Will Storm-Struck Nursing Home Find Shelter From Litigation?

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By Chris Marr

Families suing a Florida nursing home over its post-hurricane evacuation and more than a dozen deaths will have to work around state laws that attorneys say shelter the industry from large damages awards.

Plaintiffs have filed at least 10 lawsuits against the Rehabilitation Center at Hollywood Hills, which had to be evacuated last month after Hurricane Irma knocked out power to its air conditioning system for three days. Local police have reported the deaths of 14 residents related to the incident, as of the latest update Oct. 9.

But any hopes of punishing the facility’s owners financially for alleged negligence will likely be tempered by the realities of Florida law, which includes restrictions on medical malpractice and nursing home liability lawsuits found in other states as well. In particular, Florida law lets nursing homes carry as little liability insurance coverage as they choose, blocks plaintiffs from suing “passive investors” in nursing homes, and restricts the ability to pursue punitive damages.

Florida nursing homes also frequently have residents sign binding arbitration agreements, which preclude litigation of residents’ claims in court. It isn’t clear yet, however, whether the Hollywood Hills facility used such provisions.

“The climate and the statutes are extremely friendly to these facilities and their owners,” Jorge Silva, a South Florida plaintiffs’ attorney whose firm is representing five families affected by the incident at the Hollywood Hills nursing home, told Bloomberg BNA on Oct. 4.

Among the cases, Silva’s firm has filed separate lawsuits on behalf of Manuel Fernandez and Linda Horton in the 17th Judicial Circuit Court in Broward County, Fla. Fernandez’s uncle, Manuel Mendieta, and Horton’s long-time friend, Carolyn Eatherly, were residents of the nursing home who died on or shortly after Sept. 13.

Investigation Ongoing

Although the nursing home and its owners declined an interview request by Bloomberg BNA “in light of the ongoing investigation,” spokeswoman Alia Faraj-Johnson told Bloomberg BNA Oct. 5 that the nursing home “is cooperating fully with authorities and regulators.”

The facility is operated by the Larkin Community Hospital system, a privately owned business that operates two acute-care hospitals in Miami, as well as behavioral health, cancer treatment and other medical facilities in South Florida.

The lawsuits following the nursing home’s evacuation include various defendants. Some name only the Rehabilitation Center at Hollywood Hills. Others include a related entity, Hollywood Property Investments LLC (HPI); members of the nursing or administrative staff Maria Colon, Mark P. Early, and Jorge Carballo; or the electric company Florida Power & Light. Some also name Jack Michel, president and an owner of the Larkin system.

The nursing home and its owners are also contesting orders by state regulators to revoke the facility’s operating license and suspend its participation in Medicaid.

South Florida Called ‘Lawyer’s Playground’

The idea that Florida might be inhospitable to liability lawsuits is a claim that tort-reform advocates find laughable.

Darren McKinley, a spokesman for the American Tort Reform Association, said South Florida is known to be a “plaintiffs’ lawyer’s playground.” Florida, and particularly South Florida, “are perennially flagged as judicial hellholes in our annual report,” he told Bloomberg BNA Oct. 6.

He acknowledged Florida may have “gotten out in front” of other states in enacting civil liability limits for nursing homes, given the state’s relatively large elderly population. But McKinley sees that as smart policy, aimed at holding down nursing home costs and helping ensure nursing home availability. Large liability claims get passed along in the form of higher prices for consumers or government programs, such as Medicaid, that pay for nursing home expenses, he said.

“Policymakers cannot make good policy in the long-term public interest based on one-off catastrophic incidents,” McKinley said.

Florida ranks high in a survey of nursing homes’ average liability claims and losses, with nearly 8 cents of every Medicaid nursing home dollar going toward liability losses, versus a national average of 3 cents, according to Aon Risk Solutions’ November 2016 report, “2016 Long Term Care General Liability and Professional Liability Actuarial Analysis.”

The report found Florida nursing homes on average face more frequent liability claims and pay higher claim amounts than their peers nationwide. The average claim amount for 2016 was estimated at $250,000 in Florida versus $214,000 nationally, and nursing homes faced 2.79 claims per 100 occupied beds in Florida versus 1.04 claims nationally.

Two Decades of Reforms

Florida, like many states, has enacted laws over the last two decades in the name of tort and medical malpractice reform that plaintiffs’ lawyers say make it harder but not impossible to get justice in wrongful death cases. Through the 1990s, Florida gained a reputation as a hot bed for liability claims against nursing homes and saw many insurance carriers and large nursing home chains exit the state.

State lawmakers responded beginning in 2001 with a long list of new requirements for nursing homes, including higher staffing levels. The legislation also required nursing homes to carry liability insurance but didn’t set a minimum coverage amount.

The state also enacted legislation limiting awards of attorney fees and making it difficult to win punitive damages, said Steve Watrel, a Jacksonville, Fla., lawyer who represents plaintiffs suing nursing homes. He isn’t involved in the Hollywood Hills cases.

More recently, the state legislature enacted law in 2014 that blocks plaintiffs from suing passive nursing home investors.

Apart from the state laws, plaintiffs also must deal with the “corporate shell game” nursing home companies use to spread out their liabilities and separate them from their financial assets, Watrel told Bloomberg BNA Oct. 6.

“Regardless of the legal hurdles,” attorney Curtis B. Miner said his clients are interested in finding out who’s responsible for what happened, even if there isn’t much insurance money to be won.

‘Extreme Heat, Deplorable Conditions’

The approximately 150 residents of the Rehabilitation Center at Hollywood Hills “suffered for days in extreme heat and deplorable conditions” after Hurricane Irma damaged a transformer that powered the facility’s central air conditioning system, according to the lawsuit Miner filed for Margarita Navarro. Miner is an attorney and partner at Colson Hicks Eidson in Coral Gables, Fla.

Both of Navarro’s parents were residents at the Hollywood Hills nursing home when Hurricane Irma struck. Her father, Miguel Antonio Franco, died Sept. 13, just over a week after his 92nd birthday. Her mother survived but “suffered severe damage to her health” and was evacuated to a nearby hospital, the lawsuit states.

The complaint alleges the nursing home failed to adequately prepare for a disaster such as Hurricane Irma and didn’t evacuate residents or call 911 once the lack of air conditioning created a dangerous situation.

“The horrific nature” of the incident means several state regulatory and law enforcement agencies are investigating, Miner told Bloomberg BNA. “If the owners were sufficiently involved that they can be held liable, that’s going to be uncovered,” he said.

Arbitration a Possibility

Miner’s client doesn’t have a copy of the Francos’ resident contracts, so, he said, he isn’t sure yet whether they signed an arbitration agreement. He noted, however, that most of the nursing home litigation he has pursued previously in Florida has gone to arbitration.

Silva said he’s not aware of his clients having signed any arbitration agreement.

As many as 95 percent of nursing homes in Florida require arbitration agreements, Watrel estimated. But, he said, there are often ways for plaintiffs’ lawyers to get around them. For example, many times he finds a nursing home’s staff neglected to have a resident sign the contract that includes the arbitration clause.

Miner said the cases against the Rehabilitation Center at Hollywood Hills could bring details into the public eye that might spur necessary regulatory changes for the industry.

In arbitration, “some of the facts don’t get cited in the daylight,” he said.

A federal rule is pending to regulate the way nursing homes use arbitration agreements, such as requiring they be written in plain language and that the facility post a notice in view of residents and visitors that the facility uses binding arbitration.

The Centers for Medicare and Medicaid Services announced the revised rule in June, effectively undoing an earlier version of the rule published under the Obama administration in October 2016 that would have barred nursing homes from using pre-dispute binding arbitration agreements altogether.

To contact the reporter on this story: Chris Marr in Atlanta at cMarr@bna.com

To contact the editor responsible for this story: Brian Broderick at bbroderick@bna.com

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