ALF lawsuit protections in play as House panel advances bill by a 12-5 vote

Decorative Scales of Justice in the Courtroom
The ALF industry says changes are necessary because there's been an uptick of lawsuits against ALF providers, which is driving the costs of their professional liability insurance premiums.

As the fourth week of the Session nears its end, House and Senate judicial panels have approved identical bills to treat assisted living facilities (ALFs) more like nursing homes in civil litigation.

House Civil Justice Subcommittee Chair William Robinson extended Thursday’s meeting by 15 minutes so the panel could consider HB 995, filed by Republican Rep. Ryan Chamberlin. The bill, which cleared the panel by a 12-5 vote, is identical to SB 238, filed by Republican Sen. Colleen Burton.

The bills change ALF statutes to make clear that, similar to nursing homes, “passive investors” cannot be sued in civil litigation. The bills use the definition of “passive investor” that was included 14 years ago in the state’s nursing home statutes.

The bills also make it harder for plaintiffs to seek punitive damages against ALF providers by requiring a court to hold a hearing determining whether sufficient admissible evidence exists to provide a reasonable basis for the recovery of punitive damages. If the plaintiff cannot make this demonstration, the defendant will not incur the costs associated with defending the claim.

The ALF industry says changes are necessary because there’s been an uptick of lawsuits against ALF providers, which is driving up the costs of their professional liability insurance premiums.

“This bill was brought about because the ALF industry in Florida is facing a two-pronged crisis. The two-prong crisis consists of death by a thousand paper cuts — a game of waves of lawsuits designed to not to go to trial, but rather to force quick settlements — and rapidly escalating liability insurance premiums corresponding to lawsuit claim frequencies, severity and loss rate,” Chamberlin told committee members.

Citing a 2022 professional liability benchmark report published last year by Marsh, and based on data submitted by 50 long-term care providers, Chamberlin said Florida ALFs have double the claim rate frequency of the national average and loss ratios also are double the national average, ranking the state last in both those categories. ALFs rank third from the bottom when it comes to claims severity, Chamberlin said.

Florida Justice Association lobbyist Brecht Heuchan said ALFs say they want to be treated like nursing homes when it comes to litigation, but that they don’t want to be regulated like nursing homes.

“They don’t want to meet minimum staffing, they don’t want audited financial statements,” he said. “This passive investor law becomes more important when there is lack of financial transparency. So the definition is very important.”

The bills define a “passive investor” as an individual entity that has an interest in a facility but does not participate in the decision-making or operations of the facility.

Heuchan testified in the Senate Judiciary Committee earlier in the week that the definition of passive investor — first put into statute 14 years ago — has become problematic. In the near decade since the law was passed, there has been an influx of capital in the nursing home industry from private equity firms, and owners from other states.

He said nursing home investors are buying the land where the nursing homes are being built, essentially becoming landlords. The landlords enter into contracts with providers that Heuchan said essentially dictate budgets for care and staffing, yet they cannot be sued.

ALFs are establishments that provide housing, meals and one or more personal services, for periods exceeding 24 hours, to one or more adults who are not relatives of the owner or the administrator. Residents residing in ALFs are guaranteed certain rights. There are approximately 3,000 licensed ALFs in the state today with a combined 106,000 beds.

Christine Jordan Sexton

Tallahassee-based health care reporter who focuses on health care policy and the politics behind it. Medicaid, health insurance, workers’ compensation, and business and professional regulation are just a few of the things that keep me busy.

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