Cost-cutting at nursing home justified punitive damages award

A nursing home whose administrator pledged to do “whatever he needed to do to cut costs” will have to pay out almost $2 million in punitive damages to the families of three patients who died in the facility’s care, the 4th U.S. Circuit Court of Appeals has ruled.

The opinion, which originally went unpublished before plaintiff’s attorneys successfully lobbied the court to have it published, should make it easier for medical malpractice patients in North Carolina to pursue punitive damages against nursing home operators. A unanimous panel found that the three patients died as a result of the facility’s “willful and wanton” disregard.

“Defendants knew—because they were repeatedly told—that the failure to provide minimum staffing and supplies was reasonably likely to result in patient injury or death,” wrote U.S. District Judge Richard Gergel who sat on the case by designation and wrote the opinion. “They nonetheless deliberately continued to disregard duties imposed by law because doing so would increase profits.”

The case stems from three wrongful death suits that were filed in the U.S. District Court for the Eastern District of North Carolina against the long-term nursing facility Blue Ridge Health Care Center in Raleigh. The victims—Del Baird, Bettie Mae Kee, and Elizabeth Jones—were all living on a ventilator unit at the nursing facility.

A district court jury found BRHCC liable and awarded punitive damages worth about $1.5 million per plaintiff. However, U.S. District Judge Terrence Boyle ruled that the plaintiffs failed to show the “aggravating factor” necessary under North Carolina law to support such damages.

On appeal, the 4th Circuit disagreed, saying that extensive testimony showed that BRHCC purposely disregarded safety laws in an effort to increase profits.

“There was evidence from former employees at various levels … that this facility was known to be understaffed,” said attorney Rachel Fuerst of Henson Fuerst in Raleigh, who represented the estates. “They asked the prior administrator to cut back on staff and supplies and he quit because he warned this was unsafe and put lives in danger.” That administrator was then replaced with another manager who was more willing to cut corners.

I sued the sheriff

Gergel wrote that BRHCC consistently failed to meet staffing requirements, intentionally choosing not to provide sitters for agitated patients, that the facility failed to monitor oxygen levels or to provide continuous monitoring alarms and that it failed to provide the bedside supplies necessary in emergencies.

The estates claimed that the three patients all died due to negligence or lack of supplies caused by BRHCC’s cost-cutting measures.

“They didn’t have supplies to take care of patients, or to follow basic safety precautions,” Fuerst said. “They didn’t meet the required nursing levels per day. The defendants were aware and warned of this, and then people began to get hurt.”

Fuerst said that as a result of the deaths, which happened in a three-month period, the facility lost its ability to accept Medicaid and Medicare money and was forced to sell its license.

“[The new administrator, Ben] McGovern told employees that ‘he came in to cut staffing and that there was a new sheriff in town … and he was going to do whatever he needed to do to cut costs,’” Gergel wrote in the opinion.

Gergel said that because McGovern was the manager of the business, acting on its behalf, and because he intentionally chose to take these measures, the court found that his behavior counted as an aggravating factor necessary to prove punitive damages.

The 4th Circuit ruled that the district court erred in requiring “malicious intent” or proof of a “wicked purpose” to reach punitive damages, and said that “willful or wanton conduct” requires only proof of a conscious and intentional disregard of and indifference to the rights and safety of others which will likely hurt them.

“This is precisely the type of egregious conduct punitive damages are meant to deter,” Gergel wrote in the opinion.

Ultimately the appeals court ruled to remand the case to the district court with instructions to limit punitive damages to three times the compensatory damages that the jury awarded.

As a result, Baird’s estate will receive $150,000 in punitive damages, while the estates of Jones and Kee will get $900,000 each.

A pathway to punitives

Attorney Tom Comerford of Comerford & Britt in Winston-Salem reviewed the case at Lawyers Weekly’s request and said it lays out a game plan for reaching punitive damages in a variety of medical malpractice cases.

“[The case] shows a pathway toward getting punitive damages when you can show violations of standards not followed to save money or to expedite patient care when this recklessly endangers patients,” Comerford said.

He said this case also may have implications outside of North Carolina.

“It’s a wake-up call to lawyers in Virginia and South Carolina and West Virginia that punitive damages can be recovered in medical cases,” he said. “Nursing cases are ripe for these kinds of allegations … with the pressure to cut costs and to increase profits.”

Fuerst agreed.

“Even though this is a North Carolina case, this clearly indicates that in the 4th Circuit, you have to follow these rules. You must have minimum staffing to meet patient safety,” she said. “Isn’t that what we as citizens should expect for paid, skilled nursing facilities? Safety?”

Gregory Brown of Brown Law in Raleigh represented Blue Ridge Health Care Center. Brown did not respond to requests for comment on the ruling.

The 16-page decision is Vandevender v. Blue Ridge of Raleigh, LLC (Lawyers Weekly No. 001-141-18). An opinion digest is available online at nclawyersweekly.com.

Follow Matthew Chaney on Twitter @NCLWChaney