The 2014 Florida Legislature has passed Senate Bill 670 which will significantly change existing law by making it more difficult for plaintiffs to bring claims against Florida nursing homes for damages suffered by residents as a result of nursing home negligence.  The bill also makes it easier for family members of nursing home residents to obtain the resident’s medical records, and it gives the Florida Agency for Health Care Administration (AHCA), the state agency that licenses nursing homes, the ability to impose licensure sanctions against a nursing home that loses a negligence lawsuit and fails to pay a final judgment against it within sixty days.

Senate Bill 670, if signed into law by Governor Rick Scott, will amend the statutes governing litigation against nursing homes because of the death or personal injury of a resident due to the home’s negligence in the following ways:

• Section 400.023 of the Florida Statutes currently gives a resident of a nursing home a cause of action if the resident’s statutory rights as set forth in Chapter 400 of the Florida Statutes are violated.  However, this cause of action is not exclusive, and the resident can also base a lawsuit on common law remedies such as negligence.  Senate Bill 670 amends Section 400.023 to make it the exclusive remedy for a cause of action against a nursing home, its managing employees, and its management company for the recovery of damages due to the personal injury or death of the nursing home resident arising out of negligence or a violation of the resident’s statutory rights.

• In several recent cases the owner of a Florida nursing home who was not involved in its management was found liable for substantial damages when the home was negligent and caused a resident’s personal injury or death.  Under Senate Bill 670 a passive investor in a nursing home will not have any liability for damages due to a resident’s personal injury or death arising out of negligence or a violation of the resident’s statutory rights.  A passive investor is defined in the bill as an individual or entity that does not participate in the decision-making or operation of the facility.  For example, a real estate investment trust (REIT) that invests in a nursing home will be shielded from any liability for damages as a result of the nursing home’s negligence.

• Senate Bill 670 also amends the Florida Statutes to significantly restrict the ability of a plaintiff with a cause of action against a nursing home for negligence to claim punitive damages.  If the plaintiff desires to claim punitive damages, the bill requires the court to conduct a pre-trial evidentiary hearing to determine whether there is sufficient evidence that there is a reasonable basis to believe that the claimant can show at trial, by clear and convincing evidence, that the recovery of punitive damages is warranted.  Under the current nursing home statute, a defendant can be found liable for punitive damages if the defendant is “personally guilty of intentional misconduct or gross negligence.”  Senate Bill 670 imposes a higher standard, and to be liable for punitive damages the defendant must have “actively and knowingly participated in intentional misconduct or gross negligence that contributed to the resident’s damages.”

Senate Bill 670 also provides that when there is an adverse judgment against a nursing home arising from a court award, arbitration award or a settlement agreement relating to a claim of negligence or the violation of a resident’s statutory rights, the nursing home must pay the entire amount of the judgment plus all accrued interest within sixty days of the judgment becoming final.  Otherwise, AHCA may suspend the nursing home’s license, deny a license renewal application, or deny a change of ownership application.

In 2013 the United States Court of Appeals for the Eleventh Circuit ruled that Section 400.145 of the Florida Statues, which governs the disclosure of nursing home residents’ medical records, violated the Health Insurance Portability and Accountability Act of 1996 (HIPAA) because it did not require a HIPAA compliant authorization for the disclosure and allowed the records of a deceased resident to be disclosed to unauthorized individuals.  In its opinion the Court of Appeals stated that it was confident that the Florida Legislature would bring this statute into HIPAA compliance.  The Florida Legislature took up this challenge, and Senate Bill 670 amends Section 400.145 to comply with HIPAA.  As amended, that statute will require a written request for the medical records that complies with HIPAA, and it identifies to whom and under what circumstances medical records of a deceased nursing home resident may be released.  A nursing home that relies on this statute and releases a resident’s medical records in good faith is granted immunity from civil or criminal liability.

If Senate Bill 670 becomes law, Florida nursing homes and their passive investors will face less litigation exposure.  As a result, the premiums for nursing home liability insurance coverage should decrease and passive investors, such as REITs, will be more likely to invest in Florida nursing homes.

As a final note, Senate Bill 670 did not amend the parallel statutes governing Florida assisted living facilities with regard to their exposure to common law claims, punitive damages, and the liability of passive investors when there is a claim for damages suffered by an ALF resident as a result of the facility’s negligence.