Skilled Healthcare Nursing Home Lawsuit Results in $671M Verdict

A California jury has hit a major nursing home chain with a $671 million verdict as the result of a nursing home lawsuit over violations of state law at 22 of its facilities. 

The verdict was handed down Tuesday in Humboldt County Superior Court as part of a nursing home class action suit representing 32,000 residents, and family members of deceased residents, of Skilled Healthcare Inc. facilities. The complaint was filed in 2006 and granted class action status in 2008, alleging that the nursing home management company violated a California state law that requires nursing homes to provide 3.2 nursing hours per patient per day.

The jury agreed that the staffing levels at 22 of the company’s California nursing homes were insufficient and failed to meet state standards, finding the company liable for the maximum amount of statutory damages, $613 million. In addition, the company will have to pay $58 million in restitution, bringing the total award to $671 million.

The jury still has to decide whether it will award punitive damages, and if so, how much. Theoretically, the jury could return a punitive damages award several times larger than the compensatory damages.

Officials at Skilled Healthcare said that they plan to appeal the verdict. To defer the judgment while awaiting an appeal, Skilled Healthcare would have to provide 150% of the judgment as bond.

According to a Wall Street Journal article, analysts do not believe the company will be able to afford to do so. Skilled Healthcare’s primary insurance coverage has already run out for this year, and the verdict goes beyond their policy’s limits even if it had been untouched by other costs.

Skilled Healthcare stocks plummeted following the ruling, dropping $4.70 to $1.52 on the New York Stock Exchange, a decline of 76 percent.