The Impact of Litigation on Nursing Home Quality

Abstract Government reports indicate that regulations have been ineffective in improving quality of care in many nursing homes. Some analysts feel that litigation against nursing homes may be the result of quality problems that are monitored dur-ing the inspection process, some contend litigation merely causes quality problems by diverting financial resources away from patient care, and some argue that litigation is duplicating the efforts of the inspection process. Given that the relationship between litigation and inspection-oriented measures of quality is not clear, this article explores the relationship empirically. When a significant relationship is found, the empirical results suggest that litigation is associated with a decline in inspection-oriented mea-sured quality in the nursing home facing the legal claim. In contrast, litigation against a chain has a very different relationship to firm-level quality, where firms within a chain that is being sued have higher levels of inspection-oriented quality. Our results suggest that legal claims may result from quality problems that go unmeasured dur-ing the inspection process. However, more research in this area is warranted. In March 1999, the U.S. General Accounting Office (GAO) released a report indicating that more than one-quarter of nursing homes nationwide had inspection violations that resulted in actual harm or placed residents at risk of death or serious injury.1 Another study by Charlene Harrington and Helen Carrillo (1999) reveals that throughout the 1990s, quality prob-lems in nursing homes persisted. The public regulatory system, implemente