Hospital Pharmacy Volume 41, Number 7, pp 664–668 2006 Wolters Kluwer Health, Inc.
FEATURED ARTICLE
Power of Attorney Documents and Pharmacy
Joseph L. Fink III, BSPharm, RPh, JD, FAPhA* Abstract — Some pharmacists have used a power of attorney document for quite some time when submitting orders for controlled substances. This is authorized by Drug Enforcement Administration (DEA) regulations. Increasingly, pharmacists are encountering power of attorney documents in another context – durable powers of attorney authorizing an Agent to make health care decision for the Principal. Medicare requirements have greatly expanded use of such advance directives. Thus, pharmacists may encounter these documents with both professional and personal issues. Types of power of attorney documents are reviewed with the differences highlighted. A variety of legal requirements that may apply are discussed and situations where such documents may prove helpful are listed. Issues related to the Agent are discussed, because pharmacists may find themselves in this role or in the role of advising someone selecting an Agent. How to revoke such legal documents is described as well. Keywords — Power of attorney; pharmacy law; durable power of attorney; advanced directives Hosp Pharm — 2006;41:664–668
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ome pharmacists have been familiar for years with power of attorney documents used as evidence of surrogate authorization for executing controlled substances order forms in compliance with US Drug Enforcement Administration regulations (see Table 1).1 In recent years, pharmacists have been encountering power of attorney documents in another context with greatly increasing frequency – “durable” power of attorney documents represent one of two forms of advance directives the Medicare program is informing patients about when they enter a health care facility or enroll with a
home health agency or hospice for which Title XVIII will pay. Questions may arise regarding exactly what a power of attorney document is, what authority it conveys, and its limitations. Moreover, pharmacists may encounter issues with power of attorney documents in their personal lives as well as with the professional roles. OVERVIEW A power of attorney document is a grant of legal permission for another adult to act on your behalf. The document evidences the creation of a relationship between two people who are designated the “Principal” and the
*Professor, College of Pharmacy, Professor, College of Public Health, and Professor, Martin School of Public Policy and Administration at the University of Kentucky, Lexington, KY.
“Agent.” The Principal identifies the Agent in the document, and the Agent is then authorized to act on the Principal’s behalf – to stand in for the Principal. In some cases, the Agent may also be referred to as the “attorney-in-fact,” “attorney” meaning one who acts on behalf of another. This legal instrument is used to delegate legal authority to another, authority that can be quite broad or very limited. It can create great peace of mind, because the Principal is able to select a trusted Agent to decide and act if he or she cannot do so. The grant of authority must be in writing, so the Agent has documentation of the delegation that he or she can share with others with whom activities will occur on behalf of the Principal. A “nondurable” power of attorney takes effect immediately and remains in effect until it is revoked by the Principal, until the Principal becomes mentally incompetent, or dies. A nondurable power of attorney would be useful for specific transactions (eg, settlement or closing on the sale of a house) or for a specific duration (eg, while the Principal is traveling out of the country). This is sometimes also referred to as a “conventional” power of attorney or a “standard” or “ordinary” power of attorney. A standard or ordinary power of attorney is automatically suspended or revoked if the Principal becomes mentally incompetent, ironically just when the need may be greatest. This has given rise to the popularity of the durable ver-
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sion that enables the Agent to act for the Principal even after the Principal is not mentally competent to make decisions. It takes effect immediately and is effective until it is revoked by the Principal, or until death of the Principal. Durable powers of attorney for health care have received a great deal of attention in recent years as one form of advance directive, the other being a living will. A health care or medical power of attorney is an example of a “limited” form of this document, as it confers authority to make decisions only on specified topics or issues. It is a document designating an Agent to make health care decisions on behalf of the Principal, should he or she be unable to make them. A springing power of attorney becomes effective at a specified future time. It may be viewed as “springing” into effect upon the occurrence of a specific event chosen by the Principal. Such conferral of authority may be structured in a way that it can be activated by illness or disability, and, if so, should contain a provision addressing who is authorized to decide if the Principal is competent to handle his or her affairs (eg, the physician of the Principal decides). This form typically remains in effect until the death of the Principal, or until revoked by a court. On the other hand, a power of attorney may also be structured in a way that it terminates on a predetermined date. Legal Requirements Some states have adopted by statute specific wording or forms to be used for power of attorney purposes. For example, in New York those can be found at section 5-1501 of the New York General Obligation Laws.2 In some states a power of
attorney document must be recorded in a government office (eg, Register of Deeds or County Clerk) if it is to be used for certain types of transactions, such as transferring ownership of real estate. As is always the best approach, an attorney familiar with local requirements should be consulted. Also, some states are very specific about the form or wording. For example, New York law requires that a durable power of attorney be entitled “Durable Power of Attorney, New York Statutory Short Form.”2 Moreover, the statement “The powers you grant below continue to be effective should you become disabled or incompetent” must appear following the statutorily mandated title.2 In other states, the wording is not specified, so something along these lines would suffice – “This power of attorney shall not be affected by my disability” or alternatively, “This power of attorney shall become effective upon my disability.” Checking with local counsel is always advisable. State law may dictate that two witnesses sign the document, in addition to the Principal, or it may require that the signature of the Principal be notarized, something that is always a good idea even if not specifically required. Notarization adds at least an air of authenticity. An Agent or attorney-in-fact signing a document in that capacity would do so like this: “John Smith by Hershel Jones, his attorney in fact” or “Hershel Jones as agent for John Smith.” By signing correctly Agents can avoid personal liability and putting their personal assets at risk for debts or other obligations of the Principal. A power of attorney is legally effective if only one copy is executed. Nonetheless, it is recommended
that several “original” copies be signed. It is not unusual for financial institutions to require an original signed copy before accepting the authorization. A key issue with a power of attorney is whether it will be honored by those to whom it is presented by the Agent. A particular challenge may arise when dealing with government agencies, such as the Social Security Administration, the Veterans Administration, or the Internal Revenue Service. One must either use each agency’s power of attorney form, or be certain the durable power of attorney presented to the agency matches the specific wording required by each agency. The grant of authority under a durable power of attorney should be quite broad, including activities such as:3 • Borrowing money in the Principal’s name if needed • Collecting Social Security and other benefits • Conducting bank transactions • Contracting for services • Dealing with insurance and retirement benefits • Exercising rights related to a trust agreement • Exercising shareholder’s rights • Gaining access to safety deposit boxes • Handling legal claims • Making gifts • Paying for the Principal’s support and care • Preparing and filing tax returns The Agent can do nearly any lawful act the Principal confers authority to do. INTERPLAY OF POWER OF ATTORNEY WITH JOINT OWNERSHIP OF PROPERTY A question may arise about the interaction of a grant of power of attorney authority with the law
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applicable to joint ownership of property. If one person on a jointly-owned account (eg, the checking account of a husband and wife) becomes disabled the other may probably continue to sign checks and make deposits or withdrawals on bank accounts just as before. But the joint owner may not be able to sell jointly-owned real estate, or jointly-owned stocks without both signatures. It may also be that the spouse, for example, cannot name a beneficiary on the Principal’s life insurance policy or change that designation on the Principal’s retirement benefits. So, even if everything is owned jointly a durable power of attorney is still highly recommended. SITUATIONS WHERE A POWER OF ATTORNEY MAY BE HELPFUL Examples of situations where having a properly executed power of attorney document may greatly facilitate matters would include:4 • Buying or selling real estate • Conducting banking transactions • Handling tax or retirement fund matters • Investing money • Making gifts on your behalf to relatives or charities • Making legal claims or conducting litigation • Managing property Another potential advantage of a power of attorney document can be in avoiding the time and cost of going to court to have a Guardian appointed to handle the affairs of the Principal in the event of disability or incompetence. Guardianship proceedings like that can also involve substantial embarrassment associated with parties attempting to establish in the public forum of a court that competence or incompetence exists. A further advantage of the power of
attorney approach over guardianship is that it empowers Principals to select Agents to act on their behalf, thereby avoiding to have those representatives selected by a judge who probably does not know the Principal at all. SELECTING THE AGENT One should choose a trusted family member, a proven friend, or a professional with an outstanding reputation for honesty to be the Agent. Signing a power of attorney granting broad authority to another is very much like signing a blank check, and should be approached with the same level of discretion. Some erroneously think that because the word “attorney” appears in the phrase the person selected must be an attorney-atlaw. That clearly is not a requirement.5 Multiple Agents may be appointed if the Principal so wishes. If that approach is used, the Principal should decide whether they must act in concert when making decisions, or whether each has full power to act alone. Requiring that they act together can be viewed as a double check or safeguard that decisions will be made in the best interest of or consistent with the wishes of the Principal. Alternatively, requiring such agreement by the Agents can delay implementation of a decision, or perhaps result in total inaction if the two agents cannot agree on a course of action. It would be advisable to identify an alternate or substitute agent as well in case the first-designated Agent should become unable to serve. One concern some have expressed is that executing a power of attorney document may interfere with the Principal continuing to make financial or legal decisions
for him or herself. That is not the case; as long as the Principal has legal capacity to make decisions he or she can direct the Agent to do only those things consistent with his or her desires and preferences. AGENT’S OBLIGATIONS TO THE PRINCIPAL An Agent has an obligation to act in the best interests of the Principal. One serving as an Agent should scrupulously avoid selfdealing (ie, acting to advance the interests of the Agent as opposed to the best interest of the Principal). In legal terms, the Agent has a fiduciary responsibility to the Principal to meet strict standards of candor, honesty, and loyalty. The Agent should safeguard the Principal’s property and keep it separate from the property of others, including that of the Agent. Separate financial records should be maintained with different bank accounts used. No government agency oversees the activities or responsibilities of Agents named under a power of attorney. That is the responsibility of the Principal, reemphasizing the importance of judicious selection of the Agent. REIMBURSING AND COMPENSATING THE AGENT Provision should be made for reimbursing the Agent for out-ofpocket expenses paid on behalf of the Principal. Moreover, it is permissible to authorize the Agent to take an hourly fee for the time devoted to the Principal’s affairs. If a fee is authorized, the Agent should be required to keep time records in addition to records documenting the out-of-pocket expenses. REVOCATION A power of attorney may be
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Table 1. DEA Regulations Related to Powers of Attorney
21 C.F.R. §1305.06 Procedure for executing order forms.
(a) Order forms shall be prepared and executed by the purchaser simultaneously in triplicate by means of interleaved carbon sheets which are part of the DEA Form 222. Order forms shall be prepared by use of a typewriter, pen, or indelible pencil. (b) Only one item shall be entered on each numbered line. An item shall consist of one or more commercial or bulk containers of the same finished or bulk form and quantity of the same substance. The number of lines completed shall be noted on that form at the bottom of the form, in the space provided. Order forms for carfentanil, etorphine hydrochloride, and diprenorphine shall contain only these substances. (c) The name and address of the supplier from whom the controlled substances are being ordered shall be entered on the form. Only one supplier may be listed on any form. (d) Each order form shall be signed and dated by a person authorized to sign an application for registration. The name of the purchaser, if different from the individual signing the order form, shall also be inserted in the signature space. Unexecuted order forms may be kept and may be executed at a location other than the registered location printed on the form, provided that all unexecuted forms are delivered promptly to the registered location upon an inspection of such location by any officer authorized to make inspections, or to enforce, any Federal, State, or local law regarding controlled substances.
revoked at any time and the Agent should be notified of such a decision in writing. If a revocation is desired, the Principal should secure the return of all copies of the document given to the Agent and others, shredding them to avoid the potential for later confusion. If a financial institution has been accepting the power of attorney as authorization to conduct transactions, a specific written communication should be forwarded to bank officials regarding the revocation or cancellation. If a copy was filed with the Register of Deeds or County Clerk, a copy of the revocation letter should go to that office as well. All power of attorney documents terminate automatically on the death of the Principal. Medicare Requirements Current Title XVIII program requirements dictate that when a Medicare beneficiary is admitted to a hospital, or skilled nursing facility, receiving home health benefits under Medicare, or enrolled in a Medicare-approved hospice, the patient must receive written information about his or her right to accept or refuse treatment. The
same notice also emphasizes the patient’s right to make an advanced directive, either a living will or a durable power of attorney for health care.6 These requirements have greatly increased the awareness of the utility of power of attorney documents. POWER OF ATTORNEY USED FOR DEA PURPOSES The DEA has expressly authorized use of power of attorney documents in the context of ordering controlled substances. The provision of 21 C.F.R. §1305.07 even includes a specific example of a power of attorney form and wording the agency would find acceptable (see Table 2). CONCLUSION The need for a will and an estate plan is familiar to most people; without that, the distribution of their assets may be greatly delayed and may not be done in accordance with their wishes. Moreover, a substantial portion may go, by law, to the state government. A complementary need is planning for disability during one’s lifetime. Such high-profile cases as those of Nancy Cruzan and Terri
Schiavo have served to focus the attention of the public on the tribulation and travail that can occur without adequate planning. A power of attorney document can play a number of roles to facilitate handling a wide variety of business and financial transactions during trying times. REFERENCES
1. Title 21Code of Federal Regulations. 21 C.F.R. §1305.07. Available at: http://a257.g.akamaitech.net/7/257/242 2/04nov20031500/edocket.access.gpo.g ov/cfr_2001/aprqtr/pdf/21cfr1305.08.pd f. Accessed May 19, 2006. 2. New York Statutory Short Form Power of Attorney Form. N.Y. Gen. Oblig. Laws §5-1501. Available at: http://www.lawrevision.state.ny.us/repor ts/2003reportonproposedrevisionstothegol.pdf. Accessed May 19, 2006. 3. The durable power of attorney. Lansing, MI: Probate and Estate Planning Section of the State Bar of Michigan; 2002. Available at: http://courts.co.calhoun.mi.us/book023.htm. Accessed May 19, 2006. 4. Power of attorney. Albany, NY: Office of the New York State Attorney General; 2003. Available at: http://www.oag.state. ny.us/seniors/pwrat.html. Accessed May 5, 2006. 5. Power of attorney. Augusta, ME: Maine Legal Services for the Elderly;
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Table 2. DEA Regulations Related to Powers of Attorney
21 C.F.R. §1305.07 Power of attorney.
Any purchaser may authorize one or more individuals, whether or not located at the registered location of the purchaser, to obtain and execute order forms on his/her behalf by executing a power of attorney for each such individual. The power of attorney shall be signed by the same person who signed the most recent application for registration or reregistration and by the individual being authorized to obtain and execute order forms. The power of attorney shall be filed with the executed order forms of the purchaser, and shall be retained for the same period as any order form bearing the signature of the attorney. The power of attorney shall be available for inspection together with other order form records. Any power of attorney may be revoked at any time by executing a notice of revocation, signed by the person who signed (or was authorized to sign) the power of attorney or by a successor, whoever signed the most recent application for registration or reregistration, and filing it with the power of attorney being revoked. The form for the power of attorney and notice of revocation shall be similar to the following: Power of Attorney for DEA Order Forms ________________________________________________________ (Name of registrant) ________________________________________________________ (Address of registrant) ________________________________________________________ (DEA registration number) I, ___________________________________ (name of person granting power), the undersigned, who is authorized to sign the current application for registration of the above-named registrant under the Controlled Substances Act or Controlled Substances Import and Export Act, have made, constituted, and appointed, and by these presents, do make, constitute, and appoint ___________________________________ (name of attorney-in-fact), my true and lawful attorney for me in my name, place, and stead, to execute applications for books of official order forms and to sign such order forms in requisition for Schedule I and II controlled substances, in accordance with section 308 of the Controlled Substances Act (21 U.S.C. §828) and part 1305 of Title 21 of the Code of Federal Regulations. I hereby ratify and confirm all that said attorney shall lawfully do or cause to be done by virtue hereof. ________________________________________________________ (Signature of person granting power) I, ___________________________________ (name of attorney-in-fact), hereby affirm that I am the person named herein as attorney-in-fact and that the signature affixed hereto is my signature. ________________________________________________________ (Signature of attorney-in-fact) Witnesses: 1. ______________________________________________________. 2. ______________________________________________________. Signed and dated on the ______ day of __________, (year), at __________. Notice of Revocation The foregoing power of attorney is hereby revoked by the undersigned, who is authorized to sign the current application for registration of the above-named registrant under the Controlled Substances Act of the Controlled Substances Import and Export Act. Written notice of this revocation has been given to the attorney-in-fact __________ this same day. _____________________________________________________________________________ (Signature of person revoking power) Witnesses: 1. ____________________________________________________. 2. ____________________________________________________. Signed and dated on the ______ day of __________, (year), at __________.
2005. Available at: http://www. mainelse. org/poa.htm. Accessed May 5, 2006.
6. Your Medicare rights – advance directives. Los Angeles, CA: National Heritage Insurance Company; 2003. Avail-
able at: http://www.medicarenhic. com/bene/your_rights_directives.shtml. Accessed May 5, 2006.
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