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.”

Liability issues

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.

Historical background

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.

Current trends

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.

Tort reform is usually credited with having the greatest impact in reducing liability. In states that passed tort reform over the past several years (Florida, Georgia, Mississippi, Louisiana, Texas, Ohio, and West Virginia), the average claim size dropped to $104,000 in 2007 from $384,000 in 1998. Other contributing factors include withdrawal of long arbitration claims settlements and significant improvements in quality of care.

In states that have not passed effective tort reform, however, frequency of claims continues to increase-the number of claims per bed in such states has doubled since 1995. The steepest increases were found in Arkansas and Tennessee, which both reported an annual cost of claims per occupied bed of nearly $10,000-a 71% increase in the five-year period from 2001 to 2006.

Despite these facts, the industry has not succeeded in making its liability reform case to state legislatures. Trial lawyers, traditionally willing to invest more in the halls of state legislatures, have framed the issue as one of provider greed, with the growth of the proprietary LTC industry as Exhibit 1. Next, they point to patient safety, arguing that even moderate reform would diminish quality of care. From our experience, the industry cannot win a debate that is framed in this way.

We have found, however, that legislators are open to an argument based on access to care for the growing elderly population. The lynchpin to this argument is taking positive action that in effect removes patient safety off the table. By demonstrating a willingness to exceed state standards for patient safety, we believe that the industry can refocus the argument where it belongs: on preserving the viability of the full range of LTC services. When shown the facts, lawmakers understand the correlation between the spiraling cost of doing business, aggressive state regulators, and the long-term viability of the industry.

Another positive trend is found in insurance pricing. Although premium costs continue to rise, the rate of increase for commercial premiums between 2005 and 2006 was only 3%, compared to increases ranging from 16-143% between 2001 and 2005.

Steps to reduce risk

While there is no perfect shield to liability, providers can take certain steps to better protect themselves from liability associated with quality of care claims.

Arbitration. Try to execute agreements with residents or their guardians that will make arbitration the method for resolving legal disputes. These agreements can protect facilities from excessive jury awards. Keep in mind, however, that these agreements have themselves been a source of litigation over a resident’s legal capacity to waive his or her access to the courts, particularly when the resident is either incapacitated or the agreement is signed by someone on the resident’s behalf using a power of attorney.

Transfers. Require residents to move to a higher level of care when their needs can no longer be satisfied. Educate residents and families during the admission process and continuously throughout a resident’s stay regarding the process for transferring residents to a higher level of care when the need arises. Describe what services and programs are provided at the facility and do not overstate its capabilities.

Abuse. Screen employees, volunteers, contractors, and vendors by using references, verification of credentials, licenses, and certifications; conduct criminal background checks where permitted; test for drug and substance abuse as permitted by law (and develop policies and procedures in these areas and ensure that they are compliant with federal, state, and local law). Train your staff in conflict management and management of difficult residents. Post Residents’ Rights statements and make sure the staff understands and respects them. Monitor residents for signs of abuse, and immediately investigate allegations or suspicions of abuse. Document actions taken to prevent abuse following investigation of specific events.

Improper care. First, focus on employees. Express appreciation to employees for being caregivers and stress the importance of their roles. Require staff orientations that include review of competencies and evaluate employees on them annually. Provide in-service education annually, at minimum, on key care issues. Complete comprehensive resident assessments upon admission and reassess at least quarterly and after any significant change in a resident’s condition.

Elopement. Discuss a resident’s potential risk with family and staff so that the care/service plan addresses any known risks. Use preventive technology, such as monitoring devices, anklets, and camera surveillance. Maintain current photographs of residents. Lock down external doors at night and monitor persons entering/exiting.

Falls. Monitor compliance with care/service plans to ensure proper use of resident lifts, transfer devices, and fall prevention alarms. Ensure that staffing levels are sufficient to allow prompt response to call bells and verbal requests for assistance. Ensure good lighting. Lock wheelchairs prior to transfers. Require nonskid footwear. Keep walkways free of obstacles. Provide assistive devices.

Pressure sores. Retain specialized wound care staff. Develop a comprehensive skin integrity plan. Assess a resident’s skin immediately upon admission, at least quarterly thereafter, and following any significant change in health, mobility, or nutritional/hydration status. Keep assessments consistent by having them performed by the same staff member on the same day and at the same time.

In short, don’t wait for tort reform or desired changes in insurance company policies, no matter how justified. Take precautionary steps on your own behalf to reduce your risk of liability.