The $28 Million Nursing Home Verdict: The Law And The Public Policy

Last week, I blogged about how Pointoflaw, a tort reform website run by the Manhattan Institute think tank, misleadingly (to my mind) described a $28 million jury verdict against a nursing home. My post received the attention of Eric Turkewitz and his New York Personal Injury Law Blog, who included it in a link roundup. Eric’s post on his blog led to a response by Pointoflaw, defending the original post and further criticizing the verdict and nursing home litigation in general. Rather than engage in back-and-forth about whether Pointoflaw originally misstated the case, I thought I would take this opportunity to discuss the legal and public policy issues surround this $28 million verdict and nursing home litigation generally.
I. The Law
Ted Frank criticizes me failing to recognize the “utter lawlessness of the verdict.” So was the verdict unlawful? That’s a question that needs to be unpacked a bit before it can be answered.
I agree with Frank that the verdict will almost certainly be “reined in by the trial or appellate courts.” The reason is that in State Farm Mutual Auto Ins. Co. v. Campbell, the Supreme Court announced that a “single-digit ratio between compensatory and punitive damages” is the ratio most likely to comport with the Due Process requirements of the Fourteenth Amendment. While the Court declined to announce a bright-line or per se rule that double-digit multipliers are unconstitutional, the Court essentially encouraged lower courts to review double-digit multipliers skeptically and lower courts have diligently followed these instructions. The 25.5:1 ratio of punitive to compensatory damages in the California nursing home case means that a Court is likely to conclude that the damages are excessive.
It’s worth noting however that the Court’s two stalwart conservatives, Justices Thomas and Scalia, do not believe that the Court’s curtailment of punitives represents good law. Justice Scalia and Thomas believe that, “the Constitution does not constrain the size of punitive damages awards,” and that the Court’s reversal, since 1996, of certain punitive awards, constitutes, “an unjustified incursion into the province of state government.” Scalia and Thomas believe that the Court’s punitive damages jurisprudence is so badly flawed that it is not entitled to stare decisis, i.e., being treated as binding precedent.
Lastly, to the extent that Frank suggests that it was legal error for the jury to hear evidence of the defendant’s balance sheets, he would find himself in a distinct minority camp.
II. The Public Policy
Today, 1.5 million Americans live in nursing homes. As Baby Boomers age, this number will only increase. No one would dispute that some nursing home residents are abused and neglected by staff – the only questions are how pervasive the neglect is, what approaches we can take to reduce it, and the costs of those proposals to reduce abuse and neglect.
Obviously, one method of reducing nursing home abuse is to allow patients to sue their nursing homes for compensatory damages caused by the nursing home’s negligence. Ideally, such lawsuits force nursing homes to absorb the cost of the injuries they cause, insuring they will go bankrupt if, on balance, they are doing more harm than good.
Punitive damages also have an important place in such a framework. Ideally, the award of punitive damages in a nursing home neglect case serves to deter both the defendant nursing home and other nursing homes from engaging in such tortious conduct in the future. One economist, whose work is cited favorably in a recent Pointoflaw post, has proposed an efficient punitive damages regime wherein the amount of punitive damages would approximate the number of times the defendant “got away with it,” although the Supreme Court rejected such a framework in BMW v. Gore, where it noted that economic efficiency is not the criterion by which it decides its cases and that the Constitution, “does not incorporate the views of the Law and Economics School,” nor does it “require the States to subscribe to any particular economic theory.”
So the question becomes what social science data do we have to suggest that lawsuits against nursing homes are having a pernicious effect on society? Frank offers the experience of Florida, where the Florida AARP supported the repeal of a strict liability statutory scheme that held nursing homes liable for certain injuries to nursing home patients, regardless of whether the nursing homes were negligent in the treatment of the patients. But the failure of a strict liability regime is of marginal relevance to the assessment of a fault-based system.
Like the AARP in a 2003 white paper, I favor the imposition of a negligence-based standard of care on nursing homes and oppose caps on noneconomic damages on the grounds that they, “may have harmful consequences on quality of care and access to compensation for injured residents and their families.”
At risk of sounding like someone afflicted by epistemic closure, I also think nursing homes should look to draw upon an underutilized resource in their midst – their patients who are alert enough to be attentive to their roommate’s health. Rodin and Langer’s famous (or rather infamous) 1970s nursing home social psychology experiment (described in the Leonard Mlodinow blog post) shows that giving nursing home patients responsibilities for themselves or others dramatically improves their health and mortality. While having nursing home residents report on the health of those around them would not satisfy the nursing homes’ legal duty of care, it might reduce liability by by reducing the number of critical incidents.