National Practice Leader, Care Solutions
It is already known that the elderly are more vulnerable to COVID-19, with the probability of hospitalisation and death increasing with age. This vulnerability, combined with the ease of transmission, has resulted in aged care facilities being an environment with a higher rate of probability and consequence should an outbreak occur. Once residents are infected, the flow on effects on staff, other residents, families and friends are significant. In the event that families believe the provider is at fault for the outbreak, it may result in a class action being brought against the provider. With 2,000 cases recorded in aged care facilities and 633 deaths (as at 21/9/2020)1 which account for over 70% of COVID deaths in Australia, the probability of class actions is increasing.
What is a class action?
A class action is a type of lawsuit in which a group of people are represented by one or small number of individuals. In Australia, the minimum number of people required for a class action is seven. These individuals must all have claims that arise out of the same or similar circumstances. In the event of a win, all plaintiffs are awarded a pro-rate payout. Employees, consumers or patients, can all bring class actions against companies.
What could cause a class action?
A class action could be filed by friends or families of residents affected by COVID-19 for the following reasons including but not limited to:
It is important to remember that while family of residents are the most likely to participate in a class action, staff can also start a class action. This is most likely to occur because of the workplace health and safety risks associated with COVID-19. Whilst there have been no employee related COVID-19 class actions to date, class actions by employees is still a significant risk to a provider.
Current Class Actions in the Aged Care Sector
There are currently two filed class actions and one investigation against aged care providers in Australia. Anglicare’s Newmarch House was the first facility to present a case for a potential class action in regards to a COVID-19 outbreak. Shine Lawyers began to investigate after 37 residents and 34 staff became infected with the virus, resulting in 19 resident deaths during their 65-day long outbreak2. It is alleged that the provider was negligent in their handling of the crisis and breached their duty of care towards the residents.
Additionally, Epping Gardens, a facility owned by Heritage Care, was the first facility to have a class action filed against them in the Supreme Court of Victoria. The outbreak resulted in over 200 confirmed cases, where 87 staff and 102 residents were infected, and of which 36 passed away3. Carbone Lawyers officially filed the action on the 14th of August and since then 30 families have joined. They are alleging that as a result of their loved ones preventable deaths, families have suffered from psychological reactions such as depression and anxiety. It is alleged that this is a direct result of the operator’s mismanagement and dereliction of duties. This mismanagement concerns the inadequate use of Personal Protective Equipment, workers entering from other facilities and failing to self-isolate and a staff gathering occurring during the period where entry to the facility was meant to be restricted.
Carbone Lawyers also filed another class action on the 20th of August against St Basils Homes for the Aged in Victoria. The Fawkner home had 94 staff and 94 resident cases, resulting in 44 deaths4. St Basils is accused of breaching their duty of care to residents, which was a contributing factor in the spread of COVID-19 throughout the facility. It is also alleged that the facility breached both state and federal regulations as they continued to operate the facility when lives were in danger. 15 families have now joined the class action stating they have suffered psychological reactions from the outbreak.
What insurance policies come into play?
The key insurance policies which may provide cover for a class action are:
Impact and Next Steps
Class actions can have a devastating impact not just financially but also for a company’s reputation. An outbreak does not necessarily result in a class action. It is crucial that aged care providers take steps to mitigate the likelihood and develop a plan in the event of COVID-19 outbreak.
With a comprehensive outbreak plan, effective communication and the following of government guidelines a facility can mitigate the probability of a class action. It is evident that this is possible as 115 facilities in Australia have had a COVID-19 outbreak of two or more positive cases5 and only 2 class actions have been filed.
An important part of the communication plan is to ensure that insurers and stakeholders are kept fully and regularly informed of outbreaks, containment measures and improvements as infections are brought under control.
If care providers continue to learn and regularly modify their response plan, and maintain communication with all identified stakeholders, it will not only assist to mitigate the risk of a class action but could potentially save lives.
Should you wish to seek further information about the risks of class actions, and how Marsh can help, please contact us here.
The information contained in this publication provides only a general overview of subjects covered, is not intended to be taken as advice regarding any individual situation and should not be relied upon as such. Insureds should consult their insurance and legal advisors regarding specific coverage issues. All insurance coverage is subject to the terms, conditions, and exclusions of the applicable individual policies. Statements concerning legal matters should be understood to be general observations based solely on our experience as insurance brokers and risk consultants and should not be relied upon as legal advice, which we are not authorised to provide. All such matters should be reviewed with your own qualified legal advisors. LCPA Approval No.: 20/302
2 https://www.health.gov.au/sites/default/files/documents/2020/08/newmarch-house-covid-19-outbreak-independent-review-newmarch-house-covid-19-outbreak-independent-review-final-report.pdf 3 https://www.dhhs.vic.gov.au/case-locations-and-outbreaks#aged-care-facilities
National Practice Leader, Care Solutions