Supreme Court reinstates lawsuit

FAIRBANKS (AP) The Alaska Supreme Court has reinstated a lawsuit that accuses two companies of taking advantage of a Fairbanks man's mental health problems to deplete his inheritance.

The state's high court last month reversed a decision by Fairbanks Superior Court Judge Charles Pengilly to dismiss the man's suit based on a statute of limitations argument.

The case will now head back to the lower court in Fairbanks to be reheard in front of Pengilly.

In the lawsuit, the man, identified only by his initials K.H., accuses Professional Guardian Services Corp. and company president Dave Schade, as well as the now defunct Community Advocacy Project of Alaska and its bonding agency, Continental Insurance Co., with grossly mismanaging his funds and charging outrageous fees for petty tasks.

The suit was first filed in 1999. It seeks to recover from the companies about $90,000 in fees, some of which a court auditor classified as ''unheard of'' and ''1,500 (percent) higher than was necessary.'' It also seeks punitive damages.

The plaintiff inherited $92,172 in 1992 and CAPA was appointed as the conservator to handle his money, according the court.

Representatives of CAPA and PGSC from 1992 to 1998 were charged with providing care for the man, who has a history of mental health problems and suffers from paranoid schizophrenia, possible organic brain syndrome and glaucoma, according to the court.

Shortly after the CAPA appointment, K.H. moved to Seward and lived under the care of Seward Life Action Council, a mental health service provider.

The plaintiff's legal counsel asserts that while he was under the companies' care, they made unjust expenditures listed under vague categories like ''services'' and ''other.'' The companies also charged the man $80 per hour for nonprofessional services such as training the man to do his laundry.

''Although K.H. had $90,241 in a securities account at the beginning of the CAPA conservatorship in 1992, that money was gone when he arrived in Fairbanks in 1995,'' Chief Justice Dana Fabe wrote.

Following a 1996 incident in which K.H. intentionally cut his wrist, CAPA, his conservator at the time, also was appointed as the man's guardian.

Schade disputes most of what the Supreme Court included as background information.

Schade, executive director of CAPA at the time, and B. Jarvi broke ties from CAPA and formed PGSC, their own company, which is now the largest private guardianship and conservatorship provider in Alaska.

CAPA has gone bankrupt and disbanded. Former directors and workers are facing a lawsuit in federal court that accuses them of broad allegations of cheating incapacitated clients out of money.

Because Schade and Jarvi had been involved in K.H.'s affairs as CAPA workers, their new company was appointed as guardian and conservator in November 1996.

A court visitor, someone assigned to provide oversight of guardianship and conservatorship cases, conducted a review of CAPA's past handling of K.H.'s money. The court said the review found a ''disturbing breakdown of costs,'' and fees that were ''unheard of.''

The court visitor suggested that an attorney pursue recovery of K.H.'s funds.

The Office of Public Advocacy intervened in the case in July 1997 and is now K.H.'s guardian and conservator.

Pengilly dismissed the case after the companies successfully argued that it wasn't filed within six months after the companies' involvement with K.H. ended.

However, the Alaska Supreme Court justices ruled that the companies' involvement with K.H. had not ended because they failed to provide final accounting statements which ''fully disclosed K.H.'s financial matters.''