Nursing Home Plaintiffs Targeted By Tort Reform

posted on:
September 1, 2003

author:
Amy Johnson Conner and Bill Ibelle

Nursing home residents and their families seeking to sue for injuries stemming from substandard care are feeling the squeeze in many states, as advocates of tort “reform” push for caps on damages and strict limitations on the admissibility of certain evidence.

In Arkansas, Mississippi and Texas, the damages caps have been imposed via general tort limits, with nursing homes riding the momentum created by growing public concern about how doctors are being affected by skyrocketing malpractice insurance rates.

“In many states, the doctors have been out front and the nursing homes are riding in on their coattails,” said Jerry Taylor, a Montgomery, Ala., plaintiffs’ attorney who specializes in nursing home litigation.

In other states, opponents of the status quo, emboldened by the success in passing general med-mal legislation, are pushing additional measures either to limit suits against nursing homes or to eliminate exemptions created for the industry in the previous legislation. This has been the case in Alabama, Louisiana and North Carolina.

“The nursing home industry is trying, through any means available, to eviscerate the power to monitor nursing home care [through the legal system]. Some are working in coalition with larger med-mal legislation, but they will use whatever strategy works,” said Donna Lenhoff of the National Citizens Coalition for Nursing Home Reform in Washington, D.C.

In all, the legislative activity, which has met with mixed success, is aimed at making it much harder to sue nursing homes.

At the heart of the debate is the reformers’ contention that runaway verdicts are driving up insurance costs and draining nursing homes of precious resources needed to provide quality patient care.

But in the eyes of the plaintiffs’ bar, this is a thinly veiled attempt to shield unscrupulous nursing homes from paying damages when their profit-boosting budget cuts result in serious injury.

The plaintiffs contends the insurance crisis is the product of a lousy stock market and a poor economy rather than excessive verdicts. They say initiatives targeting tort recoveries are popular now, as opposed to five years ago, because the economy has been so bad in recent years.

“Insurance premiums are going up not because of lawsuits but because of the economy,” said Schuster. “[Insurers] invest the premiums and if the investment doesn’t do well, then capital shrinks. How insurance companies make their money is not by hoping nobody makes a claim. It’s investments.”

Back in the 1990s when the stock market was hot, the insurance companies were in heavy competition to raise money to invest, said Taylor. As a result, many slashed their rates to attract customers, and in doing so, underpriced their policies.

“And now we’re paying the price for it,” Taylor said. “After 9/11 and the stock market, [insurers] can’t make money anymore like they used to. The only way they’re going to create cash is by raising rates, and that’s why you’re seeing not only nursing homes’… rates going up, but insurance has gone up across the board.”

Taking Advantage Of the Disadvantaged

Plaintiffs’ attorneys argue that caps on non-economic damages rob the elderly of one of their few options for significant recovery. The vast majority of plaintiffs can claim economic damages and the cost of medical care – both past and future. But those options are not available to nursing home residents, whose working lives are over and most of whom already have their medical care financed through Medicaid.

“Nursing home residents don’t have that,” said Frank Petosa, chairman of the Florida Academy of Trial Lawyers’ nursing home task force. “All you have left is the damage for the loss of their ability to enjoy their remaining life, and pain and suffering from injuries.”

Plaintiffs’ attorneys also insist that there is no credible evidence that lawsuits have a substantial impact on nursing home costs or that there is a correlation between the quality of care and the cost of care.

Schuster has worked on nursing home issues for the AARP in Washington, D.C., for nearly 20 years. Although the AARP and other groups have pushed for – and were successful in obtaining – increased reimbursement and funding for nursing homes, “the quality of care has not gotten any better. … We don’t see a direct correlation between high reimbursement and quality of care,” he said. “Similarly, there is no direct correlation between lawsuits and nursing home costs.”

This is evidenced, according to plaintiffs’ attorneys, by White’s testimony before the Florida Legislature earlier this year. According to a report in the Palm Beach Post, White testified that even if the state did not enact caps on damages for pain and suffering, the company would continue to thrive, thanks to growing revenues and a stabilizing market.

The Palm Beach newspaper reported that when the committee chairman asked White, “If you guys are going to make a lot of money, then why am I here?” White answered, “It is for our shareholders. You are here because our shareholders believe that our product is not longer affordable.”

Petosa and others say this testimony is a victory for plaintiffs.

Plaintiffs’ attorneys also take issue with the assertion that many nursing home cases are frivolous.

“I know from cases that I’ve seen here in D.C., … they are far from frivolous. One woman died, people have stage four bed sores – you can’t say those are frivolous cases,” Schuster said, Cases against nursing homes, plaintiffs’ lawyers said, can involve rape, physical abuse and sexual abuse by staff members, in addition to lax care.

Opponents to caps on damages say the one sure-fire way to reduce lawsuits is to put the money nursing homes spend on lobbyists into patient care.

“The reason there are claims is because nursing homes are not doing their jobs. The simplest way to stop claims isn’t to cap damages so lawyers can’t help these people who have been injured,” it is to provide better care, Petosa said.

The nursing home lobby responds that better care could be provided if they didn’t have to spend so much money defending themselves from lawsuits.

Why They Succeed Or Fail

The arguments for and against caps on non-economic damages are the same in every state, the only thing that determines the success or failure of these initiatives is the strength of the opposing lobbies and how recent events fuel the arguments of one side or the other.

“The momentum is driven by current events in particular jurisdictions,” said Sierpina, describing threats by physicians to leave trauma centers, obstetricians who refuse to deliver babies and surgeons who take month-long leaves of absence in protest over their insurance rates.

In Texas, the AARP, the National Citizens Coalition for Nursing Home Reform, and the Texas Advocates for Nursing Home Reform adamantly opposed the initiative proposed there, coming out in full force against it. They even delivered a 200-page publication to legislators explaining the negative impacts, but it wasn’t enough to trump party loyalties and business interests, said David Kennedy, chairman of the nursing home litigation group for the Association of Trial Lawyers of America, who practices in Sherman, Texas.

“The Texas Legislature, like so many, is now controlled by big business interests and the Chamber of Commerce,” said Kennedy. “I think it is pure politics that drove [the Texas proposal to cap non-economic damages.]”

Case in point, Kennedy said: It was physicians in Texas who “stormed the statehouse” to demand relief from high medical malpractice premiums. But in the end, they got no legislative fix, while other medical industries did.

“That tells you the ones who really control the Legislature were the big businesses, the Chamber of Commerce and nursing homes. Otherwise, they would have given some relief to the physicians,” Kennedy said.

Schuster said a proposal in Washington, D.C., to limit tort recoveries failed because of a strong trial lawyer lobby.

In Alabama, Taylor said an initiative failed because the nursing home lobby couldn’t use white-coated doctors to run interference for them. That was a mistake, he said.

Doctors were not involved in this campaign because the state already has tough medical malpractice statutes that limit damages – essentially, doctors are already covered by legislations, he explained.

“I think they’d have had a much better shot because doctors are more credible,” he said. “My impression is that doctors have it pretty much the way they want it now. It’s very difficult to get a big verdict against a doctor or a hospital in Alabama.

They’ve had it the way they want it for a long time, so they don’t want to get out in front of current tort reform efforts.”

Taylor suggested colleagues battling these initiatives in other states stick to the facts and press the opposition for evidence that supports their claims.

“In Alabama, the first thing they said was, ‘We need this cap to control runaway jury verdicts,’ We sat down and said, ‘Show us a runaway jury verdict,’ There have been none in the last 10 years, since [the state's] medical malpractice law got passed. The highest is one I got in a nursing home case, $7 million, a few years ago,” he said.

“So the next argument was, ‘We need to control the frequency of these lawsuits.’ We said, ‘Okay, show us all these lawsuits you’re talking about,’ and by their numbers, only about 90 were pending in the whole state. By our numbers there were 60 pending in the whole state. In Florida, there’s more than that pending in Tallahassee,” he said.

“Their arguments just didn’t fly,” Taylor continued. “They never presented any credible evidence, any evidence whatsoever, that the rise in premiums was because of payouts of lawsuits.”

Petosa encouraged colleagues in other states to focus on better care for residents.

“It begins and ends with the residents,” he said. “It’s simple issue. I have parents, we have grandparents, aunts, uncles, we all know people who at some point in life may need care in a nursing home. We all want to know they will get the care they’re promised when they walk in the door, care to maintain their quality of life.”

Petosa recently spoke to a group in southern Florida made up of assisted living facility representatives. When he was introduced as a trial lawyer before his presentation, the audience booed him.

“I said, ‘You can boo me all you want. I’m not going to go away until you provide good quality care,’” he recalled. “I want my loved ones to pass away with dignity and quality of life.”

Recent Proposals Around the Country

Although the strategies and the specific proposals vary from state to state, the goal of these provisions is the same – to control the costs of running nursing homes by making it more difficult for residents and their families to win large damages awards.

A sampling of activity in a handful of states provides a picture of the range of tort-limitation strategies underway across the country:

• Lousiana

This year, the state amended the existing med-mal statute to include nursing homes under the damages caps. When tort limits were first enacted, nursing homes were exempted from those caps.

• Texas

Texas recently passed a general damage-limit bill which includes nursing homes under the $250,000 cap on non-economic damages.

“If I was a legislature, it would be hard for me to have sympathy for nursing homes as opposed to their residents,” said David Kennedy, chairman of the nursing home litigation group for the Association of Trial Lawyers of America. “So they don’t come out in the forefront – they slide in with health care tort reform in general.”

• North Carolina

In 1990, the state enacted legislation that capped punitive damages at $250,000 or three times the compensatory damages. Then in 1996, a law was passed which established a review process for determining whether there was sufficient evidence to proceed with a nursing home case.

This year, the Legislature defeated a broad-based med-mail bill that had several specific nursing home provisions, according to Bill Wilson, political director of the North Carolina Trial Lawyers Association.

The bill would have capped non-economic damages in all med-mal cases at $250,000 and placed strict caps on contingency fees. It also would have limited evidence in nursing home cases by creating confidentiality for the results of nursing committees – while allowing nursing homes to inform jurors of any collateral source payments received by the plaintiffs.

Proponents of tort limits intend to resubmit the bill during a special legislative session in September, according to Wilson.

• Arkansas

Earlier this year, the state enacted a general bill with specific nursing home provisions, according to Steve Vancourt, a consultant for Wilkes & McHugh, a Florida-based plaintiffs’ firm that handles nursing home cases across the country.

The bill imposes a $1 million cap on punitive damages and abolishes joint and several liability for doctors in nursing homes. It also placed tighter restrictions on the evidence that is admissible in nursing home cases.

“You [would] think they’d be having a party, but they came back the next week with a bill that would set a legal standard that requires a jury to find that the defendant acted with the purpose of hurting the patient,” said Vancourt. “That bill died on the last day of the session, but they plan to bring it back during a special session in September.”

• Alabama

In 1987, the state enacted a general med-mal bill that placed strict caps on damages and limited discovery, according to Jerry Taylor, a Montgomery, Ala., plaintiffs’ attorney. The bill also prohibited plaintiffs from entering evidence that shows a pattern of abuse or neglect at a nursing home, restricting testimony and discovery to the incident in question.

“That creates a perfect defense for nursing homes,” said Taylor. “I don’t know of any other state that has this kind of discovery limitations.”

The state also has a punitive damages cap that limits recovery to $1.5 million or three times compensatory damages.

In spite of these restrictions, advocates for limiting tort recoveries came back with a bill that would have capped non-economic damages at $250,000 in all cases and shortened the statute of limitations for nursing home suits.

“It was a tooth and nail fight every step of the way,” said Taylor.

The bill died in June, but proponents plan to resubmit the legislation in a special session in September.

• Mississippi

In 2002, the state enacted a med-mal bill that capped non-economic damages at $500,000 and created a punitives cap of 10 percent of the net worth of the corporation.

According to Taylor and Vancourt the punitives cap is a godsend for nursing homes, which routinely hide their assets in large parent organizations that aren’t touched by the individual lawsuits.

Although the Legislature had carved out an exemption for nursing homes, the governor eliminated the exemption when he signed the legislation, Taylor said.

• Florida

Florida has been one of the most active states in the country when it comes to limiting nursing home liability.

In 2001, the state enacted a sweeping nursing home bill eliminating exemptions in previous tort legislation and made it much harder to obtain punitive damages. In addition to a $4 million cap, the bill increased a burden of proof, requiring the plaintiff to show that a worker intended to harm the plaintiff, that management knew about it and that the abusive behavior was motivated by a desire for monetary gain.

Plaintiffs’ lawyers said this is a virtually impossible standard to meet.

Furthermore, half of all punitive damages that are awarded to go a state fund to improve nursing home care. The bill also eliminated the requirement that forced nursing homes to pay attorney fees if the plaintiff prevails.

The plaintiffs’ lobby was able to carve out an exemption from the non-economic damages cap for nursing home residents. But that victory was far from permanent.

“The nursing home pushed hard for reforms every year and finally, in 2001, they were successful,” said Barbara Hengstebeck, executive director of the Coalition to Protect American Elders in Tallahassee, Fla. “They’ve gone back to the Legislature every year since 2001. So the battle is never over. We can only win one year at a time. The battle will never be over.”

Two days after Hengstebeck uttered these words, the state Legislature passed a bill capping non-economic damages at $250,000.

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