Claims Management: From Report to Resolution
when faced with a liability claim, a facility needs to take immediate and decisive action, for its reputation and financial well-being may be on the line. A facility must prepare to defend the claim as quickly as possible. With severe consequences for inaction or the wrong action, a long-term care organization needs expert consultation to examine the incident, manage the investigation and, possibly, avoid litigation altogether. To this end, providers are employing claims management teams, whose experienced investigators work with facility staff to resolve claims. One such team is Hamlin & Burton Liability Management, Inc., a claims management firm that represents long-term care organizations. Paul Hamlin, founder and president of Hamlin & Burton, recently offered his thoughts on claims investigation, evaluation, resolution, and litigation management to Nursing Homes/Long Term Care Management.
What services does a claims management team provide?
Hamlin: We manage the entire claims process—everything from what to do when there is an unexpected outcome with a resident’s treatment to the claim and litigation process. This includes investigating and evaluating each individual case; hiring and managing defense counsel; achieving resolution, be it negotiations or litigation outcomes; and participating with facility management through risk management activities, which allow an organization to actually benefit from the experience rather than just resolve a case.
What does the claims management process entail?
Hamlin: Claims management starts with an aggressive and proactive investigation, a fact-gathering process that should include an evaluation of each claim or potential claim. The basic investigation is similar to a reporter’s work—interview the people with knowledge of what happened and gather all documentation, which can be quite extensive. Depending on the complexity of the issues presented, we may retain experts to help guide us in the more technical aspects, including developing “standard of care” and “causation” defenses.
Historically, traditional insurance carriers have taken a reactive approach to claims. They wait until the actual lawsuit is served, which may be a year or more after the first incident. With proactive claims management techniques such as conducting interviews and gathering and analyzing records, you can start defense work at the moment the incident occurs and do not have to wait until the situation develops into a full-blown claim, at which point employees may have left the organization and no one remembers the facts of the case.
Facilities don’t like to report potential claims to insurance companies for a number of reasons, and the relationships and dynamics behind those reasons create obstacles to early reporting. Opportunities can come up early in a case—sometimes before a lawsuit is ever filed—to settle the claim or position the claim in such a manner that the ultimate loss will be significantly less. These include opportunities to influence a family’s disposition or expectations by dealing with them directly or a lawyer they’ve hired who isn’t committed to aggressive nursing home litigation. With a more traditional approach to claims handling, opportunities early on get missed.
You mentioned a hesitancy to file insurance claims. What are some reasons for this?
Hamlin: Staff—particularly those at the lower levels of an organization—don’t like “telling on themselves,” and oftentimes there’s almost an adversarial perception of the reporting process. Reporting claims to a traditional insurance company may involve a financial penalty; the insurance company might not renew the next policy, or might increase the premium because of incidents that haven’t developed into a claim. In a traditional insurance environment, both educational and financial dynamics within an organization can discourage reporting.
What are some common claims?
Hamlin: Common asserted claim types in the professional liability setting include resident falls, skin breakdown, and dehydration and malnutrition. There are three categories of resolutions to these cases: (1) a settlement with the resident or counsel, (2) a verdict, or (3) some other disposition in the legal system, such as the case getting thrown out or a procedural defense. The most common outcome by far is a settlement. The second most frequent outcome is a dismissed case, and a very small percentage of these cases actually go to trial, verdict, and final disposition.
Courtroom dynamics work against the nursing home and favor the resident. Sociological and psychological prejudices are found in most jury pools; in other words, people don’t like and are fearful of nursing homes. A nursing home is a difficult defendant to present in a positive light in the courtroom, particularly when the opposing party is usually very sympathetic. Juries react unpredictably to these kinds of cases. We’ve used jury science such as mock trials and focus groups over the years. The sophisticated plaintiff’s attorney attempts to try these cases on an emotional basis, as opposed to a factual one. Plaintiff’s attorneys will try to characterize the nursing home as being more concerned with turning a profit than taking care of the resident. This is known as a “profits over people” argument.
What are some of the best practices in this field?
Hamlin: Because this is a specialized subcategory of claims handling, you need to start with a specialized expert in long-term care claims. The claims management process should entail a proactive, hands-on strategic approach in which everything is done for a reason and resources are managed efficiently.
The claims professional should carefully coordinate with management, and management should seek information from the claims professional, as litigation has many hidden costs. During the discovery process, the plaintiff’s attorney may take staff member depositions, which can result in negative developments that lead to other claims. What starts out as one lawsuit may turn into three or four more if the plaintiff’s attorney develops a framework to prosecute cases against a given facility.
Following resolution of a claim, a facility should participate in risk management in order to get something more out of the experience than simply the resolution. Addressing a claim is costly, but a facility can benefit from the process by changing organizational behavior and learning how to avoid or minimize future claims.
What qualities should a claims management team possess?
Hamlin: We strongly believe in a multidisciplinary approach to claims handling—a collaborative and participative process between the claims professional, facility, and defense counsel. These different disciplines should participate in the investigation, evaluation, and resolution of a case. We are able to get better outcomes for our clients when they work with us to investigate and understand the strengths and weaknesses of the case.
Examine the experience and dedication of the staff actually handling the files. Who is actually going to be handling the claim, and what is that person’s background and experience? A facility may hire a claims management company that really only warehouses files; little is done to affect the outcome of the case. When an incident or resident complaint is reported, or a claim or lawsuit is filed, a proactive protocol should be in place that takes a project management approach to each individual case. The claims handler should not just hire an attorney and abandon the file to the lawyer.
The facility owner needs to be able to access the claims management team’s information, including the financial forecast and plan for disposition. Each file must have a clear and concise plan of action. At our firm, we have a written plan of action that is kept current throughout the life cycle of each case and includes the expected ultimate indemnity payout, the expected ultimate expense payout, upcoming 90- and 180-day plans of action, and directives to counsel. These clear, concrete steps and procedures allow us to manage a complex and open-ended process.
What are some of the challenges claims handlers face?
Hamlin: Applying a disciplined protocol in a consistent manner is a challenge, as each case is different and each venue has different demands. Because litigation in these cases can last several years, we want to avoid letting this process run amok or take on a life of its own. Containing the facility’s exposure is also difficult, because inherently open-ended damages are available to the plaintiff in most jurisdictions. Some jurisdictions have firm caps in place, but most don’t—the facility can face an open-ended downside risk. Effectively managing, mitigating, and confining the defendant’s risk is a challenge in virtually every case.
What trends have you seen in this field, and what is your outlook for the future?
Hamlin: Historically, a few states had extraordinarily bad claims experience. Florida, Texas and, to some extent, California were among them. Starting about eight or nine years ago, we have seen a proliferation of aggressive nursing home litigation tactics. The plaintiff’s bar exported aggressive and sophisticated litigation tactics to a number of additional states, including Mississippi and Arkansas. This trend has continued and there have been very large verdicts even in states without any history of nursing home litigation. Many states have reacted with efforts at tort reform. States that have enacted statutes attempting to curb some of these litigation excesses have seen varying degrees of success. Going forward, nursing home malpractice remains a difficult class of litigation that deserves attention and management. These cases can be explosive in the courtroom, and no jurisdiction is immune from them.
Paul Hamlin is Founder and President of Hamlin & Burton Liability Management, Inc. Based in the Orlando, Florida, area with 17 regional offices strategically located throughout the country, Hamlin & Burton is in its ninth year as a specialized healthcare claims and litigation management organization with continued focus on the senior care industry. The company provides services in every state and handles more than 4,000 healthcare liability claims per year.
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