18 Feb Killing The Patient…To Save It (?) The Topics of Nursing Home Bankruptcy and Litigation

The New York Times reports that North American Health Care, a California operator of skilled care facilities, is filing for bankruptcy protection.  This would not be a major story outside of the California bankruptcy bar if not for the allegation by plaintiff’s attorneys that the filing by North American is solely a legal tactic to allow the company to avoid paying awards in multiple liability lawsuits from its residents.  This is a similar allegation which has been leveled at nursing homes in Florida and Illinois.

[As a disclaimer, Sabal is neutral on this matter.  Regarding this subject, like any emotionally charged issue, the opposing parties can – and do – often get waylaid by their own vitriol.  Having worked with healthcare providers across the spectrum (nursing homes, home care providers, hospices) for twenty-plus years, we have seen the pendulum swing multiple times:  pro-plaintiff’s counsel, pro-healthcare company, and back, and forth.  And sometimes the attorneys are correct whereas sometimes the operators are in the right.]

Rather, the underlying problem here is larger than the story of one firm’s efforts to rein in its potential future litigation costs.

If North American operates facilities that hold the highest award that Medicare bestows, it begs the question of “if [North American] can’t successfully care for seniors…then who can?”  And this is NOT meant as an indictment of North American or indicative of ‘agreement’ with the plaintiff’s attorneys seeking redress for its residents.

Instead it’s an invite for a RATIONAL conversation about realistic expectations of patient care, patient acuity levels, and the ‘fairness’ of expecting skilled nursing facilities — or any healthcare provider dealing with the elderly, the infirm, or end-of-life care cases – to be able to handle 100 percent of those cases in exactly the manner in which the families of these patients would ‘expect’ their loved one(s) to be treated.  I would suggest that this is an impossible task, especially given staffing costs, budgetary constraints, and other business factors that impact the business of residential senior care.  Those costs, in fact, are a primary driver in the growth of home-based care services.  It is less expensive to care for patients in their homes; but many patients — Alzheimer’s cases, wound care cases, mobility-challenged cases – REQUIRE in-patient care.  And many of these patients – if an honest assessment is made — will not get ‘better’.

So is it ‘fair’ and equitable to penalize a healthcare provider – like North American – who (ostensibly) has done the best that could be done — for factors outside their control?

Are there long term care facility operators who underperform?  Yes.  Are there some who understaff and have horrific claims?  Yes.  Are these in the minority?  Yes.  Most nursing home and senior care facilities genuinely do care for their residents and seek the best standard of care for same.  Does that ‘excuse’ those who do not?  Definitely not.

Nursing home residents should have the same rights as any other citizen to seek redress for negligent care or for civil concerns.  Forfeiting those rights is in no way being suggested or advocated.  But there has to be a middle ground between the rational expectations of patient care…and the reasonable standard of care that should qualify as ‘negligence’.

Some background:  Florida saw an explosion of nursing home negligence cases in the 1980’s and 1990’s that resulted in massive losses for insurance carriers (St Paul Companies and Atlantic Mutual come to mind) and a rapid exodus of all insurance carriers from the Florida long term marketplace.

Subsequent to those market shifts, the availability of affordable liability coverage for nursing homes – with reputable, established insurance carriers – vanished.  They were replaced – akin to property coverage immediately after Hurricane Andrew in 1992 – with a hodgepodge of self-insurance pools, unrated insurers, and various other schemes to handle the risk of running skilled nursing facilities and assisted living facilities.  Clearly, this was not a ‘solution’ at all.

Since that time, the Florida insurance market for these operations has stabilized, in large part due to legislative action.  That legislative action has, candidly, favored the long term care providers more than the plaintiff’s bar (and residents of long term facilities.)   Negligence ‘caps’ and similar measures to rein in the litigation against operators have successfully created a more level playing field in which insurance is available, albeit with lower limits and different coverages than available in years prior.

And this returns to the initial question posed here for the need of a RATIONAL conversation on this subject.

In this case, there is ample evidence to support the plaintiff’s bar and facility residents.  Because the lack of ‘real’ insurance (e.g., low limit policies with thinly capitalized insurance carriers) is just as bad a solution…as a facility operator being forced to seek bankruptcy protection to save the company from crippling lawsuits and awards.  Neither of these ‘solutions’…solves the problems of either party: the nursing home providers or their residents.

Denying a nursing home resident the ability to be fairly compensated for genuinely negligent care?  Is wrong.  Aggressively seeking to bleed the assets from a well-meaning healthcare operator via endless litigation?  Is similarly wrong.

There has to be a better methodology for compensating residents (and their counsel) while also respecting the good faith efforts of nursing home providers to do same.  Arbitration, mediation, and/or structured settlement(s) are just a few of the ideas that could potentially serve as a REAL solutions to the issue.  Fairly compensating the wronged without overly penalizing the providers as a real aim…should be the goal.

Alas, like the earlier citation in this post of ‘emotionally charged issue(s)”, a rational solution?  Probably isn’t likely in the current environment.  But it should be noted that one does exist…and if enough people are motivated to see something codified, then perhaps California can be the leader in this arena and serve – as the old Golden State cliché states – as “…being ten years ahead of the rest of the US.”

Being ‘ten years ahead of [your] time’ can be made much easier with the participation of a dynamic insurance broker that is a decade ahead of its industry cohort.  Sabal can assist you with innovative risk management and loss mitigation matters for business on a national basis.  Speak with a Sabal representative today to see what Sabal can do for you to insulate you from the uncertainties of life.  If it’s simpler, you can call us at 800 716 9948 or email us at info@sabalinsurance.com.

Thanks for visiting.





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