U.S. Department of Health and Human Services
This report was prepared under contract #HHS-100-02-0018 between the U.S. Department of Health and Human Services (HHS), Office of Disability, Aging and Long-Term Care Policy (DALTCP) and Boston College. For additional information, you may visit the DALTCP home page at http://aspe.hhs.gov/daltcp/home.htm or contact the ASPE Project Officer, Pamela Doty, at HHS/ASPE/DALTCP, Room 424E, H.H. Humphrey Building, 200 Independence Avenue, SW, Washington, DC 20201. Her e-mail address is: firstname.lastname@example.org.
The research reported herein was performed pursuant to a contract awarded to Boston College Graduate School of Social Work by the Department of Health and Human Services (HHS), Office of the Assistant Secretary for Planning and Evaluation (ASPE). The opinions and conclusions expressed are solely those of the authors and should not be construed as representing the opinions or policy of Boston College or HHS/ASPE or any agency of the Federal Government. The views expressed herein have not been approved by the House of Delegates or the Board of Governors of the American Bar Association, and should not be construed as representing the policy of the American Bar Association.
This report addresses the liability issues that may arise in government-sponsored consumer-directed personal assistance programs (CDPAS). In analyzing these issues, the report focuses on the programs implemented in Arkansas, Florida and New Jersey as part of the Cash and Counseling Demonstration, but also briefly addresses variations on the liability analysis for two well-established CDPAS programs, California's In-Home Supportive Services Program and New York's Consumer-Directed Personal Assistance Program. The purpose of this report is twofold: first, to identify the circumstances in which negligence or other misconduct could result in liability and what persons or entities are likely to be liable; and second, to identify steps that can be taken to reduce exposure to such liability.
The methodology for this analysis involved review of all available program materials and operational procedures, relevant law and regulations, available literature and reports on the state programs,1 and telephone interviews with several key contacts from the three Cash and Counseling programs and the California and New York programs. Legal research revealed that there are very few reported cases that discuss liability issues in the context of government sponsored consumer-directed care. Consequently, much of the legal analysis in this report is based on either the application of basic legal principles of tort law or analogies to comparable situations where appropriate. However, in the case of claims between workers and consumers, there is considerable case law that is directly analogous, in the context of both traditional agency care and privately employed care providers.
Although not identical, the Cash and Counseling programs in Arkansas, Florida and New Jersey share the following characteristics:
All participants are Medicaid recipients who have been determined to be eligible for specific numbers of hours of home care services, based on their level of need or claims history.
The consumer's eligibility level for traditional Medicaid long term care benefits is converted into a cash benefit amount or "allowance."
Consultants, who are private agencies or individuals with whom the state has contracted, provide supportive services to consumers to help them convert the cash allowance into a spending plan. Most of the consumer's allowance typically is used to pay wages to CDPAS workers, but consumers have the discretion to spend part of their allowance on a variety of goods and services that enable them to function more independently, such as equipment and home modifications.
Consultants are also responsible for advising the consumer about hiring, training and supervising personal assistance workers.
If the consumer is unable to or does not wish to assume the responsibility of directing his or her own care, the consumer has the option of designating an authorized representative.
In addition to providing these supportive services from consultants, the state contracts with one or more fiscal intermediary agencies that are available to perform employer bookkeeping functions for the consumer.
Once the spending plan has been completed and the workers hired, consultants maintain regular contact with the consumer, and consultants and/or fiscal agents periodically review consumer records to check for errors or overspending.
In this model of consumer-directed care, the state relinquishes considerable control over services to consumers. This raises the concern that in the absence of state control, there may be a decline in the quality of care and that: (1) poor care may result in injury to consumers; and (2) the state or its agents may be held responsible for the injury. However, the preliminary data from the Cash and Counseling Demonstration supports the conclusion that there is no increase in risk of injury to consumers under the consumer-directed model of care, compared to agency-provided care.2
Building on that conclusion, this analysis of liability risk (i.e., the risk of being held legally responsible for the injury suffered by another) finds that the risk of liability as between the consumer and the worker is no greater than that encountered under agency provided care. In addition, because in many cases family members serve as CDPAS workers under this model of care, there is, as a practical matter, less likelihood that the parties will seek compensation for personal injuries in the courts.
Putting aside any impact of familial relationships, personal assistance workers face a heightened theoretical risk of liability if they are negligent in performing caregiving duties, compared to agency provided care, because in the latter structure the agency shoulders the ultimate responsibility for injury under the doctrine of vicarious liability. Absent the agency, the individual worker employed by the consumer bears the sole legal responsibility for injuries caused by the worker's negligence. However, the practical likelihood of liability is influenced by the extent of assets or insurance owned by a prospective defendant. Individuals providing personal assistance are likely to have insignificant assets compared to agencies and in practical terms, are therefore likely to be "judgment proof."
In the case of injury to workers while on the job, liability risk is affected dramatically by the availability of workers' compensation. Where workers are not covered by workers' compensation benefits, consumers who have assets are more likely to be subject to suit for compensation if a worker is injured on the job, because of the absence of other remedies. Workers' compensation provides a relatively simple administrative remedy to injured workers and, at the same time, bars most personal injury actions by the worker against the consumer.
With respect to other actors in the provision of services -- i.e., the state sponsoring agency, consultants, fiscal agents, public authorities (as in California), or consumer-directed provider agencies (as in New York) -- this analysis finds that their liability risk is limited to the specific tasks they perform, with minimal risk of vicarious liability for personal injury negligently caused by personal assistance workers. The risk of direct liability is also relatively very low because of each actor's limited functions. Thus, in general, delivering home care services through the Cash and Counseling model or a similar consumer-directed structure results in a relatively low level of liability risk where employer and support functions are "unbundled" in a clearly defined and communicated fashion.
Seeking to provide a broad taxonomy of all possible tort liability risks, this report identifies the following liability risks for each of the actors in consumer-directed care:
Section II.A and Section II.C discuss the following liability risks for workers:
Negligent caregiving. Case law demonstrates that individual workers face a significant risk that they may be found liable if they are negligent in performing their caregiving duties, including leaving the consumer unattended. However, if a worker's income and assets are low or modest, as is the case for many in this field, the worker may, in practical terms, be "judgment proof." From this perspective, the risk of enforceable liability for negligent caregiving is a risk that is not likely to materialize (Section II.A.1).
Negligence in non-caregiving matters. A worker may be found liable for negligence in non-caregiving activities, most notably creating a hazard in the consumer's home. However, here, again, if a worker does not have sufficient income or assets to pay the judgment in a damage action, this is a risk that is not likely to materialize (Section II.A.2).
Failure to report abuse or neglect. A worker may be a mandatory reporter under the state's adult protective services (APS) law and may therefore be both civilly and criminally liable for failure to report abuse or neglect that comes to attention of the worker. However, liability can easily be avoided by complying with the APS law (Section II.A.3.a). As a practical matter, workers employed by the consumer or the consumer's representative, especially if the worker is a family member, may have greater emotional or economic barriers to reporting, compared to agency-employed workers.
Liability for abuse or neglect. A worker may be criminally liable under the state's APS law if the worker abuses or neglects the consumer. This is a low level risk because of the infrequency of encountering worker misconduct that rises to the level of abuse or neglect. Of course, on the rare occasions when it does occur, the injury to the consumer can be extremely serious (Section II.A.3.b).
Liability for injury to third party caused by the worker. The worker and the consumer are potentially liable for injuries to third parties caused by the worker while acting within the scope of employment. The worker's liability is direct, i.e., flowing directly from his or her own action or inaction, while the consumer's risk of liability is vicarious, arising from the employer-employee doctrine of respondeat superior. Unless the worker and the consumer have sufficient income or assets to pay the judgment in a damage action, this too is a risk that has a low probability of materializing (Section II.C).
Liability for injury to third party caused by consumer. A third party may claim that an injury inflicted by a consumer was caused by the negligent care or supervision of the worker, thus making the worker liable for damages. However, such claims are rare and are likely to be dismissed for failure to prove that the worker owed a duty of care to the third party (Section II.C).
Section II.B and Section II.C discuss the following liability risks for consumers:
Negligence in maintaining the workplace. Consumers face a distinct risk of liability for on the job injuries to individual workers they employ unless those employees are covered by workers' compensation. The existence of workers' compensation coverage is a key protection for both workers who risk injury and for consumers who, without it, face significant liability risk. The case law demonstrates that a consumer may be found liable for negligence in maintaining the workplace -- that is, for creating or failing to correct hazardous conditions in the consumer's home. If the consumer lives with a family member or friend who is the owner or renter of the consumer's home, that family member or friend may also be liable on a theory of premises liability (Section II.B.1). It is true that the consumer could be liable for injury caused to any person invited into his or her home on these same legal grounds. However, the frequency and level of involvement of a personal assistance services worker in the home raise the risk to a substantially higher level, although no higher than is faced with agency-provided services.
Injuries caused by the consumer's mental impairment. Cases in which consumers with mental impairments engage in negligent or aggressive behavior that causes injury to the worker are more complicated, because state law varies on whether the consumer's mental impairment will be recognized as a defense in an action for damages. The trend is to recognize the defense when asserted by a defendant who is confined to a residential facility, and there is case law suggesting that in at least some circumstances, this defense will also be accepted in the home care setting (Section II.B.2).
Wrongful discharge and other employment-related claims. As an employer, the consumer is potentially liable for a variety of employment related claims, such as discharge in violation of an employment agreement or employment actions that are discriminatorily motivated. However, this is a low frequency risk, and consumers can be protected from liability by a carefully worded employment agreement and by being made aware of any applicable state employment laws (Section II.B.3).
Liability for injuries to third parties caused by the workers. Consumers may be liable as employers on the basis of vicarious liability (also referred to as respondeat superior) for injuries caused to third parties by their workers while acting within the scope of employment. For example, an auto accident caused by the worker while running an errand for the consumer could result in such liability (Section II.C).
Section II.D discusses the following liability risks for authorized representatives:
Liability for negligence and for breach of fiduciary duty. In addition to potential liability for negligence (that is, failure to exercise ordinary care) in performing the duties of an authorized representative, an authorized representative may well have a heightened "fiduciary duty" to the consumer. However, in most cases authorized representatives are relatives or friends whose caregiving commitment is high, as is their level of care in performing their duties, thus significantly reducing the likelihood of negligence or breach of fiduciary duty (Section II.D).
Liability for negligent hiring of a worker. The parent or other legally responsible person who is acting as the consumer's authorized representative may be liable for injuries or damage that results from a worker's failure to properly supervise or care for the consumer. However, case law on negligent hiring and parental liability strongly suggests that the authorized representative would be liable only if the representative: (1) knew or had reason to know that the consumer was likely to cause such damage or injuries; and (2) the authorized representative was negligent in hiring the personal assistant responsible for the supervision or care of the consumer (Section II.D).
Liability as the employer of the worker. The authorized representative normally will be considered the joint employer, or the sole employer of the worker if the consumer has no ability to self direct his or her care, and therefore will have potential employment related liability (see Section II.B.3), including vicarious liability for torts committed by the worker that cause injury to third parties.
Liability for abuse, neglect or exploitation of the consumer. In states that provide for a civil cause of action for abuse of a vulnerable adult, the representative may be liable to the consumer if the representative abuses, neglects or exploits the consumer. The representative could also be criminally liable. Again, this is a very low-incidence risk. Finally, the representative may be a mandatory reporter under the state APS law (Section II.D).
Because the role of the fiscal agent is limited (processing payroll records and issuing paychecks, and, in some cases, fiscal monitoring), the liability risks for fiscal agents are correspondingly quite limited. The report does not address the various contractual obligations to the state that the fiscal agent may incur. The report does analyze the following personal injury liability risks for fiscal agents in Section III:
Liability to consumers for breach of contract. In some states, the fiscal agent (FA) enters into an agreement directly with the consumer, creating the possibility of a breach of contract action by the consumer if the FA fails to issue a paycheck to the worker and the consumer, as a result, loses the worker's services and suffers injury. However, the possible theories of liability are speculative and difficult to prove, and even if the plaintiff is nonetheless successful, the amount of damages a consumer or worker will be able to recover is likely to be insignificant (Section III.A).
Tort liability to consumers and workers for failure to pay worker. Negligence resulting in failure to pay the worker could also give rise to a tort action by the worker or the consumer against the FA. Here, too, there are serious legal obstacles to these claims, such as the difficulty of proving causation, and in any case, the amount of damages at stake is likely to be insignificant (Section III.B).
Liability to consumers for negligent monitoring. A fiscal agent's negligence in monitoring a consumer's expenses and detecting problems could result in negative consequences for the consumer such as dis-enrollment from the CDPAS program, but here again there are serious legal obstacles to recovery, most notably the consumer's contributory negligence in deviating from the spending plan (Section III.C).
Liability for failure to report abuse or neglect. A fiscal agent may be a mandatory reporter under the state's adult protective services (APS) law and may therefore be both civilly and criminally liable for failure to report abuse, neglect, or exploitation that comes to attention of the FA. Liability can easily be avoided by complying with any applicable APS reporting requirements (Section III.D).
In the Cash and Counseling model of CDPAS, consultants, rather than the state, are assigned the most critical program functions -- assisting the consumer in designating an authorized representative and developing the spending plan and the back-up plan; providing consultation with regard to hiring, training and supervising workers; and monitoring program quality and initiating action to correct problems. While the fact that the consultant's functions are so critical certainly creates a significant risk of liability, this risk is mitigated by the fact the consumer explicitly bears primary responsibility for decisions regarding development of the spending plan and the back-up plan and selection and supervision of a worker, including hiring/firing, training, and scheduling. This separation of responsibility should protect the consultant from being deemed vicariously liable for injury to consumers caused by workers or by deficiencies in the spending plan or back-up plan. The way the program defines the functions of the consultant (or case worker by any other name) is critical to the liability risk analysis, for liability risk follows function.
Consultants can effectively protect themselves against liability by: (1) being very clear in practice about staying within the bounds of consultation versus case management; (2) complying with program procedures and instructions carefully and executing all responsibilities conscientiously and with reasonable care; and (3) making it clear all times that it is the role of the consumer, not the consultant, to make decisions regarding the consumer's care.
Section IV discusses the following liability risks for consultants:
Liability for negligent designation of an authorized representative. To the extent that the consultant takes on responsibility for screening and/or approving an authorized representative, the consultant may be liable to the consumer for negligence in investigating, evaluating, or approving that selection, if the representative subsequently is negligent in performing his or her responsibilities or otherwise fails to act in the consumer's best interest (Section IV.A).
Liability for negligent assistance in the development of the spending plan and back-up plan. If the consultant provides inadequate or incorrect advice, the consultant may be liable for negligent assistance in the development of the spending plan or back-up plan. In states that give consultants authority to approve the spending plan and/or the back-up plan, the consultant may be liable for negligent approval of a deficient plan (Section IV.B).
Liability for negligent assistance in hiring, training and supervising workers. Similarly, if the consultant provides inadequate or incorrect advice regarding hiring, training or supervising workers, the consultant may be liable for negligence if the consumer who relies on that advice is subsequently injured (Section IV.C).
Liability for negligent monitoring. A consultant may be liable if the consultant is negligent in monitoring program quality or fails to initiate action to correct problems identified in the course of monitoring, resulting in injury to the consumer (Section IV.D).
Liability for failure to report abuse or neglect. A consultant may be a mandatory reporter under the state's adult protective services (APS) law and may therefore face civil and/or criminal liability for failure to report abuse or neglect that comes to attention of the consultant (Section IV.E).
In the Cash and Counseling model of CDPAS, the state's risk of liability for personal injury is greatly reduced. Most of the functions that were performed by the state or a provider agency in traditional Medicaid-funded home care services are now unbundled and performed by consumers (e.g., hiring and supervising workers), consultants (e.g., advising consumers and monitoring care), and fiscal agents (e.g., payroll services for workers). The core functions that continue to be performed by the state, such as enrolling consumers and responding to serious problems in connection with consumer care, carry some risk of liability, but if the state program is well structured and operated in accordance with that structure, this risk is minimal.
Section V discusses the following liability risks for states:
Liability for failure to obtain adequate consent. State programs that elect not to screen applicants to determine whether the applicant is an appropriate candidate for CDPAS risk liability if the state enrolls a consumer without first obtaining the consumer's voluntary agreement to participate in the program (Section V.A).
Liability for failure to adopt adequate criteria and procedures for selection of an authorized representative for consumers who lack the capacity to designate a representative. The relatively informal criteria and procedures for selection of an authorized representative that are now in effect in the Cash and Counseling states create the risk that the state may be liable if a representative mismanages a consumer's care, particularly the care of a consumer who lacks the capacity to designate a representative (Section V.B).
Liability for negligent response to a problem or complaint regarding consumer's care. The state may be liable if it fails to exercise ordinary care in responding to a problem or complaint regarding a consumer's care However, this liability risk is no different from that faced in agency-provided care (Section V.C).
Liability as alleged employer of the individual worker. If the state is found to be the employer of the individual worker, the state will be vicariously liable for torts committed by that person while acting within the scope of employment and for workers' compensation if the worker is injured on the job. However, in the Cash and Counseling model, where the consumer, and not the state (or fiscal agent), controls the key employer functions (hiring/firing, assigning and scheduling tasks, training, and supervision), the risk of such liability is negligible (Section V.D).
Vicarious liability for consultant's or fiscal agent's negligence and other tortious conduct. Even though the state identifies an individual who provides consultant or fiscal agent services as an independent contractor, if the state exercises sufficient control over the independent contractor, the state can nevertheless be found to be the employer of that contractor and will be vicariously liable for the contractor's negligence and other tortious conduct. In the Cash and Counseling model, the state typically does not exercise such control (Section V.E).
Liability based on nondelegable duty. The state will be liable if a tortious act is committed by the consultant or the fiscal agent while carrying out a "nondelegable duty" of the state. The concept of "nondelegable duty" has been used in those cases where a court concludes that as a matter of policy, the government should be responsible for the torts of independent contractors who are carrying out the work of or executing a responsibility of the government. However, courts vary in how they approach this issue, and the content of statutes or regulations setting forth the state's responsibilities in connection with CDPAS is likely to determine whether a nondelegable duty exists (Section V.E).
Liability for failure to provide effective emergency back-up care. The Cash and Counseling Demonstration states required consumers to develop back-up strategies as part of the planning process, but if the state takes on a system-wide role in securing or providing emergency back-up, the state will take on significantly greater risk of liability for failure of back-up care, depending upon the level of responsibility and function assumed. For example, under the current federal Independence Plus Medicaid waiver templates for consumer-directed personal assistance programs, the state is required to "assure" emergency backup care for consumers. Undertaking a responsibility to "assure" emergency back-up brings with it a high level of liability risk if the state's emergency backup system fails and the consumer suffers injury as a result. (Section V.F).
CDPAS programs can be structured in many ways, and it is beyond the scope of this report to identify and analyze the liability issues associated with each of the variations on CDPAS. However, Section VI of the report does address two well-established CDPAS programs, California's In-Home Supportive Services (IHSS) Program and New York's Consumer-Directed Personal Assistance Program (CDPAP). There are several significantly different liability issues that may arise in the California IHSS program:
The liability risks for counties and state agencies involved in IHSS are small because they have been given broad statutory immunity. However, the state does assume the responsibility of covering all workers with workers' compensation protection (Section VI.A.2).
The public authorities in each county act as the employer of IHSS workers for purposes of collective bargaining, but the public authorities have been granted statutory immunity which shields them from vicarious liability arising out of the consumer-worker relationship (Section VI.A.3).
The public authorities also perform certain other designated functions, such as: screening and referral of workers through employment registries; providing training; providing emergency back-up support; and monitoring services. The immunity provision for public authorities, unlike that for the state and counties, does not extend to functions such as these that a public authority carries out directly. Therefore, liability risk follows and is proportional to the breadth and depth of the specific function undertaken by the public authority (Section VI.A.3).
The New York CDPAP program is structured around a provider agency, Concepts of Independence, Inc., that serves as the employer of record of the workers for purposes of employee payroll and benefits functions and for purposes of entering into a Medicaid provider agreement with the state. At the same time, the consumer retains responsibility for directing his or her care and services to substantially the same extent as is done in the Cash and Counseling model. Accordingly, the liability issues are substantially similar in the two models, except that all workers are mandatorily covered by workers' compensation through Concepts, the provider agency.
Section VII, Conclusions and Options to Address Liability Risk, reiterates the conclusions reached in Sections II through VI. This section also sets forth an array of steps CDPAS program administrators may want to consider to address the liability risks for each actor in consumer-directed care. The steps include:
Options to Address the Worker's Liability Risks
Options to Address the Consumer's Liability Risks
Options to Address the Authorized Representative's Liability Risks
Options to Address the Fiscal Agent's Liability Risks
Options to Address the Consultant's Liability Risks
Options to Address the State's Liability Risks
The reports that have been prepared to date for the Cash and Counseling Demonstration are available at the Demonstration's website, http://www.hhp.umd.edu/aging/CCdemo/products.html.
Leslie Foster, et al., Does Consumer Direction Affect the Quality of Medicaid Personal Assistance in Arkansas? (2003). [http://aspe.hhs.gov/daltcp/reports/arqual.htm]
|The Full Report is also available from the DALTCP website (http://aspe.hhs.gov/_/office_specific/daltcp.cfm) or directly at http://aspe.hhs.gov/daltcp/reports/cdliab.htm.|