September 2011 Archives

September 28, 2011

Creditors May Sue Directors of Pittsburgh Nursing Home With Questionable Finances - In Re Lemington Home for the Aged

As a Pennsylvania nursing home lawyer, I was interested to read an appeals court opinion about a historic "home for the aged" in Pittsburgh. The Lemington Home for the Aged was originally founded in 1883 as a rest home for elderly African Americans -- many of whom, at the time, were former slaves with limited means of making a living. The nursing home was relocated and expanded in 1983, after which it encountered financial trouble, staffing trouble and a series of health and safety violations that included the deaths of two patients in the home's care. After the home eventually filed for bankruptcy, a group of unsecured creditors filed a lawsuit against the home's directors and officers, alleging they breached their fiduciary duty by failing to act sooner. The district court dismissed In re Lemington Home for the Aged, but the Third U.S. Circuit Court of Appeals resurrected the claim.

The nursing home was unable to make as much money as expected in the 1980s and 1990s, in part because almost all its residents were on Medicaid. It received loans from the city of Pittsburgh, Allegheny County and private foundations, but ended up with $4 million in mortgage debt. To make matters worse, the federal government banned new admissions for a time in 1998, and the home's administrator declined to address staffing problems. A chief financial officer hired in 2002 failed to perform basic tasks; for example, Medicare bills were not submitted, and several employees quit because they were not paid. The home's Board lacked a treasurer during some of this time, ensuring no oversight. The administrator was frequently absent and not replaced. Furthermore, the home was cited for numerous safety deficiencies during this period, leading up to the June 2004 death of a patient whose resuscitation order was ignored, and December 2004 death that could have been caused by neglect.

The administrator proposed bankruptcy in May of 2004, but the board opted for a loan instead, eventually filing for bankruptcy 11 months later. A committee of unsecured creditors in that bankruptcy eventually filed an adversary proceeding against the home's directors and officers, alleging breach of fiduciary duty and deepening insolvency. The district court granted summary judgment to the home, finding that the fiduciary duty claim was barred and the deepening insolvency claim had insufficient support. The creditors appealed.

The Third U.S. Circuit Court of Appeals reversed that decision, finding that there were fact issues sufficient to let the case survive beyond summary judgment. Pennsylvania law allows directors to rely in good faith on information provided by their officers, who in turn must act in good faith in their jobs. The creditors argued that the administrator and the CFO breached their duties of due care; and that the board had breached its duty of due are by relying on the administrator, not intervening with the CFO, and diverting funds supporting the closed home to another home with an overlapping board of directors. The Third Circuit found that the creditors' evidence was enough to convince a reasonable jury that the administrator and CFO were not competent. This shows that the business judgment rule does not apply -- that is, the board cannot be said to have used reasonable diligence if they ignored signs that their officers were incompetent. It also disagreed with the district court that the in pari delicato rule applied. This rule bars plaintiffs from going to the courts over wrongdoing that they themselves had a part in. However, the Third Circuit said, the creditors have presented substantial evidence that the board was acting in its own self-interest, rather than for the good of the nursing home, when it moved the home's funding to another home its members also controlled. This is enough to present a genuine issue of material fact, the Third said, and thus it reversed summary judgment.

As a Philadelphia injury lawyer, I'm pleased that there will be some accountability for the board and the officers for apparent mismanagement of this home. A nursing home is not just a business or even a nonprofit; it is a home, and families entrust their vulnerable loved ones to it. By failing to take good care of basics like paying employees, the officers may have made Pennsylvania nursing home abuse or neglect more likely. After all, it's hard to provide good care if you have constant turnover and low morale. And of course, at least two deaths did take place at the home that may be traceable to mismanagement and neglect. As a Philadelphia medical malpractice lawyer, I hope those two families are able to get the answers they deserve.

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September 20, 2011

Eleven People at Two Western Pennsylvania Nursing Homes Develop Legionnaires Disease

As a Pennsylvania nursing home lawyer, I was concerned to read about an outbreak of a water-borne disease in two Pittsburgh-area nursing homes. According to the Pittsburgh Tribune-Review, residents at two facilities in Turtle Creek, in the Pittsburgh suburbs, were diagnosed with Legionnaires' disease last week. Eight people fell ill at LGAR Health and Rehabilitation Center; three more patients were diagnosed at Hamilton Hills Personal Care Home. Three of the 11 patients had to be hospitalized. Because the disease is caused by a bacterium in water and spreads easily, both homes were using bottled water while they attempt to fix the problem and await test results.

Legionnaires' disease is life-threatening, particularly for children and the elderly. Rates of death for people who develop it in hospitals are as high as 50 percent. It is an infection with the bacteria Legionella, which is inhaled as water vapor from sources like showers, air-conditioners and humidifiers. Once it's in the body, victims develop a high fever and pneumonia-like symptoms that can include vomiting, diarrhea, confusion and even kidney impairment. No deaths in the Turtle Creek outbreaks were reported as of Sept. 15. However, the Tribune-Review added another victim to the total that day, reporting that the patient had previously been diagnosed with pneumonia. A spokesman for the Allegheny County Health Department said the department had already seen 50 or 60 cases this year. Nursing homes are especially vulnerable, he said, because they may keep their water temperatures low to avoid scalding fragile patients. LGAR had already heated and flushed its water, WTAE reported, and had also installed a special copper ionization system to prevent future outbreaks.

It's pleasing to me as a Philadelphia medial malpractice lawyer that this nursing home is taking quick action to solve its Legionnaires' problem. Because this disease is transmitted by inhaling, it's not uncommon to see outbreaks affecting many, many people within range of the infected water supply. In a nursing home, a closed environment that patients rarely leave, this could mean an outbreak affecting nearly everyone in the home. And because the disease is especially hard on older people with health problems -- the kinds of health problems that require nursing home care -- a Legionnaires' disease outbreak could be life-threatening. Medical authorities agree that the disease is relatively easy to prevent, by keeping water supplies at safe temperatures. As a Philadelphia injury lawyer, I don't believe this is difficult for nursing homes to do -- and could make a huge difference for nursing home patients.

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September 14, 2011

Arkansas Appeals Court Denies Charitable Immunity in Nursing Home Negligence Suit - McMullin v. Arkansas Elder Outreach of Little Rock

In my practice as a Philadelphia injury lawyer, I occasionally read about a legal doctrine called charitable immunity. We no longer have such a rule in Pennsylvania, but in neighboring New Jersey and other states, non-profit organizations can sometimes be immune from lawsuits -- no matter what they may be responsible for -- simply because they are incorporated as charities. That charitable immunity was tested in the Arkansas Court of Appeals ruling in McMullen v. Arkansas Elder Outreach of Little Rock, Inc.. In that case, Bobby McMullen sued Elder Outreach for alleged negligence when his father, William McMullen, was a resident there. Elder Outreach won dismissal of the lawsuit because it is not for profit, but the Appeals Court ruled that Elder Outreach waived the defense by failing to plead it early enough.

McMullen alleged that his father had suffered several injuries while under Elder Outreach's care, but the opinion did not go into details. The elder McMullen is now deceased. The younger one filed suit in August of 2006 and Elder Care answered in September that it is a nonprofit, but did not say it is entitled to charitable immunity. It moved to dismiss on that basis in October of that year. In his opposition to the motion, McMullen argued that Elder Outreach waived its charitable immunity by not citing it in the original answer. The motion was denied and discovery on the issue proceeded, and in March of 2009, Elder Outreach amended its 2007 for summary judgment on the basis of charitable immunity. This was granted, McMullen's post-ruling motions were denied and McMullen appealed.

Before the Arkansas Appeals Court, McMullen again argued that Elder Outreach had waived its charitable immunity argument by not bringing it up in its answer. This rendered it ineligible for charitable immunity, he argued, and thus summary judgment was incorrectly granted. The appeals court agreed. It noted that Elder Outreach not only failed to plead charitable immunity in its answer; it also failed to amend its answer according to the trial court's suggestion. Elder Outreach said it should be enough that it mentioned its nonprofit status in the answer; but the appeals court disagreed, noting that the Arkansas Supreme Court had already found this insufficient. Nor was its motion to dismiss a "responsive pleading" that can substitute for the answer, the court said. Thus, it reversed the trial court.

As a Pennsylvania nursing home lawyer, I'm pleased that McMullen will get his day in court. And that's all the court did at this stage -- allow McMullen a chance to prove his case. If Elder Outreach had been granted charitable immunity, it would have been able to dodge the lawsuit regardless of whether it had been negligent; the doctrine makes no distinction between cases with merit and frivolous cases. That's one reason why Pennsylvania and other states have abolished the charitable immunity doctrine. Applying it to nursing homes could potentially allow homes to commit Pennsylvania nursing home abuse and medical negligence with no consequences from the patients' families, although state regulators may still step in. As a Philadelphia medical malpractice lawyer, I'm pleased that our state gives victims the right to make their cases without overcoming the hurdle erected in this case.

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September 5, 2011

State of Iowa Nursing Home Inspector Refuses to Turn Over Nursing Home Statistics

As a Pennsylvania nursing home lawyer, I have been watching news about the state of Iowa's nursing home agency with some interest. Iowa is a battleground for proponents of safety in nursing homes because its governor, Republican Terry Branstad, is perceived by some as overly friendly with the nursing home industry. Branstad has taken campaign donations from nursing home companies, and during his first term as governor, he was cited by three separate state officials for failing to adequately regulate nursing homes. During this term, he has cited budget problems as a reason for cutting 10 Iowa state nursing home inspectors, bringing the office from 38 to 28, even though the positions were 75 percent federally funded. When the state Legislature restored the funds, the inspectors' department used them for something else. Now, the Des Moines Register reported Sept. 3, the Iowa Department of Inspections and Appeals, a state agency, has declined to turn over statistics it compiles to the Register or the ACLU of Iowa.

The Register asked the Department of Inspections and Appeals in July for answers to six questions about violations, time spent on inspections and uninvestigated complaints. The newspaper also requested two statistical reports the Department compiles for the federal Centers for Medicare and Medicaid Services. That agency adds the Iowa statistics to a federal database that is publicly available, and it also helps to fund the state Department. Saying the data belongs to the federal government, the Department declined to release the data. This got the interest of the ACLU of Iowa, which wrote a letter to the Department this month asking for the legal reasoning behind its refusal to release the information. In the letter, the ACLU's legal director noted that the federal government does not fund the Department completely and asked for letters, regulations or other rules the Department is relying on. CMS has given the Register the statistical reports in question, but the questions have gone unanswered. Answering them could tell readers how nursing home patients are faring in Branstad's era of looser regulation.

As a Philadelphia injury lawyer, I suspect the Department might not want to turn over the information because it could make the Department -- and the Branstad administration -- look bad. By cutting all of those nursing home inspectors, the administration was constraining the Department's ability to do its job. Thus, it would not be surprising to find that more problems at nursing homes are going unnoticed -- and thus, uncorrected. In fact, judging by Branstad's campaign comments that nursing home inspectors have a "gotcha attitude," it's possible that this was actually a goal for him. Regardless of what the voters of Iowa think of this, the dependent elderly and disabled people of Iowa deserve to be safe in their homes, not neglected or abused. That's why, as a Philadelphia medical malpractice lawyer, I hope the ACLU and the Register succeed in drawing attention to any problems they uncover under the Branstad administration -- both public attention and the attention of federal regulators.

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