Federal and Arizona Laws Governing Financial Abuse of the Elderly

FEDERAL AND ARIZONA LAWS GOVERNING FINANCIAL ABUSE OF THE ELDERLY

Are There Special Laws that Protect Elderly People from Being Exploited in Financial and Investment Transactions?

This article discusses the different federal and Arizona statutes that permit and offer protection to the elderly against financial abuse and exploitation.

I. Arizona Statutes

While understated and not in the forefront of the minds of the general public, elder abuse, and particularly financial abuse, is a serious issue.  In Arizona, between 4,600 and 6,900 seniors will experience some type of abuse each year, with reports of such abuse increasing over 150% over the last decade.  Financial Exploitation of the Elderly, Arizona Elder Abuse Coalition, (December 11, 2012), http://www.azag.gov/seniors/FinancialExploitationoftheElderly.pdf.  As adults grow more vulnerable due to age, physical and/or mental incapacities, they frequently rely on others for support.  This makes them quite susceptible to neglect, fraud, and financial and investment exploitation.  Thus, there are numerous Arizona and federal laws affording protection to financial institutions and their individual employees who make good-faith efforts to report any suspected financial abuse or exploitation to law enforcement or Adult Protective Services.  In respect to Arizona, the Arizona Revised Statutes deal with obligatory reporting of elder abuse and any corresponding immunity from such liability.  While there are federal statutes in place reflecting this topic, the Arizona statutes do not conflict with the federal laws dealing with confidentiality and privacy.

Firstly, there is A.R.S. § 46-454, which covers an individual’s duty to report any abuse, neglect and exploitation of a vulnerable or incapacitated adult, providing that:

“A physician, registered family nurse practitioner, hospital intern or resident, surgeon, dentist, psychologist, social worker, peace officer or other person who has responsibility for the care of an incapacitated or vulnerable adult and who has a reasonable basis to believe that abuse or neglect of the adult has occurred or that exploitation of the adult’s property has occurred shall immediately report or cause reports to be made of such reasonable basis to a peace officer or to a protective services worker. The guardian or conservator of an incapacitated or vulnerable adult shall immediately report or cause reports to be made of such reasonable basis to the superior court.

An attorney, accountant, trustee, guardian, conservator or other person who has responsibility for preparing the tax records of an incapacitated or vulnerable adult or a person who has responsibility for any other action concerning the use or preservation of the incapacitated or vulnerable adult’s property and who, in the course of fulfilling that responsibility, discovers a reasonable basis to believe that exploitation of the adult’s property has occurred or that abuse or neglect of the adult has occurred shall immediately report or cause reports to be made of such reasonable basis to a peace officer, to a protective services worker or to the public fiduciary of the county in which the incapacitated or vulnerable adult resides. If the public fiduciary is unable to investigate the contents of a report, the public fiduciary shall immediately forward the report to a protective services worker.”

The statute further details what must be incorporated in the reports mentioned above, including the names and addresses of the person having control of custody of the adult, the adult’s age and nature of their incapacity or vulnerability, the nature and extent of the injuries or exploitation of the adult’s property, and any other pertinent information.  Id. Moreover, the statute broadens the scope of those who must report, by including those persons who have any reasonable basis to believe that abuse or neglect of an incapacitated or vulnerable adult has occurred, and those having custody or control of medical or financial records of a vulnerable adult.  Id.

Additionally, A.R.S. § 46-456 chiefly looks to target those in a place of caring for the financial welfare of an elderly individual, including relatives and/or friends who supervise the property of an elderly individual who himself is no longer capable of doing so.  The statute makes it illegal for those in care of the assets to use them for their personal benefit, unless the Superior Court of Arizona has appropriately approved the action.  Id. Furthermore, the legislature in the statute has defined assets fairly broadly for the protection of any future elderly victim.

Lastly, the Arizona statutes, under A.R.S. § 46-453, provide criminal or civil immunity for any person making a complaint or report in light of elderly financial abuse, unless the individual reporting acted with malice or intent to abuse, exploit or neglect the vulnerable victim in question.

II. Federal Statutes

Firstly, federal statutes make it clear that the federal Right to Financial Privacy Act of 1978 does not apply to reports of financial abuse made to state or local government authorities.  According to 31 U.S.C. § 5318(g)(3), any financial institution that makes a disclosure of any possible violation of law or regulations or a disclosure pursuant to the statute, and any director, officer, employee, or agent of such institution, will not be liable to any person under any law or regulation of the United States, for such disclosure or for any failure to notify the person involved in the transaction or any other person of such disclosure.

The federal government has also subsidized functions and grant programs to the states in order to battle financial abuse and exploitation of the elderly.  In general, it is mandated that the Department of Health and Human Services provide funding State and local adult protective services offices that investigate reports of the abuse, neglect, and exploitation of elders and/or collect and report data relating to the abuse, exploitation and neglect of elders. 2 USCS § 1397m-1(a)(1).

Additionally, there is an established adult protective services grant program under which the Secretary annually awards grants to the States for the purposes of enhancing adult protective services.  Id. Subject to other federal grants and funding, “the amount paid to a State for a fiscal year under the program under this subsection shall equal the amount appropriated for that year to carry out this subsection multiplied by the percentage of the total number of elders who reside in the United States who reside in that State.”  Id. The types of activities that the grant funds are authorized for include those orchestrated by the adult protective services and the agency of the State government with legal responsibility for providing adult protective services within the State.  Id.

Furthermore, the Secretary awards “grants to States for the purposes of conducting demonstration programs.”  Id. at § 1397m-1(c).  These funds can be used to institute demonstration programs that test:

“(A) training modules developed for the purpose of detecting or preventing elder abuse;

(B) methods to detect or prevent financial exploitation of  elders;

(C) methods to detect elder abuse;

(D) whether training on elder abuse forensics enhances the detection of elder abuse by employees of the State or local unit of government; or

(E) other matters relating to the detection or prevention of elder abuse.”  Id.

Federal statutes further provide that States are to use their federal grant allotments for specific uses, including, consulting with area agencies on developing and enhancing programs to address elder abuse, neglect, and exploitation and/or “activities to develop, strengthen, and carry out programs for the prevention, detection, assessment, and treatment of, intervention in, investigation of, and response to elder abuse, neglect, and exploitation (including financial exploitation), including:

(1) providing for public education and outreach to identify and prevent elder abuse, neglect, and exploitation;

(2) providing for public education and outreach to promote financial literacy and prevent identity theft and financial exploitation of older individuals.”  42 USCS § 3058i(b).       

To arrange for a consultation concerning your legal matter, please contact Robert Mitchell at robertmitchell@mitchell-attorneys.com, or at (602) 468-1411.

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