Frequently Asked Questions: Powers of Attorney

Co-authored by Misty Watson & Patrick Murphy.

What is a power of attorney?

• A power of attorney appoints a person to act as an agent for the person who executes the document. An agent is authorized to act for another person to the extent that the document permits. The acts of the agent (also known as the attorney-in-fact) will legally bind the person who granted him or her the power to act.
• Powers of attorney come in a variety of forms. There are two major types of powers of attorney: financial and healthcare. These powers can be combined into one document, but are frequently separate documents.
• Financial powers of attorney can be effective immediately or become effective upon the incapacitation or disability of the person who executed the power of attorney.
• Powers of attorney can also be limited to a certain period of time or last until they are revoked by the person who executed the power of attorney.

What is a durable power of attorney?

• A durable power of attorney remains effective during such periods of time that the individual who executed the document is considered incompetent.
• A durable power of attorney must be designated as such in the title.
• Specific wording must be used for a power of attorney to last during any period of time the person who signed the document is considered incompetent.

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Securities Law Enforcement Reacts to the Crisis: Congress, the Courts and the Regulators

I recently published an article discussing the reactions of each of the three branches of government to the economic crisis which became so evident in mid-2008 (Soraghan, Joseph, “Securities Law Enforcement Reacts to the Crisis: Congress, the Courts and the Regulators,” Inside the Minds, New Developments in Securities Litigation 55-76. Aspatore Books/Thomson-Reuters March 2010). The article points out that, not surprisingly, the economic crisis, highlighted by the names AIG, Lehman Brothers, Madoff and others, called to action Congress, the regulators, and possibly even the Supreme Court.

Brought before Congress since late 2008 have been proposals of huge B and not-so-huge B scope. (For example, the proposals would add more supervision and regulation of bank holding companies, the asset-backed securitization process, OTC derivative products and markets, private fund investment advisers and securities rating agencies, among many other functions.)  Most have since been adopted in bills passed separately by the Senate and the House of Representatives, and await review by joint conference committees. It is likely that most will be adopted in some form, after joint conference action, and signed into law. They will significantly affect the conduct of business in this country, and therefore how attorneys must advise their clients.

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The St. Louis Broker-Dealer: June 2010

To the St. Louis region small broker-dealers, compliance officers, legal officers and banks with securities related activities: We present the twelfth issue of our newsletter.

Social Media – Linked In, Facebook, Twitter, etc. have become a major method of communicating not only personal information, but also business information. And with so many possible clients utilizing it, small broker-dealers must consider using it in their business in order to just keep up with their competition.

But the characteristics of social media which are so positive – quickness and freedom of the user and of responses of third parties – cause difficulty in this industry, which requires control and supervision of all communications with the public. The Financial Industry Regulatory Authority (“FINRA”), in its January 2010 Regulatory Notice 10-06, guides – and restricts – broker-dealers in their use of social media.

I have asked a “guest writer” to advise on these issues: Cliff Campeau, a Partner with Evolutionize, LLC. Cliff’s statements and opinions in this piece are his, and are not necessarily mine or those of Danna McKitrick, P.C.

The “Business Memo” part of this newsletter continues the discussion of theories of, and avoidance of, liability of broker-dealers (“BDs”) and registered representatives (“RRs”). This time we analyze “unauthorized trading.”

If you would like copies of past issues or have any questions arising from the contents of this or past issues, please call or e-mail me, Joe Soraghan, at (314) 726-1000 or jsoraghan@dmfirm.com at no charge.

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Voting by E-Mail

E-mail can save us from meetings, round robin telephone calls, faxes and conference calls. It’s especially time saving when we want to avoid the traditional meeting for something that seems so simple or mundane. We avoid getting in the car driving to a meeting just to say “I move that we approve the carpet cleaning contract.” That’s silly when you could just send out an e-mail and ask for everyone’s vote.

It might read: “Is everyone OK with Bob’s carpet cleaning bid? We can get a really good deal if we sign with him today. Let me know ASAP.” You get a quick response and business is accomplished right from your desk, or your smartphone. There’s just one problem. It’s illegal. No, I don’t mean you’ll get arrested. I mean that voting by e-mail isn’t enforceable. Let’s say you are the President (or committee chair) of a local charity, chamber or foundation, and you send out that carpet cleaning e-mail. A majority of your board (committee) members approve without comment. You sign the contract.

Your regular meeting comes up the next week, and a couple of the members (who were on vacation when the e-mail went out) arrive with information about Bob the carpet cleaner. While he’s inexpensive, he’s also a convicted felon and he’s been known to say some pretty unflattering things about your organization. More importantly, a board member’s uncle is in the business and made a major contribution last year. Let’s give the contract to uncle Vinnie, they say; and before you know it, Vinnie is hired. But you already signed the contract in reliance on that e-mail.

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The New “Red Flags” Rule for Healthcare Providers

Identity theft is rampant in today’s society. As many as ten million individuals per year become victims of identity theft and the number of medical identity theft cases are on the rise. In response to this growing problem, several federal agencies jointly promulgated regulations that require certain entities to implement a plan to detect, prevent, and correct identity theft. The “Red Flags Rule” applies to various types of entities, including most healthcare providers. Thus, entities ranging from a small doctor’s office to a hospital must be in compliance with the new Red Flags Rule by the date on which the Federal Trade Commission (“FTC”) will begin enforcing the Rule.   After that date, an entity may be penalized up to $3,500 per violation. Thus, healthcare providers need to take steps to comply, including creating an Identity Theft Prevention Program.

Before understanding the Rule, a healthcare provider must determine whether it is subject to the Rule in the first place. Under the Red Flags Rule, any “creditor” that offers or maintains one or more “covered accounts” is required to develop and implement a written Identity Theft Prevention Program. A “creditor” is defined as any person who regularly extends, renews, or continues credit. Healthcare providers will be considered a “creditor” if they regularly bill patients after the completion of services, allow payment plans after services have been rendered, or aid patients in obtaining credit from other sources (see note).

Under the Rule, a “covered account” is defined as (1) an account a creditor offers or maintains that involves or is designed to permit multiple payments or transactions, and (2) any other account the creditor offers or maintains for which there is a reasonably foreseeable risk of identity theft. The second portion of the definition is very broad and may include records that an entity may not recognize as a “covered account.” For healthcare providers, this definition of “covered account” generally encompasses patient and employee records. Thus, the vast majority of healthcare providers are subject to the Red Flags Rule and must comply.

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The New Security Breach Notification Rule

On August 24, 2009, the Department of Health and Human Services (“HHS”) published in the Federal Register interim final regulations and accompanying commentary with regard to breach notification requirements for unsecured protected health information (“PHI”) under the Health Information Technology for Economic and Clinical Health Act (“HITECH Act”).

This HHS publication triggers two key deadlines, one commencing September 23, 2009, when employers and health care providers (“covered entities”) will be required to comply with the Act’s security breach notification requirements; and, the other, is February 22, 2010, the 180 day enforcement grace period announced by HHS. Accordingly, during this 180 day grace period, covered entities need to digest the new requirements, revise existing HIPAA policies and procedures and develop new ones, put in place a security incident response plan, train employees, confer with business associates about security breach response and negotiate modifications to existing business associate agreements. Employers and health care providers who discover a security breach after that date and fail to provide the required notices may be targeted for an enforcement action.

A security breach notification will only apply to “unsecured PHI”. PHI that is not encrypted or completely destroyed is considered “unsecured” by HHS. The only way, generally, that HHS has said that PHI would be considered “secured” is if it encrypted or completely destroyed. If that is the case, then the covered entity does not need to develop internal procedures for notification of security breaches. In any event, those practices should review their existing Notice of Privacy Practices to update it with respect to the new notification rule.

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Special Needs Advocate Newsletter

Social Security for Disabled Children and Adults

Social Security provides a necessary financial supplement to any individual with a disability as defined under federal law. There are three types of social security available to an individual with a disability. Social Security Disability Insurance is available to those individuals who have worked at least 10 years and do not currently earn more than $980.00 a month from employment. For those individuals whose disability began before the age of 22, the work history is based upon the individual’s parent. Supplemental Security Income is available to any disabled individual who meets the “limited income and resources” test. The third benefit available under Social Security is Medicare. Medicare is a government health insurance program.

Social Security Disability Insurance

Individuals whose disability began before the age of 22 may be eligible to receive Social Security Disability Insurance (SSDI), or what people commonly refer to as “Social Security.” Typically, an individual receives SSDI based upon his or her work history and amount of prior earnings. However, an adult disabled before the age of 22 may have little or no prior earnings and would not typically qualify for SSDI.

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Missouri Shared Work Program

A Unique Opportunity to Reduce Employee Hours While Still Qualifying Them for Unemployment

In a struggling economy, employers have to make difficult decisions pertaining to their businesses and employees. Faced with “hopefully” temporary losses in business, many employers are forced to terminate employees losing their experience and knowledge. On the other hand, if the employer elects to reduce hours, the employees receive lesser pay and are ineligible to collect unemployment benefits.

Fortunately, employers do have a unique alternative under the Missouri Employment Security Law whereby they can retain their hourly workforce and reduce hours while at the same time allowing their employees to receive a proportional supplement of unemployment benefits. This article applies only to such programs that involve hourly-paid employees.

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10 Ways for Companies to Stay Union Free With or Without the Passage of the Employee Free Choice Act

The Employee Free Choice Act (EFCA), in its present form, would result in three sweeping changes to labor law. First, the EFCA allows unions to more easily organize employees by eliminating the secret ballot in a National Labor Relations Board election. Instead, the union would merely present signed cards supporting unionization (authorization cards) of 50 percent plus one of the targeted work units to the National Labor Relations Board. The company would then be required to recognize the union as the collective bargaining agent and bargain with the union.

Secondly, the EFCA forces companies to reach an agreement with the union within 90 days of the National Labor Relations Board certification of the union or either party can demand mediation. If an agreement is not reached at the mediation table within 30 days, the contract is referred to binding arbitration and the arbitration results will then be binding on both parties for two years.

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The History of Missouri Special Needs Trusts

Genesis of Current Law: Case Study

A Special Needs Trust (also known as Supplemental Support Trust) is a legal mechanism that allows families to provide funds to relatives with special needs without interfering with their government benefits. The Missouri Division of Family Services (DFS) and the Social Security Administration analyze the special needs person’s assets annually to determine if he or she qualifies for government benefits, such as Medicaid and Supplemental Security Income.

If that person has more than $1,000-2,000 (depending on the program) in assets, he or she will be disqualified and will not receive the benefits. Most families need to maintain government benefits for family members with special needs, but also want to provide additional support.

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