Skilled Healthcare And Our Absurd Judicial System

July 7, 2010

July 7, 2010
Today, Skilled Healthcare Group announced that a jury in California returned a verdict against the company related to a complaint filed more than four years ago. The jury awarded the plaintiffs $613 million in statutory damages and $58 million in restitutionary damages.

 They have not decided on punitive damages, but we know where they are likely to go on that.  What was the crime?  Not maintaining 3.2 nursing hours per patient per day at 22 skilled nursing facilities in California.  And the jury went for the maximum damages, which is $500 per patient per day that these 22 nursing facilities were in violation of the staffing requirements.  Not just for a patient who may have received poor care, but for each and every patient in these 22 facilities, whether they were part of the complaint or not, and even if they received outstanding care.

In order to appeal the verdict, the company must post a bond equal to 150% of the judgment, which it most likely will be unable to do. It does not have the cash or the access to the cash, even if it sells all its buildings, to pay anything close to the full judgment.  And to make matters worse, the company's primary professional liability insurance coverage has already been exhausted, and the excess insurance carrier may not cover it because of a lack of any allegation of injury or harm to the plaintiffs.  That's right, no claim of injury or harm, and this group wants to receive $671 million!  Why not sue the state of California for not properly supervising the staffing levels?  Oh, we forgot, the state is already basically bankrupt and can't pay its bills, so why not go after a public company with supposedly deep pockets?  This is so absurd, and perhaps the judge will modify the judgment, but this is the California court system, afterall, so don't look for much sympathy.

So what has happened to Skilled Healthcare?  Its stock price plunged by more than 75% and was trading near $1.50 per share late today.  Its predecessor company had to file for bankruptcy protection years ago to survive a stupid court verdict, and it may be forced to do so again.  We hope not, but it may have no choice.  Other skilled nursing stocks declined a bit in an otherwise bull market today as investors took note.  It the company goes down as a result of this verdict, it will just mean more people in California waiting for unemployment checks.  Just what we need.  



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You are right! We do have an absurd judicial system. sarah master of science in nursing online

Skilled Healthcare And Our Absurd Welfare System

What is the ratio of Medi-Cal patients in these Skilled facilities to private pay? What is the daily shortfall of Medi-Cal reimbursement from actual out-of-pocket per resident? If all patients were able to pay the actual price of care and allow some profit to the facility, would staffing be better? I had a woman sign up for Long-term Care insurance years ago. She said,"...I can choose the quality of my care. As an ex-CNA I've seen the difference in the care of welfare patients vs paying guests. In some cases it is drastic." Today, with her LTC insurance in-hand, she is in a lovely assisted living on an island off the Pacific Coast. If more people had Long-term Care insurance, or saved, invested and took ownership of their extended life span, with all that entails, these scandals could be decreased. If a corporation is losing money every day as a result of doing its business, how can we expect good care for our elderly and disabled? If the government mandates a SNF receive too little reimbursement for Medi-Cal patients, and the estate lawyers continue to artificially impoverish mom and dad so the kids get their home and savings by putting them on Medi-Cal, how can we stop this mad race to the bottom? Look at assisted living. Many more facilities, much lower ratio of complaints. Why? They are privately paid, adequately funded and competing in the true capitalistic model for the client. They pay staff adequately and the better facilities have lower turnover. The food can be excellent with local chefs taking pride in their work. In fact, in many facilities, there is a LOT of pride in the way the residents are allowed to live with privacy and autonomy. Oh yes, then there is the 75% of this population at home receiving care, too. LTC insurance is keeping the vast majority of the insureds at home or in assisted living. With current government statistics ( that 70% of those over 65 will experience Long-term Care needs, why isn’t THAT front page news?

Skilled Healthcare

Absurd is a kind word for the court system in Cailfornia Insane might fit the bill better. To drive decidicaed caregivers back to bankrupty to send a message defies logic and reason. There is no sense of reality in Ga- Ga land.

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