In the latest chapter in what will no doubt be a long and drawn-out saga between a group of trial lawyers who specialize in filing suits against nursing home companies and an Orange County-based provider, the company has asked a judge to declare a mistrial or order a new trial over a jury's staggering $671 million damages award.
The company asked the Humboldt County judge who presided over the trial to throw out the verdict because one juror lied about knowing one of the plaintiffs and was biased and hostile toward the company, according to an article on Bloomberg.com. The judge is expected to issue a decision on August 31.
A jury in Eureka on July 6 found Skilled Healthcare liable for statutory damages and restitution over claims the company improperly staffed its nursing homes. Although the plaintiffs did not claim any patient was harmed because of the alleged staffing shortages, the jury still awarded them the largest jury award in the U.S. this year, according to Bloomberg data.
Forbes.com against Skilled Healthcare earlier called the case "a tort reform advocate's dream--meaning a defendant's worst nightmare."
The class action suit was based entirely on wording so tortuous that the nine members of the Supreme Court would have 10 different interpretations. An earlier case in the same state was tossed out because of that wording. Yet this defendant was slammed with a massive $671 million penalty, vastly beyond its ability to pay. And punitive damages are still pending. And the decision caused the defendant's stock value to plummet 75%.
Oh, and just one other thing. The very size of the verdict effectively prevents an appeal. But besides all that...
This is the inner layer of hell in which Skilled Healthcare California LLC finds itself. The nation's 10th largest nursing care provider, it has 14,000 workers in California alone, making it one of the largest employers in a state with the third-worst jobless rate in America.
At issue was whether the company violated a state law requiring nursing homes to provide a minimum of 3.2 nursing hours per patient per day (ppd), based on a 139-word sentence in the statute that defines who should provide that care and under what circumstances.
Forbes.com points out that three years earlier, a Los Angeles County trial court faced with the identical 3.2 ppd issue said no judge or jury should be allowed to interpret the byzantine wording. An appellate court upheld the decision.
But of all the areas in which Skilled Healthcare operates its 22 California facilities, plaintiffs' attorneys wisely filed suit in the most amenable venue imaginable. This was Humboldt County, a land of recycled toilet paper and Priuses, about 250 miles north of San Francisco--and quite possibly to the left of it as well.
The activist jurors were so determined to make their message loud and clear that they awarded the maximum damages over a six-year period to each patient in the class of 32,000. That was aided by a law that includes in a class anyone who simply doesn't respond to mailed notices, including those who never received them.
Skilled Healthcare can't afford to appeal because it would have to post a bond equal to 150 percent of the verdict to do so, and says it has exhausted its primary professional liability insurance coverage and at most can borrow $94 million. Of course, that also would make paying the award difficult, and bankruptcy is a possibility.
Which, of course, begs the question of where would the patients at the company's 100 facilities nationwide go if Skilled Healthcare had to shut down - especially since two-thirds of them are on Medicare or MediCal?
But what about the plaintiffs' attorneys? As Tom Scott, executive director of Citizens Against Lawsuit Abuse, pointed out, the total fees will likely run between 30 and 40 percent of the verdict - and punitive damages have yet to be assessed. Jackpot justice indeed.
You can read the company's response to the verdict and motion here.