HOT BUTTON ISSUES IN RESIDENTIAL CARE

MICHIGAN ASSISTED LIVING ASSOCIATION ANNUAL CONFERENCE May 16, 2017 HOT BUTTON ISSUES IN RESIDENTIAL CARE Presenters: GREGORY J. BATOR CHRISTIAN A. LOBB Attorneys at Law BATOR LEGAL, P.C. 400 W. Maple Birmingham, MI 48009 248-642-7844 Gregory@BatorLegal.com Chris@BatorLegal.com

I. STATUS OF FEDERAL LITIGATION ENHANCE, INC. ET. AL. V. STATE OF MICHIGAN ET. AL. A. INTRODUCTION- Our office is representing several residential care providers and consumers in a federal lawsuit to prevent LARA from requiring adult foster care licensure of supported independent living sites where consumers receive personal care on a 24/7 basis. The case is before Judge Robert H. Cleland in the United States District Court for the Eastern District of Michigan. The case is entitled Enhance, Inc. et. al. V. State of Michigan et. al. Case No. 2:16-cv-11854 B. BACKGROUND OF THE DISPUTE i. At the beginning of 2016, several providers of community living support staffing at supported independent living sites received written notice from BCHS that, as a result of a special investigation, a license was required to continue providing services at those locations. ii. BCHS, in its reports, acknowledged that although the sites are leased by the clients who pay rent to third parties other than the staffing provider, a license is required where staffing is provided on a 24/7 basis. This is a reversal of the policy established by the State of Michigan over the last 40 years. iii. BCHS threatened circuit court action to enjoin the providers from continued service provision at these sites and invoked the criminal penalty provisions of the AFCFLA. iv. Four providers who received the written notice have joined together as named Plaintiffs in the lawsuit: Enhance, Inc., Innovative Lifestyles, Inc., Integrated Living, inc. and Life Center, Inc. v. Nine consumers also joined the lawsuit to protect their individual possessory rights to their own homes. vi. Several other providers, many of whom received similar notices from BCHS, and other interested stakeholders, have contributed financially to the litigation effort. Page 3

C. STATUS OF THE CASE i. Plaintiffs Complaint For Injunctive Relief was filed on May 24, 2016, seeking injunctive relief under the Americans with Disabilities Act of 1990 (the ADA ); Section 504 of the Rehabilitation Act; the Fair Housing Amendments Act (the FHAA ); and the 14th Amendment of the United States Constitution. ii. On August 15, 2016, the Defendants State of Michigan, Gov. Snyder, and the Directors of LARA and BCHS filed a motion for dismissal and/or summary judgment arguing: 1) the providers lacked standing; 2) governmental immunity; 3) the issue was not ripe for review; and 4) that the federal court should abstain from deciding state policy. iii. While that motion was pending, amendments to the AFCFLA were introduced in the Michigan Legislature that would have provided that homes of four or less adults where staffing was funded through local community mental health agencies and where the providers did not own or lease the property would not be subject to licensure. iv. In light of the prospective amendment of the AFCFLA, the Court dismissed the State of Michigan s motion and placed a temporary stay on the case. v. In February, 2017, after the legislative session expired without passage of the AFCFLA amendments, the Court lifted the stay and the Defendants re-filed their motion for dismissal. vi. Plaintiffs have filed a response to the motion arguing that BCHS s threatened action: 1) jeopardizes the rights of the consumers to enjoy possessory rights to their homes including the right to hire and fire staff and to be free from intrusive state inspections; and 2) jeopardizes the right of providers to continue contracts to staff independent homes without entering into leases or purchasing the property and will result in economic harm. vii. Oral arguments are scheduled for June 7, 2017. The Court will hear the arguments at the federal courthouse in Port Huron at 2:00 pm that afternoon. II. STATUS OF NO FAULT INSURANCE PAYMENT MATTERS A. INTRODUCTION - The topic of Michigan s Auto No-Fault Law is red hot. A recent Michigan Court of Appeals decision is emboldening the insurance industry to deny payments to no-fault providers serving clients in settings that do not possess an adult Page 4

foster care license. B. SUMMARY BACKGROUND i. Keys of Life provides 24/7 personal care and attendant services to a traumatically brain injured person. This person resides in his own apartment. Keys of Life does not possess an adult foster care license for this apartment. ii. The services provided by Keys of Life incurred a bill in excess of one million dollars. Auto Owners Insurance Company refused to pay the bill. iii. Auto Owners argues that the services provided by Keys of Life were foster care and foster care services are tantamount to treatment under the No-Fault law. Since Keys of Life did not possess an adult foster care license, Auto Owners was not obligated to pay the bill because the No-Fault law requires treatment services to be licensed. iv. Keys of Life sued for payment in Wayne Circuit Court. The Court determined that foster care services were not treatment as defined in the No-Fault law. The Wayne Circuit court relied in part on the analysis of City of Livonia v. DSS which determined that foster care was residential in nature, not medical. v. On December 16, 2016, the Michigan Court of Appeals determined that all of the AFC elements were being provided to an individual in an apartment setting without a license. The Court of Appeals reversed the Circuit Court and held that AFC services were treatment as defined under the Michigan No-Fault Act MCL 500.3107 and 500.3157. The Court of Appeals held that the provider could NOT recover for unlicensed AFC services under the No-Fault Act. vi. Keys of Life has appealed the matter to the Michigan Supreme Court. The Supreme Court appeal is not obligated to accept the case on appeal. vii. Other insurance companies have begun using the Keys of Life ruling to deny No-Fault payments to service providers rendering personal/attendant care to individuals in settings that do not possess an adult foster care license. C. THE CRITICAL FLAW IN THE KEYS OF LIFE DECISION i. A single person setting is not REQUIRED to obtain an adult foster care license. Page 5

ii. An adult foster care facility is defined as a governmental or nongovernmental establishment that provides foster care to adults. MCL 400.703(4) iii. Foster care is a term defined as the provision of supervision, personal care, and protection in addition to room and board, for 24 hours a day, 5 or more days a week, and for 2 or more consecutive weeks for compensation. MCL 400.704(7). iv. The critical flaw was not argued in the Keys of Life case at the Circuit Court, Court of Appeals, or initial filings before the Supreme Court. v. An extraordinary motion to amend the application for appeal to the Supreme Court is pending. D. PRO-ACTIVE STEPS i. Structure care settings carefully when operating without an adult foster care license. ii. Defend against non-payment efforts appropriately and aggressively. While single person settings may obtain an adult foster care license, single person settings do not require an adult foster care license. III. STATUS OF UNIONIZATION MATTERS A. INTRODUCTION - Our office has represented the residential/vocational industry from the inception of union organization efforts. While sharing a desire to increase wages and benefits for the deserving workforce, employers must be mindful of their financial constraints. Additionally, the extensive regulations imposed by licensing and other regulatory and contractual agencies limit an employer s ability in labor matters. B. SUMMARY BACKGROUND OF THE UNIONIZATION EFFORT i. In 1985, the United Auto Workers (UAW) attempted to organize a non-profit mental health provider s workers. ii. The unionization effort began before the National Labor Relations agency. This action failed because federal labor law at the time prevented the NLRB from exercising jurisdiction over labor relations when a co-employer was a state or local government agency. The evidence in the case Page 6

demonstrated the extensive control exercised by the State of Michigan over the non-profit company s business. iii. In the late 1980s, American Federation of State, County and Municipal Employees (AFSCME) organized approximately 35 non-profit mental health provider companies under Michigan s Public Employment Relations Act (PERA). AFSCME and the non-profit companies argued that the State of Michigan was a co-employer. After several years of litigation the Michigan Employment Relations Commission (MERC) ruled that the State was a co-employer and was required to participate in the collective bargaining talks. iv. Labor negotiations ensued for approximately one year until the NLRB issued a new decision changing its opinion to exercise jurisdiction over labor relations matters even though a state/local government may be a co-employer. v. The State of Michigan, under then Governor John Engler, amended PERA to specifically exclude mental health workers from coverage under the Act. vi. State court litigation proceeded to Michigan s Supreme Court. The Court upheld the State of Michigan s effort to remove itself from being considered a co-employer. vii. AFSCME then sought to maintain its status as the certified bargaining representative even though the State was now not a party to the labor matter. The non-profit providers filed suit in Federal Court arguing that the union elections were no longer valid because employees had voted to join the union believing there were two employers. In the absence of the State as an employer, new elections should be conducted. This legal matter took several years and was ultimately settled by the U.S. Supreme Court when it denied the appeal and allowed the Sixth Circuit Court of Appeals matter to stand. The Sixth Circuit Court of Appeals decided to allow the election results to stand. viii. Collective bargaining between AFSCME and several, but not all, non-profit companies commenced. ix. Over the course of the late 1990s and into the early 2000s, collective bargaining talks sputtered. AFSCME for unknown reasons failed to pursue the collective bargaining negotiations. Periodically, AFSCME resurfaces to inquire Page 7

about negotiations and then proceeds to re-enter a dormant state. x. Two other unions have successfully organized mental health workers. The Office and Professional Employees Union (OPEIU) and the Service Employees International Union (SEIU) have also negotiated collective bargaining agreements on behalf of the mental health workforce. xi. Periodically these and other unions have engaged in organizing efforts in the residential/vocational care industry. In 2015, the SEIU s effort to organize a vocational provider was defeated. In 2016 our office is aware of several early stage organizing efforts. C. STATUS OF THE PRIOR UNIONIZATION EFFORTS i. AFSCME continues to be legally recognized as the certified bargaining agent for the workers organized in the 1980s and 1990s. ii. There are no active labor negotiations with AFSCME at this time. iii. There are a few collective labor agreements controlling labor relations for a small number of mental health providers. iv. The NLRB election procedures may undergo further change with the new administration. Currently union organization efforts and elections can happen very quickly. D. PRO-ACTIVE STEPS i. Employees have a federal law right to organize. ii. Do not Threaten, Interrogate, or Promise. iii. Listen to employee grievances. iv. Give employees an avenue to appeal management decisions. v. CRITICAL: Train management staff in the Dos and Don ts of Unionization in advance of any organizing activity. Page 8

IV. HANDLING DISCHARGES AND EVICTIONS A. INTRODUCTION At what point does a provider pursue legal action to evict a vulnerable adult? Two main reasons: 1) nonpayment; or 2) resident (or family / guardian) behaviors. B. LICENSED SETTINGS i. AFC Discharge Rule a. 30 Days (Small Group Homes R400.14302(3) / Large Group Homes R400.15302(3)) 1. 30 day written notice 2. State reason(s) for discharge 3. Send to: - Designated Representative - Responsible Agency (if applicable) 4. Does not preclude a licensee from providing other legal notice as required by law presumably refers to eviction proceedings b. Emergency Discharge (Small R400.14302(4) / Large R400.15302(4)) 1. Available where substantial risk to, or occurrence of: - Safety and well-being of resident or other residents a) Problem area Smoking - Self-destructive behavior - Serious physical assault - Destruction of property 2. Requirements of Licensee (Small R400.14302(5)(a) / Large R400.15302(5)(a)) - At least 24 hour notice - In writing - Send to: a) Designated Representative b) Responsible Agency c) Licensing Consultant - Provide reason(s) a) Use substantial risk or occurrence categories from (b)(1) b) Rule requires specificity - Describe alternatives to discharge that have been attempted - Identify location to which resident will be discharged (if known) 3. Requires Third Party cooperation (Small R400.14302(5)(b) / Large R400.15302(5)(b)) Page 9

ii. - Confer with Responsible Agency, or, if none, Adult Protective Services or local community mental health emergency response service - Without agreement of Responsible Agency or APS no emergency discharge - Appropriate replacement setting must be located - BCHS has authority to return improperly discharged resident to your facility HFA Discharge Rule a. R325.1922(11) allows for discharge for: 1. Medical Reasons 2. Welfare of resident or of other residents 3. Non-payment 4. If sought by resident or authorized representative b. Must document reason for discharge in the resident record. R325.1922(12) c. Notice requirements R325.1922(13) 1. 30 days 2. In writing 3. To resident and authorized representative (if any) 4. Reason(s) for discharge 5. Effective date of discharge 6. Statement notifying resident of the right to file a complaint with BCHS d. Does not preclude a licensee from providing other legal notice as required by law presumably refers to eviction proceedings e. Emergency Discharge Rule Similar to AFC se (B)(i)(b) C. INDEPENDENT SETTINGS i. Non-payment 7 day notice is available a. Review your Lease / Residency Agreement which may provide 30 days and supersede the 7 day option b. If rent is not the only issue follow 30 day notice procedures ii. 30 day notice is available with or without cause a. Unless your Lease / Residency Agreement states otherwise D. NOTICE: BEST PRACTICES i. Discharge letter meeting applicable AFC or HFA rule requirements ii. Attach Court Form Notice a. Notice to Quit (30 day notice) form DC100c 1. For all licensed settings Page 10

iii. 2. For all issues other than rent in non-licensed settings b. Demand for Possession (7 day) form DC100a 1. Limited to non-licensed settings and nonpayment situations 2. Allows residents to stay if balance is paid any time before Order for Eviction is issued Service a. In person (recommended) b. First Class Mail c. Include Designated Representative / Responsible Agency E. WHAT IF THE RESIDENT DOES NOT LEAVE? i. File Eviction Complain in District Court a. Proper form 1. Complaint: Nonpayment of Rent (Form DC102a) 2. Complaint: Recover Possession of Property (Form DC102c) b. Seek money judgment c. Filing fee 1. $130.00 for Complaint and money judgment up to $10,000.00 2. $215 if seeking more than $10,000.00 d. Service requirement Personal service is preferred e. Hearing generally in 10-14 days f. Order of Eviction 10 days or more g. Actual execution of Order of Eviction Depends on Sheriff / Bailiff schedule ii. Pitfalls a. Court generally will be sympathetic to resident adjournments b. Court may confuse provider with a health care provider such as skilled nursing / rehab center c. If resident challenges balance: 1. Set for trial 30 days or more 2. Resident pays monthly rate into court escrow account and remains at facility 3. Sometimes better to separate payment issues from eviction and seek rent in subsequent district court action F. HOW TO PROTECT YOUR ORGANIZATION i. Review and Amend Lease / Resident Care Agreements a. The Resident Care Agreement / Lease in all settings should provide: Page 11

ii. iii. 1. Have guardian / DPOA / Designated Representative sign Personal Guaranty 2. Late fees provides deterrent / bargaining chip 3. Provide that residents / guarantor will be responsible for all court costs, collection costs and attorney fees 4. If you have an arbitration clause, make sure it excludes actions for possession / eviction and collections of monthly rent / fees 5. Gather information on resident income / assets at time of admission b. If independent setting: 1. Create exception to 30 day notice for 7 day notice for non-payment of monthly rate Document all rate changes with advance notice a. In writing b. With signature of Resident / Designated Representative Always include Notice to Quit / Demand for Possession with written notice of discharge a. Contains Proof of Service b. Reduce potential issues with court Page 12

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ABOUT THE PRESENTERS: GREGORY J. BATOR, B.A., J.D., founded BATOR LEGAL, P.C. in 1986, after graduating from Wayne State University Law School. Gregory has traveled throughout the Midwest to represent Michigan care providers in administrative hearings, state, district, circuit, and appellate courts, and in trials and appeals on the federal docket. Licensed as an attorney since 1981, Gregory s breadth of experience has resulted in several published decisions that have advanced the law for care providers nationwide, notably Smith & Lee Associates, Inc. v. City of Taylor and Larkin v. State of Michigan. Gregory has a long and valued association with the Michigan Assisted Living Association. His commitment goes beyond the individual case he zealously represents. Greg is widely respected among State officials, related professional organizations, and the public for his efforts to improve the lives of those less fortunate that we all serve. CHRISTIAN A. LOBB, B.A., M.P.A., J.D., is an attorney at Bator Legal, P.C., located in Birmingham, Michigan. Chris has practiced law in Michigan for seventeen years. Chris is a graduate of Wayne State University Law School, where he received awards for excellence in academics as a member of the prestigious Order of the Coif. Chris concentrates his practice on representing residential care, home care, and assisted living providers in the areas of employment law, corporate law, and regulatory compliance. Chris has won cases for clients against the State of Michigan Office of the Attorney General and has litigated several wage and hour lawsuits on behalf of employers in Federal and State Court. Chris has also represented employers before several governmental agencies including the EEOC, the Michigan Department of Civil Rights, and the U.S. Department of Labor. In addition to his undergraduate degree from the University of Michigan-Dearborn, Chris holds a Master s Degree in Public Administration from Wayne State University, which he received with honors. Page 15