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Patient Rights Laws and Nursing Home Professional Liability. Theresa W. Bourdon, FCAS, MAAA Aon Risk Consultants, Inc. September 11, 2001. Past Vs. Present. Pre - 1990 Allegations: limited Personal injury Wrongful death Damages: minimal Below cost to litigate
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Patient Rights Laws and Nursing Home Professional Liability Theresa W. Bourdon, FCAS, MAAA Aon Risk Consultants, Inc. September 11, 2001
Past Vs. Present • Pre - 1990 • Allegations: limited • Personal injury • Wrongful death • Damages: minimal • Below cost to litigate • Low value attached to elderly life • Causation of injury difficult to identify
Past Vs. Present • Post- 1990 • Allegations: expanded • Intentional fraud • Breach of contract/deceptive trade practices • Negligent hiring • Damages: staggering • Litigation costs reimbursed in some states • Punitive damages • Patient rights emphasis
Change Catalysts • Change to Medicare/Medicaid Reimbursement • Patient advocates • Increased state and federal regulation • Plaintiff lawyers new theories of liability • Bad public image
Reimbursement Changes • Reduced Medicare Reimbursements • Effective July 1998 • Pre 7/98 - Actual cost reimbursement • 7/98 - Transition to prospective pay system
Prospective Pay System • Per diem reimbursement • 44 categories of patients • Drastic underpayment for • respiratory therapy • wound care • prescription drugs • artificial limbs
Medicare & Medicaid in LTC • 1,836,657 Certified beds in U.S. • 56,183 Medicare only reim. • 1,034,882 Medicaid only reim. • 618,556 Both • 1,709,621 Some form of Gov’t aid Source: American Health Care Association (ahca.org)
Government Regulation • Nursing Home Reform Act • False Claims Act • State laws • Federal reimbursement surveys • General Accounting Office report
False Claims Act • Individuals with knowledge of anyone taking federal money under false pretenses can bring suit on behalf of the government • Plaintiff recovery up to 24-30% of gov’t recovery • Civil cases charging inadequate care
Nursing Home Reform Act • 1987 • U.S. Congress • Response to allegations of neglect & abuse • Applies to Medicare & Medicaid participants • Establishes minimum quality of care requirements • Violations apply at state and federal level
State Laws • Elder laws • Protect against physical & emotional abuse & neglect • Criminal penalties • Imprisonment • Fines • Recoveries • Pain & suffering • Punitive damages • Cost of investigation & attorney’s fees
Florida • Patients Bill of Rights - Statute 400.022 • Guarantees the patients rights to be • informed • provided adequate care • treated with dignity • Violation remedies • actual damages • punitive damages • attorney’s fees
Texas • Texas’ Residents’ Bill of Rights (Chapter 247 of the Texas Health and Safety Code • 14 rights itemized • safe and decent living environment • considerate and respectful care • dignity and individuality • 1995 Texas tort reform punitive cap not effective to claims against the elderly
California • Elder Abuse and Dependent Adult Civil Protection Act
Reimbursement Surveys • HCFA cracking down on LTC industry • March 1999 Internet site • 170,000 facilities • Results of surveys required for reimbursement program • 1 in 4 nursing homes tagged with a deficiency
Surveys Change Plaintiffs Strategies • Causation of injury tough to prove • Earnings potential non-existent • Surveys used to allege negligence per se • Evidence of institutional negligence • Support for punitive damages • Plaintiff lawyers now interested
Image Problems • Medicare cuts: denying admissions • Fraud & abuse allegations • Medicare & Medicaid inappropriate billings • Civil & criminal • Violation of patient rights allegations • Multi-million dollar judgements • Focus on inappropriate care
Expectation/Funding Mismatch • Government funding patient care system • per diem payment schedule • limited resources to improve quality of care • Tort system driving quality of care expectations • most jury verdicts favor plaintiff • slips/falls, decubitus ulcers imply negligence
Aon Long Term Care Database • Operators of Skilled Nursing Facilities • Multi-Facility • Multi-State • For-Profit • Primarily Skilled Nursing Beds • 336,000 Licensed Beds Countrywide (20%) • 33,000 Licensed Beds in Florida (40%)
Long Term Care General and Professional Liability Percentage of Losses Reported by State
Long Term Care General and Professional Liability Annual Increases by State
Florida Tort Reform Initiatives • FHCA funded an actuarial study on the rising cost of patient care liability • 1999-2000 Florida Legislative session resulted in the creation of a Task Force to investigate the long term care industry crisis • Task Force issued a report in late 2000 with draft language for proposed tort reform • 2000-2001 Florida Legislative session passed a nursing home reform bill including tort reform
Florida 2001 Legislative Changes • Punitive Damage Caps • 1st tier: Greater of 3 x Compensatory or $1M • 2nd tier (primarily financially motivated): Greater of 4 x Compensatory or $4M • 3rd tier (intentional harm): no cap • Statute 400 attorney fee provision repealed for injury/death cases; capped at $25K for resident rights cases
Florida 2001 Legislative Changes • Statute of limitations reduced from 4 to 2 years (4 yrs for repose; 6 yrs for fraudulent) • Strict liability/negligence per se replaced with negligence standard • reasonable person std for non-prof staff • professional standard for nursing staff • No cap on non-economic damages
Florida 2001 Legislative Changes • $60M state funding for improved care • increase staff hours from 1.7 to 2.9 by 2003 • internal RM department • state reporting of residents’ injuries
Texas 2001 Legislative Changes • Restricts use of survey documents as evidence (direct testimony allowed) • For-profit homes eligible for JUA coverage • Requires $1M/$3M of insurance
Activity in Other States • Alabama deflected a Wilkes attempt to broaden patient rights in 2000 • MS, PA, CA Healthcare Associations are pro-actively taking steps to avoid a Florida patients rights law
Reserving Issues • Know the provider characteristics • State (affects freq & sev) • Profit Status (affects freq & sev) • Size/Single vs. Mutli-facility (affects freq) • Medicaid funding (affects freq) • Get your arms around frequency • Severity less correlated to type of provider than frequency