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Jury awards $640 million for understaffed nursing homes

California Watch
By Christina Jewett
June 7, 2010

A Humboldt County jury called on an Orange County-based nursing home firm yesterday to pay $640 million in a class action lawsuit that alleged understaffing, likely handing down the largest such financial blow of its kind in the state.

Michael Thamer, a Callahan, Calif. attorney, said in an interview that the statutory damages are meant to refund care for each patient on each day the Skilled Healthcare Group's 22 California nursing homes failed to meet state staffing minimums. A 2000 state law determined that nursing homes must provide 3 hours and 12 minutes of direct care per day to each patient.

The trial began in January and continued for six and a half months. It will continue as a judge decides whether to grant an injunction to trial attorneys and Humboldt County's district attorney, who are seeking a demand that the firm stop operating with fewer staff than mandated by the state.

Thamer said the jury determined that the chain had engaged in "oppression, fraud or malice" in violating state staffing standards. He said the case was meant to underscore the importance of following state nursing home staffing laws, "because the consequences are so profound when they are not."

Patricia McGinnis, executive director of the California Advocates for Nursing Home Reform, said she had never heard of such a substantial jury award in a nursing home case.

"It's not a verdict, it's a statement," she said. "If you're getting paid to provide the care, you've got to provide it."

A call to Skilled Healthcare Group's chief counsel, Kippy Wroten, was not returned yesterday afternoon. In the company's annual report filed with the Securities and Exchange Commission in May, it said it "continues to zealously defend against plaintiffs' claims, but cannot predict the outcome of the claims nor estimate the amount of damages that could be assessed in the event of an adverse outcome …"

The Times-Standard newspaper covered closing arguments in the trial and documented some of Wroten's final remarks:

Wroten again questioned the formula used to translate nursing hours into patient care, saying that there were only a handful of days in which the facilities being sued operated under the 3.2 nursing hours per-patient per-day standard in California.

"They don't walk into work every day and say, 'Let's provide adequate care,'" Wroten said, pointing to the nurses in attendance for the final day of arguments. "They walk in and say, 'Let's provide the best, most loving care we can.'"

The company reported to investors that it owns 100 nursing homes and assisted living facilities in California, Nevada, Texas and other states. The company earned about two-thirds of its revenue last year from Medicare and Medicaid, its annual report says.

Thamer, one of the plaintiff's attorneys, said he and other lawyers succeeded in getting 250,000 pages of internal company e-mails, some of which were used as evidence in the case. He said one administrator told corporate that understaffing was "playing with fire."

Thamer said testimony in the case revealed that understaffing resulted in patients being forced to make difficult decisions over whether to keep quiet about soiling undergarments or seek to have their briefs changed. Because staff frequently did not have time to return residents to street clothes and put them in wheelchairs, requesting for a change of underwear typically meant being left bedridden until the next day.

"That would happen over and over," Thamer said.

Other attorneys representing the 32,000 current or former residents in the class are Christopher Healey of San Diego and Tim Needham and Michael Crowley of Eureka, Calif. Humboldt District Attorney Paul Gallegos also worked on the case.

California Watch reported in April that nursing homes saw an $880 million increase in reimbursement from 2004 to 2008, even as scores of homes trimmed staffing levels.

Weeks later, state officials announced plans to add quality and accountability measures to the new version of the law authorizing pay hikes.

The latest plan would direct public health workers to conduct payroll audits to determine staffing at nursing homes. They would be fined $15,000 if they are understaffed on 5 to 49 percent of audited days and $30,000 if they are understaffed on half or more, according to Department of Health Care Services' records.

A final version of the plan is expected to be written into the state budget when it is completed.