Jury Punches Nursing Home Company With $671 Million Fist

A jury in California has slapped Skilled Healthcare Inc. with $671 million in damages for a four-year-old lawsuit that alleged that company did not provide the required 3.2 nursing hours per day, per patient.

The verdict, unveiled Tuesday, includes $613 million in statutory damages and $58 million in restitutionary damages, the maximum damages permitted under state health law. The Humboldt County jury hasn’t determined punitive damages yet.

The WSJ says the company, which operates nursing homes in several states including California, Iowa, Kansas, Missouri, Nevada, New Mexico and Texas, has already exhausted its professional liability insurance coverage. The company has annual revenue of $760 million and employed 14,000 people as of March.

The CEO says he believes the facilities were adequately staffed and will fight the verdict.

Jury hits Skilled Healthcare with hefty damages [BusinessWeek]
Skilled Healthcare Faces Over $671 Million in Damages [WSJ]


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  1. Mike says:

    Wasn’t the $600 mil award arrived at because of a standard fine as defined by the law?

    “The jury opted to assess the maximum amount of damages pursuant to Health and Safety Code 1430 (b): California statute mandates that nursing homes maintain 3.2 nursing hours per-patient per-day. The total comes to $500 per-patient per-day that the 22 nursing facilities involved in the suit were in violation of the law, which amounts to a total of more than $600 million.”

    It would have been much cheaper to comply with the law. It was their duty to comply, they didn’t, and now they got burned for $600 million.

    • ChuckECheese says:

      Note: I inspect nursing facilities for a living.
      The operators of these homes were expecting that (a) they would never get caught; or (b) the fines wouldn’t be as much as the savings. So congratulations that the jury made sure the fines equaled the money Skilled Healthcare pocketed.
      You see, this money SH gets is mostly paid by you and me – taxpayers. The majority of patients in a NH are on Medicare and Medicaid. Providers are paid on type and amount of service, which means SH billed for services they didn’t provide. This wasn’t an accident, but a deliberate money grab on the part of SH for which they should have to return the money.

      • mythago says:

        Also, the jury is still deliberating on the issue of punitive damages – which aren’t and can’t be covered by insurance.

      • LadySiren is murdering her kids with HFCS and processed cheese says:

        My mom was a nursing home administrator throughout much of her adult career. She worked for one of the large corporate groups…and subsequently lost her license because her corporate overlords threatened to fire her if she didn’t cut down on personnel costs.

        Mom cut every place she could before touching the nursing staff but in the end, it still wasn’t enough. She protested that there was nothing left to cut but nursing, which could end up in fines and citations. In response, the company threatened to let her go on the spot. Given that she needed the job, she ended up following their directive to cut personnel costs further by starting to restrict nursing hours, and boom – the company took a financial hit, but she lost a career. Their response to Mom afterward: “You shouldn’t have gotten caught.” WTF.

        Not that I liked them to start with, but watching Mom agonize over job vs. doing what was right made me hate corporate nursing homes with a vengeance. Greedy black hearts, the lot of ’em. I hope they all DIAF. Better yet, I hope they all have to spend their final days in nursing homes with greedy corporate overlords that care more about bottom lines than they do the patients and employees.

  2. flyingember says:

    what’s the point on running lawsuit posts? It’s all just a lot of “he said,” “she said” info

    • Megalomania says:

      A lawsuit is a lot less he said she said than the emails people send about X ripped me off, Y won’t give me my money back or Z is overbilling me, since those are often just “he said”. You might as well just ignore the entire site if you’re going to call lawsuits a bunch of he said she said…

    • coren says:

      As opposed to “reader Bob writes in that Sears forced him to trade his first born child to keep a debt collector away”?

    • Smashville says:

      You’re right. Usually on this site, we only get to hear one side of the story.

    • ChuckECheese says:

      Are you always this solipsistic? Everything in life comes down to evidence of various sorts. In this case, the evidence for fraud was probably pretty well documented in the NH co’s own records, evaluated by a jury (and prosecuting attorneys), and found to be credible enough to be punished.

      • the Persistent Sound of Sensationalism says:

        Except finding a jury of peers in a nursing home case leaves one with 12 people who know jack-shit about what actually goes in to running a nursing home. Lawyers are very good at painting nursing homes as evil places where you would never want to put a loved one. They play on that stigma.

        I live in a state where you can have 10 patients per Nursing Assistant and something like 1 nurse per 40 patients and that’s considered a high ratio. When it takes 3 CNAs to get 1 patient up in the morning (as it often does with the obese, dementia patients, people with MS, hip replacements, etc), you have to wonder where (in the case of where I worked) 3 CNAs find the time to bathe, dress and feed 23 patients by 8:30 am.

        At our facility, the nursing/patient hours were posted near the time clock each day. Try taking a vacation sometime in an industry with a high amount of stress related call-ins, underpaid employees, and staffing quotas. It’s not fun, it’s not easy. My burnout for direct care happened in 4.5 years.

        • ChuckECheese says:

          I sympathize with the low staffing levels you mention. However, the good places always exceed these numbers and provide enough staff to do the job properly and quickly. Several excellent quality dementia-care facilities in AZ have 1:1 staff:resident ratios.
          3 people to do lifts, transfers and bathing for one client? Oh my. Didn’t your employers have hoyer and other lifts? One person can do a xfer with a lift. This is corner-cutting. A $1000 (or less) piece of equipment will save man hours and employees’ backs.

          • the Persistent Sound of Sensationalism says:

            Our facility used EZ Lifts and EZ stands but were required to use 2-3 people if the patient weighed more than 200 lbs. I could blame the DON for not having more staff, as there are always people looking for CNA jobs, however, while anyone can become a CNA, you don’t just want anyone working as a CNA and whenever short-staffing was brought up someone would state that we had better ratios than the state requirements already.

            I always felt we’d have done better with a less “administrative” DON who would at least pick up a couple wing shifts once in a while so she didn’t forget what it was like to be a nurse and realize what she was demanding of staff. It turned to complete politics by the time I left. They even canceled the inauguration party after Obama won suddenly citing that it was too politically divisive. That’s why I don’t work for religiously backed institutions anymore.

    • lincolnparadox says:

      Maybe the idea is to warn people about which companies are being sued? I know that I wouldn’t send my folks to a home run by the Skilled Healthcare Group, now.

    • COBBCITY says:

      There seems to be a directive to post something new on the home page of this site every hour or so during business hours, even if the topic is so far from consumer affairs you need a telescope to see the connection.

  3. headhot says:

    The CEO “believes” that they are adequately staffed? He doesn’t know? He’s not sure? Or, that he believes the staffing levels that were under the mandatory levels were adequate?

    Which one is it? Is he a bad manager who doesn’t know what its company is doing or he has a total disregard for the law?

    • windycity says:

      Option 3 – Weak wording by the CEO/PR flack who wrote the statement.

    • CoachTabe says:

      Doesn’t really matter if they’re adequately staffed or not. If the staff aren’t actually DOING their jobs, it doesn’t matter if there’s enough of them or not.

  4. the Persistent Sound of Sensationalism says:

    It’s one of many reasons I no longer work in a nursing home or health care in general. The jury hasn’t decided on punitive damages? Most nursing homes run on less than 1% profit margin because if they tried to get more, people couldn’t afford to stay in them. These nursing homes will go out of business because of this, costing the jobs of 14,000 employees and forcing the relocation of all their patients. How’s that for punitive? One major problem with health care regulation is that it has almost nothing to do with patient outcomes. It concentrates primarily on having all your “I”s dotted and “T”s crossed.

    Having been through 7 surveys in a nursing home that had won numerous awards for quality in health care I can say that regulators will slap a fine wherever they can. The surveys are not comprehensive, they focus on a different area every year. I’m not saying nursing homes need less regulation. It just needs to be more focused on patient care and outcomes and less on having all your ducks in a row.

    • the Persistent Sound of Sensationalism says:

      Oh, I should make the disclaimer that I don’t know much about hospital regulations as they are VERY different from nursing home regulations.

      Being on the inside, it was quite apparent that many legislators would rather not have nursing homes and all. Complying with the regulations makes it extremely expensive to operate a nursing home and many that are under the auspices of a hospital group operate at a loss. BTW, nursing home regulations are in the midst of a complete rewrite spanning 5 years, during which time nursing homes have to throw down the cash to make the adjustments, which has put many nursing homes out of business.

    • mythago says:

      Perhaps you should be pointing the finger for those lost jobs at the management of Skilled Healthcare, which apparently couldn’t be bothered to meet its legal obligations, rather than complaining they had to follow the rules like everyone else.

    • ChuckECheese says:

      I am going to doubt the ‘less than 1%’ profit margin statement you made. Healthcare makes lots of people very rich. People wouldn’t invest in these types of corporations if they didn’t get a market return on investment. Typically “broke” NHs and other SNFs have plenty of people at the top skimming every $ they can grab.
      It’s true that nursing facilities provide different types of care than hospitals, but the game is the same, like the differences between US and Canadian rules football.
      Inspectors use checklists to determine that proper care is provided because checklists have been strongly proven to be indicators of patient outcomes. When you say that the focus should be on “outcomes,” how do you determine what those are? And BTW, some of the rubrics used in inspections are outcomes-based measurements, such as nosocomial infections and ulcerations, use of certain drugs, etc.
      I occasionally hear this argument from shady operators – “But our patients are doing well, so why do you care about X or Y?”
      You care about X and Y because even though it may not affect your current census, it could affect future patients. You care about X and Y because you may be skating on thin ice, and it can eventually break, sinking you or your patients.
      Operators complaining about rules are usually just trying to cut corners.
      I know from experience and observation that most of the things you found frustrating about your job would have been made easier if your cheap employers didn’t try to skimp on nursing and support staff levels and adequate physical and technology resources to do your job well. Here it is, 2010, and I’m still surprised when I see a NH with computerized records, for instance.

      • Blackadar says:

        Oh, the less than 1% comment was total BS. Many nursing homes are run as non-profit, so of course they don’t show any profit. For-profit nursing homes are a moneymaker and the profit margins are quite large. Companies like GGNSC Holdings don’t make 1% in most economies.

        Interestingly enough, studies show that non-profits actually give better care.

        Furthermore, you care about health regulations because they are there for a reason. Just because there’s no fire doesn’t mean you should be allowed to lock the fire exits.

        • the Persistent Sound of Sensationalism says:

          I worked in a non-profit and the 1% margin is factual. Non-profits will still have a profit margin which is reinvested back into the company, not into the pockets of administrators. You could easily pay $8000 a month to live at the facility I worked at and we still struggled to stay in the black.

          Yes, healthcare does make money, but nursing home, unless they are for-profit, privately run and upscale, do not make much beyond that 1% margin. The money is made on the insurance end and in for-profit sectors.

          I worked on a surgical rehab unit for 4 of the 6 years I worked in a nursing facility and the last two as a unit coordinator (admissions, MD appointments, ride scheduling, etc) and I saw time and again admissions come in from other nursing homes with decubitus ulcers and it was almost guaranteed that if we sent a patient to the hospital for more than 3 days they would return with same. It was then our responsibility to heal those ulcers and post turning schedules and so on and so forth. In one case our facility was fined for a patient developing a decubitus ulcer in-house even though the patient was terminal, turned regularly, MD updated frequently, and had a alternating pressure mattress for her. We even had an affidavit from her primary MD stating we had taken every reasonable step to prevent it from getting worse and beyond, and the courts response was essentially “too bad, so sad”.

          I know it’s hard for any of you to believe that any business is turning 1% or less profit with all the big headlines, but we weren’t Kaiser or Unity, and most nursing homes aren’t. Before calling bullshit, you can at least do a little background research. I think in 6 years we averaged .7% profit and that was ABOVE the national average for nursing homes. Our administrator drove a 10 year old Honda Civic, our DON drove a G6; not exactly vehicles of the rich-elite.

          If you want an example of bureaucracy and contradictions wrapped in demands of inefficiency, you have to look no further than federal nursing home regulations.

    • dadelus says:

      The same could be said about any industry. The metrics used to judge performance hardly ever have much to do with true performance. I used to work in a call center where we were judged on call volume and length. Management wanted us to take more short calls.

      This meant we were penalized if we had the misfortune to get a call from a person with a complex issue that required a lot of time to resolve. This, of course, lead to poor service since management just wanted a quick number to look at to determine “quality”. In their minds if we were helping lots of clients we must be doing a good job and if a small percentage weren’t being helped well thats bad but it didn’t hit their preferred metric so oh well.

      That mentality worked fine until they realized that the “small percentage” they kept shortchanging actually represented a large percentage of our sales and when it came time to renew their contracts one of their biggest complaints was they couldn’t get service for complex issues.

      All that being said, the new mentality in Healthcare is being built around “Pay for Performance” (I.E. Outcome based) rather then “Per Episode”. So hopefully this new metric will help Long Term Care facilities (and other Medical service providers) meet appropriate rather then manufactured metrics.

      • ChuckECheese says:

        Let me elaborate on pay for performance schemes.
        The checklists are still used, and the rules must still be met. Money is still paid on service type and length of service.
        But the outcomes measurements are used to either provide bonuses, or reductions in payments, to over- and under- performers, respectively.
        The outcomes are a sort of extra assurance that care is being properly provided.

      • ChuckECheese says:

        Things aren’t as simplistic at a skilled nursing facility as they are in a call center.
        When a patient moves from one level of acuity to another, the service type(s) and length(s) change too. It’s not based on strict averages per patient. It’s based on what the patient needs. A new diagnosis means new approvals. More complicated issues in a SNF = more billable service codes and nursing hours.

    • peebozi says:

      yea, you’re totally right. let the free market handle this issue and it will go away.

  5. COBBCITY says:

    While the company may deserve this judgement, I am curious as to how a company with $760 million in gross revenue pays a $671 judgement. I could be the profits for many years down the drain.

    • Nytmare says:

      Amount reduces on appeal? Seems to be a common theme after zany high jury awards. (Not suggesting whether or not this amount is deserved; I don’t know.)

  6. peebozi says:

    but, but won’t the free market handle this issue? the deceased can easily choose ANY nursing home but they chose this one. sorry, but the deceased brought this upon themselves.

  7. MedicallyNeedy says:

    You’ll find that the principle shareholders are probably from Saudi Arabia and China. Shut down these assholes! Similarly, a rehab facility/nursing home, sent a young women to the hospital to tell my 90 year old Aunt “No, You’re daughter (who was on a ventilator) is not eligible for Medicaid” and made here sign a 28 page payment responsibility contract. The threat was my cousin would be streeted. She was eligible for Medicaid and has it now and has recovered. These places hire young people, (usually women I’m sure) in the finance offices. They get on the phone in the hallway to some corporate dick, come back to you and say you have to sign this, sign that…. They fear for their jobs and do the dirty work.

  8. physics2010 says:

    I wonder about all of these “metrics” being thrown around. It was state law that the nursing home maintain the minimum 3.2 nursing hours per patient per day. If there were more needs then the nursing home would have to hire more nurses. If the actual need was less, then someone was standing around twiddling their thumbs. When studies on this were done recently, even when all nursing staff hours were included (administrative tasks, breaks etc should NOT be included actually) a large number of facilities failed to meet the minimum requirements. A remember a majority of these hours aren’t even RNs(e.g. CA minimum RN staffing 8 hours/day), LN(CA minimum 24 hours per day), but the Nurse Assistants who require only 75 hours of training plus an additional 15 hours annually. On a side note you’ll find many places that “don’t make a profit” are actually pulling money out in very lucrative side businesses that service the “non profit”.

  9. smo0 says:

    These places are HORRIBLE! I hope this is distributed equally among patients and they can get private health care …. it’s sad that it’s so expensive for them and their families…