by Sean McManus
Staff Writer
There is a feeling among the people who live in downtown’s Cathedral Residences that they’ve got it pretty good. That’s why when Theresa Bertram, chief executive of the Cathedral Foundation, called everyone together two weeks ago to tell them they’re rent is increasing about 30 percent to defray the cost of an astronomical insurance increase, the reaction wasn’t panic, just a collective disgruntled sigh.
The Cathedral Foundation, which operates three towers and one low rise apartment building downtown has found itself in the middle of a crisis in property, casualty and professional liability insurance that is affecting Florida eldercare in a major way.
According to Jim Black, a vice president at Bowditch Insurance who has been serving as a consultant to the Foundation, Bertram and the 800 seniors who live in the Residences are thankful they have any insurance.
“Premiums for professional liability insurance have gone up almost five times from last year,” said Black, who noted that the insurance crisis in Florida has been ongoing for about two years. “Frankly, we’re lucky to have gotten it at all.”
Black said nursing home lawsuits all over the state are making it prohibitive for insurance companies to offer policies for that industry. And the problem, he continued, is that because lawyers have exhausted the resources of nursing homes, any organization that provides services to the elderly are coming under the gun.
He said the situation has gotten so bad that insurance companies are charging more money to provide coverage than the policies are actually worth.
“Basically, they’ll sell you $250,000 worth of coverage for $800,000,” said Black. “People who take care of the elderly can’t afford that. It’s completely out of control.”
The State requires that organizations such as the Cathedral Foundation have at least $50,000 in property and general liability insurance, which the Foundation has, but is paying $65,000 for.
After much nail biting, Black and others finally negotiated the coverage for property and general liability from New York-based Church Insurance, which provides coverage for non-profits. The professional liability is being offered by a company called Essex.
“When we took the Foundation out on the market we didn’t think anyone would cover us,” said Black. “Insurance is supposed to help you sleep at night and we weren’t sleeping.”
Black says other factors, in addition to increased lawsuits, have contributed to the steep increase in insurance coverage. For one, high rises in general, of which the Foundation has three, have drawn the attention of insurers since Sept. 11. And of course there is the fact that any time you are dealing with an aging population, the risks are greater.
“My greatest fear is that these kinds of places won’t exist any more,” said Black. “Then what am I going to do with my parents when they get too old to take care of themselves?”
Eighty percent of the elderly population at Cathedral Residences are on some kind of assistance from the Department of Housing and Urban Development. As long as Bertram and the leadership of the Foundation are able to convince HUD to step up the funding — considering the circumstances — then they should be safe. And that may not happen.
It is the other 20 percent, the ones who pay market price, who will have to drastically reengineer their lifestyles to accommodate their new rent, which will be about $180 more a month.
“When we heard about the increase at the last Resident Council meeting we were pretty upset,” said Nancy Ragsdale, Council president of the Cathedral Townhouse and a retired nurse. “If we have to pay this out of our own pocket then we won’t be able to afford stuff like groceries and medicine.”
All of the residents interviewed for this story like living in the Cathedral Residences, calling it a big family and saying that they don’t want to leave. Some, like Ruth Wheaton, who recently moved from New York, said that the rent at the Cathedral Residences is still low compared to the rent up North.
“It could go up 50 percent and it would still be a good deal,” she said.
Talmadge and Wylene Parr, who live in the Cathedral Townhouse, said that if all nursing homes and eldercare facilities treated their residents the way they are treated at the Cathedral Residences, then Florida wouldn’t be having this problem.
“Everything was explained to us and we are confident that there are good reasons why our rent is going up,” said Wylene Parr. “We may have to do less shopping, but we are confident that everything will work out in the long run.” According to several residents, they have been encouraged to write their representatives in Congress and lobby for reform.
“There has been some tort reform but not enough to discourage these lawsuits,” said Brian Keith, head of human resources for the Foundation. “We’re not alone. Physicians can’t find medical malpractice insurance and workers comp is through the roof.”
Keith, whose role at the Foundation has grown to include insurance liaison since the end of last year when the increases were announced, said insurance accounts for the biggest part of its overall budget — more than payroll and more than financing.
“We will do everything we can to mitigate this,” said Keith. “But if we want to keep the level of quality high, it’s going to be tough.”
For now, the Cathedral Foundation is insured, although with less coverage that is costing more money.
The organization, which runs Meals on Wheels and other services for the poor and elderly, is being punished by a system that pays for the abuses of a few and the greed of many.
“I’m 33 years old,” said Keith. “If it’s like this now, what’s it going to be like in another 33 years? I can’t imagine.”