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Long Term Care Facility Liability. Theresa W. Bourdon, FCAS, MAAA Jeffrey Smith. 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.

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long term care facility liability

Long Term Care Facility Liability

Theresa W. Bourdon, FCAS, MAAA

Jeffrey Smith

past vs present
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 present1
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 Catalysts
  • Change to Medicare/Medicaid Reimbursement
  • Patient advocates
  • Increased state and federal regulation
  • Plaintiff lawyers new theories of liability
  • Bad public image
reimbursement changes
Reimbursement Changes
  • Reduced Medicare Reimbursements
  • Effective July 1998
  • Pre 7/98 - Actual cost reimbursement
  • 7/98 - Transition to prospective pay system
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
Medicare & Medicaid in LTC
  • 2,000,000 Certified beds in U.S.
  • 53,000 Medicare only reim.
  • 1,031,000 Medicaid only reim.
  • 880,000 Both
  • 1,964,000 Some form of Gov’t aid
government regulation
Government Regulation
  • Nursing Home Reform Act
  • False Claims Act
  • State laws
  • Federal reimbursement surveys
  • General Accounting Office report
nursing home reform act
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
false claims act
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
state laws
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
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
california
California
  • Elder Abuse and Dependent Adult Civil Protection Act
reimbursement surveys
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
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
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
critical information for actuarial projections
Critical Information for Actuarial Projections
  • Exposure by state
  • Historical changes to exposure
  • Data on sold and acquired operations
  • Reserving changes
  • Closed claim development
  • ALAE changes
exposure by state
Exposure by State
  • Know about problem areas: Florida, Texas
    • Severity higher
    • Frequency higher
    • Loss development different
    • ALAE higher
  • Monitor loss cost trends
historical exposure changes
Historical Exposure Changes
  • Active selling/acquiring in problem areas
  • Need historical data to evaluate
    • losses
    • exposures
  • Impact substantial
  • Sold operations tend to have bad experience
reserving changes
Reserving Changes
  • Case reserves dramatically increasing
    • Reserve strengthening?
    • Loss trend?
  • Analysis
    • Client loss development vs. industry
    • Current loss development vs. historical
    • Closed claim development
    • Loss cost trends (freq., severity, combined)
closed claim development
Closed Claim Development
  • Size of loss by age closed
    • To measure trend independent of reserve changes
    • To estimate severity independent of reserve changes
  • Rate of closure (closed to ultimate) by age
    • To determine if claims are closing faster
slide23
ALAE
  • Monitor average ALAE per claim
  • 50% recovery rate from LTC litigation
  • New strategies for settling claims
  • Recognition of cost savings from early settlement
  • Should impact average ALAE (and indemnity) in the future