NEWS INDEX Archives 2004 June

Improve care by limiting lawsuits, jury awards in cases against nursing homes

Mark Reutter, Business & Law Editor
217-333-0568; mreutter@uiuc.edu

6/17/04

CHAMPAIGN, Ill. — Placing limits on lawsuits and jury awards against nursing homes would improve the quality of care to elderly residents by reducing the skyrocketing cost of liability insurance, an article in the Elder Law Journal argues.

In the wake of state laws that opened the door to lawsuits against poor care in the 1980s, nursing homes have been beset by litigation that threatens to sap the financial strength of the industry, according to R. Patrick Bedell, articles editor for the journal, which is published by the University of Illinois College of Law.

“Tort reform in nursing home litigation is desirable because the current tort regime imposes costs on the long-term care industry, while providing questionable benefits to patient care,” Bedell wrote. Nursing home malpractice costs have risen sharply both because of the number of lawsuits filed and the size of the damages awarded by juries.

“Nursing homes are a new target of the litigation system,” and lawsuits have driven costs to crisis levels, causing insurance premiums to rise to as much as $7,000 a bed in Florida in 2001.

Partly as a result of escalating costs, a growing minority of nursing homes has stopped buying insurance. “Without liability insurance, a nursing home is exposed to bankruptcy if a large monetary judgment is rendered against it, leaving patients without care,” Bedell noted.

Much of the historic problem of poor nursing home care is due to chronic government underfunding, especially compared with the public funding of acute care in hospitals. By default, Medicaid has become a primary means for funding long-term care services.

These state-administered programs, which subsidize the medical bills of the poor and elderly, are among the fastest growing expenditures in state budgets. “Given the states’ financial contribution to long-term care funding, it is in the interests of states to address the costs that tort litigation imposes on nursing homes,” Bedell wrote.

The Florida Legislature, faced with the bankruptcy of many nursing homes, capped in 2002 the award of attorneys’ fees and made it more difficult for a plaintiff to prove that a nursing home was negligent. While a nursing home could be considered liable in the past if it failed to meet federal standards, the new law required a plaintiff to show that the failure to meet the regulations resulted directly in injury or death.

A 2002 measure passed by the Ohio Legislature not only limited punitive damages, but allowed a jury to consider the impact that any payout on the ability of the nursing home to provide services for its patients.

“Tort reform should be encouraged to make litigation a more efficient means of providing a right of action for nursing home abuse or negligence,” the Illinois scholar wrote.

To make this happen, Congress should create incentives through increases in Medicaid funding to states that pass tort reform laws promoting quality patient care.

“For instance, if Congress conditioned increased Medicaid funding on some tort-reform plan, and did not insist upon particular tort reform strategies, states could decide for themselves the elements of tort reform. This discretion respects state autonomy, and state voters would be able to hold state government accountable for the particular tort reform plan it chooses to adopt,” the article concluded.

Bedell’s article is titled, “The Next Frontier in Tort Reform: Promoting the Financial Solvency of Nursing Homes.”