Seniors are at Risk for Financial Elder Abuse

We would like to believe that we get wiser as we age. It turns out that common assumption might only be true in fairy tales – at least as it applies to financial decision-making. Recognizing this reality does not disaffirm the dignity of seniors; rather it affirms the need to give our elders the care they deserve. The wisdom that comes from a lifetime of experience with family and friends, colleagues and co-workers is valid and valued, but it may not translate into sound financial risk-taking, investments, credit and debt.

Studies demonstrates that seniors actually perform much poorer on tests of financial reasoning than younger people do. The really shocking finding is that older folks do even worse than teenagers. “For instance, they generally borrow at higher interest rates, incorrectly estimate property values and pay more fees to financial institutions,” the Los Angeles Times recently reported. T he scary thing about this is that older people have more to lose and less margin of error if they make a mistake.

California, fortunately, has strong consumer protection laws in place to deter and to penalize financial abuse of the elderly. The California Civil Code, the Welfare & Institutions Code and the Finance Code can all be used to protect seniors against fraud and deception. Financial scams can be close to home, as when a child or relative or caregiver weasels money out of grandma on the basis of trust, or it can be outside in the marketplace for consumer goods or financial products. That means a car dealer, home improvement contractor, nursing home provider or mortgage lender may be taking advantage of an elder person’s naivete, obsolete information, poor health or confusion.

As the baby boomer generation turns 65 at the rate of 10,000 per day, under current census data, we should expect increasing need to enforce these laws. There is plenty of anecdotal evidence that seniors are easy targets for fraud. Sadly, scam artists and unscrupulous lenders did not need a scientific study to reveal this trend.

One trend in particular is important to note. Nursing homes and retirement community living has become Big Business. Wall Street investment – largely private equity money – is invading the community service model. Even the difference between faith-based groups and for-profit corporations is thinning. With that change in ownership comes a change in attitude and management. The temptation to increase profits all too often results in less care or a lower quality of care. Nursing homes and retirement communities all too often bury financial elder abuse right in the small print of the senior living contracts.

Most providers are adequate and some are excellent in filling important needs for seniors and society. But, as with any industry, there is fraud and abuse in the system. When nursing home care is substandard, those on the receiving end of inadequate treatment are some of the most vulnerable among us. Those suffering from dementia, stroke, drug-induced stupor, or just frailty literally have no voice. When care is not merely inadequate, but negligent, the result can be premature death or debilitating injury.

Families soon learn that the harm can be financial as well as physical. It adds insult to injury when the nursing home delivers an outrageous final invoice for tens of thousands of dollars to the bereaved family members who have just lost mom or dad. Often these final charges are fraudulent or false.

Just to make it impossible to challenge these costs, Wall Street lawyers representing nursing and retirement homes are increasingly slipping mandatory arbitration clauses into the contracts. Financial abuse of the elderly – including institutional fraud – is on the rise. Mandatory arbitration clauses imbedded in the fine print assure that injured or defrauded seniors will be blocked from enforcing their rights in court. Their surviving family members will be left without access to the civil justice system to enforce consumer protection laws that were meant for the benefit of their loved ones.

The Executive Director of Public Justice writes that “The Obama Administration is seriously considering doing something about this. The Centers for Medicare and Medicaid Services has an opportunity to say that nursing homes can no longer receive federal funding if they use arbitration clauses in their contracts.” You can read Paul Bland’s excellent article entitled “Corporate America’s Latest Target: Nursing Home Patients” here.

Nancy Barron, of Kemnitzer, Barron & Krieg is a featured speaker on the topic of “Financial Abuse of the Elderly,” at the National Association of Consumer Advocates’ Auto Fraud Conference April 2-5, 2016 in St Louis, Missouri.