New Jersey Legislature Proposes New Law, Regulations for Long-Term Care Facilities, Part Two: Guardianship Rules & the Medicaid Application Process

Newark, N.J. (March 3, 2023) – On February 13, 2023, two New Jersey State senators introduced a bill that, if passed, will affect long-term care facilities throughout the Garden State. The proposed legislation will supplement Titles 26 (the Health Care Facilities Planning Act) and 46 (of which Chapter 2B contains the Revised Durable Power of Attorney Act) of the Revised Statutes. A companion bill was introduced on February 16 in the General Assembly. Part One of this alert discussed the proposed legislation’s impact on long-term care resident admission agreements and arbitration agreements. This part covers the proposed changes to guardianship rules and the Medicaid application process.

Guardianship Proceedings Required for Appointment of Affiliated Person to Assist Residents in Medicaid Application Process

The proposed legislation would prohibit any person or entity affiliated with a long-term care facility, or its owners, employees, directors, or officers, from managing the financial affairs of a resident by acting as their agent or attorney-in-fact “except pursuant to an order of the Superior Court appointing that person as guardian.”

The bill defines a long-term care facility as a nursing home, assisted living residence, comprehensive personal care home, residential healthcare facility, or dementia care home licensed pursuant to the Health Care Facilities Planning Act, N.J.S.A. §§ 26:2H-1 — 26:2H-26. Both public and private healthcare facilities meet the definition under the Act.

If enacted, this legislation would prohibit any person who benefits financially from a long-term care facility from acting as an attorney-in-fact under a Power of Attorney for a resident of a long-term care facility, or for an individual who is in the admission process to reside at a long-term care facility. It further prohibits employees, owners, officers, directors, and administrators of a long-term care facility, or any person or entity affiliated with or related to the facility, its employees, owners, or directors and officers, from being eligible to act as an attorney-in-fact under a Power of Attorney for a resident of a long-term care facility or for an individual who is in the admission process to reside at a facility.

Under the proposed law, a Power of Attorney instrument executed by a principal (e.g., a resident or individual in the admission process) naming a person affiliated with a long-term care facility is deemed invalid. If an affiliated individual as defined above is put forth as a proposed guardian for a principal/resident, the bill would require a formal guardianship proceeding initiated in New Jersey state courts to determine whether to appoint the affiliated individual as guardian, in consultation with the Office of the Public Guardian for Elderly Adults.

The bill would require an operator of a long-term care facility to provide each resident, or a resident’s representative, a notice that is separate from the standard resident admission agreement stating that they may use an attorney to apply for Medicaid long-term care benefits at the time of admission. The notice must be typed in font no smaller than 12 point size and “shall state”:

YOU HAVE THE OPTION TO HIRE AN ATTORNEY TO ASSIST WITH APPLYING FOR MEDICAL ASSISTANCE LONG-TERM CARE BENEFITS:

Relying on a non-attorney service might expose you and your family to unnecessary financial risk. There are non-attorney agencies and companies which may offer to prepare and submit a Medicaid application. These entities are not permitted to give legal advice or to implement legal strategies that may best protect your interests, and they are not obligated to advise you of your rights. Moreover, these entities may have conflicts of interest, such as a financial relationship with the long-term care facility. Federal law restricts these non-attorney services from charging a fee in connecting with a Medicaid application.

New Jersey does not mandate that a Medicaid applicant obtain the assistance of an attorney when completing an application.

You may, however, seek the assistance of an attorney who is knowledgeable about elder law and Medicaid eligibility rules. If you wish to identify such an attorney, you may contact the State or local bar association attorney referral service.

The language in the bill indicates that the mandatory notice must be posted conspicuously in the facility. It must also be provided to each resident and the resident’s representative at the time of admission to the facility, beginning on the first day of the sixth month following the effective date of the act.

Pursuant to the proposed legislation, the New Jersey Commissioner of Human Services would be required to adopt rules and regulations establishing uniform standards of care for non-attorney individuals providing Medicaid application assistance, including but not limited to:

• defining who is permitted to act as a Medicaid application assistor before Medicaid agencies and the Office of Administrative Law;
• outlining the scope and nature of the services that non-attorney Medicaid application assistors are authorized to provide;
• requiring Medicaid application assistors to complete training on: Medicaid program rules; handling confidential financial and medical information; conflicts of interest; and what constitutes the unauthorized practice of law; and
• prohibiting non-attorney Medicaid application assistors from charging any fee for providing Medicaid application assistance services.

The proposed legislation leaves the process for courts to approve and appoint guardians as attorneys-in-fact open-ended. If passed, it remains to be seen whether the burden would fall on long-term care facilities to put forth proposed guardians for the purpose of assisting residents in qualifying for Medicaid, or if the courts will establish a list of pre-approved, qualified individuals.

It should also be noted that the proposed legislation, as written, seemingly invalidates all power-of-attorney instruments naming an affiliated individual. If passed, this would require long-term care facilities to consider whether such power-of-attorney instruments are in effect with their current population and whether they need to initiate proceedings for court-approved guardians.

For more information on this proposed legislation, contact the authors or editors of this alert. Visit our Long-Term Care Practice page to learn more about our capabilities in this area.

Authors:

Timothy Koch, Associate

Paola A. Silverman, Associate

Editors:

Malinda A. Miller, Partner

Alex W. Raybould, Partner