Fla. Nursing Home Fix Should Include Litigation Reform

January 22, 2004

Although many complex issues need to be resolved to solve Florida’s nursing home crisis, tighter litigation reforms are reportedly key to solving these problems.

“The passage in 2001 of S.B. 1202 provided only incremental reform to address nursing home litigation abuses,” said Rita Nowak, assistant vice president of commercial lines for the Property Casualty Insurers Association of America (PCI), who testified this week at a hearing before the Joint Select Committee on Nursing Homes. “Meaningful litigation reform will create capacity because insurers will write this class of business if it isn’t highly litigious, or if there are substantial limits on tort damages.”

“Although S.B. 1202 originally included caps on compensatory damages, the final bill centered on raising the bar for nursing home operation. “As a result of S.B. 1202, the nursing home industry has an excellent set of best practices for long-term care patients,” said Nowak. “PCI supports the need for stronger patient care measures, but these alone will not provide a remedy for the continuing escalating litigation problems.”

PCI opposes the concept of establishing a joint underwriting administration (JUA) for nursing homes because of its potential effect on the insurance market. “A JUA is only a short-term solution to liability insurance availability problems because it does not address the underlying nursing home problems,” added William Stander, the Tallahassee-based regional manager for PCI. “A JUA only serves to subsidize a flawed legal liability system, and guess who does the subsidizing – the taxpayer.”

Nursing home insurance has been a problem in several states, according to Stander. Last year Arizona and Texas enacted new laws addressing nursing home liability, with Texas enacting significant tort reform. This move should reportedly make Texas a “viable market” for standard insurers in the near term.

“Although a recent study by a Florida law firm indicates that fewer lawsuits are being filed against state nursing homes, this doesn’t mean that liability claims are on the downswing,” added Nowak. “The best way to fix the nursing home problem is a combination of improved operation and tort reform. PCI stands ready to work with the Joint Committee in its efforts to get to the root of the problem.”

“The most recent study by Tillinghast-Towers Perrin shows that the U.S. tort system cost $233 billion in 2002, a $27.4 billion increase over 2001, representing the largest dollar increase in U.S. history,” noted Stander. “This translates to a ‘liability tax’ of $809 per U.S. citizen, $87 more than in 2001 and $797 more than in 1950. Clearly, litigation reform is needed to address this problem, both in Florida and across the country.”

Topics Lawsuits USA Texas Florida Senior Care

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