awards, not the insurance companies. In fact, few of those large awards have actually been paid at all. Although the 1995 law capping punitive damages contains an exception for injuries to the elderly, in order to take advantage of this proviplaintiffs must prove that the defendant acted knowinglya very difficult standard. According to Carol Taylor of the Texas Trial Lawyers Association, only one nursing home suit filed since 1995 has actually taken advantage of the exemption. The home in that case failed to protect its clients from a fellow resident who was known to be dangerously violent; as a result he raped a 98-yearold woman, who later died. More commonly, juries have awarded large damages, only to have them subsequently pared down by the cap, or by the judge, who has the discretion to limit punitive damages as he or she sees fit. The $90 million Auld verdict in Fort Worth, for example, was eventually reduced to $9 million. \(It’s one of the few that has actually been paidmost of the other Availability and affordability of insurance is not a problem limited to Texas. Florida no longer has any regulated carriers covering its nursing homes. The general trend nationally is for insurance carriers to pull out of the long-term Patients have been literally starved to death, physically abused, or allowed to lie in one position until pressure sores wore through to the bone. care liability market, according to Abby Sandlin ofTexas Watch, a long-term care watchdog group. ‘Because of nationwide problems in the industry. “there is a growing sentiment that they don’t know what they’re insuring,” she said. Nor is the financial crisis in nursing homes unique to Texas. Roughly 90 percent of the bankrupt homes in Texas are owned by four corporate chains \(three national troubles have more to do with poor business decisions than greedy trial lawyers. Financed by free-flowing federal Medicare funds, nursing home chains went on a buying spree in the 1980s and early ’90s, snapping up smaller firms and related companies, and racking up huge debts in the process. When Congress tightened the flow of Medicare funds in 1997, the large chains were caught in an untenable position, one they should have anticipated, according to a study by the U.S. General Accounting Office. Instead, they continued buying companies right up until the rug was pulled out; when Integrated Health Services declared bankruptcy, the company had $3 billion in acquisitions debt. The major chains have also been hammered by charges of Medicare fraud, which have resulted in huge claims being filed by the Department of Justice. Last year,Vencor was hit with a $1.3 billion suit for fraudulent filings dating back to 1982. Another giant, Beverly Enterprises, agreed to settle fraud charges for $175 million. Mariner Post Acute Network, which has several properties in Texas, has also been hit with a multi-million dollar suit, according to SEC filings collected by Texas Watch. The solution to the crisis in Texas, says Sandlin of Texas Watch, is not tort reform or regulatory reform, but better care. Despite the cap on damages, insurance companies have lost money on nursing homes, and rates are higher than ever. But that’s the way the market works, Sandlin argues: As long as the level of care is low, risk will be high, and so will rates. Improving the quality of care will lower risk, which will bring regulatedinsurers , .bacic into the , marKet, srie prediCtS. Sandlin and Other advocates,: as well as many non-profit home operators, have proposed allowing insurers to assess rates based on performance, as they currently do for automobile policies. Bad ‘actors would pay more, while those homes with good records would get a credit. The bottom line, Sandlin say, is more money will have to be spent on staffing and services to residents. Which leads back to a familiar refrain at budget time in Austin: Like so many areas of health and human services,Texas gets what it pays for in long-term care. About 70 percent of the state’s 93,000 nursing home residents are on Medicaid; that is, the state pays the nursing home to take care of them. One thing all interested parties agree on is that the state has set reimbursement rates too low: Texas ranks 45th in the nation. That means low wages and minimal staffing levels. Annual turnover for all positions industry-wide is over 100 percent. Chris Spence of Wesleyan Homes, a non-profit facility in Williamson County, testified at a recent hearing that his non-profit spent $682,000 more in cost of care than he received in reimbursements last year. “If we demand a better standard of care in-Texas, we have to be willing to pay for it,” Rep. Naishtat said.Yet neither the House nor the Senate budgets as currently written contain any significant increases in reimbursement rates. Senator Moncrief has proposed a new fee on nursing homes, the collection of which would trigger more federal matching money from Washington. But that will only go so far. According to Rep. Davis, tort reform is just one part of a package designed to bring “stability” back to the industry. If the for-profit homes seem to be pushing harder to limit their liability than for any other portion of the package, they may simply be realists about the prospects of squeezing extra money out of the lege. Historically speaking, tort reform has been a much safer bet. 4/13/01 THE TEXAS OBSERVER 5
You May Also Like
The documentary in Falfurrias is sinister and spiritual.