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» Jury Damage Award Could Close California Healthcare Facilities – Big Government

Posted on: July 26, 2010

» Jury Damage Award Could Close California Healthcare Facilities – Big Government.

We have an out of co0ntrol torte system that MUST be fixed.  Congress can take care of this easily with restrictions on the amount of the awards and restrictions on how much the lawyers take is, but Congress is made up of lawyers.  The story below is not unusual, in fact it is played out every day as people sue companies or businesses and the jury awards cause them to simply go bankrupt and out of business.

Jury Damage Award Could Close California Healthcare Facilities

by Warner Todd Huston

When companies are found to have violated regulations that govern their industry, is it right that a jury of non-experts can award damages the amount of which will wipe the company off the face of the earth? That is a question that has been raised in a case recently decided against Skilled Healthcare LLC of California.


A class action lawsuit (lawsuit info here) brought by trial lawyers was filed late last year against Skilled Healthcare of California claiming that the company had violated state regulations that stipulates that nursing homes must maintain 3.2 nursing hours per patient, per day (ppd). The lawsuit claimed that the nursing homes operated by Skilled Healthcare often did not meet the requirement.

Interestingly, there was never any claim from any patient that they’d been harmed or put in danger. Not a single patient claimed personal injury before these lawyers began to file their class action lawsuit.

After a six-month trial the jury decided that the company did violate the rules and awarded the plaintiffs $613 million in statutory damages and $58 million in restitutionary damages.

There is a problem with this award, however. The company only has borrowing credit of $94 million. If the company were to be held to this outrageously high award it would go bankrupt and would be forced to close its doors.

Not only that but some 32,000 people — patients/residents and healthcare workers alike — would lose their heatlhcare facilities and jobs if this award were enforced.

Does this make sense?

Now, I’ve looked at many stories about this lawsuit and cannot find any claims by the State of California that Skilled Healthcare LLC was found wanting during any of the many surprise inspections of the company’s 22 healthcare facilities. I have seen no evidence from state regulators that any citations were issued or that there has been any allegations that the nursing homes in question violated any statutes.

Skilled Healthcare has reported that it has passed all inspections. That’s notable because the healthcare industry in California is almost as highly regulated as the state’s nuclear power industry.

Yet six healthcare clients from Humbolt County, CA have been allowed the status for the levy of an award so great that it will wipe the corporation of the face of the earth?

The California Association of Health Facilities agrees that this lawsuit makes no sense. James Gomez, CEO and President of the CAHF, called the whole thing “outlandish.”

The July 6, 2010 verdict against Skilled Healthcare Group Inc. and subsidiary Skilled Healthcare LLC is outlandish, excessive and extreme. The $671 million award of damages is disproportionate to the facts of the case. It’s a by-product of a series of unprecedented and erroneous rulings of law by the trial judge, and a jury that applied the flawed rulings to the maximum extent. These maximum damages were applied over a six year period to every patient in the 22 skilled nursing facilities, regardless of whether they were named in the complaint. More importantly, the allegations specifically excluded any assertion of harm.

Gomez also laments that if the judgment stands the healthcare company will be forced to close its doors causing the loss of thousands of jobs and putting the healthcare of thousands of patients in jeopardy.

And Gomez also reports that Skilled Healthcare LLC is “widely regarded as a good provider of skilled nursing care in California and elsewhere.”

The case, now concluded, is going into a mediation phase and the company hopes that the award will be lowered to one it could actually pay instead of the punitive one that they now face.

In the end this trial is evidence that this country needs some major tort reform. Here we had a company that was going about its business, and by all accounts has a good reputation in its industry yet found itself with a multi-million dollar award levied against it because of some trial lawyers that went ambulance chasing to float a class action lawsuit. And now thousands of people’s healthcare and livelihood is in jeopardy.

What are all theses elderly patients supposed to do if the company is forced to fold? And what of all the jobs lost in this, one of the worst economies in decades?

If the company was violating state regulations on the required number of nursing staff to patient ratios, then, sure, the state should force it to comply with regulations. No one would deny that fines of some sort would legitimately be part of such a finding. But this $671 million award is not corrective, it is destructive.

And what unforeseen consequences might this award have in the healthcare industry throughout California and the rest of the country? Will it drive costs up? Will it cause smaller healthcare facilities to just close up shop for fear of giant, punitive awards for minor infractions? And what other industries might next be a target of this class action feeding frenzy?

Questions that we would not be faced with were it not for an out of control tort system.


10 Responses to "» Jury Damage Award Could Close California Healthcare Facilities – Big Government"

There has to be something more to this story that hasn’t seen the light of day yet. When the company passed all state inspections, there were no complaints by patients, I find it hard to believe that a legal case was even allowed to go to court.

Something is not right here. How did the case begin? Did some lawyers just file a lawsuit without representing anyone? I mean you have to have someone who complained. This just sounds like there is a hidden agenda here. ss

I don’t know. Big Government Blog usually have their facts straight before posting. I will updater if I find more info. BB

“In the end this trial is evidence that this country needs some major tort reform. ”

Well not really. This is one story and more than likely the reward will be reduced dramatically. Unfortunately, there will be those that will take this case and exploit it to their advantage. There are plenty of stories where the middle class got screwed because of tort reform and their are many stories of people that did not sue when they should have.

Thank you for stopping by Mark.

I truly believe we need to do something about tort reform in the United States. Just in my own limited experience I tried to look back at the suits involving people I knew personally and came up with 24 cases of people suing for one reason or another. Three of these 24 are people who have used this system to IMO extort money from businesses/manufacturers. And in all of the cases the businesses settled out of court. But you and I paid that bill in higher costs.

Now if one person can count up that many cases of what I truly consider fraud because in every case there was no real damage done or it was sincerely accidental, then just how many do you think are happening daily? The public always pays!

I personally like the European system (this is one of ONLY 2 thing European I do like) In the European countries the loser must pay all expenses incurred because of the suit. Not just the award but the lawyers fees and the court fees and any “incidentals”. And in some countries the attorneys are paid a fee and the entire award is given to the person suing. This all cuts down greatly on all the suits filed because the attorneys can not take large chunks out of the awards for their services.

Something has to be done that’s all. Our court system is overwhelmed and frivolous suits are a large part of the problem. BB

By the way the other thing I like European is how their public works projects are paid for. Contractors bid for projects just as they do in the United States except that they are responsible for the costs of any delays or overruns. They also guarantee the projects viability for a given number of years so if something should go wrong or the work proves to be inferior the company has to make it right at their own expense. One doesn’t find many potholes in relatively new roads in Europe and buildings and bridges are finished on time. BB

1. In Europe your medical expenses are paid for so people would be less likely to sue for med mal.

2. We should not drive policy based on an one persons experience, mine or yours.

3. What is a frivolous lawsuit.

4. Of all the lawsuits filed in this country what percentage are frivolous?

5. I personally know of no one that has sued. I know of one person that should have sued the doctor for med mal.

6. I have great faith in the wisdom of the crowd. I have faith in the common man determining how we want to orient society.

7. What we are saying is that we can not trust the common man that is on the jury. If this is the case then why let the common man vote or participate in the market place. If we are not capable of sitting on a jury than we are not capable of deciding how we want to orient society.

The system has a lawyer for the plaintiff and a lawyer or lawyers for the defendant. There is one judge, the referee, and twelve citizens called the jury. Each side tells their story and presents their facts. When each side has completed their arguments and presented all of their facts the judge tells the jury the laws that must be applied when deciding the case. The jury then moves to deliberate the case in private amongst themselves.

It is the jury that the Republicans, the US Chamber of Commerce and big business are really complaining about, the common man, you and I. Do they not believe we are not capable of making decisions about how to live our lives, that we are not capable of governing ourselves, that we are not capable as fully informed citizens to make decisions about the conscience of our community? Is this what we believe? I would argue otherwise.

Our Founding Fathers recognized the collective wisdom and judgment of its citizens and also understood that of each of us unconsciously seeks those bits of information that confirm our underlying intuition. This is why the founding fathers gave us a system that allows for dissent. This confrontation forces us, the majority, to interrogate our own positions more seriously.

Yes, the jury system is not perfect, but neither is any institution that man creates and participates in because we ourselves are fallible. Given all of its imperfections the jury system is a microcosm of the very Democracy that men and woman have died for through our history. Yes, again I will say the jury system is not perfect but it is ours.

• A jury is made up of local citizens who are in the best position to evaluate how the conduct at issue compares with the standards of the community in which they live.
• The jury system is spontaneous, it is not known in advance preventing any undue influence on the members of the jury.
• Jurors are not paid by either side.
• Jurors complete their service and return to their private lives when the trial has ended. Judges are often on the bench for many years leaving them vulnerable to influence.
• While it may be easy to find one judge that is out of touch with the community, it is much harder to find a jury of citizens that will come to an outrageous result.

So I ask you, what other place is there to better discover the truth? What other institution in this country does the common man have access to then a court out his backdoor?

The Founding fathers wanted to create a framework that would allow society to orient itself through dictates of conscience. This framework forces each of us into a communal process of finding the truth, an approach to truth that is experienced. An approach to truth that is more than dogmatic belief or a truth inferred from logical arguments. Are these principles and values something that we truly believe in our hearts as the best approach to society?

America is a nation formed by a set of ideals. America is composed of ideas of freedom, liberty, independent thought, independent conscience, self-reliance, hard work, and above all justice. It is a country that was formed from the injustices thrust upon the people and yet we want to deny ourselves the opportunity to seek justice, to seek the truth.

That is the strength of our Democracy, the people and our access to the courts out our backdoors. The ultimate power of the people can be found as close as the nearest court house. If our laws start to deny society this process of truth then the law is in danger of becoming no less a tyrant. Our founding fathers understood this which is why they gave us this tool of Democracy, the jury system. Are we to deny the wisdom of our fathers?

I believe in the common man and his ability to serve on juries to render judgment. When we start to question that than we might as well burn the constitution.

I currently have filed a wrongful death case against a large corporation in the death of my sixteen year old son. Trust me when I say that tort laws are already stacked against the small guy.

If I lose the case I could be held accountable for over a quarter million in expenses. That is the price I would have to pay to discover the truth of my son’s death. If I win the case it will definitely be appealed for years. Do I have this kind of money, no.

How do I discover the truth about my son’s death? Should I not pursue the lawsuit and assume that this large international corporation did not wrong, did not cover anything up?

Mark, I am well aware of the Constitutional mandates concerning trial by jury. I don’t believe the Founding Fathers expected to see it being abused as it is now by all concerned. I have seen cases where real damage have been done and in these cases damages should most certainly be awarded and the guilty punished. I am also unfortunately too aware of unscrupulous people and lawyers. All I say is that awards should be set at some “reasonable” level of compensation for damages done. And attorneys fees should not be allowed to be a portion of these damages, but only their set fees that the person awarded may of course use his award to pay. Class action suits are the most lucrative for attorneys and that is why they are advertised by attorneys on TV. The only ones who win in law suits are the lawyers no matter how honest the claim for damages.

I am sorry to hear of your sons death. I have no idea how awful it must be to lose a child, but can think of nothing on earth being worse or harder to endure. Sincerely, Brenda Bowers

Are what you trying to tell me is that people were more honest back then? I hardly doubt that was the case.

Again I will ask you what percentage of all lawsuits are frivolous?

Of all the jury awards in this country what percentage are grossly out of hand?

What is the average annual income of trial attorneys?

Let’s take the recent debate in congress about capping pain and suffering awards at 250,000. What is the average cost is for discovery in this country?

If that average cost is 250,000 then what attorney in their right mind is going to take a case if they are not able to recover their cost?

It is real easy to read about those outrageous cases because those are the ones that get the headlines. Those are the ones that bring the people in that sell the advertising.

You never hear about the cases where a woman had both of her breasts removed because a lab mixed up her results with a woman that did have breast cancer. She was only able to recover $250,000 minus the cost of going to court. Why because their are no long term health issues and she is able to work with no disabilities.

What attorney would take this woman’s case if the Republicans were to pass a $250,000 cap on pain and suffering when the attorney would not be able to recover his court costs.

Hear is a federal rule that most people are not aware of. In Minnesota settlement mediation is required before you proceed to court.

A Quick Example First. By way of example, let’s say a defendant knows she has some liability and wants to settle the case before she spends too much more in legal fees. She offers the plaintiff a $20,000 judgment under Rule 68. The plaintiff, eager to hear the Court’s ruling on an important motion 11 days away, allows the offer to lapse. A year later the plaintiff prevails in court, winning a judgment of $18,000. Since the plaintiff failed to beat the defendant’s Rule 68 offer of $20,000, the plaintiff must pay the defendant her court costs. If in this case court costs totaled $7,000, which wouldn’t be unreasonable for a small case, the plaintiff would only recover $11,000 from the defendant.

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