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March 1, 2015
Court OKs Medicaid planning UPL opinion

The Florida Supreme Court has approved a proposed unauthorized practice of law opinion restricting what nonlawyers can do in assisting the elderly in Medicaid planning activities.

The opinion was submitted to the court by the Bar’s Standing Committee on the Unlicensed Practice of Law, which was approached by the UPL Subcommittee of the Bar’s Elder Law Section.

The section and standing committee were concerned that the public is being harmed when nonlawyers help the elderly arrange their finances so that they qualify for Medicaid benefits.

The court’s January 15 ruling noted that the standing committee had filed a proposed opinion and the court considered briefs supporting and opposing it, and then ordered the committee to revise the opinion to clarify activities of nonlawyer staff of the Florida Department of Children and Families who help the public in the Medicaid application process.

“The revised proposed advisory opinion is hereby approved and is set forth in the appendix to this opinion,” the court said in its ruling. “As provided in Rule Regulating The Florida Bar 10-9.1(g)(4), the advisory opinion shall have the force and effect of an order of this court and shall be published accordingly.”

The committee’s report found that Medicaid planners are unregulated and among those holding themselves out as experts were a disbarred Florida lawyer, a former securities broker who lost his license for fraudulent practice, and a life insurance agent who lost his license after being convicted of two felonies.

Among the harm it found was “denial of Medicaid eligibility, exploitation, catastrophic or severe tax liability, and the purchase of inappropriate financial products threatening or destroying clients’ life savings.”

The standing committee’s opinion noted it was asked to address three specific activities where nonlawyers had been assisting the public in seeking Medicaid benefits: “(1) drafting of personal service contracts; (2) preparation and execution of qualified income trusts; or (3) rendering legal advice regarding the implementation of Florida law to obtain Medicaid benefits.”

The opinion found that a personal service contract, frequently between the Medicaid applicant and an adult child allows the applicant to spend assets that would otherwise be countable in determining Medicaid applicability and also allows for providing for services not typically provided under Medicaid in nursing homes or assisted living facilities.

“There are both legal and tax ramifications if a personal service contract is not done properly,” the opinion said, citing examples where people had faced extra expenses, tax liabilities, loss of services, or possible legal charges because of improperly prepared contracts.

The committee noted that drafting a contract is the practice of law and that “testimony demonstrates that the improper drafting of a personal service contract and improper tax advice and planning causes public harm.” Hence it concluded that “a nonlawyer’s drafting of a personal service contract constitutes the unlicensed practice of law.”

Qualified income trusts and related checking accounts are needed if a Medicaid applicant’s monthly income exceeds Medicaid standards and if the trust is improperly prepared, the applicant will be harmed, the opinion said. It noted several examples of testimony where trusts improperly set up by nonlawyers harmed people. It also cited an earlier UPL opinion from the court which held that the “assembly, drafting, execution, and funding of a living trust constitutes the practice of law, as does determining the need for a living trust and identifying the type of living trust most appropriate for the client.

“The same would be true for a Qualified Income Trust,” the opinion said, adding that means only lawyers can perform those functions.

On advising on Florida law to obtain Medicaid benefits, the opinion said the area is complex with federal and state laws and regulation totaling “over 3,000 pages.”

“Medicaid planning involves: (1) the assessment of all facts relevant to a client’s situation, including personal, financial, familial, and historical; (2) application of those particular facts to the laws governing Medicaid; (3) developing a plan to structure or spend those assets in compliance with those laws or planning to reverse actions already taken to correct potentially unauthorized activity to minimize negative legal consequences; (4) drafting legal documents to execute the plan; and (5) assisting the client in correctly executing a particular plan,” the opinion said. It can also be complicated when one spouse is seeking Medicaid benefits and the other is not, and that there are a variety of methods to spend down assets and structure finances to qualify someone for Medicaid.

Consequently, “It is the opinion of the Standing Committee that when a nonlawyer engages in these activities or renders legal advice regarding the implementation of Florida law to obtain Medicaid benefits the nonlawyer is engaged in the unlicensed practice of law. This includes advising an individual on which legal strategy or strategies under federal or Florida law are appropriate given the individual’s factual circumstances.”

The opinion said that some nonlawyer companies claim to have relationships with attorneys who do will actually document preparation, but added that is still not allowed.

“It is the opinion of the Standing Committee that unless the client establishes an independent attorney-client relationship with the attorney, payment from the client is directly to the attorney, and the initial determination that the particular legal document or Medicaid planning strategy is appropriate for the client given the client’s particular factual circumstances is the determination of the attorney, then the company would be engaged in the unlicensed practice of law.”

Beyond the direct provision of services, the standing committee also found that “the use of legal kits and forms” should be barred because of the complexity of Medicaid planning and the resulting harm from improperly filled out forms, and the ease with which such forms could be offered over the Internet.

The committee did find that the preparation of the actual Medicaid application is not UPL because federal law specifically allows nonlawyers to perform that task.

The court acted in The Florida Bar Re: Advisory Opinion – Medicaid Planning Activities by Nonlawyers, case no. SC 14-211.

[Revised: 11-29-2017]