The recent case of Mahan v. Charles W. Chan Insurance Agency, Inc. highlights the intricacies and reach of California’s elder abuse law.

The facts of Mahan are representative of many financial elder abuse cases. As part of their estate plan, Fred and Martha Mahan in the 1990s created a revocable trust, the “Children’s Trust,” to hold their life insurance policies, with their daughter Maureen as trustee. The Mahans funded the trust with two second-to-die insurance policies valued at $1 million. The Mahans paid $14,000 in annual premiums and funded them so that their children would receive at least $1 million upon the second death.

Two decades later, in 2013, Fred, now 86, was suffering from confusion and related forms of mental impairment, and Martha, 79, had been diagnosed with Alzheimer’s. The defendants, a group of insurance brokers, allegedly conspired to sell the Mahans new life insurance coverage with a total premium of $800,000 and resulting commissions of $100,000.

The Mahans and the trust filed suit against the brokers alleging violations of California’s core financial elder abuse statute along with four related causes of action –negligence, breach of fiduciary duty, fraud, and unfair business practices. The defendants filed motions arguing that the complaint was defective and the trial court agreed, but as is often the case, gave the Mahan’s lawyers a second chance to file the complaint. That they did. Specifically, they filed a First Amended Complaint that spanned 49 pages and included details of the brokers’ alleged misconduct and conspiracy spanning 87 numbered paragraphs. The appellate court later referred to this document, which contained no subheadings, as being “not particularly reader-friendly.”

The brokers’ lawyers argued that, even if you assume all the allegations in the complaint are true, the allegations show that the trust was injured but not the Mahan’s themselves. Specifically, the brokers argued that the Mahans voluntarily transferred the policies to the Children’s Trust as part of their estate plan, and that therefore the brokers didn’t take the Mahan’s money. This is because the trust–and not the Mahans–owed the insurance policies. The trial court accepted this argument and, using similar reasoning, dismissed the First Amended Complaint. The Mahans and the Trust appealed.

The appellate court’s legal analysis begins with the words of California’s Elder Abuse Act, California Welfare & Institutions Code Section 15630 et seq. As provided in Section 15610.30, subdivision (a), “ ‘financial abuse’ of an elder occurs when a person or entity does any of the following: (1) Takes, secretes, appropriates, obtains, or retains real or personal property of an elder or dependent adult for a wrongful use or with intent to defraud, or both.”

The appellate court also undertook a detailed review of the legislative history of this provision. Specifically, it found that the legislature has made clear that the elder abuse statute is to be interpreted broadly to protect seniors. The history of the statute shows that the California legislature enacted the statute in 1982 and amended it in 1991, 1998, and 2004 to strengthen the protections afforded seniors. For example, the 1991 amendment made it easier for private parties (as opposed to the government) to sue for elder abuse.

In light of its legislative history, the appellate court found that the financial elder abuse statute covers a broad range of circumstances that result in seniors being deprived of property interests. It then concluded that the Mahan’s complaint includes several allegations that would, if true, meet this statutory definition of deprivation. Specifically, the Mahan’s allegation that they would need to continue to fund the Children’s Trust to pay the premiums for the new policies is a kind of financial harm that the elder abuse statute was amended to deter. Likewise, the manner in which the brokers convinced the Mahans and their daughter to buy the new policies could constitute churning or “undue influence” as that term has been defined in the Welfare Code. Thus, the appellate court concluded that the trial court had erred in reading the financial elder abuse statute too narrowly. It reversed and returned the Mahans’ case to the trial court so that they could continue with their lawsuit.

The Mahan decision is likely to have far-reaching consequences. Its detailed analysis of statutory history is likely to be persuasive to other courts. In addition, the court’s reasoning suggests that, at least in California, the financial elder abuse statute may cover a wide range of acts that are intended to deprive seniors financially, including by upsetting their pre-existing estate plan. Moreover, there is a distressing amount of financial elder abuse. The AARP has estimated that the annual cost of financial elder abuse exceeds $3 billion. Given the aging population and the millions of family members and trillions of dollars of wealth that will be transferred from seniors to their children, the prevalence of elder financial abuse cases is almost certain to rise.

The Mahan decision makes clear that California’s financial elder abuse statute is potent and reaches a wide array of improper conduct. It also demonstrates that individuals who fear that they or a loved one has been the victim of financial abuse should consult with lawyers who have expertise in trusts, financial documents, and the litigation process.