By Tish Kraft - July 09, 2010
EUREKA, Calif. (CN) - Skilled Healthcare Group, one of
the largest nursing home chains in the country, has been
ordered to pay $677 million for failing to keep its
California nursing homes staffed adequately. And the
punitive damages phase has yet to begin. The state jury
verdict came after a 7-month trial, assessing the group for
$619 million for Health Code violations and $58 million in
restitution.
The jury levied the maximum damages under California law.
The $677 million assessment many be a record for the health
care industry, according to the Eureka Times-Standard.
Industry observers believe the company may be pushed into
bankruptcy. The Wall Street Journal reported that the
company must post 150 percent of the final judgment, pending
appeal, and that Skilled Healthcare has $94 million in
borrowing capacity.
Skilled Healthcare's primary coverage has been exhausted for
the year, and even if it were not, the jury verdict far
exceeds its policy limits, the Journal reported. It also
cited analyst who predicted that the verdict could bring
shareholder lawsuits.
Skilled Healthcare's stock price dropped by 75 percent this
week, after the verdict, from $6.22 to $1.52 a share in a
single day.
The company excess insurance carrier will not cover the
award, citing "little allegation of injury or harm to the
plaintiffs," according to the Eureka Times-Standard.
Humboldt County Superior Court Judge Bruce Watson is
presiding over the case.
Skilled Healthcare operates 78 facilities in seven states,
including 22 assisted-living facilities in California. All
the California outlets are involved in the case, which
involves 32,000 patients during 2003 to 2009. Five of the
outlets are in Humboldt County, where the case was tried.
California law requires 3.2 nursing hours of direct patient
care per day, and the jury found that Skilled Healthcare did
not provide that.
The case was tried by Timothy Needham and Michael Crowley
with Janssen, Malloy, Needham, Morrison, Reinholtsen &
Crowley in Eureka; Michael Thamer of Callahan, Calif.; and
Christopher Healey with Luce, Forward, Hamilton & Scripps of
San Diego.
reprinted from Courthouse News