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Nursing Home Litigation Crisis

Malpractice claims against nursing homes have risen steadily for a number of years. According to the United States Department of Health and Human Services (HHS), both the number of claims against nursing homes and the average payments made to patients or their families have risen dramatically. Nursing homes in Texas and Florida have experienced the greatest increase in claims and awards. Because liability insurers have paid most of the costs associated with these claims, the result of the increases has been a vast increase in premium costs, reduced coverage and denial of coverage for many nursing homes. In response to cries for help in facing this liability crisis, the Office of the Assistant Secretary for Planning and Evaluation in the HHS is conducting a study to address the problem and devise solutions.

The rise in claims against nursing homes is attributed to a number of factors. For instance, the reduction in financing for nursing homes has been linked to inadequate patient care. Because many nursing homes are forced to pay skyrocketing insurance premiums, they are forced to rely on cost containment to fund insurance coverage. Because Medicare and Medicaid reimbursements do not always cover the costs of paying for care and because many private nursing care insurers likewise do not provide enough reimbursement, many nursing homes are forced to resort to high staffing ratios and employ inadequately trained staff. In addition, patients’ bills of rights have been attributed to the rise in claims. With nursing home patients more aware than ever of their rights, more are seeking redress of patient care rights violations. In states that have passed legislation adopting a patient bill of rights, many have seen an upswing in nursing home malpractice claims.

As the majority of nursing home patients, estimated to be over 75 percent, are Medicare or Medicaid patients, the cost of litigation against nursing homes is born largely by taxpayers. In fact, it is estimated that over $5 billion in Medicaid funds have been spent on litigation costs. Up to 5 percent of Medicaid costs are litigation loss costs. According to a study performed at the request of the American Health Care Association, nursing home insurance premiums rose on average 51 percent from 2002 to 2003. In addition, many insurers have imposed occurrence limits and raised deductibles.

To ease the burden of litigation costs on nursing homes and taxpayers, a number of states have introduced tort reform legislation. Many of these reforms cap the amount of non-economic damages recoverable in medical malpractice actions. Other proposed legislation allows nursing homes to require that patients agree to mandatory binding arbitration for any claims the patient may have against the nursing home. In addition to tort reform, nursing home policymakers suggest that the implementation of risk management procedures may help reduce the number of claims. In addition, quality improvement organizations can provide a broad range of assistance to nursing homes by developing practices that will improve quality care in all nursing homes.