A new report shows Florida is one of the states hardest hit by litigation claims against senior living and long-term care facilities.
Florida’s senior living loss rate of $1,496 was the highest in the 2022 General and Professional Liability Report for Senior Living and Long-Term Care Providers that was released March 2 by Oliver Wyman and Marsh, which are businesses of Marsh McLennan.
That means it takes $1,496 to pay indemnity or expense per occupied unit in a senior living facility in Florida. The rate for long-term care facilities in Florida is the fourth highest at $6,916 per occupied unit, behind Kentucky, Indiana and South Carolina.
For comparison, the senior living national average was $762, and the long-term care average was $2,853.
“As we look at significant inflationary pressure on the costs for these families and residents, it’s important to make sure everybody understand this is a big component that is driving costs,” John Atkinson, Marsh’s Co-Senior Living & Long-Term Care Industry Practice Leader, told The Florida Record. “There are other costs, such as food, transportation and wages that all are increasing.
“But the plaintiffs’ bar has been so aggressive in targeting this industry that it’s creating a significant impact on the ability for consumers to living in these types of facilities.”
The report, the largest study of its kind, shows national and state-specific trends driving claim costs, severity and frequency within the senior living and long-term care sectors. Actuaries analyzed nearly 11,000 closed claims with approximately $1.87 billion in paid indemnity and expense over the past 10 years. The analysis includes data from 50 senior living and long-term care providers with about 265,000 senior living and long-term care units.
“This is a groundbreaking report because the approach was to make sure to show the differentiation between senior living and skilled nursing,” Atkinson told The Record. “If they’re lumped in together, you get a false reading of what’s happening in the marketplace.
“This report provides operators and owners of these facilities an understanding of what loss costs are. It also is important for consumers and residents to understand the factors driving up costs in these facilities. Also, policymakers need to understand the impact of the tort and litigation environment in various states.
“If you look at the report, you can certainly see there are states that are outliers. Florida happens to be one of those.”
Among the findings:
* Resident falls continue to be the primary loss driver for both senior living and long-term care providers, with average closed claims costs over the last 10 years of $189,129 and $251,067 respectively.
* Abuse claims are the second highest cause of loss for senior living providers, with average closed claim costs of $269,885 over the last 10 years.
* Wounds are the second primary loss driver for long-term care providers, with average closed claim costs of $306,160 over the last 10 years.
The report excludes COVID‐19 pandemic claims, but it does say there are still more than 8,000 open COVID‐19 claims against the senior living and long-term care providers analyzed. It also shows the average COVID-related claims cost on closed claims in 2020 was $16,410 and $14,553 in 2021.
“There are active and aggressive plaintiffs’ firms that are driving up litigation costs,” Atkinson said. “They prey on families whose elderly residents have sustained injuries from a fall or some other event.
But the bottom line is residents in senior living communities are going to fall. If they’re at home, they’re also going to fall. Falls are the number one cause of loss related to injuries to senior citizens. As people age, it becomes more and more of an issue.”
He said operators have been focusing on developing falls management programs, systems, training and management policies to minimize the impact of falls.
“These seniors need additional support,” Atkinson said. “It’s a real-need based decision for these families. There is so many advantages to living in one of these communities, but if these trends continue, it’s going to continue to drive costs up to make it more difficult for families to take advantage of it.”
Atkinson said some companies have begun taking notice of states such as Texas where the legal environment for such facilities is friendlier than, for example, Florida and California.
“Plus, in Florida, you have weather events like Hurricane Ian, which created huge property damage and business losses for some of these facilities,” he said. “Our clients are looking for ways to mitigate risks. They’re doing everything they can to minimize and prevent falls and investing in technology to help that, but the litigation continues to come at them. There are two or three firms that make it very difficult.
“Like I said, there are going to be falls, whether you’re at home or at the safest and well-managed communities. What is really needed is tort reform like what Texas did a number of years ago that significantly drove down loss costs when caps were put in place.
“It’s important that legislation includes these facilities in the definition of health care providers.”
Atkinson noted legislation recently introduced in Florida that would put the state more in line with states like Texas on these issues.
“We’re focused on helping these clients reduce the frequency and severity of loss, but the tort environment has a serious impact on the ability to do business in Florida,” he said. “Coupled with the cost of insurance, it’s just a perfect storm.
“We can’t control the weather in Florida, but we can control the litigation environment. It’s good that policymakers there are taking a look at this important issue.”