Four Reasons to Examine Your Professional Liability Coverage

Liability coverage for assisted living and skilled nursing providers has never been more important. As risk management partners for many care providers, we are seeing claims arising from a variety of events, such as patient falls, delay in treatment, failure to follow physician orders, violation of resident rights, failure to address appropriate level of care, and failure to treat and diagnose.

In addition, the plaintiff’s bar is becoming ever more creative and aggressive in finding ways to bring suits or actions against long-term care owners and operators.

Cognizant of these exposures, we work with owners and operators to assist them in implementing or identifying areas of risk that can be mitigated or transferred. While each provider/organization is unique, from our vantage point, we have identified certain drivers for the escalation in numbers of claims (frequency), the increase in claims costs (severity), and the subsequent increased cost to transferring the risk of professional liability.

Staffing Shortages

As the economy booms and unemployment is low, numerous industries are experiencing a shortage in front line work force. Care providers are especially pressed as this climate makes it more difficult to attract and retain qualified professional caregivers.

Staffing challenges result in caregiver burnout, which may lead to more patient incidents, lack of follow-through, poor documentation or missed physician orders. These present an increased hazard for potential liability claims and can create workers’ compensation issues.

Increased Reporting Requirements

The Affordable Care Act (ACA) imposed many employer requirements and, while the ACA continues to evolve, Payroll Based Journal appears to remain. Payroll Based Journal specifically impacts care providers, as providers must account for and submit data to Centers for Medicare and Medicaid Services (CMS) regarding hours of care and staffing (full-time staff, agency and contract staff).

This administrative reporting to Medicare is putting more strain on an already lean administrative staff. More importantly, Payroll Based Journal provides self-reported, documented proof-of-hours of care, and plaintiff attorneys are all over it.

Further, Payroll Based Journal reinforces the staffing quotient for higher STAR ratings by CMS, which rankings skilled nursing facilities. CMS created the Five-Star Quality Rating System to help consumers, their families and caregivers compare skilled nursing facilities more easily and to help identify areas about which you may want to ask questions.

As STAR ratings decrease, lawsuits increase. As an industry, self-reporting a shortfall is asking for trouble.

Increased Acuity

Patients in skilled nursing facilities are more acute. In addition, multiple diagnoses require higher levels of care. Further, Alzheimer’s and dementia are growing at an alarming rate. The burden on caregiving professionals has never been higher and the training required to properly care for this population is often overlooked and/or learned on the job.

Claims Cost Continues to Increase

Occupancy, staffing and fiscal challenges are all factors considered by insurance carriers when analyzing future claims costs. The claims data is self-evident, and the cost of defense continues to increase year over year.

Jury awards are increasing, and even those suits that are dismissed still incur significant defense costs. Insurance carriers are constantly combing their books of business to achieve profitability by tightening underwriting and reviewing rating.

We Can Help

Oswald understands the aging services business and the challenges the industry faces. Our holistic risk management approach is designed to decrease loss while increasing operator profitability.

We invest in the talent and technology to help you make data-driven decisions to protect your business. With Oswald as your partner, you will be fully equipped when it’s time to renew your professional liability coverage.

We know the markets and the carriers and we’re eager to get to know you. Our ability to provide a clear positive depiction of your operation and negotiate terms and rates on our client’s behalf is just the tip of the iceberg. The work that goes on below sea level is what will set your organization up for future success.

This article originally posted in 2018 and was updated in 2025.

To learn more about Insurance and Risk Management Needs for Senior Living, contact us here.