Who Benefits From Damage Caps In Nursing Home Lawsuits?

Not surprisingly an article supporting damage caps in nursing home lawsuits was written by nursing home administrator, Carrie Ermshar in the Tennesseean.com.  In her piece, Ermshar equates damages awarded to an injured person as a penalty against a nursing home.  “We must ask ourselves a tough question: At the end of a lawsuit, who is really being punished?”

Now, before anyone accuses me of taking Ms. Ermshar’s comments out of context, I suggest you read her entire piece.  Nonetheless, Ermshar’s understanding of the reasoning behind nursing home litigation is off-base.  Nursing home lawsuits are intended to compensate the injured party for both the tangible (past and future medical expenses) and intangible (pain and suffering, loss of normal life) damages sustained due to the negligence of others– as opposed to punishing the alleged wrongdoer.

In most jurisdictions, a plaintiff must get permission from the judge to seek punitive damages from a nursing home. Before a judge grants the ability to seek punitive damages, a plaintiff must demonstrate that the nursing home’s behavior was so reckless that they should be able to ask a jury to award damages to punish the facility.  It is then up to a jury if punitive damages are indeed warranted and if so, how much.

Without citing any studies or facts, Ermshar implies that damage caps in nursing home lawsuits will improve patient care because nursing home owners will have more money to invest into patient care.  Ermshar implicitly claims that damage caps will lead to cost savings for nursing home owners because their liability insurance rates will decrease.

The reality is that few studies have analyzed the relationship between caps on damages in nursing home lawsuits vs. insurance premiums.  However, there have been a substantial number of studies with regard to damages in medical malpractice cases.  Overwhelmingly, the results demonstrate that damage caps do little other than arbitrarily restrict an injured, maimed or deceased person’s estate of their rights.

Damage Caps Do Not Reduce Insurance Premiums

Like Ms. Ermshar, proponents of damage caps in a medical malpractice setting claim that limiting a plaintiff’s recovery will will lead to lower insurance premiums for facilities.  The assumption made by Ermshar and her peers is that the savings will be passed along to the customers.  The reality is that damage caps do not result in reduced of insurance premiums.  Consequently, there is no rush of money pouring in to help provide additional care and treatment for nursing home residents in situations where an injured parties rights are limited by damage caps.

According to Medical Liability Monitor (October, 2005), malpractice premiums average 12.4% higher in states with caps on non-economic damages than in states without. In some states (Mississippi, Nevada, Ohio, Oklahoma and Texas), insurance premiums  were almost double compared with states that have no damage caps.

A similar study in California conducted by The Center For Justice & Democracy revealed that insurance rates increased 35% for physicians and 65% for hospitals months after the state legislature passed a cap on non-economic damages of $250,000.

Yet another study on malpractice caps was conducted by researchers at Duke University concluded that the claims made by proponents of damage caps is unfounded.  The Duke study compared insurance premiums and pay-outs to plaintiffs both pre- and post- damage cap legislation in Illinois.

The researchers’ results revealed that physicians’ insurance premiums actually increased substantially after the ‘tort reform’ legislation was passed.  Similarly, the researchers concluded the Illinois damage caps had ‘no significant  impact’ on the the total payouts to plaintiffs.  Interestingly, the Duke team noticed no increase in high-risk specialties such as neurosurgery and obstetrics after the legislation was passed– despite the claims by medical experts that such specialties could no longer afford to practice in an environment with no limits on damages.

Update On Damage Caps In Tennessee Nursing Homes

For the past several years, the nursing home industry has repeatedly attempted to restrict the rights of injured nursing residents by sponsoring damage-cap legislation in Tennessee. Under HB 2243, a nursing home resident injured due to poor care would be limited in their to a recovery based on a sliding scale that was dependent on the amount of care provided by the facility to each resident on a daily basis.  Translation: damages entitled to an injured nursing home resident could not exceed $300,000 in most situations.

Thankfully, the bill died a quiet death in subcommittee.

Read more about the proposed nursing home legislation here.

For more information on nursing homes in Tennessee look here.

Learn more about the laws applicable to California nursing homes here.
Click on the links for information on nursing homes in San Diego , Los Angeles and San Francisco