On March 16, 2011 changes to the Homestead Act (M.G.L. C188 §1) will take effect, offering sweeping new changes to benefit homeowners, protecting them against creditors, (other than their mortgage lender).

Some of the new changes for the protection of your home can be summarized as follows:

1.   New Automatic Protection.       All Massachusetts homeowners will receive an automatic homestead exemption of $125,000 for protection against certain creditor claims on their principal residence without having to file any additional paperwork. By simply buying a home as your principal residence, the $125,000 protection applies.

Exceptions to the law are as follows:          

a. sale for taxes;

      b. for a debt contracted prior to the acquisition of said estate of homestead;

      c. for a debt contracted for the purchase of said home;

d. upon an execution issued from the probate court to enforce its judgment that a spouse pay a certain amount weekly or otherwise for the support of a spouse or minor children;

e. where buildings on land not owned by the owner of a homestead estate are attached, levied upon or sold for the ground rent of the lot whereon they stand;

2.   Declaring a Homestead provides $500,000 protection.       All Mass. residents are eligible for a $500,000 “declared homestead exemption” by filing a declaration of homestead at the registry of deeds. For married couples, both spouses will now have to sign the form which will be a change from current practice.

3.   2-4 Family Homes Eligible.       Homesteads are now available on 2-4 family owner occupied homes.

4.   Trust Beneficiaries Protected.         The beneficiary of a Trust will now be able to hold a Homestead in a home, although giving up the anonymity of holding a home in Trust. The Homestead must be declared by the Trustee of the Trust.

5.   Elderly and Disabled Protected.            The existing “elderly and disabled” homestead will remain available at $500,000.

6.   New Spouse protected.            If you have a homestead as a single person, and get married, the homestead automatically protects your new spouse.

7.   Surviving Spouse Protected.     Homesteads now pass on to the surviving spouse and children who live in the home.

8.   Intra-Family Transfers Protected.               Transfers between family members will not terminate a previously declared homestead.

9.   Lenders Prohibited from Waiver of Homestead.            Under the new law, homesteads are automatically subordinate to mortgages, and lenders are specifically prohibited from having borrowers waive or release a homestead.

Protecting your home in the event of financial problems other than non-payment of your mortgage loan, is a very important family protection. 

For example, should you be subjected to a judgment against you, the creditor cannot attach a lien to your home and sell it to recover the judgment if the lien is for less than $500,000 for a “declared” homestead, and up to $125,000 for an “automatic” homestead (see above).

For answers to any question you may have about this important homestead protection, or to secure the necessary forms for a “declared” homestead exemption, please contact us at 413-499-3520.

Certain provisions of the Medicare, Medicaid and SCHIP Extension Act of 2007 came into effect with the New Year.  Beginning on January 1, 2011, insurers must report any loss payment that is made to a Medicare beneficiary that “does or could” include compensation for medical treatment and ongoing responsibility for medical treatment. 

The report must include the identity of the beneficiary of the settlement, along with detailed information relating to the settlement and judgment, or other payment that minimizes any portion of the beneficiary’s health costs.

It is important for employers to be aware of these reporting requirements, because they may be required to report judgments or settlements of employment claims to Medicare.  In fact, in those claims where the employee alleges that he or she suffered a physical or emotional injury with related medical expenses, then a judgment or settlement must be reported to Medicare. 

So, for example, the report could be required for judgments or settlements in claims of discrimination, harassment, assault, battery, and infliction of emotional distress.

If an employer pays a portion of the judgment or settlement, then the employer is responsible for making the report.  If the employer is fully-insured and the insurer pays the entire settlement or judgment, then the insurer is required to make the report.

Of course, these requirements only apply if the employee is a Medicare beneficiary.  Medicare beneficiaries include persons 65 or older and persons of any age who (a) have end stage renal disease (kidney disease/dialysis patients), and (b) apply or will potentially apply for Social Security Disability Insurance (“SSDI”).  Employees who receive, or will potentially apply for, SSDI may include worker’s compensation claimants who are permanently and totally disabled.

Governor Patrick has signed into law “An Act Further Regulating Workers’ Compensation,” also known as the Workers’ Comp Private Right of Action Bill (“PRA Bill”).

The PRA Bill creates a private right of action for employees and business competitors against employers that fail to pay their workers’ compensation insurance premiums. 

As was previously the case, the Massachusetts Department of Industrial Accidents has the authority to issue stop work orders and assess civil and criminal penalties for violations of the workers’ compensation statute.  But now employees, and business competitors, may bring a private right of action against offending employers as well. 

Employers must be particularly careful in regard to misclassifying individuals as independent contractors.  Such individuals are rarely covered by the employer’s workers’ compensation insurance.  However, if they are misclassified, they may be able to bring a suit under the PRA Bill.

So the best way for an employer to avoid liability is to make certain that is has properly classified all of its employees and independent contractors, and to make certain it pays its workers’ compensation insurance premiums properly. 

That being said, the employer does have an opportunity to correct any errors after learning of a potential suit.  The law only permits a case to be filed against an employer 90 days after it and its insurer are notified of the complaint and intent to file.  The suit may only go forward if the insurance carrier does not attempt to collect what is owed during that 90-day notice period.

Plaintiffs who can show that an employer violated the workers’ compensation statute are entitled to recover 25% of the full value of what is owed, up to a maximum of $25,000.  They are also entitled to liquidated damages, which would increase their recovery by whichever of the following is less: (1) another 25% of the full value of what is owed; or, (2) $25,000.

The rest of the recovered funds will go to the Massachusetts workers’ compensation Trust Fund for injured workers whose companies failed to pay workers’ compensation insurance.