New Jersey Court Bans Medicaid Planning By Non-Lawyers

Over the past three decades, the increasing costs of long term care have led many individuals and families to look for ways to preserve the assets which they have spent a lifetime accumulating. In that regard, the discipline of elder law has arisen and has been a focus of practice for many attorneys. As the need for advocacy in this area of law has increased, so too has the number of non-lawyer individuals or other groups seeking to provide services in this area.

Recently, the New Jersey Supreme Court issued what is known as Opinion 53. The purpose of this opinion was to distinguish actions which are permissible by non-lawyers as opposed to those which rise to the unauthorized practice of law. The Court recognized the legitimacy of certain functions by non-lawyers. Its basis in allowing same is based on federal Medicaid law which provides, in relevant part, that States “must allow individual(s) of the applicant or beneficiary’s choice to assist in the application process or during a renewal of eligibility.” 42 C.F.R. Section 435.908(b) includes “legal counsel, a relative, a friend, or other spokesman” in any hearing on agency action or decisions. 42 C.F.R. Section 431.206(b)(3). To that extent, the federal regulations permit States to certify staff and volunteers to act as application assistors. 42 C.F.R. Section 435.908(c). “Certified” assistance includes “providing information on insurance affordability programs and coverage options, helping individuals complete an application or renewal, working with the individual to provide required documentation, submitting applications and renewals to the agency, interacting with the agency on the status of such applications and renewals, assisting individuals with responding to any requests from the agency, and managing their case between the eligibility determination and regularly scheduled renewals.” Id. at (c)(2).

The Court strongly held, “While non-lawyer Medicaid advisors may provide these limited services, the Committee finds that it is the unauthorized practice of law when non-lawyers provide advice in matters that require the professional judgment of a lawyer. Hence, only a lawyer may provide legal advice on issues such as strategies for Medicaid eligibility, including provisions of wills and powers of attorney; on the need for guardianships and the authority to transfer assets; on nursing home laws; on transfers of property; on the impact of marriage and divorce; and on estate administration and the elective share.” In making this finding, the Court reflected upon instances where the advice of non-lawyers caused substantial harm to the public.

Specifically, it noted, “……, non-lawyer advisors advised a family member that she could receive monies as a caregiver when the family member did not qualify for that status; advised a family member to spend down an IRA when it would have been more reasonable to purchase an annuity with those monies; advised a family member to draw down her assets when it would have been more sensible to transfer monies to a disabled child; advised a family member to transfer real estate when it would have been prudent to address the significant tax implications of that plan; and the like.”

Abraham Lincoln has been quoted as saying, “He who represents himself has a fool for a client.” In issuing its opinion, the Court does not impede this right. On the other hand, it has taken a firm step to insure that non-attorneys do not make fools of those who would otherwise be represented by them.

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