60 Seconds with... Theresa Bourdon, managing director, AON Risk Consultants
Q: Beyond showing a doubling of liability cases and tripling of settlement dollar amounts, what else struck you about your recent report on nursing-homes' liability costs? A: The liability crisis has really expanded across the country. Fourteen of 16 states showed double-digit annual liability increases. Florida is stabilizing at high costs that are probably not manageable over the long term, but they're at least stabilizing, at around $7,500 per bed per year.
Q: What about the other original hot spot in the study, Texas?
A: Texas is heartening. That's a success story. The beauty of its reform was a $250,000 cap on non-economic damages that can't be multiplied, and nursing homes also now come under the Texas punitive damages cap like other businesses. Nursing homes hadn't qualified before because of a loophole, if you will, regarding acts concerning the elderly.
Q: What state is faring the worst?
A: In Arkansas, they're looking at a $17,000 loss for every occupied bed. Mississippi has also shot way above Florida and Texas. The nationwide average annual cost has grown from $430 in 1993 to $2,310 in 2004.
Q: How are things going overall?
A: It looks like countrywide things are more stable. But you have to remember the sample study includes the major chains and many chains have divested from states with the highest costs. Another reason why some of this is flattening is some smaller entities are purchasing lower limits of liability coverage and basically saying, "Sue us and if it's more than $250,000 per bed, here are they keys –take it." It's purely a defensive vehicle the industry has taken in some areas, like Florida. But long-term, I don't' know if that's a viable strategy.
The full report can be seen at www.aon.com.