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CRUNCH TIME

Florida’s assisted-living facilities, created as an option for seniors needing some help but not 24-hour medical care, appear headed for the same crisis as the nursing homes they were designed to relieve.

Insurance rates for assisted facilities suddenly are going through the roof, as carriers hedge against the high legal awards they’ve seen levied against nursing homes under Florida’s liberal patients’ rights laws. The cycle of high awards leading to skyrocketing insurance rates hit the nursing home industry only last year.

Now operators of ALFs, as they are known, are being told their premiums will quadruple, quintuple — or more, if they carry licenses allowing them to take patients with more advanced medical needs. Some companies simply won’t issue any liability policies for them.

“I don’t want to describe this as a crisis yet. But are we alarmed? Yes,” said Pete Buigas, deputy secretary of managed care and health quality for the state’s Agency for Healthcare Administration.

The agency, which regulates nursing homes and ALFs, notified 29 assisted facilities statewide recently that their licenses would be revoked if they did not show proof of insurance within 21 days. Twenty-four were in South Florida, with 20 of them in Dade County.

Tom Enright, the co-owner of an insurance brokerage firm, said last year he had 15 to 20 companies actively writing new assisted-living policies. Now he has none.

“What happened to the nursing homes is trickling down to the ALFs,” Enright said. “It’s so difficult to assess the risk, so the pricing becomes outrageous.”

Campbell Epes, owner of the 22-bed Xanadu Retirement Residence in Dania Beach, Fla., got an additional extended congregate care license six years ago so he could offer more extensive medical care and not be forced to discharge residents when they sickened.

But when he went to renew his insurance last year, Epes’ carrier told him the extended license puts him in the same risk pool as a nursing home — raising his premiums from $6,500 to $66,000 annually for the same coverage.

He opted to drop his extended license.

“It was nice for the families, but I can’t afford it,” he said.

Other owners may find themselves faced with a tougher choice: Pay the price or close down. Unlike nursing homes, assisted-living facilities must carry liability insurance in order to keep their state license.

“If this continues, I think you’ll see the small independents being shoved out of business,” said Joe Glucksman, president of the not-for-profit corporation operating the 200-bed Palm Beach Assisted Living home in West Palm Beach.

“I’m a larger facility, so I can absorb my increase,” said Glucksman. “But how can someone with six or eight beds do that, when they know they can’t get an extra nickel from residents or their families?”

While nursing homes tend to be larger and run by corporations, about 60 percent of Florida’s 2,400 ALFs have fewer than 16 beds and typically are privately run. Their residents often have little money and no family.

With Florida already reeling from record numbers of nursing homes filing for bankruptcy, state long-term care agencies fear assisted facilities will be next. And they find this especially worrisome because state officials over the past few years have encouraged shifting millions of Medicaid nursing home funds into what are called waiver programs.

Waivers pay for less costly assisted care, stretching government dollars. But participating facilities must have advanced licenses like extended congregate care — the licenses some are turning back because of the liability insurance crunch.

Preet Sahi, of Sunshine Assisted Living in Coral Springs, Fla., said she had switched carriers this fall when her original insurer raised her rates from $800 to $5,000. She ended up paying the higher rate with another company anyway.

“They all were the same amount,” said Sahi, who has six beds. “I really want the state to do something about this. My residents are on limited incomes and it’s going to be a problem.”

Enright, the insurer, said what scares insurers about assisted living is that, as with nursing homes, residents or their families can pursue civil lawsuits under a resident’s rights law rather than the stricter medical malpractice statute. An alleged rights breach could be something as basic as violating a resident’s dignity.

Suits can be filed up to four years after the incident has occurred. And neither attorney’s fees nor damages are capped, so the loser may have to pay out millions.

But while nursing home lawsuits and large awards have become routine in some parts of Florida, ALF suits still are uncommon.

Representatives from the insurance industry, the nursing home industry and the trial lawyers for once all agreed on something: the assisted-living premium hikes at this point are more anticipatory than a reaction to huge ALF settlements.

Tampa-area attorney Jim Wilkes, who has built one of the most successful nursing home litigation firms in the country, said fewer than 1 percent of his cases involve assisted-living facilities.

“The insurance companies appear to be capitalizing on hysteria,” he said. “We saw it before with medical malpractice, when they raised the rates high to offset claims that never came in. I would like to see some validity for prices.”