Small Firm Proves Nursing Home Negligence Will Be Punished: $29 Million Verdict

My regrets over not having posted for awhile here, but let’s get back to things today:

Normally, as this is blog is about Massachusetts personal injury cases and Massachusetts tort law, I write about plaintiffs’ civil justice issues occurring primarily in this state. However, a recent case verdict out of the state of California offers some instructive points on how personal injury plaintiffs can achieve far better legal and financial results with a small firm, than with a large law firm. On this very point, by the way, visit the “About The Firm” tab at my web site Home Page. See the article. “The Urge To Merge: Bad News.” I think you’ll find it interesting.

Two small plaintiffs’ law firms in California teamed up to obtain a $29 Million verdict against a corporation who operates a chain of 33 nursing homes across California and Utah, “Horizons West,” in an all-too-familiar case of nursing home negligence and abuse. The plaintiff was the estate of a 79 year-old woman, an Alzheimer’s Disease patient, who died after not receiving prompt medical treatment for eight days after she fell and fractured her hip. Aside from that untreated injury, the patient also developed a bed sore during those eight days, which was also listed as a cause of death on her death certificate. The plaintiffs’ lawyers, both essentially solo practitioners, alleged that the defendant nursing home intentionally understaffed the facility, or kept it at a bare minimum relative to the number of patients residing there, all to maximize its profits. Any surprise there? I’ve been writing and speaking about how corporations do this to consumers, patients, and all kinds of people, for over 20 years now. (If anyone still doubts that, take a look at my last post about BP and the Gulf oil spill.)

The plaintiffs’ lawyers who deserve the credit for this victory are attorney Edward Dudensing, principal of a two-lawyer firm in Sacramento, California, and attorney Jay Renneisen, founder of a two-lawyer firm in Walnut Creek, California. These two very small firm lawyers convinced the jury in this case that this nursing home operator intentionally and chronically understaffed their facilities, and that the owner of these facilities engaged in a corporate scheme that siphoned profits to another corporate entity, while giving the accounting appearance that the facility being sued, had essentially no assets. This is a common legal ploy with businesses that are sued: Set up a corporation separate from the corporate defendant being sued; give it a different name, different address, different staffing, different corporate officers and board of directors, different tax ID numbers. Discreetly siphon off funds from the primary corporate defendant, to that 2nd corporation, and essentially claim that the defendant corporation that is being sued is bankrupt and “judgment-proof”, to quote the legal term.

Thankfully, this scheme didn’t work here, because there happens to be another legal term known as “Piercing the corporate veil.” This occurs when a party (usually a plaintiff) successfully demonstrates to a court that the additional corporation is essentially what is legally known as an “alter ego” of the allegedly bankrupt defendant. In this case, these two talented small law firms were able to prove to the jury, that the defendant corporation was anything but devoid of assets, and that the secondary corporation was legally liable for the torts of the named primary defendant. According to Jay Renneisen, one of the plaintiffs’ two lawyers, “We were able to show how all the profits and assets floated up to the top (of the secondary corporation,) and all the liabilities were saddled on [the original corporate defendant], effectively leaving the defendant with no assets.” One particular trick the primary defendant tried, was to purchase a (liability) insurance policy for $1 million with a $1 million deductible, essentially yielding zero coverage. Making matters even worse, was that a $100,000 premium was paid to an insurance company owned by the parent of the “real” corporate defendant. This translates to the owners of this defendant essentially getting paid for lying (by collecting the “insurance” premium.) All this came into play (though not exclusively) in the jury’s award of punitive damages here.

There were far more egregious reasons to punish these defendants, than the assets manipulation and “alter ego” corporate scheme that they engaged in. The defendant corporation, Horizons West, was shown to have delayed the diagnosis and treatment of this 79-year-old Alzheimer’s patient, for eight days after she fractured her hip in a fall. As stated above, during that delay in treatment, she was left in a bed and developed a bed sore that also contributed to her death. At trial, the plaintiffs’ lawyers argued that the facility intentionally under-budgeted for staff, for the sole purpose of maximizing net income. Documents introduced at trial showed that the same day that the patient fell, the nursing home was given and acknowledged a “deficiency citation” from the state department of health, for assigning staff below what would be needed to provide the state-mandated 3.2 nursing hours for each patient per day. Just how bad was the staffing? Discovery showed the defendant employed 24 accountants for the company’s books, and only three nurses for the patients.

The facility intentionally reduced staffing, (including the day the patient fell and broke her hip,) to avoid paying staff overtime, the plaintiffs’ attorneys showed. Evidence at trial established that the facility put only one licensed nurse on duty for over 40 Alzheimer’s and dementia patients. The plaintiffs’ lawyers produced a former employee at the nursing home, a certified nursing assistant, who broke down in tears as she testified that the reason she quit the facility, was because she felt the patients were not getting the amount of type of care they needed. I’ve always been convinced that demonstrative evidence is among the most powerful types of evidence to use before juries and judges (aside from documentary evidence.) In this case, the plaintiffs’ lawyers took a page out of my playbook and taped all of their depositions. They then had these videos at the ready at trial, and used those videotaped depositions to expose contradictions and inconsistencies in witness testimony.

For example, in one witness’ in-court testimony, a nurse testified that she remembered repositioning the patient to relieve her bedsore, even though there was no notation in any medical records of turning or repositioning the patient. Cue the lights: The plaintiffs’ lawyers then played for the jury this same witness’ prior videotaped deposition testimony, where this nurse not only said that she couldn’t recall whether she had repositioned the plaintiff or not, but also appeared annoyed in the deposition that she would be even expected to recall any events that occurred five years earlier. The effect this contrast had on the jury? “One juror said that (deposition video) was the last thing left in his mind when they went into deliberations,” according to Edward Dudensing, one of the two plaintiffs’ lawyers. Great legal work.

In the end, the jury was so outraged that it ignored the plaintiffs’ request for $10 million in punitive damages and instead nearly tripled that amount to $28 million.

So let this case send two messages: One, that Massachusetts juries as just as smart as California juries, and when juries learn the truth about Massachusetts nursing home neglect and abuse, they will punish corporate defendants severely; and two: That by no means does it take a “major law firm” to get superior legal results. Most major or large law firms I know of would not have had either the agility or creativity to accomplish what these two independent lawyers did here. I operate my law firm the same way, which is why we get the superior results that we do, and why I admire these two lawyers’ results here.

To analogize: If you had to choose, which would you rather have fighting for you in court: A swift, agile Bobcat, or a large, lumbering hippo?

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