Damages cap: per lawsuit or per violation? High court to decide

At a time when some California nursing homes have come under scrutiny for their handling of the COVID-19 crisis, the California Supreme Court will hear oral argument (via video or teleconference) in Jarman v. HCR ManorCare, S241431, on Tuesday. In Jarman v. HCR ManorCare, 9 Cal. App. 5th 807 (2017), Division 3 of the 4th District Court of Appeal issued a decision reviving claims brought against nursing homes for violations of resident rights pursuant to Health and Safety Code Section 1430(b). Prior to Jarman, these claims were deemed capped at $500 per lawsuit and essentially rendered toothless. Nevarrez v. San Marino Skilled Nursing & Wellness Centre, LLC, 221 Cal. App. 4th 102, 137 (2013). The appellate court in Jarman disagreed, concluding that the better statutory interpretation would allow nursing home residents to pursue damages of up to $500 for every violation of a primary right. The California Supreme Court must now decide whether Health and Safety Code Section 1430(b), provided for damages up to $500 per lawsuit, per primary right violation, or other reasonable measure such as per violation.

In order to respond to the declining state enforcement of nursing home resident rights, the California Legislature added subdivision (b) to Health and Safety Code Section 1430 in 1982. California Health and Safety Code section 1430(b) provides:

"A current or former resident or patient of a skilled nursing facility, as defined in subdivision (c) of Section 1250, or intermediate care facility, as defined in subdivision (d) of Section 1250, may bring a civil action against the licensee of a facility who violates any rights of the resident or patient as set forth in the Patients Bill of Rights in Section 72527 of Title 22 of the California Code of Regulations, or any other right provided for by federal or state law or regulation. The suit shall be brought in a court of competent jurisdiction. The licensee shall be liable for the acts of the licensee's employees. The licensee shall be liable for up to five hundred dollars ($500), and for costs and attorney fees, and may be enjoined from permitting the violation to continue. An agreement by a resident or patient of a skilled nursing facility or intermediate care facility to waive his or her rights to sue pursuant to this subdivision shall be void as contrary to public policy."

The clear intent of Section 1430(b) was to improve the quality of care of nursing home residents by providing a means to protect their personal and private rights. "The protections [of resident rights] are mere words without meaning if there is no way to guarantee these basic rights." Assembly Committee on Judiciary, Bill Analysis Work Sheet, SB 1930, 1981-1982 Regular Session, p. 2. Thus, the Legislature provided a private right of action against nursing homes in order to "protect and ensure the rights of people residing in nursing homes." Senate Committee on Judiciary, Civil Actions-Patient's Bill of Rights, SB 1930, 1981-82 Regular Session, p. 2. The Legislature's intent to create a potent means of privately enforcing nursing home resident's rights is demonstrated by the type of remedies allowed. This cause of action not only provides up to $500 in damages, but also attorney fees and costs and an injunction to stop the nursing home from continuing to violate the rights of nursing home residents. It is the public policy of California to ensure that "long-term health care facilities provide the highest level of care possible" and providing private means of enforcement is part of furthering this policy. Health & Safety Code Section 1422 (a).

Despite the clear legislative intent, in 2013, claims brought pursuant to Section 1430(b), were essentially rendered toothless due to a Court of Appeal's interpretation of the statute. In Nevarrez, the Court of Appeal concluded that the cause of action was limited to a maximum of $500 per lawsuit. However, in Jarman, the 4th District Court of Appeal expressly rejected Nevarrez and reasoned that a $500 "per lawsuit" limitation would be inconsistent with the statute's goal of protecting nursing home residents since it would only provide a suitable remedy for "those who like litigating far more than they like money." The 4th District concluded that a plaintiff may recover up to $500 per cause of action prosecuted under the statute.

Under the primary right theory, a "cause of action" is comprised of a "primary right" of the plaintiff, a corresponding "primary duty" of the defendant, and a wrongful act by the defendant constituting a breach of that duty. Crowley v. Katleman, 8 Cal. 4th 666, 682 (1994). The most salient characteristic of a primary right is that it is indivisible: The violation of a single primary right gives rise to but a single cause of action. A "primary right" is the plaintiff's right to be free from the particular injury suffered. Ibid. More than one wrongful act may also only invade a single primary right, therefore giving rise to a single cause of action. However, the primary right theory is notoriously uncertain in application and is primarily invoked when a plaintiff attempts to divide a primary right and enforce it in two separate lawsuits. Baral v. Schnitt, 1 Cal. 5th 376 (2016), citing 4 Witkin, Cal. Procedure (5th ed. 2008), Pleading, Section 35. p.100.) It is unclear how exactly the primary rights theory would apply in the context of a Section 1430(b) claim, where harm or injury resulting from the violation is not a required element. Both Nevarrez and Jarman were silent on how the primary right theory would apply to Section 1430(b), claims in practice.

In determining what constitutes a cause of action under Section 1430(b), the courts have looked to the Federal Civil Rights Act of 1871 (42 U.S.C. Section 1983) by way of analogy. Cal. Assn. of Health Facilities v. Dept. of Health Serv., 16 Cal. 4th 284, 302 (1997); see also, Wehlage v. EmPres Healthcare, Inc., 791 F.Supp.2d 774, 787 (Cal. N.D. 2011). Like Section 1430(b), section 1983 "merely provides a mechanism for enforcing individual rights 'secured' elsewhere." Wehlage, 791 F. Supp.2d at 787. Personal rights can be discerned from determining what rights the legislature intended to confer upon a class of beneficiaries, and such intent can be gleaned from the text and structure of the statute and legislative history. Id. at 787-88. For example, the purpose behind the state requirement of providing a minimum amount of staffing hours per patient day conferred in Health and Safety Code Section 1276.5 was to protect nursing home residents, such that the statute conferred an enforceable right: a right to minimum staffing. Ibid.

Given this framework, at the very least, a cause of action under Section 1430(b), arises when there is a violation if any of the rights specified in Title 22 of the California Code of Regulations Section 72527 and, by reference, those rights specified in Health and Safety Code Section 1599.1 (including the right to an adequate level of personnel, the right to be given care to prevent pressure sores, and the right to show evidence of good personal hygiene). In addition, rights can be conferred by federal or state laws or regulations, especially those aimed at protecting residents. There are numerous rights set forth in Title 22 of the California Code of Regulations, California Health and Safety Code, and federal regulations promulgated under the Federal Nursing Home Reform Act from the Omnibus Budget Reconciliation Act of 1987. These regulations and statutes were designed to protect nursing home residents from harm by ensuring that the nursing homes provide adequate care and supervision.

Furthermore, under the rationale that the rights conferred to nursing home residents are meant to protect them, when the nursing home commits repeated violations of a resident's right, multiple causes of action thereby accrue. For example, if a nursing home knew that its liability for violating a resident's right to adequate staffing was simply limited to $500 for the first day of the resident's admission, then what would deter the nursing home from meeting the resident's staffing needs the next day and the remainder of the resident's admission to the facility? In other words, limiting the damages to $500 would incentivize nursing homes to consciously disregard the health and wellbeing of the residents by doing a simple cost-benefit analysis of weighing the potential payment of a nominal amount of $500 over spending thousands of more dollars on adequate payroll. Limiting the damages to $500 regardless of how many times a resident's right may be violated during the course of a residency would be in contravention of the Legislature's intent of promulgating regulations aimed at protecting the residents' rights, health, and safety.

The California Supreme Court will now decide whether to follow the rationale in Jarman to allow nursing home residents to obtain damages for each violation of their primary rights or the rationale in Nevarrez to limit the nursing home resident's damages to $500 for each lawsuit. It is possible that the court may prescribe a more practicable approach -- to allow damages up to $500 per violation -- period. Indeed, in both Jarman and Nevarrez, the juries rendered verdicts in favor of the nursing home residents based on that approach and were able to calculate the statutory damages accordingly. 