Private enforcement of nursing home staffing mandates

The tools available to the plaintiff

2014 September

Understaffing is uniformly viewed as one of the primary causes of violations of resident rights, inadequate care, and unsafe conditions in skilled nursing facilities. A number of studies have shown a direct causal relationship between inadequate staffing and quality of care issues that in turn lead to serious injuries to nursing home residents, including pressure sores and significant weight loss. For example, in Quality of Care in Nursing Homes: An Overview, Office of Inspector General (March 1999) the authors found that California facilities staffed at, or above, the safe staffing standard had less than half the rate of pressure sores and incontinence than facilities staffed below the safe staffing standard. Due in large part to such studies, in 2000, the California Legislature specifically recognized the relationship between staffing and quality of care at skilled nursing facilities by enacting Health and Safety Code section 1276.5, which mandates a minimum 3.2 hours of direct nursing care per patient day (“NHPPD”).

However, understaffing and the resulting violations of resident rights remain rampant in the California nursing-home industry more than 13 years after Section 1276.5 was enacted, due in large part to the ineffectiveness of public enforcement of Section 1276.5 and other statutes and regulations governing the operation of skilled nursing facilities in the state. For example, in The Quality of Nursing Home Care Before and After Assembly Bill 1629, the California Department of Public Health reported to the California Legislature that 69 percent of audited skilled nursing facilities did not comply with minimal staffing requirements for the time period of 2006-2007.

Section 1430

In part to address and militate against the ineffectiveness of public enforcement of resident rights and compliance with applicable regulations, the California Legislature enacted Health & Safety Code section 1430, which provides for the private enforcement of the rights of nursing home residents. Specifically, Section 1430(b) provides that a current or former resident or patient of a skilled nursing facility may bring a private civil action against the licensee of a skilled nursing facility that violates any rights of the resident or patient as set forth in the Patients Bill of Rights, or any other right provided for by federal or state law or regulation.

Section 1430(b) further provides for statutory penalties of $500, for costs and attorneys fees, and for injunctive relief to curb the violations. Recent cases such as Shuts v. Covenant Holdco LLC (2012) 208 Cal.App.4th 609, make clear that nursing home residents may bring a cause of action under Health and Safety Code section 1430(b) for violations of any of the resident rights set forth in Health and Safety Code section 1599.1, including a skilled nursing facility’s violation of the 3.2 NHPPD requirement set forth in Health & Safety Code §1276.5. One of the most noteworthy examples of private enforcement of minimum staffing laws pursuant to Section 1430(b) was the 2010 case of Lavender v. Skilled Health Group, Inc., wherein the jury awarded a $677 million verdict against a prominent skilled nursing company for violating the minimum staffing law. (Lavender et al. v. Skilled Healthcare Group, Humboldt County Superior Court Case No. DR060264.)

Thus, Section 1430(b) provides a powerful and important tool for the private enforcement of resident rights and minimum staffing requirements in skilled nursing facilities, and serves to buttress the enforcement efforts of the primary state agency charged with regulating California skilled nursing facilities, the California Department of Public Health, which, like virtually every other government agency in recent years, has been saddled with extensive budgetary and staffing cuts that have served to limit the effectiveness of its enforcement efforts.

But while there can be no question that the private enforcement of resident rights pursuant to Health and Safety Code section 1430(b) is an important and worthy objective, there can also be no question that its powerful private enforcement mechanisms led to a perceived abuse of the statute in recent years by private litigants and their attorneys. Central to this abuse was the seemingly ambiguous language of Section 1430(b) providing a $500 statutory penalty for a violation of resident rights. Private litigants routinely seized upon this seeming ambiguity by filing private class actions on behalf of a class of residents in the hopes of achieving lucrative settlements and verdicts by asserting that nursing home chains were liable for $500 per violation and/or per resident, a reading of the statute which of course led to massive potential liability exposure for nursing home chains.

Nevarrez v. San Marino Skilled Nursing and Wellness Centre

However, the California Court of Appeal recently clarified the seeming ambiguity of the language of Health and Safety Code section 1430(b) and largely put a stop to its perceived abuse in Nevarrez v. San Marino Skilled Nursing and Wellness Centre (2013) 221 Cal.App.4th 102 (“Nevarrez”). In Nevarrez, the Second District concluded that the $500 maximum in section 1430, subdivision (b) applies per civil action rather than per violation. That is, the court concluded that the maximum possible statutory penalty that may be awarded in a private action alleging violations of Section 1430(b) is $500, regardless of the number of actual violations or number of residents involved in that action. (Id. at 137.)

Aside from limiting the total statutory penalty that may be awarded to $500 per lawsuit as set forth in Nevarrez, another way that the courts can prevent or limit abuse of Health & Safety Code § 1430(b) is to be especially mindful to award attorneys fees only in an amount specifically commensurate with the results achieved in the case. As stated above, Section 1430(b) specifically provides that a plaintiff who prevails is entitled to attorneys’ fees.

Attorneys’ fees

An award of fees, of course, advances an important public policy to ensure that certain enumerated patient rights are not violated. (See, e.g., California Assn. of Health Facilities v. Dept. of Health Services (1997) 16 Cal.4th 284, 301-302; Title 22 C.C.R. § 72527(a) [“An agreement by a resident or patient of a skilled nursing facility . . . to waive his or her rights to sue pursuant to this subdivision shall be void as contrary to public policy.”].

But the prospect of a huge attorneys’ fees award can, and does, often lead to abuse of statutory schemes providing for private right of actions without the need to show an actual physical injury or “injury in fact.” While decided in another statutory context and in the context of private attorney general action, cases such as Consumer Defense Group v. Rental Housing Industry Members (2006) 137 Cal.App.4th 1185, serve as important reminders that in the absence of a real public benefit achieved, a large award of attorneys’ fees will often not be warranted, and can even be considered unconscionable.

Of course, in the context of actions brought under Health and Safety Code section 1430(b), attorneys’ fees are specifically provided for in the statute itself. Statutory attorneys’ fees are ordinarily determined by the court pursuant to the “lodestar” or “touchstone” method. Under this approach, a base amount is calculated from a compilation of time reasonably spent and reasonable hourly compensation of each attorney. (See Serrano v. Priest (1977) 20 Cal.3d 25, 48.)

The court then exercises its discretion to apply a multiplier to adjust the lodestar upward or downward in order to arrive at a fee that reflects the fair market value of the service rendered, based on factors including: (1) the novelty and difficulty of the questions involved, (2) the skill displayed in presenting them, (3) the extent to which the nature of the litigation precluded other employment by the attorneys, (4) the contingent nature of the fee award; (5) the success achieved (including all positive results from litigation – i.e., changes in company policy, dollar value of settlement benefits); and (6) in class actions, the rate of acceptance of the benefit offered to class members (measures one aspect of overall success – i.e., the degree to which the settlement benefits were of interest to class members). (See Graham v. DaimlerChrysler Corp. (2004) 34 Cal.4th 553, 579; Serrano v. Priest (1977) 20 Cal.3d 25, 49.)

However, even with respect to statutory attorneys’ fees, the Supreme Court has not mandated “a blanket ‘lodestar only’ approach; every fee-shifting statute must be construed on its own merits ...” (Ketchum v. Moses (2001) 24 Cal.4th 1122, 1136.) In the context of class actions, courts recognize two methods for calculating attorneys’ fees in class actions: the lodestar method and the percentage of recovery method. (Wershba v. Apple Computer, Inc. (2001) 91 Cal.App.4th 224, 254.) Of course, the economic value of injunctive relief can be taken into account when determining the amount of a fee award. Ultimately, Courts should be mindful that the predicate of any attorney fee award is the necessity and usefulness of the conduct for which compensation is sought. (Thayer v. Wells Fargo Bank, N.A. (2001) 92 Cal.App.4th 819, 846.)

Summary

Thus, despite Nevarrez, when properly applied, Health and Safety Code section 1430(b) can still be a potent device to ensure that the rights of skilled nursing facility residents, including the right to live in a facility that complies with the minimum staffing ratio set forth in Health and Safety Code section 1276.5, are not being violated. Despite the $500 maximum statutory penalty per case that may be recovered per Nevarrez, in cases where serious and extensive resident right violations are uncovered, those violations still may be remedied by the robust, enforceable injunctive relief available under Section 1430(b), as well as an award of attorneys’ fees commensurate with the results achieved. That is, despite the ruling in Nevarrez, the remaining available remedies provided for in Section 1430(b) should continue to encourage private litigants and attorneys in future cases to take up the cause of skilled nursing facility residents and thereby help to protect one of the most vulnerable segments of our population.