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The horrific photos of nursing home resident Hildegard Martin’s gangrenous bedsores did their intended job on a Broward, Fla., Circuit Court jury. On July 28, the jury found Carehouse at Hallandale Beach liable for failure to properly care for the elderly woman, 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 plaintiffs’ attorney to face this situation. Steven Charpentier, of Childress & Charpentier in Melbourne, said he has about 30 nursing home lawsuits pending. “Inadequate insurance to cover the potential liability is an issue in more than three quarters of these cases,” Charpentier said. “Collecting for the client is becoming a major issue.” 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 plaintiffs’ 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 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. “You just cannot get true insurance in the state of Florida anymore,” Black said. “We suspected [Carehouse] didn’t have enough insurance when we took on the case,” said Dean, a partner at Miami-based Ford & Sinclair. “We brought the action because the neglect of Hildegard Martin was so outrageous.” Dean said he intends to pursue the personal assets of Carehouse owner Garson Lambert of Lauderdale Lakes. “Nursing home operators must understand that they cannot operate like this,” Dean said. “They must be held accountable.” 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. “It’s the type of judgments like the one against Carehouse that are the cause,” said Ed Towey, a spokesman for the Florida Healthcare Association, a nursing industry trade group. He said a Florida law enacted two years ago granting his industry tort relief wasn’t enough. “In fact, it’s worse now,” he said. But Dean fumes that something should be done by AHCA, the agency responsible for regulating nursing homes, to ensure that operators carry adequate insurance. For its part, the agency says there is no statutory minimum coverage requirement for nursing homes. “We are bound by the statute,” said Jessica Carey, AHCA’s press secretary. “It requires that all homes carry general liability and professional liability coverage, but no minimum coverage is specified.” 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. “Trial lawyers are going to have a difficult time justifying suits from an economic standpoint,” said Andrew McCumber, a partner at Quintairos McCumber Prieto Wood & Boyer in Miami. MORE LAWSUITS THE CAUSE? 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. The law established rights to privacy, freedom from abuse and dignified treatment. 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. Last month, for example, Atlanta-based Mariner Health Care Inc. unveiled plans to sell 20 of its skilled nursing facilities in Florida. The nursing home firm said the sale was aimed at reducing liability costs. 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. NOT ENOUGH RELIEF The nursing home industry has loudly complained that excessive litigation by patients and families caused liability coverage to become inaccessible and unaffordable. In 2001, Florida Republican leaders, with strong prodding from the nursing home and insurance industries, pushed through a new law intended to provide tort relief to nursing homes. It included caps on punitive damages and elimination of a requirement that the loser pay the winner’s legal fees in lawsuits against the facilities. In addition to capping punitive damages at the higher of $1 million or three times the compensatory damages in most cases, it raised the standard of proof in abuse and neglect cases by requiring that the plaintiff prove a conscious disregard of life, health or safety or intentional misconduct. In rare cases, a plaintiff might receive four times the compensatory damages, or a maximum of $4 million, but this would require an extremely high standard of proof, including a showing that nursing home executives knew of the problem and were motivated by a desire for unreasonable financial gain. Responding to criticism from senior groups that the legislation was one-sided, sponsors of the bill included provisions to improve quality in nursing homes, including requirements for a greater level of staffing and increased state financial aid. But nursing home operators say the 2001 law hasn’t been enough to solve their insurance problems. Earlier this year, the industry pushed for further restrictions on lawsuits, including a cap of $250,000 on noneconomic dates. Despite support from Gov. Jeb Bush and Senate president Jim King, the effort failed. “It kind of got shunted to the side because of the fight over medical malpractice insurance,” FHCA spokesman Ed Towey said. Last year, nearly 37 claims per 1,000 beds were filed in Florida, according to Aon. That’s only slightly less than the rate of 38 per 1,000 in 2001, the year the Legislative enacted tough restrictions on patient lawsuits against nursing homes. AHCA reports that nursing homes, as of June, were hit with 533 new lawsuits in 2003 — up 30 percent from the first six months of last year. But Wilkes & McHugh lobbyist Steve Vancore insists that lawsuits have dropped off sharply since the passage of the 2001 law. He also notes that the insurance industry said after the law was passed that it would take several years to see the impact on insurance prices and accessibility. 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 last month 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. GROUP SELF-INSURANCE MODEL 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. Considering that the average Medicaid reimbursement is $118 per day in Florida, or about $43,000 a year, the coverage appears affordable and offers far higher policy limits than the ompliance 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 to reduce the probability of liability situations arising. The AARP’s Public Policy Institute says such programs significantly improve the quality of care. That impresses Melbourne plaintiff attorney Steven Charpentier. “[Damage] caps and other legislative maneuvers aren’t the solution,” he said. “The issue is quality of care.”

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