A senior citizen’s lawsuit against a retirement community has come to a close.
It’s a case that spotlighted a big problem for residents of Continuing Care Retirement Communities (CCRCs) and their families.
Patricia Lund, 79, filed suit against The Fountains at Cedar Parke in Atco, Waterford Township late last year, saying the CCRC was holding hostage more than $160,000 of her money. The funds were contractually owed to her after she vacated the facility, but eight years later, she still hadn’t received her money.
Eight long years.
The lawsuit said The Fountains wasn’t taking productive steps to sell Lund’s unit. The catch was that while the contract clearly stated Lund would receive the funds — 90 percent of the entrance fee she paid when she moved in — the contract had no time frame in which the money had to be returned.
Waiting eight years for a refund just wasn’t right, the senior said.
“I never expected that eight years after I moved out I would still not have received my money back,” Lund said when the suit was filed.
Rather than wait even longer, Lund agreed to a settlement for an undisclosed sum.
Lund couldn’t share the details of the settlement because of a non-disclosure provision, said Donnie Browne, Lund’s attorney.
Neither could Murphy Vandervelde, The Fountains’ owner, citing the language in the agreement.
Vandervelde did say that since taking ownership of The Fountains in November 2013, “entrance fee liabilities owed to former residents, their estates or their families” have been reduced from $10 million to less than $3 million, with 67 families receiving payments.
He said did not say whether the entrance fee payments were refunded in full or in part, or how many families are still waiting for refunds.
“We are proud to have been able to help so many families and we are happy to have worked out an agreement with the Lund family,” he said.
Vandervelde said his goal has been for The Fountains to be 100 percent fee-for-service.
“As part of our commitment to our residents, both current and past, we are striving toward being one of the first, if not the first, CCRC in New Jersey to have no refundable entrance fee liabilities owed to any resident or family,” he said.
That’s progress, at least, for this CCRC.
WHAT ABOUT OTHER RETIREES?
The Lund case may be over, but there are other residents facing the exact same challenge.
CCRCs are unique facilities that take a large entrance fee — often in excess of $100,000 — of which 90 percent is usually returned when the resident moves out or passes away.
There are 26 CCRCs in New Jersey housing some 10,000 seniors, according to the Organization of Resident Associations of New Jersey (ORANJ).
We first learned about the refund issue from Ed Nagle, whose late mother lived in a CCRC.
When she died, Nagle was expecting a refund of nearly $250,000 to go to his mother’s estate. After six years of waiting — and fighting — Nagle agreed to a settlement worth 63 percent of what was owed.
That actually led to another problem for Nagle. He had previously filed his mother’s estate tax return with the expected full CRCC refund amount as an asset. That extra money meant the estate owed nearly $15,000 in estate taxes, which Nagle paid.
When he finally got the lower CCRC refund, Nagle’s mother’s estate no longer owed the $15,000 tax, so he filed an amended return. But because it took six years to get the refund, the statute of limitations on the state estate tax refund had run out.
The whole affair meant the estate had lost $88,481.
Nagle went on a mission to make sure this wouldn’t happen to anyone else.
He lobbied Sen. Christopher “Kip” Bateman (R-Somerset) to introduce “common sense legislation” that would require CCRCs to give refunds within a year of a vacancy.
Assemblywoman Nancy Munoz (R-Union) introduced companion legislation in the Assembly.
But lobbyists representing the CCRCs fought against the bills. There wasn’t even a hearing on the Senate bill until Bamboozled started asking questions.
Still, the bill never made it out of committee.
Nagle, worried lobbyists would outmatch him, urged Bateman to introduce a second bill. This one would remove the statute of limitations to file an amended tax return in cases where refunds from CCRCs are delayed.
But now that the state’s estate tax has been repealed, the bill changing the statute of limitations is less important.
But we’re into a new legislative session, and the CCRC refund bills have been reintroduced in both houses as S1411 and A880.
Bateman said New Jerseyans “are being ripped off by CCRCs that are not returning all of the money that’s owed in a timely fashion.”
“In some cases, families are waiting years to get hundreds of thousands of dollars that they are owed,” Bateman said. “It’s sad that it will take legislation to force the CCRCs to treat families fairly, but it looks like that’s what we will need to do.”
We checked in with Sen. Joseph Vitale (D-Middlesex), chair of the Health, Human Services and Senior Citizens committee, to see when the bill might be heard.
His office said it didn’t know.
We asked the same of Assemblyman Herb Conaway Jr. (D), chair of the Assembly’s Health and Senior Services committee, but no one responded.
So come on people, let’s light a fire under these lawmakers. If you think it’s an important issue, you can reach out to your legislator to share your opinion.