Nursing Home • Corporate Liability • Punitive Damages

Scampone v. Grane Healthcare Co., PICS Case No. 10-2447 (Pa. Super. July 15, 2010) Bowes, J. (52 pages).

On appeal and cross-appeal, the Superior Court found that the evidence was sufficient to support a cause of action for corporate liability against a nursing home, that the court improperly granted nonsuit in favor of Grane Healthcare Company (Grane) and that there was sufficient evidence of misconduct to warrant submission of punitive damages to the jury. The court reversed the trial court and remanded for a new trial.

Madeline Scampone was a resident of Highland Park Care Center, LLC (Highland), a nursing home facility. Plaintiff-appellant Richard Scampone instituted this action against defendants-appellees alleging that Madeline Scampone’s urinary tract infection, dehydration and malnutrition caused the heart attack that led to her death and that defendants rendered substandard care. Plaintiff asserted that defendants were liable based on both vicarious and corporate liability. Corporate liability was based on the chronic understaffing at Highland. Plaintiff also demanded punitive damages.

At trial, the court determined that the evidence was insufficient to submit the question of punitive damages to a jury. The jury determined that Highland was both corporately and vicariously liable for Madeline’s death and entered a $193,500 verdict in favor of plaintiff.

The court examined 1) whether the trial court erred in granting Grane a nonsuit; 2) whether punitive damages should have been submitted to the jury; and 3) whether the court erred in refusing to submit certain evidence relevant to the issue of punitive damages.

First, Highland, in its cross-appeal, asserted that a claim for corporate negligence cannot be asserted against a nursing home and that an allegation of understaffing did not support a corporate negligence cause of action. The court reviewed corporate negligence as a basis for liability and explained that hospitals owe certain duties to its patients, including the use of reasonable care in maintaining safe and adequate facilities, retaining competent physicians, overseeing those who practice medicine and formulating and enforcing adequate policies to ensure quality care for its patients. The doctrine of corporate liability was extended to healthcare maintenance organizations and medical professional corporations. The court declined to extend the doctrine to a physician’s outpatient office.

Margaret was a full-time resident, Highland oversaw her care 24 hours a day, seven days a week. The court concluded that a nursing home was analogous to a hospital in the level of its involvement in a patient’s overall health care and held that the court correctly found Highland liable under a corporate negligence theory.

Next, Highland asserted that no duty existed in relation to staffing levels. The court disagreed, stating that if a health care provider failed 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. Here, witnesses established that they were unable to perform their duties due to a lack of adequate staffing. Further, state and federal regulations were regularly ignored and the evidence indicated that Highland violated governmental regulations governing minimum staffing levels.

Third, Highland contended that there was no evidence that it breached the industry standard by having insufficient staff to meet the needs of its patients or that the understaffing caused Madeline’s death. The court explored at length the general background information about Highland’s operation.

The court found that Highland breached the standard of care applicable to nursing homes in many respects and rejected its claim that a corporate negligence cause of action was not sustained by the evidence. Highland did not order testing, did not ensure Madeline was consuming sufficient food or fluids. There was no record that she received any nursing care for 19 days after she showed signs of a urinary tract infection, dehydration and acute change in her condition. Plaintiff produced evidence that the failures were caused by understaffing. The court rejected Highland’s claim.

The court found that nonsuit was improperly entered in favor of Grane. Grane managed Highland and oversaw the quality of patient care and all aspects of Highland’s operation. Grane was aware of and had budgetary approval over staffing levels at Highland. Grane was subject to vicarious liability for the acts and omissions of its agents regarding the quality of care rendered to patients at Highland. Grane was also subject to corporate liability for the understaffing based upon the extent of its corporate control over Highland.

Plaintiff established that Highland and Grane acted with reckless disregard to the rights of others and created an unreasonable risk of physical harm to the residents of the nursing home. The court determined that an award of punitive damages was not precluded by §1303.505 of the Medical Care Availability and Reduction of Error Act.

The court reversed the nonsuit granted to Grane and the trial court’s refusal to submit punitive damages to the jury.