What should we do when a demand letter arrives?

Report to the carrier immediately, through the channel the policy specifies, and keep proof. On a claims-made policy the report date is not administrative; it fixes which policy year responds, and a late report gives the carrier a defense it did not previously have.

Issue a litigation hold covering the clinical record, incident file, staffing and assignment records, video, equipment maintenance records, training files for the staff involved, and any electronic communications about the resident. Send it in writing and confirm the video retention system has been suspended, because that is the item that disappears fastest.

Do not respond to the letter. Do not call the lawyer. Do not have the administrator explain the facts to anyone outside the organization.

Assemble the record before memory degrades. Identify every staff member on duty, including agency staff, and record their contact information while you still have it, because turnover will make them unreachable within months.

Do not conduct interviews without counsel. An internal investigation conducted by management is generally discoverable; one conducted at the direction of counsel has a much better claim to protection, and the difference costs nothing to arrange in advance.

Confirm with the carrier who defense counsel will be, and confirm whether you have any right to participate in that selection. Where you control counsel inside the retention, use a firm that knows this class and this venue.

Do not alter, supplement or reorganize the clinical record. Late entries are permissible when made and dated properly, but any change made after a demand letter arrives will be characterized as fabrication regardless of intent, and electronic records carry audit trails that make the timing visible.

Do not discipline the staff involved reflexively. A termination immediately after the demand letter is read as an admission, and it also removes your most important witness and gives them a reason to be unhelpful.

Do not discuss the matter internally by email in terms you would not want read aloud. Those messages are discoverable and they are the material that converts a negligence case into a punitive one.

A demand letter is an invitation to resolve before suit, and in some cases resolving early is genuinely cheaper, particularly on an eroding limit where defense spend consumes the limit that would pay the claimant.

That decision is yours to influence if you have a consent to settle right, and not otherwise. Either way it should be made with a reserve analysis and a venue assessment in front of you, in the first sixty days, rather than drifting into litigation because nobody made a decision.