Nursing home operator ordered to pay $43.5 million in wrongful death lawsuit

By Péralte C. Paul, The Atlanta Journal-Constitution

September 3, 2010

A Georgia jury Friday ordered a Sandy Springs lawyer and nursing home operator to pay $43.5 million in a wrongful death lawsuit.

The payment is to go to the estate of a man whose family said negligent care led to his death at a Rome nursing facility that had been cited for repeated state and federal violations.

Attorneys for the plaintiff said the verdict against George D. Houser is believed to be among the highest in state history against a nursing home operator.

Earlier this week, Houser, 62, filed for bankruptcy protection, listing total assets of between $20 million and $100 million.

The verdict is not the end of his legal troubles.

Houser, who operated Forum Group Corp. and its subsidiary, Forum Group at Moran Lake Nursing Home and Rehabilitation Center in Rome, faces federal charges filed in April in which he is accused of bilking the Medicare and Medicaid programs of more than $30 million.

According to the federal indictment — in which his wife, Rhonda Washington Houser, 46, also is charged — those Medicare and Medicaid payments were supposed to go toward care of residents at Houser’s three nursing homes.

Instead, federal prosecutors allege the Housers funneled the money to purchase luxury cars and real estate, including a $1.3 million Atlanta home for George Houser’s ex-wife.

No trial date has been set for the federal case, said Patrick Crosby, a spokesman for the U.S. Attorney’s office in Atlanta. Houser’s attorney in that case, Christopher P. Twyman, did not return a telephone call seeking comment.

Houser is a Harvard Law School graduate and attorney admitted to practice law in Georgia in 1972, according to the State Bar of Georgia’s website.

He represented himself in the three-day wrongful death trial, which was heard in Floyd County Superior Court in Rome. He could not be reached for comment because after the verdict he was immediately taken to the county jail on a contempt of court charge. He was ordered to spend 48 hours in jail.

No one appeared to be home at his Hammond Drive N.E. residence in Sandy Springs.

In the 52-page wrongful death complaint, filed in March of last year, Loretta Terhune, whose 80-year-old father, Morris Ellison, died April 17, 2007, charged the nursing home failed to provide adequate care.

Her father, who was admitted to the facility a year earlier, fell numerous times, breaking his hip in one instance, according to the lawsuit. The nursing home also did not notify Ellison’s doctors or family of his injuries.

“Mr. Houser, through his companies, systematically drained the money and resources from his nursing homes [and] caused all sorts of shortages of food, water and medicine and basic supplies,” said Stephen G. Lowry, one of Terhune’s two attorneys. “He was severely neglected at the time of his death, malnourished and severely dehydrated.”

At trial, a nursing home director testified the facility lacked the funds to pay its staff, do laundry and pay bills.

The Georgia Department of Human Resources’ Office of Regulatory Services conducted numerous inspections of the facility over several years. The agency closed it and terminated all federal funding after a May 23, 2007, inspection found “Moran Lake’s deficiencies constituted violations of state and federal regulations, nursing home regulations, Georgia state health regulations, and National Fire Protection Association Life Safety Code Standards.”

Moran Lake since has resumed operations under a different management company.

Staff writers Katie Leslie and Dan Raley contributed to this article.

INDIANA JUDGES ASSOCIATION ANNOUNCES PLAIN ENGLISH CIVIL JURY INSTRUCTIONS AVAILABLE ON LEXISNEXIS

The Indiana Model Civil Jury Instructions, written in plain English, are now available through LexisNexis. The new instructions were prepared by the Civil Instructions Committee of the Indiana Judges Association (IJA). The IJA is a voluntary association of judges and magistrates created to put forth a coordinated effort toward better and simpler administration of justice and clearer, more uniform procedures in all courts. IJA President, Floyd Circuit Court Judge J. Terrence Cody explained, “The Judges Association is proud to complete this project for Indiana judges and attorneys. It benefits citizens who serve on juries and ultimately our judicial system as a whole because the new instructions are easier to understand.”

With encouragement from Chief Justice Randall T. Shepard and support from LexisNexis, the Civil Instructions Committee hired Elizabeth Francis, PhD who is a Professor of English and Judicial Studies at the University of Nevada at Reno. Dr. Francis is an expert in teaching plain English principles. Plain English involves using the simplest, most straightforward way to express an idea to increase comprehension, compliance, and satisfaction with the jury process. The Committee acknowledges that the new instructions are part of an ongoing process toward increased clarity, while still maintaining the legal meanings of the words used in the instructions.

An example of how the new instructions are clearer can be seen in the instruction on direct and circumstantial evidence. The old instruction used complex terms like “inference,” and “deduction,” and stated, “Circumstantial evidence means evidence that proves a fact from which an inference of the existence of another fact may be drawn. An inference is a deduction of fact that may logically and reasonably be drawn from another fact or group of facts.”

The new instruction uses plainer terms, stating in part, “Circumstantial evidence is indirect proof of a fact.” The new instruction then gives an illustration: “For example, direct evidence that an animal ran in the snow might be the testimony of someone who actually saw the animal run in the snow. On the other hand, circumstantial evidence that an animal ran in the snow might be the testimony of someone who only saw the animal’s tracks in the snow.”

To ease the transition between the old and new editions of the instructions, the Committee also created a disposition table to inform users of the new location of material from the old edition (and a derivation table to detail the origin of the material in each new instruction). Those tables can be found under “Publication Information” in the new online edition.

In January, Chief Justice Randall T. Shepard mentioned the instructions in the State of the Judiciary address. Attendees erupted into applause when he explained the project was underway to create easy to understand instructions. “Trial by a jury of our peers is one of the most precious rights we possess as Americans,” said Chief Justice Shepard. “Giving the citizens who serve on juries the clearest possible instructions about the law that applies to individual cases is crucial to helping them do justice.” The new plain English civil jury instructions, which are now available online at Lexis.com, are the next step in Indiana’s cutting-edge efforts to assist Hoosier jurors in understanding the issues, evidence, and trial process.
John Pera, Judge of the Lake County Superior Court and Chair of the Civil Instructions Committee stated, “Our work would not have been possible without the leadership of the Justices of the Indiana Supreme Court, and in particular Chief Justice Shepard. Projects like this don’t happen without a vision that we can always do things better and leadership from the top to nurture that vision into reality. It was the Court that started us down the path of jury reform thirteen years ago. We hope that lawyers, judges, and jurors will find these instructions to be a much clearer, understandable statement of the law of Indiana and what jurors are supposed to do with it.”

Jury instructions tell the jury about relevant laws that should guide its deliberations. In giving the instructions, the judge states the issues in the case and defines terms that may be unfamiliar to jurors. A judge’s use of the plain English instructions is discretionary. Judges may elect to use the model instructions because they provide a guide prepared by a committee of judges who have carefully considered the subject matter of each instruction. A lawyer may request the judge give certain instructions. For example, lawyers sometimes create their own proposed instructions if no models fit the case. The judge makes the final decision on which instructions are given.

The Indiana Judges Association publishes the instructions only through LexisNexis, making them available to those with a Lexis.com subscription. In late August or early September the instructions will also be available in book format to Lexis subscribers and at law libraries that carry the book, such as the Indiana Supreme Court library. The Indiana Judicial Center will present two educational sessions for judges and judicial officers in Indianapolis in September, and the Indiana Judges Association will present seven continuing legal education sessions for attorneys around Indiana in October.
INDIANA JUDGES ASSOCIATION ANNOUNCES PLAIN ENGLISH CIVIL JURY INSTRUCTIONS AVAILABLE ON LEXISNEXIS

The Indiana Model Civil Jury Instructions, written in plain English, are now available through LexisNexis. The new instructions were prepared by the Civil Instructions Committee of the Indiana Judges Association (IJA). The IJA is a voluntary association of judges and magistrates created to put forth a coordinated effort toward better and simpler administration of justice and clearer, more uniform procedures in all courts. IJA President, Floyd Circuit Court Judge J. Terrence Cody explained, “The Judges Association is proud to complete this project for Indiana judges and attorneys. It benefits citizens who serve on juries and ultimately our judicial system as a whole because the new instructions are easier to understand.”

With encouragement from Chief Justice Randall T. Shepard and support from LexisNexis, the Civil Instructions Committee hired Elizabeth Francis, PhD who is a Professor of English and Judicial Studies at the University of Nevada at Reno. Dr. Francis is an expert in teaching plain English principles. Plain English involves using the simplest, most straightforward way to express an idea to increase comprehension, compliance, and satisfaction with the jury process. The Committee acknowledges that the new instructions are part of an ongoing process toward increased clarity, while still maintaining the legal meanings of the words used in the instructions.

An example of how the new instructions are clearer can be seen in the instruction on direct and circumstantial evidence. The old instruction used complex terms like “inference,” and “deduction,” and stated, “Circumstantial evidence means evidence that proves a fact from which an inference of the existence of another fact may be drawn. An inference is a deduction of fact that may logically and reasonably be drawn from another fact or group of facts.”

The new instruction uses plainer terms, stating in part, “Circumstantial evidence is indirect proof of a fact.” The new instruction then gives an illustration: “For example, direct evidence that an animal ran in the snow might be the testimony of someone who actually saw the animal run in the snow. On the other hand, circumstantial evidence that an animal ran in the snow might be the testimony of someone who only saw the animal’s tracks in the snow.”

To ease the transition between the old and new editions of the instructions, the Committee also created a disposition table to inform users of the new location of material from the old edition (and a derivation table to detail the origin of the material in each new instruction). Those tables can be found under “Publication Information” in the new online edition.

In January, Chief Justice Randall T. Shepard mentioned the instructions in the State of the Judiciary address. Attendees erupted into applause when he explained the project was underway to create easy to understand instructions. “Trial by a jury of our peers is one of the most precious rights we possess as Americans,” said Chief Justice Shepard. “Giving the citizens who serve on juries the clearest possible instructions about the law that applies to individual cases is crucial to helping them do justice.” The new plain English civil jury instructions, which are now available online at Lexis.com, are the next step in Indiana’s cutting-edge efforts to assist Hoosier jurors in understanding the issues, evidence, and trial process.
John Pera, Judge of the Lake County Superior Court and Chair of the Civil Instructions Committee stated, “Our work would not have been possible without the leadership of the Justices of the Indiana Supreme Court, and in particular Chief Justice Shepard. Projects like this don’t happen without a vision that we can always do things better and leadership from the top to nurture that vision into reality. It was the Court that started us down the path of jury reform thirteen years ago. We hope that lawyers, judges, and jurors will find these instructions to be a much clearer, understandable statement of the law of Indiana and what jurors are supposed to do with it.”

Jury instructions tell the jury about relevant laws that should guide its deliberations. In giving the instructions, the judge states the issues in the case and defines terms that may be unfamiliar to jurors. A judge’s use of the plain English instructions is discretionary. Judges may elect to use the model instructions because they provide a guide prepared by a committee of judges who have carefully considered the subject matter of each instruction. A lawyer may request the judge give certain instructions. For example, lawyers sometimes create their own proposed instructions if no models fit the case. The judge makes the final decision on which instructions are given.

The Indiana Judges Association publishes the instructions only through LexisNexis, making them available to those with a Lexis.com subscription. In late August or early September the instructions will also be available in book format to Lexis subscribers and at law libraries that carry the book, such as the Indiana Supreme Court library. The Indiana Judicial Center will present two educational sessions for judges and judicial officers in Indianapolis in September, and the Indiana Judges Association will present seven continuing legal education sessions for attorneys around Indiana in October.

August 24, 2010

Indiana Nursing Homes Dodge Scrutiny

Attorney general has filed 6 complaints out of 300 cases in past 5 years

By Heather Gillers and Tim Evans, Indianapolis Star

When state health inspectors and police investigated a rape reported at a Marion nursing home in June 2008, what they discovered suggested such an assault could have been prevented.

The accused resident was a sex offender on parole — something the nursing home’s administrator had known since the man was admitted to the facility three months earlier. But the administrator did not ensure that information was shared with nurses and aides. Nor did the home make any plan to protect residents from the man.

So, what happened when state health inspectors made the attorney general aware of the Marion administrator’s inaction?

Nothing.

The attorney general’s office decided not to file an official complaint that would trigger a review by the Indiana State Board of Health Facility Administrators.

Without that complaint, the board — the body that licenses and disciplines nursing home administrators — never even had the opportunity to review the case.

In Indiana, that has become the norm. Over the past five years, the Health Department has passed along about 300 inspection reports to the attorney general in accordance with a federal law that says health inspectors must report major problems to licensing officials. At some homes, inspectors found such problems year after year.

But from those 300 reports, an Indianapolis Star investigation found, the attorney general brought the board a grand total of six complaints.

“It just defies logic that only 2 percent of those surveys result in the complaints being filed,” said Robyn Grant, of the statewide advocacy group United Senior Action. “It makes me definitely question how the work of the administrator is being evaluated.”

Attorney General Greg Zoeller — who has not filed a single Health Department case since he took office in 2009 — said his office vigorously investigates every inspection report. A deputy said the office files a complaint only when the nursing home administrator is personally responsible for a problem.

Other states — and one past Indiana attorney general — have used their authority more broadly.

A critical role

The attorney general is just one of many gatekeepers in the state’s nursing home industry but is the only state official empowered to bring disciplinary charges against administrators — a role experts call critical.

Administrators set the tone for care and must make sure policies are followed in the facilities they operate, said Traci Scott, an administrator at Springhurst Health Campus in Greenfield, one of the state’s top-ranked nursing homes.

“When you have a systemic problem, (an administrator) has overlooked something,” she said. “You really have to know what’s happening every day in every part of the building.”

Without the threat of serious ramifications, experts and advocates say, administrators are more likely to cut corners — often at the expense of the safety and dignity of vulnerable Hoosiers.

The issue is of particular concern in Indiana because federal regulators rank nursing homes here among the lowest performing in the nation. But as nursing home care in Indiana has fallen further behind other states over the past 10 years, fewer administrators have been disciplined for those health inspectors’ troubling findings.

In the past five years, all six of the complaints brought against administrators based on Health Department reports — five of which resulted in discipline — were filed by former Attorney General Steve Carter. But that was out of 258 reports the Health Department sent his office during his second term.

Zoeller’s office was sent 40 reports in 2009, the first year of his term. But Zoeller has not turned a single one of those reports into a complaint.

The attorney general’s office can — and sometimes does — file disciplinary cases against administrators based on information from sources other than the Health Department — if an administrator commits a crime, for example.

But critics say that by bringing so few Health Department cases to the board, the office misses an opportunity to hold administrators of problem homes accountable.

The Star left multiple phone messages for Carter that were not returned. Zoeller’s office defended its practices.

Deputy Attorney General Elizabeth Kiefner Crawford, who worked on administrator cases under Carter, said the scope of what the office can punish administrators for is very narrow.

“If (administrators) have appropriate policies in place,” Crawford said, “that may be all that you can do, because they obviously can’t be in the building 24 hours a day.”

Zoeller’s office said administrators are sometimes chastised informally, without the filing of a public complaint, but did not respond to a question from The Star about how many times — if any — that happened last year.

Abigail Kuzma, who leads Zoeller’s Consumer Protection Division, questioned The Star’s attempt to draw a correlation between the number of problems brought to the attorney general’s attention by inspectors and the number of complaints filed.

“Just as a county prosecutor looks at a police officer’s incident report and decides whether the evidence supports filing criminal charges,” she said, “we at the attorney general’s office must carefully consider all the confidential evidence — not just the fraction of the evidence available to the public — and determine if a case rises to the level of a licensing violation.”

But The Star’s review of inspection reports shows that Zoeller and his predecessor, Carter, have taken no disciplinary action even when inspectors’ findings suggest — sometimes year after year — that an administrator might bear some responsibility for a home’s problems.

Besides the Marion sex offender case — in which Carter declined to file a complaint — reports that were sent to the attorney general’s office but did not result in filing a complaint against an administrator’s license include:

After a 2007 storm left the call lights at a Westside nursing home inoperable, the facility took 11 days to put in a backup system. That left bedridden residents unable to summon staff, and six residents had falls. Carter’s office took no disciplinary action.

In Muncie in January 2009, an administrator was aware that heating units in 26 rooms needed to be replaced but left residents shivering for weeks — temperatures in some rooms had dropped to the mid-50s — in the middle of winter. Zoeller’s office has taken no disciplinary action. A spokesman said the case is still open.

Inspectors visiting a home in west-central Indiana in October 2009 found the facility failed to do enough to protect residents from developing pressure sores. Part of the administrator’s job, according to the home’s policy, was to monitor its procedures for dealing with the painful and potentially life-threatening wounds. But inspectors found the home was failing to assess residents’ sores. A spokesman said the case is still open.

But it’s not just such extreme examples that trouble advocates for seniors. It’s also the repeat offenses: Since 2000, 24 administrators have had three or more poor inspection reports — sometimes from multiple facilities — sent to the attorney general’s office within a four-year period. Five of those administrators were referred for discipline three times within a single year.

Of those 24 administrators, however, only two were brought before the board.

“I’ve seen cases where one administrator goes from facility to facility and leaves a trail of neglect and poor care,” said Grant, the seniors advocate. “When you have an administrator that’s overseeing a nursing home where survey after survey after survey, it’s bad, bad, bad, bad — well, nothing is happening to those administrators.”

There is evidence that if the attorney general followed through with complaints and made the health facility administrators board aware of problems, the board would hold more bad administrators accountable.

Consider: When former Attorney General Karen Freeman-Wilson was named to fill the post in 2000, she was confronted with a nearly three-year backlog of 300 inspection reports.

After reviewing those reports, and working under the same laws as Carter and Zoeller, she filed 92 complaints. The board responded. In at least 40 of those cases, it determined the administrator involved should receive some kind of reprimand, fine, continuing education or other discipline.

Freeman-Wilson did not confine her complaints to wrongdoing administrators had themselves committed. Instead she sought to hold them accountable for systemic problems — the way some other states do.

“Karen Freeman-Wilson made these cases a priority and took them very seriously,” said William Niemier, who handled many of those cases while serving as Freeman-Wilson’s chief of medical licensing, and whose wife heads the advocacy group United Senior Action.

“Now whether subsequent attorneys general — obviously there’s a lot of discretion there — but apparently from the numbers they don’t put the same priority on those cases that we did.”

A costly decision

The aggressive approach was a politically costly decision for Freeman-Wilson, a Democrat appointed to serve out the last year of Jeffrey Modisett’s term as attorney general. Health-care association members, nursing home owners and other members of the nursing home lobby contributed nearly $11,000 to Carter, her Republican opponent in the November 2000 election, according to campaign finance records.

The Indiana Health Care Association, a trade group representing for-profit nursing homes, also sued, claiming she had not conducted a thorough investigation.

Carter won the election and settled the suit — and over his eight-year tenure, the number of complaints filed against administrators dropped precipitously.

Former board member the Rev. J. “Woody” Woodford said he preferred Freeman-Wilson’s practice of sharing many cases with the board. Letting the attorney general screen out all but a few cases, he said, might mean missing opportunities to hold administrators accountable.

“We’re not looking at it through the eyes of an attorney — whether they can make a case or not,” Woodford said. “We are looking at real live people, the people who perpetrate and the people who are abused.”

Woodford, who left the board in 2007, was shocked to learn only six Health Department cases have been filed in the past five years.

“I cannot believe,” he said, “that the state of Indiana’s health-care system has improved to that point.”

Indiana State Board of Health Facility Administrators President Shelley Rauch, who runs an Indianapolis nursing home, declined comment.

Other states have taken a more aggressive approach similar to Freeman-Wilson’s.

Ohio’s Board of Examiners of Nursing Home Administrators sends a warning letter to every nursing home administrator referred by health inspectors under the federal law, whether or not the state determines the administrator should be held accountable for the poor care.

“We’ve found that actually it’s cut down the number of (inspection findings of) substandard care,” said Executive Director Douglas Andrews. The letter remains in an administrator’s file for a year, he said, and “they want it out of there real fast.”

In Illinois last year, one nursing home administrator was reprimanded after a resident who was not supposed to leave the facility without supervision walked out of the home on his own.

In Wisconsin, an administrator was hauled before the state’s licensing board last year because his facility failed to properly treat a resident who developed a pressure sore. He voluntarily surrendered his license.

In Indiana, The Star found, it’s unlikely the licensing board would even hear of such complaints.

Additional Facts
Action taken
Every year, the State Health Department sends the attorney general’s office dozens of inspection reports detailing problems in nursing homes. The attorney general then decides how many of those reports merit filing a formal complaint against home administrators.

Greg Zoeller
2009-present
» Reports (through 2009): 40.
» Complaints filed: 0.

Steve Carter
2001-08
» Reports: 463.
» Complaints filed: 38.

Karen Freeman-Wilson
2000 (served out final year of Jeffrey Modisett’s term)
» Reports: approximately 300.*
» Complaints filed: 92.

*Includes backlogged reports from 1998 and 1999.

Society of Actuaries Study Finds Medical Errors Annually Cost at Least $19.5 Billion Nationwide

Report shows how 1.5 million medical errors compromise quality of American healthcare and cause unnecessary waste in the system

Aug. 9, 2010

Findings from a new study released today estimate that measurable medical errors cost the U.S. economy $19.5 billion in 2008. Commissioned by the Society of Actuaries (SOA) and completed by consultants with Milliman, Inc., the report used claims data to provide an actuarially sound measurement of costs for avoidable medical injuries. Of the approximately $80 billion in costs associated with medical injuries, around 25 percent were the result of avoidable medical errors.

“This report highlights a singular opportunity for both improving the overall quality of care and reducing healthcare costs in this country,” says Jim Toole, FSA, CERA, MAAA and managing director of MBA Actuaries, Inc. “Of the $19.5 billion in total costs, approximately $17 billion was the result of providing inpatient, outpatient and prescription drug services to individuals who were affected by medical errors. While this cost is staggering, it also highlights the need to reduce errors and improve quality and efficiency in American healthcare.”

Medical errors are a significant source of lost healthcare funds every year. For example, the study found that $1.1 billion was from lost productivity due to related short-term disability claims, and $1.4 billion was lost from increased death rates among individuals who experienced medical errors. According to a recent SOA survey, which identified ways to bend the national healthcare cost curve, 87 percent of actuaries believe that reducing medical errors is an effective way to control healthcare cost trends for the commercial population, and 88 percent believe this to be true for the Medicare population.

“We used a conservative methodology and still found 1.5 million measureable medical errors occurred in 2008,” says Jonathan Shreve, FSA, MAAA, consulting actuary for Milliman and co-author of the report. “This number includes only the errors that we could identify through claims data, so the total economic impact of medical errors is in fact greater than what we have reported.”

Key findings from the study include:

•There were 6.3 million measureable medical injuries in the U.S. in 2008; of the 6.3 million injuries, the SOA and Milliman estimate that 1.5 million were associated with a medical error.
•The average total cost per error was approximately $13,000.
•In an inpatient setting, seven percent of admissions are estimated to result in some type of medical injury.
•The measurable medical errors resulted in more than 2,500 avoidable deaths and more than 10 million excess days missed from work due to short-term disability.
“In the past, the insurance industry had low visibility in its involvement in quality-improving initiatives,” says Toole. “Now is the time for the industry to assume an active role by helping healthcare systems implement an actuarial approach, which can more systematically identify potential causes of medical errors than alternative approaches.”

The study also identifies the 10 medical errors that are most costly to the U.S. economy each year. Approximately 55 percent of the total error costs were the result of five common errors:

•Pressure ulcers
•Postoperative infections
•Mechanical complications of devices, implants, or grafts
•Postlaminectomy syndrome
•Hemorrhages complicating a procedure

The SOA and Milliman findings were based upon an analysis of an extensive claims database. Measureable costs of medical errors included increased medical costs, costs related to increased mortality rates, and costs related to lost productivity of an error.

Governor Pat Quinn last week signed historic legislation that transforms Illinois’ system of care for frail older adults and persons with disabilities. The Governor signed two new laws, Senate Bill 326 and Senate Bill 2863, that improve the lives of current and future nursing home residents and are based upon recent research, investigations and deliberation done by the state of Illinois and its Nursing Home Safety Task Force.

The new law rewrites the system of nursing home admissions and strengthens the screening process to prevent residents with violent criminal histories from being placed with vulnerable, older adults. The law sets higher standards for quality and staffing for Illinois nursing homes and raising penalties for violations and increase inspections and monitoring. Both new laws go into effect immediately.

“Today begins a new era of nursing home care in Illinois,” said Governor Quinn. “Older adults who require 24-hour care deserve a safe, high-quality home, and persons with mental illness must have the care and treatment they need to live full and productive lives in their communities. This law protects Illinois’ most vulnerable adults.”

“We have to do everything we can to protect vulnerable nursing home residents and make sure they are safe,” said Illinois Attorney General Lisa Madigan. “These bills significantly strengthen the process for protecting nursing home residents from those who may pose a threat. And they provide us with critical tools needed to target nursing home fraud.

Pennsylvania Court Imposes Corporate Liability Upon Nursing Homes

By: Leo Strupczewski

07-28-2010

A unanimous Pennsylvania Superior Court panel has ruled that a nursing home can be held corporately liable for its actions.

Writing that such liability is already imposed on hospitals, health maintenance organizations and medical professional corporations, a three-judge panel in Scampone v. Grane Healthcare Co. held that nursing homes were similar to those organizations in that they provide “comprehensive and continual physical care” for patients. They are not, Judge Mary Jane Bowes wrote for the panel, like a physician’s outpatient office, which is not susceptible to corporate liability claims.

“Except for the hiring of doctors, a nursing home provides comprehensive and continual physical care for its patients,” Bowes wrote.

She later continued: “Even though Highland did not have staff physicians, it was responsible for ensuring that all doctor-ordered testing was performed. Clearly, the degree of involvement in the care of patients of skilled nursing home facilities is markedly similar to that of a hospital and bears little resemblance to the sporadic care offered on an out-patient basis in a physician’s office.”

The plaintiffs attorney in the case, Stephen Trzcinski of Wilkes & McHugh in Philadelphia, said the decision was a “big win” for nursing home residents. It had previously been difficult to bring suit against nursing homes, or the companies that run nursing homes, because the defendants would point to the fact that there was no appellate authority on the issue.

“They would point that out,” Trzcinski said. “This decision will dispose of that argument.”

Defense attorney John A. Bass of Grogan Graffam in Pittsburgh could not be reached for comment.

According to Bowes, Richard Scampone filed suit against a nursing home, Highland Park Care Center, its owners and the company that managed the facility, Grane Healthcare Co., after his 94-year-old mother, Madeline Scampone, died of a heart attack in 2004.

Scampone argued that his mother’s death was a result of substandard care from the nursing home.

According to Bowes, Madeline Scampone was diagnosed with a urinary tract infection two months before her death and was diagnosed with dehydration, malnutrition and bed sores less than two weeks before her death.

Scampone argued the nursing home was chronically understaffed, which prevented employees from providing his mother with the care she needed. He set forth claims of vicarious and corporate liability.

An Allegheny County trial court judge granted nonsuit to the nursing home’s owners, along with Grane Healthcare Co., and further ruled that there was not sufficient evidence to submit a question of punitive damages to a jury.

At trial, Scampone presented witnesses who testified that the nursing home was chronically understaffed and only operated at state-mandated levels during state surveys. Such understaffing made it difficult for employees to complete their duties, witnesses testified, and required employees to fill out paperwork without having completed the corresponding jobs. Further, one witness testified, the nursing home was so understaffed that employees were not able to provide residents with water as necessary.

Another witness told the court that Grane established a budget for Highland but that any money remaining in Highland’s bank account at the end of the month was sent to an account in Grane’s name.

A jury subsequently found Highland to be vicariously and corporately liable for Madeline Scampone’s death and awarded Scampone $193,500.

Scampone appealed the decision, arguing the trial court erred in granting nonsuit to Grane Healthcare Co. and ruling that the evidence presented was not sufficient to present the question of punitive damages to the jury.

Highland field a cross-appeal, arguing that appellate case law did not extend corporate liability to nursing homes, no case law allowed corporate negligence claims to be based on allegations of understaffing and a retrial was necessary because the verdict was prejudiced by misleading testimony and evidence.

In addressing the claims, Bowes cited a string of cases related to corporate liability claims in the health care industry.

The state Supreme Court first applied the doctrine of corporate negligence to hospitals in the 1991 case Thompson v. Nason Hospital and the Superior Court later extended it to HMOs in the 1998 decision Shannon v. McNulty and medical professional corporations in the 2009 decision Hyrcza v. West Penn Allegheny Health System.

“Herein, we conclude that a nursing home is analogous to a hospital in the level of its involvement in a patient’s overall health care,” Bowes wrote.

Highland, according to Bowes, further argued it had no duty related to staffing levels under Thompson.

The panel disagreed.

“One of the duties expressly imposed under Thompson is to formulate, adopt, and enforce adequate rules and policies to ensure quality care for patients,” Bowes wrote. “If a health care provider fails to hire adequate staff to perform the functions necessary to properly administer to a patient’s needs, it has not enforced adequate policies to ensure quality care.”

To support the decision, Bowes cited the 1997 state Supreme Court case Welsh v. Bulger, which ruled an allegation of understaffing was enough to establish a prima facia claim of corporate negligence. Such allegations, Bowes wrote, supported claims that a nursing home or hospital failed to develop or enforce policies pertaining to “quality care.”

The liability likewise extended to Grane Healthcare Co., Bowes wrote, because testimony at trial alleged Grane Healthcare Co. had corporate control over Highland and its nursing consultants were responsible for supervising the nursing home’s staff. The jury found that testimony credible, Bowes wrote.

“Corporate negligence as a basis for liability is supported as a cause of action against Grane because it was the entity that managed all aspects of the operation of the nursing facility,” Bowes wrote. “Grane had assumed the responsibility of a comprehensive health center, arranging and coordinating the total health care of the nursing facility residents. While Highland employed the nursing staff, excluding the nursing consultants who were employed by and trained by Grane, Grane established and administered a quality assurance program to ensure the nursing facility provided quality nursing care to its residents.”

Part of that program was to provide Highland with an operating budget and employees that would oversee the nursing home’s daily operations, Bowes wrote. According to testimony accepted by the jury, the staffing levels at the nursing home were too low and nursing consultants from Grane acted so recklessly that their actions, along with those of the nursing home and the management company itself, warranted punitive damages.

“Records concerning the administration of medications were falsified,” Bowes wrote. “Staffing levels were increased during state inspections and then reduced after the inspection was concluded. Deliberately altering patient records to show care was rendered that was actually not is outrageous and warrants submission of the question of punitive damages to the jury.”

The Indiana Court of Appeals held today that a mother who suffers a stillbirth due to medical malpractice qualifies as an injured patient and satisfies the actual victim requirement under the Medical Malpractice Act, regardless of whether the malpractice resulted in injuries to the mother, fetus, or both.

In Steven Spangler and Heidi Brown v. Barbara Bechtel, et al., No. 49A05-0908-CV-482, unmarried parents Steven Spangler and Heidi Brown appealed summary judgment in favor of St. Vincent Randolph Hospital, nurse-midwife Barbara Bechtel, and Expectations Women’s Health and Childbearing Center for wrongful death and emotional distress. Their baby was stillborn and could not be resuscitated.

The appellate court found the parents have a claim for negligent infliction of emotional distress based upon Brown’s direct involvement in the stillbirth. Indiana courts have held on numerous occasions that when a malpractice claim is brought based upon malpractice affecting a pregnancy, the mother satisfies Shuamber’s modified impact rule, 579 N.E.2d 452, 454 (Ind. 1991). The hospital failed to cite a case in which an Indiana court precluded parents of a fetus suffering death as a result of medical malpractice from asserting a claim for negligent infliction of emotional distress, noted Judge Elaine Brown.

The judges also ruled the parents can assert their claim under the Medical Malpractice Act. In previous cases allowing for recovery of emotional damages for negligent infliction of emotional distress stemming from miscarriages or stillbirths, the mothers were physically injured as a result of malpractice.

Previous caselaw hadn’t addressed whether Brown would qualify as an “actual victim” of negligence able to assert the parents’ claim for emotional distress because she wasn’t physically injured by the malpractice. The appellate court was persuaded by the parents’ argument that if an unborn child isn’t a separate person under law, then the unborn child must be a part of the mother, physically and legally. Other jurisdictions with similarly constructed laws have reached this conclusion, wrote Judge Brown.

“We do not believe that the legislature intended such sweeping legal implications as to preclude medical malpractice liability on the one hand and allow it on the other based upon whether a full-term, viable fetus actually survives the pregnancy, even if for a day or two only,” she wrote.

The appellate court reversed summary judgment in favor of the hospital and midwife and remanded for further proceedings.

Attorney fees not recoverable under adult wrongful death statute

July 20, 2010

The Indiana Court of Appeals today disagreed about an issue of first impression regarding recovery of attorney fees under the adult wrongful death statute. 

In Jeffery H. McCabe, As Representative of the Estate of Jean Francis McCabe, Decedent v. Commissioner, Indiana Department of Insurance as Administrator of the Indiana Patient’s Compensation Fund, No. 49A02-0908-CV-728, Jeffrey McCabe appealed the grant of partial summary judgment in favor of the Commissioner, Indiana Department of Insurance as Administrator of the Indiana Patient’s Compensation Fund. The trial court had ruled attorney fees and expenses incurred by the attorney representing the personal representative of a wrongful death estate are not recoverable damages under the state adult wrongful death statute.

The appellate court noted Indiana has three separate causes of action for the wrongful death of an individual: a general wrongful death statute, a statute pertaining to the wrongful death of children, and the adult wrongful death statute. The primary difference for the purposes of this appeal is that the GWDS and the CWDS specifically provide for reasonable attorney fees, but the AWDS does not address the matter.

Jean Francis McCabe died Oct. 1, 2003, from an methotrexate overdose negligently administered to her by medical providers at the long-term care facility where she lived. Jeffrey McCabe is her only child and a nondependent.

McCabe filed a proposed complaint in December 2003 with the Department of Insurance pursuant to the Indiana Medical Malpractice Act. The matter was presented to a medical review panel; shortly thereafter, the care facility settled all claims with McCabe for an amount that would allow further proceedings against the Indiana Patient’s Compensation Fund.

As the personal representative of his mother’s estate, McCabe filed his petition to determine the amount of excess damages against the fund Sept. 23, 2008. Through discovery, McCabe clarified that in addition to seeking recovery for the loss of his mother’s love and companionship, medical expenses, funeral and burial expenses, he also sought repayment of costs and expenses, including attorney fees, for the administration of the wrongful death estate and prosecution of the wrongful death claim.

The fund filed a motion for partial summary judgment April 7, 2009, on the issue of recoverable damages, seeking to limit the recovery to damages specifically allowed under the AWDS.

The trial court ruled in June 2009 that attorney fees, costs, and expenses are not recoverable under AWDS. The appellate court accepted jurisdiction Oct. 14, 2009, of McCabe’s interlocutory appeal.

McCabe relied on Hillebrand v. Supervised Estate of Large, 914 N.E.2d 846 (Ind. Ct. App. 2009), but the appellate court noted Hillebrand is distinguishable from the instant case because it was a probate case deciding from which probate assets attorney fees incurred should be paid, and it precedes both the CWDS and the AWDS.

Also, it noted that the Indiana Supreme Court recently concluded in Butler v. Indiana Department of Insurance, 904 N.E.2d 198, 202 (Ind. 2009),  that the “include but not limited to” language does not expand the class of necessitated expenses.

“While we acknowledge that this inconsistency is troubling, we believe such inconsistency is the result of public policy considerations that are the prerogative of the General Assembly,” wrote Judge Paul Mathias, with whom Judge Cale Bradford concurred.

Judge Patricia Riley dissented, writing, “In light of the Estate of Kuba (508 N.E.2d 1, 2 (Ind. 1987)), Butler, and Hillebrand, I would hold that reasonable attorney fees are recoverable damages under the AWDS.”

Judge Riley noted that unlike the majority’s opinion, hers produces a harmonious result between the GWDS, AWDS, and CWDS.

Subsidizing Bad Behavior: The Injustice of Tort Reform
By Ken Connor

On April 5, 2010, the community of Montcoal, West Virginia was devastated when an explosion at the Upper Big Branch mine took the lives of 29 men.  For the families impacted by this disaster, coping with the unexpected loss of loved ones is only the beginning of what is sure to be a long and arduous quest for justice.  Not only does the tragedy of Upper Big Branch demonstrate the inadequacy of regulations alone to protect vulnerable workers and their families, it highlights the vital importance of our nation’s civil justice system as a means of compensating victims and punishing those whose reckless conduct harms others.

As news of the explosion at Upper Big Branch unfolded, it wasn’t long before details of the mine’s troubling history began to surface.  According to the New York Times, “the mine had been cited for hundreds of violations over the last year, including many serious ones.”  

Why then, did the mine continue to operate?  The early evidence suggests that the owner was gaming the system to protect its bottom line, putting profits ahead of the safety of its workers.

In order to avoid steep fines and delay the need for compliance, the Massey Energy Company fostered bureaucratic gridlock by contesting most of the Upper Big Branch mine’s safety violations.  While regulatory officials at the Mine Safety and Health Administration (MSHA) waded through stacks of appeal documents, hamstrung by weaknesses in the 1977 Mine Safety Act, the mine continued to operate unimpeded.  What’s more, the mining industry (as with many other regulated industries) has long had a revolving door between the regulators and the regulated.  The ranks of the regulators are often filled with folks who come out of the mining industry.  Likewise, the industry provides opportunities for advancement for regulators who decide to leave government service.  This calls into question the zeal with which some regulators carry out their duties.  Does a regulator really want to get tough on the company that might provide him with his next job?

Of course, regulatory regimes do nothing to compensate the victims or their families for the damages they suffer in such catastrophes.  The fines that errant corporations pay for violating government regulations go to government, not the victims of those violations.  But justice requires that there be a means to ensure that wrongdoers are made to compensate for the harm they inflict on those who suffer as a result of their wrongdoing, and this is where the much maligned civil justice system – better known as the tort system – comes in. 

The term “tort” refers to a private or civil wrong.  Derived from the medieval Latin word tortum  (“wrong”), the root of the word goes back to the ancient Latin verb torquere, which means to twist (compare our modern use of the word “torque”).  The tort system is designed to “straighten out” the injustices suffered by the innocent at the hands of wrongdoers by requiring compensation for the harms they have suffered.

But the reach of Big Business extends even to the judicial system, and there is a dangerous move afoot to immunize corporate malefactors from full accountability to their victims.  Under the rubric of so-called tort reform, corporate brigands like Massey Energy use their clout in the political arena (derived from generous campaign contributions) to secure the passage of laws that artificially “cap” the amount of damages innocent victims can recover.  Caps as low as $250,000 are routinely advocated for “non-economic” damages like pain, suffering, disability, and disfigurement, regardless of how much the victims have suffered.  Tort reform means that bureaucrats and special interests far from the scene determine the amount of damages an injured party can recover, rather than a jury drawn from the community where the wrongdoing occurred.

Not content to limit the compensatory damages available to victims of corporate wrongdoing, business interests also seek to limit the recovery of punitive damages as well.  Punitive damages are awardable in cases where a wrongdoer engages in intentional or reckless misconduct.  Historically, such damages are levied as punishment, with the purpose of deterring similar misconduct by others.  In taking into account the amounts to be awarded, juries are permitted to consider such things as the reprehensibility of the misconduct, the vulnerability of the victim, the profit resulting from the misconduct, the financial condition of the wrongdoer, and the extent to which the wrongdoer tried to conceal the wrongdoing.  Juries may only punish – they are not permitted to bankrupt – the perpetrators of such misconduct.

But wrongdoers don’t like to be held accountable, so business interests – through lobby groups like the U.S. Chamber of Commerce – have launched a full scale assault on the civil justice system, seeking to emasculate the rights of innocent victims and their ability to hold wrongdoers fully accountable.  In addition to advocating caps on damages, they try to shorten statutes of limitations, secure immunity from liability, and place other legal hurdles in the path of the victims. 

Sadly, this campaign has had great success.  And without robust legal mechanisms in place to send a message that it’s cheaper to do business the right way than it is to cut corners, businesses like Massey Energy will continue to do things the wrong way, and the innocent and unwitting will continue to suffer the consequences.  If tort reform continues to be successful, it is inevitable that more and more communities across America will find themselves, much like the families of Montcoal, West Virginia, at the center of a senseless industrial tragedy.

Ohio’s tort reform law hasn’t lowered health-care costs

By Stephen Koff, The Cleveland Plain Dealer

March 20, 2010

WASHINGTON, D.C. – As the House of Representatives prepares to vote Sunday on a package that

Democrats say will make health care more affordable, critics insist the “big government

takeover of health care” is not only unwarranted, but that a part of the solution is so

obvious it’s a crime Democrats failed to embrace it.

It’s called tort reform, or putting the brakes on junk lawsuits. If doctors and hospitals

don’t need to worry about defending themselves against baseless malpractice lawsuits,

they’ll stop ordering needless, duplicative tests and halt the practice of defensive

medicine, Republican congressional leaders say. It’s an easy and necessary way to bring down

costs for all Americans, they say.

The problem is, Ohio has already taken that step, as have many other states. Yet five years

after a difficult but successful fight in Columbus to pass tort reform, health-care costs in

the state have not gone down. And health policy analysts say it may not be possible to say

whether costs would have spiked even higher had Ohio not passed lawsuit reform.

Costs climbed even after the legislature limited the size of jury verdicts for pain and

suffering to $250,000 except in catastrophic cases, restricted punitive damages, and made it

tougher to take a case to trial. In 2004, the year Ohio passed lawsuit liability reform,

average premiums for employer-based family health plans were $9,590, according to data from

the nonpartisan Kaiser Family Foundation. By 2008, average family premiums were $11,425.

This means that four years after the state passed reform, health insurance for Ohio families

in employer plans had gone up by 19 percent.

That compared with a national average rise of nearly 22 percent during that time.

While Ohio’s cost hike was smaller, too many other factors go into health-care spending to

conclude that the limits on lawsuits accounted for that difference, policy analysts say. The

American Association for Justice, a trade group that represents trial lawyers, notes with

the same data that while health insurance premiums in Ohio rose more slowly than the

national average, the Ohio pace still outstripped the hikes in neighboring Kentucky.

And Kentucky did not put caps in malpractice verdicts, so tort reform could not explain its

savings.

That’s not to say that by limiting lawsuits against doctors and hospitals, the Ohio

legislature did not make any dent. Malpractice insurance premiums for doctors have dropped

on average by 22 percent since 2006, according to the Ohio Department of Insurance.

Explanations for that vary. The trial lawyers’ lobby says the main reason liability premiums

spiked in the first place was because of a big downturn in the stock market, requiring high

premiums to shore up insurance reserves. The medical industry counters that a wave of

malpractice suits drove up the premiums.

Regardless, tort reform in Ohio has reduced the number and size of malpractice cases. In

2005, 5,051 claims were filed against doctors and hospitals. By 2008, the number dropped by

39 percent, a decline that the Ohio State Medical Association attributes to lawsuit reforms.

Doctors and hospitals have testified in Washington that when they fear being sued, they

practice “defensive medicine.” They say they order expensive diagnostic tests and

screenings, such as computed tomography or CT scans, when a simple x-ray might do because

they don’t want to risk a lawsuit.

So when they no longer have that fear, medical industry spokesmen say, doctors no longer

have to practice defensively.

“No one can argue that tort reform in Ohio hasn’t brought down the practice of defensive

medicine,” said Jason Koma, spokesman for the Ohio State Medical Association, which

represents doctors and other health care providers.

But health care costs nevertheless keep rising. Whether their growth rate has slowed — and

whether care in Ohio would cost more had it not been for liability reform — is difficult

for researchers to pinpoint.

“I’m not aware of any analysis or study or anything empirical that does that,” said Doug

Anderson, chief policy officer for the Ohio Department of Insurance. National organizations

that study health-care spending, including the Kaiser Family Foundation, say the same.

One reason for that is the lack of uniform, up-to-date data on private-sector health

spending in every state. Spending figures for Medicare, the government’s insurance program

for seniors, are available for as recently as 2006, and show that Ohio’s per-enrollee

reimbursement for medical care was $8,249, barely below the national average of $8,304.

But malpractice suits can take several years before verdicts are reached or judges dismiss

the claims, so the 2006 Medicare figures are believed to show little if any impact from

Ohio’s tort reforms.

One of the best examples of why it is so difficult to identify savings from tort reform –

and why blaming lawsuits misses other components of health spending — was cited by William

Hayes, president of the Health Policy Institute of Ohio. Hayes pointed to data from the

Dartmouth Institute for Health Policy and Clinical Practice, which found that Medicare

spending per-enrollee in 2006 was $8,377 in Cleveland, $8,153 in Akron, $7,930 in Dayton –

and a stunning $9,612 in Elyria.

How to account for that 15 percent difference over the course of the 30 miles separating

Cleveland and Elyria?

One theory cited in the New England Journal of Medicine is that in areas with a lot of

doctors, hospitals and testing equipment, patients are more likely to be referred for

treatment or tests, especially if their diagnoses fall within a gray area. The New York

Times noted earlier that in Elyria, an abnormally high number of angioplasty procedures,

which involve enlarging an artery with a balloon and inserting a stent to keep the artery

open, were being performed. And, said the Times, “nearly all the procedures at the Elyria

hospital are performed by a group of cardiologists who dominate coronary care in this city

and have an unabashed enthusiasm for angioplasties, the highly profitable procedure in which

they specialize.”

Similar theories for wild health-care spending have been cited in Texas, a state that had

tort reform similar to Ohio’s — and has some of the highest-cost cities in the country when

measured for Medicare spending.

“So states that set limits on suing may only be able to go so far,” said Hayes.

This is not to discount entirely the relationship between lawsuits and medical costs.

The nonpartisan Congressional Budget Office in October told U.S. Sen. Orrin Hatch, a Utah

Republican who favors tort reform, that if caps on civil damages were imposed nationwide, it

could reduce national health care spending by about $11 billion a year. Because the

government pays a large share of that, nationwide liability reform could cut the federal

deficit by $54 billion over 10 years, the CBO said.

“From our perspective, tort reforms do have an impact on lowering health insurance costs,

and should be a part of the discussion,” said Tim Maglione, senior director for government

relations at the Ohio State Medical Association. “And not according to us but according to

the CBO, it can result in savings of $54 billion over 10 years.”

But spending on health care is so much greater than that, and 35 states already limit

lawsuits in some way. So those billions, while substantial, would shave only about 0.5

percent off health-care spending nationwide, the CBO said.

That’s not enough to bring down spending anywhere near where economists say it should be.

Health-care spending already accounts for one sixth of the nation’s economy.

“Assuming that the CBO is accurate, or even if they’re off by 100 percent, it still is less

than 1 percent of the total cost of the health-care system,” said Dennis Mulvihill, a

Cleveland trial attorney and president-elect of the Ohio Association for Justice.

President Barack Obama, who came to Strongsville last week to promote his health-care reform

package, has already announced that $23 million in grants will be awarded “in the near

future” for states that want to work on alternatives to going to court over medical

disputes. Obama told bipartisan congressional leaders on March 2 that he would expand that

to $50 million if Congress will support it.

But he made clear that he does not believe nationwide tort reform will solve the cost

problem. Nor will it automatically make health insurance more affordable for Americans,

experts say.

“And that’s why I think tort reform is not a single panacea,” said Hayes. “I think it will

help on provider insurance rates more than consumer insurance rates.”