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Targets of opportunity--no more.

A review of the "Long Term Care General Liability and Professional Liability 2004 Actuarial Analysis" by Aon Risk Consultants, Inc., could easily persuade people in the long-term care field to believe their nursing homes have no chance of being anything other than "targets of opportunity," relative to litigation. The executive summary points out that the average long-term care general/professional liability premium per occupied bed has increased from $310 a year in 1992 to $2,290 in 2003. Nationwide in 2003, long-term care operators incurred 15.3 claims per year for every 1,000 occupied skilled nursing beds, three times higher than the 1992 frequency rate of 4.8 claims per 1,000 beds. Furthermore, the average claim has more than doubled during that period, from $65,000 in 1992 to just under $150,000 in 2003.

Statistics like these, when read by fearful consumers who have found it necessary to place loved ones in long-term care facilities, coupled with aggressive advertising by some members of the legal profession, underscored by tenacious state reviewers working for government monitoring systems, all combine to create a mind-set for the long-term care profession: You are going to have problems; accept them, cut your losses, "admit" defeat--but keep doing your job caring for America's elderly. In my opinion, providers committed to quality care and effective communication with residents, families, and staff must, in the words of Gandhi, become the change they wish to see in the world.

As a springboard for deeper reflection, I have sought and received copies of numerous general and professional liability policies from colleagues in the field. After keen study, I found several items of interest. For example, in the section under "coverages, insuring agreements," the position of the insurance company and provider relative to claims and suits can be found. In several cases, the fine print says, "We [meaning the insurance company] may at our discretion investigate any occurrence and settle any claim or suit that may result." When this language is present, regardless of the merit of claims against facilities, legal defense will generally amount to little more than time taken to negotiate settlement, rather than spending money to prepare for court to sort out issues determining right and wrong.


What does this suggest for the future for nursing homes and assisted living providers? Arguably, the answers are more litigation, more cost, and greater likelihood that the image of long-term care will worsen.

For those who believe in the work they do and the service they provide to aging Americans, what can be done to turn this losing situation around? As food for thought, consider the following:

1. Providers should return to their insurance carriers and earnestly explore those sections of their general and professional liability policies under "insuring agreements" to see if language provides for provider input before settlement occurs. If not, enter into negotiations aimed at making adjustments toward that end. Some policies provide such flexibility. The duty of providers is to find them.

2. Once the language has been amended, the insured needs to commit to working with defense attorneys to objectively evaluate the merits of any charges against the organization. If culpability is established, providers should cooperate with defense counsel and the insurance company to reach just settlements. More importantly, they should learn the lesson from their loss and resolve not to make the same mistake again.

3. Presuming wrongdoing is not established, documentation is strong, and the evidence for quality of care is apparent, providers should work with defense attorneys to prepare the defense. Providers need to trust defense counsel to do their work by supplying as much information as possible, including aiding with discovery, deposition, and possibly screening to seat jurors. It is imperative for providers to remember that if they are in the right, they must be willing to stay the course to win the case. Giving renewed life to the profession's credibility will, in the long run, reverse the downward spiral into which inappropriate litigation has brought to the field of long-term care.

4. If, as a provider, your choice is to go forward with litigation and to have your day in court, prepare all affected parties within your organization for a struggle that will likely be stressful. It is imperative to remember that winning exacts a price--but the price of a settlement when one has a favorable case is much greater. Taking the course of least resistance in the long run does not make professional life easier but in truth makes it more difficult. With this in mind, providers should assist staff, family members, boards, and/or stockholders to see that standing up for what is right can only ease the plight of the organization and ultimately enhance the image of the long-term care field.

5. Providers must understand that varied issues need consideration within the boundaries of general and professional liability policies. Today's insurance market has few "standards"; this applies to coverages, limits on legal costs, and so forth. This means that prudent buyers must work with their agents/companies to fully comprehend specific coverages. The days of "boilerplate language" seem to have disappeared forever.

To no small degree, providers control their destiny. If being the "best of the best" is, indeed, a part of the culture of the organization, that it seeks daily to provide quality care, communicate with effectiveness, and harness change to effectuate better outcomes, then the time is at hand for that organization to say "no more" to serving as a target of opportunity. Providers must work with their insurance companies to become a partner in the process--to reclaim, in this field, the meaning of a "customer with rights." If we fail in the endeavor, shame on us!


Daniel W. Farley, PhD, CNHA, has been involved in long-term care for more than 25 years and has served as the President/CEO at GlenWood Park Retirement Village, Princeton, W. Va., since 1979. For more than a decade, he has spoken nationally at professional conferences and served nursing homes and their defense teams in litigation as an expert witness. For further information, e-mail To comment on this editorial, please send e-mail to
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Title Annotation:Guest Editorial; long term care costs and insurance claims
Author:Farley, Daniel W.
Publication:Nursing Homes
Geographic Code:1USA
Date:Sep 1, 2004
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