9/27/10

Nursing home residents win major award after for-profit chain fails to meet staffing standard

A U.S. jury slammed the owners of a  major U.S. nursing home with a $677 million verdict this past summer, sending shock waves through the industry.

A class action lawsuit on behalf of 32,000 nursing home residents blamed staff shortages for the misery encountered by the residents — echoing a common complaint across the country that for-profit nursing homes are too concerned with profits rather than residents.

Critics charge that many companies drastically cut payroll expenses to prop up stock prices after Wall Street investment firms went on a nursing home buying spree.

"The major problem for most nursing homes in California and in the nation is staffing," said Pat McGinnis, executive director and founder of the California Advocates for Nursing Home Reform.

On July 6, the Humboldt County jury found that Skilled Healthcare on numerous occasions violated state regulations requiring it to keep a minimum number of nurses on duty at its 22 homes in the state.

The lawsuit accused California-based  corporation Skilled Healthcare of failing to maintain 3.2 nursing hours per patient per day at the corporation's 22 nursing homes in California. The company is the 10th largest in the USA (based on beds) in an industry that struggles to keep workers.

McGinnis said the 3.2 nursing hours required by California should be an easy standard to meet because it's nearly a full hour less than the federal recommendation of 4.1 nursing hours per patient.  "The fact that this company couldn't maintain these minimum standards makes you wonder why it was in the nursing home business to begin with," McGinnis said.

James Gomez, president and chief executive of the California Association of Health Facilities, called the verdict "outlandish, excessive and extreme" and claimed that a "good provider of skilled nursing care" is likely bound for bankruptcy if the verdict holds up.

Skilled Healthcare stock plunged 76 percent after the verdict was announced July 6. But in early September a tentative settlement between the parties, with a very significant, but reduced financial penalty, was reached

As part of the settlement, the chain will be required to provide specified nurse staffing levels, comply with state and federal laws on staffing and provide reports to a monitor.  A judge still has to apporve the settlement.

Minimum staffing hours for residents in nursing homes has long been a demand of labour and community groups in Ontario.  So far, the McGuinty Liberal government has refused.

dallan@cupe.ca

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