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Justices Extend Corporate Negligence Doctrine to Nursing HomesA nursing home may be held directly liable under a theory of corporate negligence, the state Supreme Court has ruled, providing clarity to trial courts on an issue that has been muddied since the justices first adopted the doctrine for hospitals more than two decades ago.
2012-12-04 12:00:00 AM
A nursing home may be held directly liable under a theory of corporate negligence, the state Supreme Court has ruled, providing clarity to trial courts on an issue that has been muddied since the justices first adopted the doctrine for hospitals more than two decades ago.
The unanimous six-justice court decided the matter of Scampone v. Highland Park Care Center not under the guidance of the high court's seminal case that extended corporate negligence to hospitals, but rather under its own elucidation of a defendant's "duty of care" to a plaintiff.
In a 44-page opinion, Chief Justice Ronald D. Castille said a court may find a nursing home directly liable if it breaches a duty of care. In assessing that duty, as the court explained in the 2000 decision Althaus v. Cohen, courts must weigh five factors: the relationship between the parties, the social utility of the actor's conduct, the nature of risk and foreseeability of harm, the consequences of imposing a duty upon an actor and the overall public interest in the proposed solution.
The court declined to endorse a theory advanced by defendant health care organizations, which argued the corporate negligence doctrine should remain restricted to hospitals, HMOs and medical professional corporations. Accordingly, the defendants urged the court to limit the theory of corporate negligence to such "comprehensive health centers."
The state Superior Court had also decided the case in favor of the plaintiff estate, but did so along the lines of the seminal corporate negligence case of Thompson v. Nason Hospital; the unanimous panel ruled that nursing homes were similar to hospitals and HMOs in that they provide "comprehensive and continual physical care" for patients. They are not like physicians' outpatient offices, which are not susceptible to corporate liability claims, the panel said.
But the Supreme Court said the defendants' argument was too narrow for the issue at hand. Castille noted that lower courts have long tried to apply Thompson to cases similar to the instant matter over the years, but the courts have been encumbered by an overemphasis on "the role of a comprehensive health center."
"This inquiry makes too much of the facts in Thompson and is of limited use in developing a principled analysis of relevant considerations and lacks the potential to serve as the governing principle upon which to recognize a legal duty or obligation with respect to other entities in the health care field," Castille said. "The proper inquiry is instead broader, under both Thompson and general, settled principles governing the legal recognition of a duty of care."
While the court declined to endorse the defendants' theory, the November 21 decision isn't a total loss for Highland Park Care Center, the nursing home, or Grane Healthcare Co., Highland Park's management services provider.
Making clear more than once that the high court would not assume the role of factfinder, Castille and his fellow justices kicked the case back to the Allegheny County Court of Common Pleas, where a judge will decide if either defendant, or both defendants, owed a duty of care to Madeline Scampone, a former patient who died of a heart attack in 2004. After that, another trial may ensue.
The case has since been brought by Richard Scampone, Madeline Scampone's son, who has argued his mother's death was a result of substandard care from the nursing home.
An Allegheny County trial judge granted a nonsuit to Grane on the estate's claim of "corporate negligence" at the close of the plaintiff's case, but allowed the same against Highland Park to reach the jury. The judge further ruled there was not sufficient evidence to submit a question of punitive damages to a jury, an issue upon which the high court hardly elaborated and did not review; the court said in a footnote that if the trial judge granted a new trial, the Scampone estate could reassert a claim for punitive damages.
Explaining its decision on allowing the corporate negligence claim to go to the jury, the trial court reasoned there was nothing in the Thompson decision (or the decision that expanded the theory to HMOs Shannon v. McNulty or the one expanding it to medical professional corporations Hyrcza v. West Penn Allegheny Health System) that would prohibit a similar theory against a nursing home to proceed. Grane, however, escaped with a compulsory nonsuit after the plaintiff rested.
The "central role" played by the health care entity in the care of a patient was a key factor in determining the viability of a corporate negligence claim in the trial court's analysis, according to Castille.
The Superior Court affirmed the trial court with regard to Highland Park, but reversed the trial court's decision to grant a nonsuit in favor of Grane and remanded the case for a new trial.
The Supreme Court in its analysis also examined whether the health care organizations fit into a categorical exemption, generally, from negligence liability.
The defendants, as the court saw it, had argued it was "onerous and inappropriate" to extend direct liability onto nursing homes and affiliated entities and that nothing in existing law allowed for such a claim.
But the justices rejected the defendants' claim, noting they were "insisting on a categorical exemption from direct liability for negligence," but offered no legal support to the contrary.
Additionally, Castille wrote, the health care organizations did not provide a persuasive argument that the availability of a vicarious liability claim as opposed to one of direct liability was a good substitute for acknowledging a corporation's "direct or non-delegable" duties to a plaintiff. There was no merit in their claim that presenting both a vicarious and direct liability claim to a jury would lead to double recovery.
"To the extent that [the defendants'] arguments are also tantamount to a request that we recognize a form of judicial immunity for nursing home-related entities, we decline the invitation," Castille said,
Madeline Scampone was diagnosed with a urinary tract infection two months before her death, an ailment to which she was susceptible and for which she was "hospitalized repeatedly." She was also diagnosed with dehydration, malnutrition and bed sores less than two weeks before her death.
At trial, Richard 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 Richard Scampone $193,500.
Now, as the case heads back to the trial court to determine if, in fact, another trial is necessary under the high court's directive, attorneys for both sides are welcoming the decision.
Jenkintown attorney Alan S. Gold, of Gold and Ferrante, argued the case on behalf of Highland Park Care Center.
Gold said the decision provides guidance to trial courts concerning corporate negligence, noting that Highland Park's case was not closed after the Supreme Court decision.
"There was a multitude of tests that was confusing trial courts. They're all gone," Gold said.
Attorneys for the estate were likewise pleased with the decision; one of the plaintiff's lawyers said the decision eliminates a number of "bogus arguments" that were being presented to trial courts on nursing home liability.
"Thompson was too restrictive," said Stephen Trzcinski, of Wilkes & McHugh. "Thompson was designed to create additional protection for hospitals."
Trzcinski said trying to advance a corporate liability theory against a nursing home under the Thompson test was like "trying to put a square peg in a round hole." He said he preferred the Supreme Court's analysis to the Superior Court's, in that the Supreme Court did not lump nursing homes into the Thompson fraternity of health care providers.
Trzcinski added that the decision leaves open the possibility for appellate courts to assess the theory of ordinary negligence in the context of nursing homes and even hospitals and ripens the issue for review.
The Scampone court declined to express a view on that issue, but tangentially mentioned it several times, which Trzcinski said was an acknowledgment that ordinary negligence is one of many avenues for direct liability. Likewise, he said, for instances of extreme abuse.
"I think that is going to be a developing issue," he said, based on the attention the court gave it, albeit without a ruling, in the opinion and during argument.
"The typical nursing home case is one of ordinary negligence, with instances of professional negligence involved," he said. "The typical hospital case is one of professional negligence with instances of ordinary negligence."
Pittsburgh attorney Peter D. Giglione, also of Wilkes & McHugh, handled the trial.
"I think what's important about the decision is the court is saying if a company causes harm, they're directly liable if a duty exists," Giglione said. "The overriding principle is accountability."
(Copies of the 44-page opinion in Scampone v. Highland Park Care Center, PICS No. 12-2251, are available from Pennsylvania Law Weekly. Please call the Pennsylvania Instant Case Service at 800-276-PICS to order or for information.)