In the senior living industry, the average expenses for handling and resolving a claim are approximately $44,000 according to an Oliver Wyman Study. With the industry facing numerous lawsuits, this amount can accumulate and lead to significant financial exposure for operators, potentially reaching millions of dollars annually. Managing these expenses is crucial in minimizing the overall severity of claims and achieving better outcomes.
There are two financial aspects to a senior living professional liability claim: indemnity and expenses. Indemnity refers to the amount of liability and damages the claim is worth, which can be paid through settlement or a trial verdict. On the other hand, expenses are the costs incurred for defense counsel, experts, and mediators to handle the litigation and resolution of the case. In most senior living cases, the indemnity amount is relatively fixed, determined by the damages and defensibility of the claim. However, expenses are not fixed and can be controlled through decisions such as choosing a defense attorney and strategizing the case resolution.
To determine if you have an expense spend challenge with your claims, follow this simple step: analyze your historical claim data and calculate the average expense spend on closed claims where the indemnity is over $5,000. This will provide a clear apples-to-apples comparison with the baseline data from the Oliver Wyman study.
Once you are ready to address the issue, it’s important to set a goal and create a plan for change. Start by identifying the reasons behind your expense problem and make the necessary adjustments. Here are a few ideas to consider:
- Choose your attorney partners wisely. While larger firms may have extensive trial and litigation experience, they may not be as nimble. Look for counsel who can manage litigation in a pragmatic way, understanding that not every motion needs to be filed and not every witness needs to be deposed.
- Establish and distribute clear and concise litigation guidelines to your defense attorney partners. Set specific rules for how you expect them to handle different aspects of your cases. Ensure that your communication expectations are clear and adjust invoices accordingly for any work done outside of your guidelines. By having clear guidelines and mutual understanding, you can minimize billing adjustments each month, benefiting both you and your partners.
- Act swiftly to obtain necessary evidence. Work with your attorneys to obtain necessary records, evaluate damages and liability within 90 days, and establish a plan towards resolution. Acting swiftly not only saves on expenses but can also have a significant impact on indemnity. Many plaintiff attorneys are willing to offer discounts for early case resolution, as they too can save on expenses.
To learn more about our claim resolution strategies for your senior living community, check out our TPA Services.
