Will Florida's New Law Stop a Dangerous Game? - nursing home regulation

Nursing Homes, Oct, 2001 by Suzanne Singer

The unwilling bellwether state for the nursing home liability crisis has tried to put on the brakes

Florida's nursing home industry has been going through a crisis that might be a sign of what's to come throughout long-term care nationally. It's a sort of domino effect.

The way the game was played out in Florida was this: The first "domino" was excessive litigation, often the result of the attorneys' fee provision, which led to settlements that carried enormous attorneys' fees no matter how small the settlement. This hit the next "domino": skyhigh insurance rates for facilities. The "game" ended with many facilities having to claim bankruptcy and thus close down. Because of this game:

* Nursing homes in Florida were three times more likely to be sued than nursing homes in other states.

* The average amount of claims against nursing homes in Florida was two-and-one-half times greater than the average amount of claims in the other 49 states.

* The average cost of liability insurance per nursing home in Florida was eight times the national average.

To address some of these concerns, Florida Governor Jeb Bush signed into law on May 15, 2001 (Senate Bill 1202), legislation that produced new nursing home and long-term healthcare reforms. Although these reforms are a good start, the industry still has a long way to go before its problems are resolved.

The initial nursing home reforms that were proposed to the Florida Senate mirrored the state's medical malpractice statute, including placing caps on noneconomic damages, applying medical malpractice exemptions for wrongful death cases so adult children of nursing home residents would have no recovery and eliminating punitive damages altogether. However, the final bill became a watereddown version of its predecessor, lacking many of the significant changes initially envisioned. Nevertheless, the new long-term healthcare reforms are a step in the right direction and will hopefully increase the quality of care and decrease the amount of nursing home litigation.

Among all of the reforms, the most significant litigation changes were confined to:

* Punitive damages

* Elimination of entitlement to attorneys' fees

* Reduction in the statute of limitations and mandatory presuit mediation

In addition to litigation changes, nursing home reform has also improved the quality of care by significantly raising staffing level and training requirements, increasing regulatory oversight and requiring nursing homes to implement risk management programs. Although the importance of improving quality of care by raising standards should not be underestimated, the focus of this article will be on the significant legal changes that were adopted relating to long-term healthcare. For example:

No more "gold" dominoes. Fondly referred to by the plaintiffs bar as the "pot of gold at the end of the rainbow," the attorneys' fee provision entitled many attorneys in the past to an amount over and above the recovery record. No matter how minimal the violation or how nominal the damage award, an attorney could claim fees calculated upon hundreds of hours of legal work. It was not unusual to see minimal damage awards accompanied by an enormous award for attorneys' fees.

The new nursing home reforms eliminate the attorneys' fee provision for cases involving injury or death. Before this reform came into effect, a lawyer would simply need to prove a violation of the state's Patient's Bill of Rights to entitle him or her to an award of attorneys' fees over and above the recovery award.

Because of the new reforms, plaintiffs' attorneys' fees will be paid as a percentage of the recovery, as in most personal injury cases. Consequently, fees will be paid from the damage award as opposed to being added on top of the damage award. (The exception to the elimination of the automatic attorneys' fee provision is when a resident prevails in seeking injunctive relief or a claim for administrative remedy. If the resident prevails on this theory, there will be an assessment against the defendant for reasonable attorneys' fees not to exceed $25,000.) With the elimination of the attorneys fee provision, some attorneys will now think twice before pursuing legal actions that might not yield the "pot of gold" they once did.

Three-tiered damages. One of the most significant litigation changes can be seen in the punitive damages reform, which applies to nursing home and assisted living facility cases. Before the reform, there was no limit if the defendant's conduct met a certain standard. The new punitive damages reform follows a threetiered approach.

The first tier limits punitive damages to $1 million or three times the amount of compensatory damages, whichever is greater, in cases where an employer participated in the wrongful conduct, condoned or ratified the conduct, or if the employer engaged in gross negligence that contributed to the injury. (The knowledge requirement regarding an employer who condones, ratifies or consents to the conduct of the employee has been removed.)