Skilled Healthcare Group Reaches Settlement

September 8, 2010

September 8, 2010
After losing its bid for a mistrial based on alleged juror misconduct, Skilled Healthcare reached an agreement yesterday to settle the case against it which involved allegations of understaffing at 22 California skilled nursing facilities that resulted in a $677 million jury verdict.  Under terms of the settlement, Skilled Healthcare will

deposit a total of $50 million into escrow accounts to cover settlement payments to class members, administrative costs and plaintiffs' attorneys' fees.  In addition, the company must comply with specified state and federal staffing levels, and provide reports to an independent monitor detailing such staffing levels. Without this settlement, the company could have been forced into bankruptcy protection.  While not an insignificant number, $50 million, which will come from the company's revolving credit facility, is a lot better than $677 million.  At current interest rates, it will cost the company more than $2.0 million in annual interest expense.  The problem, however, will be paying it back at some point.         

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