Month: January 2010

Nursing Homes Support Scheme

The new Nursing Homes Support Scheme is now in operation, having replaced the Subvention Scheme, and is already causing headaches for applicants and their relatives.

Background

In 2004, the Government announced that the means by which it had been charging long-stay patients in public nursing homes for the cost of their care was contrary to the law and had to be replaced. The Government attempted to address the problem by rushing the Health (Amendment) (No. 2)  Bill 2004 through the Oireachtas and by providing retrospective validity for historical charges. The presence of “(No. 2)” in the title of a bill is generally an indicator that it was born out of crisis or mishap.

The President convened a meeting of the Council of State to consider the Bill and later referred it to the Supreme Court to test its constitutionality, with the result that the Court found the Bill unconstitutional. The Supreme Court decision left the State open to claims for the repayment of illegally deducted charges and the HSE Health Repayment Scheme was established to deal with such claims.

The Govermment then set about replacing the Subvention Scheme with what was first known as the Fair Deal Scheme, a loaded phrase with which not all might agree, and which is officially titled the Nursing Homes Support Scheme.

Overview of the Scheme

The main features of the Scheme are that both State and patient contribute to the cost of long term nursing home costs and that the patient can defer part of that payment by obtaining a loan from the HSE. In summary:

  • The HSE carries out a financial assessment to establish the patient’s rate of contribution. This can range to a maximum of 80% of the applicant’s income and 5% of the applicant’s assets, both contributions arising on an annual basis. However, the 5% asset contribution only arises in the first three years of care (ie. it is capped at 15% of the applicant’s assets).
  • The first €36,000 of an applicant’s assets is exempted from the financial assessment (€72,000 in the case of a couple).
  • The HSE loan (the official term is Ancillary State Support) will most commonly be used where the applicant’s main or only asset is the principal private residence. Obviously, the Scheme should not require the applicant’s home to be sold to contribute the annual 5% contribution, so that element of the contribution is deferred and recouped from the sale of that property or from the applicant’s estate after death.
  • Whatever the rate of contribution by the applicant, it will never exceed the actual cost of care and all applicants will retain at least 20% of their income.

The Department of Health was anxious to ensure that the Scheme be a lawyer free zone; an understandable concern given its previous experience with the legality of nursing home funding schemes operated by it.

Implications

There is, of course, no reason why a solicitor should be required in order to apply to a State agency for receipt of an entitlement but two legal issues arise:

  1. the implications of the Scheme for an applicant’s assets must be considered; and
  2. what happens if the applicant is not in a position, due to illness, to apply?

The first issue can only be considered in the context of the applicant’s assets and personal circumstances. The Scheme may have unintended consequences and must be borne in mind when when dealing with assets, family transfers of property, when making a will or when executing an enduring power of attorney. For example, the financial assessment will look at income or assets which the applicant has deprived him or herself within the five years leading up to the application.

The second question is a topical one for solicitors, as the Scheme began to operate in early January. If the HSE loan is not required, a specified person may make an application on behalf of the applicant. A specified person is one of the following:

  • the Committee of a Ward of Court, duly authorised;
  • a person appointed by a registered enduring power of attorney which does not prohibit the attorney from making such an application;
  • a Care Representative (within the meaning of section 21);
  • a spouse or partner (within the meaning of the rather awkwardly phrased section 4);
  • a relative of the person who is not less than 18 years of age;
  • a next friend appointed by a court;
  • a legal representative of the person; or
  • a registered medical practitioner, a registered nurse or registered social worker.

These categories of person are specified in decreasing order of priority. If the applicant has diminished mental capacity, the specified person can make the application for State support. However, if an application for a HSE loan is made and the contribution from the applican’t assets to be deferred, it can only be made by one of the first three categories of specified person. More often than not, this requires the appointment of a care representative.

The appointment of a care representative is a limited form of wardship and is, therefore, subject to court oversight. It must be done on notice of motion to the Circuit Court, grounded by an affidavit sworn by the proposed care representative and accompanied by two independent reports, in a specified form, from medical practitioners (a bare letter from the applicant’s GP stating that the applicant has diminished mental capacity, for example, will not suffice).

The procedure to be followed and forms required are set out in these Circuit Court Rules and, while they would benefit from clearer drafting, are not overly complicated. The procedure is a good deal more complicated if the proposed care representative is, for example, a grandchild of the applicant. The procedure requires that documents be stamped and filed and the proposed care representative make a Circuit Court application in person. Many will be happy to do so but many more will not relish the experience.

Of course, the forms include the disclaimer: “You should consider taking legal advice on this document.” This is certainly the case as, if nothing else, errors or complications with the application process could delay it considerably and result in unnecessary stress for both the applicant and his/her family.

Advertisements

Hadji Bey et Cie

Hadji Bey's confections

A very pleasant weekend in Cork included a picturesque stop by the Port of Cork and a trip to the recently flooded Lewis Glucksman gallery in UCC, re-opened on Friday by President Mary McAleese. The current exhibition, Thingamajigs, is subtitled “the secret life of objects” and contains various items from local, private and public collections in Cork. The objects were everyday, but are no longer, and include the above exotic confectionary tins from Hadji Bey et Cie which, I have since learned, was a Cork institution and purveyor of fine confectionary.

The back story to Hadji Bey is fascinating, having been set up in the 1900s by Harutun Batmazian, an Armenian immigrant who fled the pogroms in the Ottoman Empire and exhibited at the Cork International Exhibition of 1902-3. He set up his sweet shop on MacCurtain Street in what is now the Metropole Hotel and lived at St. Patrick’s Terrace. By the time of the 1911 census he appears to have been thriving in Cork with a household including three children. Ireland was, at this time, part of the United Kingdom and Mr. Batmazian shows up in the British national archives as having been naturalised in 1915.

Sadly, it seems the business died out a few decades later when his son retired, but the Hadji Bey brand was set for a relaunch by Urney Chocolates last year. I have yet to see it anywhere, but the packaging is based on the the above original examples.

Pandora Bell, another recently established Irish confectioner, is based in Limerick and seems to have done well over the Christmas season. Despite Ireland’s economic woes, entrepreneurship is not dead and we may even be seeing the beginning of a new tradition of small indigenous producers in Ireland.

Law Society follows emergency guarantee fashion

In late 2009 the Law Society bailed out a specialist insurance broker which provides cover to about 60% of solicitors in Ireland. The guarantee resulted from a crisis not unlike that which led to the Government bank guarantee in 2008. It caused a significant hike in premiums and was a contributing factor in the closure of a number of firms throughout the country.
Irish solicitors cannot incorporate as a company and therefore cannot avail of limited liability. Accordingly, solicitors are personally liable when sued and are required by law to have insurance (referred to as professional indemnity, or PI insurance).
In the 1980s the cost of PI insurance shot up and the profession reacted by establishing the Solicitors Mutual Defence Fund Limited, a specialist insurance broker which is separate from, but effectively a tentacle of, the Law Society. The PI insurance market came full circle in 2009 with rumours of premiums doubling and worse.
A common refrain was that the profession was paying for the mistakes of Michael Lynn and Thomas Byrne, but that assumption is incorrect. Where a client is owed money by a solicitor they may make a claim against the Law Society’s compensation fund; if the money is lost due to the fraud of a solicitor, PI insurance generally won’t cover that loss (see d-f here). The true cause of the PI insurance crisis was bad financial investment decisions made by the SMDF.
Once it became clear, to the Law Society at least, that premiums were going to rocket, the initial approach was to tweak the mandatory requirements, for example by reducing the minimum amount of cover from €2.5 million per claim to €1.5 million. Solicitors’ insurance premiums would likely still increase and they would receive less cover than in previous years unless they opted to top-up their cover.
The annual deadline for renewing insurance cover is 1 December. In Autumn 2009 most solicitors were not hearing from their insurers about renewal. Concern began to grow, as did calls to the Law Society. This resulted in regular email missives from the Law Society to its members. Some of these emails were alarming, such as that on 20 November 2009 informing solicitors that delay was due to “uncertainty until very recently over whether the insurance industry would quote at all”. Others passed the buck, like that on 25 November 2009 asking the main insurance companies to backdate policies which were not renewed on time (with no mention of the regulatory issues arising from the intervening lack of cover).
The other emails are available here: 24 November 2009; 2 December 2009; 4 December 2009; 14 December 2009.
The Law Society’s statement that there was uncertainty as to “whether the insurance industry would quote at all” was interpreted by some as a rather scary indication that the industry saw the legal profession in general as high risk. It did nothing to suggest that the problem might have resulted from the SMDF’s internal problems.
In its 2008 annual accounts published in July 2009, the SMDF revealed the near total loss of value in a Saturn bond in which it invested one third of its portfolio through Bloxham Stockbrokers. When the loss of value of the Saturn bond became known, many expected legal action to be taken and the 2008 accounts stated that Bloxham intended to do so. On 1 December 2009, coincidentally the first day of the new insurance year, the SMDF instituted proceedings against Bloxham in the High Court (2009/10863P, since transferred to the Commercial Court).
On 15 December 2009, with the deadline for renewal safely passed and most solicitors covered, the Law Society revealed to members what was really going on.
On 22nd September, 2009, the directors of the SMDF had the first of a series of meetings with the Society. The directors informed the Society that, as a result of [the Saturn bond] losses, the SMDF would not be in a position to write indemnity business for the new insurance year beginning 1st December, 2009 …
The Law Society claimed that the SMDF held more than 60% of the PI insurance market and their withdrawal would result in either a complete market failure or a massive increase in premiums. Either consequence could result in a huge number of solicitors having no cover and having to cease practising.
The delays and damage, with human and commercial consequences, resulting from this dislocation of the entire Irish legal system could be incalculable.
The result was that the Law Society would guarantee a loan to the SMDF of €8.4 million by a commercial lender on the condition that it provide PI insurance for the year beginning 1 December 2009. This was done without informing members despite the fact, as pointed out by Vincent Crowley, that a debate on insurance issues lasting one and a half hours took place at the Law Society’s AGM on 5 November 2009.
Poor investment decisions are not new to the profession. In 2006 the Law Society paid €22.4 million for a 1.09 acre property at Benburb Street, ostensibly to provide extra space for expansion. According to a report of the purchase in the Law Society Gazette (April 2006, p.12), a lengthy debate on the proposed purchase took place at the Law Society Council, which voted unanimously to purchase the site.
“[O]ne Council member seemed to sum up the view of most when he said that ‘very few purchasers ever regret acquiring the site next door'”.
That appears to have been the full extent of the thinking behind the decision to purchase. Michael Irvine, president of the Law Society at the time, said:
I believe that the great majority of solicitors today, and in the future, will view the purchase of this Benburb Street site, like the purchase of Blackhall Place, as a wise and practical decision made in the long-term interests of the profession.
In 2009, the value of the site was written down to €7 million (Annual Report 2008/9, p.21; Phoenix Annual 2009, p.12). A feasibility study on the potential uses of the site was carried out after the purchase was complete, concluding that, due to current economic conditions, no development will take place.
When the deadline for renewing practicing certificates arrives on 1 February 2010, the Law Society will know which solicitors are operating without insurance and will take steps to close them. It appears likely that the Law Society will seek the introduction of legislation allowing solicitors to incorporate, perhaps along the lines of the UK’s LLP system. Another proposal that has emerged to remedy the PI insurance problem, but is unlikely to attract much support, is that the obligation to hold insurance be abolished. This suggestion is accompanied by the surprising logic that the existence of the obligation to carry insurance has led some solicitors to cut corners in carrying out their work, safe in the knowledge that they can fall back on their insurance.
If nothing else, the debacle may at least cause professional representative bodies to exercise greater care in managing their investment portfolios.
  • Update (16 February 2010): Kelly J has granted Bloxham’s application to join Morgan Stanley to the proceedings.

Wondering what they’ll scan next?

Two recent events have brought airport security back into the headlines:

  1. Umar Farouk Abdulmutallab‘s attempt to detonate explosives on a flight from Amsterdam to Detroit, and
  2. a botched security exercise by the Slovakian authorities which resulted in explosives being imported, undetected, into Ireland.

These events have introduced another exciting and slightly terrifying technology: the full body scanner, the arrival of which in Ireland appears inevitable.

This technology raises, once again, the contemporary conflict between security and privacy. What is sometimes missed in the aftermath of a terrorist attack or attempt is that the conflict requires a balance to be struck, rather than one side trumping the other.

“The big question to [the US] is how to balance the need for personal privacy with the safety and security needs of our country,” said Representative Jason Chaffetz, a Utah Republican who sponsored a successful measure in the House this year to require that the devices be used only as a secondary screening method and to set punishments for government employees who copy or share images. (The bill has not passed in the Senate.)

“I’m on an airplane every three or four days; I want that plane to be as safe and secure as possible,” Mr. Chaffetz said. However, he added, “I don’t think anybody needs to see my 8-year-old naked in order to secure that airplane.”

As technology becomes increasingly sophisticated and invasive, the difficulty in finding the balance increases proportionately.

Some have already reached a clear conclusion: get over it. USA Today plays the out-of-touch politician card with opinion poll suggesting that 78% support body scanners, but legislators voted to ban the machines because they can see through clothing.

It’s a simple choice: safety over modesty, the same trade-off you make to get an annual physical. With the failed Christmas Day bombing plot fresh in mind, the Senate, which has yet to vote on the House bill, should do a better job of sorting priorities.

But this is not the choice facing citizens.

As Gerry Byrne points out, “there is a historical precedent for each security action.”  A corollary of this is that we are not finished with new security measures and are faced with the prospect of invasive security by default, backed up by a mentality that holds you have nothing to fear if you’ve done nothing wrong.

So, the obvious question is: what will they scan next? Unfortunately, we already know the answer: your brain.

It might sound improbable, but “mind reading” technology has been under development for some time. The challenge, for the developers, will be to differentiate between the passenger who is nervous because they plan on blowing up an airplane and the passenger who is just nervous because they have to travel on an airplane; but imperfections in a techology are no guarantee against its introduction.

Security agencies and worried passengers prioritise the implementation of new technological security measures as a source of comfort and are content to worry about civil rights and social issues later. Instead, these issues should be considered at each step. The development of a vast, information-hungry security system is already underway. Where will it stop?

Endnote: The contemporary importance of the right to privacy is handled expertly in an episode of The West Wing which covers nominations to the US Supreme Court and which culminates in a stirring monologue by Sam Seaborn:

The next 20 years it will be about privacy. The internet. Cell phones. Health records. And who’s gay and who’s not. Besides, in a country born on the will to be free, what could be more fundamental than this?

Fans of The West Wing might also remember a relevant 2004 episode in which press secretary C.J. Cregg is asked by a blogger about the development of mind control technology by DARPA. She treats the suggestion as ridiculous, but later discovers that there might be something to the story, albeit to do with mind reading rather than control.

In real life, something similar did happen. A privacy advocate working in Washington DC told me a few years ago of a wide-eyed acquaintance who suggested the existence of such technology. Thinking the suggestion crazy, he nevertheless lobbed in a FOIA request in the event something might come out of it. Sure enough, he received a sheaf of heavily-redacted technological specifications and presentations outlining the technology, then at the early stages of development. Truth really can be stranger than fiction.

Why these calls for the death penalty?

For reasons unknown, the reintroduction of the death penalty in Ireland has become something of a hot topic.

First, a recently retired and highly respected High Court judge calls for its reintroduction so that certain types of murderers “pay the price”. Then, John O’Keefe (Dean of Law at the Dublin Business School) agrees, referring to uncited research which apparently demonstrates the deterrent effect of the death penalty. His contribution is highly charged, with populist statements that range from the vague:

In truly civilised countries, murder means murder.

to the gung ho:

One thing of which we can be certain is that the murderer who receives a lethal injection is now deterred for good. It’s called permanent incapacitation and it always works.

He also raises the old chestnuts of criminals getting off on a technicality and enjoying greater comforts in prison than at home, and refers dismissively to “rehabilitation aficionadoes”.

Now, county councillors from Fianna Fáil and the Green Party have chimed in, despite their lack of a role in national matters concerning criminal justice or the constitution.

Speaking at the January meeting of the Mid-West Regional Authority in Ennis, Co Clare, Cllr PJ Kelly (FF) said that the fear of punishment for crimes among criminals no longer existed.

Mr Kelly said: “I believe that there will be a demand before long for the reintroduction of the death penalty for certain offences. I would support a public debate on the issue.”

Supporting Mr Kelly’s call for a debate on the matter, Cllr Brian Meaney (Green) said: “A debate on the reintroduction of the death penalty is something that would put the focus on the issue of crime and punishment.”

There is a moral argument against the use of the death penalty which people either agree with or they don’t. But many of those calling for its reintroduction do so in apparent ignorance of or disregard for our international obligations and recent history. The attitude of the European Union to the death penalty, for example, can be gleaned from the fact that it marks an annual European day against the death penalty.

The history of the death penalty in Ireland was neatly summarised by the Irish Times when reporting on Mr. Justice Richard Johnson’s comments:

The last person executed in Ireland was in 1954, when Michael Manning was hanged, with the sentence being carried out by English official hangman Albert Pierrepoint. No further executions were carried out and it was abolished in law in 1990.

The abolition of capital punishment is also a condition of EU membership and exists in a protocol to the European Convention on Human Rights, to which Ireland is a signatory.

The 21st amendment inserted [in 2001] a clause preventing the Oireachtas from reintroducing the death penalty without a further referendum. It was passed in a referendum held the same day as the first Nice referendum by 62 per cent of those who voted, with 38 per cent voting against the ban.

In summary:

  1. Executions by death penalty were possible in Ireland until 2001.
  2. The last execution carried out was in 1954.
  3. A public debate and national referendum on the death penalty was carried out within the last decade and resulted in an overwhelming majority of the Irish electorate agreeing to its abolition.
  4. Reintroducing the death penalty would require Ireland to leave both the European Union and the Council of Europe.
  5. Reintroduction of the death penalty would, instead, join us with a colourful club of nations.

There appears no serious reason for this debate to be held at the present time and, Mr. Justice Johnson aside, can only be explained by “law and order” politics.

Small Claims Court open to businesses (a little)

Dermot Ahern (FF/LH; Minister for Justice, Equality & Law Reform) has announced the introduction of new District Court Rules to amend the small claims procedure of the District Court, commonly referred to as the Small Claims Court (SCC). They will take effect from 11 January 2010.

I have written about this before in the context of Fine Gael’s proposals to change the SCC and to accomodate business claims. The new rules are less ambitious than those proposals and allow businesses to use the SCC in respect of goods or services not exceeding €2,000. In effect, the new rules open the SCC to business-to-business claims but maintain the existing limitations on the SCC; the most noteworthy being that a claim cannot be for an unpaid debt.

FG wanted the SCC to allow debt claims by businesses, whether against other businesses or consumers and, while the proposals may have been popular, they did raise balance-of-power concerns. For example, an unrepresented individual could be faced by a large business with daily, in-house experience of such claims. Certainly, FG’s broadening of the SCC would represent a significant function-creep, introduced as a band-aid measure during an economic downturn rather than as part of a programme of civil litigation reform in the District Court.

ISME have called for the jurisdiction of the SCC to be raised for businesses to the limit of the District Court’s jurisdiction and the implication appears to be that solicitors’ fees are the issue for businesses. Fees in the District Court are quite low and many claimants are quite happy to engage a solicitor to take or defend a claim. (As a sidenote, the implicit suggestion by ISME that solicitors’ fees are the problem in this area is interesting given that the vast majority of solicitors’ firms in Ireland are SMEs and are under tremendous pressure, like most other SMEs.)

Yesterday I sat in on a common example of a consumer complaint: a warranty claim for a defective second-hand car. The amount sought was within the SCC’s jurisdiction but three witnesses, including one expert, were questioned and cross-examined. Most parties to a dispute are happy to outsource the management of such a claim to another party (i.e. a solicitor). The SCC is more routinely used used for complaints of a value far smaller than the jurisdiction of the SCC.

Minister Ahern’s amendment is far more modest than the suggestions of FG or ISME and do not raise the concerns mentioned in relation to FG’s proposal. It is certainly a useful mechanism for businesses with small claims who are prepared to deal with them on their own. However, it is not likely to prove particularly useful to businesses in the current context, where most B2B claims under €2,000 relate to debts.

Taoiseach’s residence by Zaha Hadid

I visited the Zaha Hadid exhibition at the Design Museum in London a few years ago and was surprised to find interesting, though somewhat incomprehensible, drawings entitled “Taoiseach’s residence”.

From www.bdonline.co.uk
Zaha Hadid's taoiseach's residence

They were dated around the time of Charlie Haughey, which led one to suppose that the art-mad Taoiseach was not only interested in Gandon’s mansions but also in cutting-edge architects. Having a significant public building in Ireland built at that time by the then-unknown Hadid would have left an interesting architectural landmark in the capital, but it never happened.

Now, with the publication of the government papers from 1979, it appears that it was Haughey who scrapped the plan and it must have been either Jack Lynch or Liam Cosgrave who commissioned the competition.

[Haughey] summarily dismissed a £4 million plan to build a Taoiseach’s official residence and State guest house on the site of the former Apostolic nunciature in Phoenix Park. This had been the subject of an architectural design competition and a winning English design had been selected.

I am assuming that the winning design was Hadid’s, though no mention is made of her in the Times piece and this discussion at Archiseek suggests that the competition was won by Evans & Shalev Architects, with a Rem Koolhaas entry also commended [Update: OWA’s website has extracts from his entry].

It seems quite the missed opportunity that the residence was not built at the time. Instead, around 27 years later, the Taoiseach gets the dull, if dependable, Steward’s Lodge on the Farmleigh estate.

From www.independent.ie
Steward's Lodge living room