Do Not Call Your Insurance Company!

Insurance is such a comforting thing. The word is delicious. It slips off the tongue like a mouthful of creme caramel. Being insured feels like wearing armor – or at least a generous application of Scotchguard.

What if a pipe bursts on the second floor and floods the bathroom and the living room under it? No matter, you’re insured. What if a tree limb falls on your garage and damages the roof? Never mind, you’re insured. Or are you?

If you call J.K. Simmons, of Farmers Insurance fame, beware of the one-strike rule. Two claims in two years, or even one claim, could result in non-renewal of your insurance. The avuncular J.K. is not so reassuring when he says your insurance is cancelled; often with little notice. Claim too often and you are dumb da-dumb dumb dumb dumb dumb.

One homeowner was recently informed that her insurance was not being renewed because she filed two claims in less than two years, despite the fact that the two claims totaled less than $6,000. Loss of homeowner’s insurance can lead to mortgage foreclosure. To make a bad situation worse, claim history applies to both the real estate and the owner. The Comprehensive Loss Underwriting Exchange (CLUE) and A-Plus track insurance claims nationwide and are reviewed every time a person applies for insurance. Too many claims will make it difficult sell the home to a new buyer and difficult for the person to buy and insure another home.

The homeowner was able to find a second-tier insurance company to insure her home, after being denied by all the big home insurers – Farmers, Allstate, Hartford, Nationwide, MetLife and Chubb. However, her equity was threatened because she could have difficulty selling her current home or purchasing another for at least the next year. Talk about a triple-whammy!

What is a homeowner to do? Here are five tips to stay out of trouble:

1) Raise your deductible and drop coverage for hazards that are unlikely to result in large losses. For example, mold remediaton is unlikely to cost more than $5,000 and probably would be much less. Filing a claim for mold remediation would cost you one strike and a second, much larger, claim within two years could cost much more. Set aside the money you save by raising the deductible and dropping coverage so you can self-pay relatively minor damage items. Raising your deductible to $5,000 will help you avoid the temptation to call the insurance company every time there is minor damage or loss.

2) Request and review CLUE and A-Plus reports annually by calling these numbers:
CLUE – 866 312 8076
A-Plus – 800 627 3487

3) Do not call your insurance company until you know how much repairs will cost and you have determined that you cannot cover the loss yourself. Calling to enquire about whether to file a claim may be recorded as a claim that will be reflected on your CLUE and A-Plus reports.

4) Inspect your home and surroundings for conditions that may give rise to damage or loss. Call a tree expert to evaluate the health of trees around your home and remove branches that may fall on your property. Have a plumber check your water supply and drain lines for potential problems. Make sure the electrical and HVAC systems are in good shape. Consider paying for home security monitoring; the cost is low compared to the risk of burglary or having your home go up in smoke. You cannot afford to be blasé about these hazards because your insured. Your insurance company will not inspect your home. You need to take that responsibility, yourself.

5) Annually review your property coverage with a trusted insurance agent. Although you may not have a local agent, your insurer will have advisers available to answer questions and give advice about coverage.

The odds are heavily weighted against customers in the insurance game. Television commercials by insurance companies stress the infinite variety of risks covered by their policies. They want you to think that their policies are available to give the customer aid and comfort at the drop of a piano or tree limb. Do not be fooled into thinking the company’s first priority is the customer’s well-being. Beware of getting too chummy with your insurance company’s claims department.

John B. Payne, Attorney
Garrison LawHouse, PC
Dearborn, Michigan 313.563.4900
Pittsburgh, Pennsylvania 800.220.7200
law-business.com

©2017 John B. Payne, Attorney

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Second Case of Measles in Michigan This Year

This week, the second case of measles in Michigan this year was big news.  For someone who remembers when nearly everyone contracted measles at some time in his or her life, this is almost as amazing as cellphones with apps that start your car in the morning and close the garage door or adjust the thermostat from half a world away.

Measles, like mumps, is much less serious when contracted by a young child than by an adult.  Since the disease was so prevalent before the vaccination was developed in 1963, parents would send their children to visit friends who had the disease to avoid the possibility of an adult case later in life.  The relatively few adults who had never
had measles or mumps were very careful to avoid contact with anyone who might be contagious. The eradication of measles, mumps, polio and other diseases that plagued our species is due to widespread vaccination.  The rarity of measles is reflected in this table:

Now, foolish people who did not live in a time when these diseases were widespread refuse to vaccinate their children. One could almost wish that such airheads would contract one or more of the diseases that their children will risk. However, it is unlikely because they were vaccinated as children by their more responsible parents.

Please also read “Michigan in the Vaccination Toilet.”

John B. Payne, Attorney
Garrison LawHouse, PC
Dearborn, Michigan 313.563.4900
Pittsburgh, Pennsylvania 800.220.7200
law-business.com

©2017 John B. Payne, Attorney

NSA Snoops in Bank Safe-Deposit Boxes

Estate-planning clients often have safe-deposit boxes, as do decedents. On the occasions when I have been involved in an estate where there is a safe-deposit box, the box has always turned out to be empty or containing items of little or no value. One recent decedent had had two safe-deposit boxes with lost keys. It took weeks to arrange to have the boxes opened, only to find them as empty as a womanizer’s vow of fidelity.

I advise my clients that safe-deposit boxes are for illicit arms or drug dealers, or aggressive tax evaders. Honest people do not need them. Deeds and estate-planning documents are better kept in a file cabinet at home. They can be easily replaced. Stock certificates should be surrendered and the stock held in an account with a stock broker. About the only real reason to have a safe-deposit box is to store a large stash of gold or platinum. Silver is not precious enough to require that level of security. A person with enough precious metals to need a safe-deposit box is either a jewelry maker or a survivalist on the ragged edge of sanity.  Assuming that civilization has deteriorated to the degree that the survivalist needs that gold, does he really think that the banks would still be operating?

I have always suspected that few safe-deposit renters put anything worthwhile in them. Now there is proof.

Roland Hedley reported on foxnews.com, on April 1, 2017, in “NSA Snoops in Bank Safe Deposit Boxes” on a leaked study of actively-rented safe deposit boxes by the NSA. According to the article, the NSA regularly sweeps bank vaults using a high-tech electromagnetic device similar to ground-penetrating radar to detect explosives, banned substances like weaponized bacteria and viruses, and stolen classified documents in safe-deposit boxes.

Having conducted these sweeps, the NSA compiled and analyzed the data it collected. The studies revealed that 63% of boxes rented by private individuals are totally empty; 26% contain only miscellaneous replaceable documents like deeds, birth certificates and original Social Security cards; 8% additionally contain silver coins from before 1965 or indian-head pennies; 2% also contain stock certificates; and less than 1% contain items that are actually valuable. It appears that money spent renting most safe deposit boxes is as wasteful as putting premium gas in a car that only needs regular – or so the NSA would have us believe.

John B. Payne, Attorney
Garrison LawHouse, PC
Dearborn, Michigan 313.563.4900
Pittsburgh, Pennsylvania 800.220.7200
law-business.com

©2017 John B. Payne, Attorney

PS — Mr. Hedley’s article has been subsequently removed from foxnews.com, presumably by the NSA.

Michigan in the Vaccination Toilet

This is a follow-up to a prior post on the anti-vaccination movement.  Recent surveys show that Michigan is now 46th in the nation in vaccinating our children and teenagers.  This is appalling.  Vaccination protects and benefits the child who is vaccinated.  It also protects and benefits the children around them — so-called herd immunity.

As a socially-conscious individual, it is your responsibility to remind parents around you to vaccinate their children.  For more information, visit visit ivaccinate.org.

John B. Payne, Attorney
Garrison LawHouse, PC
Dearborn, Michigan 313.563.4900
Pittsburgh, Pennsylvania 800.220.7200
law-business.com

©2017 John B. Payne, Attorney

Sad End for Penn Treaty Insurance — Reblog

Jeff Marshall, a highly-respected colleague in Williamsport, Pennsylvania, documented the failure of Penn Treaty Insurance’s long-term care insurance products in “Sad End for Penn Treaty Insurance.”  The column is interesting and informative in describing the problems of the LTCI industry as the costs of long-term care steeply increased, while interest rates plunged and customers held on to their policies at much higher rates than expected.  Jeff’s column is also an excellent backgrounder to my post, “Long-Term Care Insurance — Smart Buy or Not?

John B. Payne, Attorney
Garrison LawHouse, PC
Dearborn, Michigan 313.563.4900
Pittsburgh, Pennsylvania 800.220.7200
law-business.com

©2017 John B. Payne, Attorney

 

 

Justice for the Rich; Slapdown for the Rest of Us

In a September 30, 2016 decision, Price v. Medicaid Director, 838 F.3d 739 (6th Cir. 2016), The U.S. Sixth Circuit Court showed its lack of compassion and understanding of those who have limited income and modest net worth. The court held that while nursing home residents may have their eligibility for care paid by the state backdated up to three months before they apply for Medicaid, assisted-living residents, whose benefits are generally much lower, may not. The court took pains to resolve ambiguities against the impoverished assisted-living residents in contrast to the court’s willingness to find loopholes that favor wealthy taxpayers in a very recent tax case.

The key ruling in Price is that federal law prohibits the state from extending eligibility for Medicaid assisted-living services under the Home and Community-Based Services Waiver, or simply “Waiver,” that are rendered before a beneficiary’s “service plan” is approved. The Medicaid application for nursing home residents is effectively a one-step process because they are determined eligible for the services when admitted. Application for Waiver benefits has two steps – financial eligibility determined by the Medicaid agency and physical need evaluated by a “Waiver Agent,” typically the Area Agency on Aging, which develops the service plan. Depending on the region, applicants might wait six months or more on a waiting list for the Waiver Agent to get around to evaluating them.

While nursing home applications can languish for months on a Medicaid worker’s desk, on approval the eligibility begins with the application date if the applicant was then factually eligible. It is even possible to apply for three months of benefits preceding the original application. Waiver applicants get no such treatment. According to the Price decision, eligibility for benefits begins, if at all, when the Waiver Agent signs the service plan.

Price and the other plaintiffs sued the Ohio Medicaid director, complaining that Waiver beneficiaries should be eligible for retroactive benefits the same as nursing home Medicaid beneficiaries. The operant provision in the Social Security Act reads, in part, as follows:

[S]tates must offer Medicaid assistance to all beneficiaries for care and services included under the [Medicaid] plan and furnished in or after the third month before the month in which [the beneficiary] made application … for such assistance if such [beneficiary] was (or upon application would have been) eligible for such assistance at the time such care and services were furnished. 42 U.S.C.A. § 1396a(a)(34).

According to the court’s rationale, the plaintiffs would have been entitled to Waiver reimbursement during the three months prior to their applications only if those services were provided, under 42 U.S.C.A. § 1396n(c)(1), “pursuant to a written plan of care.” “Pursuant” means “after,” in the court’s view. Thus, a prospective Medicaid beneficiary is eligible only after the service plan is signed. Price v. Medicaid Dir., 838 F.3d 739, 747-49 (6th Cir. 2016).

The court could have reached the opposite result if it had based its rationale on “or upon application would have been” eligible, which would relate backward, rather than its dubious reliance on the temporal aspect of “pursuant to.”

To buttress its holding, the court observed that a prospective applicant could request an evaluation and service plan in advance of applying for Medicaid. This is asinine. There would seldom be such an opportunity.

In the first place, the family would have no way of knowing that it would be necessary to ask for an evaluation that early unless they have an elder-law attorney on retainer and consult him or her almost constantly. Secondly, the need to apply for Waiver services generally comes close on the heels of the need for care.

Comparing this decision to a tax decision, Summa Holdings v. Commissioner, No. 16-1712, Slip Op. at 5 (6th Cir. Feb. 16, 2017), it is clear that the court cares deeply about preserving rich families’ millions and not a all about preserving poor families’ pittances.

The tax attorneys for the Benensons, a wealthy family near Cleveland, Ohio, concocted an ingenious tax strategy involving a “domestic international sales corporation” (DISC) and Roth IRAs. According to the decision:

Summa Holdings is the parent corporation of a group of companies that manufacture a variety of industrial products. Its two largest shareholders are James Benenson, Jr. (who owned 23.18% of the company in 2008) and the James Benenson III and Clement Benenson Trust (which owned 76.05% of the company in 2008). James Benenson, Jr. and his wife serve as the trustees, and their children, James III and Clement, are the beneficiaries of the Trust.

In 2001, James III and Clement each established a Roth IRA and contributed $3,500 apiece. Just weeks after the Benensons set up their accounts, each Roth IRA paid $1,500 for 1,500 shares of stock in JC Export, a newly formed DISC. The Commissioner did not challenge the valuation of these shares then and has not challenged them since. To prevent the Roth IRAs from incurring any tax-reporting or shareholder obligations by owning JC Export directly, the Benensons formed another corporation, JC Holding, which purchased the shares of JC Export from the Roth IRAs. From January 31, 2002 to December 31, 2008, each Roth IRA owned a 50% share of JC Holding, which was the sole owner of JC Export.

With this chain of ownership in place, the family, trust, and company were a few clicks away from the possibility of considerable future tax savings. Summa Holdings paid commissions to JC Export, which distributed the money as a dividend to JC Holding, its sole shareholder. JC Holding paid a 33% income tax on the dividends, then distributed the balance as a dividend to its shareholders, the Benensons’ two Roth IRAs. From 2002 to 2008, the Benensons transferred $5,182,314 from Summa Holdings to the Roth IRAs in this way, including $1,477,028 in 2008. By 2008, each Roth IRA had accumulated over $3 million.  Summa Holdings, Slip Op. at 5 (Feb. 16, 2017).

Each of these cases turned on subtle legal principles that could have been resolved either for or against the appellants. It is not coincidence or simple luck that the wealthy litigants won and the poor ones lost.

This is not to say that federal courts never issue decisions that disadvantage the rich or help the poor. However, studies clearly show that the courts have a marked proclivity to favor wealthy litigants over poor ones. Michele Benedetto Neitz, “Socioeconomic Bias in the Judiciary,” 61 Cleveland State L. Rev. 137 (2013); see also Ga. Supreme Court Comm’n on Racial & Ethnic Bias in the Court Sys., “Let Justice be Done: Equally, Fairly, and Impartially,” 42 Ga. St. U. L. Rev. 687 (1996).

Occasionally, a jurist is perceptive enough to comment on the disparity. Dissenting from the court’s decision in United States v. Pineda-Moreno, 591 F.3d 1120 (9th Cir. 2010), Chief Judge Alex Kosinski stated,“No truly poor people are appointed as federal judges, or as state judges for that matter. Judges, regardless of race, ethnicity, or sex, are selected from the class of people who don’t live in trailers or urban ghettos.” He termed this “unselfconscious cultural elitism” and observed that for him and his colleagues “the everyday problems of people who live in poverty are not close to our hearts and minds because that’s not how we and our friends live.” Pineda-Moreno at 1123.

There was a time when lawyers and judges were socially and economically closer to their clients and litigants. Abraham Lincoln, who attended school for less than a year was a case in point. In 50 years, the law has changed from a reasonable career choice for those on the lower rungs of the economic latter to all but unreachable even for the lower middle class. Prior to World War II, legal education in the United States was more haphazard. In Michigan, only two years of college were required before law school. By the 1970s, admission to law school in Michigan and most other states required a bachelor’s degree. Law school tuition was relatively affordable up until the 1990s. Since then, tuition has skyrocketed. The legal profession has become the province of the affluent.

We in the elder law and disability rights community cannot reverse decades of elitist self-selection in our profession. However, we must become aware of the “unselfconscious cultural elitism” in ourselves and the hearing officers and judges we practice before.

We can relate socially with most of the judiciary because we speak their language. Our kids go to school with their kids. We see them at PTSA meetings and civic events. What we must do is learn to relate to those who live in trailer parks and ghettos and truly accept their humanity. Then, perhaps, we can communicate what we have learned to the hearing officers and judges making crucial decisions about their liberty and property.

John B. Payne, Attorney
Garrison LawHouse, PC
Dearborn, Michigan 313.563.4900
Pittsburgh, Pennsylvania 800.220.7200
law-business.com

©2016 John B. Payne, Attorney