COVID-19 Class Actions against Aged Care Providers

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:

  • Failure to adequately plan for the control, diagnosis and treatment of the disease 
  • Improper isolation of known or suspected cases
  • Negligence
  • Breach of professional duty
  • Incorrect protocols and medical care procedures
  • Failure to act in the deceased best interest
  • Failure to provide a safe and comfortable environment
  • Inadequate use of Personal Protective Equipment 

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:

  • General (Public) Liability policy for the provider’s or its employees’ liability at common law for causing or contributing to injury to third parties. This is likely to be the main policy, which could respond to a class action against the provider. 
  • Medical Malpractice/Professional Indemnity policy for the provider’s or its employees’ negligence to provide services of a professional nature and this results in injury to the person receiving the service. Providers are considered to have a professional duty to provide care to their residents and this includes infection management and control. 
  • Directors & Officers Liability policy for the directors and officers failure to properly govern the management of the provider and avoid breach of its duty of care and legislative compliance requirements. 

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

1 https://www.health.gov.au/news/health-alerts/novel-coronavirus-2019-ncov-health-alert/coronavirus-covid-19-current-situation-and-case-numbers
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  https://www.dhhs.vic.gov.au/case-locations-and-outbreaks#aged-care-facilities
https://www.dhhs.vic.gov.au/case-locations-and-outbreaks#aged-care-facilities
https://www.health.gov.au/sites/default/files/documents/2020/09/covid-19-outbreaks-in-australian-residential-aged-care-facilities-11-september-2020.pdf

 

Image placeholder

Lyle Steffensen

National Practice Leader, Care Solutions

Marsh Pty Ltd (ABN 86 004 651 512, AFSL 238983) (“Marsh”) arrange this insurance and is not the insurer. The Discretionary Trust Arrangement is issued by the Trustee, JLT Group Services Pty Ltd (ABN 26 004 485 214, AFSL 417964) (“JGS”). JGS is part of the Marsh group of companies. Any advice in relation to the Discretionary Trust Arrangement is provided by JLT Risk Solutions Pty Ltd (ABN 69 009 098 864, AFSL 226827) which is a related entity of Marsh. The cover provided by the Discretionary Trust Arrangement is subject to the Trustee’s discretion and/or the relevant policy terms, conditions and exclusions. This website contains general information, does not take into account your individual objectives, financial situation or needs and may not suit your personal circumstances. For full details of the terms, conditions and limitations of the covers and before making any decision about whether to acquire a product, refer to the specific policy wordings and/or Product Disclosure Statements available from JLT Risk Solutions on request. Full information can be found in the JLT Risk Solutions Financial Services Guide.”