The family of a husband and wife who both died after contracting COVID-19 at a nursing home last year is suing the facility, alleging that it lacked proper staffing, infection control policies and personal protective equipment. William and Martha Ames were both in their late 80s when they were diagnosed with the virus at the Villages of Orleans Health and Rehabilitation Center in Albion, New York; they died in April of 2020, two days apart. According to their daughter, the couple had endured poor care at the nursing home even before the pandemic hit.
Filed on June 1, the lawsuit challenges a New York state law that gave nursing homes legal immunity amid the COVID-19 emergency until earlier this year. The family’s attorney has said that the immunity protection does not apply in certain cases and that ”reckless conduct” took place. Though it is thought to be the first lawsuit confronting the provision in New York, similar suits could be forthcoming across the U.S.
“There may be a lot of individuals challenging that immunity,” said Rusty Wells, Senior Broker, Professional Liability, Burns & Wilcox, Indianapolis, Indiana. “Many of the state legislatures have moved to implement this type of protection, but I believe there will be more cases like this where folks will allege there was a willful disregard for patient care.”
Though the courts will ultimately decide whether the challenges can move forward, a nursing home’s Professional Liability Insurance is extremely important at these times, said Greg Wideman, Manager, Healthcare, Burns & Wilcox, Pittsburgh, Pennsylvania.
“This sort of lawsuit could put a nursing home out of business, especially if they do not have Professional Liability Insurance or they do not have sufficient limits for their exposure,” Wideman said. “It could definitely be quite damaging to some of the nursing homes that are already struggling.”
Legal immunity unclear, but ‘willful’ negligence may not be insurable
According to a May 22 report in Politico, about 200 wrongful death lawsuits have already been filed against nursing homes related to COVID-19, and many more are expected. In addition to individual state protections, facility owners are also looking to immunity shields offered by the federal government as a way to potentially avoid liability.1 In most cases, these immunity shields have specific exclusions for negligent behavior that puts patients at risk, Wideman explained. “They usually have similar wording where if a facility is letting visitors in without PPE, for example, or they are found to be negligent in their staffing, they are open for lawsuits,” he said.
This sort of lawsuit could put a nursing home out of business, especially if they do not have Professional Liability Insurance or they do not have sufficient limits for their exposure.
Professional Liability Insurance for nursing homes, also known as Medical Professional Liability Insurance or Medical Malpractice Insurance, is one of the most important protections a nursing home can have, Wells said. “In essence, Professional Liability revolves around someone acting as a reasonably prudent individual should or would have in the same or similar circumstances,” Wells said. “Each state has its own legal definition of the standard of care.”
In nursing homes, common types of Professional Liability Insurance lawsuits are related to bedsores, injuries, patients who are hurt after wandering off, or inappropriate staff behavior. The insurance policy can help with expenses including defense costs, investigations, and potential judgments or settlements. “The greatest cost of these cases is often the defense,” Wells noted.
Nursing home operators should know that an intentional or willful and wanton act is “generally not insurable,” he pointed out. “It could be alleged that something was not intentional but was so egregious that it violates the standards we would expect to be in place, and that is a little different,” Wells said. “It will be interesting to see how that all shakes out with the courts and how the judges rule.”
States often have their own rules regarding malpractice coverage, including who must carry it. This could include the nursing home as well as its health care providers. “Many times, the physicians, nurse practitioners and physician assistants will carry their own Professional Liability Insurance as well,” Wells said.
Professional Liability Insurance for nursing homes may be packaged with other policies these facilities rely on, including Commercial General Liability Insurance for third-party accidents such as slip-and-falls, Commercial Property Insurance to cover perils to the property itself, and Commercial Auto Insurance for any vehicles the facility may use for patients.
Staffing shortages among other ongoing liability concerns
A potential wave of lawsuits is just one way the aging services industry has been impacted by the coronavirus pandemic, which has caused more than 132,600 deaths among U.S. nursing home residents and over 1,900 nursing home staff deaths.2 Staffing shortages are another major concern, affecting nearly one-fourth of U.S. nursing homes and prompting the Centers for Disease Control and Prevention to release guidance in March on addressing these shortages.3,4
In Rhode Island last month, Gov. Daniel McKee signed a bill into law that would give the state’s nursing homes the highest staff-to-patient ratio in the country.5 It requires at least 3.58 hours of direct nursing care per resident, per day, and goes into effect Jan. 1, 2022. Although critics of the bill believe it could lead to nursing home closures, others have said the mandate will make residents safer and boost pay for staff.
“There is no doubt, in my opinion, that the more attention a patient gets, the more likely they are to do well,” Wells said. “On the other hand, there is a shortage of individuals qualified or willing to work in long-term care facilities. It is great to devote more time to the patients, but where is it going to come from?”
More stringent requirements could put a strain on small- to mid-sized facilities in particular, Wideman said, especially as many facilities struggle with other employment issues such as COVID-19 vaccination rates among staff and whether it should be required.6 Still, failing to meet nursing home staffing standards has been linked to omitted patient care, and increased staff-to-patient ratio requirements could become more common over time.7 “We may start to see more states push their staffing requirements up as well,” he said.
Due to the potential severity of nursing home injuries and the risk of large settlements, Excess Liability Insurance is often needed for these facilities. This type of insurance can help with settlement amounts or other expenses that exceed the limits of existing insurance policies such as Professional Liability Insurance. A hardening insurance market for nursing home coverage makes this policy even more essential, Wells said, especially in states with no limit on malpractice settlements.
“If you are in an area where the sky is the limit, an insurance carrier might have been willing to offer $10 million in limits in the past, but now they might offer only $5 million. This is where Excess Liability Insurance comes in,” he said. “You can seek out an excess layer of $5 million to sit on top of that.”
Nursing homes also need insurance for evacuation and crimes like theft and cyberattacks
Many insurance carriers are no longer offering coverage for nursing homes, due in part to the impact of the COVID-19 pandemic, Wells explained. “Limits are also decreasing, and the coverage itself has been more restricted,” he said. “All carriers are now adding communicable disease or pandemic exclusions, which are designed to exclude coverage for things like COVID-19.”
Avoiding this exclusion is extremely difficult, Wideman added. “There are still a couple of carriers out there who are willing to consider removing the exclusion, but there must be solid risk management procedures in place,” he said.
Nursing home owners should also ask their broker whether their insurance includes evacuation expense coverage — an issue that has come into greater focus during the pandemic. “When you have outbreaks of any kind at a nursing home facility, you have to move residents out of that facility,” Wideman said. “That is a supplementary coverage that nursing homes should be inquiring about.”
Insurance coverage for theft and other crime, including cyberattacks, should also be considered. Cyber and Privacy Liability Insurance is an emerging need for senior living facilities, Wideman pointed out. “This does not get discussed enough with nursing homes, but we are starting to see hackers go after health care providers more and more,” he said. “It is only a matter of time before they start going after nursing home data as well. If you have 300 residents with their patient data on file, that is data on 300 patients that is vulnerable for attacks. This is especially true for larger, multi-location facilities.”
Risk management should include continued COVID vigilance and other protocols
On March 30, the American Health Care Association released a report showing a 96% decline in COVID-19 cases in nursing homes.8 While cases among patients and staff have plummeted since the vaccination rollout began, breakthrough infections and smaller outbreaks are still possible, and facilities are encouraged to continue taking precautions.9
“These facilities are going to have to devote resources and attention to their risk management efforts,” Wells said. “They may need to do more documentation, and it may be important to designate a risk manager. Risk management is going to be very important in the future.”
With the establishment of risk management provisions, and certainly as medicine improves, we may see these nursing homes flourish like they once did.
Procedures should be in place for screening employees and visitors for signs of illness and how to respond if someone is symptomatic for COVID-19 or other types of illness. “You are going to need strong policies and procedures to address that as quickly as possible so you can mitigate any losses,” Wells explained. “They should also have a COVID testing policy in writing that must be adhered to. The requirements can vary, but it should address testing those who are symptomatic, any routine testing, and testing if an outbreak occurs. This virus is still getting passed around, so that is important.”
Though bolstering risk management procedures may be a challenge for nursing homes that are struggling financially, owners should look to their insurance carrier’s risk management benefits as a key resource. “I think the risk management component of an insurance carrier will play an even bigger role now in making a decision about a policy,” Wideman said.
These services may be included with the cost of an insurance policy or offered for a fee. Because an insurance carrier may have experience with many nursing homes across the country, their input could be invaluable. “They may have recommendations for how to avoid losses or mitigate them if they occur,” Wells said. “Nursing homes should avail themselves of whatever risk management sources their insurance carrier offers.”
Despite the challenges they face now, the post-pandemic future for nursing homes could see improvements in patient care and safety, and ultimately an easier time purchasing insurance. In St. Louis, Missouri, a recent report highlighted how nursing homes are reflecting on lessons learned from the pandemic, including increased use of technology with iPad communication and telehealth visits, improved HVAC and air filtration systems, and a better understanding of viral spread.10
“With the establishment of risk management provisions, and certainly as medicine improves, we may see these nursing homes flourish like they once did,” Wells said. “Equally as important, the insurance marketplace may have more open arms to them and be able to cover them a little less onerously than we are right now.”
Nursing home insurance decisions should always involve an experienced broker who specializes in the industry, Wideman said. “Expertise is the biggest thing to look for,” he said. “Going through policy forms and seeing what is and is not excluded is the broker’s job, and you need someone who has experience placing coverage, reviewing policy wording, and understands what coverage is needed for your business.”
1Luthi, Susannah; and Roubein, Rachel. “Nursing homes invoke Trump-era protections to fight lawsuits over Covid deaths.” Politico, May 22, 2021. 2Centers for Medicare & Medicaid Services. “COVID-19 Nursing Home Data.” May 30, 2021. 3AARP Public Policy Institute. “AARP Nursing Home COVID-19 Dashboard.” AARP, June 10, 2021 4Centers for Disease Control and Prevention. “Strategies to Mitigate Healthcare Personnel Staffing Shortages.” CDC, March 10, 2021. 5Associated Press. “Nursing home staffing measure signed into law.” AP, May 28, 2021. 6Gleckman, Howard. “The Federal Government Will Require Nursing Homes to Report Covid-19 Vaccine Rates for Staff And Residents.” Forbes, May 12, 2021 7Harrington, Charlene; and Edelman, Toby S. “Failure to Meet Nurse Staffing Standards: A Litigation Case Study of a Large US Nursing Home Chain.” U.S. National Library of Medicine, July 20, 2018. 8Lasek, Alicia. “Coronavirus rates drop 96% in nursing homes, but some see first-ever cases in new year.” McKnight’s Long-Term Care News, March 31, 2021. 9Bailey, Melissa; and Dubnow, Shoshana. “Covid Cases Plummet 83% Among Nursing Home Staffers Despite Vaccine Hesitancy.” Kaiser Health News, March 15, 2021. 10Simpson, Maddy. “Beyond the List: How the pandemic impacted senior living facilities, and lessons moving forward.” St. Louis Business Journal, June 11, 2021.