Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.
In another illustration of the risk and proliferation of class action lawsuits against healthcare employers, Skilled Healthcare Group, Inc. has agreed to pay $50 million to settle a claim alleging understaffing at its facilities.
Skilled Healthcare Group operates 22 assisted-living facilities in California. State law requires such facilities maintain staffing levels of 3.2 nursing hours per patient per day. The plaintiffs, a class of approximately 32,000 patients and former patients, filed a class action alleging that Skilled Healthcare Group failed to comply with this requirement. The case proceeded to trial in Humboldt County Superior Court in California and the jury ruled in favor of the plaintiffs, ordering Skilled Healthcare Group to pay $670 million in damages.
Faced with this verdict, which according to Skilled Healthcare Group would have more than exhausted the company’s credit lines and insurance policies, the company appealed. The parties engaged in settlement negotiations and ultimately agreed upon the $50 million figure. Counsel for the plaintiffs said that their motivation in entering into the settlement was avoiding the delay and uncertainty that accompanies the appeal process.
This case highlights some of the class action risks that healthcare employers continue to face for alleged violations of state law as well as federal law. Because the healthcare industry operates in such a heavily regulated environment, in addition to the flood of wage and hour claims that have plagued healthcare employers, there are numerous other potential claims employers in this field may face. Also, as the $670 million verdict shows, healthcare employers can be perceived by juries as deep-pocketed institutions that are able to absorb large verdicts. The proliferation of class actions against healthcare employers can only be expected to continue as potential plaintiffs and their counsel are buoyed by news of this $670 million verdict and $50 million settlement.
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