We don’t think we are exaggerating the significance of two published opinions released by the Court of Appeals yesterday in In re MJG (Docket 332928) and In re JSP/In re BGP (Dockets 333700, 333813). These three appeals challenged the trial courts' denials of out-of-state adoption agencies' adoption fees. If the trial courts’ decisions were upheld and the agencies were not allowed to be paid for the services they rendered, then agencies would not be able to perform direct placement adoptions in Michigan at all. After all, even a non-profit organization has to be able to pay its staff, rent, utilities, and all the services that go into an adoption. And although the Adoption Trilogy involved out-of-state agencies, three other appeals are also pending that involved an in-state adoption agency whose fees were similarly denied by trial courts.
In
all three cases the fees were uncontested and based on contract between the
adoptive family and the adoption agency, the agency and adoptive family were
both out of state, the birth mother and child were in Michigan, and the cases
were filed in Oakland County. In JSP and BGP, the trial court
denied the fees without a hearing, when the only evidence presented was a
lengthy letter from the agency detailing the fees (again, unrebutted), and the
trial court approved some of the fees, but denied other fees. In MJG,
the trial court held an evidentiary hearing where a representative from the
adoption organization testified by phone about the fees, and the trial court denied
all fees of the organization.
The
COA conducted a thorough review of MCL 710.54 which delineates which adoption
fees are allowable (710.54(3)), which fees are allowable only upon court
approval (710.54(1)) and which fees are prohibited (710.54(2)). The COA
also discussed three other important subsections of MCL 710.54. Section 7
requires a verified accounting submitted by the adoptive family “itemizing all
payments ….made or agreed to be made by the petitioner in connection
with the adoption.” MCL 710.54(7) (emphasis added). Section 10 requires the
court to “approve or disapprove all fees and expenses.” MCL 710.54(10). And
Section (11) imposes criminal liability if a person violates MCL 710.54.
The Court of Appeals set forth a
multi-step process for a trial court to evaluate fees in an adoption
case. First, the court must determine whether the fee is “in
connection with an adoption,” as required by MCL 710.54(7). The court has
an independent obligation to make this inquiry even when the fee is included on
the disclosure form because petitioners will tend to over-include fees as there
are criminal penalties for not reporting. So if the fee was for services
rendered before an adoptive family and child are identified, then they are not
in connection with that particular adoption. Also, general administrative fees
of the agency (often pro-rated over all of the agencies clients) are not in
connection with a particular adoption. If the fees are not in connection
with an adoption, then the “court has no authority to disapprove the
fees.” Second, if the fees are in connection with an
adoption, then the court must determine whether the fees fall under MCL
710.54(1) – such that court approval is required, or under MCL 710.54(2) --
such that the fee is prohibited. Third, if the fees are not
prohibited by Sections (1) or (2), then the trial court must determine whether
the fees are permitted under the exclusive list contained in MCL 710.54(3), and
if they are in this list, the trial court must determine whether the fee is
“reasonable and actual.” Fourth, although not at issue
in the Adoption Trilogy, the Trial Court should also confirm whether the fees
are required in Sections (4) or (5).
Reviewing the fees from the
Adoption Trilogy, the COA reached the following conclusions:
- Marketing fees to promote the profile of an adoptive
family, often on a nationwide or even international basis, are not in
connection with an adoption, and cannot be disallowed.
- Administrative fees of the agency, such as general
contract labor, IT services, payroll, health insurance, professional
insurance, office supplies, and rent, are not in connection with the
adoption itself and cannot be disallowed.
- Preliminary fees for work done before any potential
adoptees or birth mothers are identified are not in connection with the
adoption (much less the specific adoption that occurred of a specific
child in Michigan) and cannot be disallowed.
- Apprising the client of various birth mothers, are
connected to the adoption, and fall under the prohibited category of “referring
a prospective adoptive parent to a parent or guardian of a child for
purposes of adoption.”
- Generating a profile for the birth mother and
comparing the alignment of preferences of the birth mother and the
adoptive parents are prohibited under MCL 710.54(2)(a) and (b) because
they amount to assisting the birth mother and adoptive parents evaluate
each other.
- Presenting an adoption opportunity to the clients is
prohibited under MCL 710.54(1)(b) or MCL 710.65(2)(d) because they are
communicating the existence of a child available for adoption or referring
a parent or guardian to a prospective adoptive family.
- The intake meetings with the birth mother is allowed
under MCL 710.54(3)(c) as counseling of a parent, along with directing and
assisting the birth mother to have a physical evaluation, screenings, and
testing.
- Obtaining medical records and information about
possible birth fathers are allowed under MCL 710.54(3) as expenses
incurred in ascertaining information required under the Adoption Code about
an adoptee and the adoptee’s biological family and under MCL 710.27, which
requires accounts of the health and genetic history of the child and
biological parents.
- Analyzing the legal requirements and applicable laws
is allowed under MCL 710.54(3)(f) as legal services.
- Introducing the birth mother to the adoptive family
is prohibited under MCL 710.54(2)(c) and (d) as a referral between the
adopters and parents.
- Providing medical records is allowed under MCL
710.54(3)(e).
- Paying for the birth mother’s needs and
transportation is allowed under MCL 710.54(3)(d) and (g).
- Assisting the birth mother in applying for insurance,
securing professional counseling, mentoring support services, and support
to the birth mother is allowed under MCL 710.54(3)(c).
- Referring the adoptive family to agencies, social
workers, and attorneys; managing the adoption plan; communicating with
legal entities are not contained within MCL 710.54(3), and are there not
allowed.
- Counseling services for the adoptive family is not allowed under MCL 710.54(3), although it “would be payable if these counseling services … [were not] in connection with the adoption.”
While we
take issue with a few of the points addressed by the Court of Appeals’
opinions, the overall outcome is a good result and should be workable in the
future – although it will certainly require more thought and evaluation by the
trial courts to determine whether to allow, prohibit, or disregard the fees
that cannot be disallowed.
Labels: Administrative Fees, adoption agencies, adoption appeal, adoption fees, birth mothers, Direct Placement Adoptions, Marketing fees, MCL 710.54, Michigan, Michigan Appeals, Oakland County, potential adoptees
