June 25, 2015
Contact: Eric Kiehl, 717-221-7935
Cell: 717-599-2077

PHCA/CALM Commends Senate on Passage of Lawsuit Abuse Reform

S.B. 747 protects long-term care providers from predatory out-of-state law firms

HARRISBURG —The Pennsylvania Health Care Association and Center for Assisted Living Management (PHCA/CALM) commended the state Senate today for passage of S.B. 747, by a vote of 40-9. This lawsuit abuse reform is crucial for Pennsylvania’s most vulnerable citizens.

Without this legislation, which limits punitive damages to 250 percent of the amount of compensatory damages for long-term care providers, Pennsylvania’s skilled nursing facilities, assisted living residences and personal care homes would continue to face excessive litigation from lawsuits brought by out-of-state, predatory law firms, resulting in higher consumer prices and decreased availability of services. The high legal costs paid by Pennsylvania health care providers, employers and governments inhibit job growth, increase health care costs and limit access to medical care. This legislation does not limit compensatory damages, nor does it change the definition of punitive care in the MCARE law in effect for physicians since 2002.

Stuart H. Shapiro, M.D., CEO of PHCA/CALM expressed “heartfelt gratitude” to Senate President Pro Tempore Joe Scarnati, Senate Banking and Insurance Committee Chairman Don White and bill sponsor Sen. Elder Vogel for their tireless advocacy for this important legislation that benefits Pennsylvania residents and their providers of care.

According to a new national actuarial analysis on liability costs, published by AON, the liability cost per Medicaid day is $4.71. Given that Medicaid paid for about 19.2 million days of care in 2013, Medicaid spent nearly $91 million on liability related costs in 2013, much of this in contingency fees to out-of-state predatory lawyers. Most of the almost $91 million could have been used to improve the quality of care and the quality of life for nursing home residents.

Despite these funding pressures and the current legal environment, these lawsuits contradict trends in quality as Pennsylvania’s nursing centers continue to exceed major milestones in quality. According to the U.S. Centers for Medicare & Medicaid Services’ five-star system, which is used to rank the country’s best nursing homes, Pennsylvania facilities have improved on 10 of 11 five-star quality measures from the third quarter of 2013 to the third quarter of 2014.

“Punitive damage reform is crucial for Pennsylvania’s long-term care providers in order to continue to provide quality care to our most vulnerable citizens. Excessive litigation and damage awards result in higher consumer costs and decreased availability,” said Dr. Shapiro.

Prior to the punitive damages protections enacted for physicians (MCARE, 2002), physicians had been facing large numbers of frivolous lawsuits and most cases were settled for fear of unpredictable jury verdicts on punitive damages. Many doctors felt blackmailed by lawyers into settlements, and many physicians were fleeing Pennsylvania. Once the limits on punitive damages (but not on compensatory damages) were enacted, lawyers stopped filing frivolous lawsuits, the number of suits fell dramatically and physicians felt comfortable fighting cases and allowing them to be decided on the merits. The physician flight stopped almost overnight and insurance rates stabilized.

The cases have been driven primarily by predatory out-of-state law firms who advertise heavily in newspapers throughout Pennsylvania, trolling for plaintiffs. Since 2011, their advertisements have appeared more than 150 times in Pennsylvania newspapers with 33 full page advertisements attacking 48 nursing facilities since January 1, 2015. The ads have brought public mistrust and anger against an industry that cares for the frail elderly of our commonwealth, and made hard-working staff embarrassed to go to their local grocery store.

The bill will now be considered by the House, which passed similar legislation in the 2011-2012 session.

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