Nursing homes' bid for law to limit punitive damages stalls in Harrisburg
July 2, 2012 4:00 AM
By Steve Twedt Pittsburgh Post-Gazette
An effort by the Pennsylvania nursing home industry to limit its malpractice liability appears to be losing steam, at least for this legislative session.
A bill passed by the state House last fall, but stuck in the Senate judiciary committee since January, would limit punitive damages for long-term care homes to no more than double compensatory damages unless there is intentional misconduct. The bill, which legislators may act on in the fall, also would require lawsuits to be filed in the county where the injury occurred, a move to prevent plaintiffs from filing in counties known for awarding large judgments.
Physicians sued for medical malpractice already have these limits and nursing homes industry officials say they need them too, so they don't risk being wiped out by a single lawsuit.
Currently, skilled nursing and personal care home operators will agree to settle a lawsuit "70 to 80 percent of the time," rather than take the risk of losing their business, said attorney Robert Evarts of Stevens & Lee in Harrisburg, which represents about 70 long-term care providers.
"They're very aware that if there's a punitive component and they lose on the merits of the case, the payout could skyrocket based on nothing more than a runaway jury."
Attorney William J. Mundy of the Pittsburgh-based Burns White, which represents more than 10 providers in Pennsylvania, said the bill would not affect compensatory damages. "The only issue here is one of punishment," he said, adding that the state already has regulatory power to punish poorly run homes, including the option of closing them down.
Hospitals do not consider this a major issue because "punitive damages are rarely awarded in hospital medical liability cases," said Roger Baumgarten, spokesman for the Hospital and Healthsystem Association of Pennsylvania.
But nursing homes and other long-term care facilities, which say they're working on an average 1 percent profit margin, say they feel vulnerable.
Officials with the Pennsylvania Health Care Association/Center for Assisted Living Management, the trade association for the state's skilled nursing homes and personal care homes, point to a recent analysis that shows Pennsylvania had the second-highest medical malpractice payout amount in 2011.
The analysis was done by Carbondale, Ill.-based medical malpractice specialists Diederich Healthcare (www.diederichhealthcare.com), based on information reported to the National Practitioner Data Bank by malpractice payers and insurers, state licensing boards, hospitals and other health care entities including nursing homes.
According to Diederich, the state's malpractice insurers paid out $319.7 million for malpractice claims in 2011, nearly all of that amount in settlements rather than judgments.
New York had the highest payout amount, at $677.9 million, but Pennsylvania was well ahead of third-ranked Illinois ($242.1 million) and fourth-ranked New Jersey ($221.2 million).
Physician Stuart Shapiro, president and CEO of the trade association, blames the high payout amounts to "out-of-state predatory trial lawyer firms" rather than any quality of care issues. These law firms target Pennsylvania providers, he said, "because they are located in Pennsylvania, which has been cited as one of the nation's most favorable legal climates for trial lawyers."
The charge rankles Jim Wilkes of the Tampa, Fla.-based law firm of Wilkes & McHugh, which specializes in nursing home abuse and neglect cases, and has aggressively advertised its services. Wilkes & McHugh opened a Pittsburgh office in 2005.
Pennsylvania is hardly plaintiff-friendly, said Mr. Wilkes, citing the requirement that medical experts must first say the complaint has merit before it can be filed and the procedural requirements for discovery.
"It takes a long time to get to trial in Pennsylvania," he said.
He also disagrees that the state should put limits on damages. "I don't think it's ever legitimate to tell a jury what they should do because each set of circumstances deserves individual consideration."
He said that large judgments, and even criminal charges, are sometimes justified, citing the 2001 case of an Alzheimer's patient who died after being trapped in an outdoor patio at a Robinson nursing and rehabilitation center.
He added that although his firm is based in Florida, it hires local attorneys. Bios on the three Pittsburgh-based Wilkes attorneys show two are Duquesne University law graduates, and the third earned his law degree from Ohio Northern University after completing his undergraduate studies at Washington & Jefferson College.
There is no dispute about the firm's success -- the Wilkes & McHugh website lists judgments of $900 million and $200 million that the firm won against two Florida nursing homes just this year.
Numbers like those certainly have caught the attention of nursing home operators.
"Short of Apple, who's going to have $900 million to pay punitive damages?" asked Mr. Evarts.