ICurrentN DevelopmentsBRIEF in Maine Law SPRING ISSUE 2018 / VOL. 30, NO. 2 Index MARIJUANA AND MAINECARE LONG TERM NHD RECOGNIZED BY 1 EMPLOYMENT: REMOVING 6 CARE BENEFITS FOR THE 11 CHAMBERS & PARTNERS THE SMOKE SCREEN ELDERLY

WORKERS’ COMPENSATION: RECENT DECISIONS FROM 3 LAW COURT AND APPELLATE 9 THE LAW COURT DIVISION DECISIONS

Marijuana and Employment: Removing the Smoke Screen

By: Jessica S. Smith, Esq.

he first half of 2018 has been a roller Can I refuse to hire someone or fire an JESSICA S. SMITH Tcoaster of a year for marijuana law in employee that uses marijuana outside Maine. The moratorium on recreational of work? marijuana use ended; the Law Court found No, the fact that someone uses that Maine’s Workers’ Compensation Board marijuana outside of the workplace cannot cannot force an employer/insurer to pay for be the reason you refuse to hire or adversely medicinal marijuana; the FDA has approved • Discipline employees under the affect his or her employment. However, influence of marijuana while engaged the first prescription drug with the marijuana impairment while at work or poor job component CBD; and the Maine Legislature in activities within the course and scope performance can be the reason for refusal of employment. overrode three vetoes by Governor LePage to hire or discipline an employee. Under the regarding a bill to legalize recreational Marijuana Legalization Act, 28-B M.R.S. The important thing is that employers have marijuana and two bills rehabbing Maine’s § 112, an employer may create workplace policies in place that prohibit marijuana medical marijuana laws. policies that: use and impairment and they consistently follow those policies. Such policies might All this activity has Maine employers • Prohibit marijuana in the workplace; asking where they stand when managing include a Drug Free Workplace, those that their employees. This article will address the • Restrict marijuana use in the workplace prohibit smoking any substance while at questions employers are asking and what the and within the course and scope of work, and that impose discipline for poor law is today. employment, and work performance. INBRIEF Current Developments in Maine Law

How to determine if an employee is positive, then an employer can refuse to hire However, an employer is not responsible using marijuana at work? the employee, change the employee’s work under the Workers’ Compensation Act Maine’s substance use law has not assignment, impose discipline, or terminate for paying the cost of medical marijuana caught up to the legalization of recreational the employee. 26 M.R.S. § 685. However, prescribed for an injured worker under marijuana. The law regarding recreational while traditional drug testing can detect MMUMA. Gaetan Bourgoin v. Twin Rivers use of marijuana is clear that an employer marijuana, marijuana stays in a person’s Paper Company, LLC, et al., WCB-16-433, can discipline an employee who is high at system for several weeks. A test that reads 2018 ME 77 ( June 14, 2018)( J. Hjelm) For work; however, what constitutes sufficient positive for marijuana does not prove that a more detailed discussion of Bourgoin, see proof is still uncertain. the employee is under the influence at the the accompanying article in this issue on time the test was taken. workers’ compensation appellate decisions. An employer is able to drug test an employee if they have an approved substance As an alternative, an employer can Significantly, to support its decision in use testing policy and a compelling reason to conduct an impairment analysis to document Bourgoin, the Law Court cited two cases that believe the employee is under the influence. why they believe an employee is impaired. found that employers were not required 26 M.R.S §§ 683, 684. If the employee An impairment analysis considers an to accommodate employees who used refuses to take the test or the employee tests employee’s physical characteristics, workplace medical marijuana, because the federal behaviors, and work performance as evidence CSA preempted state medical marijuana of impairment. If an employer suspects law. This is a strong indication the Law an employee is high at work, they must Court would find in favor of the Employer “THE IMPORTANT THING document why they believe the employee is in an accommodation or discrimination suit under the influence. The person conducting based on the use of medical marijuana. “[A] IS THAT EMPLOYERS the analysis should have a witness to confirm person’s right to use medical marijuana and corroborate any findings. cannot be converted into a sword that HAVE POLICIES IN Can I refuse to hire or fire someone would require another party…to engage who uses medical marijuana? in conduct that would violate the CSA”. PLACE THAT PROHIBIT Bourgoin, at ¶ 24. No, the Maine Medical Use of Marijuana MARIJUANA USE AND Act (MMUMA) allows an employee to use How does the federal law affect an medical marijuana and their employment employer’s state law requirements? IMPAIRMENT AND THEY cannot be adversely affected because they This area of the law is still very much use medical marijuana. As of July 9, 2018, developing. The Department of Justice CONSISTENTLY revisions of MMUMA became law. These under the Obama administration had issued revisions not only protect patients and their an advisory letter stating that the federal FOLLOW THOSE caregivers, but also anyone that is involved government was not going to delegate in the marijuana industry. Therefore, the resources or funds to prosecuting parties that POLICIES. SUCH fact that an applicant or employee works or violated the federal CSA when complying has worked at a marijuana manufacturing with state law. However, the Trump POLICIES MIGHT facility, a manufacturing testing facility, or for administration issued a rescission of this INCLUDE A DRUG FREE a dispensary cannot be a factor in the hiring policy. In Bourgoin, the Law Court found that process or be the basis of any change to an this policy was transitory and that whether or WORKPLACE, THOSE employee’s terms of employment. This also not the federal government was committed to applies to directors and officers associated enforcing the law, it had nothing to do with THAT PROHIBIT with these organizations. the existence of the law. “The magnitude of Can an employer regulate the use of the risk of criminal prosecution is immaterial SMOKING ANY medical marijuana at the workplace in this case. Prosecuted or not, the fact at all? remains that Twin Rivers would be forced SUBSTANCE WHILE AT to commit a federal crime if it complied with Yes, the law does provide that an the directive of the Workers’ Compensation WORK, AND THAT employer can prohibit employees from using Board.” Bourgoin, at ¶ 28. medicinal marijuana if their use would put However, on June 25, 2018, the FDA IMPOSE DISCIPLINE the employer in violation of federal law, or if an employee’s administration of marijuana approved the first prescription derived from a component of the marijuana plant. The FOR POOR WORK on the premises of the business is inconsistent with the use of the premises. Additionally, prescription is Epidiolex and is derived from CBD, a component of the marijuana PERFORMANCE.” an employer can prohibit the smoking of marijuana on its premises if it prohibits all plant, which does not cause euphoria or smoking (marijuana, tobacco, e-cigarettes). intoxication like the THC component of the 22 MRS § 2430-C. plant. Epidiolex is approved to treat seizures in children who suffer from Lennox-Gastaut 2 INBRIEF Current Developments in Maine Law and Dravet syndrome.; Because CBD is Summary of what an employer can 6. Refuse to be complicit in any activity classified as a Schedule I Drug and is illegal do to limit marijuana use in the where the employer would necessarily for use under the CSA, the developer of workplace: violate federal law to comply with state Epidiolex conducted studies to assess the 1. Prohibit employees from using recreational marijuana laws. abuse-potential of the drug in order to win marijuana at work or coming to work In conclusion, the legal landscape DEA approval for medical use. Prior to the impaired. surrounding marijuana use in the workplace, actual release of the drug for prescription especially the use of medical marijuana, use, the DEA and FDA will review the data 2. Discipline employees under the influence of recreational marijuana while engaged is volatile. New state and federal laws and to make a scheduling determination for regulations, as well as court decisions, Epidiolex, separate from marijuana. in activities within the course and scope of employment. will continue to influence an employers’ While this new approval and new obligations to employees who use marijuana. scheduling does not affect Maine Law at 3. Conduct drug testing of employees who Future interpretations of the Law Court’s the moment, it could in the future. The new an employer reasonably believes is under decision in Bourgoin are likely to have a schedule classification of Epidiolex opens the the influence of recreational marijuana. significant impact on how employers comply door for rescheduling and FDA approval of 4. Prohibit smoking or the administration of with state laws and regulations. other CBD based prescriptions. If CBD or medical marijuana on workplace premises. specific prescriptions that contain CBD are 5. Refuse to pay for medical marijuana no longer Schedule I drugs, the manufacture, prescribed for an injured worker under distribution, dispense, or possession would the Workers’ Compensation Act. not be illegal under the CSA.

Workers’ Compensation: Law Court and Appellate Division Decisions By: Stephen W. Moriarty, Esq.

STEPHEN W. MORIARTY

Employer Responsibility for Medical prescribed under medical supervision in were inconsistent with each other. Marijuana accordance with a state law. Under MMUMA The issue was finally addressed in a ince the enactment of the Maine Medical a “qualifying patient” may be prescribed recent decision of the Law Court. The ​SUse of Marijuana Act (MMUMA) a marijuana for medical use, and Section 206 employee had sustained an original back conflict sprang into existence between the of the Workers’ Compensation Act requires injury in 1989 and had been totally disabled Act and the federal Controlled Substances an employer to pay for reasonable and proper ever since. Conventional treatment proved Act (CSA), which classifies marijuana as medical treatment as well as medicines. unsuccessful in alleviating his symptoms or in an unlawful Schedule I drug, even when Therefore, from the outset the two statutes restoring work capacity. Ultimately in 2012 3 INBRIEF Current Developments in Maine Law he obtained a medical marijuana certification had overreached its authority in enacting how much time may have passed since the and since that time had used marijuana to the statute. Nevertheless, it is unmistakably injury occurred. In the following years the control chronic pain. He then filed a Petition clear that the Board may no longer order employer community invested considerable for Payment requesting his employer to pay an employer to pay for the cost of medical effort to amend Section 306(1) to reverse the for the cost of the marijuana. A Hearing marijuana, even though the injured worker Wilson decision, as the effect of that case was Officer granted the Petition in 2015, and may otherwise qualify for a certification to delay the commencement of the statute the Appellate Division affirmed in 2016. under MMUMA. of limitations indefinitely until such time as The Law Court then accepted the case for Since Bourgoin was decided, two panels an employer had an obligation to file a First appellate review. of the Appellate Division have vacated ALJ Report. Ultimately the Legislature amended In a 5-2 decision, the Law Court in decisions ordering employer payment of Section 306(1) effective August 30, 2012. Bourgoin v. Twin Rivers Paper Company, LLC, marijuana. See, Crandall v. University of Maine Since then the Law Court has never had an 2018 ME 77 ( June 14, 2018), the Court System, Me. W.C.B. No. 18-22 (App. Div. opportunity to interpret the language of the examined the two statutory schemes in 2018) and Doten v. Domtar Industries, Inc., Me. amended statute, but in a recent decision the detail and ruled that “compliance with W.C.B. No. 18-23 (App. Div. 2018). Appellate Division confronted the matter “head on” and set forth the proper method both is an impossibility.” The decision is Average Weekly Wage narrow in its focus and is based upon the for applying the amended statute. federal supremacy of acts of Congress over The employee worked for the same In Bickmore v. Johnson Outdoors, Me. W.C.B. state laws, frequently referred to as federal employer for 52 weeks preceding a December No. 18-18 (App. Div. 2018) the employee preemption. The Court found that MMUMA 17, 2014 injury, but for approximately 13 of sustained two separate injuries eight years presented a case of “conflict preemption,” those weeks she was out of work for non- apart while working for the same employer in which there is a direct conflict between occupational reasons. During this period of but when different insurers were on the risk. state and federal law. The Court concisely time she received STD benefits which were The insurer at the time of the second injury described the controlling issue as follows: substantially lower than her customary weekly filed a Petition for Award seeking to establish earnings. In determining the average weekly Consequently, when framed in terms the compensability of the first injury and wage, the ALJ excluded from consideration a corresponding obligation on the part of of the conflict preemption rubric, the the weeks in which the employee received dispositive question presented here the first insurer to contribute to payment STD benefits and took the remaining weeks of benefits owed to the employee. The first is whether Twin Rivers is necessarily into consideration in arriving at an average. in violation of the CSA if it were to insurer had actually paid medical expenses The employer appealed to the Appellate in connection with this injury but had never comply with the Board’s order to pay for Division. the medical marijuana that Bourgoin is been required to file a First Report. More authorized to purchase pursuant to the In Thibeault v. Twin Rivers Paper Company, than six years from the date of the last MMUMA. LLC, Me. W.C.B. No. 18-20 (App. Div. 2018) payment had elapsed before the duty to file the Division ruled that STD benefits were a First Report arose. Stated in the alternative, the Court asked “can not similar or analogous to vacation pay and In its opinion the Division set forth the Twin Rivers be required to pay for Bourgoin’s should not be considered in determining the acquisition and use of marijuana – conduct complex legislative history behind the 2012 average weekly wage. The Division found amendment to Section 306(1), and the details that is proscribed by federal law but allowed that during the period in which the employee by the State because a MMUMA certification of that history are beyond the scope of this had been taken out of work by her physician summary. Ultimately, the Division concluded had been issued to him?” In examining the she received no wages, earnings, or salary matter, the Court found that the actual risk that the amendment lacked clarity and was from her employer. The Division found susceptible of different interpretations. of criminal prosecution was immaterial to the that including the weeks of STD benefits result, as an order directing Twin Rivers to Indeed, the Division found that it was would artificially deflate the average weekly not clear exactly what the Legislature had pay for marijuana would force it to commit wage and would not fairly compensate the a federal crime. intended and observed that the Legislature employee for the loss of earning capacity had never specifically stated that it was acting Accordingly, the Court found that following the injury. to modify Wilson. Because the meaning of “Because the CSA preempts the MMUMA Accordingly, the Division found that the the statute was found to be ambiguous, the when the MMUMA is used as the basis ALJ had properly excluded the STD benefits Division analyzed the legislative history in for requiring an employer to reimburse an received during the weeks in which she did detail and concluded that the Legislature employee for the cost of medical marijuana, not work and had correctly calculated the had in fact acted to limit the scope of Wilson. the order based on the MMUMA must average weekly wage. yield.” The Court vacated the decision of Specifically, the Division held as follows: the Appellate Division and remanded the Statute of Limitations …we conclude that the appropriate matter with instructions to deny the Petition Ten years ago the Law Court ruled in interpretation of section 306(1) as for Payment. Wilson v. Bath Iron Works, 2008 ME 47, 942 A.2d amended is: except as otherwise provided Significantly, the Court did not invalidate 1237 that the two-year statute of limitations in section 306, a claim is barred two years the MMUMA or suggest that the Legislature does not begin to run until the employer after the date of injury or, if within that files a First Report of Injury, regardless of two year period the employee’s employer 4 INBRIEF Current Developments in Maine Law

is obligated to file a first report under Inc., Me. W.C.B. No. 18-17 (App. Div. 2018), section 303 and fails to do so, two years the Petition for Award was granted and the from the date the employer files the first employee was given the protection of the Act. “IN PARTICULAR, IF report However, the claim for incapacity benefits THE DATE THAT AN Thus, the Division held that if an employer was denied pursuant to Section 214(1)(A) is not required to file a first report within on the grounds that a bona fide offer of EMPLOYER BECOMES the two year period immediately following employment within the restrictions had been an injury, the statute of limitations bars a rejected without reasonable cause. There OBLIGATED TO FILE claim filed after that point. was conflicting evidence on this issue: The employer’s evidence showed that an offer A FIRST REPORT AND The Division then addressed the had been made while the employee argued issue of whether the amended version of that no such offer had been extended. As THE DATE THAT THE Section 306(1) could be applied retroactively. the finder of fact, the ALJ accepted the The panel found no express or implied testimony from the employer’s witnesses, and EMPLOYER ACTUALLY legislative intent that the amendment the Appellate Division affirmed, finding that should be given retroactive effect. However, an ALJ has full authority to select between FILES A FIRST REPORT the panel concluded that this finding was the testimony of conflicting witnesses. not determinative, and that retroactive OCCUR AFTER THE application must be resolved by considering On the Petition for Reinstatement, the employee evidently had made only a the timing of two events. In particular, EFFECTIVE DATE OF if the date that an employer becomes vague and limited reference to the matter obligated to file a first report and the date during litigation, without actually requesting THE 2012 AMENDMENT, that the employer actually files a first report reinstatement. No mention of the issue was occur after the effective date of the 2012 made in the employee’s written position THE AMENDED amendment, the amended version of Section paper or in post-hearing proposed Findings 306(1) will therefore apply to determine of Fact. Following in the footsteps of VERSION OF whether or not a claim is barred by the statute Henderson v. Town of Winslow, Me. W.C.B. of limitations. Accordingly, because of the No. 17-46 (App. Div. 2017) and Waters v. SECTION 306(1) WILL passage of time the first insurer in Bickmore S.D. Warren Company, Me. W.C.B. No. 14-26 had no obligation to file a first report for the (App. Div. 2014), the panel found that the THEREFORE APPLY TO initial injury until long after the amendment ALJ committed no error in finding that the took effect. All claims with respect to the claim for reinstatement had been abandoned. DETERMINE initial injury were barred by the statute of The key significance of the decision is that limitations. all issues raised by the parties, whether in WHETHER OR NOT A the nature of claims for benefits or defenses This is an extremely important decision to such claims, must be explicitly developed CLAIM IS BARRED BY and resolves a number of questions that and maintained both during litigation and have remained unanswered since the 2012 in the post-litigation stage in drafting closing THE STATUTE legislative effort to modify or reverse the memos and proposed Findings of Fact. When scope of Wilson. Carriers and self-insureds a party barely mentions an issue at all and OF LIMITATIONS.” can now determine with greater accuracy fails to support its position with developed whether or not the statute of limitations on argumentation, the issue will be found to a particular claim has expired. have been waived. Waiver of Issues The employee filed a Petition for Award resulting from a December 8, 2015 injury to her neck and left hand. She also filed a Petition for Reinstatement. She had not worked for the employer since the date of injury, and a dispute arose as to whether the employer had offered her suitable employment which had then been rejected without good and reasonable cause. Also in dispute was the issue of whether or not the employee had properly preserved her claim for reinstatement. In Ornberg v. Pineland Farms Potato Company, 5 INBRIEF Current Developments in Maine Law MaineCare Long Term Care Benefits For The Elderly By: Charles C. Hedrick, Esq.

I. OVERVIEW edicaid, known in Maine as MaineCare, covers the cost of long term care for CHARLES C. HEDRICK Melderly adults who meet income and asset limits and medical criteria. According to the Maine Health Care Association (“MHCA”), a trade association which represents long term care facilities, 73% of the nursing facility residents in Maine receive MaineCare. Also according to the MHCA, 75% of the residents in assisted living facilities in Maine which accept MaineCare (not all such facilities do) receive MaineCare. The following statics from Genworth Financial, Inc., show the cost of paying for long term care with your own resources:

Average Private Pay Rate for a Semi-Private Nursing Facility Room (2017) an applicant in a residential care facility and $40/month for an applicant in a nursing Location Daily Rate Monthly Rate Annual Cost facility. Because of the minimal size of the Lewiston Area $275 $8,365 $100,375 personal needs allowance, and the fact that Portland Area $325 $9,870 $118,443 the applicant is restricted to having less than $10,000 in savings and countable assets, it is State Median $301 $9,140 $109,683 unlikely that the applicant would be able to pay the carrying costs of any residence, let Average Private Pay Rate for a One Bedroom Assisted Living Facility (2017) alone a $750,000 residence, for long. Location Daily Rate Monthly Rate Annual Cost B. Asset Limits When the Applicant is Married Lewiston Area $178 $5,400 $64,800 If the applicant is married, and if his Portland Area $181 $5,500 $66,000 or her spouse is not also on MaineCare or State Median $161 $4,890 $58,680 applying for MaineCare, then the applicant is called the “institutionalized spouse” and the applicant’s spouse is called the “community spouse.” When there is a community spouse, the asset limits are substantially different from II. ASSET LIMITS when the applicant is single. For instance, A. Asset Limits for a Single Person the rule that the applicant is ineligible for To qualify for MaineCare, the person who needs long term care (the “applicant”) is MaineCare if his or her equity interest in subject to strict asset limits. If the applicant is unmarried, then the asset limits generally the primary residence exceeds $750,000 are: less than $10,000 (consisting of less than $2,000 in “countable assets” and $8,000 in does not apply if the applicant’s spouse is savings), a vehicle, prepaid burial arrangements up to $12,000, and a primary residence residing in the residence. How much the worth not more than $750,000 net of the outstanding balance of any mortgage. Although community spouse may keep in other assets the $750,000 primary residence exclusion may sound generous, MaineCare requires depends on whether the institutionalized the applicant to apply almost all of his or her income toward his or her cost of care and spouse is entering a nursing facility or a Medicare and other medical insurance premiums. The “personal needs allowance” (i.e., the residential care facility. If the institutionalized amount of income an applicant is allowed to keep for spending money) is $70/month for spouse is entering a nursing facility, then 6 INBRIEF Current Developments in Maine Law the community spouse may keep $123,600 is filed can be critically important. income must be paid to the residential care in countable assets. This amount is called C. Exemption for Assets Transferred facility as the individual’s “cost of care” (i.e., the “Community Spouse Asset Allowance.” to Spouse copay). The same is true for an unmarried The Community Spouse Asset Allowance MaineCare recipient in a nursing facility, is above and beyond the $10,000 that the An important exception to the transfer except that the personal needs allowance is institutionalized spouse may keep and is penalty is that transfers from one spouse to $40/month. above and beyond the value of a vehicle and the other are not penalized. This provides a valuable opportunity for last minute planning A. Income Provisions for Residential the primary residence. If the institutionalized Care Facilities spouse is entering a residential care facility, in the case of a married couple when one then the institutionalized spouse is subject to spouse is healthy and wants to remain in the In the case of a married MaineCare the same asset limits discussed previously but community and the other spouse needs long recipient in a residential care facility, the the community spouse is allowed to keep an term care. Even with respect to exempt assets, community spouse is allowed to keep all of unlimited amount of assets. such as a vehicle or a primary residence, it is the community spouse’s income. In addition, often good practice to transfer such assets to the “spousal living allowance” allows the the community spouse before the applicant community spouse to retain a portion of the III. TRANSFERS OF ASSETS applies for MaineCare. That is to prevent a institutionalized spouse’s income. However, A. 5-Year Look Back MaineCare lien from attaching to the assets the spousal living allowance is subject to in the event that the community spouse dies stringent asset limits and is capped the When an applicant applies for before the institutionalized spouse. amount needed to bring the community MaineCare, DHHS audits that person’s D. Exemption for Assets Transferred spouse’s income to 100% of the Federal finances for the preceding 60 months. This Poverty Level for one. is known as the 5-year look back. If the to Disabled Child applicant is married, the audit includes the Assets may be transferred, without B. Income Provisions for Nursing spouse’s assets. The purpose of the audit is to penalty, to the transferor’s child who does Facilities see if the applicant or the applicant’s spouse or would meet the SSI criteria of total and In the case of a married MaineCare transferred assets for less than fair market permanent disability or blindness. The recipient in a nursing facility, the income value within the look back. transfer may be made directly to the child provisions for the community spouse are B. Transfer Penalty or to a trust established for the sole benefit more generous. Again, the community spouse of the child. In the case of an applicant with is allowed to keep all of the community For each $8,476 transferred during a blind or disabled child, this exemption spouse’s income. If the community spouse’s the 60 month look back for which the presents an opportunity both to bring the income does not equal the “Minimum applicant did not receive fair market value, applicant within the MaineCare asset limits Monthly Income Standard” (currently DHHS assesses a penalty of one month of and to preserve assets for the benefit of the $2,057.50/month), then the community ineligibility for MaineCare. The penalty is blind or disabled child. spouse is allowed to keep enough of the assessed regardless of whether or not the institutionalized spouse’s income to raise transfer was made by the applicant or by the E. Exemption for Primary Residence Transferred to Caregiver Child the community spouse’s income to the applicant’s spouse. For example, if you apply Minimum Monthly Income Standard. The for MaineCare, and during the 60 month The primary residence may be community spouse’s income allowance can look-back your spouse spent $85,000 helping transferred, without penalty, to a child over be increased to a maximum of $3,090/ your grandchildren pay for college, then age 21 if the child resided in the home for at month to extent that the community spouse’s DHHS would take the $85,000 transferred least two years prior to the applicant entering housing expenses exceed a threshold amount and divide it by $8,476. The result would a nursing facility and provided care which (currently $617.25/month). be a 10 month penalty, meaning that for enabled the applicant to live at home rather the first 10 months after your MaineCare than in a nursing facility for that period. Prior application was approved MaineCare would to the transfer a letter should be obtained V. ESTATE RECOVERY not pay for your long term care. The transfer from the applicant’s primary care physician The Maine Department of Health and penalty applies regardless of whether or documenting that the above requirements Human Services (“DHHS”) may assert a not the transfer was eligible for the annual were met. claim against the estate of a MaineCare exclusion or for the educational or medical recipient for the amount of benefits paid. expenses exclusion from the federal gift tax. IV. INCOME Significantly, DHHS is prohibited from If a significant gift was made, then it might enforcing a claim against the estate of be wise for the family to muster other assets In the case of an unmarried MaineCare deceased recipient until the recipient has to pay for the individual’s long term care recipient in a residential care facility, the no surviving spouse, no surviving child who and wait until 60 months have elapsed since recipient is allowed to keep $70/month as is under age twenty-one, and no surviving the month of the transfer before filing a a personal needs allowance (i.e., spending child who is blind or permanently and MaineCare application, thereby avoiding the money) and enough income to cover totally disabled. When a MaineCare claim transfer penalty in its entirety. In other words, Medicare and other medical insurance otherwise would fully deplete the recipient’s the timing of when a MaineCare application premiums. The remainder of the individual’s estate, DHHS has the discretion to reduce 7 INBRIEF Current Developments in Maine Law its claim to permit reimbursement of an principal’s health deteriorated and the making home improvements, or purchasing heir or devisee who used his or her own principal needed long term care, the gifting a new vehicle for the community spouse. resources to protect the recipient’s real estate power would allow property to be transferred If those steps are insufficient to bring during the last two years that the recipient out of the principal’s name to his or her the community spouse’s assets within the was institutionalized. spouse. Likewise, when an individual has $123,600 limit, then the community spouse a child who meets the SSI criteria of total can use the excess assets to purchase a and permanent disability or blindness, that Medicaid compliant annuity. A Medicaid VI. MAINECARE PLANNING individual might want to have a durable compliant annuity must: (1) be owned by TECHNIQUES power of attorney authorizing the agent to the community spouse; (2) be irrevocable A. Durable Power of Attorney With make gifts of the individual’s property, either and non-assignable; (3) have a term that Gifting Power outright, or in a sole benefit trust, for the does not exceed the community spouse’s For a married couple at or near benefit of the principal’s blind or disabled life expectancy; (3) provide for payments retirement age, it often is advisable for each child. in equal amounts, with no deferral and no spouse to have a durable power of attorney B. Testamentary Trust for the Benefit balloon payments; and (4) name the State that authorizes the agent to make gifts of of the Surviving Spouse of Maine as the remainder beneficiary for the amount of MaineCare benefits paid on the principal’s property to the principal’s Transfers to a trust generally are subject spouse. That is the case even if both spouses behalf of the institutionalized spouse. If the to the 5-year look back and to a transfer annuity complies with those requirements, are healthy and might not need long term penalty. A significant exception applies to a care for many years. In the event that the then it is not counted against the $123,600 testamentary trust established for the benefit Community Spouse Asset Allowance. of the individual’s spouse. A testamentary The annuity payments are treated as the trust is a trust set forth in an individual’s Community Spouse’s income and are not “LONG-TERM CARE IS will which is not funded until the individual required to be applied to the institutionalized dies. When a married individual, at or near spouse’s cost of care. Substantial sums, ENORMOUSLY retirement age, is updating his or her estate including funds in an IRA, can be sheltered plan it might make sense for him or her to using a Medicaid compliant annuity. EXPENSIVE. FOR consider leaving all or a portion of his or her estate in trust for the benefit of his or INDIVIDUALS WHO her surviving spouse, rather than outright VII. CONCLUSION to the surviving spouse. The trustee is given Long-term care is enormously expensive. MEET MEDICAL, broad discretion as to whether or not to make For individuals who meet medical, asset, distributions. If distributions are made, they ASSET, AND INCOME and income requirements, MaineCare are to be made only to or for the benefit can provide substantial assistance with the of the surviving spouse. This arrangement REQUIREMENTS, cost. However, the MaineCare rules are keeps the deceased spouse’s assets out of complex and subject to frequent change. the name of the surviving spouse, but MAINECARE Individuals who might want to, or need to, preserves their availability to be used for avail themselves of MaineCare now or in the CAN PROVIDE the surviving spouse’s benefit. If the surviving future should seek advice from knowledgeable spouse is healthy, the trustee can freely make counsel to mitigate the impact of transfers SUBSTANTIAL distributions to the surviving spouse. If the made within the 5-year look back and to surviving spouse needs long term care and implement strategies to preserve assets for ASSISTANCE WITH plans to apply for MaineCare, then the themselves, their spouses, and their children. trustee can terminate distributions thereby THE COST. HOWEVER, preventing the trust assets from being deemed to be an available resource of the surviving THE MAINECARE spouse. Upon the surviving spouse’s death, the trust terminates and the trust assets are RULES ARE COMPLEX distributed to the couple’s adult children or to other specified beneficiaries. AND SUBJECT TO C. Medicaid Compliant Annuity FREQUENT CHANGE.” When one spouse needs nursing home care but the community spouse exceeds the $123,600 Community Spouse Asset Allowance, basic steps to reduce the countable assets should be explored, such as paying off debt, prepaying for burial arrangements,

8 INBRIEF Current Developments in Maine Law Recent Decisions From The Law Court By: Matthew T. Mehalic, Esq., CPCU

MATTHEW T. MEHALIC

Evidence of Damages Inadmissible the rental agreement) on the grounds that it then transmitted to another, the records Hearsay was inadmissible hearsay because the exhibits will be admissible pursuant to M.R.Evid. n Avis Rent A Car System, LLC v. Darron were not “business records” under M.R.Evid. 803(6) if the foundational evidence from IBurrill, 2018 ME 81 (June 19, 2018), the 803(6). the receiving entity’s employee is adequate Law Court held that evidence of damages In the affidavit, the Avis claims examiner to demonstrate that the employee had presented by Avis was inadmissible hearsay, “certified that the report was kept in the sufficient knowledge of both businesses’ and as a result, a damages award in favor of regular course of Avis’s business, that the regular practices to demonstrate the Avis was vacated. affiant maintained the report as part of her reliability and trustworthiness of the information. The case arose from a vehicle rental duties as a claims examiner for Avis, and contract in Nevada. Burrill had rented a that it was made reasonably soon after the Burrill at ¶ 18. Under the circumstances, the vehicle from Avis, declined the loss damage incident.” Burrill, at ¶ 8. The District Court Court held that it would have been necessary waiver protection, thereby agreeing to be determined that a sufficient foundation was for the Avis claims examiner to demonstrate responsible for all damage to the vehicle, provided and admitted the affidavit and all of knowledge that, and subsequently was involved in an accident the attachments. Based on this information • the producer of the record at issue damaging the vehicle. Despite multiple the Court entered a judgment awarding Avis employed regular business practices for requests by Avis to Burrill for reimbursement damages of $15,342.57, attorney’s fees of creating and maintaining the records that for the damages to the vehicle, Burrill ignored $5,985, and costs of $433.24. were sufficiently accepted by the receiving those requests. Avis filed a Complaint in On appeal, the Law Court held that the business to allow reliance on the records Maine District Court, Skowhegan, for admission of the affidavit and exhibits thereto by the receiving business; breach of contract. Summary judgment was (with the exception of the rental agreement) • the producer of the record at issue entered in Avis’ favor for breach of contract was improper because it was inadmissible employed regular business practices for liability, but left for hearing a determination hearsay. The Court found that the Avis claims transmitting them to the receiving business; of damages. The Court recognized that examiner was not a qualified witness to certify Nevada law controlled the substantive law the records as required by M.R.Evid. 803(6) • by manual or electronic processes, the of Avis’ claims, but Maine law controlled and 902(11). Previously in Keybank Nat’l Ass’n receiving business integrated the records the procedural law, including the evidentiary v. Estate of Quint, 2017 ME 237, 176 A.3d 717 into its own records and maintained them law. and Beneficial Me. Inc. v. Carter, 2011 ME 77, through regular business processes; At the damages hearing, Avis presented 25 A.3d 96, the Court had held that, • the record at issue was, in fact, among the an affidavit of an Avis claims examiner that [a] qualified witness is one who was receiving business’s own records; and included as exhibits: the rental agreement; a intimately involved in the daily operations • the receiving business relied on these vehicle valuation report prepared for Avis by of the business and whose testimony records in its day-to-day operations. J.D. Power and Associates; a bill for towing showed the firsthand nature of his Id. Because the proper foundation was not the damaged vehicle; and a record of the knowledge but who need not be an established by the Avis claims examiner’s vehicle’s salvage value. Burrill objected to employee of the record’s creator. Where affidavit the J.D. Power and Associates’ the admission of the affidavit (other than records are created by one business and valuation report, the bill for towing, and

9 INBRIEF Current Developments in Maine Law the record of the vehicle’s salvage value were or rental value of the land.” Id. at 16. The 411. The rule prohibits admission of evidence excluded. The damages award was vacated. cost to repair the land was sufficient evidence that a “person was or was not insured against Under Nevada contract law, when a to justify the jury award. liability” “to prove whether the person acted plaintiff establishes liability for breach of Another issue involved in the case was negligently or otherwise wrongfully.” If the contract, but fails to prove specific damages, whether introduction of evidence relating to purpose for seeking admission of evidence the plaintiff is only entitled to nominal the conduct of Jewett’s insurer was an abuse pertaining to an insurer is for establishing damages. The Court remanded to the District of discretion by the trial court. Following something other than that prohibited by Court for a finding of nominal damages and the spill, Jewett undertook clean-up efforts M.R.Evid. 411, admission is within the trial what the appropriate attorney’s fees would in conjunction with the Maine Department court’s discretion. This decision in certain be for an award of nominal damages. of Environmental Protection and the Wests. contexts could have far reaching effects. This decision is important to recognize Jewett’s team consisted of its safety director, an engineer and environmental scientist, the avenues a party has to admit documents “THE COURT HELD typically considered “business records” and and a representative of Jewett’s insurer. Of the 9000 gallons of oil and kerosene spilled, who the potential authenticators of such THAT SUBSTANTIAL documents could be. It is also important in only 7,800 gallons was captured through that it identifies that admissibility should not the clean-up efforts. The Wests wanted to INTERFERENCE be taken for granted and all the enumerated excavate to remove the uncaptured spill. requirements set forth in the Rules of However, Jewett’s team decided that natural WITH THE PHYSICAL Evidence and case law need to be satisfied attenuation was the most cost-effective in order for valid admissibility. means to address the remaining spill. Jewett CONDITION OF THE stalled the performance of the DEP order Evidence of Specific Diminution in to excavate and emails existed that the WESTS’ LAND WAS Market Value Not Necessary to Prove Jewett team discussed the idea of parking Nuisance and Evidence of Insurer excavation equipment on the property to NOT IN DISPUTE Conduct Admissible create the appearance that excavation would In Kathleen West et al. v. Jewett and Noonan be imminent, with the hope that excavation BECAUSE OF THE Transportation, Inc., 2018 ME 98 ( July 12, could be avoided. Additional soil samples 2018), the Law Court addressed whether, were taken by Jewett, which revealed that SPILL OF 9000 when a Defendant has caused a physical lower contamination levels were present invasion of the plaintiff’s property, the than had existed in the prior year. The GALLONS OF OIL AND plaintiff must present evidence of a specific DEP determined based on these samples diminution in value in order to establish that excavation was no longer necessary. KEROSENE ON THE common law nuisance. The case arose out of Jewett sought to exclude evidence of LAND. BECAUSE a 9000 gallon oil and kerosene spill by Jewett its team’s conduct, including reference to its and Noonan Transportation, Inc. (“Jewett”) insurer, arguing that admission of evidence THE INTERFERENCE onto a parcel of property owned by the Wests. referencing an insurer was prejudicial. Jewett In the Wests’ common law nuisance also argued that reference to the existence WAS ‘MORE THAN claim, they presented evidence that they of an insurer influenced the jury’s award had intended to subdivide and develop the of compensatory damages. The evidence MERE PHYSICAL land upon which the spill occurred. As a had been admitted in support of the Wests’ result of the spill, four potential developers punitive damages claim. No punitive DISCOMFORT OR they had engaged in discussion pre-spill lost damages were awarded by the jury. interest in the project. The Wests’ expert, The Law Court held that because the MENTAL ANNOYANCE, a civil engineer, testified at trial that the Wests did not seek to admit the evidence of cost to restore the land would be $490,000. Jewett’s insurer’s conduct as proof that Jewett THE WESTS DID The jury awarded the Wests this amount was insured against liability, but to convince in compensatory damages for the nuisance the jury that the team assembled by Jewett, NOT NEED TO claim. including the insurer, acted with malice when SHOW A SPECIFIC The Court held that substantial it sought to delay the clean-up process, the interference with the physical condition of trial court did not abuse its discretion in DEPRECIATION IN THE the Wests’ land was not in dispute because of admitting the evidence. The Court also found the spill of 9000 gallons of oil and kerosene that there was no evidence of how Jewett was MARKET OR RENTAL on the land. Because the interference was prejudiced by the admission of this evidence “more than mere physical discomfort or where no punitive damages were awarded. VALUE OF THE LAND.’ ” mental annoyance, the Wests did not need This decision is important in that the to show a specific depreciation in the market Court elaborated on the reach of M.R.Evid. 10 INBRIEF Current Developments in Maine Law NH&D Recognized by Chambers & Partners hambers & Partners USA 2018 has recognized NH&D as a Top Firm in the category Litigation: General Commercial. C Additionally the following NH&D attorneys have received the “Ranked Lawyer” distinction in the publication:

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INBRIEF Current Developments in Maine Law

Spring 2018 issue 2018 Spring

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