Lawsuit form an a desk with pen and calculator
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Two proposed bills that have the backing of Florida’s senior living industry would limit liability claims against “passive investors” who are not involved in the day-to-day operations of assisted living communities.

If passed as written, the bills would go into effect July 1.

Driven by a steep increase in lawsuits against assisted living communities in the Sunshine State, which are driving increases in liability premiums, Sen. Colleen Burton (R-Lakeland) and Rep. Ryan Chamberlin (R-Marion) said they introduced SB 238 / HB 995 to “crack down on the abundance of ‘sue-to-settle’ lawsuits currently overwhelming Florida’s assisted living facilities,” according to Jason Hand, the Florida Senior Living Association’s vice president of public policy and legal affairs.

“A nationwide study of assisted living facility claims found Florida has double the national average in both claim frequency and loss rate, making it the worst state in the nation for both indicators,” Hand told McKnight’s Senior Living. “Florida is also the third worst for assisted living facility claim severity.”

Liability insurance policy costs, he said, are directly tied to claims history. In 2016, an assisted living company spent an average of $529 per resident on liability insurance. Today, that amount is $2,220 per resident — almost quadrupling in seven years. There are approximately 3,000 licensed assisted living communities in Florida.

“Numbers like these matter,” Hand said. “Since most assisted living facility residents are private-pay, these expenses directly translate to increasing costs for the seniors who call assisted living facilities home.”

Civil liability shields

SB 238 and HB 995 limit residents’ rights violation or negligence claims under the Assisted Living Facilities Act to the licensee, management company, management or direct caregivers. Passive investors — companies or individuals that own a community but do not participate in day-to-day decisionmaking or facility operations — would not be liable for such claims unless a court or arbitration panel finds sufficient evidence to establish a reasonable claim of breach of duty that led to a resident’s loss, injury, death or damage.

“Currently, the law does not limit who can be sued, which means building owners, real property owners, passive investors and others may be included in the suit, creating increased pressure to settle cases and costs associated with removing unrelated parties from the lawsuit,” LeadingAge Southeast Senior Director of Operations Nick Van Der Linden told McKnight’s Senior Living. “Because passive investors will no longer be named as defendants in assisted living facility lawsuits, they will avoid potential liability under the bill as well as the costs associated with defending themselves in court.”

The bills also would make it more difficult for plaintiffs to seek punitive damages, requiring the court to hold a hearing to determine whether sufficient evidence provides a reasonable basis for the recovery of damages.

The proposed bills would extend to assisted living the same protections that already apply to nursing homes. Nursing home statutes limit lawsuits to the licensed facility, the management or consulting company, employees and direct caregivers, but current assisted living statutes do not limit who can be sued for violating a resident’s rights. By reducing liability risks, assisted living communities would be better positioned to attract passive investors, according to the bills’ sponsors.

“A patchwork civil justice system results in exploitative litigation conduct, driving costs for end users of the goods or services,” Van Der Linden said. “LeadingAge Southeast supports tort reform that brings parity for assisted living facilities with nursing home protections.”

Costs passed on to residents

Hand called passage of the bills “critically important” for Florida’s senior living industry.

“As lawsuits designed to result in quick settlements increase, they also cause the costs of professional liability insurance to skyrocket, and our seniors and their families are ultimately stuck footing the bill,” Hand said. “As rate increases price seniors out of assisted living facilities, they may have no other choice but to go to more restrictive Medicaid-funded nursing homes.”

Van Der Linden said rising operating costs associated with increased costs of liability insurance, claims frequency and settlement expenses also potentially create barriers to care access and divert staff resources from resident care.