Long before summer parties have begun, some nursing home owners are getting into a limbo contest of their own– how low can they go with respect to the liability insurance they carry for their facility. In terms of liability insurance coverage, many facilities are electing to completely forgo such insurance or obtain such negligible coverage that provides mostly for the ‘cost of defense’ — to pay lawyers to defend them.
These are termed ‘eroding’ or ‘wasting’ where the cost of defense is deducted from the policy limits. Hence, if a facility had a $500,000 eroding policy and there were $400,000 in defense counsel fees (this is not necessarily an extravagant cost of defense), the most an injured party could recover under the policy would be $100,000. In situations involving a severe injury, such an amount would cover little more than a fraction of an injured parties medical expenses.
True, most states allow an injured party to recover money for damages directly from a nursing home owner if a judgment exceeds the limits of the policy. In reality recovery of personal assets from a nursing home owner rarely occurs. Most nursing home owners create limited liability companies, many times based outside of the United States, that insulate their personal assets from any judgments.
Is this legal? You bet. As a plaintiffs’ lawyer I feel very strongly that the real losers in this game of ‘insurance roulette’ are those that are severely injured or maimed due to the negligent acts of the nursing home.
Personal Liability Of Nursing Home Employees
While we can debate, the ‘fairness’ of the lack of mandatory liability insurance for nursing homes when it comes to residents, I want to focus on a second– and usually forgotten group– nursing home employees.
As agents of a nursing home or hospital, nurses, CNA’s, administrators and physicians have generally been able to sleep well at night they even if they were accused of negligence and a lawsuit was brought against them. Their employer almost universally defend the lawsuit and if needed pay a settlement or judgment.
Today, this situation is less common. Increasingly, nursing home employees are being named personally in nursing home lawsuits–especially in situations where a facility has no coverage or is likely uninsured. This means that nursing home workers are becoming personally exposed with respect to being named as a defendant in a lawsuit. That’s right, you–the nursing home worker– could be responsible for paying for a legal defense and for paying any judgment or settlement.
This new era litigation should not be passed off a new guerrilla tactic employed by plaintiff’s lawyers. To the contrary, most plaintiffs’ lawyers would much rather pursue a cause of action against a large company as opposed to an individual– jurors are more likely to hand down larger verdicts if they know a corporate entity is paying for it. In most cases this is due to a complete lack of other options for an injured party to recover.
The real blame for this situation falls squarely on the shoulders of the individuals and corporations who own these nursing homes. For the most part, this group has made a conscious decision to forgo or minimally insure their facilities without little regard to personally exposing their employees.
Time For Employees To Become Familiar With Insurance Coverage
If you work in a nursing home or long-term care facility, it’s time for you to get acquainted with the insurance procedures at your facility. Without sounding overly alarming (and I know I already have), your failure to learn some of the insurance lingo could jeopardize both your professional career and personal finances.
I now believe all nursing home employees should secure professional liability insurance for themselves. The cost of this coverage is less than you would think and becoming necessary in situations where injured parties are increasingly looking to individuals to be held responsible for their damages.
Before purchasing an individual policy, keep in mind the following:
- Does the policy pay for both costs of legal defense and a settlement or judgment?
- Would the policy pay for claims made against you by your employer– if they were to sue you for a contribution claim?
- Does the policy cover you if you change jobs?
- Will the policy reimburse you for time spent at a trial or deposition?