What’s driving the rise of professional liability costs in nursing homes? A variety of factors may be responsible for the rise, but the most significant are significant and complex shifts in the industry based on the changing nature of who lives in nursing homes. In short, with Americans living longer the kind of care they require is changing and the claims brought for failure to provide that care is also changing.

According to McNight’s, significant shifts are expected in senior housing. As they characterized it: “increased demand, the rise of medically complex patients, occupancy challenges amid fierce competition, and continued industry-wide shifts to value-based payment.” Frequency and severity of claims are increasing as well. Those shifts are driving general and professional liability claims for long-term care providers. It’s estimated that claims were projected to rise by almost 6% in 2019, accounting for a significant portion of operating costs for those providers. More specifically, that 6% amounts to almost $2350 per skilled nursing resident, or one claim per bed.  Those claims rates are now driving the commercial liability insurance rates for senior and living and long-term care up by 30% according to some sources. Other sources, such as Willis Towers Watson, project increases in a more moderate 5 to 30%.

Nursing home litigation is one of the fastest-growing areas of health care litigation. But the frequency of claims alone isn’t the main factor driving the increase in insurance costs. It’s the severity of those claims. Headline grabbing jury awards in nursing home cases include those awarding billions to families whose loved ones died after multiple falls.

In slight nuance to the topic of severity of claims may be the rise of batch claims. According to some news sources, batch claims are those with similar incidents that injure multiple patients but relate to the same underlying cause – an omission or error by the provider. Along the same lines, some plaintiffs now incorporate PBJ data into their arguments about negligent staffing or understaffing arguments. Those claims based on PBJ data are often boilerplate but that language finds its way into multiple cases and the argument still has to be addressed by legal counsel. Another nuance to litigation includes claims made on marketing materials by the nursing home. Now plaintiffs are adding novel theories of consumer fraud against nursing homes for not providing the claims made in marketing materials. While the 2015 case brought by the Pennsylvania Attorney General against Golden Gate National Senior Care LLC was dismissed as “mere puffery” it shows that nursing home providers need to be aware of the potential for these consumer fraud cases. 

But the expense of litigation isn’t necessarily tied only to increasing jury awards based on severity or number of plaintiffs. Other sources point to the cost of litigation itself. Most health care providers have had to move from paper to electronic health records (EHR) to comply with federal law. While the use of EHR can help providers in documenting their side of the story, the sheer amount of documentation in a case has increased. And with that increase in documents comes an increase in the fees charged by those who read them, as well as the experts who handle the electronically stored information (ESI).

Finally, while the average life expectancy of Americans decreased for three straight years, it still remains high. As reported by Senior Housing News, “the average life expectancy in the U.S. is 78.6 years….” This longevity has changed, somewhat, how Americans live in these nursing homes. As one source stated, Advances in physical care have led to patients living longer, but as medical care finds ways to prolong life, more and more elderly are dealing with mental deterioration. According to the World Health Organization, over 20% of adults aged 60 and over suffer from mental or neurological disorders.” Increases in dementia and neurological problems can lead to more and more cases where a plaintiff may injure his or herself. Those increases in opportunity for accidents and injury turn into costs for nursing home providers.  The answer may be to require higher amounts of care possibly by more providers. This higher care may require higher levels of training, higher levels of organization and higher levels of management and administration.  All of these higher levels result in higher costs.