Skilled Healthcare ordered to pay $671 million in health code trial

By Caroline Salls

Pittsburgh, July 7 - Skilled Healthcare Group, Inc. has been ordered by a Humboldt County, Calif., jury to pay $613 million in statutory damages and $58 million in restitutionary damages in connection with a nursing home statute violation complaint filed more than four years ago, according to a company news release.

Skilled Healthcare said it plans to "vigorously pursue various post-trial motions, as well as an appeal, if necessary."

However, in order to satisfy the typical bonding requirement to defer enforcement of a judgment pending outcome of an appeal, the company said it would be required to post a bond for 150% of the final judgment amount.

Skilled Healthcare said it currently has $94 million of borrowing capacity under its $100 million revolving credit facility, but its ability to draw on the credit facility is limited by the covenants of that facility.

In addition, the company said its primary professional liability insurance coverage has been exhausted for the policy year applicable to this case, and the excess insurance carrier issuing the policy applicable to this case has issued its reservation of rights to preserve an assertion of non-coverage for this case because of the lack of any allegation of injury or harm to the plaintiffs.

Even if it is successful in obtaining insurance coverage for this matter, Skilled Healthcare said the amount of the jury verdict far exceeds the policy limits of its insurance.

According to the release, the maximum amount of damages allowed by Health and Safety Code 1430(b) were awarded on Tuesday in the first phase of deliberations. The California statute mandates that nursing homes maintain 3.2 nursing hours per patient per day.

The total damages were assessed at a rate of $500 per-patient per-day that the 22 nursing facilities involved in the suit were in violation of the law.

According to the release, the jury has yet to hear the punitive damages phase of the trial. The final judgment is expected in the next few weeks.

"We are deeply disappointed in the verdict, and continue to firmly believe that our facilities are appropriately staffed and that our caregivers work hard every day to provide the care and services our residents need and deserve," chairman and chief executive officer Boyd Hendrickson said in the release.

Skilled Healthcare is a Foothill Ranch, Calif.-based health care services company.

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