PA Small Estate & Deposit Payment Thresholds Increased

The Pennsylvania Probate, Estates & Fiduciaries Code (Title 20 of PA Consolidated Statutes) was amended in minor, but helpful, ways by Act 35 of 2013, which became effective on August 31, 2013.

The changes in affected sections of Title 20 are noted in the adopted form of House Bill 513, Printer's No. 2169, of the 2013-2014 Legislative Session.  HB 513's History indicates it was adopted by the Legislature on June 29, 2013, and signed by the Governor on July 2, 2013.  It became effective 60 days thereafter.

Under long-standing statutory law regarding "Dispositions Independent of Letters", pursuant to 20 Pa. C.S. § 3102 ("Settlement of small estates upon petition"), a "small estate" -- defined as one with assets less than $25,000 and no real estate -- could be settled by a customized petition presented to the Orphans' Court Division, as an alternative to a formal probate procedure.

Section 3102 provides, in its first sentence, as follows:

When any person dies domiciled in the Commonwealth owning property (exclusive of real estate and of property payable under section 3101 (relating to payments to family and funeral directors), but including personal property claimed as the family exemption) of a gross value not exceeding [$$$ = AMOUNT], the orphans' court division of the county wherein the decedent was domiciled at the time of his death, upon petition of any party in interest, in its discretion, with or without appraisement, and with such notice as the court shall direct, and whether or not letters have been issued or a will probated, may direct distribution of the property (including property not paid under section 3101) to the parties entitled thereto.

The prior law had stated an AMOUNT of $25,000.  The amendment increased the AMOUNT to $50,000, but made no other changes to that Section.

Other, more frequently used dispositions of a decedent's assets of a limited value without a formal probate were provided under 20 Pa. C.S. § 3101  ("Payments to family and funeral directors").  That Section continues to provide for payments directly to certain persons or organizations regarding five different classes of assets up to certain amounts.

Act 35 amended the maximum amounts for two of the five classes of assets, as set forth in subsections (b) and (c) only.

• (a)  Wages, salary or employee benefits (remains at not more than $5,000)
• (b)  Deposit account (previously not more than $3,500, which was increased to $10,000)
• (c)  Patient's care account (previously not more than $4,000, which was increased to $10,000)
• (d)  Life insurance payable to estate (remains at not more than $11,000)
• (e)  Unclaimed property (remains at not more than $11,000)

In two further helpful tweaks to subsection (b), Act 35 clarified that a "credit union" is included as a financial institution holding a "deposit account" and authorized to make such payments directly, without proof of an estate administration.  It also amended the law to be directive, as opposed to optional, for a financial institution to make such payments upon proper application.  The word "may" was replaced with "shall".

Section 3102 (b) now provides:

Deposit account.--Any bank, savings association, savings and loan association, building and loan association, credit union or other savings organization, at any time after the death of a depositor, member or certificate holder, shall pay the amount on deposit or represented by the certificate, when the total standing to the credit of the decedent in that institution does not exceed $10,000, to the spouse, any child, the father or mother or any sister or brother (preference being given in the order named) of the deceased depositor, member or certificate holder, provided that a receipted funeral bill or an affidavit, executed by a licensed funeral director which sets forth that satisfactory arrangements for payment of funeral services have been made, is presented. Any bank, association, credit union or other savings organization making such a payment shall be released to the same extent as if payment had been made to a duly appointed personal representative of the decedent and it shall not be required to see to the application thereof. Any person to whom payment is made shall be answerable therefor to anyone prejudiced by an improper distribution.

Such amendments are helpful to many folks facing an immediate need for money for death-related expenses, or simple collection of stray or remaining assets in a decedent's name, such as a solely-held financial account, a small insurance policy, periodic final wages and benefits, or a balance remaining in a patient's care facility account.  

Likely, these changes will not affect old or stale accounts, due to periodic sweep collections by the Commonwealth since 1998 of inactive assets pursuant to the Unclaimed Property Law and Regulations.  However, subsection (e) of Section 3102 would permit recovery of such collected funds due to a decedent, if less than $11,000.

These sections do not avoid accountability or even tax reporting upon a death, but provide an expedited way for collection and application of funds without formal probate.

Filial Support of Indigent Parents in PA

On Tuesday, June 12, 2012, WITF-FM's Radio Smart Talk will host a discussion about the legal concept of "filial support" and its possible consequences for Pennsylvania's sons and daughters with aged parents who require care, but who can't pay.

"Filial" is defined by the Merriam-Webster dictionary as 1: of, relating to, or befitting a son or daughter, or 2: having or assuming the relation of a child or offspring.  

However, the concept of "benefit" to a son or daughter becomes reversed, if you add a duty of "support" under a state statute.  The result?  Adult children (if not abandoned in their youth) owe an ongoing duty of support to parents who have become indigent; and they must defend against claims by their parent's care-giving creditors in court.

On May 7, 2012, a three-Judge Pennsylvania Superior Court panel issued an opinion and order in Healthcare Retirement Corporation of America v. Pittas (PDF, 10 pages).  The ruling upheld a judgment rendered by a Lehigh County, PA trial court, against a son for his mother's unpaid debt of $92,943.41, owed to a institution for her medical and residential care.

The charges resulted from treatment needed after the mother was injured in a car accident.  The care extended six months before she withdrew from the facility, and then left the country.  The case at trial was decided while an application for Medicaid coverage was pending.

The Court's opinion noted the essential facts:

On or about September 24, 2007, after completing rehabilitation for injuries sustained in a car accident, Appellant’s mother was transferred to an HCR facility for skilled nursing care and treatment.  Appellant’s mother resided in the facility and was treated by HCR until March of 2008.  In March of 2008 Appellant’s mother withdrew from the HCR facility and relocated to Greece.

A large portion of the bills incurred by Appellant’s mother due and owing to HCR went unpaid.  As a result, on or about May 12, 2008, HCR instituted a filial support action against Appellant.  Pursuant to 23 Pa.C.S.A. § 4603, entitled “Relatives’ liability,” HCR sought to hold Appellant liable for the outstanding debt incurred as a result of his mother’s treatment and care.

The parties submitted the case to arbitration, whereupon a three member arbitration panel found in favor of Appellant.  HCR appealed the arbitration award to the trial court.  The trial court held a three-day non-jury trial, after which it entered a verdict in favor of HCR in the amount of $92,943.41. * * *

The Court referenced portions of the applicable statute, 23 Pa.C.S.A. § 4603 (unofficial version posted online by OneCLE), which provides:

(a) Liability. --
    (1) Except as set forth in paragraph (2), all of the following individuals have the responsibility to care for and maintain or financially assist an indigent person, regardless of whether the indigent person is a public charge:   

        (i) The spouse of the indigent person.
        (ii) A child of the indigent person.
        (iii) A parent of the indigent person.

    (2) Paragraph (1) does not apply in any of the following cases:
        (i) If an individual does not have sufficient financial ability to support the indigent person.
        (ii) A child shall not be liable for the support of a parent who abandoned the child and persisted in the abandonment for a period of ten years during the child's minority. * * *

When is a person "indigent"?  The Court noted:

What it means to be “indigent” is not defined within the applicable statute. Therefore, in  applying Section 4603, our Courts have applied the common-law definition of indigence.    In  so  doing,  we  have  held that:     

the indigent person need not be helpless and in extreme want, so completely destitute of property, as to require assistance from the public.  Indigent persons are those who do not have sufficient means to pay for their own care and maintenance.  “Indigent” includes, but is not limited to, those who are completely destitute and helpless.  It also encompasses those persons who have some limited means, but whose means are not sufficient to adequately provide for their maintenance and support. 

 Savoy v. Savoy, 641 A.2d 596, 599-600 (Pa. Super. 1994), quoting Verna v. Verna, 432 A.2d 630, 633 (Pa. Super. 1981). [Unofficial case links added.]

Any adult child whose parent is now, or might become "indigent", might be just an accident or medical emergency away from becoming liable for that parent's care under the cited statute and its application by the Pennsylvania courts in a debt collection lawsuit commenced by a creditor.

Concerns about the ruling were reported in an article entitled Pennsylvania Man Appeals to Court to Avoid Paying Mom's $93,000 Nursing Home Bill, by Susanna Kim, posted May 23, 2012, by ABC News.  Many readers' comments to the article reflect deep personal concerns and even anger.  See also: PA EE&F Law Blog posts "Filial Support" in PA? Really?!? (07/28/08); and PA's "Filial Responsibility" Law in the News (07/16/09).

On May 25, 2012, The Dickinson School of Law of Penn State University highlighted on its home page a link to a four-minute video presentation posted on YouTube, entitled Elder law expert Katherine Pearson explains new family support decision in PA and its policy issues.

A dramatic holding in a nursing home debt collection case by the Pennsylvania Superior Court "breaks new ground," explains elder law expert and Penn State Law professor Katherine Pearson.

In Health Care & Retirement Corporation of America v. Pittas, the nursing home obtained a judgment against an adult son for the cost of his mother's care with neither a contractual obligation nor "fault" on the son's part.

Professor Katherine C. Pearson briefly and conversationally addresses these questions in the video:

• What is the history of the filial support statute in Pennsylvania?
• What is so dramatic about the Superior Court's application of this law in the Pittas case?
• What are the consequences of this decision?
• What's wrong with requiring adults to support their parents?
• What other issues do you see?
• What policy questions does this case raise?

Katherine is an expert on "filial support" in Pennsylvania. She wrote a chapter on the topic, entitled Filial Support Obligations in Pennsylvania: Adult Children, Parents and Spouses, in the book, Elder Law in Pennsylvania (Jeffrey Marshall, ed., 3d ed. 2011), published by the Pennsylvania Bar Institute.

Just last Friday, June 8, 2012, she posted a more sweeping analysis of "filial support" laws online, including a comparison of each state's current laws.  Her article, which was accepted for publication by the University of Illinois School of Law's Elder Law Journal for its Fall, 2012 issue, is entitled Filial Support Laws in the Modern Era: Domestic and International Comparison of Enforcement Practices for Laws Requiring Adult Children to Support Indigent Parents.  That academic paper (Abstract No. 2079753) can be downloaded from the Social Science Research Network (SSRN) free (32 pages, PDF).

In early April, before the Pittas decision was issued, Katherine gave an extended interview about "filial support", which was broadcast on the Australian radio show Encounter.

During the program “Dutiful Sons and Daughters” Professor Katherine Pearson discusses filial support laws trends in the U.S. during a panel dialog. * * * A recording of “Dutiful Sons and Daughters” is available on Radio National, the largest single network in the country. A recording of an extended interview with Pearson can be downloaded from Radio National’s website. * * *

Tomorrow's Radio Smart Talk presentation, during a fifty-minute discussion, likely will consider these questions and more.  I hope that Katherine will be a guest.  The program will be broadcast at 9:00 AM and again at 7:00 PM.  I will update this posting afterwards to include both a web link and a podcast link for the recorded presentation.

Update: 06/12/2012 @ 11:30 AM:

I guessed correctly:  Professor Katherine Pearson was one of the panelists.  The other panelist was a local professional colleague and friend, Attorney Jan L. Brown, of Harrisburg, PA.  The program, entitled Who is responsible to pay for long-term care?, broadcast from 9 to 10 AM.  It will be rebroadcast at 7 PM this evening.

A recording of the program is available now.  The discussion among host Scott LaMar, Katherine, and Jan can be heard online by downloading an MP3 file (20.8 MB) posted at this link: http://witf.vo.llnwd.net/o35/smarttalk/radiosmarttalk/RST_June122012.mp3. 

Katherine and Jan concisely explained the legal principles operating in the Pittas case (now the subject of an en banc reconsideration petition filed with the PA Superior Court).  They also placed it into the context of Pennsylvania domestic relations law.  Only Pennsylvania and South Dakota statutes and case decisions will sanction such third-party collection actions against an adult child for long-term care obligations incurred by an indigent parent, without considering situational "equities".

They addressed consequences and planning considerations for families of indigent long-term care residents.  The callers' comments ventured further, however, questioning fairness of responsibility for an estranged parent's medical care, oppressive debt collection efforts of institutions, and selective application by institutions.  Katherine also mentioned the cost of litigation in defending such claims, which alone can be staggering.

The discussion then focused on long-term care insurance.  Both federal and state governments have promoted LTC coverage for the past few years as a viable individual hedge against future inability to support long-term care.  

However, LTC coverage has become prohibitively expensive for the middle class.  Two major issuers -- John Hancock and Met Life -- discontinued their LTC offerings.

Even after an individual's purchase and ongoing premium payments, LTC insurance coverage might be revealed, when claim would be made, as unreliable or inapplicable.  LTC coverage, as a future source of support, may be a "bet" more than a "hedge", due to contract limitations, changes in medical services and billings, or illiquidity of an insurer.

Katherine and Jan considered many questions and offered some tips.  However, given flux in applicable law, distinctive facts in individual situations, processing complexities, and reduced government funding, there can be no definitive general answers regarding long-term care provisions, much less specific predictions as to personal financial liability.

I heartily recommend this program for listening by lawyers and laypersons alike.

Proposed Amendments of PA POA, Guardianship & Health Care Directive Laws

On June 14, 2011, the Pennsylvania Joint State Government Commission posted the latest report (June, 2011) of the Advisory Committee on Decedents' Estates Laws regarding proposed amendments to the Probate, Estates, and Fiduciaries Code (PEF Code), which is available here.

This latest report (June 2011; PDF, 85 pages) alters and updates a prior report (June 2010; PDF, 87 pages) of the same organization regarding the PEF Code.

The two reports are the product of Subcommittee study and drafting, Advisory Committee review and revision, and JSGC approval, for submission to the Pennsylvania Legislature:

Over the years, the Advisory Committee has formed various subcommittees to assist in reviewing specific topics and developing statutory recommendations involving the Probate, Estates and Fiduciaries Code for consideration by the Advisory Committee.

The Subcommittee on Guardianships and Powers of Attorney was formed to review, among other things, 20 Pa.C.S. Chapters 54 (health care), 55 (incapacitated persons) and 56 (powers of attorney).

The subcommittee consists of John F. Meck, Esq., Chair; Robert Clofine, Esq.; William R. Cooper, Esq.; The Honorable Calvin S. Drayer, Jr.; Jay C. Glickman, Esq.; Neil E. Hendershot, Esq.; The Honorable Anne E. Lazarus; John J. Lombard, Jr., Esq.; James F. Mannion, Esq.; Michael J. Mullaugh, Esq.; R. Thomas Murphy, Esq.; The Honorable Paula Francisco Ott; The Honorable Stanley R. Ott; William Campbell Ries, Esq. and Robert B. Wolf, Esq.

After reaching consensus on its legislative recommendations, the Advisory Committee presents its recommendations to the Task Force on Decedents’ Estates Laws, which is a bicameral and bipartisan panel of legislators. The Task Force authorizes the Joint State Government Commission to publish a report containing the recommendations, which serve as a basis for legislation. * * * [Paragraphs rearranged]

What is in the June 2011 Report?  Its proposed legislation would reverse one Pennsylvania Supreme Court decision (Vine, December 21, 2010) regarding financial powers of attorney, and clarify the guardianship and healthcare decision-making statutes after another Pennsylvania Supreme Court decision (D.L.H., August 17, 2011) regarding medical decision-making.

In response to the Vine [v. Commonwealth, 9 A.3d 1150 (Pa. 2010)] and [In Re] D.L.H. [2 A.3d 505 (Pa. 2010)] rulings of the Pennsylvania Supreme Court, the Subcommittee on Guardianships and Powers of Attorney reviewed the topics of powers of attorney and health care decision-making and presented its recommendations at the 2011 annual meeting of the Advisory Committee.

The Advisory Committee reached consensus on the recommendations, and the Subcommittee subsequently finalized specific statutory amendments to the Probate, Estates and Fiduciaries Code, which are contained in this report.

The major statutory amendments that form the basis of this report concern the following:

(1) Third party liability and immunity regarding powers of attorney under 20 Pa.C.S.  Chapter 56, in light of the Vine ruling.
(2) An acknowledgment by the principal and affidavits of the two witnesses for powers of attorney.
(3) Health care decision-making by guardians under 20 Pa.C.S. Chapters 54 and 55, in light of the D.L.H. ruling.

Proposed legislative reversal of the Vine holding was explained in a Memo, dated April 4, 2011, from Senator Stewart J. Greenleaf to all Pennsylvania Senators:

[The Court's opinion appears to remove the immunity third parties have had for decades in relying on facially valid power of attorney.

Third parties will now be put in a position of having to investigate the circumstances surrounding the execution of a power of attorney.

Instead of routinely relying on the validity of a power of attorney, they may have to seek the principal's ratification before acting. And, in turn, if the third party questions the power of attorney and does not comply with the instructions of the attorney-in-fact, the third party could find itself subject to liability for failing to comply with an agent's instructions. * * *

The need for remedial legislation after the Vine decision was highlighted by a Pennsylvania Bar Association Recommendation, dated April 11, 2011.  That Recommendation concluded:

These amendments are vital to restore commercial viability of Powers of Attorney following the decision in Vine v. Commonwealth, 9 A.3d 1150 (Pa. 2010), while still adopting appropriate new safeguards for potentially vulnerable principals. In expressing our support for prompt action by the Pennsylvania State Legislature, we have carefully considered the proposals by the Joint State Government Commission and we support the Commission’s approach to the necessary amendments of existing statutes.

As a means of strengthening the original execution of powers of attorney in Pennsylvania, the most recent proposal would require notarization of the maker's signature and affidavits by two witnesses, which requirements parallel those of a self-proving last will.  Other amendments would allow for use of facsimile copies of documents.

The other proposal in the June 2011 Report would clarify points made in the D.L.H. case, where the PA Supreme Court considered, "[W]hether plenary guardians can refuse life-preserving medical treatment on behalf of a person who lacks -- and has always lacked -- the capacity to make personal healthcare decisions, where the person is neither suffering from an end-stage medical condition nor permanently unconscious."

Careful study of that decision revealed areas of the Guardianship statute and the Health Care Decision Making statute that should address long-term and end-of-life medical decision making by a court-appointed guardian.  The result would be these amendments:

• § 5521. Subsection (d.1)(1) is added to provide that a guardian of the person for an incapacitated person shall have the same authority to make health care decisions on behalf of the incapacitated person as a health care representative, and a decision shall be effective without court approval, subject to (1) any limitations and conditions set forth in the order of appointment; (2) the same health care decision-making process as prescribed in the statutory provisions regarding the authority of a health care agent in making health care decisions; (3) the same limitations regarding pregnancy and regarding the duties of an attending physician and health care provider under Chapter 54; (4) the statutory provisions regarding powers and duties only granted by the court and regarding powers and duties not granted to a guardian; and (5) any other provision regarding health care representatives as set forth in Chapter 54, except the statutory provisions regarding who may act as a health care representative.

• Subsection (d.1)(2) is added to specify that, to the extent practicable, a guardian of the person must consult with close family members of the incapacitated person in making a health care decision, particularly one involving end-of-life decision-making.

• Subsection (d.1)(3) is added to require that a petition that is filed for the appointment of a guardian of the person on or after the effective date of the act must state whether it is proposed that the guardian of the person shall have the power to make health care decisions and, if so, whether the guardian shall have all the powers of a health care representative to make such decisions, and any limitation of those powers.

• Subsection (d.1)(4) is added to require that the notice of a petition or hearing must contain the information under the previous paragraph.

• Subsection (d.1)(5) is added to require that an order of appointment of a guardian of the person that is issued on or after the effective date of the act must specify whether the guardian of the person shall have the power to make health care decisions and, if so, whether the guardian shall have all the powers of a health care representative to make such decisions, and any limitation of those powers.

• Subsection (d.1)(6) is added to specify that a guardian of the person appointed before the effective date of the act shall have the same powers as a health care representative unless (1) a prior court order has limited the power of the guardian to make health care decisions or (2) a health care representative is available and assumes authority to act by agreement between the health care representative and the guardian, in which case the guardian thereafter has no health care decision-making powers.

I serve as a Guardianship/POA Subcommittee member and as an Advisory Committee member, and I worked on the reports and recommendations.

I strongly advocate for the Legislature's adoption of the recommendations contained in the June 2010 Report, as modified by the June 2011 Report.

Update:  10/27/11:

In searching bill information on the website of the Pennsylvania General Assembly, I do not find any legislation pending that derives from the two reports.

However, a guardianship-related bill, House Bill 1720, was introduced recently and finds support.  See: PA EE&F Law Blog posting "Granny Snatching" Prohibition Pending in PA (10/25/11).

Bowmaster Decides Difficult Medicaid Lien Issues

On December 29, 2009, the Pennsylvania Supreme Court issued an opinion in E.D.B., v. Gerald Clair and Centre Community Hospital, No. 78 MAP 2008, that resolved a conflict in decisions issued by the Superior Court and the Commonwealth Court as to the extent of the statutory lien provided to the Pennsylvania Department of Public Welfare upon private litigation proceeds, for reimbursement to DPW of its expenses advanced to a Medicaid beneficiary.

The Court's ruling vacated the Superior Court’s prior holding in the case, and reinstated the Order of the Court of Common Pleas of Centre County, dated November 6, 2006.

The Supreme Court’s E.D.B. opinion settles the “incompatible--indeed opposite—holdings” reached by the two Pennsylvania lower appellate courts -- the Superior Court in Bowmaster v. Gerald Clair and Centre Community Hospital, 933 A.2d 86 (Pa.Super. 2007) [PDF, 11 pages], and the Commonwealth Court in Shaffer-Doan v. Department of Public Welfare, 960 A.2d 500 (Pa.Cmwlth. 2008) [PDF, 9 pages]. See also: Jordan v. Western Pennsylvania Hospital, ___ A.2d ___, No. 346 C.D. 2008, 2008 WL 4831303 (Pa. Cmwlth. Nov. 10, 2008) [PDF, 12 pages], and Galindo v. Crozier-Keystone Health System, No. 1136 C.D. 2008 (Pa.Cmwlth., January. 8, 2009) [PDF, 9 pages].

The Supreme Court majority sided with the Commonwealth Court's analysis by holding that a minor Medical Assistance (Medicaid) recipient has a cause of action against a third-party tortfeasor to recover, but then reimburse the Department of Public Welfare, for Medical Assistance benefits received during minority.

Specifically, the Court majority interpreted subsection 1409(b) of the Pennsylvania Fraud Abuse and Control Act to supersede, according to the dissent, “centuries’ worth of Pennsylvania jurisprudence which places the responsibility to raise a child upon her parents”. The Court majority favored the public interest of protecting taxpayers and the public treasury in the provision of Medical Assistance benefits, which historically were not considered in common law parental support principles.

Notably, the Supreme Court recognized that the General Assembly had enacted subsection 1409(b), conferring upon the Department of Public Welfare a statutory right to reimbursement from the “entire amount of any settlement” “notwithstanding any other provision of law”, prior to the United States Supreme Court’s monumental decision in Arkansas Department of Health & Human Services v. Ahlborn, 547 U.S. 268, 126 S.Ct. 1752 (2006).

Because the operative facts of E.D.B.’s case arose pre-Ahlborn, the Court leaves the door open for post-Ahlborn challenges to claims for reimbursement by the Department when a beneficiary’s complaint unequivocally fails to assert damages for medical expenses incurred during minority.

Notably, the Department of Public Welfare appears to be proactively preempting the opportunity for any such argument by actively intervening in minors’ actions that do not seek recovery for medical expenses during minority, as contemplated in 62 P.S. 1409(b).

For the Department's general Statement of Policy in this regard see: Implementation of Third-Party Liability Provisions of Act 2008-44, published Saturday, November 1, 2008, 38 Pa.B. 5970, which states "how the Department will interpret and apply sections 1409 and 1409.1 of the Public Welfare Code (code) (62 P. S. §§ 1409 and 1409.1) to tort claims involving MA recipients."

Note: Thanks to Nora E. Gieg, Esq., of Tucker Arensberg, P.C., for contributing to this article, edited and expanded by Neil E. Hendershot, Esq. for this Blog.

Filing Fees Increase in PA

On Tuesday, December 8, 2009, various court-related filing fees increased in Pennsylvania, pursuant to Act 46 of 2009 (formerly House Bill 1607), signed into law by the Governor on October 9, 2009.

In his newsletter, Good Deeds, dated October 29, 2009, Ryan Costello, Esq., the Recorder of Deeds of Chester County, PA, noted the fee increases applicable to his row office:

On October 9, 2009, Governor Rendell signed House Bill 1607 amending Title 42 (Judiciary and Judicial Procedure) of the Pennsylvania Consolidated Statutes.

This bill, in part, mandates an additional $13.50 fee be charged and collected statewide by Recorders of Deeds. These funds will be deposited into the State’s Judicial Computer System Augmentation Account, the Access to Justice Account, and the Criminal Justice Enhancement Account. The monies are specifically designated to fund Constable training and full-time County district attorney salaries.

This $13.50 increase will be collected on documents recorded as deeds, mortgages, mortgage satisfactions, mortgage assignments and releases, and easements. * * *

Websites of Recorders of Deeds statewide now announce the increased filing fees, such as those for Butler County, PA., Lackawanna County, PA, Allegheny County, PA, Dauphin County, PA, and Beaver County, PA, for example.

The fee increases also affect filings made on or after December 8, 2009, in the Registers of Wills Offices in Pennsylvania. The effect was noted by Paula Gowen, the Register of Wills and Clerk of the Orphans' Court in Chester County, PA:

This Act adds additional fees of $13.50 to the current fee of $10.00, for a total of $23.50 for the FIRST filing of Petitions in the Register of Wills and Clerk of Orphans’ Court.

Among the actions that are impacted by this increase in state fees are Petitions for Grant of Letters, Small Estate Petitions, Initial Petitions for Adoptions and Terminations and Guardianships of Minors and Incapacitated [Persons].

Please note that NO PART of this $23.50 fee is allocated to or appropriated by the Register of Wills or Clerk of the Orphans’ Court. The entire amount collected is remitted to the Commonwealth by this office on a monthly basis.

Similar announcements as to the filing fee increases affecting Registers of Wills statewide were posted on their websites, such as those for Susquehanna County, PA, Blair County, PA, and Centre County, PA.

The Supreme Court of Pennsylvania posted online its Financial Regulations, which were published in the Pennsylvania Bulletin on November 14, 2009. Those Regulations set forth all the actions and entities affected by the boosts in fees collected for the Commonwealth.

In that long list of filings subject to new surcharge fees, those relating to the Court of Common Pleas. Orphans' Court Clerk, Register of Wills, are specified as follows:

Except for the provisions of subsection (g) below, for purposes of 42 Pa.C.S. §§ 3733(a.1) and 3733.1, a statutory fee of twelve dollars and twenty-five cents ($12.25) shall be imposed on all petitions for grant of letters, and first filings in petitions concerning adoptions, incompetents' estates, minors' estates, and inter vivos trusts.

Thus, litigants and other users of the Pennsylvania legal system must now bear a boost in filing fees statewide.

PA's "Filial Responsibility" Law in the News

Within the past few days, major media -- the Philadelphia Inquirer and ABC News -- published accounts about Pennsylvania's filial responsibility law, drawing attention to the desperation caused in some families in the Commonwealth who are compelled to support their parents' costly care needs despite their disconnection or their best efforts.

The Inquirer, from Philadelphia, published its article, "If mom can't pay, adult child must", by Monica Yant Kinne, on Sunday, July 12, 2009; and ABC News, from New York City, published its article, "Pay Your Parents' Bills or Else -- Little-Known State Laws Force Some to Pay Their Parents' Nursing Home Bills" by Alice Gomstyn, on Wednesday, July 15, 2009.

The Inquirer article told the story of Don Grant, of Havertown, Pennsylvania, who was sued for care costs incurred by his mother:

This one's going to blow baby boomers' minds. It concerns a little-known law dating to Elizabethan England suddenly being enforced with gusto in Pennsylvania. The law can force adult children to pay their parents' health-care costs. If Mom and Pop can't pay, you pay. If they have the money but refuse to pay, you pay.

If you don't, watch your credit rating sink under the weight of a legal judgment that will haunt you for life.

It happened to Don Grant. It can happen to you.

The Havertown man is nearly 50 and struggling to pay his mortgage and $100,000 in student loans incurred by his daughter, a recent Albright College grad.

Last year, Grant was sued because his mother, Diana Fichera, did not pay an $8,000 bill at a Delaware County nursing home, where she rehabilitated after surgery.* * *

Don Grant's mother was disassociated from him, and incurred substantial bills at care facilities. However, one care facility utilized Act 43 (recodified in Pennsylvania law in 2005), as a legal ground to sue him as her responsible family member.

The ABC News article told the story of Andrea August, of Norristown, Pennsylvania, who was also sued for care costs incurred for her mother:

Could you be sued for your parents' unpaid health care bills? It happened to Andrea August.

One spring day, the 39-year-old Pennsylvania woman was stunned to learn that a nursing home was suing her for more than $300,000 in unpaid bills related to her father, who died after spending about a year in the home, and her mother, a dementia patient still living there.

"I was devastated," August said. "We're living basically paycheck to paycheck. We don't try to live beyond our means -- it was just unbelievable that all of a sudden there was this debt hanging over us."

August said that both she and her husband work two jobs each to make ends meet for themselves and their two children. She loves her parents, she said, and did what she could to help them. But footing their bills was out of the question.

"I don't think anybody should be responsible for someone else's bill," she said. "You can only do so much."

August found herself among a growing number of adult children facing legal pressure to pay their parents' medical bills. * * *

Both articles deliver excellent reviews about the "filial support" concept, which derived from English law in the 1600s, was transported into Colonial laws, but fell into disfavor and disuse with the introduction of the federal Medicare and Medicaid systems in the mid-sixties.

Both articles note how the precarious financial situations of care facilities and the funding problems of the federal systems now lead providers to invoke those prior laws, particularly in Pennsylvania, due to the 2005 reenactment, which followed issuance of a Superior Court decision in Presbyterian Medical Center v. Budd, 832 A.2d 1066 (Pa. Super. 2003). 

Elder law attorneys have known about, and have opposed, the impact of Act 43 since its reenactment in 2005 into Pennsylvania's Domestic Relations Code, 23 Pa.C.S.A. § 4603 regarding "Relatives' liability" (unofficial form) and its supporting Regulations ("Actions for Support").

I noted the problems that a spotty enforcement of such a law could create for families, and provided further references. See: PA EE&F Law Blog post "Filial Support" in PA? Really?!? (07/28/08). See also: "Should you worry about your parents' debts?" by Liz Pulliam Weston, posted on MSN Money; and "Paying for Mom: Little-Known Laws Force Families to Fund Parents’ Care" (01/10/09) by Beth Baker posted by the AARP Bulletin.

My post quoted Professor Katherine C. Pearson, who is the Director of the Elder and Consumer Protection Clinic, of Penn State - Dickinson School of Law, and who now is Chair of the Elder Law Section of the Pennsylvania Bar Association.

She was quoted in both the Inquirer and ABC News articles, too.  

These articles appear just as federal health care insurance proposals air nationally. Such reform should take in account remaining state filial responsibility laws, and address, at minimum, the procedural rights that should be afforded to those being charged with care costs of family members.

However, until the situation of "filial support" is clarified -- particularly in Pennsylvania -- anyone receiving an Act 43 demand from a care facility regarding costs incurred by a family member must be vigilant. Never brush off such a demand, or else you run the risk of becoming the star of another article about filial support.

Graphic Source: AARP Bulletin

Update: 2012-06-11:

See PA EE&F Law Blog posting Filial Support of Indigent Parents in PA (06/11/2012) regarding a recent Superior Court decision that addressed the filial support statute in Pennsylvania.

Proposed Expansion of PA Medicaid Recovery

On Friday, May 1, 2009, Katherine Pearson (Professor of Law, Penn State Dickinson School of Law), as Chair of the Pennsylvania Bar Association's Elder Law Section, sent an email message alerting section members that, "[a]s part of a plan to implement Governor Rendell's proposed budget for the Commonwealth, legislation was introduced on April 28 that would significantly affect Medical Assistance (MA) Estate Recovery."

This legislative proposal would create far-reaching changes in the law -- not only for Medicaid recovery, but also for estate planning, real estate ownership & transfer, creditors' rights & lien priority, and fiduciary liability in estate & trust administrations. I hope that it is not reviewed lightly or superficially given these potential effects.

With her permission, I repost her alert.

In the key bill, House Bill 1351, at Section 1412 [See: Footnote 1, below], the proposal expands the ability of the Commonwealth to seek reimbursement of MA monies paid to/for a person 55 or older by giving the Commonwealth the right to make a claim against all real property, personal property and other assets in the deceased's probate estate, including any such property in which the deceased had "any legal title or interest at the time of death . . . including such assets conveyed to a survivor, heir, or assign of the deceased individual through joint tenancy, tenancy by the entireties, tenancy in common, survivorship, life estate, living trust or other arrangement.

Section 1412 further creates a lien on the property, that follows the property into any surviving party's hands, and establishes the Commonwealth's priority rights of repayment, with the potential for penalties on executors or administrators who fail to protect the lien.

Section 1412, subsection 10, seeks to restrict attorneys fees payable from an estate that is subject to the Commonwealth's lien.

HB 1351 also has provisions that affect calculations of eligibility for Medical Assistance because of payment of prior or "other" medical expenses, and that create new definitions.

This bill is likely to come to the floor of both houses very soon as part of the Governor's Omnibus Budget proposal, and will certainly be voted on before the end of the session, June 30.

* * *

Footnote 1:

This is the language of Sections 1412 and 1417 of the bill (HB 1351):

Section 1412. Repayment from Estates.—

(a) Notwithstanding any other provision of this act or any other law, the department shall establish and implement an estate recovery program to recover medical assistance paid with respect to individuals who were fifty-five years of age or older at the time that assistance was received. Under this program, the department shall recover from the estate of an individual the amount of medical assistance paid for all services provided to the individual. For purposes of this section, an individual's estate shall include all of the following:

(1) All real and personal property and other assets subject to inclusion within the deceased individual's estate under 20 Pa.C.S. (relating to decedents, estates and fiduciaries).

(2) Any other real and personal property and other assets in which the deceased individual had any legal title or interest at the time of death, to the extent of such interest, including such assets conveyed to a survivor, heir, or assign, of the deceased individual through joint tenancy, tenancy by the entireties, tenancy in common, survivorship, life estate, living trust or other arrangement.

(a.1) Liability for debt shall be as follows:

(1) If property subject to the department's claim is transferred without the department's claim being satisfied, then the executor or administrator transferring such property, if there is one, shall become liable to pay the department's claim.

(2) If property subject to the department's claim is transferred to the extent that the transfer is made without valuable and adequate consideration in money or something worth money at the time of the transfer and without the department's claim being satisfied, then the executor or administrator transferring such property, if there is one, and the person receiving such property shall become liable to pay the department's claim.

(3) If property subject to the department's claim is held by a person, including a cotenant, remainderman, or trustee, then the person holding such property is liable to pay the department's claim.

(b) The executor or administrator of the estate of a decedent who attained fifty-five years of age shall ascertain whether the decedent received medical assistance during the five years preceding death and, if so, shall give notice to the department to secure from the department a statement of the department's claim for medical assistance consistent with 20 Pa.C.S. § 3392(3) and (6) (relating to classification and order of payment). The department must submit its claim to the executor or administrator within forty-five days of receipt of notice or the claim shall be forfeited.

(c) This section shall apply notwithstanding the provisions of section 447.

(d) The department may administratively assess liability under this section. Any final order of the department determining liability under this section:

(1) Shall be a lien on the real and personal property of the individual in the manner provided by section 1401 of the act of April 9, 1929 (P.L.343, No.176), known as "The Fiscal Code."

(2) May be entered by the department in the manner provided by section 1404 of "The Fiscal Code."

(3) Shall continue and retain priority in the manner provided in section 1404.1 of "The Fiscal Code."

Note that the legislation places personal liability on any person, including a trustee, holding any interest that the Department of Welfare determines is subject to estate recovery. “If property subject to the department's claim is held by a person, including a cotenant, remainderman, or trustee, then the person holding such property is liable to pay the department's claim.” Under the legislation this liability is set by the Department of Public Welfare administratively rather than by a court. This could allow the Department to effectively limit the payment of personal representative, trustee, and attorneys fees payable from a decedent’s estate or trust.

Another section of the Bill also attempts to limit attorneys fees.

Section 1417. Limit on claim reduction.

In any action, claim, or settlement where the department is required to reduce its claim, on account of attorney fees incurred by a recipient in obtaining a recovery of cash or medical assistance for the department, the reduction shall not exceed twenty-five percent of the department's recovery.

Offshore Accounts in Dangerous Waters

According to "IRS: Offshore account holders told fess up to lower penalties" (03/27/09) by Kevin McCoy, published in USA Today, the Internal Revenue Service finally is claiming its tax stake in unreported offshore accounts owned or controlled by U.S. citizens, under severe penalties if voluntary compliance is not forthcoming.

Trying to lure wealthy Americans to disclose assets hidden offshore, the IRS on Thursday announced a six-month program that offers lower penalties to those who come forward and pay taxes due on the secret holdings.

The offer includes clients of UBS, the Swiss banking giant that last month gave federal investigators the names of American owners for about 300 accounts in a continuing federal court showdown.

Along with lower tax penalties, those who comply are expected to avoid criminal prosecution.

"This is a chance for people to come clean on their own," said IRS Commissioner Douglas Shulman.

"For taxpayers who continue to hide their heads in the sand, the situation will only become more dire." * * *

The IRS Commissioner commented on the 2009 Amnesty Program in a posted Press Release entitled "Statement from IRS Commissioner Doug Shulman on Offshore Income" (03/26/09).

In a posting on his Tax Prof Blog, Professor Paul L. Caron noted "IRS Offers Amnesty to Those Who Evaded Tax Through Offshore Accounts" (03/26/09); and he listed articles published about the IRS foreign holdings amnesty program. I've added the articles' titles and authors, and noted some substantive points:

• "IRS increases pressure on Swiss bank clients" (03/26/09) by Devlin Barrel, published by Associated Press, who noted: "[Taxpayers] coming forward are now confronting a list of nearly 30 detailed questions, asking not just about financial documents, but any travel to conduct banking business, documents and correspondence related to the accounts, and which bank employees helped them manage the accounts." * * *
  
• "UBS Offshore Customers Offered Eased Tax Penalties" (03/26/09) by Ryan J. Donmoyer, published by Bloomberg, who noted: "It is legal for Americans to have money in offshore accounts, which many do for legitimate reasons such as when they own a home or business overseas. The accounts must be disclosed to the Treasury Department when they hold more than $10,000, and U.S. taxes must be paid on any income earned."* * *
  
• "IRS aims to reel in offshore-account holders --Penalties reduced, criminal prosecution unlikely for those who come clean" (03/26/09) by Andrea Coombes, posted on MarketWatch, who noted: "The U.S. loses an estimated $100 billion in tax revenue every year because of money stashed offshore, according to Sen. Carl Levin, D-Mich., who with other lawmakers introduced the Stop Tax Haven Abuse Act in March. * * *
• "I.R.S. to Ease Penalties for Some Offshore Tax Evaders" by Lynnley Browning, published by The New York Times, who noted: " In another shift, the I.R.S. will generally not prosecute taxpayers who come forward voluntarily, provided they are not drug dealers, arms merchants or others with ill-gotten gains. And it will not assess a 35 percent penalty on money secretly transferred to foreign trusts — a common method of tax evasion. The goal, Douglas Shulman, the I.R.S. commissioner, said during a briefing 'is to get taxpayers who have been hiding assets offshore back into the system.'" * * *
  
• "IRS launches crackdown on offshore tax evasion" (03/26/09) by Corbett Daley, published by Reuters, who noted: "IRS memos sent to agency examination staff said offshore tax cases should 'receive priority treatment.' 'Offshore cases sent to the field are work of the highest priority," said one document, which was made public by the IRS. "Examiners should utilize the full range of information gathering tools in properly developing offshore issues with special emphasis on detecting unreported income. This includes interviewing taxpayers, making third-party contacts and timely issuing summonses to taxpayers and third parties." * * *
• "IRS Cuts Penalties to Lure Tax Evaders" (03/27/09) by Evan Perez & Tom Herman, published by The Wall Street Journal, who noted: "A key part of the program, IRS officials said, is 'developing intelligence' on bankers, lawyers, accountants and others who help the rich hide assets from tax authorities. This raises the likelihood that the IRS and the Justice Department could take aim at major financial firms, as they have against UBS AG, the Swiss bank that admitted in a settlement last month that some of its bankers had helped U.S. clients evade taxes." * * *
  

Clearly, past tax law and current tax return forms require that a U.S. citizen who has an interest in, or signature or other authority over, a financial account in a foreign country with assets in excess of $10,000 are required to disclose the existence of such account on Schedule B, Part III of their individual income tax return.

The IRS has made various tax amnesty offers as recently as 2005 and 2003 to enforce these rules. But the political and economic climates have chilled sufficiently to steel the IRS' intentions towards non-reporting citizens.

For those U.S. citizens who have continued to ignore the legal requirements of reporting and paying income tax, the "amnesty" program may be viewed as harsh, but it may be their last chance before criminal prosecution.

This program and the alternative enforcement routes are now supported politically by the new federal law. And it is consistent with prior initiatives by the IRS. See: Abusive Offshore Tax Avoidance Schemes -- An Abusive Scheme Toolkit for External Stakeholders, updated in April, 2009.

Offshore accounts and trusts have been utilized by some Pennsylvanians to avoid both federal and state income tax, as evidenced by a prosecution in Pennsylvania announced recently by the IRS on its website in a posting entitled "Pennsylvania Father and Sons Sentenced in Tax Fraud Scheme."

On March 26, 2009, in Scranton, Pa., Wendall Sollenberger was sentenced to 42 months in prison and ordered to pay $1,274,615 in restitution to the Internal Revenue Service (IRS).

Last week, Avery Sollenberger, Wendall's father, was sentenced to 44 months in prison and Gary Sollenberger, Wendall's brother, was sentenced to 42 months in prison. In September 2008, a jury found Avery, Wendall, and Gary Sollenberger guilty of conspiracy to defraud the IRS. According to court documents, the Sollenbergers own and operate a house framing business in Hanover, Pennsylvania.

Evidence introduced at trial stated that beginning in 1994, Wendall, Gary and Avery began to employ a deceptive scheme consisting of bogus trusts, a foreign corporation and an off-shore bank account in Cyprus to conceal assets from the IRS. The three men have not paid any income tax on their business earnings since 1994.

During the trial, the government also introduced evidence of defendants expenditures including the purchase of a $100,000 race car, a $40,000 custom made motorcycle, a motor boat, gold, silver, rental properties, a second home in Altoona, Pennsylvania, and hunting trips to Idaho. * * *

See also: Press Release, "UBS Client Charged with Filing False Tax Return Boca Raton, Fla. -- Resident Hid Income and Assets in Secret Swiss Bank Account" (04/02/09).

CCH summarized the terms of the amnesty program in its Tax News posting on March 27, 2009 entitled "Voluntary Disclosure Terms."

[The IRS Commissioner] emphasized that the terms being offered for the disclosure of offshore accounts are an outgrowth of current policy and carry penalties at a level consistent with voluntary disclosure programs in the past. Within this framework, Shulman enumerated the amounts that would need to be paid by taxpayers with heretofore undisclosed offshore accounts who "come clean" under the program:

• Back taxes due on newly disclosed assets for the last six years;
• Interest due on these back taxes for the last six years;
• A 20-percent accuracy-related under Code Sec. 6662 or a 25-percent delinquency penalty under Code Sec. 6651 for each tax year at issue;
• Looking to the past six years, a 20-percent penalty on the total balance of all the taxpayer's foreign bank accounts or assets during the year among the past six in which the accounts had their highest aggregate value. * * *
  

In the past, Pennsylvania did not elect to participate in the IRS' Offshore Voluntary Compliance Initiative, and, may not participate in this latest program. Therefore Pennsylvania residents intending to participate in this IRS amnesty program should consider their future interactions, too, with the Pennsylvania Department of Revenue.

Penn Treaty Insurers under PA Rehabilitation

On January 6, 2009, the Pennsylvania Insurance Department announced in a Press Release entitled "Insurance Department Takes Control of Struggling Allentown-based Insurer & Subsidiary" that the PA Commonwealth Court approved the Department's petition to place Penn Treaty Network America Insurance Co. and its subsidiary, American Network Insurance Co., into a "rehabilitation" conducted under the Department's statutory control.

Penn Treaty was an aggressive issuer of long-term care insurance policies over the past decade.

The very name "Penn Treaty" invoked a powerful, historical, moral compact known as Penn's Treaty -- an exchange of promises made early in the history of Pennsylvania by the Commonwealth's founder, William Penn:

In 1682, along the gentle banks of the Delaware River, under the shade of a great elm tree in an area then known as Shackamaxon, William Penn is believed to have made a Treaty of Friendship with the Native Americans.

Few events in American history are noted for the just and fair treatment of peoples from different cultures.

The legend of William Penn's Treaty with the Indians became a universal symbol of religious and civil liberties. Voltaire made reference to the event in 1764, and artists throughout Europe recreated the scene first painted by Benjamin West in 1771.

Drawings of the transaction were used to promote commercial interest in the emerging land. American painter Edward Hicks created numerous depictions of the treaty meeting to promote social change.

In the pre-Civil War era, artistic renderings of Penn's Treaty were used to encourage political movements, religious agendas and social reforms. * * *

Penn's Treaty was never written, only spoken. Voltaire said it was "never broken."

William Penn’s “memorable treaty with Tamanend and other Delaware chiefs, of the Turtle Clan, under the great elm at Shackamaxon, within the limits of Philadelphia," is full of romantic interest. Unarmed, clad in his somber Quaker garb, he addressed the assembled Native Americans, uttering the following which will be admired throughout the ages:

“We meet on the broad pathway of good faith and good-will; no advantage shall be taken on either side, but all shall be openness and love. We are the same as if one man’s body was to be divided into two parts; we are of one flesh and one blood.”

The reply of Tamanend, is equally noble:

“We will live in love with William Penn and his children as long as the creeks and rivers run, and while the sun, moon, and stars endure.”

There is no actual record of the “Great Treaty,” the treaty made familiar to many by Benjamin West’s painting and Voltaire’s allusion to it “as the only treaty never sworn to and never broken.” * * *

As a modern-day insurance company, Penn Treaty, instead wrote and swore to its contractual arrangements with approximately 126,000 policyholders located in Pennsylvania and every other state.

But now, due to financial distress, the company requires "rehabilitation" by the Commonwealth to protect parties in interest. The necessity for such rehabilitation is distressing news for many Pennsylvanians who rely upon the company for their long-term care coverage. But this is not an outright bankruptcy, and that is some good news.

This is the text of the Insurance Commissioner's Press Release:

COURT APPROVES ORDER TO PROTECT PENN TREATY
POLICYHOLDERS, ENSURE CONTINUITY OF CARE

Insurance Department Takes Control
of Struggling Allentown-based Insurer & Subsidiary

HARRISBURG -- Insurance Commissioner Joel Ario announced today that the Commonwealth Court approved his petition for an Order of Rehabilitation for Penn Treaty Network America Insurance Co. and its subsidiary, American Network Insurance Co.

The order places the company under the statutory control of the Pennsylvania Insurance Department. It also grants the commissioner direct authority to preserve the company’s assets and oversee its current financial situation and operations, while continuing to pay policyholder claims.

“It is the Insurance Department’s responsibility to take action when a company is in financially hazardous condition,” Ario said. “Placing Penn Treaty into rehabilitation will make certain that long-term care policyholder claims are paid, helping to ensure continuity of care for a community in need.

“We gave Penn Treaty time to find a buyer and infuse new capital. To date, the company has been unable to raise enough capital, so we must protect the company’s assets and put policyholder protections into place. I want to assure policyholders that their policies remain in effect during this rehabilitation and that their premiums should continue to be paid in order for coverage to remain in place.”

This rehabilitation is the first receivership action the department has taken in more than four years.

Penn Treaty, headquartered in Allentown, provides long-term care insurance to more than 126,000 policyholders. Together, Penn Treaty Network America Insurance Co. and its subsidiary, American Network Insurance Co., write long-term care insurance in all 50 states and the District of Columbia.

The Insurance Department will perform an independent, comprehensive evaluation of the company's finances. Based upon this review and analysis, the department then will determine the viability of a rehabilitation plan. Any plan will give payment priority to policyholder claims.

Policyholders and other interested parties will receive further information about the rehabilitation in the future. In the interim, policyholders with questions on claims or non-claim matters may use the following toll-free number: 800-362-0700, ext. 3190.

For original documents, see: Rehabilitation Order: Penn Treaty Network America Insurance Company; and Rehabilitation Order: American Network Insurance Company. See also: "Penn Treaty Insurance Subsidiaries Enter Rehabilitation" (01/08/09) posted by PRWire.

How fortunes can change.

The Google search engine reports that, after the issuance of the Department's Press Release, "errors" occurred while indexing Penn Treaty websites, including www.penntreaty.net, which are unavailable online presently.

However, another website, XOM Reviews, still references information previously posted on a Penn Treaty website (www.penntreaty.com) as follows:

Welcome To Penn Treaty Network America

Description: Long term care insurance company provides rates and quotes online . . . information on the company, nursing home and home health care coverage, benefits, and policies.

Penn Treaty Network America -- America's Long Term Care Insurance Superstore

On November 20, 2000, a BusinessWeek article, entitled "Long-Term Care Policies That Will Last -- Built-in inflation protection is an invaluable feature" by Ellen Hoffman, referenced a recommended inflation feature of long-term care coverage, using Penn Treaty's policy as an example:

For a 55-year-old male with no health problems, two years of coverage at that level through Penn Treaty runs $340 without inflation protection or $600 with it.

The conclusion of that article, however, offered a general warning to consumers:

Long-term-care insurance is a relatively new product, so companies do not have decades of experience on which to base their premiums.

And regulators continually question how best to protect consumers against some insurers' aggressive marketing.

That's why it's critical to define your long-term-care needs and shop around until you find a policy that really meets them.

The Pennsylvania Insurance Department examined Penn Treaty as of year-end 1999 and 2003. See: Department's Examination Report, stated as of 12/31/03 (PDF, 28 pages; Examination Warrant Number 03-LH-359-Z). The 2003 Examination Report's first recommendation was: "[T]hat the Company secure an infusion of surplus to bring it into compliance with The Pennsylvania Insurance Company Law, NILS 40-5-106 (40 P.S. § 386)."

Nevertheless, on July 8, 2004, a Business Wire article entitled "S&P Announces: Penn Treaty Network America Insurance Co. and Penn Treaty American Corp. Ratings Affirmed; Outlook Positive" stated "the outlook remains positive" for Penn Treaty. Yet the article noted "PTNA continues to have the characteristics of a start-up company."

But, on February 20, 2008, Reuters reported that "A.M. Best Downgrades Ratings of Penn Treaty American Corporation". In the article, the position of that rating agency was made clear:

If there are any unanticipated negative events, material charges or write-downs as Penn Treaty works to become current on its Securities and Exchange Commission filings, an additional downgrade could occur.

Even if no unexpected items are found during this period, A.M. Best will not give consideration to an outlook change until Penn Treaty files audited GAAP financials on time. * * *

On October 3, 2008, Penn Treaty announced that it would no longer issue new policies. The New York Stock Exchange then suspended trading in Penn Treaty's shares. See: "NYSE suspends trading in Penn Treaty shares" (10/03/08) posted on a blog by Philly.com.

The New York Stock Exchange today suspended trading of the common stock of Penn Treaty American Corp.

That decision had nothing to do with today's PhillyInc. column, and everything to do with the Allentown insurers' announcement today that it is suspending the issuance of new policies and entering a rehabilitation plan with the Pennsylvania Insurance Department as of Jan. 1 [, 2009]. * * *

Now, by consent and with court approval, the PA Insurance Department has placed the Penn Treaty entities into a state-run "rehabilitation."

Holders of long-term care insurance policies issued by Penn Treaty and its affiliates should be vigilant, and should respond when contacted by the Department. In the meanwhile, read the Department's "Questions and Answers concerning the Penn Treaty and American Network Rehabilitations" (Word, 10 pages).

Don't rely on that familiar name alone, even though it resonates.