California Supreme Court Limits Nursing Home Liability to $500 in Resident Rights Suits

On August 17, 2020, the California Supreme Court ruled in favor of Manatt client HCR ManorCare, owner and operator of nursing homes across the country, holding that statutory damages in residents’ lawsuits alleging violations of regulatory resident rights are capped at $500 per lawsuit, not $500 per violation.

In Jarman v. HCR ManorCare, the plaintiff claimed that his rights were violated while staying at an HCR ManorCare skilled nursing facility. The trial court agreed with the plaintiff’s theory that the nursing home should be liable for up to $500 for each regulatory violation under Health & Safety Code section 1430(b). As a result, the jury awarded the plaintiff $95,500 for 382 violations of his rights, as well as damages, and the court awarded attorneys’ fees. Manatt became counsel for the appeal that followed.

The Court of Appeal upheld the verdict, and in doing so created a conflict with two prior decisions (one of which was litigated by Manatt) in which liability was limited to $500 for the entire lawsuit. The California Supreme Court stepped in to resolve the conflict and, in a 5-2 decision, held that the “up to $500” text of the statute means that a plaintiff is entitled to a single award of up to $500 in any lawsuit. The court found that the text, purpose, and context of the statute prohibit recovery on a per-violation basis, and that the question of whether to change the law falls to the Legislature, which has not done so despite repeated efforts by resident advocates since the law was enacted in 1982.

Healthcare litigation and appellate partners Barry Landsberg and Joanna McCallum led the team of Manatt litigators on the case, with valuable support from appellate senior counsel Michael Berger.

To read the full opinion in Jarman v. HCR ManorCare, click here.

To learn more about the implications of this decision, please see Los Angeles Times, Law360 and Bloomberg Law’s coverage of this ruling. This ruling was also covered by Daily Journal.

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