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Arbitration Records Success, Hence Under Attack

From a news release from the Aon Corp., the risk management and consulting firm, reporting the results of an annual survey of liability costs in the long-term care industry. Costs have stabilized.

The study found that average general liability and professional liability loss costs nationwide are at approximately $1,460 per bed after peaking at $2,030 per bed in 1998. This trend is driven by a reduction in the average severity of claims from a high of $261,000 in 1998 to $138,000 in 2007. In addition, the number of claims (frequency) has stabilized in recent years -- hovering around 10.6 claims per 1,000 occupied beds after rising from 6.7 claims in 1997.

Theresa W. Bourdon, managing director and actuary, credits tort reform for much of the progress, while adding: "Many other changes, including the withdrawal of some long term care facilities operators from expensive markets, more effective defense strategies, the use of arbitration for claims settlement and significant improvements in quality of care, have combined to help alleviate the liability crisis."

In April, Sens. Mel Martinez (R-FL) and Herb Kohl (D-WI) introduced S. 2838, the Fairness in Nursing Home Arbitration Act. The bill would amend the Federal Arbitration Act to ban pre-dispute arbitration agreements for nursing homes and residential care facilities, e.g., assisted living facilities. The Martinez news release is here. The American Association of Justice issued a news release upon the bill's introduction. They like it.

More at Shopfloor.org and the WSJ Law Blog.

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Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.