AZ professional fiduciaries ‘racket’ follows nationwide pattern

Maricopa County Probate Court – Caregivers criticized for ties to fiduciaries
Pat Kossan/Robert Anglen
December 29, 2010
The Arizona Republic

If you become ill from old age and can no longer take care of yourself, the people you and your family turn to for help can hand over control of your life to an expensive for-profit business.

Hospitals, social-service agencies, financial planners and attorneys often act as pipelines to private fiduciary companies, which depend for their business on a steady stream of stricken adults unable to pay their own bills or manage their care.

Fiduciaries charge fees that in months or years can wipe out your assets. The organizations and firms that refer clients to fiduciaries often do not advise clients of the potential costs.

Many people, even if they have assets, can’t afford extensive services from a private fiduciary because they must stretch their money over years, paying for health and nursing care. Fiduciaries charge $100 or more an hour and bill $50 to $89 an hour for administrative tasks that can end up costing thousands of dollars.

Few other options exist when no family members or friends are willing or available to manage an incapacitated person’s affairs.

“People with middle-income resources – in other words, most of us – have too much money to qualify for public-fiduciary services and not enough money to pay for private fiduciaries,” said Peggy Mullan, president of Beatitudes, a non-profit, adult-care center in Phoenix.

County, or public, fiduciaries largely limit their service to the poor.  An ongoing Arizona Republic investigation has found that Maricopa County Probate Court judges rarely curtail fiduciary and legal fees, even when wards of the court end up broke and on state-paid care.

Incapacitated adults and their relatives say the relationships fiduciaries have forged with hospitals and other agencies, particularly in retirement communities, create conflicts of interest. They say the relationships give private businesses easy access to vulnerable potential customers.

Doctors and social workers working for Banner Health, the state’s largest hospital system, often refer cases to favored fiduciaries, court records show.

In one Valley case, a man says that Banner called a fiduciary to take over his parents’ care without trying to notify him and that the fiduciary petitioned for guardianship without contacting him. Banner officials cannot comment on individual cases but said staff members act in the best interests of patients.

However, Banner Health’s review of procedures after inquiries by The Republic revealed inconsistent policies among Banner’s 23 hospitals.

A Banner spokesman said the hospital is working to create uniform guidelines.

In addition to relations with hospitals, fiduciaries and law firms specializing in elder care have developed other marketing strategies.

Among them: Fiduciaries train personnel at senior centers, and law firms and fiduciaries send business to each other.

Advocates say that the system needs to change and that more options should be available for people with average incomes and savings.

Bill Dettelback, former financial manager for Maricopa County Public Fiduciary, favors eliminating private fiduciaries.

“You do away with the private fiduciaries altogether and you might have to double or triple the size of the public fiduciary,” Dettelback said. “You just do away with the profit motivation and make it (county fiduciary offices) a state agency.”

Mullan, of Beatitudes, favors the creation of a non-profit organization to handle the gap between rich and poor. Her agency plans to offer such a service within five years.

“Certainly, there will be a growing need as the Boomers age, and they’re notorious because they’ve not prepared well for their future,” she said.

Maricopa County Probate Court – Hospitals can call fiduciaries for their patients
December 29, 2010
The Arizona Republic

Hospitals can call a preferred private fiduciary that will assess your situation and may petition the court to declare you legally incapacitated.

If appointed your guardian, the fiduciary can charge substantial fees to manage your finances and care.

In one Sun City case, neither the hospital nor the fiduciary contacted the son of an elderly couple with dementia before taking action. The couple had not wanted their son contacted, but experts agree that is typical for people with dementia.

Fiduciaries, along with probate law firms, often have relationships with hospitals that they have carefully cultivated as part of their marketing strategy, The Arizona Republic has found.

Court records and interviews show some hospital social workers and doctors often call favorite fiduciaries to manage care of their patients.

Relatives of some incapacitated adults say hospitals call the fiduciaries without first advising family members of the potential for significant fees. Some probate lawyers say fiduciaries assist hospitals to move patients out of costly medical beds and into nursing homes or other care.

Records and interviews also indicate some law firms conduct free “in-service training” for hospital staff and take their questions by phone about moving patients into care. They supply hospitals with power-of-attorney forms that patients may sign, giving a relative, lawyer or fiduciary control of their lives if they become incapacitated.

Some hospital officials say their social workers and doctors make decisions in the best interest of patients. They acknowledge some social workers and doctors may have professional relationships with fiduciaries they consider reliable.

“The role of our case managers is going to be proactive in getting patients into long-term care,” said Bill Byron, spokesman for Banner Health, which operates 13 hospitals in Arizona and 10 outside the state. “What they have done (in making referrals) is not . . . incorrect or inappropriate.”

Byron confirmed, however, that Banner had no specific policy regarding fiduciary referrals in its hospitals, leaving the decision up to case mangers or doctors. He said inquiries by The Republic revealed inconsistencies and Banner is now working to establish uniform guidelines for all 23 hospitals.

“(We) will make changes as deemed necessary,” Byron said.

In making referrals, some hospitals use a rotating list of fiduciaries; others tap preferred ones. At least four Valley hospitals say they refer cases only to the public fiduciary. Some hospitals don’t require staff members to first contact relatives who might want a say in managing a patient’s care outside the hospital.

Court records show two Sun City hospitals, Banner Boswell Medical Center and Banner Del E. Webb Medical Center, called Childers & Berg and some other preferred fiduciaries to handle cases.

One case in 2007 involved Charles and Julia Gustafson of Sun City. A case manager at Boswell called Childers & Berg after Charles came to the hospital with leg ulcers. Doctors would not allow him to go home because of concerns that Julia could no longer care for her husband.

Court records show that Childers & Berg assigned its own care managers, who determined both Charles and Julia needed protection; each suffered from dementia. Childers & Berg’s staff arranged for both to be moved from their home into an adult-care home and petitioned the court for guardianship.

But Julia’s son, Ray Ireland, says all of this happened before he was even notified that his stepfather was in the hospital.

“I hadn’t heard from my parents in almost a month. I didn’t know what was going on. . . . Then I got a call from my mother’s court-appointed counsel that my parents were in the custody of Childers & Berg,” said Ireland, who is a retired firefighter in Clark County, Nev.

Ireland said by that time, Childers & Berg had changed the locks on his parents’ house and placed the Gustafsons in a home where they shared a small bedroom with a shared bathroom for about $5,000 a month.

Court records show that from January to March, Childers & Berg and its attorney charged total fees of $27,015.

Childers & Berg did not return repeated requests for an interview.

Childers & Berg reported in court records that the Gustafsons’ case included “extraordinary expenses” and the firm spent “numerous meetings and telephone calls with attorneys regarding . . . the decision to eventually notify” Ireland. His parents had asked that Ireland not be contacted, but Childers & Berg also reported that “this reaction is very typical of persons suffering from dementia.”

Ireland said given the incapacity of his parents, he should have been contacted before Childers & Berg took over. He said he wasn’t hard to find; his name, address and phone number were noted throughout his parents’ financial, telephone and other records.

“The reason they didn’t inform me was for their own monetary benefit, in my opinion,” Ireland said. “And it is sanctioned by the state of Arizona.”

Ireland petitioned the court to be appointed guardian and immediately moved his parents to Nevada, where his mother still resides. His stepfather has passed away.

Law firms specializing in estate planning and adult care also get calls from hospitals. The lawyers work with them on issues such as powers of attorney, trusts and planning for state assistance.

“We have unique relationships with hospitals,” said Liz Coyle, spokeswoman for Jackson White, a law firm with offices in Peoria, Mesa, Casa Grande and Payson. “We have three social workers who work (with) hospitals.”

Coyle says the firm’s staff provides free seminars and brochures to hospitals and conducts training on preparing patients for state assistance and veterans benefits.

Jackson White conducts about 20 seminars a year, each of which attracts anywhere from five to 30 hospital staffers. Coyle said the firm doesn’t pay for traditional marketing, but instead relies on word of mouth to attract business.

“We’re there to help these hospitals,” Coyle said, adding that when a hospital has a patient in crisis, “they refer them to us.”

Maricopa County Probate Court – Close lawyer-fiduciary ties raise questions of cronyism
December 29, 2010
The Arizona Republic

Given their control over some people’s lives, for-profit fiduciaries work hand in hand with attorneys to initiate probate-court cases and to protect themselves from lawsuits.

They also send each other business.

If you seek advice from a probate lawyer about the handling of an incapacitated relative’s money and care, the lawyer may recommend a favorite fiduciary to handle the case.

Relatives of some incapable adults say such relationships can lead to cronyism and conflicts of interest. Lawyers who are cozy with fiduciaries may not warn families of the steep fees that fiduciaries charge in some cases. Ultimately, families come to feel they were manipulated into an arrangement that ate up large portions of the relative’s estate.

Lawyers and fiduciaries say their legal relationships are beneficial to an incapacitated ward because attorneys know which fiduciaries do the best work.

“We use them (fiduciaries) because our clients need them,” said Chandler probate lawyer Peter Williams. “And we have to make sure that we are using someone we know is reliable.”

Court records show that fiduciaries often use the same lawyer in case after case.

Cathy Rebarick, of Alexandria, Va., who sought help for her 93-year-old mother, Catherine, from a Sun City law firm in 2007, takes a dim view of the lawyer-fiduciary connection.

“It’s a big racket, really,” she said.

Rebarick said she was driven to seek legal advice following a dispute with relatives about control of her mother’s finances.

“I had no idea what kind of hornet’s nest I was walking into,” she said.

Rebarick said during a discussion of her case, lawyer Patti Shelton, of Cooley & Robbins, first suggested hiring a fiduciary and then picked up the phone and called one. Within minutes, Don Childers of Childers & Berg, located in the same building, walked into the room. The firm has regularly represented Childers in probate cases, although it did not in the Rebarick case, court records show.

Neither Cooley & Robbins nor Childers & Berg returned repeated requests for interviews.

“Don Childers just immediately dashes up the stairs. (Shelton) tells him the trust is worth maybe . . . $650,000 . . . and that’s how he got involved,” said Rebarick, who works as a court reporter in Virginia. Rebarik said she ended up signing over temporary control of her mother’s care and finances to Childers & Berg, but didn’t realize what she had done. “I thought I was going to be guardian and trustee and they would be protecting my mother from (other relatives) and would be paying her bills.”

Childers & Berg petitioned the court for guardianship rights, moved Rebarick’s mother out of the group home where she had lived for years and began charging fees.

Childers & Berg and its attorney billed $36,489 for work from April to August 2007.

In court documents, Cathy Rebarick complained that Childers & Berg made improper charges, including billing $65 an hour “for placing files on a desk, filing and faxing.” Rebarick said Childers & Berg billed for reading her mother trivial information and hand-delivering letters that could have been mailed.

Ironically, the dispute that drove Rebarick to seek legal help in the first place ended with the family’s joint concerns over the fiduciary and legal fees being run up in the case.

“These people ripped through (tens of thousands of dollars) in less than three months,” Rebarick’s nephew, James McMellen, said. “My aunt Cathy called me. . . . She said we’ve got to get back together to show the court we have solidarity. We need to get an attorney and get these people kicked out.”

McMellen and Rebarick hired a new lawyer and challenged Childers & Berg in court. In 2007, a judge appointed a new fiduciary as guardian and named Rebarick as her mother’s trustee.

“Every time I hear, ‘Save your money for retirement,’ I say, ‘Oh yes,’ ” Rebarick said. “Until you make one wrong move and get involved in that probate system.”