Nursing homes are facing rising legal risk as plaintiffs are increasing their use of AI to analyze medical records and public data. The trend is making documentation gaps more visible and influencing which nursing home-related cases law firms choose to pursue.
In 2026, skilled nursing providers will face key legal challenges tied to this shift, including heightened scrutiny of documentation and compliance, ownership transparency, and multi-defendant lawsuits involving third-party vendors. Additional pressures will come from increased False Claims Act exposure, resident monitoring and privacy concerns, state-level staffing enforcement, and expanded resident rights protections, legal experts told Skilled Nursing News.
The presence of AI is also changing the profile of those driving nursing home lawsuits, Laura Hall, partner with law firm Hall Booth Smith, told SNN. Law firms with less history and experience in the sector are now deciding to take on nursing home cases, emboldened by their ability to parse data more easily with the use of AI tools.
“They now have the tools to digest publicly available data. They can take massive records that previously were overwhelming to a firm that doesn’t necessarily handle skilled nursing work, and digest it in a more expedient way and in a more cost effective way,” said Hall. “We’re going to be seeing firms come into the space that don’t really have a history of practicing in the space.”
Given this environment, strong, consistent documentation is more critical than ever, Hall said, especially around activities of daily living (ADLs) and care delivery. That documentation is potentially getting thrown back at operators in court.
“Firms take and process medical records to find patterns that sometimes previously they weren’t necessarily investing in. It’s going to make documentation come up even more in the coming years, as plaintiff lawyers get more savvy with how AI interprets records,” said Hall. “It’s going to fine tune which cases they pursue, but it’s also going to make the gaps a little bit more glaring.”
Hall believes that operators should prioritize thorough, integrated documentation across all providers and services to mitigate risk. Ensuring clear records of communication, visits and care coordination will help with any holes in documentation exposed with AI.
Traditional cases involving falls and wounds will continue, but cases will take on a more corporate and multi-defendant character, she said, with AI introducing new and evolving surprises in litigation strategy.
Legal issues around ownership, third parties
AI is also being used to analyze public ownership data to analyze public ownership data in the sector and then pursue corporate-level claims. Hall expects this trend to grow as private equity involvement in skilled nursing grows, but ownership transparency, including Medicare revalidation data, may be misunderstood or weaponized by less experienced firms, Hall said.
“Plaintiffs’ lawyers are also going to be using AI to dig into public data on ownership and try to breach the corporate veil,” said Hall.
Chris Puri, counsel with Bradley Arant Boult Cummings, told SNN that he expects there to be a continued progression and legal attention on change of ownership transparency and overall ownership issues in the nursing home sector.
“We’ve got the impending deadline of the off-cycle revalidation rule that now has been indefinitely postponed, at least for a deadline,” said Puri. And yet, the issue remains a point of focus with lawmakers. “[H]ow do we properly vet the folks that are owning facilities?” is very much a question on their minds.
Regardless, third-party service providers to SNFs will also feel the heat. Hall said that plaintiffs are shifting strategies by naming adjacent or outsourced providers rather than focusing solely on the nursing home operator – this shift is in response to recent bankruptcies and stayed litigation, including large system restructurings.
That means litigation that names medical directors, wound care vendors, therapy providers, dietary services and other such vendors in cases mirroring “name everyone” tactics is on the rise, she said. In fact, the trend is driving more pre-suit negotiations, she added.
Hall has seen this trend in other care settings, with medical malpractice attorneys oftentimes naming everybody that set foot in the hospital operating room.
“Lawyers historically have done that. They’ve always named anybody that was involved: the nursing group, the physician, the hospital system, the surgical team, whoever sterilized the equipment,” said Hall. “But lawyers that have been focused on skilled nursing or aging services have typically focused on the operator or the provider, the management companies, not the outsourced care or services.”
Legal issues around resident monitoring, Medicaid pressures
Resident monitoring is another focus for lawyers as well as lawmakers, with questions around privacy popping up again after initial concerns five to eight years ago, Puri said. Having live feeds available of residents for safety dovetails with the backlog of surveys seen in a lot of states, Puri added, with proponents of the monitoring saying video can help when surveyors come to call.
Lawmakers have made it clear that if monitoring is allowed, it won’t be done in a surreptitious way, Puri said. People obviously need to consent to it and technology needs to be HIPPAA compliant.
“The privacy and surveillance balance is definitely a component of at least the legislation I’ve seen in a number of states on that issue,” added Puri.
Craig Conley, shareholder at law firm Baker Donelson, said that federal funding cuts and financial constraints could drive an increase in False Claims Act activity. These include lawsuits against individuals or companies that knowingly defraud the government by providing false claims for payment.
“I would not be surprised if there’s an increase to [False Claims Act cases] especially tied in with the OBBBA, and the cuts that are associated with that,” said Conley.
While changes to nursing home provider taxes were avoided in OBBBA, hospital-side funding and reimbursement mechanisms were reduced. Medicaid funding is interconnected – cuts in one area can indirectly affect non-hospital sectors, forcing states to adjust how they finance their programs, ultimately resulting in fewer dollars to nursing homes.
Staffing enforcement could move from feds to state
Greater resident rights in 2026 are another source of potential litigation, and Illinois appears to be leading the way on this front, Conley said, with a new law that was effective Jan. 1. This law expands protections against retaliation when residents file complaints, participate in hearings or engage with regulators.
Admissions practices, arbitration agreements and complaint handling is likely to be affected in states with such laws.
Overall, the sector and its governing bodies have an opportunity to rethink regulatory approaches, since the sector is still rebuilding post-Covid with states facing survey backlogs and staffing, resource constraints in oversight agencies, Puri said.
There may be a “Goldilocks” middle ground, somewhere between overly punitive assumptions or overly lax oversight, he said.
“It’s going to be interesting to see if we have the opportunity to develop a different paradigm, where, from a regulatory standpoint, oversight standpoint, both at the state and federal level, we’re working together to identify what the proper vetting is, what proper oversight is,” said Puri.
Companies featured in this article:
Baker Donelson, Bradley Arant Boult Cummings, Hall Booth Smith
