By: Mitchell H. Frazen
and Dawn M. Gonzalez

The current hot economy is no friend to the long term care industry which has recently seen a significant increase in job turnover as employees in both skilled and non-skilled positions leave. The biggest problems are associated with the lack of qualified Certified Nurses Assistants, who provide the bulk of the day-to-day services at nursing homes. The facilities, which usually pay these assistants between $7 and $12 an hour, are having a hard time competing against other business sectors that offer better, higher paying jobs. Analysts have reported that long-term care staff turnover rates are now approaching 95% annually. Current understaffing can lead to an increase in allegations of neglect and insufficient training can lead to an increase in allegations of negligence. The problems will not likely improve in the near future. The U.S. Department of Health and Human Services predicts that by 2010, there will be 635,000 registered nurses for almost 1.8 million positions.

Coupled to the recent trends in staffing problems, are the recent announcements of increases in reported cases of Alzheimer’s, drug-resistant tuberculosis and other long term debilitating diseases. As the "baby boomer" generation ages, the number of residents in nursing homes will continue to steadily increase. The number of persons needing long term care in 2000 is estimated at 9 million, an increase of over 25% from the 7.4 million estimate in 1994. At the same time, life expectancies continue to steadily increase. California researchers predict that by 2050, the average life span will be 83 years.

These conditions are contributing to the steady increase in the number of lawsuits filed against long term care facilities. Specifically, there appears to be a recent trend in an increased number of cases involving allegations against home health care providers. However, these types of cases have a higher percentage of intentional conduct allegations, which generally would not be covered by insurance.

Another troubling trend is the success plaintiffs are experiencing by using violations of federal and state regulations as evidence of negligence per se. Plaintiff attorneys are increasingly taking advantage of a government agency’s public files by obtaining facility survey reports, which identify a facility’s deficiencies. Specifically, plaintiffs’ use of the reports as evidence of system-wide problems is becoming more important in cases where the harm to the individual plaintiff might be harder to prove due to his/her already compromised health.

In addition to the trends in the number of cases and the theories of liability, there also seems to be a trend in higher valuations of damages. The elderly have always been seen as sympathetic plaintiffs. Now, plaintiffs’ attorneys are becoming more successful in presenting themes of the loss of "golden years" in order to maximize damages in elder care cases, which were once considered less valuable due to the plaintiff’s age.

The State of Florida has been especially hit hard. It has three times the number of nursing home lawsuits as the rest of the country. It has also recently seen some of the bigger recoveries. In March, a Taylor County jury returned a verdict of $2.21 million in compensatory damages and $10 million in punitive damages in the case of an 80-year old woman who was allegedly sexually assaulted twice and beaten by other residents. A study conducted in April by the University of California, San Francisco gave the Florida industry an overall "D" grade for quality of service. This study noted that Florida has 300% more violations issued than any other state for insufficient staffing.

The increased concern of risk management and liability exposure across the country has lead to a general increase in liability insurance premiums. Marsh Inc., reports that some long term care facilities across the country are seeing a 600% increase in their 2000 policy period premiums. The St. Paul companies, which have been among the largest medical malpractice carriers, have reportedly stopped underwriting nursing home liability policies in 33 states.

Liability insurance premiums are seven times higher in Florida than in other states. At least one insurer, Caliber One Management, Inc., announced this spring that it would not renew insurance coverage for almost 30 nursing homes in Florida. The lack of a stable insurance market has contributed to bankruptcy filings on behalf of at least five for-profit nursing home companies that collectively make up 20% of Florida’s nursing home residents. These and other events have lead some in the media to claim that Florida is facing a liability insurance crisis. On the other hand, patient advocacy groups complain that the industry is hyping the situation in order to push for favorable legal reforms. Nevertheless, the Florida legislature has established a commission to evaluate the situation. The commission is reportedly considering proposing tort litigation limitations on compensatory and punitive damages recoveries in nursing home cases and reversing the state law that allows recovery of plaintiff attorneys’ fees in nursing home cases whether or not the plaintiff is successful. The commission had an unusual session of negotiations with industry lobbyists and plaintiffs’ attorneys in the spring; however, the commission has not yet drafted any proposals.

In the face of the rising number of lawsuits, some states, in addition to Florida, are starting to take actions to protect the long term care industry from frivolous negligence allegations. For example, Oklahoma legislators recently proposed House Bill 2392, a measure requiring nursing home residents to consent to arbitration of any negligence allegations before a suit can be filed.

The NBC national magazine-news show, Dateline, recently highlighted a potential new trend – family members demanding installation of video cameras in residents’ rooms to monitor the quality and timing of services. The show, which aired on August 1, 2000, primarily focused on the experiences of Ms. Gail Sweeney who secretly installed a video camera in her mother’s room in a Houston, TX care facility, Parkway Place Hospital. The camera was discovered within a matter of days. After negotiations, the facility allowed the camera to remain in the room with a sign. Ms. Sweeney plans on using video tapes from the camera as support for a lawsuit against the facility alleging negligence in the care of her mother. The show also highlighted a facility in Irvine, California that requires all residents to consent to the placement of video cameras throughout the facility. In a defensive manner, this facility uses the video tapes to disprove frivolous allegations of negligence. The story also reported that the U.S. Senate Special Committee on Aging is looking into the possibility of proposing a law requiring federally funded facilities to consent to the installation of video cameras.

At the federal government level, the long term care industry continues to suffer the effects of significant cuts in Medicare funding stemming originally from the Balanced Budget Act of 1997. In June, President Clinton announced that he will propose reestablishing some of the Medicare payments that had been cut. Also, the federal Health Care Financing Administration (HCFA) recently increased the amount of civil fines that it can impose for regulatory violations to $10,000 per day. The HCFA also has reported that there has been a recent increase in federal False Claims Act/Qui Tam prosecutions for Medicare/Medicaid fraud in the long term care industry.

This fall’s presidential campaign may also highlight issues relating to the long term care industry. Already, Republican nominee, George W. Bush, has announced his proposal for tax incentives for long term care insurance. Both he and Democratic nominee, Al Gore, are in favor of tax credits for individuals that provide at-home care for elderly and disabled family members.

Like other industries that have faced mass-tort issues, the long term care industry has recently seen an increase in advocacy groups turning to the Internet to establish themselves and to spread their influence. Just one example of such an internet-savvy advocacy group is the Coalition to Protect American's Elders (www.protectelders.org), created by a Florida attorney, James Wilkes, who has made a career out of bringing high profile negligence suits against long-term care facilities. Mr. Wilkes’ firm also has a detailed web site (www.wilkes-mchugh.com) that markets directly to potential plaintiffs. Pitted against them is a group called Protect our Parents (www.protectourparents.com). Created by the industry, but promoted as consumer-oriented, the group advocates "fair nursing home litigation laws" that would protect the facilities against frivolous lawsuits. This, the group says, is the best method to allow the facilities to focus their resources on providing services.

Perhaps in response to the increased liability that long term care facilities face, there is an increased number of "assisted living facilities," which are more insulated against negligence allegations. These facilities are intended to serve the elderly and disabled who are generally able to take care of themselves with nominal oversight. Most state statutes distinguish these facilities as merely providing "access to services," not the services themselves. Therefore, liability allegations against these facilities are much harder to prove.

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