Long-Term Health Care Dealt Another Blow

_{Defense Digest, Vol. 23, No. 4, December 2017}

By Joan Orsini Ford, Esq.*

Scampone v. Grane Healthcare Co., 2017 Pa.Super. LEXIS 603 (Pa.Super. Aug. 8, 2017), a longstanding case that has been to the Superior Court twice, the Pennsylvania Supreme Court once and the trial court twice, previously established two distinct bases for recovery against nursing homes: (1) a non-delegable duty under Thompson v. Nason Hospital, 591 A.2d 703 (Pa. 1991) in direct corporate liability; and (2) vicarious liability. Recently, the Pennsylvania Superior Court reversed the trial court’s grant of a non-suit in favor of the parent company of a nursing home and remanded the case back to the trial court for proceedings against the nursing home and the parent company on the issue of punitive damages. Scampone v. Grane Healthcare Co., 2017 Pa.Super. LEXIS 603 (Pa.Super. Aug. 8, 2017). This opinion has far greater implications than the previous Scampone decision, and it may potentially impact the defense of any entity subject to Department of Health surveys.

The underlying case involves the care provided to Madeline Scampone, a resident of Highland Park Care Center, a nursing home, from February 5, 1998, until January 30, 2004. On December 15, 2003, Madeline was diagnosed with a urinary tract infection (UTI) and hospitalized for a few days before returning to Highland in good condition. She was readmitted to the hospital on January 30, 2004, and was diagnosed with another UTI, dehydration, malnutrition and bedsores. Madeline died on February 9, 2004, from a heart attack. She was 94 years old. Her son, Richard Scampone, filed a lawsuit in September of 2005 against, among others, Grane Healthcare Company (Grane) and Highland Park Care Center, LLC d/b/a Highland Park Care Center (Highland). Highland is the licensed owner and operator of the nursing home. Grane, the parent company of Highland, managed the nursing home pursuant to a written agreement.

Scampone alleged that the UTI, dehydration and malnutrition were a result of substandard care, which led to his mother’s death. Scampone claimed the defendants failed to formulate, adopt, and enforce adequate rules and policies to ensure quality care to the residents and that, as a result of chronic understaffing—known but uncorrected—employees were incapable of providing appropriate care to the residents, including his mother. Vicarious liability as to Highland was premised upon its failure to deliver food, water, medicine and proper medical care to his mother from December 18, 2003, to January 30, 2004. As to Grane, it was premised on the fact that some of Grane’s employees were directly involved in overseeing the care delivered to the nursing home’s residents. Scampone also sought punitive damages. The case went to trial in 2007. Grane was granted a compulsory nonsuit at the close of the plaintiff’s evidence, and Highland remained the sole defendant. The trial court refused to submit punitive damages to the jury, which awarded $193,500. Scampone appealed, and Highland filed a cross-appeal.

In the first appeal, the Superior Court reversed the trial court’s refusal to submit the question of punitive damages to the jury. It remanded the case for a new trial against Grane on compensatory and punitive damages and against Highland on punitive damages. On Highland’s cross appeal, the court ruled that a cause of action for direct corporate liability could be asserted against a nursing home. Scampone v. Grane Healthcare Co., 11 A.3d 967 (Pa.Super. 2010). Grane and Highland filed a petition for allowance of appeal as to whether they could be subject to corporate liability under Thompson v. Nason. The Supreme Court of Pennsylvania rejected their arguments that nursing home management companies are exempt from liability on a direct corporate negligence theory and that Thompson v. Nason should be limited to hospitals. Scampone v. Highland Park Center, LLC, 57 A.3d 582, 600 (Pa. 2012). The case was remanded to the trial court.

On remand, the trial court found that, because Grane was to provide management services to Highland—not the care and treatment of Madeline—the law did not impose liability. Also, Grane was not vicariously liable because the record did not support the conclusion that any of Grane’s employees caused injury to Madeline. The trial court reentered a compulsory nonsuit in favor of Grane, and it conducted a new trial as to punitive damages solely against Highland, the corporate entity with a non-delegable duty in terms of direct corporate negligence. The jury returned a verdict in Highland’s favor. Scampone filed post-trial motions, which were denied.

Scampone filed two appeals in which he raisied five issues, three of which were whether: (1) the trial court erred in dismissing Grane from the case for the second time; (2) the trial court erred in denying Scampone’s request for a new trial for punitive damages against Highland; and (3) the trial court improperly refused to strike Highland’s answer and affirmative defenses when it declined to obey the court’s discovery order.

The Superior Court, in assessing whether Grane was properly granted a nonsuit, looked at the plaintiff’s evidence and the management agreement, which required Grane to “[e]stablish and administer a quality assurance program to assure Highland provided quality nursing services to its residents.” Grane was responsible for management of all aspects of the operation. While Highland set staffing levels, Grane had budget approval over staffing levels, hired and trained all of the RNs and employed a nurse consultant, who visited weekly and oversaw the quality of patient care. In evaluating the shifts and staffing, the court considered the testimony from the RN unit manager and two CNAs regarding concerns raised about state surveys and staffing. The Superior Court found that the Restatement (Second) of Torts § 323 (Negligent Performance of Undertaking to Render Services) and § 324(a) (Duty of One Who Takes Charge of Another Who Is Helpless) imposed a duty upon Grane sufficient to establish a cause of action. The management agreement required Grane to manage all aspects of Highland’s operation; therefore, Grane was contractually responsible. After the 2007 trial, Scampone uncovered a policy and procedure manual that Grane created that demonstrated Grane’s role in overseeing the operations of the facility. Highland’s non-delegable duty under Thompson did not mandate the dismissal of Grane. Grane’s liability was attached under vicarious liability and was voluntarily assumed by its contract. Highland’s liability in direct corporate negligence for Grane’s alleged misfeasance did not absolve Grane from its duty of care, which it assumed by virtue of Restatement (Second) of Torts § 323 and § 324(a).

Scampone averred that he was entitled to a new trial as to both Grane and Highland on the issue of punitive damages and that reversible error occurred when he was not permitted to introduce certain evidence at trial. The trial court permitted Scampone to introduce the Department of Health surveys relating to the failure to hydrate patients properly, a condition that led to his mother’s death. However, the court refused to admit the surveys pertaining to other substandard patient care issues the DOH found. Scampone argued that all of the DOH deficiencies in surveys from August of 2002 through July of 2004 regarding patient care were admissible in order to demonstrate the defendants’ awareness of the various conditions that existed and that they recklessly disregarded their responsibility to correct those conditions.

The Superior Court held that the trial court abused its discretion in prohibiting Scampone from introducing certain DOH surveys, which demonstrated that the nursing home operated in a systemic manner, patient neglect was common and the existence of across-the-board substandard patient care. These surveys were relevant to show that Highland and Grane had knowledge of the deficiencies and ignored them by failing to increase staffing levels. These deficiencies proved that Highland and Grane knowingly failed to take corrective measures to remedy the neglect of patients and that the deficiencies involved with Madeline’s care were not isolated incidents.

The Superior Court addressed Scampone’s contention concerning the denial of his motion for sanctions due to the defendants’ discovery violations. Scampone contended that the defendants failed to produce the policy and procedure manual that Grane created, which was requested during discovery, and that the defendants understated the amount of their insurance coverage. At trial, Highland introduced undisclosed materials that included 400 pages of staffing sheets and payroll documentation. Scampone’s sanctions essentially sought entry of a default judgment against the defendants. The Superior Court found that the failure to produce the manual was improper and inexcusable and that the sudden discovery of staffing sheets during trial was especially egregious. However, it held that the trial court did not abuse its discretion in refusing to direct a verdict due to these discovery violations, but that it would be apprpriate for the trial court to consider on remand some type of monetary sanction. The Superior Court stated that, if the foregoing were the fault of counsel, it could constitute a violation of the Rules of Professional Conduct.

The defense of long-term health care continues to present multiple challenges. Care generally involves an at-risk patient population, staff turnover is common, documentation issues are common, policies and procedures are scrutinized, and now management companies can be implicated and Department of Health surveys can be used to support claims for punitive damages. Clients should be mindful of these challenges and work with counsel to provide all relevant information at the outset of litigation.

*Joan is a shareholder in our King of Prussia, Pennsylvania office. She can be reached at 610. 354.8468 or joford@mdwcg.com

_{Defense Digest, Vol. 23, No. 4, December 2017. Defense Digest is prepared by Marshall Dennehey Warner Coleman & Goggin to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. ATTORNEY ADVERTISING pursuant to New York RPC 7.1. © 2017 Marshall Dennehey Warner Coleman & Goggin. All Rights Reserved. This article may not be reprinted without the express written permission of our firm. For reprints, contact tamontemuro@mdwcg.com.}