Long-Term-Care Planning Adds Protection from Filial Laws

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The resurrection of old filial responsibility laws can blindside close family members with a potentially significant financial burden. Filial laws impose a legal responsibility upon family such as a spouse, adult child, or parents for the support of indigent relatives. These laws, in fact, are a compelling reason for clients to consider long-term-care planning for themselves and family members.

Filial laws are not the same thing as the Medicaid five-year look-back, a process used to determine if assets have been fraudulently diverted. Family members may have firsthand knowledge of this procedure, but they may not be aware of their responsibilities under filial law.

Filial laws, filial support laws, or filial piety laws, have been on Pennsylvania lawbooks since 1771. More than half the states have these laws, and enforced them until the middle of the 20th century. State filial laws are rarely used now, but there is one exception: Pennsylvania. Pennsylvania Act 43 of 2005 resurrected the old filial laws, and the problem is that almost no one knows about it.

Fraudulent financial activity does not have to occur before filial laws can be enforced. With the demographically large baby boomer generation moving into retirement, there may soon be many people without the financial resources to support themselves through retirement. They will find themselves increasingly unable to pay for the cost of health care, long-term care, or nursing care. There may be greater incentive among the states and private businesses to resurrect the long-dormant filial laws to seek payments from close relatives. To minimize the burden on a state’s welfare system, do not be surprised to see them used more commonly.

Nursing homes, for example, have been successfully using the laws to sue adult children for their parents’ past-due bills. In a 2012 Pennsylvania case, HCRA vs. Pittas, a son (John Pittas) was held liable for nearly $93,000 of his mother’s past-due nursing home bills. The son was not on the contract and was not accused of any wrongdoing. He was held liable for the debt because he was his mother’s son and had the income to pay. John Pittas appealed, but the Superior Court of Pennsylvania affirmed a lower court ruling in favor of the nursing home. The Pennsylvania Supreme Court has declined to hear the appeal of the son, leaving the lower court ruling in the case as the guiding precedent in Pennsylvania. With the Pittas ruling, health care providers and nursing homes may turn to the filial laws more often to recover past-due bills.

Filial laws, however, do not apply if an individual does not have sufficient financial ability to support the indigent close relative or if an adult child was abandoned or abused as a minor child. Once an indigent person qualifies for Medicaid, under current law there should be no liability for future care under the filial laws. Federal law currently requires a nursing home to accept the Medicaid payment in full satisfaction of the cost. For this reason, helping a needy family member qualify for Medicaid eligibility is the most important thing a close relative can do to avoid being sued by a nursing home for past-due bills. Once an indigent person is in a nursing home and qualifies for Medicaid, the close relative should have no reason to be concerned about liability for future care.

For close relatives who may have the financial means to support themselves for a while, long-term-care insurance should be considered to protect assets and avoid spending them down for nursing care. Long-term-care planning using insurance or Medicaid to cover the costs of a loved one’s nursing care should be reviewed. With ever-increasing costs and tight state budgets, nursing homes and other health care providers have an incentive to use the courts. They may file a suit against any close family member who is able to financially pay the past-due bills.

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John D. Rossi III, CPA, is an associate professor of accounting at Moravian College in Bethlehem and a member of the Pennsylvania CPA Journal Editorial Board. He can be reached at rossij@moravian.edu.