Tort reform reshapes assisted living landscape.

Tort reform efforts--legislative initiatives aimed at limiting product liability and medical malpractice lawsuits against care providers--continue to tackle some of the biggest challenges facing assisted living in the public policy arena today. Intended to keep insurance premiums from rising, legislation recently enacted in several states scored major victories for tort reform proponents.

Legislators and policymakers appear to be hearing the sentiments expressed by the medical and long-term care communities: Placing limitations on damages and excessive liability claims will have a positive impact toward the goal that all concerned parties are staving to meet--improved accessibility and quality in the care system. If providers are forced out by unduly high insurance premiums, quality of care likely will be compromised, and consumers will be denied the array of care choices now available to them.

Perhaps the most important development occurred in Texas, where in September, the electorate voted 51 to 49% to add an amendment to the state constitution providing various limitations on monetary awards. One provision of the tort reform package approved last year by Texas lawmakers, H.B. 4, establishes a $250,000 cap on noneconomic damages per assisted living residence. Also under this measure, the most a plaintiff can recover for such damages is $750,000, regardless of how many providers are sued. Long divided on the cap issue, legislators eventually let the voters decide. The definition of healthcare providers includes assisted living establishments.

During the past year, the Texas Assisted Living Association (TALA) has worked with other advocacy groups as a member of the Texas Alliance for Patient Access (TAPA) to ensure that assisted living providers would be covered under tort reform and included as healthcare providers. This alliance has en abled the assisted living industry to collaborate with other healthcare interests in legislative matters. Opposed by organizations representing trial lawyers, law enforcement, and citizen groups, the contentious measure (H.B. 4) had critical support from TALA, the Texas Medical Association, and other healthcare groups.

"TALA couldn't have done it without our involvement in TAPA," says Skip Comsia, chairman of TALA, all affiliate of the Assisted Living Federation of America (ALFA), emphasizing the importance of the alliances that made state tort reform possible. "In the end, it came down to the efforts of one cohesive group," adds Comsia, who is also president of Texas-based Veranda Living, Inc., and a member of the ALFA board of directors.

A few other states enacted significant measures in 2003. Arkansas raised standards for imposing damages, provided for modified repeal of joint and several liability provisions, and required a certificate of merit in medical malpractice cases demanding expert testimony. Idaho similarly raised standards for imposing damages. West Virginia limited trauma care liability to $500,000 and required the state's board of medicine to investigate claims after three judgments or five settlements in a five-year period. Arkansas capped punitive damages at $250,000, and Idaho and West Virginia set the same limit on noneconomic damages. Other states--Arizona, Colorado, Minnesota, and Montana, for example-approved more modest reforms, often complementing more comprehensive legislation enacted years earlier.

Federal Scrutiny

Healthcare liability reform also has been a hot topic on Capitol Hill. Last March, the House approved H.R. 5--the Help Efficient, Accessible, Low-Cost, Timely Healthcare (HEALTH) Act of 2003. If it is approved by the Senate this year and becomes law, the measure will provide compensation for injured patients and set specific parameters for the timing of lawsuits, permissible recovery amounts, and payment-of-damage arrangements. The Senate companion bill, S. 11, the Patients First Act of 2003, would seek similar results.

The General Accounting Office (GAO), the research arm of the U.S. Congress, gave credence to the arguments that providers are making. The GAO recently released two reports showing a direct link to higher premiums in states without caps on noneconomic damages.

The two recent reports by the GAO--Medical Malpractice Insurance: Multiple Factors Have Contributed to Increased Premium Rates, June 2003 (www.gao.gov/highlights/d03702high.pdf), and Medical Malpractice: Implications of Rising Premiums on Access to Health Care, August 2003 (www.gao.gov/highlights/d03836high.pdf)--also tie claim awards to higher premium rates. The GAO found that medical liability premiums in states with caps on noneconomic damages grew at a slower rate than the premiums in states without caps.

Promising Trends

In addition to TALA's leadership in the Texas tort reform experience, ALFA and many of its other state affiliates have taken an increasingly active role in similar legislative initiatives nationwide. This is a huge issue for ALFA's member providers right now. With the escalating premium costs, if reform doesn't happen, some providers will be forced out of the marketplace, which will negatively affect the number of quality care options available to consumers looking for assistance with long-term care.

ALFA has focused its efforts on Capitol Hill, not only because ALFA affiliates and provider members are taking the lead at the state level, but also because federal-level reform stands to benefit assisted living consumers and providers nationwide. As a result of ALFA's efforts, H.R. 5 and S. 11 both include assisted living providers in the definition of "healthcare provider." As noted above, the House bill has passed, although on the Senate side passage is uncertain.

The recent developments in legislation, GAO reporting, and state activity indicate a trend toward stricter parameters on the size of plaintiff judgments as well as the amount of time that may elapse before a claim can be brought. This is welcome news to many providers. The legislative reform witnessed around the country will likely help keep insurance premiums from rising.

RELATED ARTICLE: Tort reform: issues and terminology.

Tort reform legislation generally refers to product liability and medical malpractice reform proposals, the latter being most relevant for assisted living providers. A tort is a civil Ins opposed to criminal) wrong other than a breach of contract that causes injury for which a victim may sue and recover damages. Tort law is primarily state-based, although Congress has enacted a number of broad tort reform statutes.

In the context of medical malpractice, tort reform legislation generally limits the amount of damages awarded to plaintiffs, particularly for noneconomic damages--for pain, suffering, and emotional distress--and punitive damages. Additionally, some states have enacted legislation that addresses the issue of joint and several liability (the legal doctrine that makes each party responsible for an injury liable for all the damages awarded if other parties responsible cannot pay), as compared to basing liability directly on the percentage of fault that can be attributed. Finally, some reform legislation focuses on the collateral resource rule and whether a plaintiffs monetary recovery from an independent third party, such as an insurance company, should be considered when the plaintiffs claim is tried in court.

Janet Forlini is Senior Vice-President of Public Policy, Assisted Living Federation of America (ALFA). For further information, contact ALFA at [phone] or visit www.alfa.org. To comment on this article, please send e-mail to [e-mail].