Pa. Superior Court Decides Case Dealing With Rule Against Perpetuities

          While giving a person flexibility in distributing their property, trusts do have some limitations. One of those limitations is known as the "Rule Against Perpetuities." Happily for many, Pennsylvania abolished that law in 2006 by passing Title 20 PSA  § 6107.1. However, the new law only applies to interests created on or after January 1, 2007.

          For trusts created before that date, the law contained in Section 6104 et seq of Title 20 still stands. It provides that any interest must vest within 21 years after lives in being. The intention of the law was to limit trusts from continuing forever. History and experience have established that the rule is not necessary. For those interested in knowing about the law in detail, click here. For others, you need only be aware that a trust created before January 1, 2007 should not continue for 21 years after the last life in being at the time the trust was created. That may limit trust bequests to great grandchildren who were not alive at the time a trust was established.

          The Pennsylvania Superior Court recently decided a case where that law came into play. It was Re: In the Matter of Estate of George McFaddden, 2014 PA Super 203, decided September 18, 2014.This case dealt with a trust that was established in 1929 before the stock market crash.  It is always a good idea to enlist the help of an experienced attorney when drafting a trust, because the "Rule Against Perpetuities" is one of several issues that confront the drafter. Trusts can be very useful, and are sometimes essential, but should be drafted by someone with the appropriate experience.

Stay well until the next post:

Bob Gasparro, Esq.

Philadelphia Court Gives Priority to Outstanding Child Support Claims Over Distributions to Beneficiaries

          A recent Philadelphia case focused on the liability the executrix may face for improper distribution of the estate proceeds. It also considered exceptions to the "spendthrift provisions" contained in a will or trust. In this case, Roy Creamer Sr., deceased, had a will attempting to distribute the proceeds of his house to his son Roy Jr., who  also had an outstanding $16,289.87 child support obligation. The mother of the children who were owed support filed a formal claim against the estate, saying that the children were entitled to the bequest before Roy Jr.  Roy Sr., the decedent, also failed to provide for his wife in his will, so she filed a spousal election against the estate.

          The executor initially dishonored the claim for child support, stating that only a creditor of the decedent can bring a claim against his estate, and that a creditor of a beneficiary had no standing to bring any claim at all. Furthermore, said the executor, the will contained a "spendthrift provision" which protected claims of beneficiaries against creditors.

          Note #1: each of our clients, and many others who own a will drafted by an attorney, will notice a clause under "Powers of the Personal Representative" which permit them to make payments to any beneficiary without any duty to see to the proper allocation or application of the funds paid. In many cases a trust will contain a provision that the trustee may shield the principle from claims of creditors of the beneficiary. These are similar to "spendthrift provisions."

         Note #2: No matter what a will says, a decedent may not disinherit a spouse. Under Title 20, Section 2203 of Pennsylvania laws, a spouse is entitled to at least 1/3 of the estate. However, in making this election, life insurance, annuities and other payments outside of probate are taken into consideration in computing the 1/3 share.

         In this case the Philadelphia Orphans Court refused to approve the executor's proposed distribution of the estate. The court stated that the children who were owed child support had rights to contest the distribution of the estate to the beneficiary who owed the support obligation. The court went on to say that they also might rights against the spouse taking the 1/3 elective share, and the children might have a right to have a guardian appointed for them to pursue their claim. The court postponed the settling of the estate until the parties determined if there was enough money in the estate to pay the child support obligations, and to see if the parties could resolve the matter without resort to litigation. The case is In re Estate of Creamer, Court of Common Pleas of Philadelphia 14-1760, and the 16 page decision was published on September 30, 2014.

 Stay well until the next post:

Bob Gasparro, Esq.

Judge in Lycoming County PA Reminds You to Read the Boilerplate in Your Will or Power of Attorney

Nearly every Power of Attorney or Will contains a clause enabling the agent, or the executor, to commence or settle or discontinue litigation. This boilerplate clause recently became the focus of litigation in Lycoming County, PA, where the court ruled that "it is what it says."

Prior to his death, John Bower, Sr. brought a lawsuit against a business. After he died his wife and executor discontinued the litigation under the power given to her in the will. The other beneficiaries of the estate brought an action against her and asked the court to remove her as executor for not acting prudently in handling the estate. The judge who heard the case disagreed with the beneficiaries, and stated that the boilerplate in the will gave her that power, and she was free to exercise it, even if they received less money. The case was In re the Estate of John Bower, Sr. 14-1593, Lycoming County, and the decision was rendered last September 23rd. 

Cases like this are one reason many law firms, including ours, place a clause in a will stating that if anyone contests the will or the administration of the estate without probable cause, they are automatically disinherited from the will.

Stay well until the next post,

Bob Gasparro, Esq.

Allstate Insurance Forced to Pay $22. Million Dollars on a $250,000 policy, for Bad Faith Toward It's Policyholder

Unfortunately, most consumers purchase insurance on the basis of a television commercial or by though price comparisons. Yet, not all insurance companies are equal, and some have a reputation for providing meager loss payouts. The problem may be exacerbated after a calamity such as a hurricane where several hundred claims are made at once.

Contesting the amount offered by an insurance company to cover a loss may be a daunting task. Insurance companies are, after all, large companies. Most consumers do not fully understand the terms of an insurance policy that may be fifty pages long. One alternative to poor service, is to file a complaint with the state insurance commission, who will try to mediate the complaint.

You can also sue an insurance company for breach of contract, but that's also a poor solution. The insurance company can afford to hire a law firm who may then file a multitude of motions and other legal papers driving up the price of litigation. Should the consumer prevail, even if they hire an attorney on a contingent fee basis, they must still pay the costs of litigation. This may leave a consumer with an insufficient amount to do the necessary repairs. Should the consumer hire an insurance adjuster who takes 25%, and then hire an attorney who takes a 33% contingent fee, they’re left with very little money to perform repairs.

 

Fortunately, Pennsylvania and most other states have a law called a “Bad Faith Statute” which penalizes insurance companies for failing to make good on the policy they sold to the consumer. Pennsylvania’s law is found at 42 Pa. C.S.A. § 8371, and it provides that if an insurer does not comply with the terms of an insurance policy by paying according to the terms of the policy, the policyholder may be entitled to : (1) Interest on the amount of the claim at the prime rate + 3%; (2) Punitive damages against the insurance company; (3) Court costs and attorney fees paid. 

Although not our primary area of practice, our firm has handled a some of these cases in the past. The insurance company will usually try to remove the case to federal court to avoid the wrath of a local jury, and litigation can take years. 

This Bad Faith statue cited above recently played out in a case in Philadelphia, where the insurance company had to bear the wrath of a local jury. Allstate was required to pay a record $22 million dollars in punitive and delay damages for not living up to it’s promise to place it’s insured “In good hands” by paying the $250,000. benefits under an insurance policy. The local jury jury was incensed by Allstate’s refusal to pay $250,000. benefits to a man whose leg was crushed following an auto accident by their insured, and then using frivolous delay tactics in the case brought against it by the insured, so they added punitive and delay damages to the $250,000. policy held by the insured. 

There is an added twist that may have something to do with the verdict, and that is the fact that the insured became so exasperated trying to get Allstate to pay under the policy, he assigned his rights under the policy to the man whose leg he crushed. So the $22. million dollar award went directly to the man who’s leg was crushed following the accident rather than to the person who bought the policy.

It is never a good idea to buy insurance simply on the basis of a television commercial or lower rates. If the insurance company will not repair your home after a hurricane, or pay your benefits after an auto accident, it is not a bargain after all. It is always better to talk to family and friends about their experiences with their insurance company. The case cited above was Hennessey v. Alltate Insurance, Philadelphia Court of Common Pleas Case No. 131001095.

Stay well until the next post.

Bob Gasparro, Esq.

Some Tips for Medicare Open Enrollment Ending December 7, 2015

It’s that time of year again to choose a Medicare supplemental plan. Remember that it isn’t necessary to have Medicare additional insurance and those with Medicare coverage can choose to cover the 20% Medicare co-pay by themselves. In general, however, most seniors opt for supplemental insurance.

Unfortunately, most seniors are so overwhelmed by the complexity of choosing the right supplemental plan that they just choose a name they know such as AARP or Blue Cross. While both are good plans, most seniors might save money, and be better served, by finding a plan which is the best fit for them. 

There are several ways to find the best plan: We perform that service and we consider the insurance that your current physician accepts as well as your current physician's ease in working with various insurance companies. We also consider the Plan Quality and Performance Ratings posted on the Medicare web site. In addition to that, we consider your current list of prescriptions and we try to forecast your needs in the future (not an exact science by any means). The fee is generally a few hundred dollars, but it is possible to save much more. We recommend at least three insurance companies and do not sell insurance.

Another alternative is an independent insurance agent who specializes in Medicare supplemental plans. While in some cases the determination is made only on the basis of annual premiums, at least you will be presented with a few choices. A good agent will go beyond price considerations. The best part about this option is that it generally costs nothing and the agent is compensated by earning a commission on the insurance sale.  

Finally, as part of the Medicare program, money is allocated for a program called APPRISE and volunteers under this program will help you choose a supplemental plan. Each county in Pennsylvania has it’s own APPRISE counselors.  Whatever you do, it is very important to obtain supplemental insurance within six months of attaining age 65, because then your insurance will cover pre-existing conditions. The rules of Medicare supplemental insurance are different from the rules under the Affordable Care Act (Obama Care).

Another separate but related consideration is whether a senior should choose a Medicare Advantage plan or regular Medicare supplemental insurance. 

Advantage plans operate like Health Maintenance Organizations (HMO's) and are generally less expensive. These insurance plans presume that a senior will spend most of his or her time in a particular area. They are definitely not for seniors who travel a lot. Although Advantage Plans have a more restrictive provider list (the list of physicians to treat you), they usually provide more preventative medicine support. You may receive visits from a nurse practitioner who will assist you in maintaining your health and/or free transportation to a clinic. And so, if you are just now Medicare-eligible (i.e. 65 to 70 years old) and in good health, an Advantage Plan is probably a good choice because of the low cost and the preventative support. 

Under traditional Medicare nothing  happens unless you visit a doctor first, and there may be a tendency for doctors and hospitals to bill for as much as possible while they have you. Advantage Plans cut costs through monitoring your health and preventative medicine. Advantage plans may also offer additional services such as dental, hearing or vision, and most cover prescription drugs. They may also include health club fees. 

On the other hand, if you are frail and may require rehab after an injury, Medicare Advantage plans will be more restrictive. When it comes to rehab, Medicare itself allows 100 days of rehab and only pays in full for the first 20 days. The remaining days are subject to the supplemental insurance 20% co-pay. An Advantage Plan will pay close attention to your progress during therapy, and if they do not see adequate progress, will cut of payments for continued rehab. We have had experience with Medicare Advantage plans that denied some testing due to cost, and that initial determination had to be appealed. Another possible problem with Medicare Advantage plans is the wait time to see a physician. While you can visit any doctor who takes Medicare if enrolled in a supplemental plan, Medicare Advantage policyholders are restricted to physicians and testing centers in the network. Also, some “no premium” Advantage Plans have large co-pays. 

To reiterate, if you are young and need preventative support, a Medicare Advantage Plan will have a low premium and may be a good fit. If you are on Medicare because of a disability, or are on Medicaid for long term care, or if you’ve had a rehab stay anytime in the past, you should consider a supplemental plan instead.

And don’t forget to re-evaluate your plan each year. For example Bravo Medicare Advantage was later bought by Health ‘Springs and then that new entity was bought by Cigna. The atmosphere and quality of service changed during the evolution. Your prescription needs may also change. As with all insurance, you should review your needs and your coverage.

Stay well until the next post:

Bob Gasparro, Esq.

The Pennsylvania Depatment of Welfare Receives a New Name

The Pennsylvania Department of Welfare is very much involved in Elder Law. It is this agency that governs and regulates personal care homes and assisted living facilities. While skilled nursing facilities (nursing homes) are regulated by the Pennsylvania Department of Health, DPW reviews applications for Medicaid made by nursing home residents. The department has more than 16,000 employees and oversees 94 county assistance offices statewide

On September 24th, 2014, the governor signed a law that changed the name of the agency to The Department of Human Services. The change will take effect beginning in November and be phased in gradually. For example, stationery will not be replaced right away, but the new stationery and deliverable will bear the new name as the old ones are replaced.

Philadelphia Area Alzheimer's Walk. on November 9, 2014. Would You Like to Pledge?

The Philadelphia 2014 Walk to End Alzheimer's takes place on November 9, 2014, in South Philadelphia. If you would like to pledge, please contact the office at 484-451-6612.

For those willing to pledge $100. or above, I, Bob Gasparro, take you there live. You will receive an internet address so you can watch a live broadcast on YouTube, and feel as though you are in the middle of the march. I did this last year and you should know that the reception quality is not guaranteed throughout the walk, but it certainly was fun. Also, the broadcast will extend from the beginning of the walk to either the end of the walk, or the end of the battery. No refunds, but the money goes for a great cause.

There are some promising research studies that may prevent, end, or mitigate the effects of this disease. Treatment regimens learned from recent researched has already helped to make life more comfortable for those afflicted. When one considers that over 40%  of those past the age of 85 are afflicted with the disease, you can appreciate how important the work done by the Alzheimer's Association is.

Bob Gasparro

Can You Vote as a Guardian or Agent Under a Power Of Attorney?

People often ask: "I am agent under my father's Power of Attorney. I know exactly how he would want to vote at the next election, may I vote for him?"

The simple answer to this question is "no." An agent's authority under a power of attorney is defined by statute in Title 20, Chapter 56, and voting in a government election is not one of those powers.. The power to vote in corporate elections is often granted, but it does not extend to governmental elections. Neither may a guardian vote for their ward.

However, you may transport your ward to the polls so they can vote. If they cannot travel to the polls, you may order an absentee ballot for them.

Another different, but related question, is whether someone who has been found incompetent after an adjudication in a guardianship proceeding, or pursuant to the terms of a springing power of attorney, may vote.

The law says that everyone is deemed to be competent until there has been a finding of incompetency. Someone who is demented,yet not formally determined to be incompetent, is still presumed competent. Furthermore, the distinction between competency and incompetency is not static; many people drift between the two depending on the time of day or other environmental conditions.

Even as to persons found to be incompetent, there is a constitutional right to vote. Because the right to vote is fundamental and preserves other basic civil and political rights, it has protections under the Due Process Clause of our nation's constitution. A state must provide an adequate notice and hearing to an incapacitated person before revoking the right to vote. While most states have laws that determine whether an incapacitated person may vote, Pennsylvania is one of the thirteen states that are completely silent on the issue.

This topic was addressed and the current law exhaustively reviewed in the most recent Journal of the National Academy of  Elder Law Attorneys. If you would like a copy of the article, please contact our office.

Finally, the last date to obtain an absentee ballot in Pennsylvania for the upcoming election in November, is October 28, 2014. 

Judgement Against Philadelphia Nursing Home in the Amount of $2.9 Million Dollars

Thanks to enhanced regulation and inspection, nursing home negligence does not happen as much as it did in the past. However, it still does occur. One recent case dealt with a nursing home in Philadelphia, in the case of Williams v. Willow Terrace. The Pennsylvania Superior Court (No 14-1254), last July of 2014, upheld a verdict of $2, 901,602 against the nursing home for wrongful death, medical expenses and punitive damages for outrageous conduct.

Mr. Williams, a patient, was supposed to be turned every two hours due to his bed sores, but there were up to 33 eight hour shifts in one month in which, because of under-staffing, he was ignored.The failure to treat his pressure ulcers ultimately caused his death. The final verdict against the nursing home, consisting of both damages for negligence and punitive damages for outrageous conduct against a senior, was upheld on appeal.

After the verdict the family issued a statement: “The family hopes that the corporations that own and operate nursing homes and medical facilities in southeastern Pennsylvania and beyond take notice of this verdict, and operate their facilities the right way so that other people are not harmed.”

The defendant in this case was affiliated with a large medical center in Philadelphia. The take home message is that if you have a friend or relative in a nursing home, you need an Advance Medical Directive which places one person in charge, and that person needs to view the charts and medical records often.This is a service provided to our clients using the Nurse Practitioner affiliated with our firm, or a geriatric care manager or health care advocate can also be of assistance in matters such as this.

Stay well until the next post.

Bob Gasparro, Esq. 
robert.gasparro@lifespanlegal.com
(484) 451-6612

WestChester County, PA Woman Gets Relief After the Court Sorts Out Her Husband's Letters

    Pennsylvania has minimal requirements for creating a will. While these modest requirements were intended to protect consumers, on occasion they have the opposite effect. The law, contained in Title 20 Pennsylvania Code, Section 2502, states that the only requirement for making a will, is that the testator sign at the end of the document. The reason most lawyers have the testator sign before two witnesses is because of different laws governing the steps necessary to have a will accepted for probate by the local Register of Wills.

     Section 3132 of  Title 20 states that, before the Register of Will will accept the document for probate, all wills must be proved by the oath or affirmation of two witnesses to the testator's signature. Most lawyers figure it is easier to have the two witnesses present at the time the will is signed, rather than delay probate until two witnesses can be found after the death of the testator. If the decedent lives many years past his or her life expectancy there may not be many people around who can vouch for his or her signature. There are many other provisions of the law, not relevant here, dealing with acknowledgments before a notary (self proving wills), what happens if a will is destroyed or lost, and many other intricacies of interest mainly to lawyers. For purposes of our discussion here, we only need to know that a testator signs at the end of the will.

These simple laws made a big difference in the estate of Jeffrey K. Basner, who died on June 7, 2012, while a resident of West Grove, Chester County, Pennsylvania. On July 7, 1995, Mr. Basner drafted a simple document which stated that at the time of his death he left all of his "worldly possessions" to his mother Ellen. But during an inventory of his possessions after his death, another document was found which stated "at the time of my death, the house goes to Sally Munro." That latter document was not even dated. Sally Munro was the maiden name of the decedent's wife. So the question became, who received what from Jeffrey Basner? Did his mother or his wife receive his estate?

This issue went before the Courts in Chester County, PA a few weeks ago.The court recognized that the law does not require even a date on the will, but they were able to prove the document leaving things to his wife was drafted after the original will in 1995. But was that document leaving everything to his wife a second will? After taking testimony and conducting an examination, the court decided that the second document was a codicil (a minor modification to the original will) and that Mr. Basner's mother received all of his estate except for the house he owned on Sunnyside Rd, and the house went to his wife.

It might seem that justice has been served, but Mr. Basner's frugality probably did more harm than good. The cost of filing the court case in Chester County, at the time of this writing in 2014, starts at $173. The hourly fee for an attorney to try the case usually amounts to between $250 and $450. the money the beneficiaries spent in court over his documents came from their bequest, and they may lose even more if one or both parties appeal to the Pennsylvania Superior Court. Our office drafts a simple will, power of attorney and advance medical directive for $480. and dozens other law firms charge around the same. If someone in your family does not have a will, and you might be a beneficiary, you might want to nudge them toward seeing a lawyer to have it done right.  

Stay well until the next post.

Bob Gasparro, Esq. 
robert.gasparro@lifespanlegal.com
(484) 451-6612

United States Supreme Court Asked To Strike Down Pennsylvania's Funeral Laws.

 Two weeks ago, at the Jenkins Memorial Law Library,  I taught a course about the laws surrounding death and burial. One topic of interest to the lawyers and judges who enrolled in the course, because of the Constitutional issues involved, was the controversy surrounding Pennsylvania's Funeral Laws. Our laws are in a state of flux following a suit brought by a contingent of funeral directors who are now asking the United States Supreme Court to find them so anti-competitive and protectionist, that they are unconstitutional. On the other hand, the State Board of Funeral Directors and the Commonwealth are trying to defend the laws.

This disagreement started when a York County, PA  funeral director named Ernie Heffner challenged  some of the state's laws, as well as the actions of the Board of Funeral Directors. Hefner was later joined by consumer groups such as the Funeral Consumers Alliance and the Institute for Justice. He brought suit in federal court where the judge found the Pennsylvania laws, passed in 1952, outdated and patently unconstitutional.

Some of the contested Pennsylvania laws are:

*Every funeral home must have an embalming room, including those funeral homes that engage exclusively in cremations or green funerals, neither of which use embalming fluid.

* The Pennsylvania board is given the authority to inspect funeral homes with no advance warning, and without a warrant.

* Funeral homes are banned from offering food of any kind although there is no proof of any safety concerns. The funeral directors who brought the suit felt that offering some light refreshments might be appropriate to any gathering of family and friends.

* Funeral homes must be named after the current or former funeral director operating them, despite the fact similar rules in other professions have been ruled unconstitutional.

*A wife of a deceased funeral director may continue to operate the funeral home even though she does not hold a license, but that exception does not apply to any other person.

Following defeat in the lower court, the state board appealed to the Third Circuit Court of Appeals who reversed. The Third Circuit agreed that the laws are outdated, but that alone did not make them unconstitutional, with one exception. They struck down the law mandating the funeral home must be named after one of the owners. They correctly held that state law does not in any way serve to protect the public. After all, Ernie Madoff operated under the insignia of his own name, but nevertheless cheated many of his customers. And so, in the months ahead we may see funeral homes with names such as "Happy Ending Funeral Services" or any derivation thereof.

Undaunted by the loss in the Third Circuit,  the original plaintiffs have filed a writ of Certiori with the United States Supreme Court and is asking them to weigh in on the issue. The U.S. Supreme Court is not obligated to take every case that is filed with them, and we will see if they take on the Pennsylvania case or allow the antiquated laws to stand. 

Stay well until the next post,

Bob Gasparo, Esq.
robert.gasparro@lifespanlegal.com
(484) 451-6612

In Bizzare Case Before PA Supreme Court, Beneficiaries Sue the Register of Wills

Consider the case of Andre Leonti, a man who died Fayette County PA without a will. The hospital refused to release his body to his lifelong  friend, Cheryl Keefer, until she produced evidence of her authority to administer his estate. She had no luck with the Fayette County Register of Wills, who would not appoint her administrator because she could not establish that she was next of kin. So she next petitioned to the Orphans Court to be appointed administrator of the estate so she could arrange a funeral and burial for her friend, and use money from his estate to pay for the service. Although Cheryl held a power of attorney for Mr. Leonti, that expired upon his death. The court ordered the Register of Wills to appoint her administrator of the Andre’s estate and ordered the hospital to release the body to her for burial. Andre’s estate was worth about $ 242,000.  Normally the Register of Wills would require Ms. Keefer to post a bond before administering the estate, but the court order did not mention any bond requirements.

 As often happens, a distant cousin of the decedent living in Texas became aware of his possible inheritance, so he sought to have Cheryl Keefer removed as administrator and the estate, and he appointed in her place. Ms. Keefer not only refused to turn over the assets, but she also disappeared. Undaunted by this setback, the distant cousin sued the Register of Wills for failing to obtain the bond. 

Normally a government employee is exempt from suit under the doctrine of “governmental immunity,” and the Register of Wills of Fayette County thought so, too. The Pennsylvania Supreme Court held otherwise and stated that the Register of Wills of Fayette County might be liable because of a special Pennsylvania statute governing when the Register of Wills must require a bond, and they sent the case back down to the lower court for more fact finding. 

If you are appointed to administer an estate, do you need to obtain a bond? Would you qualify for a bond? Most wills contain a boilerplate provision stating the executor (also known as the “personal representative”) need not file a bond.  It is there because of  a Pennsylvania Law, similar to the laws of other states,which direct the Register of Wills to obtain a bond from a personal representative, unless waived in the will. The law, contained in Title 20 Pa. C.S.A. Section 3171 to 3175,  is too complicated to discuss in detail, but in most cases, an out of state personal representative must obtain a bond before they can administer an estate. Since they will control the checkbook, and have access to all of the funds of the estate, the bond is intended to secure faithful performance of their duties.  A bond can usually be obtained from an insurance company and most attorneys who do estate work, such as our firm, have access to companies who issue bonds. 

The case brings up a more fundamental question for anyone who drafts a will. Should you require that the representative obtain a bond? It is not impossible to purchase a bond, and it may protect your heirs. It would be pointless if the person you appoint as your personal representative is also your sole beneficiary, but it would make sense if your personal representative is a personal friend, yet not an heir of your estate. 

Without a will, there is no choice in the decision at all, and the laws stated above control. Was Cheryl Keefer a close friend of the decedent who was shortchanged because the decedent did not leave a will? She was appointed his agent under his power of attorney, and she seemed to be the only person interested in arranging decedent’s funeral, since his relatives only stepped forward when they found there was money to be claimed. Or, was she a neighbor who saw an opportunity to convince the decedent to appoint her agent under his power of attorney, and later pocket the decedent’s money by opening up an estate in his name and getting appointed administrator? We do not know enough to decide either wasy, but the case illustrates the importance of having a will.  

Have you ever had experience with getting a bond? If so, comment below.

Stay will until the next post.

Bob Gasparro

Pennsylvania Case May Provide Refund of Medical Record Overcharges Paid Prior to 2012

Most consumers do not realize that if they want copies of their medical records from their physician, or from a hospital, they must pay. This usually becomes an issue when a senior is switching from their former physician to a gerontologist , but it may also become an issue if they change physicians or even dentists because they obtained new medical insurance.

It also frequently becomes an issue if an agent under an advance medical directive or power of attorney wants to obtain a second opinion about medical care, and needs the medical records to do that. 

There is a Pennsylvania law that places a ceiling on what health care providers or health care facilities can charge you for those medical records, and the amount is annually adjusted by the Pennsylvania Department of Health to account for inflation. As of this writing the costs may not exceed $1.44 per page for the first 20 pages. Then $1.06 for pages 21-60, and 35 cents per page for any remaining pages. The cost for microfilm copies is $2.12 per page. There may be a higher charge to copy x-rays. Postage and shipping charges can be added to that amount. In some cases a “search and retrieval” fee of $21.33 may also be added. 

There are some exceptions to the rule, of interest to consumers. If you are using the records to support a claim for Social Security or any other Federal or State financial needs based program, including Medicaid, the total fee may not exceed $27.02. 

Prior to 2012, it was typical for a health care provider or facility to charge that maximum amount for the records, and providing medical records became a separate profit center in addition to providing medical care. However, in 2012 a provision was added to the law (42 Pa. C.S.  §§6152 and 6155 ) stating a provider could only charge the actual costs of producing the records, and could not automatically charge the maximum permitted under the law. 

But what about those people who were over-charged before the change in the law in 2012? A class action case is currently making it’s way through the Pennsylvania courts (Wayne M. Chiurazzi Law v. MRO,) to try to obtain a refund for consumers. Since the case involves so much money, the journey through the courts is going very slow. Just last June 24^th the Pennsylvania Supreme Court decided a motion on behalf of the consumers and stated the case could go forward. It still must be decided if the case can go forward as a class action case, or whether individuals who were over charged have to bring separate claims. And finally the case will go to trial. 

I will keep readers posted as the case makes it’s way through the courts. If the case is permitted to proceed as a class action case, it is likely people who overpaid will be notified by the court about their rights to a refund.

 Stay well until the next post.

Bob Gasparro