Daily Blast - August 17, 2020 - Lewis Brisbois Bisgaard & Smith LLP

Today, the California Supreme Court issued its long-awaited opinion in Jarman v. HCR Manorcare, Inc. (S241431). In an opinion authored by Justice Chin, the court held the $500 cap for violation of Health & Safety Code section 1430, subdivision (b) (section 1430(b)) (the “Patient Bill of Rights”) applies per action,not per violation. While plaintiffs and the plaintiffs bar argued the “per violation” measure applies, the Supreme Court affirmed the Legislature’s intent to provide a narrow private enforcement mechanism for a broad range of patient rights violations. In a significant win for the defense bar, the court construed the Long-Term Care Act to be primarily preventative, not punitive or deterrent in nature. While the statutory language was not clear, the legislative history and the Act as a whole demonstrated that the section 1430(b) $500 monetary remedy is not the primary or exclusive enforcement mechanism available to residents. Limiting it to $500 per action is consistent with the Legislature’s intent.

In Jarman, a jury found a skilled nursing facility had committed 382 violations of the Patient Bill of Rights and awarded $500 for each one. The Court of Appeal reversed the judgment, concluding the $500 cap applied per “cause of action.” The Supreme Court rejected both approaches. First, the court looked at the statutory language and found it to be far from clear, “offering little insight.” (Typed Opn., p. 6.) The court next examined the Long-Term Care Act as a whole. The legislative history showed from the outset the dollar amount for a section 1430(b) violation referred to the entire action and had been consistently interpreted since then as applying the $500 cap per lawsuit. Further, section 1430(b) provides no guidance on how to determine the amount recoverable for each violation and did not depend on the severity or type of violation. In addition, the court noted that many of the rights set out in the Patients Bill of Rights appear to overlap, “making it difficult to parse out what constitutes a separate and distinct violation for purposes of section 1430(b).” (Id., at p. 13.)

In addition to legislative history, the court looked at the remedies provided under the Long-Term Care Act and noted that injunctive relief is perhaps the most important remedy specified by section 1430(b). (Typed Opn. p. 19.) Further, the court commented that the availability of attorneys fees and costs still served as a strong deterrent. (Ibid.) And, the court noted the difficulties in distinguishing between a series of violations from a continuing violation. (Id., at p. 14.)

The court rejected the notion that plaintiffs would maneuver around the cap by filing multiple lawsuits as “low risk” because claim and issue preclusion could limit such attempts. In addition, such inefficient and duplicative efforts would likely not garner high attorney fee awards. The court specifically did not reach the question how the cap would apply to multi-plaintiff lawsuits. (Typed Opn. p. 23, fn. 8.)

Dissenting Opinion. Justice Cuellar, with Justice Liu concurring, authored a lengthy dissent. Justice Cuellar began by noting the disparate impact COVID-19 has had on skilled nursing facilities. He advocated for a per violation cap, finding that to be more in line with the legislation’s purpose to protect resident rights with the goal of determining violations of those rights and providing recourse for such violations.

Justice Cuellar also justified a per violation cap as a way to combat a strategy already employed by many of our astute LBBS health care litigators who tender the $500 cap to resolve section 1430(b) causes of action early in the litigation. Justice Cuellar’s dissent argued that a $500 cap per action will “encourage rational defendants to settle lawsuits quickly” because of the low dollar amount and the “nominal attorney fees accumulated during short settlement negotiations.” (Dissenting Opn. p. 14.) Justice Cuellar also discussed at length the limitations of other remedies such as injunctive relief and the enhanced remedies available under the Long Term Care Act due to the high burden of proof. He criticized the special verdict form used in Jarman for providing no guidance to the jury on how to determine what constitutes a violation and contended that bad facts should not make bad law. (Id., at p. 19.)

The opinion represents a significant victory for the defense bar in long-term care cases. A copy is attached.