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Manor Care, Inc. v. Douglas

Manor Care, Inc. v. Douglas

Associated Case: 
Case No. 
13-0470
Opinion Date: 
6/18/2014
Opinion Author: 
Davis, C.J.
Decision 
Affirmed in Part, Reversed in Part
Vote: 
3-2
Facts 

This was a closely watched case involving a nursing home death.

Dorothy Douglas was an Alzheimer’s patient who was admitted to a nursing home on September 4, 2009.  Within three weeks, it is alleged that Mrs. Douglas was dehydrated, malnourished and largely unresponsive, and that she had fallen multiple times resulting in bruises and a head trauma.  Mrs. Douglas died shortly thereafter.

Mrs. Douglas’ son, as plaintiff, sued the owner of the nursing home along with other, related companies that were responsible for budgeting and staffing at the home.  The plaintiff brought a claim for medical negligence along with other, non-medical claims.  The case proceeded to trial, and the jury awarded $11.5 million dollars in compensatory damages and $80 million in punitive damages.

Issue 

The issues addressed by the Supreme Court fell into three broad categories: (1) the verdict form, (2) the viability of the plaintiff’s non-medical claims, and (3) the punitive damage award.

Analysis 

The Court addressed each of the issues in turn.  The first issue concerned the language and format of the verdict form.

The plaintiff not only sued the corporation that operated the nursing home, but also a series of related corporations.  Though related, the defendants alleged that they were, in fact, separate corporations.  The defendants argued that the verdict form improperly lumped them together, preventing the jury from making a separate punitive damage award for each defendant.  The Court found this error had been waived because the defendants made an initial objection to this aspect of the verdict form, but then withdrew it.

In addition, the defendants complained that the verdict form improperly enabled the jury to make an award of damages to “nonparties.”  Citing the Wrongful Death Act, W.Va. Code 55-7-5 et seq., the defendants argued that the only proper plaintiff was the personal representative of Mrs. Douglas’ estate.  Therefore, it was error to include Mrs. Douglas’ children on the verdict form.  The Court rejected this argument, noting that the personal representative was merely a nominal party and that any damages would ultimately be distributed to the children.

Next, the Court considered each of the plaintiff’s non-medical claims.  These included:  a negligence claim against the nursing home premised on understaffing; a claim arising under the Nursing Home Act, W.Va. Code 16-5C-1 et seq.; and a claim for breach of fiduciary duty.

With regard to the negligence claim, the plaintiff alleged that the defendants failed to adequately staff and manage the nursing home.  The defendants contended this claim was covered by the Medical Professional Liability Act, W.Va. Code 55-7B-1 et seq., which establishes strict presuit requirements and imposes a cap on noneconomic damages.  The Court, however, disagreed.  By its express language, the MPLA only covers medical professional liability claims that are brought against healthcare providers.  Citing Boggs v. Camden Clark Memorial Hospital Corp., 216 W.Va. 656, 609 S.E.2d 917 (2004), the Court reaffirmed that when a claim is not based on healthcare services which were rendered or should have been rendered, the MPLA does not apply.  The Court concluded:  “Claims related to business decisions, such as proper budgeting and staffing, by entities that do not qualify as healthcare providers under the MPLA simply do not fall within that statutory scheme.”

The plaintiff also brought a claim alleging that Mrs. Douglas’ death was caused by NHA violations.  The defendants argued this claim, likewise, was covered by the MPLA.  However, the Court did not reach this issue because of the confusing nature of the verdict form.  Specifically, the jury was asked if any NHA violations caused “injury” to Mrs. Douglas, but neither the jury instructions nor the verdict form itself defined what kind of injury was involved.  This rendered the verdict form “fatally flawed” with regard to the NHA claim and, accordingly, the Court dismissed that claim and vacated the judgment for that claim.

The remaining claim was one for breach of fiduciary duty.  The plaintiff alleged that because of the nature of its relationship with its patients, the nursing home owed Mrs. Douglas a fiduciary duty--one of the highest duties recognized by the law.  The Court, however, declined the plaintiff’s invitation to expand the law of fiduciary duty into the nursing home setting.  Instead, the Court dismissed the fiduciary duty claim and vacated the damages awarded thereunder.

The final issued addressed by the Court involved punitive damages.  All awards of punitive damages must be reviewed to ensure that they comply with federal due process.  West Virginia has established a full set of guidelines for courts to follow in conducting this review.  See, e.g., Garnes v. Fleming Landfill, Inc., 186 W.Va. 656, 413 S.E.2d 897 (1991).

One of the key factors under Garnes is the ratio of punitive damages to compensatory damages.  The Court noted that the jury’s original award had a 7:1 ratio.  Because parts of the original award were vacated (i.e., the awards for the NHA and fiduciary duty claims), the Court conducted its analysis by keeping the 7:1 ratio and using the reduced amount of compensatory damages.  The amount of compensatory damages was reduced to $4,594,615.22.  Therefore, the Garnes analysis was conducted using a punitive damage figure “of approximately $32,000,000.”

The Court engaged in a lengthy and highly detailed analysis.  Of particular importance to trial attorneys is the Court’s treatment of the 5:1 ratio from TXO Production Corp. v. Alliance Resources Corp., 187 W.Va. 457, 419 S.E.2d 870 (1992).  In TXO, the Court had stated that a ratio “of roughly 5 to 1” was the “outer limit” in cases where there was no proof of actual, malicious intent by the defendant.  Here, however, the court suggested that TXO’s 5:1 ratio was merely a “guide” and not a “strict standard” which must be followed in every case.  Finding the conduct here to be “intentional, reprehensible, self-serving and financially motivated,” the court had no difficulty upholding a 7:1 ratio.  The Court reversed the punitive damage award and remanded, giving the plaintiff a choice:  either accepting a reduction in the amount of the punitive damage award to the $32,000,000 figure or submitting to a new trial.  The plaintiff will have 30 days to make his choice.

Separate opinions were issued by three of the justices.

In a concurring opinion, Justice Workman chided the majority for throwing out the NHA verdict “like so much garbage simply because it claims to be confused by it.”  Instead, she found the NHA claim to be duplicative--that is, it arose out of the same wrongful conduct and it provided compensation for the same injuries.  Therefore, the majority was right to set aside the damage award, but for the wrong reason.

Justice Benjamin concurred in part and dissented in part.  Essentially, Justice Benjamin found that the verdict form was “woefully inadequate to serve as a proper legal basis” for supporting a punitive damage award.  In fact, he said, the verdict form did not even require the jury to make a finding that the defendants had engaged in willful, wanton or reckless conduct, which, he pointed out, is a necessary predicate for any punitive damage award.

Justice Loughry dissented, complaining that the verdict form “was an inscrutable mess.”  Because of multiple errors involving the verdict form, the proper remedy should have been reversing the judgment in its entirety and remanding for a new trial.  Regarding punitive damages, Justice Loughry commented that TXO’s 5:1 ratio should actually be reduced to bring it into line with newer federal case law.

Commentary 

There are several takeaways from this case:

(1)    Verdict forms are important.  Especially in complex cases, attorneys must draft verdict forms that are internally consistent and include all of the necessary findings for the jury to make.  The Court has shown that it will act decisively when verdict forms are incomplete or incoherent.

(2)     The Court has relaxed the 5:1 ratio from TXO and appears willing to embrace larger ratios.  Of course, whether any particular ratio will pass constitutional muster has to be determined on a case by case basis.

(3)     Claims involving budgeting, staffing, management and other non-medical services do not fall within the scope of the MPLA.  Therefore, neither the stricter procedural requirements of the MPLA nor the caps on damages would apply.  This is good news for patients and for attorneys representing them.

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