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HomeMy WebLinkAbout21-1999-1150 OrphansIN RE: ESTATE OF JANET W. LINDSAY, (Previously incapacitated and now deceased) IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA ORPHAN'S COURT DIVISION NO. 21-99-1150 OPINION HOFFER, P.J. Cumberland Crossings, a not-for-profit corporation domiciled in Pennsylvania, provided nursing care to Janet W. Lindsay during the last years of her life. Cumberland Crossings is currently the administrator and principal creditor of Ms. Lindsay's estate in the amount of $48,553.31. Cumberland Crossings has petitioned this Court for relief on the basis that Harold S. Irwin, III ("Irwin") breached his fiduciary duty in his capacity as guardian of the estate. Cumberland Crossings contends that Irwin breached this duty by not acting prudently and failing to timely liquidate Ms. Lindsay's assets for the purpose of obtaining medical assistance eligibility. In addition, Cumberland Crossings argues that Irwin breached his fiduciary duty by not appealing the County Assistance Office's denial of Ms. Lindsay's medical assistance application. As a result of Irwin's alleged breach of fiduciary duty, Cumberland Crossings seeks the following relief: a surcharge in the amount of $48,553.31, representing the additional amount Irwin could have recovered in medical assistance benefits if he had timely liquidated Ms. Lindsay's assets and appealed the denial of Ms. Lindsay's medical assistance benefits; interest on the sum of $48,553.31; $7,071.61 for expenditures Cumberland Crossings incurred in pursuit of a successful second medical benefits application; and $8,365.68 for expenditures Cumberland Crossings incurred to bring a surcharge action. Findin.qs of Fact In late 1998, Cumberland Crossings lodged a complaint with the Cumberland County District Attorney's Office and the Area Agency on Aging ("AAA") concerning Ms. Lindsay's son, Robert Lindsay, and his misuse of Ms. Lindsay's resources. The District Attorney's office referred the matter to the Pennsylvania State Police. The police conducted an investigation, but concluded that no criminal wrongdoing had taken place. The AAA investigated the matter further, and concluded that although Robert Lindsay was not criminally misusing his mother's resources, he was not diligently performing his duties as her agent and attorney-in-fact. As a result of its investigation, the AAA contacted Irwin in February 1999 and hired him to assist Robert Lindsay in the administration of Ms. Lindsay's affairs. At that time, Ms. Lindsay's outstanding balance at Cumberland Crossings exceeded $100,000. Ms. Lindsay's assets consisted of a Keystone Financial checking account, stock in Central Hudson & Gas, stock in Northeast Utilities, stock in Yankee Energy 2 System, a Florida unclaimed property account, certificates of deposit and uncashed checks. Between February 1999 and December 1999, Irwin helped Robert Lindsay arrange for the liquidation of several accounts, replace certain stale checks and make payments to creditors of Ms. Lindsay, including Cumberland Crossings. Robert Lindsay continued to serve as attorney-in- fact for his mother. In that capacity, Mr. Lindsay cashed checks, made deposits, liquidated stocks and paid various bills, such as pharmacy charges and Cumberland Crossings' nursing charges. During this time period, Irwin found Mr. Lindsay to be uncooperative and difficult to work with in administering Ms. Lindsay's affairs. Therefore, Irwin requested the AAA to petition the court to appoint Irwin as guardian of Ms. Lindsay's estate. On December 30, 1999, the court granted the AAA's petition and appointed Irwin as the plenary guardian of Ms. Lindsay's estate. At the time Irwin was appointed guardian, Ms. Lindsay subsisted on social security, retirement income and income from various investments. Between December 30, 1999 and May 2000, Irwin was unable to further liquidate Ms. Lindsay's assets. However, this was due to Robert Lindsay's failure to cooperate and turn over necessary documents in a timely fashion. Following his appointment as guardian, Irwin almost immediately verbally requested Robert Lindsay to forward him all checks and mail belonging to Ms. Lindsay. Irwin followed up his verbal request with written requests to Robert Lindsay on February 5, 2000, March 7, 2000, April 11,2000, July 13, 2000, August 1,2000 and August 24, 2000. Liquidation proved to be problematic not only because of Robert Lindsay's failure to cooperate, but also because certain stocks could not be disposed of immediately. A stock company merger required Irwin to wait until new stock certificates were issued, further delaying the liquidation process. Irwin liquidated Ms. Lindsay's assets to the best of his ability under the given circumstances. In May of 2000, Irwin applied for Medical Assistance benefits on behalf of Ms. Lindsay. Irwin filed the required PA 600 form, which listed Ms. Lindsay's resources/assets in order for the County Assistance Office to verify Ms. Lindsay's indigency. According to 55 Pa. Code § 178.1(c), Ms. Lindsay's assets needed to be liquidated to an amount below $2,400, which is the threshold amount to qualify for medical assistance benefits. Irwin listed over $20,000 worth of assets on Ms. Lindsay's PA 600 form. Irwin filed the application at the first reasonable opportunity, which is when he anticipated that Ms. Lindsay's assets would be liquidated before the County Assistance Office issued a ruling. The County Assistance Office wrote letters to Irwin on May 19, 2000 and May 31, 2000. In the letters, the Office explained that it could not approve benefits until Ms. Lindsay's assets were liquidated below the threshold amount. Irwin spoke 4 with a representative from the County Assistance Office after receiving each letter. On both occasions, Irwin was under the impression that the County Assistance Office would not take immediate action on the application. The County Assistance Office denied Ms. Lindsay's medical benefits application on July 3, 2000. At that time, Ms. Lindsay's assets exceeded the threshold amount of $2,400, even after accounting for the liquidation of Florida unclaimed property proceeds. The County Assistance Office sent a notice of denial to Ms. Lindsay at Cumberland Crossings. Irwin did not simultaneously receive this notice of denial. During July, August, September and October, Irwin remained unaware of the denial of Ms. Lindsay's medical assistance benefits application. Irwin did not have actual notice of the denial until November of 2000, when counsel for Cumberland Crossings investigated the status of the PA 600 and informed Irwin that it had been denied. From late 2000 through early 2001, Irwin entered into discussions with Cumberland Crossings to discuss outstanding matters pertaining to Irwin's administration. In November of 2000, Cumberland Crossings filed a new medical assistance application on Ms. Lindsay's behalf as well as a petition with the court to compel Irwin to liquidate remaining assets. While this application was pending approval, Irwin filed an appeal nunc pro tunc with the Department of Public Welfare, alleging he had not received timely notice of the denial of benefits. Irwin sought an eligibility date of February 1,2000 based on the May application date.~ The County Assistance Office approved Ms. Lindsay's PA 600 medical assistance application in January of 2001. The County Assistance Office approved the benefits retroactive to August 1,2000, based on the date that Cumberland Crossings submitted the second application. This date also represented the earliest date that Ms. Lindsay was eligible for benefits because her estate had been sufficiently liquidated to meet the $2,400 threshold requirement. The approval of Ms. Lindsay's application resulted in her estate receiving $31,675.32 in medical assistance funds. On March 12, 2001, the Department of Public Welfare denied Irwin's nunc pro tunc appeal. The denial was based on the hearing officer's conclusion that Irwin received notice of the denial, but failed to file a timely appeal. The denial was also based on the officer's conclusion that the application listed over $20,000 in resources when the eligibility threshold was $2,400. Irwin requested that the Secretary of the Department of Public Welfare reconsider the hearing officer's decision but she declined. Irwin did not take further action. Ms. Lindsay passed away on May 6, 2001, leaving an insolvent estate. Attempts to resolve outstanding issues were unsuccessful and on ~ A person may qualify for medical assistance benefits beginning on the first day of the third month preceding the month in which they applied for benefits if other eligibility criteria such as indigency are met. 55 Pa. Code § 140.335. 6 September 30, 2001, Cumberland Crossings filed a petition to amend the citation and surcharge Irwin for the amount of medical assistance reimbursement. Conclusion In his capacity of guardian of Ms. Lindsay's estate, Irwin acted as reasonably and prudently as possible under the circumstances. The Court finds that Irwin acted diligently and competently in his attempts to liquidate the assets of Ms. Lindsay's estate so that she could qualify for medical assistance. Irwin encountered difficulty in liquidating Ms. Lindsay's stocks because of a merger. He also received little cooperation from Robert Lindsay, who failed to produce to Irwin the papers, mail and documentation necessary to liquidate Ms. Lindsay's assets. Irwin exercised the appropriate care as guardian, but was unable to liquidate the assets in enough time for Ms. Lindsay to qualify for medical assistance benefits under the original May 2000 application. The Court finds that Irwin acted diligently and competently in filing the medical assistance application. Irwin filed the application at the first reasonable opportunity, which is when he anticipated that Ms. Lindsay's assets would be liquidated before the County Assistance Office issued a ruling. Furthermore, Irwin breached no duty of care in failing to appeal the denial of medical assistance because he did not receive actual notice of the denial. Upon receipt of actual notice of the denial in November of '7 2000, Irwin promptly filed a nunc pro tunc appeal with the Department of Public Welfare. Ms. Lindsay's estate was insolvent before Irwin was appointed plenary guardian and remained insolvent until Ms. Lindsay's death. Even if Irwin could have accelerated Ms. Lindsay's qualification for medical assistance, the additional medical assistance benefits would have been insufficient to rectify the estate's insolvency. The Court concludes that because Irwin liquidated the assets of Ms. Lindsay's estate as quickly and reasonably as possible under the circumstances, the estate could not qualify for medical assistance before August 1,2000, the actual effective date for benefits. Accordingly, Irwin did not breach his fiduciary duty. IN RE: ESTATE OF IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA JANET W. LINDSAY, (Previously incapacitated and now deceased) ORPHAN'S COURT DIVISION NO. 21-99-1150 ORDER OF COURT AND NOW, this day of ,2004, upon consideration of the Petition for relief by Cumberland Crossings and the Proposed Findings of Fact and Conclusions of Law submitted by both parties, and after hearing the testimony of both parties, it is hereby ORDERED that said Petition is DENIED. By the Court, George E. Hoffer, P.J. Jeffrey P. Lewis, Esquire McKissock & Hoffman, P.C. 105 E. Evans St., STE D P.O. Box 3086 Attorney for Petitioner Christopher S. Lucas, Esquire 220 Cumberland Pkwy. STE 4 Mechanicsburg, PA 17055 West Chester, PA 19381 Attorney for Respondent