The Liability Nightmare Hits Home
Case studies illuminate the real & devastating effects on LTC
by Meg LaPorte
For Luis Gonzalez, Jr., MD, CMD, deciding to become a geriatrician was easy: He enjoyed his patients enormously. Like his fellow geriatricians, however, he has had to accept the challenges of less than competitive reimbursement (Medicare and Medicaid reimbursement rates for physicians who work in nursing homes are among the lowest for specialty physicians), time-consuming patient visits, and complex, frail patients with multiple complicated medical problems.
These factors add up to hard work and low pay. Nonetheless, Dr. Gonzalez has continued to see nursing home patients for the past 18 years. Unfortunately, the current liability crisis leaves Dr. Gonzalez wondering if he made the right career decision.
If you speak to almost any long-term care physician these days you'll likely hear a similar sentiment: There are few incentives for physicians to practice in nursing homes. In addition to low pay, nursing home physicians are either stuck with prohibitively expensive insurance premiums or denied access to coverage because most liability carriers have decided that long-term care is no longer within their "risk appetite." Many believe that quality long-term care is jeopardized by the current medical liability crisis.
The risk of a costly lawsuit and difficulty in obtaining insurance coverage are driving a growing number of physicians to stop practicing in long-term care and have forced some nursing homes to close their doors.
According to an AMDA survey conducted in Sept. 2002, more than 20% of respondents who work in nursing homes reported problems obtaining or renewing their medical malpractice insurance coverage because carriers had pulled out of nursing home markets in their region or premium costs were too high. Some experienced average premium increases of 154% in one year.
What's worse, more than 27% reported that they were forced to reduce patient care hours, no longer provide certain services, or refer complex cases as a result of the medical liability crisis.
Further exacerbating the crisis are the states' budget woes. Legislatures and governors are cutting funding for nursing home patient care, appropriate staffing, and facility maintenance to balance their budgets, according to an alliance of long-term care organizations committed to ending the crisis (AMDA, the American Health Care Association, the American Association of Homes and Services for the Aging, and the American Geriatrics Society). Growing liability costs made up 21% of nationwide average nursing home Medicaid reimbursement increases between 1995 and 2002. This means that nursing homes have fewer dollars to improve patient care, causing some to close or lose beds. In turn, this denies the most vulnerable patients--frail elders and disabled individuals--access to quality care.
Because the elderly population (age 65 and over) is expected to double in size by 2030 (from almost 35 million today to more than 70 million in 2030), the effect of reduced numbers of physicians and nursing home beds will only worsen in the coming years.
The following case studies illuminate the hardships faced by long-term care doctors across the country. In addition to Dr. Gonzalez's story, they include other accounts of physicians' unfortunate experiences with their professional liability and medical director insurance coverage.
Cheryl Biros, RN (Ohio)
While speaking to her husband's current medical liability insurance carrier, Cheryl Biros, a registered nurse and office manager for her husband's geriatrics practice, was dismayed to discover that his policy may not be renewed next year.
"My husband is a family practice physician with a big heart for geriatrics," said Ms. Biros of her husband, Ken, DO, CMD. Most of his patients are nursing home residents.
"He would love to leave the office and just do nursing home work, but our malpractice carrier said they 'highly suggest' [that my husband] not do just nursing home work and to keep the nursing home patients we have to ourselves," she said.
She added that their liability carrier also frowns upon doctors seeing patients in their homes. "Is it not restraint of trade to tell a doctor where he can see patients as long as it is within their scope of practice?" she asked.
Ms. Biros also pointed out that she and Dr. Biros know at least eight doctors who are either leaving medicine altogether or who are moving out of state.
"One of my husband's mentors is suggesting he use a nurse practitioner in a nursing home to help alleviate some of liability issues," she explained. "We found this very upsetting because as far as my husband is concerned, it would only increase the liability risk when more than one hand is on the chart.
"It's a shame that we have been forced to discourage our children from taking up a career in medicine--a profession that my husband loves so much," she said.
Wilson Coudon, MD, CMD (Va.)
When Dr. Coudon's senior practice partner informed him of a rumor that medical liability insurance carriers were pulling out of the nursing home market, he didn't think it would affect his practice so quickly. His internal medicine practice has a great patient care track record and no medical liability suits.
"Unfortunately, when my renewal date recently came up, my carrier informed me that they could no longer cover me because I am a medical director for a nursing home," he said.
Dr. Coudon is in his second year of working as a medical director for a northern Virginia nursing home.
"Since most of my patients are older, and I love working with this population, it was an easy transition to begin medical direction," he explained. "But I now have to reconsider this work because I otherwise will not be able to obtain malpractice insurance coverage.
"In addition, I don't know how nursing homes will be able to comply with regulations when they have no medical directors or doctors who are willing to pay exorbitant premiums to be covered for this work," he continued.
"Nursing home workers are the most caring and sincere people," he said. "It's unfortunate that good doctors will be forced to leave long-term care. The elderly will suffer from this."
Charles Crecelius, MD, CMD (Mo.)
This past July, Dr. Crecelius's medical liability insurance carrier left Missouri. Of the two remaining Missouri carriers, neither would cover him due to a claim in his history. The suit involved multiple parties and was eventually settled out of court.
"I found coverage with a 'secondary' company for $37,000 a year," said Dr. Crecelius, who had previously paid $6,500 a year. "My new geriatric-trained partner was given the option [either] of paying $5,000 a year if he stayed out of nursing homes and obtained coverage with one of the two primary companies or paying $37,000 to obtain coverage from the secondary company to be able to see nursing home patients."
Because payment is, in general, better in an office practice, Dr. Crecelius's partner didn't feel he could go to nursing homes. In order to make up the $32,000 difference in one year, Dr. Crecelius figured his partner would have to make almost 1,000 level-one nursing home visits or four visits a day just to cover the difference in premiums--five a day to cover the total premium cost.
To put things in perspective, Dr. Crecelius described a friend who practices standard internal medicine in an office setting with one claim settled out of court. That friend currently pays only $15,000 per year for malpractice insurance.
"We are both highly respected in our community and hold leadership positions. I could easily stop seeing nursing home patients and reduce my premiums and increase my total revenue," explained Dr. Crecelius. "I continue to spend about half my time in nursing homes only due to my dedication to the patients there. It is becoming an increasing financial, personal, and emotional liability."
Dr. Crecelius may be able to reduce his premiums by joining a new startup, physician-owned company, but will be liable for any extra expenditure by the company if costs exceed revenues for up to five years. His premiums could be reduced by 50%, however. Most physicians join and hope the company's assets will build sufficiently over the years.
Luis Gonzalez, Jr., MD, CMD (Ariz.)
Recently, Dr. Gonzalez, who is board-certified in both geriatrics and internal
medicine, received a quote for his medical liability insurance coverage.
"In addition to our low pay, long hours, and mountains of paperwork, I must now contend with paying an exorbitant amount of money for my professional liability (malpractice) coverage or face losing coverage altogether because I choose to treat elderly patients in nursing homes," he lamented.
For the past several years, Dr. Gonzalez has limited his practice exclusively
to the care of geriatric patients. One half of his patients are over 80, and
25% are over age 90. All of his patients reside in a facility.
Following his unsuccessful attempt to find more affordable liability insurance coverage, and despite the fact that he has never had a claim against him, Dr. Gonzalez realized that his current carrier may further raise his premiums or drop him altogether.
"I must now pay $20,000 for a professional liability insurance policy that cost $11,000 one year ago," he said. This was his only option after applying to two other carriers that had rejected his application solely because he treats patients in nursing homes.
"If my carrier raises premiums any further or drops me, I will be forced to consider resigning as medical director of my facilities," conceded Dr. Gonzalez. "Physician care for your parents and grandparents will be limited or unavailable without a change in the current conditions."
Kenneth Hill, MD (Tenn.)
"Due to an unfortunate parade of circumstances involving a lawsuit in which I was named, but soon thereafter dismissed," said Dr. Hill, "I was forced to resign from my medical directorship and leave many patients behind."
In 2001, a wrongful death lawsuit was brought against Dr. Hill's nursing home administrator, the director of nursing, and Dr. Hill. His nursing home filed for bankruptcy shortly after the lawsuit was filed. Despite his dismissal from the suit, a technicality prevented Dr. Hill's attorney from removing his name from the suit while it was on hold.
Then, St. Paul, Dr. Hill's insurance carrier, left the medical liability market. He scrambled to find another carrier.
"This was particularly uncomfortable when I had to fill in the space 'lawsuit in litigation' on my application forms," he recollected. "The major carrier in the state would not even consider me. This is frustrating to someone who was sued once in 18 years of practice."
Some of the first quotes Dr. Hill received from other carriers were in the $56,000 range (compared with his previous cost of around $5,000). One company quoted him around $8,000--but under two conditions:
- He would be responsible for the tail coverage he had previously purchased from St. Paul for $29,000; and
- He could no longer be the medical director for the nursing home--nor be the attending physician for nursing home residents over and above what is expected for an average practitioner.
"What that amounted to was that I had to send letters to 115 families that I could no longer care for their loved ones. The nursing home had to not only find another medical director but also find a physician who was willing to take care of that many residents right off the bat," he related. "Our medical community is small, and the nursing home was unable to find a willing provider locally--especially knowing the legal circumstances that got it there."
Ultimately, the nursing home found a practitioner from out of the county to become medical director.
"While I know this physician and have nothing but nice things to say about him, it has caused some logistical problems when a resident becomes acutely ill and has to be sent out," said Dr. Hill. "The EMTs are mandated to bring the resident to the closest hospital available; however, the new medical director does not go to [the] hospital in the nursing home community. This becomes chaotic to the ER personnel, who obviously do not want to violate any COBRA rules by transferring the resident to the hospital of the new medical director. This results in residents being seen and cared for by whomever is on call or unattached, which frustrates the physician on call and possibly the residents' families."
Dr. Hill, now a retired medical director, is no longer an AMDA member. "It upsets me immensely to see how the forced retirement of one medical director can result in so much hurt to a community," he said of the negative snowball effects his liability problems have brought on so many people.
Michael Knight, DO (Ohio)
Dr. Knight became the medical director of Menorah Park Center for Senior Living, Beachwood, Ohio, on Oct. 8, 2001. He holds a full-time position and doesn't practice medicine outside Menorah Park.
"I came from a more traditional family practice setting and had an individual medical liability insurance policy with [one company] for the previous 12 years," he explained. "With making the change to long-term care, I was covered by the facility's liability insurance policy, but initially I thought it may be wise to continue to carry my individual policy."
The first year, Menorah Park paid the insurance premium, which covered Oct. 2001 to Oct. 2002. In spring 2002, Dr. Knight received a letter from his carrier informing him that they would terminate his insurance as of July 2002. No reason or explanation was given.
"I proceeded to call the insurance company to get an explanation," he said. "This in itself was very difficult."
In addition, the agent he had previously dealt with was no longer with the company, and he was given the covering manager's information. "But despite numerous calls and messages left, I don't believe I ever received a return call," said Dr. Knight. "I started contacting other [insurance] agencies, which are becoming fewer in Ohio."
One insurance agent revealed the gravity of the situation to Dr. Knight when he admitted that many of the insurance carriers were trying to dump their high-risk policies. "It never occurred to me that caring for the elderly, some near the end of life, would be considered high-risk medicine," he said.
Finding liability insurance proved difficult for Dr. Knight. Due to his association with long-term care, several carriers wouldn't offer or quote a premium to him. He received one quote: a premium of $40,000 per year to cover only patients outside of the nursing home and not his nursing home care.
"I obviously rejected this policy," he said. "I then talked with the agent who provides the medical liability coverage for Menorah Park, and he gave me assurances that I would be completely covered for seeing patients at the nursing home.
"This was satisfactory to me, plus I had no alternative," he added. "The agent impressed upon me I could not provide any medical care outside Menorah Park."
In fact, Dr. Knight used to perform free sports physicals for the Catholic school his children attend, but he had to stop. In addition, he was warned against giving medical advice to friends or neighbors.
One of Dr. Knight's long-term care physician colleagues--we'll call him Dr. Smith--also wrestled with the liability crisis. After having practiced for more than 25 years, Dr. Smith was recently informed that his insurance carrier was going to cancel his policy in four months due to his long-term care exposure. Dr. Smith has never had a medical liability claim against him.
When Dr. Smith searched for a new policy, most companies refused to offer a quote due his long-term care practice. "This physician only goes to nursing homes to provide care for the elderly," said Dr. Knight. "The only offer of insurance coverage was for $40,000 per year, which was more than a 500% increase from his previous year's premium. He was on the verge of retiring from medicine--a prospect he was not looking to do or ready for."
Dr. Knight then discussed with his executive director at Menorah the idea of hiring Dr. Smith as an employee so he could be covered by the facility's malpractice insurance. After Dr. Knight presented the idea to him, Dr. Smith decided to take the position because he wasn't ready to retire and couldn't afford the expensive medical liability premium.
"He gave up his other nursing home patients and is only seeing patients at Menorah Park," said Dr. Knight. "This was a solution for his dilemma, but most facilities are probably not able to offer that chance. Also, most doctors in long-term care are going to multiple nursing homes, have an office, and are going to the hospital. The number I was told was if a physician had greater than 20% of their practice in long-term care their insurance would not be renewed or their premium would increase considerably.
"Who is going provide long-term care to our aging population if the insurance companies continue to make insurance unaffordable?" he queried. "This is a serious situation that is little known in the general public. The plight of obstetricians and neurosurgeons is very serious as well, but seems to be more publicized."
Harry Krulewitch, MD (Ore.)
Having recently opened a private geriatric practice, Dr. Krulewitch is one of only two Oregon physician members of AMDA and the American Geriatrics Society to exclusively practice geriatrics in a primary care setting as a self-employed physician. All other Oregon physicians either work in a group practice or include geriatrics as part of their general primary care population or nursing home work.
"My practice is growing and is also hard work and also suffers from a reduced revenue, but I love geriatrics and refuse to believe that I could only find work as a corporate employee," said Dr. Krulewitch. "I believe I have more experience in practicing geriatrics than most other physicians in Oregon, having worked as a practicing geriatrician since 1991."
This past May, Dr. Krulewitch found a graduating geriatric fellow from the Oregon Health Science University who wanted to be his partner.
"To supplement work with me he was going to join another geriatrician who works for a nonprofit agency serving indigent elderly," explained Dr. Krulewitch. "However, my malpractice carrier would not cover that work because they feared the liability of his working in unsupervised indigent home-care settings."
The only other carrier in the state would not cover him as Dr. Krulewitch's employee, but would cover his work with a nonprofit agency.
"By the time we could sort out how to get all of his coverage and who could pay for it, he had been offered a job by one of the local hospitals and their financial stability and easy access to liability for employed physicians led him to renege on his agreement and seek their employment," he said.
Today, Dr. Krulewitch has no partners. His practice is almost filled and he desperately wants to hire someone. "The carrier's response to my concerns: Call your senator in Washington," he related.
Jacqueline Mohs, MD (Mich.)
Following the completion of her internal medicine residency, Dr. Mohs began her first job treating 150 nursing home patients. She quickly learned that the environment required a knowledge base beyond her training.
"I decided to pursue formal training to address this deficit and began a geriatric fellowship one year later," said Dr. Mohs. "Ironically, I found that, during my fellowship, I had become one of the uninsurable solely because my interest lay in taking care of patients in the nursing home environment."
No insurance organization would offer her medical liability insurance coverage--let alone at an affordable price. "There was no exception for the additional training I had received, no consideration of the fact that I have never had to face a malpractice suit, no cognizance of the possibility that there may be a physician who loves the nursing home environment and feels compelled to provide excellent care within this environment," she related.
Dr. Mohs has since joined a private practice with connections to hospitals in her area that provide medical liability insurance to affiliates who provide care in nursing homes.
"In a sense I got around the obstacle," she explained. "However, the most concerning aspect of this trend to refuse liability coverage to the nursing home physician was the unmistakable impression that I was stepping into a litigation hotbed."
While she admitted that the realization was somewhat frightening at first, she got around the fear by recognizing a metaphor: "Physicians have always been willing to go where others fear to tread--whether it be stepping into an epidemic or reattaching a limb or holding the hand of a dying woman.
"I'm just another physician, walking into the litigation hotbed and believing that what I have to offer is important enough to face the danger this hotbed poses," she said.
Edwin Tomlin, MD, FACS (N.C.)
How can an insurance company force a long-term care physician to retire before he's ready? Just ask Dr. Tomlin.
In 2002, after 57 years of practice without any litigation brought against him and having been insured for liability coverage through St. Paul for 46 of those years, he was dropped from St. Paul because they stopped offering liability insurance in North Carolina.
"With the help of AMDA and others, I attempted to obtain insurance from other carriers," he said. "They were all eager to sign me up until they learned that I was a medical director at two nursing homes."
After 32 carriers turned down Dr. Tomlin, St. Paul finally agreed in July 2002 to write liability coverage for him for 11 more months on the condition that he would sign an agreement to retire on June 30, 2003.
"I signed because I had no choice, but even then I tried for 11 months to find a company to cover me, without any success," he explained. Dr. Tomlin retired on June 30, 2003, leaving two nursing homes and one assisted living facility without a medical director.
"While I am obviously of retirement age at 80 years old, I am in good health both mentally and physically," he asserted. "All of the insurance companies I contacted, knowing my age, wanted to insure me until they found out I was a medical director for nursing homes."
Contributing writer Meg LaPorte is AMDA's government and public affairs specialist.
This article originally appeared in
Caring for the
Ages, November 2003; Vol. 4, No. 11, p. 1, 6-9.
Caring for the Ages is an official publication of the American
Medical Directors Association, published by Elsevier. This article may not be
reproduced in any form, print or electronic, without
The opinions expressed
by the authors are their own
and not necessarily those of AMDA or of Elsevier.
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