, LawrenceDavidow, your new President, DonnaBashaw, your President-Elect, and ournew Executive Committee are excitedabout taking to the next level.

As I said in my acceptance speechlast May, we face many challenges inthe months and years ahead. None of

ciate Director. Some of you may knowSusan through her work with the NationalGuardianship Association. Susan, a te-nacious advocate for those with disabili-ties who started one of the first PooledTrusts in Illinois, has joined us afterworking many years in multifarious roleswithin the disability rights/guardianship/special needs trust community in Illinois.Like many of us, she takes her work homewith her, but with a twist: after a hardday at the office she comes home to carefor rescued greyhounds who have beenpart of her and her husband, Tom’s, fam-

ily for many years. After a lifetime inIllinois (with so many trips to Ireland thatTom now holds dual citizenship), sheand her family have relocated to Tucsonto join NAELA’s professional familythere. Welcome, Susan! I am really look-ing forward to working with you.

Last, but most definitely not least, Iwant to thank the woman I consider tobe the “president” of the “NAELA FanClub,” my “First Lady” long before mypresidency, my best friend and soul-mate, Carol, whose belief in NAELA andits Mission has been a great source ofinspiration to me. I could not have donethis without her.

We, NAELA as an organization, andwe, its members, have our work cut outfor us.

But we’ve made a great beginning,created a great foundation and we’re onour way. Thank you for this opportu-nity to serve you. It’s been an honor, apleasure, and a heck of a lot of fun!

Stuart D. ZimringVery-Soon-To-Be-Past President

SIG Sitesat Naela.orgSIG members--visit anarea designed just foryou! Not a SIGmember? You can joinhere too.

Stu Zimring and his wife, Carol,at the annual meeting.


Laury Adsit Gelardi

NAELA Executive Director’s ColumnTime to Move On…By Laury Adsit Gelardi

Many of you may haveheard that I announced my in-tention to retire as ExecutiveDirector of NAELA. It’s been17 wonderful years and it willbe difficult to give up the jobI really love! Unfortunately,as so many of you have seenin your own families or in yourclients, it took a health-crisisto make me sit down and take

note of what is really important to me. While I amdealing with the health situation, it has brought aboutseveral of those “AH-HA” mo-ments. Not to bore you with thedetails, but I have come to the re-alization that I am not indispens-able, irreplaceable or invincible.When one is confronted with thereality that our time is limited…itmakes us step back, evaluate andcontemplate the past, present andfuture. What have we done? Whatare we doing? And what do we stillwant to do in moving forward?

I have been involved withNAELA since October of 1988.It has been a whirlwind….as theprofession of elder law wasformed, defined and developed.OBRA ’93 came and went andGranny Goes to Jail turned intoGranny’s Lawyer Goes to Jail.Through Medicaid/Medicare Re-form, Pension Fund Revisions,Social Security Lock Boxes andnow privatization, elder law, elderlaw attorneys, and NAELA haveall prevailed. The hours spent onanalyzing the effects of legislationon elder law clients are too greatto count…and certainly have been the hallmark ofNAELA’s success. The minds in NAELA are incred-ible, the ability to collaborate on behalf of a client isamazing, and the shear character of attorneys who workwith those with special needs is unparalleled.

NAELA members have also endured through the

toughest of situations: We have members who have beenthrough the Oklahoma bombings, through the torna-does in the Mid-West, through the hurricanes in Floridaand through flooding in the upper plains. We haveNAELA members who were in Manhattan on 9/11 andthrough the blackout in 2002. It has been gratifying tobe part of a group that has a “Good and Welfare” com-mitment to reach out to those members in troubledspots... and I have heard over and over again how grati-fying it was for the members on the receiving end ofthose calls.

If you are new to NAELA, you are probably won-dering what all this talk about the “NAELA Family”

is about. Well... since day one,NAELA has intentionally operatedas a small community of caring pro-fessionals who place family first ontheir list of priorities. The “NAELAFamily” is certainly as functional...and dysfunctional... as any family Iknow. We have our spats, our dis-agreements and some have actuallyleft the family... and then returned.We have family members of vary-ing ages with different backgrounds,different styles and different ideas.BUT...ultimately, we all come to-gether for the good of the clan.NAELA members have made them-selves available to assist each other anyand every time the need was there!

Since 1988, NAELA member-ship has blossomed to morethan5,000! We have come from anoperating budget of $30,000 to oneof almost $2.5 million. The NationalElder Law Foundation was foundedin 1993 and now supports almost400 certified elder law attorneys in42 states! The Senior Rights Politi-cal Action Committee was formed

in 2004 to provide a funding mechanism to get elderlaw issues noticed among legislators. The PAC distrib-uted over $50,000 in its first year! NAELA has an Ex-perience Registry, six very active Special InterestGroups, 20+ active committees and task forces, and 17

When one is

confronted with the

reality that our time is

limited…it makes us

step back, evaluate

and contemplate the

past, present and

future. What have we

done? What are we

doing? And what do

we still want to do in

moving forward?



The net effect of this transactionis that the elder loses almost $100,000of value with the TV advertiser’s re-ceipt of guaranteed payments from arespectable insurance company.

What to do? Consider attackingthis transaction on behalf of the elder.Allege that the transfer is not in thebest interest of the elder. The purposeof the original settlement annuity wasto protect an unsophisticated injuredperson so that he would have a reli-able source of income for an extendedperiod. The effect of this transactionwould be to take away that safety netwhen the elder needs it the most. Anexample of an affidavit of a financialplanner to support your attack is at-tached.1

B. Predatory Loan Practices.Be on the look out for predatory

home-lending practices. The FederalTrade Commission reportedly settleda case against Capital City Mortgagefor $750,000. Capital City can no longermake home loans as part of the agree-ment.2

C. Inappropriate AssistiveLiving Contracts.A 94-year-old signed a check to a

Service Company to pay for a year’sworth of in-home non-medical care.The same day the elder was declaredincompetent. The state insurance com-missioner issued an order that theCompany refund premiums paid by 323buyers of assisted living contracts andto pay a $162,000 fine. The Commis-sioner said the company engaged inunconscionable behavior targeting anelderly, vulnerable population.3

D. Abuse by Fiduciaries.The Wisconsin Court of Appeals

recently reported that an agent undulyinfluenced a principal and violated herfiduciary duty by misappropriation offunds to purchase a house.4

The most important documentmany fiduciaries do not have is an In-vestment Policy Statement. A full dis-cussion of this important weapon toprevent loss of an elder’s treasury isavailable.5

E. “Little Check” Scams.Be on the look out for the “little

check” scam. Elder cashes a $2.50check and he is enrolled in a credit pro-tection service that costs him $100 ormore to enter and there are monthlyfees to boot.

F. Isolation and Neglect.California reported a case that

shows how far an exploiter will go. Theabuser intentionally prevented the el-der from seeing or speaking with fam-ily members, denied family members ac-cess to the elder’s house, duct tapedher telephones so that she could notreceive or make phone calls, locked hermetal security door from the outsideso that elder could not open her frontdoor to leave the house and affixed asign that stated: “DAY SLEEPER, DONOT DISTURB! NO SOCIAL WORK-ERS. NO PEDDLERS. WILL NOT AN-SWER DOOR.”

The Judge provides a good defi-nition of the terms “financial abuse,”“isolation” and “neglect.” 6 CompareCalifornia’s elder abuse statutoryframework with your own for interest-ing reading.

II. Physical AbuseThe reports of physical abuse of

elders continue to appear.

A. Suit Against SkilledNursing Facility forPunitive Damages.Upon hospital discharge, an elder

was a resident of a health care center.While there, her pressure ulcer on herright heel worsened. The center failedto provide adequate relief. She suf-fered a fall when the staff dropped her.The Center failed to provide personal

hygiene. She developed pneumonia andlater died. A suit requested relief forwillful misconduct, negligence, viola-tion of rights, fraudulent concealment,elder abuse, unfair business practices,wrongful death and punitive damages.The defense moved to strike punitivedamages. Heart of the case was viola-tion of Elder Abuse Act.

The appellate judge supported theclaim citing the uniqueness of elderabuse claims based on custodial neglectrather than professional negligence.7

B. Blindness, Dementia &Alzheimer’s Disease.Elder suffered from the above con-

ditions, unable to care for herself. Herattorney alleged that she was insaneand that the limitation of action statutewas tolled. The acts of abuse includedfailure to assist the elder in personal hy-giene, in provision of food, water, cloth-ing and shelter, in provision of medicalcare, and in provision of proper safetyprecautions. The defense moved todrop the case on the statute of limita-tions.

The decision provides expansivestatute of limitations, differentiatingcustodial elder abuse from a cause ofaction for professional negligence.8

C. Inadequate Staffing.In Texas, nursing staff member set

an elder’s wheelchair on the sidewalkand then proceeded to attend to a dif-ferent patient. The elder’s wheel chairbegan to roll down the sidewalk out ofcontrol, tipping, spilling her and caus-ing serious injuries. She died 4 dayslater. A jury award was over $1.5 mil-lion.9

In Florida, a retired postal workerdied from hundreds of fire ant bites in a

Advocacy/Litigation SIG(continued from page 1)

Congratulations to thenewest CELAs!

Mary McCormickKansas City, MO

R. Thomas MurphyPhoenix, AZ



local nursing home. He died of shockfrom the amount of ant poison in hisbody. The expert in the case indicatedthat elders who are debilitated or de-mented are not alert enough to withdrawwhen they get covered with pests. Rela-tives will reportedly receive almost $2million for their loss.10

ConclusionIn ancient times, King Lear spoke:

“I am mightily abused. I should e’endie with pity.

To see another thus. I know notwhat to say.”11

In modern times, the lamentation ofabuse continues. Elder law attorneysrecognize the need for advocacy. Theyknow what to say.

Endnotes1 STATE OF WISCONSIN CIRCUIT COURT

COUNTYPetitioner:L.L.C.CASE NO.:Respondent:ELDER_______________________________

AFFIDAVIT OF FINANCIAL PLANNERSTATE OF WISCONSIN )

) ss.COUNTY OF )

This affiant, being first duly sworn, onoath states as follows:

a. I am an adult resident of the Stateof Wisconsin.

b. I sign this affidavit to request thatthe Court deny the transfer ofstructured settlement paymentsrights to L.L.C. I am a licensed andregistered representative,authorized under the law to sellinsurance, and annuities in thestate of Wisconsin. My office islocated at Racine WI and I am afinancial planner for individuals.My business operation is called Inc.and I am the President.

Since 1992 I have counseledindividuals on their investments andbudgets and have sold andreviewed over 1000 annuitycontracts issued throughout theindustry.

c. That the purpose of the StructuredSettlement was to protect ELDER,an unsophisticated investor, fromloss of funds needed throughouthis lifetime.

d. The Assignment and Article 9Security Agreement of SettlementFunding, LLC is not in the bestinterest of ELDER. The support-ing documents on their face,Exhibit F, indicate that thePetitioner concedes the presentvalue of the payments is $174,522 and they will pay Elder$77,524.24 in gross advanceamount.

e. The Petitioner wants the right toreceive more money than theoriginal annuitant, Elder. THIS ISNOT IN HIS BEST INTEREST. Theloss of value to Elder and fees ofthe Petitioner are extremelyexcessive. The loss of substan-tial resources of Elder is notjustifiable.

f. The Securities ExchangeCommission and the NationalAssociation of Securities Dealersprohibit their investment advisersfrom selling such Assignments inthat they prey on people who fallon hard times. The Petitionerfailed to give him proper invest-ment advice. This assignmenthas no substantial economicbenefit to Elder. It does notimprove his financial situation.Instead it takes away a possibleincome stream for his future.

g. Based on the record andattachments to the Petition, Elderhad earnings of $5,520 annually.Elder has no experience orknowledge of the value of apresent interest of an annuity norhas he ever previously negotiatedan assignment of annuity. He hadno past education in budgeting,financial planning, investments orannuities. This assignment is illadvised and the Court couldcharacterize this transaction as arip off of an unsophisticatedunmarried man with no investmentexperience.

Advocacy/Litigation SIG(continued from page 6)

FINANCIAL PLANNER (Affiant)

Subscribed and sworn to before me

this ________ day of_______________________, 2005

_______________________________

Notary Public, State of Wisconsin

My Commission:

Expires ______________________

2 Sandra Fleishman, The WashingtonPost, 02/24/2005.

3 George Hesselberg, Wisconsin StateJournal, February 17, 2005.

4 Estate of Salwey v. Klein et al., 2004WI App. 167 Wis. App., 2004 WL1661046, July 27, 2004, unpublished.

5 Fiduciary Theft: Recognition, Responseand Prevention, Hon. Patricia L. Belois,et al.; Minimizing Fiduciary Liability-Maximizing Fiduciary Effectiveness,Charles F. Robinson, Esq., AIF, A Taleof Fiduciary Abuse: How the Guardian,Attorney, Law Enforcement andDistrict Attorney Can Recover Assetsand Convict, Gary Beagle, MG, CPG,Jessica W. Dimitrov, Esq., NAELAConference Vol. 11, November 11-14,2005; Liss V. Smith, 991 F. Supp. 278(S.D.N.Y. 1998).

6 In re Estate of Lowrie, 118 Cal. App.4th 220, 12 Cal. Rptr. 3d 828 (Cal. App.Dist. 2 4/30/2004)

7 County Villa Claremont healthcareCenter, Inc., v. Ridriguez et al., 120Cal. App. 4th 426, 15 Cal. Rptr. 3d 315,2004 CA. 2004.

8 Benun et al. Va. Country Villa East,L.P. et al., 123 Cal. App. 4th 113, 20,Cal. Rptr. 3d 26, 2004 Ca.

9 Sunbridge Healthcare Corporation v.Penny, Court of Appeals of Texas,Texarkana, March 11, 2005.

10 Jeff Schweers, March 11, 2005,Florida Today, www.floridaytoday.com.

11 Shakespeare, King Lear, IV, vii. 53

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Chapter PresidentsArizona Chapter

Bridget O’Brien Swartz, Esq.Phoenix, AZ

(602) 955-7886Colorado Chapter

R. L. Steenrod, Jr., Esq.Denver, CO

(303) 534-5100Florida Chapter

Alice Reiter Feld, CELATamarac, FL

(954) 726-6602Illinois Chapter

Amy Paris Delaney, Esq.Palos Heights, IL(708) 361-8819

Kansas ChapterTimothy P. O’Sullivan, Esq.

Wichita, KS(316) 267-6371

Maryland/DC ChapterMorris Klein, CELA

Bethesda, MD(301) 652-4462

Massachusetts ChapterMichael F. Loring, Esq.

Scituate, MA(781) 545-2600

Missouri ChapterBarbara A. Braznell, CELA

Saint Joseph, MO(816) 364-1818

New Jersey ChapterEugene Rosner, CELA

Clark, NJ(732) 382-6070

New York ChapterVincent J. Russo, CELA

Westbury, NY(516) 683-1717

Northern California ChapterDoris E. Hawks, Esq.

Los Altos, CA(650) 949-4117

North Carolina ChapterJ. Gregory Wallace, Esq.

Raleigh, NC(919) 876-1400

Wendy A. Craig, Esq.Black Mountain, NC

(828) 669-0799South Carolina Chapter

Leigh Flynn, Esq.Columbia, SC

(803) 791-1991Southern California Chapter

Brian J. Sheppard, CELAEncino, CA

(818) 342-5799Texas Chapter

Patricia F. Sitchler, CELASan Antonio, TX 78205

(210) 224-4491Virginia Chapter

R. Shawn Majette, Esq.Richmond, VA(804) 698-6233

Washington ChapterEric R. Vargas, CELA

Yakima, WA(509) 972-9862

NAELA ExecutiveDirector’s Column(continued from page 5)

healthy chapters! We have an incred-ible infrastructure of leaders, moversand shakers and a public relations pro-gram designed to draw attention to el-der law, elder law practitioners andNAELA. NAELA programs have beendiverse: ranging from an “Unprogram”for beginners to “Redefine Your Prac-tice” programs for those looking to di-versify their practices, and from ad-vanced programs for those leading theway to telephonic seminars offering le-gal staff training. NAELA has also beenon the forefront in utilizing technologyfor the good of the association and itsmembers with very active list serves,the E-Bulletin, the Eye on Elder Issues,on-line registrations and a wonderfullyhelpful website.

And we aren’t done yet. With amission statement proclaiming, “we shallbe the premier providers of legal ser-vices for the elderly and for those withspecial needs”... our work will never bedone. The need to advocate for seniorclients will only intensify as the BabyBoomers move into their golden years.There is so very much to do... and gen-erations behind us that will benefit fromthe foundation that has been laid.

Of course, the NAELA staff hasbeen the bedrock of NAELA for years...and should continue to be. The wealthof expertise is amazing and the dedica-

tion to the job mirrors that of the mem-bers. Our staff is also a family culture.We have learned a great deal from manyof you who have so freely and graciouslyshared your knowledge and gifts with us.

My timeframe is to leave some timebetween the end of the year and the endof March 2006. Susan McMahon, my re-placement, has been hired to work withme through the transition period. Susanis an attorney with extensive experiencein disability law and in dealing with Spe-cial Needs Trusts as she served as In-House Counsel for Ray Graham Associa-tion for People with Disabilities, one ofIllinois’ largest provider of services forthose with special needs, for the past 29years. She comes with extensive experi-ence in working with, and serving on, avariety of non-profit association boardsof directors. Most notably, she is thePast President and 16-year board mem-ber of the National Guardianship Asso-ciation. I know you will welcome her andmake her feel part of the NAELA Family.I know I am leaving you in good hands.

Change is never easy. It is fraughtwith trepidation and excitement, but ittruly is the only way for us to move on.You will be hearing more from me in theissues to come and I hope to see many ofyou in New Orleans for a fabulous Insti-tute. Thanks for the memories. Thanksfor sharing the wisdom and the passionand many of the good things in life. For17 years, it has been my pleasure to cometo work everyday. Thank you.

The NAELA News is published by theNational Academy of Elder Law Attorneys, Inc.

1604 N. Country Club Road � Tucson, AZ 85716-3102520/881-4005 � 520/325-7925 Fax � www.naela.org

Articles appearing in the NAELA News may not be regarded as legal advice. Thenature of elder law practice makes it imperative that local law and practice be con-sulted before advising clients. Statements of fact and opinion are the responsibilityof the author and do not imply an opinion or endorsement on the part of the officersor directors of NAELA unless otherwise specifically stated as such.

Publications Chair ................................................ Edwin M. Boyer Esq., Sarasota, FL

Editor ........................................................... Judith D. Grimaldi, CELA, Brooklyn, NY

Associate Editor ..................................... Bridget O’Brien Swartz, Esq., Phoenix, AZ

Publications Coordinator .......................................... Jonathan D. Boyle, Tucson, AZ

Graphic Designer ....................................................... Kristin L. Hager, Tokyo, Japan

© Copyright NAELA 2005

Please note thatthis list does not

include theNAELA chapters

currently information.



I am humbled but ex-cited by the opportunity tobe your leader for the nextyear.

I am also very honoredto be following in the foot-steps of some great peoplewho have led this organiza-tion in the past, most re-cently Stu Zimring. I re-member Stu’s speech lastyear: That the time had come to raisethe bar. The time had come to memorial-ize in writing the fact that NAELA mem-bers operate at a higher standard of prac-tice. That our higher standards distin-guish us from the rest of the crowd.With the enormous help from our friendGreg French and the Professionalismand Ethics Committee, Stu has led thisorganization to a higher place....and forthat we are grateful...and for that he

should be very proud. I am proud tohave worked with him and to havelearned from him over the last year. StuZimring, on behalf of myself and allNAELA members, thank you for yourcommitment to our success, and for ajob well done. Today, NAELA member-ship stands for practicing law at the high-est level.

I also have a few other people tothank.

To my partners, especially StevenStern, and my staff, thank you for beingso supportive. I realize the time that

NAELA leadership hastaken and will take this year,and I thank you for your in-dulgence and friendship.

To Vincent Russo,thank you for handing me anapplication for membershipin NAELA so many yearsago and thank you for be-ing my mentor.

To Laury Gelardi andDebbie Barnett, and the rest of our greatstaff at Kellen Company, thank you forraising me to be a leader.

As for Laury, I can’t imagine aNAELA without you being our residentmother, historian and friend. While to-day is not the day to say our goodbyes,just know that we love you, support you,and wish you well. As for SusanMcMahon, welcome aboard and wel-come to the NAELA family!

I love being alawyer. I want totell you how I de-cided to become anattorney in the firstplace. My grand-father started mylaw firm on LongIsland in the year1913. His two sons,my uncle and myfather, followedhim in the practice.Well, no one wassurprised to findout that I got a jobat the law firm. Butwhy I took the job

is more touching. I used to ask my fa-ther, “Dad, do you want me to become alawyer and join the law firm?” My fa-ther would answer, “Lawrence, do whatever makes you happy.” Well my fatherwas smart. He did not tell me directlywhat to do, but he came home happyevery night from work. He would pas-sionately tell us over dinner eachevening about his interesting cases andhow he was able to help someone to-day, even if he wouldn’t be paid, as longas justice was served. He was and re-mains a great role model. Even at the

age of 81 today, he still comes to workone day a week and teaches us a thingor two about the love for the law. Thatis why I am a lawyer. That is why I lovewhat I do. My father is with us today.This is a very proud day for my father.Incidentally, he thinks because I am thePresident that I am the top elder law at-torney in the country. While we allknow that is not true, I would appreci-ate you not letting him know. In anyevent, I would like to publicly thank myfather for being such a great role model,mentor and friend. Dad, please standup. Thanks, Dad.

I love being an elder law attorneyand I love being a member of NAELA. Ican not imagine practicing any otherarea of law. I joined NAELA in the lateeighties, when I was about 28 years old,and I have never looked back. I grewup with NAELA and NAELA grew up atthe same time.

From a group that started with 36dedicated attorneys, we now have anorganization that is 5,000 membersstrong! We are NAELA!

From a group that was dedicated toeducating its members, we now have anorganization which offers the most pres-tigious cutting edge elder law programsin the country. We are NAELA!

From a group that debated overwhether or not we should get involvedin the public policy arena, we now havean organization that has a talented fulltime public policy consultant, BrianLindberg and a Public Policy Chair, PastPresident Charlie Sabatino, whose vi-sion along with the leadership of someof our recent past presidents, Judy Stein,Bernie Krooks, Bill Browning and StuZimring (not to mention VincentRusso, Dan Fish), has helped positionNAELA as a significant player in Wash-ington and throughout this country’saging network. We are a player. Nowwe are an organization that is part of thesolution rather than on the sideline.Now we have our own political actioncommittee. Now we have resourcessaved to fund a battle when unfair lawsimpact our clients. We are making a dif-ference in public policy. We are NAELA!

From a group that had one part timestaff person helping get our messageout, now we are an organization with apublic relations company, The KellenCompany, to direct our sophisticatedcommunications platform. From a group

Lawrence Davidow

Stuart Zimring “passing the gavel” to Lawrence Davidow.

Incoming President’s SpeechBy Lawrence E. Davidow, CELA


Incoming President’sSpeech(continued from page 9)

whose voice was small, we are now anorganization quoted in the news almosteveryday. We are NAELA!

From a group that was dedicated tohelping the elderly, we are now an orga-nization dedicated to helping all peoplewho face incapacity and aging issues,regardless of their current chronologi-cal age. We are NAELA!

A lot has changed throughout theyears, but some things remain the same.

We are still an organization that pas-sionately believes in protecting therights of our clients. We are NAELA!

We are still an organization that be-lieves that our clients deserve superiorhealth care, the highest quality of life,and compassionate end-of-life choices.Yet, they should not be in fear of losingtheir assets in the process. We areNAELA!

We are still an organization that be-lieves that society must be protectedfrom bureaucrats who poorly administerour social programs like Medicare, Med-icaid and Social Security. We are thesystem’s watchdog. We are NAELA!

We are still an organization that be-lieves that we must practice law with thehighest standards possible...standardswhich set us apart from all other elderlaw attorneys. We are NAELA!

We are still an organization whosemembers spend hundreds of hours eachyear volunteering their time for ourneighbors in the not-for-profit sector.For example, we have members who areinvolved in practically every Alzheimers,Parkinsons, ALS, MS, UCP, Heart, Can-cer Association in this country. At theNAELA Symposium in San Francisco,many of our members are giving up theirFriday afternoon, rolling up their sleevesto help a local charity. I welcome you tojoin us. OUR GOOD DEEDS MAKE ADIFFERENCE. We are NAELA!

This brings to mind a story that myfather has been telling me my whole life...about a man who was called before theking. To help plead his case before theking, the man turned to his first friend,but his first friend would not go with

him a single step. He then turned to hissecond friend, but his second friendwould only go with him to gates of thecastle. The man then turned to his thirdfriend, the one he least esteemed, whowent with him to the castle, argued hiscase before the king and won him anacquittal. So who are these threefriends? The first friend, who would nottake a single step, represents our money,which simply has no meaning at the timeof death. The second friend, who wouldonly go to the gates of the castle andnot beyond, represents our loved ones,our friends and family, who can only goto the edge of the grave and not be-yond. The third friend, the one leastesteemed, who argued our case beforethe king and won us an acquittal, repre-sents the good deeds we do here onearth. That is what makes a difference.That is what we do as NAELA mem-bers. Good deeds. Doing well by doinggood has been our motto. Our gooddeeds make a difference. We areNAELA!

We are still an organization dedi-cated to helping each other be the bestelder law attorneys we can possibly be.We are dedicated to sharing our knowl-edge with each other. We are dedicatedto promoting a warm congenial feelingamong our members. We are a family...and we are NAELA.

Yet, together, we still can accom-plish so much more as an organization.

We can expand our public policyefforts by building more coalitions andby continuing to educate our legisla-tors and their staffs, and we will act fastto influence the outcome of what is go-ing on in Washington right now!

Recognizing that much of our leg-islative efforts have been and will con-tinue to be on the local level, we need tobe formally represented in all fifty states.I believe that we can and should have aNAELA Chapter in every state or regionwithin the coming years. For now, I willconsider our effort successful if we canadd 10 chapters to our existing 17 chap-ters by the end of my Presidency. I chal-lenge you to make this happen. If youare interested in starting a chapter letMichael Loring know, as I have ap-pointed him to chair the Chapters com-mittee over the next year. Michael is the

current President of the Massachu-setts Chapter, the state with the larg-est NAELA membership.

We can begin the process ofbranding NAELA. NAELA should be-come a household name. Legislators,the media and potential clients shouldthink of NAELA attorneys first whenlooking for elder law expertise. In thisregard, I have asked our Treasurer,Craig Reeves, to also serve as PublicRelations committee Chair. And, withthe help of The Kellen Company, wewill develop a new look, logo and tagline for our organization. I believe theterm elder law is limiting because inreality we help more than our elderlypopulation. We help all people withspecial needs as they age. And wecan explore changing our name to re-flect that!

We can diversify our practices. Ifthis country takes the path of turningits back on the middle class by limit-ing access to the Medicaid program,then our legal practices will feel theimpact. Increased competition leadsto the same result. It is our responsi-bility to lead NAELA membership intonew practice areas which both help ourconstituencies and are consistent withour mission. We need to develop newskills in Medicare advocacy, media-tion, fiduciary work, financial planning,geriatric care management, legal solu-tions for non-traditional families, aswell as continue to work with the spe-cial needs community. Diversificationshould be our mantra. I have askedMark Shalloway to lead this effort,with help from Stephen Silverberg, ourPrograms Chair, and Ed Boyer, our Pub-lications Chair.

Speaking of diversity, we can es-tablish an inclusive outreach to expandon who we are and who we serve. Wewant NAELA to be representative ofAmerica’s rich ethnic tapestry. To ac-complish this objective, NAELA canredirect funds into creating an annualjournal written by minority law stu-dents addressing diversity related ag-ing issues. This will benefit ALLNAELA members and strengthen ourrelationships with the law schools. Ihave asked Past President, ProfessorBecky Morgan, to assist in this effort,as well as our new Membership Chair,



2005 NAELA Theresa Award2005 NAELA Theresa Award2005 NAELA Theresa Award2005 NAELA Theresa Award2005 NAELA Theresa Award

Steve’s children, Scott & Jared,Steve’s children, Scott & Jared,Steve’s children, Scott & Jared,Steve’s children, Scott & Jared,Steve’s children, Scott & Jared,with Steve’s nephew, Jeffwith Steve’s nephew, Jeffwith Steve’s nephew, Jeffwith Steve’s nephew, Jeffwith Steve’s nephew, Jeff

Steve and his familySteve and his familySteve and his familySteve and his familySteve and his familyenjoy the Caribbeanenjoy the Caribbeanenjoy the Caribbeanenjoy the Caribbeanenjoy the Caribbean

We just love chairingWe just love chairingWe just love chairingWe just love chairingWe just love chairing“Swingin’ fore Theresa”“Swingin’ fore Theresa”“Swingin’ fore Theresa”“Swingin’ fore Theresa”“Swingin’ fore Theresa”

Steve’s Tailgate PartySteve’s Tailgate PartySteve’s Tailgate PartySteve’s Tailgate PartySteve’s Tailgate PartyA Tradition for 20 yearsA Tradition for 20 yearsA Tradition for 20 yearsA Tradition for 20 yearsA Tradition for 20 years

Stephen J. Silverberg, Esq.Stephen J. Silverberg, Esq.Stephen J. Silverberg, Esq.Stephen J. Silverberg, Esq.Stephen J. Silverberg, Esq.

Born in Brooklyn, New York toparents who were holocaustsurvivors, Steve lives their story inthe way he treasures family andfriends. He takes no one for grantedand his one guideline for friendship isthat there be “no conditions” ..... oncehis friend, you are in the “melting pot”forever. Social status in any form isnever a part of the Silverbergphilosophy. This man and his family live, shareand respect the uniqueness of every humanbeing in their many diversified relationships.

Professionally, Steve is a mostdedicated and respected elder law attorneywho has reached out to seniors since the 1980’s.His high standards of living have positivelyaffected his work ethic and professional life.Clients and staff are his extended family.

On the personal side, Steve is a greathost as well as a most enjoyable guest. His lovefor cooking helps him "gather them in” aroundhis dining table, on his patio, and sometimes,even in their own homes. He “caters” to the needs

of many, mixing fun andlaughs with fine cui-sine. It is no secret totheir friends thatthe Silverbergs areseason-ticket holdersand devoted fans ofthe New York Jets, andthat is putting itmildly. Like everythingelse he does, Steveeven brings passion tohosting a barbecueand a tailgate partyat the stadium.

Steve enjoys family life with his wife,

Robin, and their sons, Jared and

Scott, in East Williston, New York.

Planning family vacations, watching

sports and sharing quality time

together are an important part of

their home-life, but anyone visiting

their home knows of their generous,

loving spirit. From the moment the

word “welcome” greets you at their front door,

you know you are in a place where you make a

difference.

The Theresa Foundation is proud to present the

20052005200520052005

NAELA THERESA AWARDNAELA THERESA AWARDNAELA THERESA AWARDNAELA THERESA AWARDNAELA THERESA AWARD

to

Stephen J. SilverbergStephen J. SilverbergStephen J. SilverbergStephen J. SilverbergStephen J. Silverbergfor his outstanding achievement in Community

Service. In honoring Steve, we open the book to

a heart that never says

“No” and to a man who has

generously said “Yes” to the

Theresa Foundation.

The Theresa Foundation

has awarded a cash grant

of $2,500 to the Morgan

Center in honor of Stephen

J. Silverberg. The Morgan

Center is dedicated to

providing preschool

aged children with

cancer the opportunity

to interact and social-

ize in a safe environ-

ment that stimulates

cognitive and social

development.


Martha Brown, and our PublicationsChair, Ed Boyer.

We can help law school graduatesbe better prepared for a career in ElderLaw. Too often we have tried to hire lawstudents only to find out that they havenot taken the right courses while in lawschool. As such, we can draft a NAELAapproved elder law curriculum and get

Incoming President’sSpeech(continued from page 10)

the message out to the law schools.We can acknowledge the accom-

plishments of some of our most es-teemed practitioners and past leaders.As our organization matures, it is natu-ral that some of these members will seeknew and more challenging and innova-tive mountains to climb. We need to besensitive to their wishes and offer themthe freedom to explore new heights, butall with an eye on keeping them withinthe NAELA family. We need their expe-rience and passion. We can providethem with that freedom and receive their

continued loyalty in return. One of ourlong range goals states that: “NAELAshall design a level of membership andbenefits to address the needs of experi-enced elder law practitioners.” We willembark upon this goal during my ten-ure as President.

We are and will always strive to bethis nations’s “premier providers of le-gal advocacy, guidance and services topeople with special needs and peopleas they age.” This is our mission and....

We are NAELA! Hear us roar!

President’s AwardElizabethanne(Betsy) Angevine

Betsy has made an extraordinary contributionto the National Academy of Elder Law Attorneys.She joined NAELA in 1990 and has served on theboard of directors as Health Care SIG Chair andChapter Presidents Committee Chair. Recently,under her direction, the chapters have pulledtogether and expanded into additional states. WithMedicaid issues a current hot topic area, NAELAstate chapters are more important thanever.

Betsy is caring and understanding,not just for her clients and family, butfor NAELA and individual NAELAmembers, making her a clear choicefor this year’s President’s Award.

Fellows of NAELACongratulations to Doris E Hawks, Esq., Morris Klein, CELA, and Ian S. Oppenheim,

CELA, 2004-2005 Fellows of the National Academy of Elder Law Attorneys.Fellows of NAELA have distinguished themselves both by making exceptional

contributions to meeting the needs of older Americans and by demonstrating a substan-tial commitment to the academy and its mission.

Elizabethanne (Betsy) Angevine, Esq.

Doris E. Hawks, Esq.

Ian S. Oppenheim, CELA Morris Klein, CELA


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Product information: Installationand training of Time Matters andElder Law Feature Packagesoftware for elder law practices.

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NAELA Member Discount Partners

The National Academy of Elder Law Attorneys’ (NAELA) MemberDiscount Program (formerly Affinity Partner Program) provides discountsto NAELA members on software programs, office supplies and equipment,credit card services, document storage and retrieval services and more.

The program was formed to develop partnerships with companies willing toparticipate in a group-purchasing program that extends discounts to NAELAmembers.

You can look forward to receiving information directly from these vendorsby contacting them for further information. NAELA will announce new partnersas they are approved; meanwhile, we encourage you to take full advantage ofthis member service and reap the benefits of your NAELA membership!

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Finding a fellowNAELA member isa click away!Did you know

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So next time you’re looking for anaddress, phone number or e-mail of aNAELA member, just go online whereyou’ll find the most current information!

Understanding TheMedicare SecondaryPayer ProgramBy Sally Hart, Esq.

The Center For Medicare Advocacy receives many inquiriesabout the Medicare Secondary Payer program from Medicarebeneficiaries and attorneys. This article explains some basic factsabout the Medicare Secondary Payer (MSP) law to help individu-als understand their rights and obligations under it.1

The Medicare Secondary Payer (MSP) program is designedto reduce costs to the Medicare program by requiring other insur-ers of health care for beneficiaries to pay primary to Medicare. Itapplies in three situations: (1) where there is liability insurance,2

e.g. for an accident; (2) where there is workers compensationcoverage,3 e.g., for a job related injury; and (3) where there is anemployer’s large group health plan (EGHP).4 We will focus hereon the liability insurance and worker’s compensation insuranceprograms.5

When Does MSP Recovery Occur?If an injured Medicare beneficiary’s medical expenses are

covered by liability insurance, (including self-insurance, no-faultand med-pay insurances), Medicare will pay for medical servicesonly when the third-party insurance payment will not be“prompt.”6 Such Medicare payments are described as “condi-tional” and the program expects to recover them when the privateinsurance payment “has been or could be made.” When a healthcare provider seeks conditional Medicare payment, it must ac-cept payment at the Medicare rate and cannot obtain additionalpayment from a subsequent liability insurance award.7

Congress has given the Medicare program specific collec-tion powers with respect to its conditional payment recoveryclaims. The Center For Medicare Services (CMS) has both subro-gation rights and the right to bring an independent action torecover its conditional payments from any entity that is “requiredor responsible . . . to make payment”. 8 CMS is further authorizedto bring actions against “any other entity that has received pay-ment from a primary plan.” The Medicare program does not fre-quently exercise any of these collection powers.

How Does Medicare Collect The MSPOverpayment?

Typically, although not always, Medicare initiates collectionprocedures when a beneficiary’s personal injury attorney notifiesit that a settlement is expected. Many personal injury attorneysbelieve that they will be subject to penalty unless they contactand repay Medicare directly, but the law imposes penalties onlyon insurers (“third party payers”) that fail to repay Medicare.9

Beneficiaries themselves are required to notify and pay Medicarewithin 60 days of receiving a liability payment.10 Medicare alsomay learn about the existence of third-party liability claims throughquestionnaires to beneficiaries, contractor screening of claimsfor injury-related services, and information-sharing with the In-ternal Revenue Service.


The Basics ofElder Law ProgramThe Basics of Elder Law program will be held in Nashvilleon August 19-21, 2005, produced by the Tennessee BarAssociation's Elder Law Section and co-sponsored byNAELA. This program covers the breadth of elder law and is notstate-specific. Speakers at this program include:

Cindy Barrett Bill Browning Larry Frolik Jo-Anne Herina Jeffreys David McGuffey Rebecca Morgan

A unique aspect of this program is its focus on a casestudy. We're going to break participants into groups andeach group will develop a Medicaid long-term care plan. Participants at last year's program say that they foundthe opportunity to work with experienced elder law attor-neys on developing a long-term care plan an invaluablepart of the program. For those of you just starting out or just feeling yourway through some of your first few Medicaid cases, youreally need to attend this program. Details on registration, etc., are posted on the NAELAWeb site at http://www.naela.org/applications/calendar/calendar.cfm.Meanwhile, you can view the agenda athttps://www.tba.org/onsiteinfo/elderlaw_2005.html.

Steve SilverbergTim TakacsLauchlin WaldochPam WrightStu Zimring


CMS sends a collection letter thatsets out the amount claimed as an MSP“overpayment” by Medicare. Thisamount is determined by its Coordina-tion of Benefits (COB) contractor, basedon claims for health services paid byMedicare. The letter should also de-scribe the repayment process, and theprocedures for seeking waiver and ap-peal of MSP recovery claims. The col-lection letter pressures beneficiaries topay Medicare immediately by assertinga right to interest accruing on unpaidclaims even during the pendency of un-successful beneficiary requests forwaiver and/or appeals. It further statesthat Medicare may arrange for theamount of an overdue MSP claim to bededucted from the beneficiary’s SocialSecurity or Railroad Retirement check.

Beneficiaries can respond to thecollection letter by simply paying theamount claimed, or by seeking a reduc-tion of the MSP claim through the ap-peal and waiver procedures describedbelow.

How Much CanMedicare Recover?

In general, CMS may recover anamount equal to the Medicare paymentfor injuries covered by the liability in-surance, up to the full amount payableunder the insurance.11 However, thereis no MSP recovery for services cov-ered by Medicare after the date of settle-ment unless the settlement included aspecific allocation for future medicalservices.12 Importantly, Medicare re-duces its recovery to take account of“the cost of procuring the judgment orsettlement. . . .” Thus, if payment is theresult of a judgment or settlement, a pro-portionate share of attorney’s fees andcosts can be subtracted from theamount recovered by Medicare.13

Example: Ben Beneficiary receiveda settlement of $50,000 following an ac-cident. His medical expenses were$40,000, of which Medicare paid $25,000;his pain and suffering were valued at$10,000; lost wages were $20,000; and

his permanent loss of limb was valuedat $30,000.

Despite the fact that Ben’s settle-ment was only 50% of his $100,000 dam-ages, Medicare will demand recovery ofits entire $25,000 outlay, reduced onlyby its proportionate share of the pro-curement costs. Assuming a 30% con-tingency fee arrangement, Medicare willclaim $17,500, Beneficiary’s personal in-jury attorney will receive a fee of $15,000,and Ben will receive only $17,500, leav-ing him with $82,500 in uncompensatedlosses.

There are several ways that theamount claimed by Medicare can be re-duced. First, MSP recovery is limitedto Medicare outlays for health servicesresulting from the accident or other in-cident that gave rise to liability.14 A ben-eficiary should carefully look over theitemized list of health services for whichMedicare claims recovery to be sure itdoes not include care due to, or aggra-vated by, for example, a preexisting con-dition. If the costs of such unrelatedcare are not excluded, or if the amountclaimed is incorrect for some other rea-son, the beneficiary has the right to ap-peal.15

Second, a beneficiary can askMedicare to compromise its claim forMSP recovery before a settlement isreached. Compromise is appropriatewhen the amount of recovery is too smallto merit pursuit of the claim, and it is inthe best interests of the Medicare pro-gram.16 The CMS Regional Officeshandle requests for compromise, whichusually come from the attorney handlinga liability claim.

Finally, a beneficiary can ask Medi-care to waive recovery of some or all ofthe amount of its MSP claim on theground of hardship.17 The MSPManual, which can be found online atwww.cms.hss.gov/manuals/105_msp/msp105.index.asp, sets out factors to beconsidered in granting waivers.18 Theyinclude out-of-pocket expenses incurredby the beneficiary, his age, assets, in-come and expenses, and impairments ofthe beneficiary. All of these factors mustbe documented by specific information.Medicare’s decision about whether towaive recovery in whole or in part isnot an appealable initial determination.19

Medicare RecoveryFrom Workers’Compensation Awards

The Medicare Secondary Payerlaw also makes Workers’ Compensa-tion programs primary payers of medi-cal expenses for persons receivingWorkers’ Compensation benefits forhealth care.20

In many respects, MSP recoveryfrom Workers’ Compensation paymentsis the same as Medicare recovery fromliability insurance. For instance, theamount recoverable can be reducedthrough the waiver and appeal pro-cesses described above. However, un-like its policy with respect to liabilityinsurance settlements, Medicare mayalso reduce the amount of its recoveryby an apportionment in the Workers’Compensation settlement agreementbetween medical expenses and otherdamages (e.g., lost wages). It will dothis when it has determined that thesettlement represents a compromise ofdisputed claims, and the specified ap-portionment is fair to Medicare.21

Workers’ Compensation claims forfuture losses may be settled by a lumpsum payout rather than continuing pay-ments for the lifetime of the disabledworker. This is known as commutationof future benefits. Medicare will payfor the beneficiary’s covered healthcare only after the portion of the com-muted amount allocated to Medicarecovered health expenses has beenspent for such expenses.

In certain circumstances, the ap-portionments in the settlement and thearrangements for setting aside an ap-propriate amount of the settlement forpayment of future Medicare coveredhealth costs should be approved bythe CMS Regional Office. Such ap-proval is required when the individualwill be entitled to Medicare within 30months of the date of settlement, andwhen more than $250,000 is designatedfor future Medicare covered costs.22

Some attorneys recommend that a“Medicare set-aside trust” be estab-lished to keep records of expendituresfor medical services from the desig-nated portion of the Workers’ Compen-

Understanding TheMedicare SecondaryPayer Program(continued from page 14)



sation settlement so as to determinewhen it has been exhausted and Medi-care should become primary payer. How-ever, CMS does not require the estab-lishment of a set-aside trust, and will al-low a beneficiary to self-administer thefund by keeping records of her expendi-tures for Medicare covered costs untilthe amount set aside has been ex-hausted. At that time, full Medicare cov-erage of the beneficiary’s health care canbe reestablished

ConclusionThe Medicare Secondary Payer law

undoubtedly creates complications forMedicare beneficiaries who are injuredin accidents or on the job. With an un-derstanding of the rules and proceduresfor MSP recovery in such situations, el-der law attorneys can minimize the un-certainties and costs for their clients.

Sally Hart is an attorney with the Ari-zona Center For Disability Law, in Tuc-son, Arizona, and is consulting coun-sel to the Center For Medicare Advo-cacy, Inc. in Willimantic, Connecticut.

Endnotes1 The MSP statute is found at 42

U.S.C. § 1395y(b), Social SecurityAct § 1862(b). The MSP regula-tions are at 42 C.F.R. §§ 411.20 etseq.

2 42 C.F.R. § 411.50 - 54.

3 42 C.F.R. § 411.40 - 47.

4 42 C.F.R. § 411.100 - 130.

5 A series of court decisionsinterpreted the Medicare statuteas not allowing MSP recoveryfrom settlement funds in classaction lawsuits. Thompson v.Goetzman, 334 F.3d 489 (5th Cir.2003); Mason v. AmericanTobacco Co., 346 F.3d 36 (2d Cir.2003); U.S. v. Phillip Morris, 116 F.Supp. 2d 131, 145 (D.D.C. 2000).In 2003, Congress overturnedthese holdings by amending thestatute to expand the definitionsof self-insured entities and primaryplans from which MSP recovery is

authorized. See 42 U.S.C. § 1395y(b)(2)(A) and (B).

6 “Prompt” is defined as within 120days of the earlier of the date ofan insurance claim or the date ofmedical service. 42 C.F.R. §411.50(b).

7 Rybicki v. Hartley, 792 F.2d 260(1st Cir. 1986); Holle v. MolinePub. Hosp., 598 F. Supp. 1017(C.D. Ill. 1984). However, aprovider can choose not to billMedicare but to instead bill aliability insurer or assert a lien onthe beneficiary’s insurancesettlement. Medicare Program:Third Party Liability InsuranceRegulations, 68 Fed. Reg. 43940(2003), modifying 42 C.F.R. 411.54and 489.20.

8 42 U.S.C. § 1395y(b)(2)(B)(ii) - (iv).

9 42 C.F.R. § 411.24(i)(1).

10 42 C.F.R. § 411.24(h).

11 42 C.F.R. § 411.24(c).

Calling All NAELA Members!This is a call for any NAELA Member wishing to serve on a committeeor special interest group. A valuable network for learning and sharing,we encourage you to participate in the planning and direction of NAELAand to maximize your membership benefits. Contact Bridget Jurichat [email protected].

Understanding TheMedicare SecondaryPayer Program(continued from page 15)

12 Letter of July 3, 2002 from ThomasBosserman, CMS Region IX HealthInsurance Specialist, to Sally Hart.

13 42 C.F.R. § 411.37(a)(1) and (d).

14 42 C.F.R. §§ 411.21, 411.24(c).

15 42 U.S.C. § 1395ff; 42 C.F.R. §411.28(c).

16 42 U.S.C. § 1395y(b)(2)(B)(v); 42C.F.R. § 411.28(b).

17 42 U.S.C. § 1395y(b)(2)(B)(v); 42C.F.R. § 411.28(a).

18 MSP Manual, Pub. 100-5, Ch. 7, §§50.5.4.4. - 50.7.3.

19 42 C.F.R. § 405.926(h).

20 42 U.S.C. § 1395y(b)(2)(A); 42C.F.R. §§ 411.40 - 47.

21 MSP Manual, supra, Ch. 7, §§40.3.4 - 40.3.5.

22 Procedures for obtaining CMSapproval of a set-aside arrange-ment from the CMS Regional Officeare described in the MSP Manual,supra, Ch. 7, at §§ 40.3.5 -40.3.5.1.


Commissioner of InternalRevenue v. Banks, andCommissioner of InternalRevenue v. BanaitisAttorneys Fees in Litigation Recoveries:Beware of Phantom IncomeBy Noreen A Dillman, CELA

In a recent decision, the U.S. Su-preme Court ruled that the portion of asettlement or litigation award paid to aplaintiff’s attorney under a contingentfee arrangement is taxable income to theplaintiff for federal income tax purposes.

Fortunately, however, for mostplaintiffs this will not be a problem. Ifan award is recovered after the Ameri-can Jobs Creation Act of 2004 wassigned into law on October 22, 2004,plaintiffs with employment, whistle-blower, and civil rights claims are relievedfrom having to pay taxes on attorneysfees. A provision in the American JobsCreation Act, the Civil Rights Tax ReliefAct, frees plaintiffs who settle or winunder a number of federal and state civilrights statutes from having to pay taxeson the attorneys fee portions of theirawards. Congress already allows thisfor attorneys fees in personal injurycases. For those plaintiffs who receivedrecoveries prior to October 23, 2004, thedate the Act goes into effect, the Court’sdecision applies and attorneys fees areconsidered taxable income.

The Supreme Court decision wasthe result of two consolidated cases thatcame before the Court: Commissionerof Internal Revenue v. Banks, consoli-dated with Commissioner of InternalRevenue v. Banaitis, 125 S.Ct. 826 (Jan.24, 2005). In both actions, the taxpay-ers, Banks and Banaitis, settled theirclaims and paid their attorneys pursu-ant to contingent fee agreements. Banksreceived the total settlement and paidhis attorney out of the settlement pro-ceeds. Banaitis separately received hisjury-awarded compensatory and puni-tive damages, and the defendant directlypaid Banaitis’ attorney his contingentfees. Neither paid taxes on the attor-

neys fee portions and each was issueda notice of deficiency by the IRS. TheCourt said that, in both instances, theamounts paid to the attorney weregross income to the plaintiffs for taxpurposes. The Court went on to saythat the attorneys fees may be deduct-ible, but it is not excludable from grossincome.

In the opinion by Justice Kennedy,the Court rejected the plaintiffs’ argu-ment that the contingent fee agreementcreates a joint venture or partnershipin which the attorney fee payment rep-resents the attorney’s preexisting part-nership interest. The Court viewed therelationship between plaintiff and at-torney as that of principal-agent. TheCourt stated that the plaintiff exercisescomplete control over the income inquestion because, throughout the liti-gation, the plaintiff retains dominionover the income-generating asset,namely, the legal claim. This holds trueas long as the relationship’s fundamen-tal principal-agent character remainsunchanged, even where the attorney-client contract or state law confers any

special rights or protections on the at-torney.

The ruling resolved a split amongthe circuit courts. Prior to this ruling,the majority position among the circuitcourts, as well as the U.S. Tax Court,had been that a plaintiff must include ingross income the full amount of a tax-able litigation award or settlement, in-cluding that portion of the award orsettlement payable to the taxpayer’s at-torney pursuant to a contingent fee ar-rangement.1 The minority position hadbeen that contingent fees are income tothe attorney, but not to the plaintiff; theplaintiff need only include in gross in-come that portion of an award or settle-ment that is net of the contingent feepaid to the taxpayer’s attorney. 2

The Court declined to addresswhether its ruling would apply to attor-ney fees paid under fee-shifting stat-utes, saying it did not apply in this casebecause the fee paid to the attorney wascalculated solely on the basis of the pri-vate contingent fee contract. The courtalso stated that the recent amendmentadded by the American Jobs CreationAct redresses the concern for manyclaims governed by fee-shifting stat-utes.

The Ruling’sImpact on Clients

Previously, expenses such as attor-neys fees relating to the recovery of tax-able damages were treated as miscella-neous itemized deductions, and weresubject to several limitations. Itemizeddeductions are only deductible to theextent they exceed 2 percent of the ad-justed gross income. In addition, there

A special thanks goes to the followingoutgoing board members for theirdedication and service to NAELA:

Elizabethanne (Betsy) Angevine ...................................... 2001-2005Baird Brown ..................................................................... 2004-2005William (Bill) Browning .................................................. 1993-2005Aimee Rudman ................................................................. 2001-2005Daniel (Dan) Tully ............................................................ 2001-2005




is an overall limitation for itemized de-ductions if the taxpayer’s adjusted grossincome exceeds a threshold amount.Furthermore, for purposes of calculat-ing the alternative minimum tax, no de-duction is allowed for any miscella-neous itemized deductions. The fore-going was the situation with Banks andBanaitis, whose large taxable recover-ies subjected them to the alternativeminimum tax, a tax that cannot be re-duced by any attorney’s fees that the tax-payer has paid.

While Banks and Banaitis werepending, Congress, in a preemptivemove, passed the American Jobs Cre-ation Act of 2004, signed by the Presi-dent on October 22, 2004. The Act

amended the tax code to allow a tax-payer, in computing adjusted gross in-come, to deduct “attorney fees and courtcosts paid by, or on behalf of, the tax-payer in connection with any action in-volving a claim of unlawful discrimi-nation.” Thus, the Act provides thatattorney’s fees and costs paid by, or onbehalf of, a taxpayer in connection withany action involving a claim of unlaw-ful discrimination in employment orhousing, certain civil rights claims, em-ployee benefit claims under ERISA,claims for violation of the federalwhistle blower statute or a private causeof action under the Medicare Second-ary Payer Statute may now be deductedas “above-the-line” items and will notbe subject to the limitation on itemizeddeductions. In addition, the Act makessuch payment effectively deductible foralternative minimum tax purposes. Fi-nally, the amount of fees and costs thatare deducted “above-the-line” may notexceed the amount includable in thetaxpayer’s gross income for the taxableyear on account of the recovery.

It is to be noted that the Act doesnot cover claims for the recovery of per-sonal debts, claims for breach of con-tract or consumer claims not arising froma personal injury. Practitioners shouldbe aware of these distinctions in formu-lating their claims to take advantage ofthe provisions of the Act.

Endnotes1 See Raymond v. United States,

355 F.3d 107 (2nd Cir.2004);Campbell v. Comm’r, 274 F.3d1312 (10th Cir.2001); Kenseth v.Comm’r, 259 F.3d 881 (7thCir.2001); Young v. Comm’r, 240F.3d 369 (4th Cir.2001); Baylin v.United States, 43 F.3d 1451(Fed.Cir.1995).

2 See Davis v. Comm’r, 210 F.3d1346 (11th Cir.2000); Estate ofClarks v. United States, 202 F.3d854 (6th Cir.2000); Cotnam v.Comm’r, 263 F.2d 119 (5thCir.1959).

Commissioner ofInternal Revenue v.Banks, andCommissioner ofInternal Revenue v.Banaitis(continued from page 17)

John J. ReganWriting AwardPresented toTimothy Takacs andDavid McGuffeyThe John J. Regan Writing Award is presented to the bestarticle published in last year’s NAELA Quarterly, whichhas a significant impact on the field of elder law. Regan,a NAELA founder and Fellow, was a pioneer in elder law.A prolific writer, he was also a professor at Hofstra LawSchool. The award was established in 1996, after Johnpassed away, as a tribute to his contributions to the fieldof elder law.

The 2005 John J. Regan Writing Award is presentedto Timothy L. Takacs and David L. McGuffey for theirarticle: Revisiting the Ethics of Medicaid Planning, pub-lished in the Summer 2004 NAELA Quarterly.

The article considered for the award must be origi-nal, in-depth, and explore a single topic that has an im-pact on the field of elder law. Their article certainly meetsthese criteria.

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Estate Tax RepealBenefits Few Taxpayersbut Penalizes A LargerPopulation by TakingFunds from CharitiesBy H. Amos Goodall, Jr.,CELA

The House of Representatives haspassed legislation terminating estate taxin the United States four out of the pastfour years, most recently on April 13,2005. This measure has not previouslypassed the Senate. However, based onPresident Bush’s recent campaign, theEstate Tax faces a strengthened assault.

Federal estate taxes as we knowthem had their genesis with the 1916Revenue Act. They both produce incomefor the federal government and causechanges in the way residents act, aspeople seek to transform themselvesfrom taxpayers into non-taxpayers, or atleast reduce their tax burdens.

While an eleemosynary intent mayspark charitable donations, the rewardof favorable tax treatment provides fuelfor the process. A theory of charitablegifting is that this tax savings acceler-ates peoples’ natural tendency to sup-port worthwhile organizations such asinstitutions of higher education, whichis born out by research published bythe Congressional Budget Office (CBO).The thesis of this article is that repeal ofthe estate tax will have a substantialdampening effect upon charitable gifts,while only benefiting a small handful oftaxpayers.

Since 1916, there have been manychanges in federal laws dealing with gra-tuitous transfers, both during life and atdeath. One set of fundamental changeswas introduced with the Tax Reform Actof 1976 which created a uniform gift andestate tax rate schedule applying bothto gifts during a lifetime and after death1.One facet of this Act was a threshold forthe imposition of a tax, called the “uni-fied credit,” originally set at $175,0002.Essentially, until a person’s gifts andbequests, exclusive of all annual exclu-sions, cumulatively exceed the thresh-old, there is no tax due. The unified creditestablishes a credit for the taxes thatwould be otherwise due on gift or estate

transfers of property up to the creditamount. For example, in 2004 and 2005,the applicable credit was $555,800,which by design is the tax due on a be-quest of $1.5 million. In 2003, it was$345,800, the tax due on a bequest of $1million. This credit may be applied tooffset taxes on gifts during a lifetime (upto $1 million) or at death.

The Economic Recovery Tax Act of1981 gradually increased the unifiedcredit over a six-year period, raising thethreshold to $600,000.00. In 1997, theTaxpayer Relief Act gradually raised thethreshold to $1 million by 2006. Fouryears later, the Economic Growth andTax Relief Reconciliation Act of 2001(EGTRRA) produced sweeping changesto the tax landscape, providing substan-tial incremental increases in the thresh-old, so that the effective threshold willbe $3.5 million by 2009, and repealingthe tax altogether for decedents dyingon or after January 1, 2010. Since the2001 legislation was passed by a closelydivided Senate, an interesting parliamen-tary provision, the Byrd Rule3, requiresthat the Act is automatically repealedfor 2011 and pre-EGTRRA thresholds re-instated, unless there is additional leg-islation.

No observer expects EGTRRA’ssunset provision to become effective.This past November, one plank ofGeorge Bush’s reelection platform in-volved the more rapid and permanentrepeal of Estate Taxes. When Congressconvenes, this may be a primary focusof the session.

Only a small number of residentsactually pay federal Estate Taxes. Fordecedents dying in 1998, when thethreshold was lower, there were 20,350tax returns filed that reported estate taxliability after applicable deductions andcredits4. In 2000, this number had grownto 24,399.

Applying a $2.5 million threshold

to tax returns filed for 2000, there wouldhave been 14,712 returns with tax due.For 2003, the IRS estimates that therewere 16,295 estate tax returns with taxdue. If the threshold had been $3.5 mil-lion as presently is provided for 2009,there would have been 5,689 taxable es-tates.5 Inflation may drive this numberup slightly6. Thus, conservatively, lessthan six thousand taxpayers’ families willreap a reward from the total repeal of fed-eral Estate Taxes each year.

On the other side of the equation,repeal of the federal Estate tax willdampen charitable contributions. Ac-cording to a study published by CBO,elimination of this tax, using 2000 figures,would have resulted in a decrease incharitable contributions and bequests by16 to 28 percent.7

If some persons make charitable do-nations to be effective upon their death,other persons get triple duty from theirgifts by making them during life. First,they can see the effect of their largessand experience the appreciation of thedonee. Second, they can obtain a tax de-duction on current income taxes.8 Third,they reduce the size of their estates soas to diminish their estate’s ultimate taxliability.

According to a study by the Ameri-can Association of Fund Raising Coun-sel, published by the Center for Philan-thropy at Indiana University, individu-als donated $183 billion to charity in 2002(representing 76.3% of all such giving),while individuals bequeathed $18.1 bil-lion (representing 7.5%). The balancecame from foundations and corporations.

The authors of the CBO study con-cluded that if all taxpayers responded tothis loss of incentive, lifetime donationswould decrease by up to 11% in the yearstudied.9 Finally, the CBO study con-cluded that raising the threshold from $2million (its level in 2006) to $3.5 million(its maximum level under EGTRRA) wouldhave a much more negligible effect ongiving, roughly a one percent diminutionin charitable contributions.10

Thus, using the estimates summa-rized above, complete repeal of estate taxmay benefit roughly six thousand verywealthy taxpayers per year, while reduc-ing contributions needed by charitiespotentially by more than $25 billion. Thisrepresents a significant loss to highereducation institutions and others whodepend on charitable support for a sub-stantial part of their budgets.



Building Bridgesto Better TomorrowsBy Ruth E. Ratzlaff, Esq. and Doris E. Hawks, Esq.,Symposium 2005 Co-Chairs

Bright tie dyed T-shirts were the at-tire of choice at the 2005 NAELA Sym-posium held May 19-22 in San Francisco,CA. The event was held at the glamor-ous Fairmont Hotel, on top of Nob Hill.

The theme of the conference was“Building Bridgesto Better Tomor-rows.”

There werespecialized trackson Planning Forand RepresentingDiverse Popula-tions, Planning forMedicaid and ItsAlternatives, Prac-tice Development/Practice Manage-ment, and Legisla-tion/Hot Topics.

The beginninggeneral sessionwas on the newMedicare Part D,prescription drugcoverage, by VickiGottlich. Para-phrasing loosely, al-though it soundsgood in principle, the regulationshave not been finalized andMedicare beneficiaries will besurprised with the amount of co-pays and deductibles and expen-sive brand name medications noton a particular company’s for-mulary.

A. Frank Johns followedwith a general session on Pro-fessionalism and Ethics, includ-ing the Aspirational Standardsfor the Practice of Elder Law thatare being circulated withinNAELA.

Members were delighted toobtain a copy of the new ABAand American PsychologicalAssociation jointly producedpaperbound book on workingwith clients with diminished ca-pacity. A breakout session gave

community service activity was at sev-eral locations of On Lok. Services pro-vided included assisting with prepara-tion of advanced directives and garden-ing.

Thursday night the Northern Cali-fornia Chapter hosted dine-arounds at12 of San Francisco’s finest restaurants,with varied price ranges and cuisines.This was a splendid opportunity for100+ NAELA members and spouses toget to know each other in a social set-ting. It was also easy for newer mem-bers to hook up with a group merely by

signing onto a list,rather than havingroom service alone. The weather clearedup beautifully for theFriday night baseballgame at SBC Park be-tween the San Fran-cisco Giants and Oak-land A’s. All ofNAELA’s reserved tick-ets were sold and thegame itself was soldout. The views and thesetting made it irrel-evant that the Giantslost (again).

The wrap-up gen-eral session Sundaymorning was an inspi-rational presentationby NAELA membersabout how otherNAELA members can

be proactive in their states toadvocate for changes in legis-lation and regulations. One im-portant lesson is that it’s not alawyer’s issue, it’s a client/voter’s issue. If the client can’tparticipate, tell the client’sstory and show a photo.

members a more in-depth look at the is-sues.

To give Symposium attendees andfamilies a hands-on experience with theflagship Program for All Inclusive Carefor the Elderly (PACE) program, the

Vincent Russo presents Steve Silverberg withthe 2005 Theresa Award.

From Left to Right: Co-"Queen"/Chair Ruth Ratzlaff; NorthernCalifornia Host Committee Chair/Dine-Around Coordinator HeleneWenze; NAELA Meeting Planner, Pam Carlson; and Co-"Queen"/Chair Doris Hawks.



Key Planning Group - From Previous IssueHard Copy - Manually place

Endnotes1 The Tax Reform Act also created a tax

on gifts which transferred property totwo or more generations younger thanthe donor, called the GenerationSkipping Tax.

2 There is also a gift tax threshold forpresent value gifts, called the “annualexclusion. Through the various lawsdiscussed in this article, the gift taxthreshold is currently at $11,000 perdonor per donee per calendar year.

3 The Byrd Rule is codified in Section313(b)(1) of the Congressional BudgetAct.

4 Johnson and Mikow, “Federal EstateTax Returns, 1998-2000”, Statistics ofIncome Program Bulletin, Spring, 2002,April 2004 at 72.

5 Email, Eric Henry, Staff Economist,Statistics of Income (SOI), Internal

Revenue Service, January 27, 2005.

6 Other statistics may allow an estimateas high as just under 8,400 returns,which is still a very small number oftaxpayers benefiting from the repeal.The IRS estimates that in 2010, 18,200estate tax returns will actually be filedfor deaths prior to January 2010,when the threshold is presentlyscheduled to be $3.5 million. Manzi,“Projections of Returns that Will beFiled in 2004-2010”, Statistics ofIncome Program Bulletin, Winter 2003-2004, April 2004 at 72. However,many of these have no tax due, suchas a married person leaving an entireestate to a surviving spouse. In 2003,for example, non-taxable returnscomprised nearly 54 percent of allestate tax returns filed. “Estate TaxReturns Filed in 2003: Gross Estate byType of Property, Deductions, TaxableEstate, Estate Tax and Tax Credits, bySize of Gross Estate”, UnpublishedSOI Data, October, 2004, reported athttp://www.irs.gov/pub/irs-soi/03es01tp.xls. A similar proportion ofnon-taxable returns applied in 2002.“Estate Tax Returns Filed in 2002 withGross Estates of $675,000 or More:Gross Estate, Total Deductions, StateDeath Tax Credit, and Net Estate Tax,by State of Residence”. UnpublishedSOI Data, November, 2004, reported at

http://www.irs.gov/pub/irs-soi/02es05gr.xls. Applying the proportionof 54% nontaxable to 46% taxableyields an estimate of 8,372 taxablereturns.

7 "The Estate Tax and CharitableGiving”, CBO Paper, CongressionalBudget Office, July 2004 at 8. Accord,McClelland, Charitable Bequests andthe Repeal of the Estate Tax”,Technical Paper Series, CongressionalBud

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