Florida Medicaid Planning UPL Advisory Opinion
NAELA News Oct/Nov/Dec 2016
The History of the Florida Medicaid Planning UPL Advisory Opinion
By John Frazier, Esq.
This article provides some suggestions on how states can move forward with their own Medicaid planning advisory opinion, as well as point out a few of the potential pitfalls and roadblocks.
The rise of “Medicaid Planning” by non-attorneys in the United States is a relatively new phenomenon.1 As of the writing of this article, there are only four states that have addressed the issue of non-attorney Medicaid planning with the issuance of an advisory opinion: Tennessee (2007),2 Ohio (2011),3 Florida (2015),4 and New Jersey (2016).5 The purpose of this article is to discuss the history of the Medicaid planning advisory opinion process in Florida, and to provide some guidance to attorneys in other states that do not yet have a Medicaid planning advisory opinion. The article will also provide some suggestions as to how to move forward with an advisory opinion, and what some of the potential pitfalls and road blocks to that process might be.
History and Background to the Florida Medicaid Planning Advisory Opinion
I began my career as a Florida lawyer in 2001. During the first two years of my legal career, I worked primarily in estate planning and tax law. Early in my career, I noticed a fairly large number of clients with family members in nursing facilities. Many of the clients expressed serious concerns about paying for the high cost of nursing home care.
In 2003, I began to work primarily in elder law and Medicaid planning. As soon as I began to practice in elder law, I began to hear about non-attorney “Medicaid planners” who seemed to be primarily Florida licensed insurance and annuity agents. In our region of the state, there were a number of these businesses that would provide two types of services for their clients:
- Non-attorney Medicaid planners would advise the public on the laws regarding Florida asset protection strategies, and also submit Medicaid applications to the Florida Department of Children and Families. These companies would often charge several thousand dollars for their services.
- Licensed insurance and annuity agents would frequently sell “Medicaid qualifying annuities” to the same Medicaid applicant and/or their spouse, and earn a commission (sometimes a significant commission) for the sale of those financial products.
I saw potential ethical problems with the conduct of these non-attorney Medicaid planners:
- It appeared that these individuals might be engaging in the unlicensed practice of law by advising the public on legal strategies to obtain Florida Medicaid benefits.
- These individuals have no formal licensing or training to advise the public on Florida and/or federal Medicaid laws.
- These individuals appeared to be operating with virtually no regulation or oversight from any Florida government agency.
- There appeared to be an inherit conflict of interest for a Medicaid planner to advise the public on Medicaid laws for a fee, and then also recommend a Medicaid-qualifying annuity to the same client, and earn a commission (possibly an undisclosed commission) on the sale of the financial product.
Then in November 2007, the federal Deficit Reduction Act of 2005 (DRA) went into effect in Florida. The DRA eliminated Medicaid-qualifying, balloon-style annuities for unmarried Medicaid applicants in Florida. The DRA also required a Medicaid payback provision if a Medicaid-qualifying annuity was used (by either the Medicaid applicant or the spouse) to obtain Medicaid benefits.
As a result of the DRA, Medicaid annuity salespeople, who previously made the bulk of their income from the sale of Medicaid-qualifying annuities, now lost the primary source of their income. Florida then saw a rapid increase in the number of people who had previously only sold Medicaid-planning annuities now turning to charging a fee for advising the public for rendering Florida Medicaid planning legal advice, and charging a fee for filing Medicaid applications. The record shows that some of these non-attorney Medicaid planners were charging more than $25,000 for their Medicaid planning advice. By some estimates, there were more than 500 non-attorney Medicaid planning companies in Florida by 2012.
The Florida Medicaid Planning Advisory Opinion Process
The Medicaid planning advisory opinion process took nearly five years to complete. In 2009, the Florida Bar Standing Committee for the Unlicensed Practice of Law addressed the topic of non-attorney Medicaid Planning in a May 13, 2009 letter. This letter resulted from discussions between April Hill, Chair of the Florida Bar Elder Law Section Unlicensed Practice of Law (ELS UPL) Committee, and Bruce Lamb, Chair of the Florida Bar Standing Committee for UPL.
At the end of April Hill’s term as chair of the ELS UPL Committee, April asked me if I would be the next committee chair, and I accepted. During my first year as the chair of the Committee, in 2010, I was well aware of the rapid expansion of non-attorney Medicaid planners. Due to this rapid expansion, it was also clear to me that the 2009 Florida Bar letter was having no effect on the rapid expansion of non-attorney Medicaid planning companies in Florida. I contacted the Florida Bar regarding my concerns. After my communications with the director of client protection at the Florida Bar, the ELS UPL Committee decided to explore an advisory opinion to address this topic.
After some discussions with the ELS UPL Committee, I prepared a request to the Florida Bar Standing Committee for UPL, asking that the Florida Bar Standing Committee consider an advisory opinion to address three narrow legal issues:
Are the following activities UPL under Florida law, if performed by a non-attorney?
- Providing legal advice to obtain Florida Medicaid benefits.
- Preparing a Qualified Income Trust.
- Preparing a Personal Service Contract.
I felt that decades of case law would clearly support that each of these three categories clearly constituted the unlicensed practice of law. Upon my first request to the Florida Bar, the Florida Bar Standing Committee for UPL declined to move forward with my request to issue a proposed advisory opinion. The Standing Committee decided to “table” my request.
The ELS UPL Committee regrouped and a second request was submitted to the Florida Bar Standing Committee for an Advisory Opinion. This time, the request came from both myself, as chair of the ELS UPL Committee, and Elder Law Section Chair Enrique Zamora.
After the second request, the Standing Committee agreed to hold a public hearing on the matter. The hearing included testimony from Florida elder law attorneys, two non-attorney Medicaid planners, and members of the public. Reporters from the Tampa Bay Times, The Tampa Tribune, and Bay News 9 attended the Tampa hearing. After the hearing, the Standing Committee voted to proceed with an advisory opinion.
The Standing Committee issued the initial proposed advisory opinion in 2014, and then later issued a revised proposed advisory opinion on October 12, 2014. The Florida Supreme Court approved the advisory opinion on January 12, 2015. The advisory opinion became final on April 10, 2015. However, Florida stockbroker William D. Burns filed a petition for Certiorari with the United States Supreme Court (U.S.S. ct. 15-75) challenging the Florida Advisory Opinion. On October 15, 2015, the United States Supreme Court denied Mr. Burn’s petition for Certiorari.
1 See John Frazier, The Unlicensed Practice of Law in Medicaid Planning: A Fresh Look at an Old Problem, NAELA News Online, www.NAELA.org/NAELANewsOnline (Jul. 2015).
2 State of Tennessee Office of the Attorney General Opinion No. 07-166, Practice of Law; Medicaid Eligibility (Dec. 18, 2007).
3 Board on the Unauthorized Practice of Law of the Supreme Court of Ohio Advisory Opinion UPL 11-01 “Medicaid Assistance and Planning by Nonattorneys” (Oct. 7, 2011).
4 Florida Bar Standing Committee on the Unlicensed Practice of Law FAO #2011-4 Medicaid Planning Activities by Nonlawyers (Oct.14, 2014).
5 New Jersey Committee on the Unauthorized Practice of Law Opinion 53, Non-Lawyer Medicaid Advisors (Including “Application Assistors”) and the Unauthorized Practice of Law (May 16, 2016).
Advice for Attorneys Seeking a UPL Advisory Opinion in Other States
The following are some recommendations I have for attorneys who wish to pursue an advisory opinion in their own states:
- Contact the UPL Department at your state bar association, and find out what is required to proceed with an advisory opinion.
- Enlist the help of the leadership of the Elder Law Bar in your state and your state NAELA Chapter. The process is too difficult for just one attorney to undertake alone.
- The focus of the advisory opinion must be on protecting the public from harm, and not based on attorneys seeking the bar’s protection from non-attorney competition. State bar associations are not immune from federal antitrust litigation (however, state Supreme Courts and State legislations generally are immune) and state bar associations are likely to be very concerned about any actions that might subject the bar associations to federal anti-trust litigation.
- Keep your request for an advisory opinion simple and include in the request only actions by non-attorneys that are clearly and historically within the legal definition of the practice of law (such as the preparation of trusts, the preparation of contracts, and rendering legal advice).
- Bar associations frequently take a reactive, “complaint-driven” approach to the investigation of UPL. Many members of the public are reluctant to file UPL complaints, and your state bar association may use the number of UPL complaints filed as measure of the potential for harm to the public. Be prepared to demonstrate public harm and the potential for harm to the public in ways others than just the number of UPL complaints filed in a given year.
- Be aware that your state bar association is likely to be concerned about the protection of the elderly and those with special needs from financial predators and unlicensed individuals who might choose to prey on them. If you are able to obtain media coverage of the advisory opinion process to highlight the potential risk of harm to the elderly and those with special needs, that would surely help the process to have a favorable outcome.
About the Author
John Frazier, Esq., is this month’s Featured Member. He practices elder law in Florida. He would to like to thank the following individuals for their efforts during this long process: All the members of the Florida Elder Law Section UPL Committee. In particular, he would like to thank long-term Elder Law Section UPL Committee members Leonard Mondschein, Twyla Sketchley, Mike Jorgensen, and David Selby. He would also like to thank all of the Elder Law Section Chairs for their support during these years of work. In addition, he would like to thank everyone who provided oral and written testimony for the Florida Bar UPL hearing held in Tampa, Florida, on February 22, 2013, and all those who personally attended the Tampa hearing.