Florida’s High Court Bars Non-Lawyers From Engaging in Medicaid Planning

Florida’s Supreme Court has ruled that non-lawyers who engage in various Medicaid planning activities are engaging in the unlicensed practice of law. The court’s ruling embraces a proposed advisory opinion of the Florida Bar that resulted from a petition by the Bar’s Elder Law Section.

The Elder Law Section had asked the Bar to consider whether it constitutes the unlicensed practice of law for a non-lawyer to engage in three Medicaid planning activities leading up to the Medicaid application: the drafting of personal service contracts; the preparation and execution of qualified income trusts and the rendering of legal advice regarding the implementation of Florida law to obtain Medicaid benefits. However, the issue goes far beyond those specific services.

After considering the resulting proposed opinion and the briefs of interested parties, the Supreme Court of Florida directed the Florida Bar’s Standing Committee on the Unlicensed Practice of Law to revise its opinion to exempt the activities of non-lawyer staff of the Florida Department of Children and Families in relation to their duty to assist the public in the Medicaid application process.  The court then approved the resulting revised opinion in total.

That advisory opinion concludes that non-lawyers engaging in any of the following activities constitutes the unlicensed practice of law:

  • Drafting a personal service contract
  • Determining the need for, preparing, and executing a Qualified Income Trust, including gathering the information necessary to complete the trust
  • Selling personal service or Qualified Income Trust forms or kits in the area of Medicaid planning
  • Rendering legal advice regarding the implementation of Florida law to obtain Medicaid benefits, including advising an individual on the appropriate legal strategies available for spending down and restructuring assets and the need for a personal service contract or Qualified Income Trust

The advisory opinion also takes aim at non-lawyer Medicaid planning companies that claim to have relationships with lawyers who draft the legal documents for the company’s clients.  The opinion concludes that that such a company would be engaged in the unlicensed practice of law unless the client establishes an independent attorney-client relationship with the attorney, payment from the client is made directly to the attorney, and the determination that the particular Medicaid planning strategy is appropriate for the client given the client’s particular factual circumstances is made by the attorney.  Recently two Pennsylvania lawyers were disbarred for participating in living trust mills where they had non-lawyers do all of the work and they rarely, if ever, had any actual contact with the client.

The opinion notes that due to a lack of regulation, “non-lawyer Medicaid planners include a disbarred Florida lawyer, an individual who lost his securities license for fraudulent practice, and a life insurance agent who was convicted of two felonies and lost his insurance license.”

According to the Orlando Sentinal, at least two non-lawyers objected to the committee’s conclusions.  William B. Burns, who holds insurance and securities licenses and part of whose business involves providing Medicaid planning services, filed a brief arguing that professionals with insurance and securities licenses are subject to regulation and that the Bar committee highlighted “extreme examples” of Medicaid planners. He has appealed the ruling.

However, this is an issue that needs to be addressed and the law clarified. Certainly non-lawyers who are doing this will argue that lawyers are simply trying to prevent others from providing a necessary service.  There are several valid reasons why this ruling is beneficial to the public and a long time coming:

1. The practice of law is heavily regulated. Lawyers (in PA) are required to carry malpractice insurance (or provide notice to their clients that they do not).  A non-lawyer will be unable to get such a malpractice policy because no insurance company is going to insure a non-lawyer for malpractice in providing bad legal advice since they are not licensed to provide legal advice.

2. Lawyers have ethical rules that bind them. One ethical rule of lawyers is not to practice law in an area in which you are not competent. Yes, that can be pretty ambiguous. But the fact remains that a lawyer who is clearly incompetent in a certain area of the law can lose his or her license to practice law. This is a pretty strong incentive not practice areas of law in which you are not prepared to practice.  And, although a license to practice law does not guarantee competence, the fact that person was able to get a 4 year degree, take the LSAT, get into law school, graduate and pass the bar, at least shows some basic level of intelligence and general academic capability.

3. Lawyers have a client security fund in the event of fraud. No other profession protects its clients from fraud. In Pennsylvania, when I renew my license I must pay a fee to the client security fund. There are no such protections for non-lawyers providing legal advice.

4. There is also the larger societal issue. For whatever reason, society has determined that certain professions need to be licensed and to maintain certain educational and ethical standards. They require most types of doctors to be licensed, lawyers to be licensed, CPAs to pass a test, etc. Society has determined that the potential damage that can be caused by providing bad advice in these professions mandates certain professional qualifications.  To allow non-licensed parties to provide what is clearly legal advice opens the door to unlicensed providers giving medical, tax and other advice.

The question really is a larger one for society. Is it a benefit to society to require certain levels of education or training to provide certain services or should it be a free market for anyone to do anything?  The position of the Florida Supreme Court is that having unlicensed parties providing legal advice puts society at risk. And it is right.