To hear the providers tell it, patient-liability lawsuits are making the sky fall on the Sunshine State's nursing homes.
To hear the lawyers who bring the lawsuits tell it, any changes to Florida's nursing-home tort laws would make the sky fall on nursing home residents.
The Florida Legislature will have the difficult task of determining which side is Chicken Little and which side is telling the truth. In a session that opens March 6, legislators will consider various proposals that would weaken the strict liability standard used to judge nursing homes and cap the damages that can be awarded to plaintiffs.
Florida Gov. Jeb Bush, a Republican, has stated his support for changing tort laws as they apply to nursing homes, but with the state's well-heeled plaintiff's lawyers adamantly opposed to caps or any changes to the liability standards, it's hard to predict which way the battle will go.
What's easy to see, however, is that patient-liability lawsuits are having a tremendous impact on nursing homes in Florida, and the effects are spreading to other states.
"Nursing homes are being hit hard everywhere, not just Florida," said Joseph Fasi II, a Milwaukee lawyer and chairman of the medical liability committee of the Chicago-based Defense Research Institute.
Citing figures from a presentation at the committee's recent annual conference, Fasi said nursing homes paid from $100 to $200 per bed annually for liability insurance in 1999. This year, homes paying $600 per bed per year are lucky. In Texas, Fasi said, nursing homes are paying $2,000 to $3,000 per bed per year, and those homes in Florida that can find insurance-many underwriters are dropping out of the state-are paying about $7,000 per bed annually.
Insurers "continue to be very, very troubled about what is going on in Florida," said Rick Abrams, chief operating officer of the American Health Care Association, which represents primarily for-profit providers of skilled-nursing and assisted-living facilities. "This is sending shock waves throughout the industry."
Liability insurance underwriters aren't the only ones exiting Florida. In the past year, Extendicare, based in Markham, Ontario, Canada, has sold or leased its 16 skilled-nursing facilities in the state, and National HealthCare, Murfreesboro, Tenn., sold its 12 Florida nursing homes.
Earlier this month, executives at Beverly Enterprises, Fort Smith, Ark., told analysts during a conference call that the company must sell its 60 nursing homes in Florida to be successful (Feb. 12, p. 15).
Nursing homes leaving Florida is like an ice cream truck leaving a park packed with families-it doesn't make much sense. Florida's demographics are fantastic: 18.3% of the population is 65 or older (compared to 12.7% nationally) and 2.1% is 85 or older (vs. 1.5% nationally), according to an analysis of HCFA data by researchers at the University of California-San Francisco.
But thanks to the litigation environment, "Our Florida nursing homes are a barrier to growth," said William Floyd, Beverly's chief executive officer, COO and president. Even the prospect of tort reform can't change the basic economics in the state, said Floyd, who expects Beverly to leave Florida by the end of the year.
For-profit providers are not the only ones to feel the squeeze. The Florida Association of Homes for the Aging, which represents 280 not-for-profit facilities, found in an April 2000 survey that 40% of its members had suits pending against them. Erwin Bodo, M.D., the FAHA's senior vice president, said a more recent estimate was that two out of three FAHA members were fighting lawsuits. He also cited an October 2000 study by the Florida Agency for Health Care Administration that showed that liability insurance premiums for nursing homes rose an average of 409% from 1998 to 2000.
The lawsuit explosion in Florida seems to be the combination of a patients' bill of rights under state law that makes it easier to sue nursing homes than hospitals and some quality-of-care deficiencies, said Larry Polivka, director of the Florida Policy Exchange Center on Aging. The center draws researchers from several Florida universities and is based on the University of South Florida's campus in Tampa.
Under the current law, Polivka said, "There are no caps (on damages). Attorneys can get their fees in addition to the awards. And there's very little basis for an affirmative defense." Nursing homes are held to a strict liability standard, not the negligence standard that hospitals and physicians are held to. That makes it much harder for nursing homes to defend themselves the way the other providers do, by showing they provided generally accepted levels of care to a patient, Polivka said.
At the same time, Florida providers have a mixed record on patient care, Polivka said. A state task force on the nursing home industry that Polivka headed noted that inspectors increasingly were citing nursing homes for inadequate staffing-5.6% in 1993 vs. 12.4% in 1999. The report also said that Florida homes draw more than the average number of citations for food sanitation, care planning, dignity and assessment. On the other hand, Florida ranks better than the national average on measures relating to the use of restraints, accidents, accident prevention, pressure sores and assistance with daily living activities.
Not surprisingly, provider groups emphasize Polivka's formula. The FAHA, representing the not-for-profit providers, supports a system of voluntary binding arbitration that would limit punitive damages to $500,000. If the parties couldn't agree to arbitration, the damages would be unlimited. The FAHA's Bodo said the association also wants to see state regulators granted more authority to shut down consistently poor-performing homes, and he said the industry needs to do more to improve its risk-management strategies.
But Bodo has no doubt what's driving the lawsuits. "I think what contributed to the lawsuits is essentially one law firm, the Wilkes (& McHugh) Law Firm, and their belief that nursing homes are evil," he said.
Evil may be too strong a word, but Tampa lawyer James Wilkes, the lead partner in Wilkes & McHugh, is certainly no fan of nursing homes.
"Institutional care of frail elderly just doesn't work. Dumping everyone in a warehouse doesn't work," Wilkes said. He called the industry's lobbying efforts for tort law changes in Arkansas, Florida, Texas and other states "the nursing home rolling minstrel show. They go from town to town, county to county, denouncing these lawsuits."
Wilkes said he supports a few changes, such as no longer requiring nursing homes to pay the plaintiff's attorney fees and shortening the statute of limitation, but he won't be satisfied with anything less than an industry revolution. He said Florida needs to concentrate on promoting alternatives to nursing facilities, such as small, residentiallike group homes and more home health options. Bush has proposed spending an additional $52.4 million on alternative care in the state's 2001-02 budget, but Wilkes said more is needed.
He scoffed at calls for better regulation. "We can't enforce the basic stuff we have now. What good does it do to change regulation? One survey every 15 months that you know is coming? Come on, it doesn't work," he said.
Melvin Wright, an Orlando, Fla., lawyer who has handled nursing-home lawsuits exclusively for the past six years, would hold an even harder line than Wilkes on tort law changes. Wright argued that elderly plaintiffs need to have the attorneys' fees paid by the nursing homes because of the expense of bringing the cases and the lower verdicts juries typically award to older plaintiffs.
Wright said it costs from $100,000 to $150,000 just to bring a case to trial, in part because nursing homes fight the suits ferociously. If damages were capped below $300,000, Wright said, many attorneys wouldn't take the cases because the plaintiffs would hardly benefit once the attorneys' fees were subtracted from the judgment.
Wright sees some hope for better regulation and changes in insurance laws "so that the insurers can't profiteer and take advantage of the nursing homes, the not-for-profits, that provide good care."
If nursing homes are to win any tort law changes, they will have to overcome the public perception that care is not up to snuff, Polivka said, noting that nursing homes were an explicit exception to a 1999 law capping punitive damages in other tort cases.
"They're politically more vulnerable than other providers," he said. "You've got a contrast here between HMOs, which can't get sued at all, and nursing homes that can't get any tort protection at all."