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Fighting ‘tooth and nail’: The agreement that kept a company alive and well

December 29, 2010

Click photo to enlargea748d 20101228 local healthcare tue VIEWER Fighting tooth and nail: The agreement that kept a company alive and wella748d 20101228 local healthcare tue VIEWER Fighting tooth and nail: The agreement that kept a company alive and well

Editor’s note: This is the second in a three-part series looking at the stories behind the class action lawsuit against Skilled Healthcare. In the end, parties agreed to a settlement in the case in which the company admitted no wrongdoing, and the court granted an injunction ordering 22 California nursing homes to comply with minimum staffing levels as mandated by the state.

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It was a mistake that saved Diana Medal’s life, landing her in a nursing home in the midst of an unprecedented legal battle over staffing levels.

On the night of Jan. 17, Medal fell asleep on the recliner in her living room. A 71-year-old widow diagnosed with osteoporosis, she’s plagued by constant back pain and spends most of her time watching television. Medal hadn’t slept in her bed in more than a year.

At 2:45 in the morning she woke up to use the bathroom, but never made it.

Medal got up from her chair and fell backward, hitting her head on the edge of the coffee table. She didn’t lose consciousness, and remembers her walker falling sideways across her legs.

She said every curse word imaginable — in English and in Spanish.

”The pain was unbearable,” Medal said. “It was like somebody shot me.”

Most nights Medal would take the cordless phone, which she keeps tied to her walker with a piece of fishing line, and charge it on her nightstand. But on that night she forgot, and the mistake ended up saving her life — she was

able to reach for the phone to dial 911.

The medics arrived, one at the front door and one at the back, which she kept unlocked since the last time she went to the hospital. The ambulance had been to Medal’s house twice before, but this time was different, and would require more than a few nights in the emergency room.

The X-rays at St. Joseph Hospital in Eureka revealed multiple compression fractures in her lower back and severe swelling. This wasn’t the first time Medal had injured her spine, which is now riddled with 22 separate fractures. She needed rehab if she was going to stand again.

Doctors sent her to Granada Healthcare and Rehabilitation, a nursing home less than one mile away and one of five Humboldt County facilities owned and operated by national nursing home chain Skilled Healthcare. Her roommate at the hospital told her never to go to the facility — that it was a “nightmare” — but Medal didn’t have a choice in the matter.

On the afternoon of Jan. 22, five days after her fall, Medal stared at the ceiling as she was rolled through the front doors of Granada on a stretcher. For the next three weeks, the facility would be her home.

Medal is one of 42,000 patients represented in a class action lawsuit against Skilled Healthcare, and her story is a recurring theme at facilities run by the national nursing home chain. With chronic understaffing, caregivers at nursing homes are forced to make difficult choices.

Medal said when she arrived at Granada everything her hospital roommate told her just clicked.

”I wouldn’t send my worst enemy there. It was hell,” she said.

Taking a risk

After 365 days of disputing documents, presenting evidence and arguing over testimony, it was all over.

On Nov. 30, the court approved a settlement in the class action lawsuit against Skilled Healthcare — exactly one year from the start of the trial. Valued at $62.8 million, or a little less than 10 percent of the initial jury verdict of $677 million, the settlement marked the end of the longest civil trial in Humboldt County history.

Health care industry analyst Sheryl Skolnick said that considering the net worth of Skilled Healthcare — which heading into the lawsuit was already $450 million in debt and armed with a revolving credit line of $94 million, a far cry from the more than $1 billion that would be needed to appeal the verdict — a settlement was the only logical conclusion for both sides.

”It makes a lot of sense to reach a settlement that the company can actually pay,” Skolnick said, adding that had the initial verdict stuck, Skilled Healthcare would have been forced into bankruptcy, delaying or even jeopardizing altogether any of the money getting back to the class in the case. “Once in bankruptcy, the whole game starts over again.”

If recent stock prices for the company are indication, bankruptcy is even more unlikely now than before the suit. Prices have been on the rise since the settlement was reached, hitting $8.58 a share on Dec. 17, the highest it’s been all year.

Of the settlement, roughly $20 million will end up in the hands of a half-dozen plaintiff attorneys, according to court documents, while $26 million will be divided among a class of 42,000 people. The figure is par for the course when it comes to plaintiffs’ attorneys fees, said Skolnick, which typically amount to somewhere between 30 and 50 percent of a settlement once a case has gone to trial.

”I was initially concerned that it would be even less, so I was relieved to hear that they got something,” Skolnick said. “Could it have been higher? Yes; but that doesn’t surprise me.”

Lead plaintiffs’ attorney Timothy Needham said the fees were standard and, if anything, with a 1.9 percent multiplier, were lower than what they could have been. The team of attorneys logged nearly 29,000 hours working on the case and spent more than $1.7 million on out-of-pocket expenses, Needham said, including the cost of documenting staffing reports and bringing in experts to testify during trial.

”Essentially what it comes down to is, ‘What’s the risk you’ve taken?” Needham said, adding that his office turned down more than 100 cases during the nearly five years spent working on the case. With 129 motions, 14 writs and two appeals, there was ample opportunity to strike out.

”Everything was fought tooth and nail,” Needham said. “There was not one thing that was left uncontested.”

Lead Skilled Heathcare defense attorney Kippy Wroten called the settlement “amazing.”

Wroten said the agreement was “as good of a result as we could have obtained,” adding, “It was just an incredible effort.”

Unlike most lawsuits in the nursing home industry, the suit was not a personal injury case and never claimed a patient was harmed in a Skilled Healthcare facility. The distinction was key, Needham said, in building a case around Section 1430 (b) of the California Health and Safety Code, which allows individuals to sue over violations of patients’ rights, like hours of care.

The catch is that the statute allows for a maximum of $500 per violation, not worth a lawyer‘s time when attorney’s fees and court costs are factored in. But aggregate a class of people under the same lawsuit, all of a sudden that $500 becomes millions. In the end, the goal was to get $20 for each class member per day they stayed in an under-staffed facility, Needham said, a goal that unless there is a substantial amount of money left over from settlement claims, many patients will never see.

For Needham, the suit was a once-in-a-lifetime case.

”We had so many people complain to us that these facilities were not treating them properly. But we weren’t solving any problems,” Needham said. “It’s one of those occasions where you can say you did the right thing for the right reasons. For an attorney, it’s about as close to trial heaven as you can possibly get.”

What dentures?

The tears rolled down Cindy Cool’s face when she heard her father’s name during the Skilled Healthcare trial.

Jack Stern developed Alzheimer’s disease in 2004, and Cool needed to find a place that could care for him 24 hours a day. After weeks of searching for a nursing home, she decided on Eureka Healthcare and Rehabilitation.

”I would come in to find him sitting on the love seat in the lobby; his sweat pants soiled and urine dripping down into his shoes,” Cool said, fighting back tears as she took the witness stand. “I saw other patients walking around with their catheters dragging on the ground, leaving a trail of urine behind them.”

Cool drove to the facility from her home in Blue Lake five days a week to be with her father, who died of complications from the disease in 2006. One day, when she found that her father’s face had not been washed since she last saw him, Cool asked a nurse when his dentures were last cleaned.

The reply: “We didn’t know he had dentures.”

Cool stayed at her father’s bedside for 48 hours straight when he died, and while she can recall horror stories from her time spent in the facility, she offered nothing but praise for the nursing staff, who she said came in the room and told her how much they enjoyed caring for her father before his death.

”I know they really do care,” Cool said. “But when you’re short-handed like that, you just don’t have enough time to take care of everyone.”

Since 2004, Eureka Healthcare and Rehabilitation has been cited for 19 patient care violations, according to state records, 10 of which were appealed. Fines for the remaining violations varied, and amounted to almost $25,000 over the six-year period.

During that time there were a total 45 official complaints, ranging from quality of care, admission/discharge rights, dietary services, administration/personnel and accidents. State investigations substantiated 30 of them, more than half of which occurred during 2008.

Like many class members, the lawsuit came too late for Cool’s father. All she wants to see is change.

”I just want the situation to get better for other people and their loved ones,” Cool said. “I would like to think that when I get to be that age, I will be taken care of.”

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By the numbers — Amount that class members can receive per day a Skilled Healthcare facility operated beneath 3.2 nursing hours per patient per day during their stay:

* $20 per day for a claimant who is both a class member and a private pay member

* $18.30 per day for a claimant who is a class member but did not pay out of pocket

* $1.70 per day for a claimant who is a family member and is not making a claim as a successor to a deceased resident class member

Note: Class period from Sept. 1, 2003, to Sept. 7, 2010. Figures can increase slightly depending on how many claims are filed, and can jump from $20 to $25, $18.30 to $22.87 and $1.70 to $2.13 per day, respectively. To date, more than 4,000 claims have been filed.

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Matt Drange can be reached at 441-0514 or mdrange@times-standard.com.

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