Small firms team up to win $29M in nursing home death in California Superior Court

Two small firm lawyers joined forces to win a $29 million jury verdict against a nursing home for delaying treatment of a 79-year-old woman who suffered a fractured hip and bed sore that led to her death. Edward Dudensing, who runs a two-lawyer firm in Sacramento, Calif., and Jay Renneisen, founder of the two-lawyer Nursing Home & Elder Abuse Center in Walnut Creek, Calif., grew up in the same neighborhood, went to the same law school and both specialize in elder abuse cases. Trying their first case together, they convinced the jury that the nursing home chain’s chronic understaffing and a corporate scheme that siphoned profits to an alter-ego entity merited punitive damages. “The corporate manipulation of money earned by the facility supported our position that this was an organization that puts profits over patient care,” said Dudensing. A decision to leave three health care workers on the jury – including a nurse who raised her hand during jury selection to say she thought jury awards are too high and that punitive damages are generally not a good idea – resulted in a surprise ending to the seven-week trial. “We went back and forth about it, but we felt good about having health care providers on the jury for liability, and we were willing to take our chances that punitive damages would be lower,” said Dudensing. In the end, however, the jury was so outraged that it ignored the plaintiffs’ request for $10 million in punitive damages and instead nearly tripled that amount to $28 million. Defense attorney Michael Levangie of Prout LeVangie in Sacramento, Calif. did not return a call seeking comment. Understaffing The case alleged that Horizon West, owner of 33 nursing homes across California and Utah, delayed the diagnosis and treatment of Frances Tanner, a 79-year-old Alzheimer’s and dementia patient, for eight days after she fell and fractured her hip. During the delay, she developed a bed sore that was also listed as a cause of death on her death certificate. At trial, the plaintiffs’ lawyers argued that the facility under-budgeted for staff and kept staffing at the bare minimum. They introduced documents showing that the same day Tanner fell, the nursing home signed off on a “deficiency citation” from the department of health for staffing below the required 3.2 nursing hours per patient per day. The facility cut back on staff on weekends and holidays, including the Labor Day weekend when Tanner fell, because it would cost more to pay overtime, the plaintiffs’ attorneys argued. “They budgeted to the bone on staffing,” said Renneisen, who presented evidence at trial that the facility had only one licensed nurse on duty for over 40 Alzheimer’s and dementia patients. Renneisen also questioned a certified nursing assistant and former employee at the nursing home who broke down in tears when she testified that the reason she quit was because she felt the patients were not getting the kind of care they needed. The plaintiffs’ lawyers, who tape all of their depositions, used the video at trial to expose contradictions in witness testimony. For example, in her live testimony a nurse said that she remembered repositioning the plaintiff for her bedsore, even though there was no notation of turning or repositioning in the medical records. But when they dimmed the lights and showed her videotaped deposition testimony, the nurse not only said she couldn’t remember whether she had repositioned the plaintiff but appeared annoyed that she would be expected to remember events that occurred five years earlier. “One juror said that was the last thing left in his mind when they went into deliberations,” said Dudensing, who spoke to jurors after the trial. ‘Alter ego’ An initial hurdle in the case was proving to the judge in a mini- trial that the nursing home’s parent company was an “alter ego” of the local facility, a separate entity from its owners that in turn is owned by other entities. “With all these layers of corporate protection, the unfortunate reality is at the facility level they don’t have any assets and no effective insurance. … It’s very difficult to sue and collect,” said Renneisen. But they were able to show that through various self-dealing arrangements, the different entities all worked as one. In one contract, the local facility paid the parent $500,000 for various overpriced “services.” In another, an insurance policy for $1 million with a $1 million deductible, essentially providing zero coverage, was purchased by the local facility for $100,000 paid to an insurance company owned by the parent. “On the books [the local facility] showed a $750,000 loss, but in fact when you took out all the related party dealings [which were priced] above market value, it should have showed a $850,000 profit,” said Dudensing. “We were able to show how all the profits and assets floated up to the top and all the liabilities were saddled on [the local entity], effectively leaving them with no assets,” said Renneisen. Perhaps most damaging to the defendants was the testimony of the majority owner, Martine Harmon, one of 10 children of a wealthy real estate developer. Testifying at both the alter ego trial and the jury trial, Harmon testified that she was not sure why she was on the board of directors of the local entity because she knew nothing about nursing homes but her lawyers thought it was a good idea for a family member to be on the board, according to Dudensing. “These guys were real estate developers. They owned all this property and turned to skilled nursing to make profits. If you do that, you damn well better have people who know what they’re doing,” said Dudensing. Instead, he charged, they had 24 accountants for the books and only three nurses for the patients. Dudensing, who has settled all of his previous cases against the same defendant, offered to settle the case for $600,000, but the highest offer from the defendant was between $30,000 and $40,000. In the punitives phase, Dudensing brought the defendant’s $200 million net worth into perspective for the jury. He asked them to imagine that they were in charge of chaperoning a group of 13 boys at a county fair and gave each of them $20. “If you have to punish them, are you going to reach into their pocket and take away 20 cents?” he asked the jury. He argued that $10 million is the equivalent of taking one dollar out of $20. The jury, a stricter chaperone than Dudensing, took away $28 million instead. Plaintiff’s attorneys: Edward Dudensing of The Law Office of Edward P. Dudensing in Sacramento, Calif., and Jay Renneisen of the Nursing Home and Elder Abuse Center in Walnut Creek, Calif. Defense attorneys: Michael LeVangie, Eric Emanuels and Kim Wells of Prout LeVangie in Sacramento, Calif. The case: Tanner v. Horizon West; May 13, 2010; California Superior Court, Sacramento County; Judge Roland L. Candee.

(c) 2010 ProQuest Information and Learning Company; All Rights Reserved. Article can be found on www.advisen.com

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