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Pennsylvania Ct. Imposes Corp. Liability On Nursing Homes

August 2, 2010

Pennsylvania Court Imposes Corporate Liability Upon Nursing Homes

By: Leo Strupczewski


A unanimous Pennsylvania Superior Court panel has ruled that a nursing home can be held corporately liable for its actions.

Writing that such liability is already imposed on hospitals, health maintenance organizations and medical professional corporations, a three-judge panel in Scampone v. Grane Healthcare Co. held that nursing homes were similar to those organizations in that they provide ""comprehensive and continual physical care"" for patients. They are not, Judge Mary Jane Bowes wrote for the panel, like a physician's outpatient office, which is not susceptible to corporate liability claims.

""Except for the hiring of doctors, a nursing home provides comprehensive and continual physical care for its patients,"" Bowes wrote.

She later continued: ""Even though Highland did not have staff physicians, it was responsible for ensuring that all doctor-ordered testing was performed. Clearly, the degree of involvement in the care of patients of skilled nursing home facilities is markedly similar to that of a hospital and bears little resemblance to the sporadic care offered on an out-patient basis in a physician's office.""

The plaintiffs attorney in the case, Stephen Trzcinski of Wilkes & McHugh in Philadelphia, said the decision was a ""big win"" for nursing home residents. It had previously been difficult to bring suit against nursing homes, or the companies that run nursing homes, because the defendants would point to the fact that there was no appellate authority on the issue.

""They would point that out,"" Trzcinski said. ""This decision will dispose of that argument.""

Defense attorney John A. Bass of Grogan Graffam in Pittsburgh could not be reached for comment.

According to Bowes, Richard Scampone filed suit against a nursing home, Highland Park Care Center, its owners and the company that managed the facility, Grane Healthcare Co., after his 94-year-old mother, Madeline Scampone, died of a heart attack in 2004.

Scampone argued that his mother's death was a result of substandard care from the nursing home.

According to Bowes, Madeline Scampone was diagnosed with a urinary tract infection two months before her death and was diagnosed with dehydration, malnutrition and bed sores less than two weeks before her death.

Scampone argued the nursing home was chronically understaffed, which prevented employees from providing his mother with the care she needed. He set forth claims of vicarious and corporate liability.

An Allegheny County trial court judge granted nonsuit to the nursing home's owners, along with Grane Healthcare Co., and further ruled that there was not sufficient evidence to submit a question of punitive damages to a jury.

At trial, Scampone presented witnesses who testified that the nursing home was chronically understaffed and only operated at state-mandated levels during state surveys. Such understaffing made it difficult for employees to complete their duties, witnesses testified, and required employees to fill out paperwork without having completed the corresponding jobs. Further, one witness testified, the nursing home was so understaffed that employees were not able to provide residents with water as necessary.

Another witness told the court that Grane established a budget for Highland but that any money remaining in Highland's bank account at the end of the month was sent to an account in Grane's name.

A jury subsequently found Highland to be vicariously and corporately liable for Madeline Scampone's death and awarded Scampone $193,500.

Scampone appealed the decision, arguing the trial court erred in granting nonsuit to Grane Healthcare Co. and ruling that the evidence presented was not sufficient to present the question of punitive damages to the jury.

Highland field a cross-appeal, arguing that appellate case law did not extend corporate liability to nursing homes, no case law allowed corporate negligence claims to be based on allegations of understaffing and a retrial was necessary because the verdict was prejudiced by misleading testimony and evidence.

In addressing the claims, Bowes cited a string of cases related to corporate liability claims in the health care industry.

The state Supreme Court first applied the doctrine of corporate negligence to hospitals in the 1991 case Thompson v. Nason Hospital and the Superior Court later extended it to HMOs in the 1998 decision Shannon v. McNulty and medical professional corporations in the 2009 decision Hyrcza v. West Penn Allegheny Health System.

""Herein, we conclude that a nursing home is analogous to a hospital in the level of its involvement in a patient's overall health care,"" Bowes wrote.

Highland, according to Bowes, further argued it had no duty related to staffing levels under Thompson.

The panel disagreed.

""One of the duties expressly imposed under Thompson is to formulate, adopt, and enforce adequate rules and policies to ensure quality care for patients,"" Bowes wrote. ""If a health care provider fails to hire adequate staff to perform the functions necessary to properly administer to a patient's needs, it has not enforced adequate policies to ensure quality care.""

To support the decision, Bowes cited the 1997 state Supreme Court case Welsh v. Bulger, which ruled an allegation of understaffing was enough to establish a prima facia claim of corporate negligence. Such allegations, Bowes wrote, supported claims that a nursing home or hospital failed to develop or enforce policies pertaining to ""quality care.""

The liability likewise extended to Grane Healthcare Co., Bowes wrote, because testimony at trial alleged Grane Healthcare Co. had corporate control over Highland and its nursing consultants were responsible for supervising the nursing home's staff. The jury found that testimony credible, Bowes wrote.

""Corporate negligence as a basis for liability is supported as a cause of action against Grane because it was the entity that managed all aspects of the operation of the nursing facility,"" Bowes wrote. ""Grane had assumed the responsibility of a comprehensive health center, arranging and coordinating the total health care of the nursing facility residents. While Highland employed the nursing staff, excluding the nursing consultants who were employed by and trained by Grane, Grane established and administered a quality assurance program to ensure the nursing facility provided quality nursing care to its residents.""

Part of that program was to provide Highland with an operating budget and employees that would oversee the nursing home's daily operations, Bowes wrote. According to testimony accepted by the jury, the staffing levels at the nursing home were too low and nursing consultants from Grane acted so recklessly that their actions, along with those of the nursing home and the management company itself, warranted punitive damages.

""Records concerning the administration of medications were falsified,"" Bowes wrote. ""Staffing levels were increased during state inspections and then reduced after the inspection was concluded. Deliberately altering patient records to show care was rendered that was actually not is outrageous and warrants submission of the question of punitive damages to the jury.""