By Lazar Emanuel [Originally published in NYPRR April 1998]
The New York State Bar Association has filed a lawsuit in federal court (97-CV-1768) asking to declare unconstitutional the “Granny Advisor Goes to Jail Act,” Section 4734 of the Balanced Budget Act of 1997. The statute imposes criminal penalties for advising clients, especially the elderly, about transfers of assets in order to qualify for Medicaid.
The Association has now filed a motion seeking to enjoin Attorney General Janet Reno from enforcing the criminal penalty provisions. The application asks U.S. District Judge Thomas McAvoy (Northern District of New York, Albany) to rule that the statute violates the First and Fifth Amendments of the U.S. Constitution. Oral argument was heard on March 27, 1998, in Binghamton.
Applies to Lawyers and Others
Under the Act, lawyers, accountants, certified financial planners, social workers and anyone who, for a fee, knowingly dispenses advice concerning the lawful disposition of assets to establish Medicaid eligibility, can be punished with a $10,000 fine, one year in jail, or both. The law firm of Nixon Hargrave Devans & Doyle, LLP is representing the 60,000-members of NYSBA on a pro bono basis.
State Bar President Joshua M. Pruzansky of Smithtown said, “This ‘gag rule’ chills and punishes speech which serves to provide full and effective counsel as to lawful actions, rights and benefits. The statute also is ambiguous as to what conduct will create criminal liability, and what conduct will not. The government will not be able to justify this infringement.”
Violates the First and Fifth Amendments
In its motion, the state bar contended:
• Section 4734 violates the Fifth Amendment right to due process as it is unconstitutionally vague.
• Section 4734 unquestionably infringes upon the First Amendment rights of NYSBA members, and others, who, for a fee, provide advice concerning long-term Medicaid benefits. The statute specifically targets a particular type of speech, i.e., advice relative to the disposal of assets to qualify for long-term Medicaid benefits, and creates the potential for criminal liability each time a NYSEA member, or other professional, has a conversation with a client related to that topic.
Lazar Emanuel is the Publisher of NYPRR.
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