Nursing Home Abuse and “Direct Liability”

February 23, 2024

As discussed in earlier blogs, affixing liability against an elder care facility’s corporate overseers is critical in elder abuse litigation. This is important morally, as the corporate overseers are invariably responsible for neglect that occurs at the facility because they control key features of facility operations such as staffing, supplies, and staff pay. Securing corporate liability also is important to ensure that corporate defendants are held accountable for their wrongdoing.

Typically, the financial benefits of nursing home operators’ ill-conceived plan to maximize profits at the expense of patient care are maintained by the corporate overseers. Thus, a judgment against solely the facility not only may be uncollectible but also will be substantially less than would be available if the corporate defendants were held liable because punitive damages are capped at 10% of the overall net worth of the defendants.

There are many different legal theories elder abuse practitioners can use to pursue corporate overseers in connection with the neglect that their clients suffered while residing in an elder care facility. These theories include, but are not necessarily limited to, direct, joint venture, conspiracy, aider and abettor, and alter ego liability.

This blog addresses pursuit against corporate entities under a “direct” theory of liability. The facts underlying a direct theory of liability are familiar to us all. The corporate defendants siphoned money from their facilities that was necessary to ensure that their facilities provided appropriate patient care. In the broadest strokes, plaintiffs’ counsel will need to show that the corporate defendants exercised substantial control over the subject facility and then exercised this control in a manner designed to maximize profits at the expense of patient care. The typical evidence that is most helpful to meet this showing is the subject of other blogs.

Often practitioners express concern about the plaintiffs’ burden to show that the corporate defendants had a “substantial caretaking” relationship with the plaintiff. Defendants will argue that no employee of any defendant knew the plaintiff or at any time provided care of any kind to plaintiff. Defendants will rely on the Supreme Court’s decision in Wynn v. Pioneer Services, in which the California Supreme Court held that an outpatient doctor did not have “care or custody” over his patient for purposes of the Elder Abuse Act.

We do not have encountered any difficulty with superior court judges appreciating that the “care and custody” analysis for corporate overseers is wholly different than it is for healthcare practitioners with only intermittent contact with patients. In the case of corporate overseers of nursing home and assisted living facilities, there is no question that the underlying facility had “care or custody” of the plaintiff within the meaning of the Elder Abuse Act. From there, it takes little imagination to understand how owners and operators of facilities also have care and custody over the patients in their facilities when they are making material decisions that impact the care provided at the bedside. Simple examples paint this picture easily. Assume that a nursing home owner directed the facility’s administrator not to staff the facility with any nurses for the last two days of the month so that budget could be met and that this direction caused harm to patients. As a matter of common sense, the owner would have no ability to suggest that he did not have care or custody of the patients in the facility because he handled this directive from the comfort of his home thousands of miles away. We believe factfinders also have been able to reach this same conclusion rather easily.

In sum, plaintiffs’ counsel in elder abuse cases should essentially always assert direct liability against corporate overseers if these overseers are exercising material control over the operations of their facility.

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