Proposed Legislation Takes Aim at Soaring Nursing Home Liability Costs in Tennessee

Tennessee’s limitless nursing home lawsuits and resulting record verdicts have driven the liability cost per bed here to second highest in the nation, studies show.

Now some state legislative leaders have introduced a bill to bring the liability costs more in line with comparable cases like those for medical malpractice and workers’ compensation in a move aimed at protecting the stability of community nursing homes.

“The average annual cost of items like liability insurance, legal services and other liability-related issues is now $500,000 per Tennessee nursing home – enough to hire and pay for 10 new nurses,� said Steve Flatt, senior vice president of development for National Healthcare Corp., an operator of several Tennessee nursing homes.

“The problem is that our laws right now allow the filing of limitless lawsuits claiming tens of millions of dollars in damages,� Flatt said. “The result is that the big- money personal injury lawyers from Texas and Florida have been arriving regularly to pelt our courts with lawsuits.�

Highlights of the legislation, introduced today by state Sen. Jim Tracy (R-Shelbyville) and state Rep. Randy Rinks (D-Savannah), include the following:

* It places health services provided by nursing homes under the same guidelines as medical malpractice cases. Attorneys’ fees in cases involving doctors and hospitals have limits while such fees involving nursing home litigation do not.
* It allows nursing homes to require an arbitration agreement for each patient entering a nursing home. The provision would not affect patients already in nursing homes.
* While it does not place limits on economic damages that can be claimed in nursing home liability cases, it does place a limit on non-economic damages. That limit would be in line with laws currently on the books for workers’ compensation cases. It also allows punitive damages of double the amount of the non-economic losses.

“There was almost a billion dollars spent on nursing home care last year, and about 93 percent of that was borne by taxpayers as services were delivered through TennCare and Medicare,� Flatt said. “This means that all taxpayers have a stake in seeing these soaring liability claims brought under control.

“Good nursing homes are having to be sold in Tennessee, and that trend will continue if this problem is not addressed,� he said. “Florida saw 123 of its nursing homes sold between 2000 and 2002 before its legislature took action to solve the problem. We need to avoid that happening here.�

“Too many health care dollars and too much time are being spent on lawsuits and litigation and diverted from providing care,� said Jim Smith, president and CEO of Tennessee Health Management, Inc., another multifacility Tennessee provider.
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