Proving Corporate Liability In Elder Abuse Cases – The Crucial First Step Of Propounding A PMQ Re Organizational Structure To Named Corporate Defendants

May 20, 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.

The typical elder abuse practitioner will conduct initial research pre- filing as to the identity of a facility defendant’s corporate overseers. Needless to say, this is an important step as one cannot secure liability against corporate overseers if they are not named defendants in the action.

From there, however, we have noticed that plaintiffs’ counsel often tends to wait until after they have conducted extensive discovery relating to the neglect their plaintiff suffered while in the defendant facility. If you are doing this, we cannot urge you strongly enough to change your approach – starting with your very next case!

Simply stated, there is no reason whatsoever to wait to determine the actual corporate structure and the identities within that corporate structure until after you have secured discovery on the underlying neglect. The most effective way to immediately secure the corporate structure is by propounding a PMQ notice of deposition re “organizational structure” of any named corporate defendant. You can and should propound these PMQ notices at the same time you propound discovery to the facility defendant relating to the neglect of the plaintiff. We can walk and chew gum at the same time here!

The beauty of the PMQ re organizational structure is that you really don’t need anything in advance of the deposition to get the ball rolling. Just go into the deposition as would a journalist and carefully go over ALL of the entities within the enterprise and nailing down the entire organizational structure. Inevitably, there will be one or more organizational charts depicting the enterprise structure and you should doggedly seek out those documents as they are very valuable documents not only in helping you to understand the organizational structure but also in showing the same to the jury. Often organizational charts are our very first trial exhibits before the jury.

When taking these PMQ re organizational structure depositions be detailed and turn over every stone. As to each entity, you should determine (1) exactly who owns it, (2) exactly who it owns, (3) what the nature of its business is, and (4) who its managers and directors are, among potentially other things.

What if defense counsel sends you an email saying one of the named defendants “had nothing to do with the” facility defendant and is not in the chain of ownership, etc? Most of us have had this happen to us because we are definitely not going to be perfect in who we initially name unless we have sued the corporate chain at issue often and in close proximity to the current suit. The answer is simple – you are not dismissing any defendant until you take the PMQ re organizational structure of that entity. With the advent of Zoom, this is a simple matter, and a law and motion judge surely would understand your reasons for wanting to question a PMQ under oath on the topic before dismissing the entity. Usually, defense counsel will simply prep the PMQ of the “right” entities to testify that the other entity is unrelated and thus should not be included in the suit.

After the PMQ deposition, you should have multiple action items that you should act expeditiously on. First, immediately Doe in to the suit any corporate entities that you believe need to be added based on the PMQ testimony and organizational charts. Second, submit the deposition to your economic expert to determine whether the testimony re ownership changes the valuation of the enterprise in any way.

Securing timely PMQ organizational structure depositions is a crucial preliminary step to ensuring that the correct corporate entities are in the lawsuit well before trial approaches. Every elder abuse practitioner should consider serving such notices from the outset of the litigation.

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