- The Washington Times - Tuesday, September 4, 2001

The high cost of negligence lawsuits in Florida is causing nursing homes' liability insurance premiums to rise nationwide, damaging the industry's finances and the quality of services it provides, local industry officials say.

In Virginia, some premiums have jumped to as much as $500 per bed from the $75 per bed that nursing homes were paying just two years ago, said Stephen Morrisette, president of the Virginia Health Care Association, which represents the state's nursing homes.

Few lawsuits have been filed in Virginia or Maryland, but rates are rising and, in some cases, facilities are having difficulty getting insurance, officials say.

Insurance companies servicing nursing homes usually deal with facilities nationwide, and their costs are distributed evenly. So if one state costs more, the insurance premium will cost every nursing home the insurer works with, regardless of location.

Florida represents about 21 percent of total claims, but accounts for only 10 percent of the nation's beds, according to a study done by Aon Risk Consultants Inc. The size of claims in the state, which has one of the largest elderly communities in the nation, is almost triple the average for the rest of the country.

Half of Florida's claims are for more than $500,000, whereas only 21 percent of the claims for the rest of the country are reported to be greater than that, Aon found.

Texas and California nursing homes also are seeing rising claims, accounting for 20 percent. The rest of the nation made up 59 percent of claims.

"We don't have nearly as many cases as some of the other states, but premiums are going up to pay for the losses in other states," Mr. Morrisette said. "It's a very serious problem because … 70 percent of nursing facilities are covered under the Medicaid program and that does not reimburse all of these costs immediately."

Nursing homes have not passed the rising costs on to their patients.

The rising insurance is just one more thorn in the side for an industry with a high rate of bankruptcy filings, a growing number of patients and a crisis over nursing staff shortages. All of these factors have made the industry an easy target for trial lawyers, who can fight the industry more easily while it is weak.

"There is an overall increase" in premiums, said Theresa Bourdon, one of the authors of the Aon study. "If you look at other states, the trends are definitely higher than is typical for patient care liability … it's a concern for all states."

Increasingly, insurance companies are refusing to work with nursing homes.

"There hasn't been an actual increase in suits in Maryland, but insurance companies are looking at the potential of that and are bracing themselves for it," said Becky Sutton, chairman of the Health Facilities Association of Maryland.

She added that some insurers are working only with nonprofit facilities, such as Hartley Hall Nursing Home Inc., a 91-bed facility on the Eastern Shore that she heads.

Hamilton Insurance Agency, a Fairfax insurance broker, is one of few agencies that are still serving the nursing home industry.

"There is a drying up in the market," said Alan J. Zuccari, president and chief executive of the business, which insures more than 600 nursing homes nationally. "More carriers are dropping out of this business than coming into this business."

Hamilton's approach has been the recruitment of a clinical staff of four nurses, who visit facilities to oversee nursing staffs and ensure no errors are made.

The company has no plans to leave the business, Mr. Zuccari said.

"We think that now nursing homes are going to have a greater awareness of the dangers, so we are going to continue insuring," he added.

Some nursing homes are getting creative in insurance matters.

The Virginia Health Care Association, for instance, is considering forming a self-insured pool so that it can set its own rates, Mr. Morrisette said.

Meanwhile, state insurance officials plan to survey nursing homes, insurance companies and agents to get a better idea of market conditions.

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