Diminishing Returns

The prospective clients still walk into Sly James‘ Kansas City law office with stories about loved ones hurt or fatally injured in nursing homes.

But four years after tort reform, instead of sliding a contingency fee agreement across his desk, James pulls out a calculator.

He punches in the new cap for noneconomic damages, $350,000, and starts subtracting. For settlement purposes, slash the cap by $100,000. For two to three expert witnesses, lop off another $22,000. Typical attorney’s fees swallow 40 percent of any recovery, which leaves about $136,000 to split among all claimants.

James crunches the numbers and more often than not he tells people he can’t take their cases.

“It doesn’t do any good to tilt at windmills and be out of business the next day,” he said. 

When it roughly takes two post-tort reform cases to equal the value of one pre-tort reform case, James is not alone in drastically scaling back the nursing home litigation at his practice. Other longtime nursing home litigators report a 50 percent drop in injury and wrongful death cases against long-term care facilities.

To even accept a case, plaintiffs’ attorneys say the cases must meet higher criteria.

It’s been four years now since a Republican-controlled Legislature overhauled the civil litigation system, adding lower damage caps and stricter evidence standards and venue rules.

Even before its passage, plaintiff lawyers lamented the anticipated drop in once lucrative cases. The nursing home industry looked to the tort changes to restore a much-needed balance to the litigation area – and the changes appear to be working for the industry.

Malpractice insurance payouts for insured hospitals and nursing homes are at their lowest levels in a decade, according to data from the Missouri Department of Insurance, Financial Institutions & Professional Registration.

“[Lawyers] are not going to make a case unless it’s really valid, so it’s probably dropped off,” said Jon Dolan, executive director of the Missouri Health Care Association, a trade group for nursing homes.

Consumer watchdogs, however, say the tort legislation has weakened the No. 1 deterrent protecting the elderly from potential abuse: the plaintiff lawsuit. 

“Until we mandate liability insurance and get the caps lifted, the families are at a disadvantage and frankly are being toyed with,” said Amy Coffman, executive director of the Missouri Coalition for Quality Care, a nonprofit based in Jefferson City.

Old cases, new players

Jefferson City attorney Anthony DeWitt used to file five nursing home lawsuits a year, including cases against a St. Charles facility whose operators were jailed for failing to report elder abuse. He hasn’t filed a single case for a new nursing home client since August 2005.

“You can’t lie to them,” said DeWitt, an attorney with Bartimus, Frickleton, Robertson & Gorny, also invoking Don Quixote. “You can’t tell them this is great, and we’ll charge at this windmill and knock it down.”

Defense attorney Steve Strum said he’s seen only a slight drop in his nursing home caseload. Plaintiff’s lawyers still file suits, he said. They’re just not the same plaintiff’s attorneys he faced five years ago.

“An area is hot for awhile and then people go on to bigger and better things,” said Strum, a St. Louis attorney with Sandberg Phoenix & von Gontard. “Other lawyers kind of take up the slack that got left behind.”

One such lawyer is David Byerley of Kansas City. Byerley has handled nursing home cases for 10 years as part of his personal injury practice with McKay and Byerley. But now he’s getting referrals from Kansas City attorney Tim Dollar, who’s turning down more cases.

“These cases are very expensive to prosecute. I’m sure that’s why he made the decision that he can’t justify taking the case,” Byerley said. “I’m willing perhaps to take a little bit more risk on these cases.”

The risk doesn’t always pay off. Byerley faced Strum in June in a wrongful death trial over the death of a nursing home resident in Platte County. The jury returned with a defense verdict for a doctor at the facility, although Byerley’s client settled with the nursing home before trial for a confidential amount, he said.

New case criteria

Dollar said he’s limiting the kinds of nursing home cases he now accepts.  To get around the damage cap, he looks for cases where medical expenses exceed the $350,000 limit.  

Plaintiffs’ lawyers celebrated a pair of January decisions from the Missouri Supreme Court that threw out forced arbitration in wrongful death cases.

But in a post-tort reform Missouri, plaintiffs in a wrongful death case could actually see lower payouts than in injury cases, Dollar said. Without the medical expenses and extended hospital stays that accompany injuries, a death case can’t overcome the noneconomic damage cap, he said.

Dollar said there’s a crass way to describe this outcome. “The bottom line of the tort reform bill is that it may be cheaper for the defendant to kill the person than injure them.” 

Other plaintiffs’ attorneys have upped the criteria a case must meet before they’ll accept it.

Kansas City attorney Derek Potts looks for cases that center on a single negligent event, one fall or one medication error. The cases cost less to prepare, he said, than those involving months or years of neglect.

Potts has also narrowed the geographic bounds of his practice to the Kansas City area. Out-state nursing home facilities force him to log more hours traveling, so they’re out. It also helps when potential clients show up at his office toting all the medical records they can get their hands on.

Nursing homes are resistant to turn over resident records, Potts said, and it costs more time and money to drag the facility into court to get the documents.

“If the family has records, I might look at a case that I wouldn’t even look at before,” Potts said.

James, the attorney in Kansas City, is also looking for slimmer, trimmer cases. The conduct must be egregious and the medical issues clearer. Multiple defendants don’t help a case, he said.

“If you sue five people, you still get one cap, but you need five different experts to deal with those five [defendants],” James said, citing the more stringent requirements for expert witnesses, another element of tort reform.

“The cost goes up and the recovery stays stagnant.”

To make up for the drop in nursing home cases, James’ firm expanded their general personal injury practice, taking on more vehicular injury and electrical shock cases.

Potts has opened offices in New York and New Mexico to expand his mass tort practice nationally. Those offices are serving as a starting point for nursing home litigation in states with less restrictive damage caps than Missouri, he said.

“New Mexico resembles Missouri pre-tort reform,” Potts said.

Fewer deterrents?

While attending law school in the early 1990s at Saint Louis University, DeWitt, the Jefferson City attorney, cared for nursing home residents as a respiratory therapist. After seeing workers at the facility harm the patients, he said he made several calls to the state’s elder abuse hotline.

He said he once saw a nurse slap a patient across the face. The nurse was frustrated and short-staffed that night, DeWitt said.

“It’s a very taxing job,” he said. “Unfortunately you don’t get a pass on how you take care of these people.”

Before the 2005 changes to tort law, DeWitt said he filed four or five nursing home cases a year. In 1998, he filed nearly 17 cases, most related to a St. Charles nursing home called Claywest House Healthcare.

DeWitt’s work for the daughter of a nursing home resident coincided with the 1999 death of a resident there. DeWitt and Dollar’s firm sued the management company of the facility, settled most of the claims and then turned over all the evidence to former U.S. Attorney Catherine Hanaway.

Hanaway pursued federal charges against the management company and its CEO, Robert D. Wachter, who spent time in federal prison and was released last year.

Jefferson City attorney Harvey Tettlebaum defended the owners of Claywest in their criminal proceedings. He said the civil litigation in the case was not typical of nursing home cases.

“For the plaintiffs, it wasn’t just about getting recompensated for their loss,” Tettlebaum said. “They wanted to put the facility out of business and put the owners in jail, and they were successful.”

DeWitt likened the tort changes to someone welding shut the release valve on a pressure cooker: eventually, the cooker is going to blow up.

“If there isn’t somebody these people can go to seek help for these patients, then eventually what happens is the system gets so bad it does take criminal cases to try to get the problem solved,” he said.

Strum, the defense attorney, rejected the idea that the tort changes will limit the consequences for facilities that don’t properly care for residents. The federal government and the U.S. Attorneys Offices in Missouri have been aggressively regulating nursing homes, he said.

“I think it’s a ridiculous comment to say that if you don’t have heavy-hitting plaintiffs’ lawyers then nursing homes operators are running amok and have poor care,” Strum said.

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