The ineffectiveness of donations and other benefits to home operators and employees in accordance with the so-called "prohibition of benefits" under home law
According to Section 16 of the WTPG, in Baden-Württemberg "the provider of an inpatient facility and the provider of an outpatient assisted living community are prohibited from promising or granting cash benefits or benefits of monetary value in excess of the agreed or to be agreed remuneration from or for the benefit of residents or applicants for a place in inpatient facilities or outpatient assisted living communities". The regulations governing residential homes in the other federal states contain almost identical provisions.
Donations or other monetary benefits that a care home provider or its employees receive from residents or their relatives are generally invalid under this so-called "prohibition of benefits" and can be reclaimed by the resident themselves or - as is often the case in practice - by their heirs at a later date. In addition, promises of benefits that violate the prohibition constitute an administrative offense and can be punished with a fine of up to EUR 25,000 in Baden-Württemberg in accordance with Section 27 WTPG. In this respect, a breach of the prohibition on donations under nursing home law can have serious legal consequences.
In the following, we will discuss some questions of practical relevance and special features that must be urgently observed in connection with this prohibition on donations.
Protective purpose of the prohibition on donations under care home law: Why are benefits from residents and relatives to the home provider and its employees prohibited?
According to the intention of the legislator, the prohibition of gratuities under nursing home law is primarily intended to protect the residents and the so-called "peace of the home". In particular, the following protective purposes are pursued with the legal prohibition:
Avoidance of preferential or disadvantageous treatment of individual home residents ("protection of peace in the home");
Protection of care home residents against financial and economic exploitation or discrimination, in particular against compensation for services already paid for by the care home provider;
Protection of the residents' freedom to make wills;
Which benefits are subject to the prohibition of benefits?
The prohibition of donations under care home law includes all types of gratuitous donations such as donations in kind and cash donations, gifts or inter vivos endowments as well as all testamentary dispositions such as legacies, bequests and inheritance contracts. However, the prohibition on donations does not apply to testamentary donations of which neither the home provider nor employees of the home provider were aware during the lifetime of the resident.
Furthermore, the prohibition does not apply to minor gifts that do not exceed EUR 25.00 in individual cases or EUR 100.00 per year in total.
The statutory prohibition already applies to the promise of benefits made by the nursing home resident. Accordingly, even a declaration by the resident that they wish to make a donation to the home provider is invalid from the outset if the prohibition on donations is breached.
The circle of recipients covered by the prohibition on benefits: which persons may not "promise" benefits to care home providers?
The prohibition of benefits under care home law not only covers promises of benefits made by the residents themselves, but also promises of benefits made by third parties if the benefit is made "for the benefit" of a resident. In the case of close relatives of a care home resident, such a connection to the respective care home resident is obvious, which is why case law generally assumes a prohibition of gratuities. In addition, gifts from unrelated persons to a care home provider are also prohibited if they are expressly made for the benefit of a care home resident. The decisive factor in this respect is that a specific resident is named or otherwise recognizably designated in the promise of benefit.
However, if a donation is intended to benefit all care home residents equally and without distinction, the prohibition on donations does not apply. This is particularly the case with anonymous fundraising or donations from external third parties without any recognizable connection to a specific resident.
Recipients covered by the prohibition on donations: Which persons may not accept promises of donations or other benefits from care home residents or their relatives?
The prohibition on donations includes promises of donations to the home operator itself as well as to all employees and board members.
However, in order to prevent possible circumvention of the prohibition on donations, case law extends the prohibition on donations under care home law beyond this group of recipients to include donations to other legal entities if these legal entities have a recognizable connection to the home operator. Case law has already affirmed a corresponding application of the prohibition of donations under nursing home law in the following cases:
Donation to the sole shareholders of the home provider organized in the legal form of a GmbH;
Donation to a charitable foundation where there is a personal link between the charitable foundation and the home provider;
Grant to a charitable foundation in the case of a "related" public appearance of the charitable foundation and the home sponsor (no personal interdependence!)
On the basis of this case law, donations to charitable foundations or associations are by no means legally secure, even if there is no personal or legal interdependence between the home sponsor and the sponsoring body.
Is it possible to apply to the home supervisory authority for an exemption from the ban on donations?
The ban on grants can be lifted for individual promises of grants by means of an exemption from the home supervisory authority in accordance with Section 16 (5) WTPG. However, a general exemption for a large number of promises of support is not possible. Both the home provider and the person making the grant can apply for approval from the home supervisory authority for an intended grant to the home provider. As part of the approval procedure, the home supervisory authority must check whether the intended grant does not run counter to the protective purpose of the prohibition on grants. In particular, the home supervisory authority must come to the conclusion that the donation is not intended to favor a particular resident and that the financial circumstances of the resident are not exceeded. Furthermore, the home supervisory authority must ensure that the donation is not intended to purchase services from the home provider that are already owed under the home contract. The person who submits the application for an exemption permit is therefore also required to provide the information necessary for the examination. The legislator has granted the home supervisory authority a very wide margin of discretion within the scope of this examination. In this respect, it ultimately depends on the specific circumstances of the individual case as to whether an exemption can be granted.
When must the exemption be applied for?
The prohibition of grants takes effect beforehand. All promises of support that are subject to the prohibition of support are therefore irremediably null and void if an exemption has not first been granted by the home supervisory authority in accordance with Section 16 (5) WTPG. According to the explanatory memorandum to the law, only a prior review of the resident's intentions by the home supervisory authority can ensure that the benefits to the home operator or its employees are unobjectionable within the meaning of home law. The exceptional approval must therefore already be in place before the resident or relative makes the promise of benefit. In contrast, some home supervisory authorities, among others, recommend accepting a grant subject to approval by the home supervisory authority and temporarily paying it into an escrow account, and only then applying for approval. However, according to the legal system of the prohibition of donations under nursing home law, this procedure would necessarily lead to the nullity of the donation and would not be remedied by the subsequently granted exemption. Finally, according to the applicable civil law rules, the acceptance of a donation "subject to reservation" also requires that an effective promise of donation has already been made. It is then no longer possible to subsequently approve the promise of donation already made at this point in time. Formulations in the application for approval such as "acceptance subject to reservation" would suggest that a binding promise of funding has already been made. It must therefore always be made clear in the application for approval that it is a non-binding request for a donation or a mere intention to make a donation on the part of the resident. Otherwise, in subsequent civil court proceedings, there is a risk that the benefit will be declared null and void and the resident will be ordered to repay the benefit received.
Summary and recommendations for practice
The scope of application of the prohibition of benefits under care home law is very broad and covers a large number of possible benefits between care home residents and persons close to them on the one hand and care home operators, their staff and other legal entities on the other. Due to the difficult-to-understand scope of the prohibition of gratuities in individual cases and the mandatory consequence of nullity without the possibility of a remedy, the legally compliant implementation of the home supervisory approval procedure is of decisive importance, especially in the case of larger gratuities. In addition, there is the threat of punishment as an administrative offense with the imposition of a fine of up to EUR 25,000. Home operators are therefore recommended to implement uniform review and procedural guidelines as well as legally secure standards for the home supervisory approval process for non-minor promises of funding.
Status: 22.04.2015