At least 40% of all coronavirus deaths in the U.S. are from nursing home residents and caregivers. States like Massachusetts and Pennsylvania report an astounding 62% to 65% of their COVID-19 deaths from nursing homes and assisted living facilities. The disproportionate death rate to society’s most vulnerable and fragile population has put nursing homes, assisted living facilities and continuing care retirement communities into a precarious financial future as wrongful death lawsuits begin to mount.
The liability that nursing homes carry is going to be a huge concern going forward. Insurance carriers are already writing COVID-19 exclusions into their professional liability policies for the next renewal period, and we expect the insurance market to harden even further.
Evolution of the Crisis
In the early phases of the pandemic, nursing homes, like many other health care providers, didn’t have the necessary playbook on how to contain and prevent the spread of the virus. The challenges were to keep residents, patients and employees from being exposed, as well as to secure personal protective equipment (PPE), identify infections, implement quarantines, and segregate infected in-patient populations. As brokers, one of the early actions we took was to do an extensive review of policies to find applicable coverage. For example, many facilities were able to get reimbursement for expenses related to disinfection.
Moving into April, business interruption (BI) claims for the loss of revenue became the insurance focus. At this point, it’s unknown how BI claims will be resolved. Any coverage will likely target extra expenses incurred to fight the pandemic with PPE, overtime pay, additional supplies and disinfection costs.
Now one of the biggest liabilities for nursing homes are wrongful death lawsuits, which are climbing rapidly. While professional liability insurance normally provides coverage for defense costs and settlements, insurance companies are currently adding COVID-19 exclusions for all new business. Any facility with pending litigation should file claims now before the next renewal period.
Compounding the problem, nursing homes have been painted with a broad brush as death traps and morgues. While front-line health care workers at hospitals have been rightfully hailed as heroes, those working in senior living facilities have, in many cases, been demonized. The outsized death toll has been translated to mean that facilities mismanaged the situation and mistreated residents, which misses important details.
Some states are trying to shield nursing homes from litigation. Already 25 states have passed or proposed legislation to provide caregivers immunity from claims coming out of COVID-19 with exceptions for gross negligence. However, there are no guarantees. Immunity laws will be challenged by plaintiff attorneys and advocacy groups.
Emotions drive these lawsuits as well. Family members who weren’t allowed to say goodbye or be with their loved ones as they suffered because of quarantine measures are devastated. Many nursing homes were overwhelmed and communication with some families may have taken a back seat to caring for residents. Many families of deceased residents want someone to blame.
By all accounts, we can expect another surge of coronavirus cases in the fall or early winter. When that happens, most nursing homes will not have coverage for that next wave of potential deaths.
Liability insurance rates for nursing homes were already rising — often by double digits — over the last 18 to 24 months and now everything will be accelerated because of the coronavirus. Brokers will also have a more difficult time placing insurance for their clients, especially if they don’t have strong relationships in the marketplace.
The summer months offer an opportunity for nursing homes to prepare for the next wave. They can ensure they have an adequate supply of PPE and life-saving equipment, and can conduct more training and education for caregivers.
Nobody was prepared for a viral spread of this magnitude and velocity. While some nursing home operators didn’t do everything right, it’s important to recognize that most did a remarkable job with the resources they had. At the end of the day, they cared for their residents first while risking their own health.
Levy is a senior vice president at Risk Strategies. Email: email@example.com.
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