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Paul Willging Says...

January 1, 2006
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Litigation Is Everyone's Problem

Litigation is everyone's problem Thank God for the lawyers! Or so they would have us believe. After all, they're only doing what they do "for the good of our residents," of course, and certainly not for the money. Such legal altruism notwithstanding, during the 1970s and 1980s, juries started awarding very large amounts of money in response to professional malpractice suits, much larger than those typically awarded for automobile accidents and other incidents. And the amounts awarded seemed increasingly to have little relationship to the actual professional transgression or harm caused.

You might have noticed this trend. Indeed, some would argue that long-term care is a specially chosen target. This does not apply only to nursing homes. It has become increasingly difficult, for example, to refer to assisted living as a "housing" or "social" model and, by definition, immune from medical malpractice litigation. Assisted living communities are really hybrids, including medical care (e.g., medication assistance, incontinence care) in addition to social and housing services. Even within the independent senior housing sector, of all places, expectations for the provision of healthcare services are escalating (e.g., the widespread demand for and use of cardiac defibrillators) and, with that, exposure to liability prosecution.

Nor are the legal attacks being mounted solely from the private sector. The increasing involvement of the Federal Bureau of Investigation and the U.S. Department of Health & Human Services' Office of Inspector General reflects enhanced and continuing federal government scrutiny of seniors' housing and its liability potential. State governments are taking an active interest, too. For example, Alterra was forced by Minnesota's attorney general some years ago into a widely publicized settlement regarding staffing and other issues in one of its assisted living facilities.

A variety of new tools has surfaced in the hands of prosecutors and claimants in recent years, including the use of false advertising statutes. More than one facility has discovered to its detriment that advertising (in any form) can provoke litigation if it makes unrealistic promises. Such statements as "allowing aging in place" or "providing above-average quality of care" can put a facility at risk of "false advertising" litigation, including class-action suits by groups of claimants alleging injury.

Among the tools employed relatively recently by federal and state governments against healthcare providers are the qui tam provisions of the federal False Claims Act of 1863. (Qui tam is shorthand for the Latin phrase qui tam pro domino rege quam pro se ipso: "He who as much for the king as for himself.") In these actions, a plaintiff sues on behalf of the government to secure damages for illegal acts. Such litigation, as applied to publicly funded healthcare, operates on the assumption that a provider must meet a minimum threshold of quality in order to legitimately seek reimbursement under federal or state funding programs. During a specified period of time, the government examines the claim and decides or declines to proceed with recovery. Should the government decide to take over the claim, the plaintiff receives a percentage of the recovery. Should the government choose not to intervene, the litigant (under certain circumstances) has the right to continue the action independently. Facilities in several states have lost multi-million-dollar judgments this way and have been placed under close government supervision in rectifying their operations.

Novel techniques for attacking providers have been accompanied by equally novel methods of redress. One of the more ominous sounding is the "CIA" or corporate integrity agreement. CIAs entail extremely close federal monitoring of the provider, often by a contracted independent agency or individual, and can cover everything from a company's internal operations to the quality of its services to the nature and integrity of its claims submission practices.

Clearly, though, the type of litigation that keeps most providers awake nights is the private-sector lawsuit alleging negligence. The impact of such litigation on profit and loss can be staggering-as much as hundreds of millions of dollars. Such expenditures have had obvious impact on the already financially troubled chains, which have had to increase reserves just to stay in business.

The damage occasioned by increasing amounts of litigation and prosecutorial oversight is by no means limited to the facility involved and the financial damages incurred. The effects of heavy media coverage can be as damaging as the lawsuit itself-and that goes for all providers in the community, not just those immediately involved.

So, how do you avoid this increasingly menacing situation? We start by understanding the risks involved so as to better avoid them (and be prepared for legal challenge if it comes). In tort litigation, for example, four conditions need to be present for successful action by a plaintiff: "duty," "breach," "damages," and "causation." (Some have argued for a fifth: a malleable jury that can be persuaded by plaintiff's counsel to ignore the first four.)