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 Providers' 'Litigation Tax' Expanding, New Report Warns

Providers can expect to pay more than $2,000 per bed this year in what some are calling the litigation tax, a new analysis released by the American Health Care Association and Aon Global Risk Consulting is claiming in a report issued Thursday.
The overall loss rate from plaintiffs’ liability claims will grow by 5 percent in 2015, the analysis says. The average provider can expect to pay some $2,030 per bed because of liability claims, the report says.
The rates vary widely, though: In Kentucky, where tort laws have long been anathema to reform groups, liability will cost providers $9,220 per occupied bed, while in Texas—one of many Southern states that caps plaintiffs’ awards—providers will lose about $320 per occupied bed, the 54-page report says.
West Virginia is No. 2 on the dubious list of high-risk states, the report says. Providers there can expect to lose some $6,950 per occupied bed next year. That comes despite West Virginia’s caps on “noneconomic” damages.
The dissonance in West Virginia is because “it has not been clear whether this limit applied to long term care providers,” Thursday’s report says.
“In a 2011 trial involving a long term care provider, a jury awarded $91.5 million, of which $80 million was noneconomic damages,” according to the report. “The state legislature extended the protections of the cap to long term care providers in 2013, and this appears to be reducing claims frequency.”
More troubling to providers, though, is that the frequency of liability claims is increasing (by 3 percent per year), and the severity of the claims is increasing, too (by 2 percent), Thursday’s report says. The average payment is now $218,000 per claim.
Opponents of tort reform have long argued that caps and other measures only allow big companies to duck responsibility for the pain and suffering their carelessness causes. But providers say that the tort system punishes even the most responsible caregivers and is becoming a drag on a profession that is working hard to meet the critical, and surging, needs of an aging America.
The need for long term and post-acute care is growing, and increasing liability costs impede our ability to serve those we care for and their families,” AHCA President and Chief Executive Officer Mark Parkinson said Thursday in announcing the findings. “This report underscores the importance of delivering solutions so we can continue to provide the highest-quality care and improve lives.”
Bill Myers is Provider’s senior editor. Email him at wmyers@providermagazine.com. Follow him on Twitter, @ProviderMyers. 
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