Trial Magazine

In 936, King Aethelstan founded St. Peter’s hospital to provide a residence for men past their working days. As one of the earliest examples of dedicated housing for the elderly in England, St. Peter’s enabled residents to live out their remaining years in peace. Today, around the world, care at specialized facilities—assisted living facilities, skilled nursing facilities, life care communities, or other long-term care facilities—is a necessity both for older adults and people of all ages with physical and cognitive impairments. AARP estimates that more than half of the people who turned 65 in 2017 will need long-term care services in their lifetime, and the number of people needing this assistance likely will continue to grow because of the country’s aging population.

But nursing homes are notoriously underfunded and understaffed, putting patients at risk. Trial lawyers have been at the forefront of forcing nursing homes to treat their residents with dignity and respect, holding them accountable for systemic failures, and effecting real change in patient care.

The Dark History of Neglect

Despite decades of hand-wringing from regulators over the state of America’s long-term care facilities, poor quality care continues to affect millions of vulnerable residents. In 1935, providing care for the elderly became a national mandate after the Social Security Act made funds available to care for older, destitute adults. But starting in the 1950s, nursing home operators realized they could make easy money acting as the go-between for veterans receiving checks from the U.S. Department of Veterans Affairs. One notoriously greedy nursing home operator made millions by billing Medicaid for deceased patients while current residents lived in filth.

Congress attempted to alleviate the growing crisis with the 1987 Nursing Home Regulatory Act, followed quickly by federal regulatory requirements for nursing homes. States passed similar bills providing a “Resident Bill of Rights”—these were met with early optimism that the issues had been fixed. In reality, the changes created a fractured regulatory framework subject to political capture and an overall lax regulatory environment where strong rules, if implemented, are unevenly enforced.

The Campbell case. Despite lawmakers’ efforts to address the treatment of nursing home residents, reports of serious abuse skyrocketed through the early 1990s. This time, attention was generated by lawsuits seeking to hold facilities to task for the terrible conditions and care being provided to residents. And juries agreed that our elderly citizens are not disposable.

A key turning point came in 1985. Three years earlier, Morris Hugo Campbell was admitted to Lakeland Health Care Center in Florida, following a stroke. He was elderly and suffered from dementia and disabilities before he set foot in the facility, but he was the center of his wife’s world and dearly loved by his family.

Within two months of his admission, Campbell developed horrific necrotic pressure ulcers that ultimately killed him. His family sued the facility, and at trial, defense experts characterized him as “just a stroke victim” who was “alive but not living.” And that is the challenge of nursing home litigation—how to help jurors care about the death of a man even if he was enduring a low quality of life or was at the end of his life when an injury occurred.

Campbell’s attorney powerfully argued that although his client may have been near his time, that did not mean Lakeland Health Center could throw his life away. The jury agreed, delivering what was then a record-setting judgment in the county—$509,000 in compensatory damages and $1.7 million in punitive damages. The verdict was upheld on appeal.

These facilities avoided regulatory oversight for years, but Campbell started a wave that quickly expanded across the country. Trial lawyers put the industry on notice that if it failed in its duty to care for residents with dignity and respect, it would be responsible for the harm it caused.

The Rise of Private Equity Hellholes

The surge in litigation to hold this negligent industry accountable came just in time. The recent rise of corporate ownership of long-term care facilities has led to increasing problems in infection control, understaffing, patient abuse, and more. Private equity investment in nursing homes went from $5 billion in 2000 to more than $100 billion by 2018. While good facilities exist—generally individual facilities operated by nonprofit or service-oriented organizations—the most notorious nursing home operators have skirted insufficient regulations and squeezed every penny possible from understaffed and under-provisioned facilities.

Unsurprisingly, cutting costs creates devastating consequences for residents. A 2020 NYU Stern School of Business study found that residents die more often when private equity firms own nursing homes. Trial lawyers have helped expose these abuses, which range from physical to emotional to financial.

In one horrifying instance at Hacienda HealthCare in Arizona, an incapacitated resident was repeatedly raped and eventually impregnated by a staff member. In another tragic chain of events, a 90-year-old woman, a resident of Brookdale Charleston in South Carolina, was left unattended by staff and wandered off the property into a large nearby pond where she was killed by an alligator. And in yet another example, an 87-year-old West Virginia woman spent only 19 days in Heartland of Charleston nursing home but lost 15 pounds, suffered head trauma, and became severely dehydrated and unresponsive. Sadly, these stories are not unique; almost every family in America has a tragic story about a relative or friend who experienced negligent care in a nursing home—sometimes with fatal outcomes.

Sadly, almost every family in America has a tragic story about a relative or friend who experienced negligent care in a nursing home—sometimes with fatal outcomes.

Hiding From Accountability

The nursing home industry has done everything in its power to evade liability for the harms it causes, with two legal strategies inflicting the most damage: corporate shell games and forced arbitration.

Corporate shell games. The de facto way to run nursing homes for decades, corporate shell games create a mess for grieving families trying to hold the responsible party accountable. On paper, multiple related “companies” own, manage, and operate each nursing home. That normally includes an operating company, a management company, and a property company, all of which are ultimately owned by the same individuals or entities. The property company owns the real estate where the nursing home is housed and often charges above-market rents in tax-advantaged trusts, while the management company charges large “management” fees to the operating company.

This all saddles the operating company with significant expense and debt at outrageous interest rates that make it impossible for it to run effectively. Residents—and Medicaid and Medicare—are mined as rent for the property company, while the operating company takes the liability for inadequate care.

Many nursing homes also contract with related parties—companies also owned or managed by the same entities—for services such as the provision of medications, food, laundry, and therapy at above-market rates. This further siphons money out of the nursing home operating company and hides profits. Operating companies are forced to cut staff and services to residents to cover inflated bills paid to their private equity owners. This leads to poor care, resulting in more immediate jeopardy deficiencies. Far too often these companies simply fold when faced with significant liability for their actions—leaving residents and their families with an insufficient insurance policy as their only means of recourse.

Forced arbitration. By forcing residents and their families into a secretive, rigged system—often burying arbitration provisions in hundreds of pages of admission paperwork—nursing home operators ensure an industry friend will decide discovery disputes and damages. A 2009 study by the American Health Care Association, which represents most nursing homes, found the average awards after arbitration were 35% lower than if the plaintiff had sued in court. It’s no coincidence that the rise of forced arbitration clauses in admission contracts occurred during the 1990s and 2000s as the industry consolidated under corporate ownership.

Unfortunately, even though forced arbitration is an unjust practice, the U.S. Supreme Court has ruled in favor of nursing home operators—allowing them to use it to avoid accountability. In 2012, the Court held in Marmet Health Care Center v. Brown that forced arbitration clauses in nursing home admission contracts were not barred by the Federal Arbitration Act. A few years later the Court issued a similar decision in Kindred Nursing Centers LP v. Clark, ruling that a nursing home’s binding arbitration clause must be given the same weight as those in other contracts and was therefore valid and enforceable.

As plaintiffs lost in court, the Obama administration tried to discourage the use of forced arbitration clauses through a regulatory fix. In 2016, the Centers for Medicare and Medicaid Services (CMS) proposed a rule that would have prohibited long-term care facilities from accessing Medicaid and Medicare programs if they used forced arbitration clauses in their resident admission contracts. However, the Trump administration largely struck the forced arbitration prohibition from the final CMS rule. The final rule does, however, include language barring facilities from requiring residents to sign forced arbitration agreements as a condition of admission.

Unfortunately, it’s likely that many facilities will still rely on forced arbitration clauses to avoid accountability. The final rule doesn’t ban all forced arbitration in nursing homes; it only prohibits nursing homes from requiring residents to sign these agreements to live in their facilities.

However, nursing homes can still offer residents a forced arbitration clause to sign on a voluntary basis—and because many people don’t understand the implications of forced arbitration, if there’s a voluntary form buried in all of the other paperwork they are signing, they might just sign it. In addition, forced arbitration is only restricted as a condition of admission, not once someone is already a resident—so these clauses still can be used later for issues unrelated to admission.

A Pandemic Compounds Systemic Problems

Decades of neglect by companies that spend their money covering their tracks, not on patient care, led to a predictable result as COVID-19 swept the globe in 2020. According to a U.S. Government Accountability Office research report from early in the pandemic, 82% of all surveyed nursing homes—13,299 homes in total—had been cited for infection prevention and control deficiencies in the years leading up to the pandemic. Many were cited multiple times over several years. Thus, it was unsurprising when hundreds of thousands of nursing home residents tested positive for COVID-19 in 2020 and early 2021.

One of the first and deadliest outbreaks occurred at Life Care Center in Kirkland, Wash., where in March 2020, 81 out of 120 residents tested positive and at least 34 residents died. But Life Care was quick to blame slow-moving government officials instead of its poor infection protocols, lack of staffing, and failure to quickly test residents. It was later fined more than $600,000 for several immediate jeopardy deficiencies related to its pandemic response, including failure to notify local authorities of the outbreak and failure to provide adequate care to residents. As nursing homes across the country faced similar devastating outbreaks, family members were outraged by the increasing neglect, illness, and death.

Rather than admit they were unprepared, long-term care facility operators instead demanded immunity and higher reimbursement rates—arguing this was necessary to prevent thousands of nursing home facilities from closing. Across the country, associations representing the nursing home industry pushed for states to adopt broad “transmission immunity” legislation that would let the industry off the hook for operating dangerous facilities that allowed COVID-19 to thrive.

Many of the state bills were drafted broadly to capture coronavirus-specific deaths and also any neglect or care “impacted” by the pandemic—a standard meant to protect against virtually any litigation for at least one year and sometimes much longer. For example, Georgia’s law extends to acts or omissions by a health care facility or provider when “the response to COVID-19 reasonably interfered with” arranging or providing medical services. Texas’s law covers “care, treatment, or failure to provide care or treatment relating to or impacted by a pandemic disease or a disaster declaration related to a pandemic disease.”

While millions were suffering from the coronavirus, then Sen. Majority Leader Mitch McConnell drew a red line when Congress debated an economic rescue package, saying that any funds would need to be attached to broad immunity for businesses—including nursing home operators. AAJ and its coalition partners—including Consumer Voice and AARP—worked with trial lawyers to ensure that this never happened.

On the state front, state trial lawyers associations mounted a coordinated defense across jurisdictions. And while over 30 states passed bills addressing COVID-19-related cases, some were scaled back due to these efforts. For example, New York backtracked on its April 2020 pandemic immunity law, repealing some provisions that had protected nursing homes from liability—its original immunity law was vague, had protected all care as opposed to pandemic-specific care, and had been retroactive to early March.

Long before COVID-19 put us on the front lines against immunity, trial lawyers have pushed for negligent nursing home operator accountability; organized opposition to legislation and rules that would unfairly shield the industry; shared techniques and strategies for attacking unconscionable forced arbitration clauses and unraveling corporate shell games; and, with AAJ, filed amicus briefs in numerous cases involving the use of forced arbitration in nursing home admission contracts.

Nursing homes should be responsible for ensuring excellent patient care and protections against COVID-19, but unfortunately they have fallen short, and it will likely remain the trial lawyers’ fight. As our population ages and costs surge, we must remind the world that long-term care residents deserve to live and die with dignity and respect. Trial lawyers will keep shining a light on abuse, holding negligent parties accountable, and fighting the good fight.