The state does not require operators of residential care homes to carry commercial liability insurance, exposing yet another gap in the safety net for vulnerable seniors in Hawai'i's long-term-care system.

Some industry officials believe as many as half the roughly 500 licensed care homes in Hawai'i don't carry liability insurance, though no one has reliable data on that.

The percentage probably is much greater among Hawai'i's unlicensed care homes, which industry leaders estimate number anywhere from a few dozen to close to 500.

"It's definitely a problem and a way for providers to evade responsibility for poor care," said Eric Carlson, an attorney specializing in long-term care issues for the National Senior Citizens Law Center in Los Angeles. "Worse than that, it leaves residents in a very vulnerable position."

Liability insurance protects the insured from claims made by others who suffer injury at the business. The breadth of coverage can vary significantly depending on the terms of the policy. But it also provides an avenue for the injured person to seek redress, particularly if the harm is caused by a hazard at the home or negligence.

If the business is run out of one's home, regular homeowner's insurance usually doesn't provide such coverage.

Without liability insurance, an injured senior would have no recourse to pursue a claim — short of suing the caregiver, a costly and time-consuming process.

Some liken the coverage gap to physicians practicing without malpractice insurance or motorists driving without auto insurance. But because care-home residents are so frail, which would magnify the effects of any injury, the potential for uncompensated pain and suffering is greater and the ultimate cost of the medical care could pass to taxpayers, senior advocates say.

"I'm stunned," said Jim Pietsch, head of the University of Hawai'i's elder law program. "You would think the state would require this."

The insurance gap adds to the portrait of a troubled long-term care system detailed last week in a four-part Advertiser series. The stories identified numerous problems, including a patient-placement process tainted by kickbacks and oversight flaws that compromise the safety net for seniors.

The insurance issue also underscores another problem detailed in the series: a dual state regulatory system that often produces inconsistent results.

MEDICAID CLIENTS

While the Department of Health does not mandate that care homes purchase liability insurance, the Department of Human Services, which regulates about 1,000 adult foster homes in Hawai'i, requires such coverage as part of its Medicaid program. Foster homes, which take up to three clients, are designed to care for nursing-home level cases and must have at least one Medicaid patient.

Care homes are designed for less intensive cases and usually are not eligible to take Medicaid clients. But so-called expanded care homes, which can take Medicaid clients, must have liability insurance if they accept them, industry officials said.

Some leaders in the care-home sector believe liability coverage should be mandatory for the entire sector because such insurance is essential to operate a sound business, providing protection for caregivers as well as clients.

"I would not even open up a care home without liability insurance," said Myriam Tabaniag, owner of two care homes and president of the Alliance of Residential Care Administrators, an industry trade group.

Mandating basic coverage also would nullify the unfair advantage care-home operators without insurance have over all the others, according to Medy De Lara, president-elect of the alliance and a care-home owner for 24 years.

A bare-bones policy costs less than $700 per year for an entire facility, but more comprehensive ones have annual pricetags of $5,000 to $7,000 per bed, industry officials say.

The lack of coverage, they note, is much more prevalent among unlicensed care homes, which De Lara estimated number as many as 500. Others say the unlicensed total is significantly less than that.

Whatever the number, operators who don't bother to comply with state licensing requirements are unlikely to purchase liability coverage, De Lara and others said.

"Our concern is all these unlicensed care homes," she said. "It's a problem."

NO GUARANTEES

Just because a care home has coverage, however, doesn't guarantee high quality care.

'Aiea resident Glenn Nishida recalled that his late mother lost a tooth, suffered bed sores, had bruises and lost significant weight because of negligent care at a Waipahu care home in 2006. The state confirmed the negligence and shut down the home in 2007, Nishida said.

After Nishida's lawyer contacted the care-home operator about pursing a negligence claim, her liability insurance carrier paid $20,000 to settle the case, Nishida said.

"It should be required of all care-home operators," he said of the insurance.

Ron Gallegos, a caregiver advocate and former alliance president, noted that many older-generation Filipinas who run care homes don't buy insurance — despite industry training sessions stressing its importance — because they generally lack business savvy.

Many started caregiving businesses so they could stay home to raise their kids while earning money, Gallegos said.

"Most of them are just good, loving, caring people who also are good with elders," he said. "But they aren't business-minded."

Keith Ridley, chief of the Health Department's Office of Health Care Assurance, which oversees care homes, said he was unaware facilities were not required to purchase liability insurance until contacted by Mānoa resident Steve Lane last week.

Lane said he inquired after reading The Advertiser's series and wondering whether a care home where a family member was staying had liability coverage.

Ridley said he plans to discuss with industry representatives and others whether coverage should become mandatory. He noted, however, that care homes already are subject to various regulations designed to keep clients safe, including health and work-place safety rules.

Hawai'i is not the only state without a liability requirement for care homes.

Oregon, for instance, does not require liability insurance for homes with five or fewer residents, a state spokeswoman said, but facilities with six or more that take Medicaid patients must have coverage.

In Washington state, all facilities that take Medicaid clients are required to have liability insurance, a spokeswoman said.

Hawai'i legislators have discussed the issue of gaps in liability coverage before.

In 2003, House members proposed establishing a state fund to assist care-home operators in purchasing liability insurance. But the proposal died for lack of support.

CORRECTION: Keith Ridley of the Department of Health, which oversees care homes, was aware that the agency’s rules didn’t include language that would require care homes to carry liability insurance. He was inaccurately quoted on the issue in a previous version of this story.