It has been reported that nursing homes are filing for bankruptcy in larger numbers recently. There has also been a significant increase in lawsuits against nursing homes claiming abuse and neglect, and in addition to the typical nursing home injuries, a great many of the lawsuits against nursing homes have claimed wrongful death. The nursing homes generally blame the fact that they have been faced with a wave of lawsuits and a related rise in liability insurance rates, coupled with low Medicare reimbursements for services, on the increase in bankruptcies.
Lawsuits and the ability to recover for damages are normally only affected if a bankrupt nursing home has no insurance. Otherwise, the insurance company is the party that pays for the litigation and the award or settlement in a case that is brought against the insured nursing home. The solvency of an insured nursing home is not related to the ability to file suit and collect damages.
If a nursing home has not paid for insurance and does not have the resources to pay a claim, you will have a very difficult time collecting the full value of an award for damages. If a nursing home is in bankruptcy and you have a judgment against it, you might have to settle for pennies on the dollar, as one of many creditors the nursing home has. If the nursing home in insolvent at the time you bring your lawsuit, it might not even have the resources to respond to your claim, resulting in a judgment by default in your favor and against the nursing home. In any situation where a nursing home is in bankruptcy or close to it and is uninsured, you risk gaining little or nothing in a lawsuit.
Of course, there are larger issues with an insolvent nursing home, such as making sure it can afford the staff and resources to care for patients properly in the first place. It is important to monitor the care that a loved one is receiving and look for any indications that large cuts in staff or facilities is not leading to undue risks to your family member. If you are concerned about the financial stability of a particular nursing home, it is best to contact a nursing home attorney to find out how you can measure the risks versus the advantages of keeping your loved one at that nursing home.