Predicting lawsuits against nursing homes in the United States, 1997-2001

Health Services Research, Dec, 2004 by Christopher E. Johnson, Aram Dobalian, Janet Burkhard, Deborah K. Hedgecock, Jeffrey Harman

Policymakers continue to grapple with the escalating growth of the elderly population in the United States. The current and predicted strains on an already resource-strapped sector of the health care system are major concerns for both researchers and the general public. Of particular interest is the quality of care provided to this vulnerable population. Nursing homes trying to meet the requirements of the Omnibus Budget Reconciliation Act of 1987 (P.L. 100-203; 101 Stat. 1330) deal with a resident population that is very vulnerable due to chronic disease and disability. When adverse events occur within the elderly population, a common response is to seek legal remedy through the court system. The nursing home industry believes that many of these lawsuits are driven by monetary greed, while families, trial lawyers, and other advocates see the court system as a legitimate check on a long-term care industry known for high-profile examples of poor quality of care.

There are very few studies that use data aimed at disentangling the relationship between quality of care and litigation activity against nursing homes. Studies are beginning to emerge that examine Florida's experience within its litigious environment. Lobbying groups funded most of the recent national studies for various interests concerned about the ramifications of policy changes to various regulatory statutes around the country (Bourdon and Dubin 2002). The few national studies not funded by these groups show an increase in both the numbers of lawsuits filed against nursing homes and the costs of these suits to the industry (Stevenson and Studdert 2003). Much of this independent empirical work is exploratory in nature and is limited by sample size or geography, but it is providing the first objective evidence about the nursing home litigation climate in the United States.

This study examines these issues through the litigation experience of 2,378 nursing homes operating in 45 states from 1997 to 2001. A stratified random sample of nursing homes was linked to information about lawsuits filed against these facilities stored in Westlaw's Adverse Filings: Lawsuits database. These data were linked to the Centers for Medicare and Medicaid Services' (CMS) Online Survey, Certification, and Reporting (OSCAR) system for structural and quality survey information. Building on previous research in smaller samples, a predictive model was analyzed using negative binomial regression modeling techniques to determine the influence of nursing home quality and structure on the number of lawsuits filed against a facility over time. We hypothesize that nursing homes will have more lawsuits filed against them if (a) the homes have poor quality of care, (b) have more financial resources available to them, and (c) are more exposed due to their number of residents. Variables used in the analysis were chosen to measure these dimensions while also controlling for the acuity level of the residents.

NURSING HOME LITIGATION IN THE UNITED STATES

There is growing evidence that litigation against nursing homes in the United States is placing a strain on industry resources. There is very little question in the empirical literature about the appropriateness of the majority of lawsuits brought against facilities. Most involve legitimate issues surrounding residents, employees, and companies with whom the nursing homes contract. The focus of concern has been on the litigation process. One study examined the costs associated with nursing home litigation, but that study focused only on jury awards (Bennett et al. 2000). The vast majority of nursing home lawsuits are settled out of court and never go to trial. This means that there is little public information available about the total dollars expended by nursing homes and their insurance companies to pay for litigation related costs. The one study that conducted a national sample of lawyers found that 88 percent of all cases were resolved through settlements and that the average recovery of claims was $406,000 (Stevenson and Studdert 2003).

In addition to concern regarding the size of awards paid as a result of these lawsuits, there is concern that liability insurance premiums are skyrocketing. Insurers in Florida began to drastically increase liability insurance premiums to the point that 9 percent of the nursing homes in Florida began to operate with no insurance coverage in 2001. At the same time, most liability insurers in Florida stopped writing new policies for long-term care facilities (Florida Policy Exchange Center on Aging 2001). Those that were still renewing policies were increasing premiums from 100 percent to 1,000 percent from previous year rates (Hedgecock and Salmon 2001).

Policymakers have begun to examine the impact of statutes that allow for individual causes of action in resident rights states. These "rights statutes" represent a major remedy offered by the courts for resident care issues. These regulatory changes were put into place because it was believed that malpractice lawsuits brought under negligence standards were too restrictive, although claims could also be brought against nursing homes under various intentional tort and contract claims. The limitations of malpractice law in the nursing home arena are discussed in more detail in previous work (Johnson, Atherly, and Bunderson 2000;Johnson and Bunderson 2002; Williamson 1999). One primary example is that under the Florida Wrongful Death Act of 2004 (Fla. Stat. [subsections] 768.16-26), only a surviving spouse or child under the age of 25 can bring a wrongful death claim unless the resident was found to be incompetent prior to his or her death. Most nursing home residents do not have a surviving spouse or children under 25. In Florida, 20 percent of long-term care nursing home residents with less than one year in a facility have no identified family (Polivka, Dunlop, and Brooks 1997).