Judges: JAMES D. COLE, Assistant Attorney General
Filed Date: 3/25/1997
Status: Precedential
Modified Date: 7/5/2016
Owen B. Walsh, Esq. Informal Opinion County Attorney No. 97-17 County of Nassau Nassau County Executive Building One West Street Mineola, N Y 11501-4820
Dear Mr. Walsh:
You have requested an opinion of the Attorney General regarding whether a person seeking admission to a State-licensed nursing home may be required to execute a power of attorney, a durable power of attorney or a springing durable power of attorney as a condition of admission to the facility. Under the facts presented, upon the resident's incapacity the durable or springing power of attorney would give the facility's administrator broad endorsement and negotiation powers over the resident's social security1 Since your inquiry only makes a general reference to "social security benefits", we have assumed that you are alluding to Federal old-age and SSI benefits, the two most common non-medical Federal social security assistance programs. Nonetheless, we believe that the analysis employed in this opinion would apply regardless of which Federal or State social security program is actually at issue. and retirement benefit checks. A power of attorney or durable power of attorney would give the administrator these powers while the resident is competent.
Title 15 of the General Obligations Law authorizes a principal to invest an agent with a power of attorney, including one that will survive even if the principal should become incapacitated or otherwise disabled. See, General Obligations Law §§
You indicate that some administrators of long-term residential care facilities wish to have their residents execute powers of attorney at the time of their admission. Your letter suggests that the purpose of requiring incoming residents to execute such instruments would be to give the home administrator broad powers with respect to endorsing and negotiating social security and/or retirement benefit checks to offset the nursing home charges incurred.
We conclude that the use of any form of power of attorney in this manner is inconsistent with Federal and State law and regulations, and that neither the language nor the legislative history of General Obligations Law Title 15 permits the conclusion that a power of attorney was intended to be used in this manner. However, on a strictly limited and controlled basis, under Federal law a nursing home may be designated by the United States Social Security Administration (SSA) to receive certain social security benefits on behalf of a resident, and under State law and regulations a guardian may be appointed with authority to distribute benefits on behalf of an incompetent resident.
Federal law permits a nursing home facility to make an application to the SSA for the appointment of a "representative payee" on behalf of a resident beneficiary, thereby allowing a third party to receive SSA benefits on a beneficiary's behalf. Regarding Federal old-age, survivors, and disability insurance benefits, the Social Security Act provides that:
If the Commissioner of Social Security determines that the interest of any individual under this title [
42 U.S.C. § 401 et seq.] would be served thereby, certification of payment of such individual's benefit under this title [42 U.S.C. § 401 et seq.] may be made, regardless of the legal competency or incompetency of the individual, either for direct payment to the individual, or for his or her use or benefit, to another individual, or an organization, with respect to whom the requirements [listed below] have been met (hereinafter in this subsection referred to as the individual's "representative payee").
The SSA will appoint a representative payee when it appears to be in the interests of the beneficiary.
The representative payee designation process contains a number of procedural safeguards devised to protect the interests and financial well-being of the incompetent beneficiary. In determining whether to appoint a representative payee, the SSA will take into consideration any court determinations of competency (
As an adjunct to these selection requirements, the SSA has established an order of preferences it uses in choosing among prospective representative payees. See,
Once so designated, representative payees must adhere to a number of safeguards built into the Federal regulations. See, e.g.,
The Federal statute and accompanying regulations establish the appropriate procedure for designation of a third-party payee for receipt of Social Security Act benefits. In our view, the power of attorney provisions (all forms) contained within the General Obligations Law may not be substituted for the requirements of
With regard to other assets of the resident, including State retirement benefits, we believe that mandatory execution of any form of power of attorney naming a facility administrator as agent for the management of those assets would be contrary to Federal and State law and regulations. Federal law contains detailed provisions directing how persons or organizations are to manage the finances of a nursing home resident.See,
Both State and Federal regulations contemplate voluntaryagreements by residents authorizing nursing homes to manage their finances, subject to rigid limitations and safeguards designed to protect the resident. See, 10 NYCRR §§ 415.3(g)(1), 415.26(h)(5);
Under Federal law, a nursing home "may not requireresidents to deposit their personal funds with the facility".
The facility must deposit any amount of personal funds in excess of $100 with respect to a resident in an interest bearing account (or accounts) that is separate from any of the facility's operating accounts and credits [sic] all interest earned on such separate account to such account. With respect to any other personal funds, the facility must maintain such funds in a non-interest bearing account or petty cash fund.
State nursing home regulations have been similarly crafted to guide and limit a nursing home's access to, and management authority over a resident's personal finances. See, Public Health Law §
These Federal and State statutory and regulatory provisions do not permit a nursing home to condition admission upon an agreement by the prospective resident to authorize the home to manage his or her finances. Nor do they contemplate the required granting of any form of power of attorney to the facility. Instead, they authorize limited voluntary agreements for the management of patient finances with strict reporting requirements to the patient or the patient's legal representative.
Powers of attorney are usually given to a trusted family member, friend or advisor, and in the absence of such a person, a bonded attorney, accountant or a bank trust department is usually selected. A power of attorney vests a fiduciary responsibility with the agent, and regardless of who is ultimately chosen, that agent has a duty to act in the principal's best interests. Northeast v. Wellington Adv.,
We conclude, under the facts presented, that the principal/agent relationship under a power of attorney between a creditor nursing home facility and a resident would be inappropriate. Any form of power of attorney, where the object is to protect the financial interests of the nursing home, rather than create a fiduciary relationship to represent the interests of the resident, is inconsistent with the purpose of a power of attorney.
Nursing homes are not without other means to ensure reimbursement for their services by residents. See, e.g.,
We conclude that a policy of requiring incoming residents to execute any form of power of attorney naming the nursing home administrator as agent for the management of social security and retirement benefits is inconsistent with Federal and State law and regulations. Any form of power of attorney vests a fiduciary responsibility with the agent under which the agent must act in the principal's best interests. The object of the power of attorney, as presented in your letter, is to protect the interests of the nursing home facility, as a creditor, an object inconsistent with the purpose of a power of attorney to protect the interests of the resident. Therefore, the granting of a power of attorney to a nursing home administrator, for the benefit of the nursing home, is inappropriate.
The Attorney General renders formal opinions only to officers and departments of State government. This perforce is an informal and unofficial expression of the views of this office.
Very truly yours,
JAMES D. COLE
Assistant Attorney General
In Charge of Opinions