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September 2, 2003 - Jury Awards $17.4 Million for Nursing Home Neglect

On July 28, a Broward Circuit Court jury found Carehouse at Hallandale Beach liable for failure to properly care for nursing home resident Hildegard Martin's gangrenous bedsores, who died last year from the neglect she suffered. Testimony had shown that the nursing home staff allowed Martin to lie in her own waste for days on end, causing the infections.

Carehouse violated Florida's Patient Bill of Rights, which sets standards of care for nursing homes, the jury decided. The verdict was eligible for unlimited punitive damages because it was found that Carehouse's neglect of Martin was willful and for financial gain.

The jurors awarded Martin's survivors $17.4 million, including $15 million in punitive damages.

Carehouse Healthcare Corp., which owns and operates two nursing homes in Florida, didn't mount a defense, and declined to comment for this article.

But William Dean, a Fort Lauderdale attorney who represented Martin's estate in the case, said he isn't optimistic about collecting the award. That's because Carehouse, like many nursing home operators in Florida, essentially had no liability insurance. On paper, the company had $50,000 in coverage, Dean said, but costs related to defending a previous patient abuse and neglect case already had exhausted that.

Dean is hardly the only plaintiff attorney to face this situation. Steven Charpentier, of Childress & Charpentier in Melbourne, said he has about 30 nursing home lawsuits pending.

A similar case occurred recently in Citrus County. In July, a circuit court jury awarded $3.3 million to a resident of Surrey Place Convalescent Center. Surrey Place presented no defense at trial because it carried no insurance - despite the fact that nursing homes have been required to carry liability coverage under Florida law since May 2001. As has become increasingly common, Surrey Place declared insolvency right after the verdict was handed down.

Dean and other plaintiff lawyers say the problem of nursing homes essentially going bare is pervasive throughout Florida, and that the state Agency for Health Care Administration has failed to adequately address it.

Many, if not most, nursing homes are carrying insurance coverage that's far too skimpy to cover liability in patient abuse and neglect cases, they say. The typical policies homes now carry are designed merely to comply with the state requirement to have some type of insurance.

Insurance broker Ned Black, of Seitlin & Co. in Fort Lauderdale, said such compliance policies cost more than the limits of coverage. A typical policy offered by insurance giant AIG with a $50,000 annual policy limit costs $70,000 in premiums; a policy with a $250,000 limit costs $310,000.

The nursing home industry claims the widespread lack of adequate liability coverage arises from an insurance "crisis" caused by out-of-control jury verdicts against nursing homes.

Sen. Burt Sanders, R-Naples, chairman of the Senate health and aging long-term care committee, did not return calls for comment.

A prominent nursing home defense attorney said the insurance situation for Florida nursing homes may drive many plaintiff lawyers out of the business of suing nursing homes.

Insurance was not always expensive and hard to come by for Florida nursing homes. In the early 1990s it was cheap - about $100 per bed - and many insurance companies competed to sell coverage.

Then Tampa law firm Wilkes & McHugh started making aggressive use of a little-noticed provision of the Florida nursing home residents' bill of rights statute, which was enacted in 1976 in the wake of a major nursing home scandal in Miami-Dade County.

Four years after its passage, the Legislature gave residents and their families additional rights to sue facilities that infringe on any of the original rights, and to recover legal fees over and above damage awards.

Seeing the large verdicts won by Wilkes & McHugh, a number of other plaintiff firms jumped into the business. That, combined with continuing quality of care problems in the nursing home industry, led to the number of liability claims per thousand beds more than doubling since early 1990s.

In addition, the average settlement more than doubled to in excess of $300,000, according to Aon Risk Consultants, a division of insurer Aon of Chicago, which has pushed for restrictions on lawsuits against nursing homes in Florida and other states.

The large national nursing home chains, which were facing a variety of financial problems including increased liability costs, began leaving the state.

Much smaller mom-and-pop operators, like Carehouse's Lambert, have taken up the slack. But while the national chains were self-insured and had the deep pockets to cover liability claims, the smaller operators often do not.

Consumer groups and plaintiff attorneys say litigation is only one factor driving the insurance problems faced by Florida nursing homes - and that it may not be the most important factor. A study published July by the AARP Public Policy Institute found that Florida's insurance problems have as much to do with the cyclical nature of the property and casualty market, underpricing in the early 1990s and insurers' investment losses as they do with increased litigation.

To address the insurance problems of the state's nursing home operators, AHCA recently funded a group self-insurance operation, which, if successful, could provide a model for insuring nursing homes throughout the state. It has invested $6 million to help capitalize the Long-Term Care Risk Retention Group, which opened for business earlier this year.

Owned by the facilities it insures, the risk retention group requires skilled nursing homes to invest $780 per insured bed. Facilities then will be charged about $1,000 per bed per year for coverage, rising to about $1,500 over three years.

Under risk retention group coverage, the policy limit is $250,000 per incident and $500,000 aggregate. That's better coverage than the compliance policies currently carried by most nursing home operators.

The risk retention group also offers advantages from a patient point of view. Nursing homes that participate in the risk retention group must implement risk management programs. The AARP's Public Policy Institute says such programs significantly improve the quality of care.

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