An Arizona assisted living facility, fined last year over two powers of attorney, appealed its civil sanction through the courts. It’s story raises concerns about the vulnerability of ALF residents. It also offers insight into common practices in the industry.
The first resident’s story
The case involved two residents at Heritage at Carefree Senior Living in the Phoenix area. A July, 2016, complaint to the Arizona Department of Health Services alleged that Heritage owner Daniela Holbura had been named as agent on a resident’s health care and financial powers of attorney.
After investigating the complaint, the Department decided that yes, Ms. Holbura had been named as the resident’s agent. It did not appear that Ms. Holbura had actually taken any steps as agent — either regarding health care or finances. Still, it seemed like a situation ripe for abuse.
In fact, Arizona law directs that a “manager” of an assisted living facility may not act as a “representative” for any resident. The rules don’t define “representative” (though “manager” is a defined term) — but the purpose is clear: facility managers should not be in control of residents’ personal affairs.
The resident in question did not recall having given Ms. Holbura a power of attorney. Ms. Holbura herself, though, acknowledged that she knew the resident had signed the documents while applying for benefits through ALTCS, the Arizona Medicaid program, in 2014. The documents were unrevoked — and unused.
The facility agreed to modify its practices, and submitted a plan of correction. After review, the Department accepted that plan in January, 2017.
A second resident’s powers of attorney
The very same day that the Department accepted Heritage’s plan of correction, it also received a second complaint. This time their investigation showed that a daughter of a Heritage employee had secured appointment as health care and financial agent for a resident.
In the second resident’s case, the employee’s daughter had allegedly told the resident to sign the documents to “get a better rate” at Heritage. Once again, it did not appear that the powers of attorney had actually been used. Unfortunately, the resident was no longer capable of telling investigators very much about the circumstances.
Based on the new allegation, the Department decided it would need to impose a civil penalty against Heritage. The assisted living facility was fined $11,000 in September, 2017.
Heritage appeals its fine
The assisted living facility appealed the fine imposed against it. A hearing officer reduced the fine to $2,000. The agency raised the fine back up to $2,200; oddly, the agency’s head gets to rewrite decisions by administrative law judges. Heritage appealed that fine to the courts, and the Arizona Court of Appeals considered the case last week.
In its decision, the appellate court agreed with the Department of Health Services. The court ruled that the $2,200 fine was reasonable and justified.
The Department’s authority came from the Arizona Administrative Code and state statutes, said the appellate judges. The purpose of the prohibition was to prevent exploitation of residents by assisted living facilities, and a civil penalty was appropriate. Heritage at Carefree LLC v. Arizona Department of Health Services, July 16, 2020.
What does having an assisted living facility fined mean?
Ultimately, the only penalty levied against Heritage Carefree was a small civil penalty — a fine of $2,200. But that isn’t the real significance of this enforcement action.
The Arizona Department of Health Services regulates assisted living facilities, nursing homes, adult foster care homes and other health care facilities. By imposing even a modest fine (and defending it through the court system), the Department has made clear that it does not approve of facilities taking charge of finances or health care decisions for residents.
Neither of the power of attorney sets were actually used. One of the people named on powers of attorney wasn’t even an employee of the facility. Still, the facility’s manager must develop policies and procedures to protect against exploitation or abuse.
But the agency’s (and the court’s) expansive reading of the regulation should give pause to health care facilities generally. The regulations deal with a facility manager acting as “representative” of a resident — or allowing other staff members to do so. That should be broad enough to include acting as representative payee for Social Security or other benefits payments. It would prevent facilities or employees from handling any funds or personal decisions.
