A good reason you might sense a lawsuit increase

James M. Berklan
James M. Berklan

Given the most recent report from Aon's Actuarial & Analytical Practice, a few stanzas of “Whistle While You Work” could be helpful. Either that or a stiff belt of Lynchburg, TN's finest export.

Projected liability costs are rising for skilled nursing operators. They're expected to jump a robust 6% in 2017, in fact.

But that's not the most worrisome part of the report. The frequency of liability claims is forecast to increase 4% this year. Just a few years ago, the rate was 2%, which means that even as providers have ramped up efforts to improve quality care, plaintiffs and their attorneys have been running to the courthouse with increasing frequency.

Aon's actuaries predict that the average severity for a successful general liability/professional liability claim in 2017 will be $218,000. 

Put another way, the 2017 projected loss rate per occupied bed (for awards under $1 million) is $2,350 — or more than double the 2006 amount.

A “deteriorating claims environment” is how the restrained numbers-crunchers describe it. Its publishing partner was the American Health Care Association so LTC leaders are fully aware of the situation. It's time you were too.

So why is the number of claims rising? Simply put, trial attorneys are becoming more efficient at finding favorable jurisdictions in which to sue, believes Christian Coleianne, associate director and actuary with Aon Risk Solutions.

Worse, efforts to implement award caps have stalled or gone dormant in many places. 

Providers, led by the AHCA, which did some venue cherry-picking of its own, successfully filed for and received a temporary injunction in November against implementation of the arbitration ban. They face better odds fighting the arbitration ban with the White House and both chambers of Congress led by Republicans.

While the majority of the Aon data stems from larger provider chains, menacing implications extend to smaller mom-and-pop type operators, too. Despite shallower pockets, they also are at greater risk of being sued.

“If a fire burns in the forest, it's not just the larger trees that will be impacted,” Coleianne observed. “All the trees will be impacted.”

Or more bluntly put, it's all the more liable to become a large-scale forest fire.