Assembly Standing Committee on Aging
Assembly Standing Committee on Banks
Studying the Efforts of State Agencies to Prevent Financial Exploitation
of the Elderly
Karen L. Nicolson, Esq.
CEO, Legal Services for the Elderly, Disabled or Disadvantaged
of Western New York, Inc.
I am the Chief Executive Officer of Legal Services for the Elderly, Disabled or Disadvantaged of WNY, Inc. We are located in Buffalo and usually referred to as Legal Services for the Elderly. Since 1978 my program has provided free civil legal services to seniors, disabled and low-income people in a six county area and the Seneca Nation of Indians reservation. We also provide guardian services to an additional 94 elderly and disabled individuals, most of whom are victims of financial elder abuse by family members, or trusted friends or advisors.
FINANCIAL ELDER ABUSE IS BOTH A NATIONAL AND LOCAL EPIDEMIC
Nationally, between 1 and 2 million Americans age 65 or older have been injured, exploited, or otherwise mistreated by someone on whom they depended for care or protection. 1 A more recent study estimates that one in ten seniors has experienced some sort of abuse. Specifically, 5 percent of seniors has experienced /are experiencing financial exploitation by family members within the last year, and 7 percent had experienced financial exploitation by strangers at some point in their life.2
Annual financial loss by victims nationally in 2010 was estimated to be at least 2.9 billion dollars.3
Unfortunately, elder abuse is severely underreported. This was explored in the New York State study “Under the Radar: New York State Elder Abuse Prevalence Study”, self-reported prevalence and documented case surveys from May 2011 prepared by Lifespan of Greater Rochester, Inc., Weill Cornell Medical Center of Cornell University, and New York City Department for the Aging. The study includes both documented and self-reported elder abuse, broken down by region and type of abuse.
According to that survey, in a one-year period in 2008, 11,432 victims were served throughout New York State, yielding a rate of 3.24 elder abuse victims served per 1,000 older adults. This number includes only officially documented cases. The self-reported rate for that year is much higher, at a rate of 76 per 1000. In addition, the study found that 141 out of 1,000 older New Yorkers reported having experienced an elder abuse event since turning age 60; a significantly higher proportion that documented incidents.
In Western New York, which includes Erie, Niagara, Chautauqua, Cattaraugus, and Allegany counties, the documented rate in 2008 was 2.34 per 1000; however, local experts agree that the number is higher and increasing each year; the Erie County the Sheriff’s department states that over 1,500 cases were reported last year alone. Moreover, self-reported was significantly higher at 71.1 per 1000. WNY’s population over 60 as of 2008 was 293,132. Applying the rate of self-reported elder abuse (71.1/1000) to this population, and the result is an estimated 20,648 cases in those counties in 2008, most of which go unreported.
CURRENT MECHANISMS TO PREVENT ELDER ABUSE ARE INADEQUATE
The demand that elder abuse places on local senior services programs is overwhelming and will continue to worsen. There are now more Americans age 65 and older than at any other time in U.S. history. According to Census data, there were 40.3 million people age 65 and older on April 1, 2010, up 5.3 percent from 35 million in 2000
(and just 3.1 million in 1900). This trend continues in Erie County which had a 14% senior population and that number continues to grow. By the year 2015, the Erie County Department of Senior Services estimates that nearly 1 in 4 residents will be age sixty or older and that there will be a 73.8% increase in the number of seniors age 85 and older as compared to 1990.
In Erie County, we have strived to leverage our inadequate resources by using the expertise and skills of each and every organization that encounters elder financial exploitation. In 1986, advocates in Erie County formed the Council on Elder Abuse, current chaired by Kathy Kanaley, a social worker at Legal Services for the Elderly. The council meets monthly to discuss cases, coordinate training and conduct professional education. We have recently developed a strategic plan after an exhaustive needs study, which is attached as Exhibit A. We have been training on elder abuse prevention in Erie County for many years. Last year, the Council on Elder Abuse did 23 SAFE (Safety Awareness for the Elderly) trainings and reached 1,250 seniors. We also distributed more than 3,000 brochures. In addition, the Family Justice Center has had signs on buses, a public service announcement and posters throughout our area. However, despite our collaboration and coordination, our local programs are still unable to meet the need. According to our local Protective Services for Adults, we had 1,500 reports of elder abuse last year. Compounding the problem is that most elder abuse prevention methods do not actually prevent elder abuse, but deal with the fall-out once abuse has occurred.
PROTECTIVE SERVICES FOR ADULTS
Unlike in cases of suspected child abuse, New York does not require mandatory reporting in cases of elder abuse. There are some limited exceptions, abuse in nursing homes must be reported and Protective Services for Adults must call the police if they believe that a crime has been committed. However, social workers and other individuals who are required to report suspected child abuse or neglect do not have to report suspected cases of elder abuse to law enforcement, social services, or regulatory agencies. Mandatory reporting of elder abuse is a controversial topic however, because, unlike children, adults are rightly considered to be capable of making their own decision, unless a court has determined otherwise.
In New York State, the primary agency charged with Elder Abuse Prevention is Protective Services for Adults (PSA). Any individual who becomes concerned that an elderly or impaired adult is being abused can call their local PSA. For those who do call, Social Services Law 473-b provides immunity from civil liability to any person who, in good faith, refers an adult whom they believe may need protective services. PSA does not have the authority on their own to remove a competent adult from his or her home.
However, if they suspect that the adult is in danger and mentally incapacitated, they can call the police to have someone involuntarily committed to a hospital through a process detailed in Article 9 of the Mental Hygiene Law.
After the referral, PSA will conduct an assessment, including a home visit, if necessary, to investigate the allegations of abuse. In cases of suspected financial abuse, the investigation may include access to bank records pertaining to the person referred for services. However, PSA cannot open a file unless they have met specific regulatory criteria. PSA regulations enumerate three criteria that must be met before an individual can be accepted as a client of PSA. 18 NYCRR. Section 457.1 (c). The individual must be unable to meet their essential needs, be in need of actual or threatened harm and have no one available who is willing and able to assist them. All three prongs of the test must be met before PSA can accept a referral.
ARTICLE 81 GUARDIANS
This Article 81 Guardian statute has become a tool for fighting financial elder abuse, which was not the original, initial intent of the statute. Article 81 of the Mental Hygiene Law, Appointment of a Guardian for Personal Needs and/or Property Management, became law in New York State in 1992 and went into effect April 1, 1993. The statute repealed Articles 77 and 78 of the Mental Hygiene Law and replaced them with one guardianship statute. Article 81 authorizes a proceeding based on the concept of the least restrictive alternative and the statute does an admirable job of building in protections for the AIP (Alleged Incapacitated Person) and setting forth the process and procedure for the court when appointing a guardian. The statute provides for a court evaluator and/or an attorney for the AIP and requires a hearing in most cases. Potential guardians may only be appointed from the court-approved fiduciary list and are vetted by the NY State Unified Court System, Office of Guardian and Fiduciary Services before they can be on the list. Guardians are monitored by the court after appointment, as they are required to file annual financial accountings and visit the ward at least 4 times per year. However, despite all of its strengths, there is no provision in the statute to pay the fees of the guardian for indigent AIP’s. Moreover, the statute seems to indicate that this burden should fall to the counties as the “guardian of last resort”.
Legal Services for the Elderly is currently court-appointed guardian for 94 individuals. Almost all of our appointments are due to the fact that the court found physical, or financial elder abuse, or believed that such abuse was imminent. We stop the abuse, remove the abuser, marshal all assets and ensure the safety of our wards. We pay all bills, make all health care decisions, and arrange all services. We also do the legal work for our clients, as we would do for clients who engage our civil legal services department. We work with the District Attorney to prosecute these cases as crimes and seek to recover funds civilly, saving the county Medicaid program from paying for cases that should have been paid for out of the victims’ funds.
This type of work is time consuming- this year through September 30, 2012 our attorneys and social workers have spent 2,655 hours on guardianship work. We have provided this service, despite the fact that we receive no governmental funding for our guardian program. Our work is paid for through a combination of fees and fundraising. When possible, we take a court-ordered fee for clients who have some assets and need to “spend down” to Medicaid. However, the majority of our clients are indigent. For those indigent clients on Medicaid in facilities, Erie County DSS allows us to take a monthly fee from the individuals NAMI (Net Available Monthly Income). In exchange for allowing us to take this deduction, we have agreed to handle a number of appointments without payment or pro bono. Unfortunately, out of our total caseload more than one third is now done “pro-bono”, severely straining the program’s ability to accept new cases.
Because of the epidemic of elder abuse and the inappropriate reliance on the Article 81 Statute to stem the tide, each week, we receive 3-4 new requests from judges, hospitals and other advocates. Clearly, more needs to be done to stop elder abuse before it happens, rather than turning to the court system and the invasive remedy of a court appointed Guardian after the abuse has occurred.
DEPARTMENT OF FINANCIAL SERVICES
The Department of Financial Services has made great strides in attempting to limit the opportunities for financial exploitation of the elderly. The recent addition of Insurance Regulation 199, which prohibits insurance producers from using unfounded senior specific certifications that are often misleading, will hopefully reduce occurrences of seniors being led into life insurance policies or annuities that are not in their best interest. Seniors often rely on their brokers to help them make decisions that will give them security as they get older, and they need to have an accurate understanding of their broker’s ability to advise them on necessary considerations for seniors. Allowing a broker or agent to advertise a certification that was paid for, but not earned, can open the door for seniors to place too much trust in the agent to make important financial choices for them. Insurance Regulation 199 takes a step in right direction to helping elderly consumers avoid this pitfall.
Similarly, Department of Financial Services ’Insurance Regulation 187 can assist in preventing seniors from putting their retirement funds in jeopardy. This regulation requires agents and brokers to consider the various needs and objectives of a consumer when selling or replacing annuity contracts. By having to consider such information from the consumer as their age, income and financial time horizon, agents and brokers should be in a position to make better decisions for their elderly clients. This is highly important for seniors who are at an age when managing retirement funds is as critical as ever. The proper management of their retirement savings can allow a senior to be able to afford basic necessities and live independently.
For those seniors who still fall victim to misleading certifications or mismanaged retirement accounts, it is our hope that DFS will take these violations seriously. It starts with a senior consumer having an avenue to file a complaint that will be heard and responded to. At Legal Services for the Elderly, we are fortunate to have staff that can assist seniors in our area with filing these complaints, but it would be highly beneficial to have additional outreach or pamphlets for seniors with complaint forms and steps on how to file a complaint. This can only serve to maximize the impact of these very important regulations.
CRIMINAL PROSECUTION OF FINANICAL ELDER ABUSES
Prosecution of elder abuse is another method that state agencies utilize to fight financial elder abuse; however, it is also not a method of prevention, unless you factor in the deterrent effect of publicizing such prosecutions. Several statutes are specifically targeted to help seniors.
Article 260 of the NY Penal Law, Offenses Relating to Children, Disabled Persons, and Vulnerable Elderly Persons Section 260.31 includes the definition of vulnerable elderly person as a person 60 years of age or older who is suffering from a disease or infirmity associated with advanced age and manifested by demonstrable physical, mental, or emotional dysfunction, to the extent that the person is incapable of adequately providing for his or her health or personal care. This definition excludes seniors who have capacity, and is therefore very limited in the scope of the class of persons it is designed to protect. Often seniors have capacity and are able to care for themselves, however they can still fall victim to scams targeted at the elderly or to family members whom they trust to handle their finances and who steal their money.
Section 260.31 also defines a caregiver as “a person who assumes responsibility for the care of a vulnerable elderly person, or an incompetent or physically disabled person pursuant to a court order, or receives monetary or other valuable consideration for providing such care.” Effectively this means caregiver in the statute is limited to paid or court-ordered aides. This eliminates family members or volunteers from being eligible for prosecution; because elder abuse is most often committed by family members who act as caregivers; this severely limits the scope and reach of the statute.
There is proposed legislation designed to expand this limited definition of caregivers in 260.31 to include anyone who “voluntarily assumes responsibility for providing care for a vulnerable elderly person, or an incompetent or physically disabled person. The legislation was proposed by Joseph D. Morelle, D-Irondequoit, and can be found under A. 9764.
Section 260.32, endangering the welfare of a vulnerable elderly person in the second degree, is a Class E felony. It includes: causing physical injury whether with intent, recklessness, or criminal negligence, as well as nonconsensual sexual contact with the vulnerable, elderly person. It applies to physical injury or sexual contact without consent. Thus, this statute excludes cases of financial exploitation cases where the senior is manipulated by a caregiver or family member, as well as those cases where seniors can care for themselves but is still subject to abuse.
Section 260.34, endangering the welfare of a vulnerable elderly person in the first degree, limits the actions to causing serious physical injury either by intent or recklessness.
The only statute not limiting its scope to the vulnerable elderly is section 120.05-12 of the NY Penal Law, also known as the “Granny” Statute. The legislation was enacted in 2008, and is a D Felony. Under it a person is guilty of assault in the second degree when, with intent to cause physical injury to a person who is sixty-five years of age or older, he or she causes such injury to such person, and the actor is more than ten years younger than such person. The legislation still does not apply to cases of financial exploitation.
USE OF HATE LAW LEGISLATION IN CASES OF FINANCIAL EXPLOITATION
In recent years prosecutors across the state have charged those who singled out their victims because of their age with hate crimes along with the initial criminal charge. For example, prosecutors in Queens have, since 2005, convicted at least 5 persons of the hate crime of singling out elderly victims for nonviolent crimes, including mortgage fraud, simply because their age led them to believe the victims would be easy targets.4 The theory behind tacking on the hate crime to the charge is that the elderly are singled out because of preconceived notions based on their age. If convicted of committing a hate crime, the penalties imposed are harsher than if only convicted of the crime itself.
The hate law legislation in New York, found in Article 285 of the NY Penal Law requires that prosecutors must prove only a crime was committed “because of a belief or perception regarding the race, color, national origin, ancestry, gender, religion, religious practice, age, disability or sexual orientation of a person.” Prosecutors across the state have taken notice, and several counties have implemented the hate law when prosecuting crimes against the elderly.
While we applaud the resourcefulness of prosecutors in using the hate law legislation, it is troublesome that such outside the box thinking is necessary due to the severe lack of legislation designed to protect the elderly and punish those who wish to do them harm, simply because of their age. Moreover, as summarized in the NY Times article, using hate crime laws in this matter could have the unwanted impact of diluting their effectiveness. http://www.nytimes.com/2010/06/23/nyregion/23hate.html?_r=0
The current system of services in New York is inadequate to prevent elder financial abuse before it happens. The PSA regulations prevent the agency from accepting a case when there is someone available to assist them (18 NYCRR Section 457 (c) (3). Since most cases of financial elder abuse are perpetrated by family members, potential victims often cannot obtain assistance from APS until after the abuse has already occurred, or at least started. After funds have been stolen, the statute also allows Adult Protective Services to step in because there has been an actual or threatened harm. PSA does not have a crystal ball and cannot take a case because somebody thinks abuse is likely to occur.
Similarly, prosecuting an abuser, by its very nature, must occur after the crime has been committed. While a policy of aggressive prosecution of financial elder abuse may have a deterrent effect to other potential criminals in the community, that is little comfort to the senior who lost his/her life savings. The Department of Financial Services has done a good job of attempting to prevent financial exploitation of seniors by brokers and other financial professions. However, we know from numerous studies that most elder abuse is perpetrated by family and or friends. In the NY Prevalence study, in NYS of the documented cases for ALL types of abuse, 77.2% was by family members and 3.5% by friends and neighbors. For the self-reported cases, friends and family make up 54% of major financial exploitations.5
We think a potential solution is to allow seniors to obtain POA services while they are competent to choose to do so and to have a trustworthy provider of such services. Legal Services for the Elderly has been representing seniors in Erie County for over 30 years. Case managers can assist clients with financial bill paying through Title III-B of the Federal Older Americans Act, but in Erie County this does not include acting as power of attorney even for clients who desire that service. In the past, senior services or PSA acted as Power of Attorney for clients. This service was provided to competent clients who needed assistance, but who were not in need of a court-appointed guardian. Although we cannot speak to what occurs in other areas of the state, there is nobody who will regularly fulfill this role in Erie County at this time.
At Legal Services for the Elderly, we draft the legal documents for low income seniors to appoint others to act as POA and we are regularly asked if we could fulfill this function for our clients. We believe that this service omission directly leads to financial elder abuse. Competent seniors who have no one to act as their POA are vulnerable to unscrupulous family members, investment advisors, and others. In almost every case where the court asks us to serve as Article 81 Guardian, the senior was first financially exploited by someone else, usually a family member. These losses do not only impact the senior who was victimized. Indigent seniors who have had their funds stolen by others turn to Medicaid, food stamps, and other forms of public assistance. In one study almost one in ten financial abuse victims turned to Medicaid as a direct result of their own monies being stolen from them. 6
As a preventative measure, New York should provide funding for an organization, Senior Services, PSA or the non-profit community, to take on the duties of power of attorney for clients who request it. The POA services could be provided on a sliding scale for those with means, and free to clients who only have their Social Security income to risk. By giving seniors another option, they will be less vulnerable to distant relatives, or other acquaintances who will exploit the senior’s need for help for their own financial gain.
1 Elder Mistreatment: Abuse, Neglect and Exploitation in an Aging America. 2003. Washington, DC: National Research Council Panel to Review Risk and Prevalence of Elder Abuse and Neglect.)
2 Ron Acierno PhD,: Melba Hernandez-Tejada M.S.; Wendy Muzzy B.S.; Kenneth Steve M.S.; “National Elder Mistreatment Study” March 2009, available at
3 The MetLife Study of Elder Financial Abuse: Crimes of Occasion, Desperation and Predation Against America’s Elders, June, 2011. National Committee for the Prevention of Elder Abuse Virginia Tech and MetLife Mature Market Institute. Available at
4 Anne Barnard, “A Novel Twist for Prosecution of Hate Crimes” New York Times, June 22, 2010.
5 Table 10 in the self-reported study, distribution of abusers by relationship and type of mistreatment, found on p. 35.
6 Jilenne Gunther. The Utah Cost of Financial Exploitation. March, 2011. Utah Division of Aging and Adult Services.
If you Suspect Abuse, TAKE ACTION!
More than 1,500 cases of elder abuse are reported each year in Erie County. Many more cases are never reported.
If you suspect abuse and would like legal assistance, please contact:
Legal Services for the Elderly, Disabled, or Disadvantaged of WNY: 716-853-3087
For immediate assistance 24 hours a day, call Crisis Services Hotline at: 716-834-3131
If you suspect someone is being abused, call Erie County Protective Services for Adults: 716-858-6877
For general information on programs or referrals call: 716-858-8526
In an emergency, call 911