Getting Our Minds (and Laws) Around Undue Influence

Undue influence. We know it when we see it, and those of us in elder abuse prevention see it often: elders who are ill, lonesome, isolated, impaired, or grieving being persuaded to give away assets, sometimes homes and life savings, to new acquaintances, suitors, family members, or even cunning cons in other countries. They use various devices--trust documents, powers of attorney, wills, sweepstake offers, bogus charities, or quickie marriages--but the results are the same: getting vulnerable elders to do things they wouldn’t have done otherwise.

Still, defining undue influence for legal purposes hasn't been easy. Maybe it’s because for some, the very prospect of outlawing persuasion or protecting people from being wooed is offensive. After all, in our consumer culture, we’re used to being lured and won over. We romanticize risk taking, gambling on long shots, or taking leaps of faith that those charming suitors really do love us.

When does persuasion become undue influence? The answer is when powerful individuals use unfair means: deception, exploiting disabilities, fostering dependency, playing on fears, emotional blackmail, and isolating elders from those they trust. But how do we set the bar in defining and measuring undue influence? What circumstances should we include and what penalties should apply? These are questions that advocates and policy makers in California are tackling in earnest these days. Here are updates on three initiatives.

Senate Bill 1140 Passes
Written by San Francisco Attorney Steve Riess and authored by Senator Darrell Steinberg, Senate Bill 1140 adds undue influence to the definition of financial abuse in California’s elder and dependent adult abuse civil protection code, providing new remedies to vulnerable elders and "fundamentally changing the obligations of those who contract with them."

In his rationale for the bill, Riess points out that we already have laws on the books that address undue influence, but they’re inadequate for elder financial abuse. Establishing that someone exercised undue influence under current law simply serves to negate contractual consent and rescind agreements, which, in non-legalese, means that it stops improper transactions. It doesn’t allow for damages or lawyers’ fees so abusers have little incentive to stop doing what they’re doing and lawyers have little incentive to take undue influence cases. By including undue influence as a basis for elder financial abuse, Senate Bill 1140 allows for the recovery of damages, attorneys’ fees, and court costs, making it more feasible for victims to initiate lawsuits and, hopefully, making would-be perps think twice. For more on the bill, see: The New Elder Financial Abuse Law: Big Changes Are Coming!

It won’t be long before the new law is put to the test. In a December 2007 New York Times article, Charles Duhigg reported that more than 760 civil lawsuits claiming elder abuse, mostly financial abuse, had been filed in the previous year, a 98% increase from five years earlier. Other states are seeing similar trends.

SB 1259 Fails
On the criminal side, SB 1259 attempted to add undue influence to the definition of elder financial abuse in California’s elder abuse criminal code (Penal Code §368). Sponsored by the California District Attorney’s Association, the bill was a response to People v. Brock, in which Norman Roussey, who had a cognitive impairment, lost his home and nearly $700,000 to his “friend” Ronald Brock who worked in the law firm that was handling Roussey’s deceased mother’s estate. (See Undue Influence is Not a Crime and Postscript on Elder Abuse is Not a Crime. The prosecutor in the case, Melissa McKowan, successfully argued that Brock had committed theft by undue influence, and Brock was sentenced to five years in prison and ordered to return the money. Later, however, an appellate court overturned the conviction. While acknowledging that Brock’s conduct was “manipulative” and “oppressive” and that Brock knew that Roussey was cognitively unable to resist his demands, the court ruled that the conduct wasn’t a crime in California. SB 1259 would have made it one by amending Penal Code §368 to include “criminal undue influence,” which it defined as:

The exploitation by a person of a known physical or mental infirmity or other physical, mental, or emotional dysfunction in a vulnerable elder or dependent adult for financial gain by one of the following methods:

• Using a position of trust or confidence or using any real or apparent authority over the vulnerable elder or dependent adult for the purpose of obtaining an unfair advantage over the vulnerable elder or dependent adult.

• Knowingly taking an oppressive and unfair advantage of a vulnerable elder or dependent adult's weakness of mind, necessities, or distress.

SB 1259 provided for a defense if the accused believed that their victims had the capacity to consent to the transactions. But for the defense to apply, the transactions had to have taken place “openly.” If defendants attempt to conceal their actions, the defense wouldn’t fly.

SB 1259 also upped the ante for repeat acts of financial elder abuse by allowing for sentence enhancements for prior convictions. It also would have expanded the scope of persons protected by broadening the definition of dependent adults and elders. Under the expanded definitions, protected parties would have included all elders (as opposed to only those with disabilities) and adults with physical as well as cognitive impairments.

The bill’s primary opponent was the California Public Defenders Association, which objected on the grounds that:

1. The proposed definitions were too broad and paternalistic in including physically disabled adults and seniors with no significant cognitive disabilities.

2. Given the budget shortfall and prison overcrowding, any legislation that increases penalties is ill timed and poor public policy.

3. The defense requirement to prove that financial transactions were done "openly" isn’t dealt with adequately. “Openly" is subject to interpretation and the law isn’t clear about who should interpret it.

For more, see Analysis of SB 1259.

Prohibited Transfers (Probate Code §21350)
The California Law Revision Commission recently released a report and recommendations about the "prohibited transfers" provisions in the state’s Probate code, which deal with undue influence. (The Commission, which includes reps from both houses of the state assembly and the executive branch, studies “defects and anachronisms” in California law and recommends legislation reforms.)

The prohibited transfers statute was originally enacted in response to a high- profile case involving an estate-planning attorney who named himself and members of his family as fiduciaries for, and beneficiaries of, clients’ estates. The prohibited transfer law prevents certain professionals from inheriting assets from clients unless they can demonstrate that they didn’t use fraud, menace, duress, or undue influence to get them. The law covers “care custodians,” essentially saying that those who receive last-minute bequests from dependent adults are presumed to have exercised undue influence, even if they were close friends of the deceased. There are several exceptions, including gifts to family members and gifts that have been reviewed by independent attorneys who certify that they aren’t the product of menace, duress, fraud, or undue influence.

The prohibited transfers statute was challenged in Bernard v. Foley, a case involving 97-year-old Carmel Bosco, who left her half million-dollar estate to two friends who cared for her during the last months of her life. While under their care, Bosco amended her living trust several times, giving more and more to the caregivers until, a few days before her death, she made them the beneficiaries of her entire estate. Bosco’s family, the original beneficiaries, sued, claiming that the caregivers had exerted undue influence over Bosco while she was gravely ill and heavily sedated. The case got down to whether the friends were in fact “care custodians,” and therefore, covered under the prohibited transfers law. The caregivers claimed that they were just “performing acts of kindness on a purely volunteer basis as good friends often do for others.”

The court found in the caregivers’ favor but the family appealed, and the appeals court reversed the decision, stating that “a caregiver may be a personal friend, and in fact, personal friends are uniquely positioned to unduly influence the elderly for whom they care.” It affirmed that the caregivers were covered under Probate Code §21350 and had failed to satisfactorily rebut the statutory presumption of undue influence.

Despite the finding, the statute has continued to raise concerns and questions, including:

• How should caregivers or caretakers be defined? Should the law differentiate between long and short–term caregivers and between those who are paid and unpaid?

• Who needs protection and how should “dependent adult” be defined?

• Will the law inhibit old friends or acquaintances from assisting elders for fear of losing any transfers that the elder may make?

• Should the law exempt families, the most common offenders in financial abuse cases?

These were among the concerns the Commission was charged to consider. Specifically it was asked to review “the proper scope of the statutory presumption of fraud and undue influence that applies when a “dependent adult” makes a gift to that person’s “care custodian.”

The Commission concluded that the care custodian presumption is broader than it needs to be, protecting people who are not necessarily subject to any heightened risk of undue influence (adults with physical disabilities) and gifts to care custodians that do not seem to be “unnatural” (i.e., gifts to friends and other volunteer caregivers). The Commission is further proposing to narrow the definition of “care custodian” to only include caregivers who provide services for remuneration (i.e., volunteers would not be included). A copy of the Commission’s report and tentative recommendations is available on its Web site at online at Recommendations. The minutes of the Commission’s meeting where the recommendations were discussed are also available online at Minutes.

Definitional Debates
Like other legislation initiatives, including SB 1259 (described above), the effort to revise Probate Code §21350 essentially gets down to how terms like “dependent and elder adults” and “caregivers” are defined. Although the definitional debates in our field may have been academic in the past, our failure to resolve them has become a barrier to effective public policy. Not only do we need to reach agreement within our own network, we're going to have to start working with those other stakeholders with whom we’re increasingly coming into conflict. These include the California Public Defenders Association, which helped kill SB 1259, and Protection and Advocacy, Inc., an advocacy group for people with disabilities in California, which is actively working with the California Law Commission on Probate Code §21350. Strangely, advocates for the elderly in California are increasingly being branded by as ageist in these conflicts owing to the broad definitions we use in defining elder abuse (unlike many states that limit protections to “vulnerable and dependent elders,” many of California’s elder abuse laws cover all elders). Surely, we could resolve some of these conflicts through upfront advocacy and consensus building. One would hope that our common interests exceed our differences.