Tag Archives: california department of public health

Mandatory Skilled Nursing Hours Claims: Are You Covered?

As coverage counsel for policyholders, we see a variety of cases, claims, and complaints. In recent years we have observed a growing trend in health care litigation. Specifically, claims alleging violations of California Health and Safety Code Section 1276.5, which requires skilled nursing facilities (SNFs) to provide at least 3.2 nursing hours per day for each facility resident (3.2 Requirement). In the past, the 3.2 Requirement was mainly enforced by the California Department of Public Health, not private individuals. However, skilled nursing facility residents have the right to bring a private cause of action alleging violations of the 3.2 Requirement (3.2 Claims). The Lavender, et al. v. Skilled Healthcare Group, Inc., et al. matter,1 which resulted in a 2010 jury verdict of more than $670 million for plaintiff skilled nursing facility residents asserting, among other things, 3.2 Claims, demonstrates how disastrous such claims can be for skilled nursing facilities that litigate such claims through trial.

This private right of action was recently addressed by the California Court of Appeal in Shuts, et al. v. Covenant Holdco LLC, et al., where the plaintiff skilled nursing facility residents asserted 3.2 Claims under Health and Safety Code Section 1430(b).2 The Court in Shuts held that Section 1430(b) permits current or former skilled nursing facility residents to bring a lawsuit against the facility for violating any of their rights under the “Skilled Nursing and Intermediate Care Facility Patient's Bill of Rights.”3 The Patient's Bill of Rights includes the entitlement to live at a skilled nursing facility that employs an “adequate number of qualified personnel.”4 Thus, Section 1276.5's requirement that facilities maintain staffing ratios compliant with the 3.2 Requirement may be enforced by residents through Section 1430(b). Additionally, Section 1430(b) allows plaintiffs to recover monetary damages, up to a maximum of $500 per violation, as well as attorneys' fees and costs. By law, these damages may be multiplied by a factor of three if such violations caused a senior citizen or disabled person to suffer.5

Very recently, the California Court of Appeal held in Nevarrez v. San Marino Skilled Nursing and Wellness Centre that Section 1430(b) permits a maximum recovery of $500 total in a civil action for violation of the Patient's Bill of Rights.6 The Court opined that $500 is the maximum recovery available “regardless of how many rights are violated or whether such rights are violated repeatedly.”7 The trial court's award of $7,000 (based on a $500 award for each of the 14 violations alleged) was therefore reversed.8 This is an important ruling for skilled nursing facilities, and may significantly curtail litigation based on alleged violations of the Patient's Bill of Rights given the potential for very limited monetary recovery.

The Nevarrez decision is not yet final and may be reversed. Indeed, the Court of Appeal granted a petition for rehearing on the issue of the maximum recovery allowable under Section 1430(b). As a result, the decision in Nevarrez is now vacated pending rehearing.9 Thus, given the potentially significant exposure facilities still face opposing 3.2 Claims, insurance coverage is critical. Such coverage turns on the policy language at issue. Generally speaking, there are two types of liability policies: those that require physical harm and those that do not. The policies that do not require physical harm are more likely to result in coverage for 3.2 Claims, as patient-plaintiffs tend to disclaim any intent to “'seek damages for personal injuries, wrongful death or other resident-specific harm that may have been caused by inadequate staff.'”10 Such disclaimers are likely included to facilitate class certification in putative class actions; if there is any indication that individual claims of injury or death could predominate the lawsuit, the facility-defendants could possibly defeat class certification.

Despite policy language indicating coverage, insurers attempt to avoid their coverage obligations by asserting various arguments, including that 3.2 Claims amount to uncovered fines and penalties (liability policies commonly contain provisions excluding coverage for “fines and penalties”). Such arguments are unpersuasive. For example, nowhere in the statute through which patient-plaintiffs assert 3.2 Claims — Section 1430(b) — are fines or penalties mentioned. To the contrary, Section 1430(b) is entitled “Actions for injunction or civil damages.”11 Additionally, in the Shuts matter, the California Court of Appeal explained that “Section 1430, subdivision (b) authorizes statutory damages, attorney fees, and injunctive relief.”12 Further, the California Supreme Court has drawn a distinction between penalties that may be assessed by the State Department of Health Services (now the Department of Public Health) for violations, and the damages that may be recovered by a private party under the Long-Term Care, Health, Safety, and Security Act of 1973 (which includes Section 1430).13 Thus, the relief available to private party plaintiffs under Section 1430(b) constitutes covered damages, not uncovered fines or penalties.

Notwithstanding the title of Section 1430(b) — “Actions for injunction or civil damages” — and the California Supreme Court's distinction between penalties and damages, the Court of Appeal in Nevarrez referred to the amount recoverable under Section 1430(b) as a “penalty.”14 Because the Nevarrez court's reference to Section 1430(b)'s imposition of supposed “penalties” (as opposed to damages) was not an issue pending before the Court, its characterization of the relief available under Section 1430(b) is non-binding dicta.

Further, it is well established in California that insurance coverage is interpreted broadly so as to afford the greatest possible protection to the insured.15 Courts will not read words into a statute to facilitate a declination of coverage.16 Additionally, an insurer bears the burden of bringing itself within a policy's exclusionary clauses and exclusions are narrowly construed against insurers.17 Policy exclusions are strictly construed and an insurer cannot escape its basic duty to insure by means of an exclusionary clause that is unclear.18

Because Section 1430(b) is properly construed to provide for damages, not fines or penalties, and insurers must meet a high burden to avoid coverage based upon exclusionary policy language, a standard “fines or penalties” coverage limitation should not preclude coverage for 3.2 Claims.

Understanding insurance coverage issues can be key for skilled nursing facilities facing 3.2 Claims. Not only can insurance funds provide a defense against such claims, they may also assist in resolving those claims so as to avoid potentially devastating results at trial.

Authors
Miles Holden collaborated with Samantha Wolff in writing this article. Ms. Wolff is an attorney at Hanson Bridgett LLP. She represents both public and private sector clients in a variety of matters, including insurance coverage disputes and putative and certified class actions, through all phases of litigation in federal and state court.

1Lavender, et al. v. Skilled Healthcare Group, Inc., et al.; California Superior Court, Humboldt County; Case No. DR060264.

2Shuts, et al. v. Covenant Holdco LLC, et al. (2012) 208 Cal.App.4th 609.

3Health & Saf. Code, § 1430, subd. (b); Shuts, 208 Cal.App.4th at p. 614.

4Health & Saf. Code, § 1599.1, subd. (a); Cal. Code Regs., tit. 22, § 72527, subd. (a)(25).

5Civ. Code, § 3345.

6Nevarrez v. San Marino Skilled Nursing and Wellness Centre (June 5, 2013, B235372) __ Cal.App.4th __ [2013 Cal.App. LEXIS 444].)

7Nevarrez, supra, __ Cal.App.4th __ [2013 Cal.App. LEXIS 444, at p. *46].

8Id. at p. *47.

9Cal. Rules of Court, rule 8.268(d).

10See, e.g., Shuts, 208 Cal.App.4th at p. 615.

11Health & Saf. Code, § 1430 (emphasis added).

12Shuts, 208 Cal.App.4th at p. 614 (emphasis added).

13Kizer v. County of San Mateo (1991) 53 Cal.3d 139, 142-43.

14Nevarrez, supra, __ Cal.App.4th __ [2013 Cal.App. LEXIS 444, at pp. *45-47].

15See, e.g., MacKinnon v. Truck Ins. Exch. (2003) 31 Cal.4th 635, 648; see also State of Cal. v. Allstate Ins. Co. (2009) 45 Cal.4th 1008, 1018 (where insurance policy terms are ambiguous, they must be interpreted to protect the objectively reasonable expectations of the insured).

16Code Civ. Proc., § 1858; see also Silicon Valley Taxpayers' Assoc., Inc. v. Santa Clara County Open Space Authority (2008) 44 Cal.4th 431, 444-45 (statutes are to be given their plain meaning and courts are not permitted to read into the meaning of a statute if the language is clear and unambiguous); People v. Guzman (2005) 35 Cal.4th 577, 587-88 (courts may not add provisions to a statute by inserting words).

17N. Am. Bldg. Maint., Inc. v. Fireman's Fund Ins. Co. (2006) 137 Cal.App.4th 627, 642; Charles E. Thomas Co. v. Transamerica Ins. Grp. (1998) 62 Cal.App.4th 379, 382.

18E.M.M.I. Inc. v. Zurich Am. Ins. Co. (2004) 32 Cal.4th 465, 471.