Cotton v. Senior Planning Servs.
| Decision Date | 30 November 2020 |
| Docket Number | Civil Action No.: 19-8921 (FLW) |
| Parties | THE ESTATE OF LESTER COTTON, et al. Plaintiffs, v. SENIOR PLANNING SERVICES, LLC and PRICE & PRICE LLC, Defendants. |
| Court | U.S. District Court — District of New Jersey |
*NOT FOR PUBLICATION*
:
Presently before the Court are motions by defendants Senior Planning Services, LLC ("SPS" or the "Company") and Price & Price, LLC ("Price") (collectively, "Defendants") to dismiss this putative class action filed by plaintiffs the Estate of Lester Cotton and Jennifer Cotton (the "Cotton Plaintiffs"), and the Estate of Raymond J. Wojna, Sr., Raymond J. Wojna, Jr., David Wojna, and Helen B. Wojna (the "Wojna Plaintiffs") (Wojna Plaintiffs and Cotton Plaintiffs collectively, "Plaintiffs"). In this matter, Plaintiffs, former clients of SPS, assert claims of consumer fraud and breach of fiduciary duty, against SPS alleging, inter alia, that the Company provided illegal Medicaid application assistance services to Plaintiffs. Furthermore, Plaintiffs allege that those services constitute the unauthorized practice of law and that SPS partnered with Price, a law firm, in order to camouflage SPS's provision of illicit legal advice. Plaintiffs assert breach of the implied of good faith and fair dealing, and unjust enrichment claims against both Defendants. Defendants have separately moved to dismiss Plaintiffs' Complaint for failure to state a claim, and to strike Plaintiffs' class action allegations and other purportedly immaterial and prejudicial information from the Complaint.
For the reasons set forth below, SPS's motion is GRANTED IN PART AND DENIED IN PART and Price's Motion is DENIED. SPS's motion to dismiss is granted with respect to Plaintiffs' New Jersey Consumer Fraud Act ("NJCFA") claim and Plaintiffs are granted leave to file an amended complaint as to the Cotton Plaintiffs and putative Class A member's NJCFA claim within 45 days. Further, because this Court's exercise of jurisdiction, pursuant to the Class Action Fairness Act ("CAFA") is largely premised on Plaintiffs' NJCFA claim, as explained infra, the Court does not address the merits of Plaintiffs' unjust enrichment, breach of fiduciary duty, and breach of the implied covenant of good faith and fair dealing claims; Defendants' motions are both denied without prejudice with respect to those claims. If Plaintiffs file an amended complaint, Defendants may file renewed motions to dismiss those claims, if appropriate. Defendants' motions to strike Plaintiffs' class action allegations and to strike certain factual allegations from the Second Amended Complaint ("SAC") are also denied without prejudice.
The following allegations are taken from the SAC and assumed true for purposes of this motion.
SPS is a New Jersey company that provides assistance to applicants applying for Medicaid. SAC ¶¶2, 36. In exchange for a fee, SPS handles the Medicaid application process for its clients, including completing the application and representing clients at the Medicaid office. See SAC Ex. D, SPS website "New Jersey Medicaid Planning and Eligibility"; Ex. G, SPS website "ConnecticutMedicaid Planning and Eligibility." SPS provides services in New Jersey, Connecticut, New York, Pennsylvania, Rhode Island and Massachusetts. SAC ¶36.
Medicaid is a federal benefit program that provides health insurance, including paying for hospital services, doctor visits, prescriptions, and nursing home care, to eligible beneficiaries. In order to receive Medicaid, an individual must also meet financial eligibility factors determined by his or her particular state. Id. at ¶44. For instance, "to qualify for institutional care in most states, an individual may not have assets exceeding a total of $2,000, and thus, to qualify for Medicaid, an individual would need to spend-down (or otherwise have properly invested or disposed of) nearly all of [his or her] assets." Id. According to Plaintiffs, prior to 2016, SPS marketed itself on its website, print and internet ads, and interviews, as qualified to assist families with the "spend-down procedure" in order to meet Medicaid's qualification requirements. Id. at ¶¶60-62. For example, SPS's Facebook ads in 2014 and 2015, purportedly described the company as the "Industry Leaders in Optimizing Medicaid Eligibility for Seniors," and the Company's Facebook posts provided hypothetical examples of how to analyze Medicaid spend-down issues. See id. at ¶60; see also SAC, Ex. R, Feb. 14, 2015 Facebook Post; Ex. S., July 16, 2014, Facebook Post.
Non-party LTC Consulting Services, LLC ("LTC"), a New Jersey company, is an affiliate of SPS, which provides finance, billing, and business management services to long-term care facilities. SAC at ¶¶53-55. Plaintiffs allege that SPS leverages its relationship with LTC to market its services directly to long-term care facilities. Id. at ¶¶56-58; 91-107. In Plaintiffs' view, "SPS's true clients are actually the long-term care facilities," which benefit from the company's services because "with SPS's assistance, the facilities [are] less likely to experience any gap in payments between when a private payor's funds run out and Medicaid kicks in." Id. at ¶91. As such,Plaintiffs allege that the relationships between SPS and the long term care facilities poses a conflict of interest for SPS's elderly clients. Id. at ¶¶91-107.
Id. at 3 (quoting 42 C.F.R. §435.908 (c)(2)). The certified assistors "may not receive payment or compensation for their services." Id. (citing 42 C.F.R. §435.908 (c)(4)). The Committee "acknowledge[d] that the federal program requires [s]tates to permit nonlawyers to assistapplicants and beneficiaries with Medicaid applications and represent persons in hearings." Id. Nonetheless, the Committee held, consistent with similar decisions in Ohio, Florida, and Tennessee that, although non-lawyer Medicaid advisors may provide "limited services" :
it is the unauthorized practice of law when non-lawyers provide advice in matters that require the professional judgment of a lawyer. Hence, only a lawyer may provide legal advice on issues such as strategies for Medicaid eligibility, including provisions of wills and powers of attorney; on the need for guardianships and the authority to transfer assets; on nursing home laws; on transfers of property; on the impact of marriage and divorce; and on estate administration and the elective share.
Id. at 3. The Committee further explained that a non-lawyer Medicaid advisor may provide information on insurance programs, coverage options, and assist filing or renewing a Medicaid application in limited ways, such as by calculating income or assets, but warned that such an advisor "may not provide legal advice on strategies to become eligible for Medicaid benefits, including advice on spending down resources, tax implications, guardianships, sale or transfer of assets, creation of trust or service contracts, and the like." Id. at 5. The Committee further noted that the unauthorized practice of law "is not only a criminal offense, N.J.S.A. 2C:21-22," but also suggested that such conduct "may violate the Consumer Fraud Act." Id. at 2.
Plaintiffs assert that the services which SPS provided prior to and following the May 2016 Decision, would clearly constitute the unauthorized practice of law under the Committee's decision.2 SAC at ¶59.
Plaintiffs allege that following the May 2016 Decision, SPS revised its marketing materials on its New Jersey webpage3 to remove language which could be construed as providing legal advice. SAC ¶5. Specifically, SPS purportedly removed statements which promised that the Company would "[g]uide families through the spend-down process." Id. At that time, SPS also entered into a relationship with Price, a New Jersey elder care law firm, to provide legal services related to the Medicaid application process for its New Jersey clients. Id.; see also SAC Ex. B, SPS Post-2016 Fee Agreement Packet. In that regard, the Fee Agreement between SPS and its clients provides that "Applicant acknowledges and agrees that Senior Planning Services does not provide any legal service or advise and Applicant is not relying on Senior Planning Services to furnish any legal services or advice." Ex. B ¶8.4 Rather, according to the SPS Fee Agreement, New Jersey clients who contract with SPS also agree to pay a fee "to Price & Price, LLC for providing legal services in connection with the Medicaid application." Id. at ¶76; see also Ex. B. The SPS Fee Agreement for its...
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