While other higher-profile bills approved by the Maryland General Assembly during the 2021 session garnered more attention, the recently passed Senate Bill 327 – Civil Actions – Financial Exploitation of Susceptible Adults and Older Adults (Maryland SAFE Act) will be a significant new tool in the fight against financial abuse against susceptible and older adults. The SAFE Act – which stands for “Stop Adult Financial Exploitation” – was passed unanimously by the Maryland legislature and goes into effect on October 1, 2021.

What is the Maryland SAFE Act?

This new law authorizes the Office of the Attorney General or the Maryland Securities Commissioner to initiate a private cause of action to confront instances of financial exploitation of susceptible and older adults. The law creates a new civil cause of action which permits a susceptible or older adult, or their authorized representative, to recover money lost due to financial exploitation. The newly created cause of action survives the death of the susceptible or older adult. See Commercial Law § 13-204(a) and Corporations and Associations § 11-209.

Why was this legislation needed?

Nationally, millions of susceptible or older adults are targeted annually, and according to studies the financial loss to financial exploitation victims is estimated to be several billion dollars annually. Prior to this law, the remedies for financial abuse victims in Maryland was limited to adult protective services, criminal penalties and expensive civil remedies. Victims of financial abuse were forced to rely on either the criminal justice system or local adult protective services to seek redress and protection from additional harm. Unfortunately, financial abuse cases are rarely prosecuted. This is largely due to the heightened burden of proving guilt beyond a reasonable doubt in a criminal case as well as the difficulty in proving abuse when the victim is often older or infirm. Even when an order for restitution is obtained, the restitution is often never paid in full. The families of the exploited were frequently left without recourse unless they either pursued guardianship over the susceptible or older adult or filed suit on behalf of the deceased susceptible or older adult after their death. As such, the legislature created this new civil remedy to tackle financial exploitation.

Who does the SAFE Act protect?

As stated above, this law protects certain susceptible and older adults. The law defines an “older adult” as an individual who is at least 68 years old (See Estates & Trusts § 13-601(I)), while a “susceptible adult” is defined as “an adult who is unable to perform, without prompting or assistance, one or more activities of daily living, is unable to protect the adult’s rights, or has diminished executive functioning, due to: (1) advanced age; (2) mental, emotional, sensory, or physical disability or disease; (3) impaired mobility; (4) habitual drunkenness; (5) addiction to drugs; or (6) hospitalization.” See Estates & Trusts § 13-601(K)

What constitutes “financial exploitation?”

“Financial exploitation” is defined in Estates & Trusts § 13-601(E), and includes an act taken by a person who stands in a position of trust and confidence with a susceptible or older adult and who knowingly obtains or uses the susceptible or older adult’s funds, assets or property with the intent to temporarily or permanently deprive the adult of the use, benefit or possession of those assets. The law continues to define “financial exploitation” as an act taken by a person who uses deception, false pretenses, false promises, larceny, embezzlement, misapplication, conversion, intimidation, coercion, isolation, excessive persuasion or similar actions and tactics to obtain or use a susceptible or older adult’s assets with the intent to deprive. Lastly, “financial exploitation” also includes the act of obtaining a consent when the individual knows or should have known that the susceptible or older adult lacks capacity to consent to the individual obtaining or using the susceptible or older adult’s assets with the intent to deprive.

What will be the procedure of filing a cause of action using the SAFE Act?

The Maryland SAFE Act permits a susceptible or older adult, as well as the adult’s family members and agents, to contact the Attorney General’s office to seek redress for the victim of financial exploitation in Maryland. The Attorney General’s office will have the power to bring a civil cause of action against the individual alleged to have financially exploited the susceptible or older adult. This lawsuit will seek damages for the recovery of any misappropriated assets. In addition to the Attorney General, the following individuals may bring a cause of action against a person who has allegedly committed financial exploitation: the susceptible or older adult, an attorney-in-fact, guardian, trustee, other fiduciary, person authorized to make health care decisions for the adult, spouse, parent, descendant, presumptive heir, person named as a beneficiary to receive any property, and a personal representative or special administrator of an estate of a deceased susceptible or older adult.

What are the damages available under the SAFE Act’s new cause of action?

When a cause of action under the SAFE Act is successful, a plaintiff is entitled to recover compensatory damages. Theses damages are in addition to, and cumulative with, other available damages. A plaintiff in an action under the SAFE Act that is awarded compensatory damages may also seek, and the court may award treble damages and prejudgment interest. Furthermore, in addition to monetary damages, a plaintiff is entitled to other appropriate relief, including emergency, preliminary or permanent injunction, rescission, restitution, accounting, unjust enrichment, declaratory relief and constructive trust. The court may also grant emergency or interim injunctive relief to preserve the assets of the susceptible or older adult. The court may award reasonable attorney’s fees and expenses to a plaintiff for injury or loss. If the court determines an action is brought in bad faith or of a frivolous nature, the court may order the offending party to pay reasonable attorney’s fees and expenses.

What is the statute of limitations for claims under the SAFE Act?

The statute of limitations for claims under the SAFE Act is considerably longer than the standard Maryland three-year limitations period. Pursuant to Estates & Trusts § 13-607, an action under the SAFE Act shall be commenced within five-years after the susceptible or older adult, or the adult’s representative, discovers or through reasonable diligence should have discovered the facts constituting financial exploitation. The exception to this five-year statute of limitations is in cases where criminal prosecution is initiated. If a criminal prosecution arises out of the same facts, the time during which the prosecution is pending shall not be computed as part of the statute of limitations period. After the criminal prosecution is concluded, the action under the SAFE Act may be brought within the later of either 1) the remainder of the five-year limitations period or 2) one year.

What are the relevant statutes of the SAFE Act?

The relevant statutes that form the SAFE Act can be found in Commercial Law § 13-204(a)(14), (15) and (16), Corporations and Associations § 11-209, and Estates and Trusts § 13-601 through § 13-609. In the Estates and Trusts Article, the relevant sections will be under the new subtitle “Subtitle 6. Financial Exploitation of Susceptible Adults and Older Adults” and the amended title “Title 13. Protection of Minors, Disabled Persons, Susceptible Adults and Older Adults.”

Zachary W. Worshtil is an attorney at Powers & Worshtil, P.C. He is also a member of the PGCBA Board of Directors and co-chair of the Probate, Estates, Trusts & Elder Law Section. He concentrates his practice primarily in estate administration and probate litigation.