American Journal of Law & Medicine

The siren song of the elderly: Florida's nursing homes and the dark side of Chapter 400.


Nursing homes perform a vital function in the long-term care continuum by providing nursing care around the clock to the elderly and disabled,(1) By entrusting these institutions with society's frailest members, the general population relies on government agencies and their regulations to ensure that the elderly receive quality care.(2) States expect quality care, but providers often lack the financial support and regulatory guidance.

Recently, the conflict between reimbursement and quality care received national attention.(3) Vencor, the U.S.'s second largest nursing home chain, attempted to terminate its Medicaid contracts and evict all its Medicaid residents.(4) Executives explained that the contract terminations and resident evictions were strategies to make room for higher paying private pay residents.(5) Faced with state, and potentially federal, fines,(6) as well as a district court injunction and public outrage over the patient dumping, the company quickly abandoned its policy and apologized.(7) The attempted resident evictions quickly prompted new legislation less than a year later, which forbids facilities from evicting Medicaid patients based solely on payment status. Although the strategy resulted in a public relations disaster, the company claims that the real "bad guy" is the government because what the government pays "is not adequate to cover the cost for what [the company] believe[s] is the proper care for a patient."(8) This statement reflects providers' frustration with current government payment levels and expected standards of care throughout the nation.

The tensions between government standards, agency oversight and state reimbursement exposes the industry to private litigation. When agency oversight and enforcement of government standards proves ineffective or inefficient, society turns to the legal system for a remedy,(9) but unrestrained private litigation is easily abused against nursing home providers. Although punitive damages are certainly warranted in cases of egregious abuse and neglect, excessive and frivolous residents' rights suits driven by plaintiffs' attorneys can bankrupt providers already struggling to operate on inadequate Medicaid reimbursement.(10) Suspending the discussion of Medicaid reimbursement, both legislative reform and strong state agency action are necessary to reform this vital industry and to save it from potentially devastating litigation. The industry needs efficient and consistent regulatory oversight and application, while being afforded some limits to currently unlimited legal liability.

This Note discusses the causes of recent growth in nursing home litigation and its effects on nursing home residents, providers and government. Specific attention is devoted to Florida for demographic and legislative reasons. Complementing its large elderly population, Florida has one of the broadest private rights of action for nursing home residents. Consequently, other states use Florida's statute as a model.(11)

Part II of this Note examines the national nursing home environment, reflecting on the status of the industry and relevant legislation. Part III explores current federal nursing home legislation and discusses recent reform efforts. Part IV examines Florida's nursing home industry and raises concern about particular state legislation widening nursing home liability. Through its residents' rights statute, Florida has witnessed a tremendous growth in nursing home litigation and corresponding jury verdicts. Part V describes the actual and potential effects of Florida's rapid growth in nursing home litigation on providers and residents. Part VI discusses the state's reform efforts and powerful political lobbies' countermeasures. Finally, Part VII suggests possible state regulation reforms to preserve the industry before excessive private litigation reaches devastating levels.


The percentage of elderly Americans is growing.(12) In 1997, 34.1 million elderly accounted for 12.7% of the U.S. population.(13) Roughly 4% of that elderly population elderly received care in 17,176 nursing homes providing approximately 1.8 million beds.(14) Expenditures to care for this population totaled $78.5 billion in 1997,(15) with Medicaid (48%) and private pay sources (31.4%) shouldering most of the burden.(16) The entrance of the Baby Boomers into the 65 and older age categories will double the number of elderly persons to approximately 70 million, or 20% of the population by 2030.(17) This growing elderly population will need adequate long-term care resources to meet its needs,(18) Although nursing homes are not always the preferred method of long-term care,(19) their importance and necessity in our society will only increase as America ages.


Nursing homes receiving federal funds through Medicare and Medicaid must comply with federal laws requiring nursing homes to provide high quality care to residents.(20) Responding to the widespread nursing home abuse in the mid-to-late 1970s,(21) Congress enacted the Nursing Home Reform Act (NHRA) to reform the nursing home industry.(22) Included in the Omnibus Budget Reconciliation Act of 1987, this legislation specifies that nursing homes seeking reimbursement from Medicare and Medicaid must "care for residents in such a manner and in such an environment as will promote maintenance or enhancement of the quality of life of each resident"(23) and "attain or maintain the highest practicable physical, mental and psychosocial well-being of each resident in accordance with a written plan of care...."(24) Promulgated under NHRA, the "Requirements for Long Term Care Facilities"(25) regulation governs the operations of nursing homes with Medicaid patients and mandates residents' rights and facility duties.(26)


Under the current statutory system, the Health Care Financing Administration (HCFA) contracts with state agencies to inspect nursing homes for compliance.(27) Federal officials then randomly reinspect at least five percent of the homes to verify the state surveys.(28) NHRA produced dramatic effects.(29) By 1996, the regulations had cut the use of physical restraints on nursing home residents in half; incidences of dehydration also decreased by fifty percent.(30)

Despite these promising results, subsequent reports found many disturbing conditions.(31) Approximately forty percent of all HCFA-certified facilities repeatedly violated federal standards over the past four surveys, including critical aspects of patient care.(32) "[A] quarter of the nation's nursing homes failed even to assess each patient's needs or develop individual care plans"(33) and, at the time, "government data show[ed] more than 2/3 of [the nation's] nursing homes d[id] not fully comply with federal standards."(34) Explanations for the survey results ranged from the "federal inspection guidelines were less than rigorous and enforcement had little teeth ... [because] ... the only fines were minimal("35) claims that the inspection process was too subjective. The primary federal remedy, to deny payment for new admissions after three months of noncompliance,(36) apparently did not suffice to reform the quality of nursing home care.(37)

In 1995, HCFA released regulations ("1995 regulations") outlining significant enforcement remedies for surveyors.(38) This allowed the federal government to penalize nursing homes in several other ways. Some of the current remedies now available include: levying hefty fines ranging from $50 per day to $10,000 per day;(39) denying payment for new admissions(40) or all payments;(41) closure of facility and/or transfer of residents;(42) and termination of the provider agreement.(43)

The 1995 regulations also changed the format and scope of the survey process.(44) The surveyors mark down all violations on a grid.(45) Once plotted, the location of the violation on the grid determines the severity of the punishment.(46) The 1995 regulations broadened the scope of surveys, as surveyors may now consider residents' quality of life.(47) "A resident's happiness with staff treatment, or level of privacy, is now mixed with the old standards."(48) Facilities may no longer hide behind numerical standards. For example, a surveyor can still cite an adequately staffed facility "if [the] residents complain of inattention."(49)


In 1996, roughly 10,000 of the 15,000 nursing homes inspected by state surveyors had deficiencies.(50) The federal government actually collected or imposed only 2% of the monetary fines or penalties recommended by the states.(51) State inspectors recommended that the federal government bar 5,458 nursing homes from receiving money for new admissions, of which the government enforced only 156 proposals.(52) Surveyors suggested special staff inservices for 3,039 nursing homes; HCFA imposed this remedy on only 103.53 States proposed 2,935 facilities for fines; HCFA fined 228 and gave a 35% discount to the facilities that did not appeal the fine.(54) When confronted with this lack of enforcement, HCFA officials explained that nursing homes "`have a right' to correct problems before penalties are imposed."(55)

The current administrative appeals process may explain HCFA's poor collection rate. The Departmental Appeals Board (DAB), a division of the Department of Health and Human Services, is a three judge panel designated to hear all of the nation's nursing home appeals.(56) Although this panel is capable of about two dozen decisions a year, as of January 1999, 670 appeals involving millions of dollars were pending.(57) The backlog began with the imposition of heavier fines in 1995. Even though it costs a facility approximately $10,000 to bring an appeal, and they receive a 35% discount if they do not challenge the fines, many providers feel that by accepting such fines, they are making it easier for "big-verdict lawsuits brought by patients for abuse and neglect."(58)


Recent actions indicate that the federal government is responding to the public's lost faith in survey results and agency oversight. Responding to mounting political and public pressures about the crisis in the nation's nursing homes, President Clinton ordered increased scrutiny of nursing homes in July 1998.(59) He instructed federal officials to conduct more random inspections,(60) as well as to impose more stringent penalties.(61) In particular, officials should focus on facilities with a history of poor performance.(62) President Clinton also allocated funds in fiscal year 2000 to double the number of DAB judges.(63) Recent government reports, issued by the General Accounting Office (64) and the Office of Inspector General,(65) documented the problems with nursing home surveys and speculated that nursing home conditions have in fact worsened since 1995. These announcements proposed swifter investigations and sanctions, and increased federal enforcement efforts.(66)

Reacting to President Clinton's initiative, the agencies' reports and the public rally for improved nursing home conditions, HCFA implemented many new regulations and policies.(67) Some of the new regulations include harsher monetary penalties on chronic nursing homes,(68) quicker investigations(69) and compliance tracking.(70) To ensure the adequacy of state inspections, monitoring and enforcement actions, HCFA implemented a new monitoring system.(71) The system will increase state surveyor training and improve enforcement of nursing home regulations.(72) Most recently, HCFA drafted new survey protocols and interpretive guidance for state surveyors.(73) The draft drew criticism from trade groups who claimed it focused on punishing providers rather than collaborating with the homes to correct problems and improve the quality of care.(74)

HCFA is also encouraging public participation in its reform efforts. The agency created Nursing Home Compare,(75) a website to put nursing home inspection information on public display.(76) Because the public will now be able to find out exactly how well a nursing home complies with federal standards, the agency hopes to motivate the industry toward providing and maintaining quality care.(77) HCFA is also launching a national campaign on the prevention and detection of elderly abuse and neglect to inform and educate consumers.(78)

IV. …

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