Using Medicaid to Cover Services for Elderly Persons in Residential Care Settings: State Policy Maker and Stakeholder Views in Six States. Liability Insurance


The increase in the cost of liability insurance was cited by most respondents as the biggest problem facing Florida's assisted living industry, and a major barrier to assuring the availability of residential care options for older persons who do not want to live in a nursing home.

Recently, ALFs licensed to provide Extended Congregate Care or Limited Nursing Services have been notified by insurers they will be charged the same rate as nursing homes because insurers now consider them to be equally at risk for lawsuits because they are licensed to serve waiver clients who meet the state's nursing home level-of-care criteria.

  • My annual liability insurance premium has increased from $7,000 three years ago to $55,000.

  • Since January 1, 2002, no one can get ECC or LNS liability insurance. We are going backwards here in Florida, the closure of ECC beds will result in a reverse diversion of the low-income elderly on the waiver program back into nursing homes.

  • We are hearing that many facilities no longer have an interest in having ECC licenses, which will reduce the number of facilities licensed to serve waiver clients.

In 2002, the Florida legislature authorized a state insurance program called the Long Term Care Risk Retention Group (RRG). RRG is an insurance product that could provide as many as 800 assisted living facilities with affordable general and professional liability insurance with good coverage and reasonable premiums. RRG was also developed to offer coverage for facilities with Extended Congregate Care and Limited Nursing Services licenses, which are practically uninsurable at this time. The cost for initial capitalization of the Long Term Care Risk Retention Group is $6 million. There was disagreement among respondents about whether the RRG program would adequately address the liability insurance crisis.

  • I do not think that the new insurance will ultimately solve the problem. Tort reform is what is needed.

  • Risk Retention will solve the situation right now, but it is not the answer, we need tort reform.

Many respondents recommended tort reforms that would set a limit on compensation and punitive damages.

  • Now a plaintiff might get $150,000 for damages, but the facility gets hit with $2 million for punitive damages which goes to the plaintiff. Damage awards shouldn't just punish, they should be put into the industry to address the problems.

There were many different suggestions from providers, consumers and advocates, and not all were in agreement.

  • We want to see strict liability as specified in the statutes maintained as the standard for resident rights litigation. We do not want the medical malpractice model.

  • The same rules should apply to long term care facilities as to other health care providers, which are governed by negligence law rather than strict liability.

  • I would like to see the law changed so that facilities can be released from liability.

  • They should transfer liability to the state for people on Medicaid or add on the cost of insurance to the Medicaid reimbursement, similar to how they pay extra for case management.

Many respondents said they would support federal action to address the liability insurance crisis, and expressed the need for some real leadership in Congress to address the issue.

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