The Class Action from Hell

Tom Scott
CA Executive Director, National Federation of Independent Business

A recent lawsuit against Skilled Healthcare California LLC has
had little or no coverage and it is amazing. Skilled Healthcare
California was hit with a penalty of $671 million dollars by a Humboldt
County jury. And that does not even include the punitive damages. The
core issue was whether the company violated a state law requiring
nursing homes to provide a minimum of 3.2 nursing hours per patient per
day (ppd). The key word here is minimum.

care in this state and country is a huge issue. Skilled Healthcare has
never received one complaint against it on the California Nursing Home
Directory. However, this did not stop the plaintiffs’ attorneys. The
judgement was leveled against Skilled Nursing on behalf of the 32,000
patients it has in California, awarding the maximum damages over a six
year period to the whole class.

is a company that provides 14,000 jobs to people in California. Its
stock price plummeted 75% on news of the judgement. It looks like it
cannot appeal the decision because to do so you have to post a bond of
150% to do so and its assets are approximately $2 million. It has also
exhausted its primary professional liability insurance.

Healthcare California has 22 facilities in California. What happens
now?  Does it file for bankruptcy? Close it’s doors? What happens to
the 14,000 employees? Are they let go? Considering this state has the
third worst unemployment rate in the nation that would be a disaster.
And what about the 32,000 patients?

whole thing is a mess. How can this happen? There has to be a better
way. The only people that are truly are going to benefit from this sham
of a class action are the shameless trial lawyers. Since the punitive
damages have not been awarded, I have not seen their fee, but it will
likely fall between 30% and 40% of the total award. All because this
jury in Humboldt did not feel the company met a nursing patient ratio.

Cross posted at

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