Increasing litigation and difficulty in insuring facilities have forced an increasing number of long-term care (LTC) providers to divert critical resources to defend legal claims. The average amount spent by providers to defend a general or professional liability claim has nearly quadrupled over the last seven years, according to recent reports.
The source of much litigation is allegations that a facility is providing an unacceptably low standard of care. In 2007, more than 90% of U.S. nursing homes were charged with varying degrees of violation of federal health and safety standards, according to a report issued by the Office of Inspector General (OIG) of the Department of Health and Human Services on Sept. 29, 2008. In conjunction with the report, OIG issued a new compliance guide that “strongly encouraged [facilities] to assess their staffing patterns regularly to evaluate whether they have sufficient staff members who are competent to care for the unique acuity levels of their residents.”
Federal law defines “quality of care” as the requirement that “each resident must receive and the facility must provide the necessary care and services to attain or maintain the highest practicable physical, mental, and psychosocial well-being, in accordance with the comprehensive plan of care.” An LTC facility that participates in Medicare can be found liable for being out of substantial compliance with the Social Security Act's provider requirements. The following are some of the most common liability risks:
Slip/fall exposures. In a recent study, falls accounted for approximately 38% of claims filed.
Elopement/wandering. Any resident might wander off and endanger him or herself, but residents that suffer from dementia, organic brain syndrome, or Alzheimer's disease are at a higher risk. Elopements in “at-risk” cases can be extremely costly claims, since the families of such resident often hold facilities accountable for knowing the propensities and characteristics of their residents.
Skin integrity. Some of the most notable liability cases involve skin breakdown issues, such as bed sores, caused in part to the very visceral reaction that images of the sores evoke in both family members and juries. Facilities that adopt the most current technology to prevent these wounds, and to document and treat them when they occur, are much less likely to be sued over skin breakdown issues.
Resident rights/abuse/neglect issues. Claims for abuse or neglect are common. These claims often arise from the widely differing expectations regarding levels of service among providers, residents, and/or family members. For example, what is the ratio of staff to resident and is it appropriate? When are restraints employed as treatment and for how long? Failure of a facility to communicate its service standards at the beginning of a resident's stay can lead to potential claims.
Medication and treatment errors/omissions. Failure of facilities to monitor and continuously train staff to achieve adequate risk reduction has led to increased claims in this area. High staff turnover rates have also been cited as a contributing factor.
Enormous jury verdicts during the 1990s and the first half of the current decade caused facilities to encounter difficulty in finding adequate, if any, insurance coverage. Although these large jury awards were seldom actually paid, some carriers stopped writing liability coverage for long-term care facilities. In Florida, for example, after an onslaught of claims, there were no state-licensed insurance carriers providing long-term liability coverage as of mid-2003. In Texas, almost half of all nursing homes, both nonprofit and for-profit, carried no liability insurance at the end of 2002. Tort reform enacted in Texas in 1993 and 1995 required annual mandatory rate reductions based on the effects of reforms, which did result in an approximately 17% rate reduction, but these reductions applied only to regulated carriers and there were no regulated carriers underwriting on behalf of for-profit nursing homes.
In 2001, the state of Texas passed significant legislation-the Long Term Care Facility Improvement Act-under which all licensed nursing homes were required to carry liability coverage by September 2003. The law also addressed affordability of coverage by making for-profit providers of long-term care eligible under the Texas Medical Liability Insurance Underwriting Association, which had previously provided coverage only to nonprofit providers.
Although Florida and Texas have historically led the nation in number of claims, over the past decade, lawsuits and claims have steadily increased nationwide. Current trends vary from state to state for several reasons, such as state tort reform, insurance carriers' response to increased litigation, and actions by facility operators to invest in patient safety, claims management, and risk mitigation. The findings of a recent study published by AON Corporation are enlightening in this regard.
The study identified both positive and negative trends. Among the positive, it revealed that average liability claims in the LTC industry dropped for the first time in nine years in calendar year 2007. Average general liability and professional liability loss costs nationwide were approximately $1,460 per bed, down from their peak of $2,030 per bed in 1998. The study also indicated that frequency of claims has stabilized.