The Impact of Investigations on LTC Facility Litigation

The Art of Investigation: The Impact of a Facility’s Investigation on Future Litigation By: Matthew F. Tibble and Donald Patrick Eckler

Why is this topic important to me as an LTC Administrator? • LTC Facilities have become targets with personal injury attorneys. • Trend is for personal injury attorneys to become involved with the handling of claims very early. • Increase in the dollar value of verdicts and settlements relating to LTC Facilities in all parts of Illinois. • LTC Administrators and their staffs can take affirmative steps during their investigation to prevent or limit potential claims.

Pretzel's observations concerning attorneys bring lawsuits against LTC Facilities. • Specialized attorneys. • Involved very early in the process. • Obtaining resident charts immediately. • Retaining an RN who reviews the chart for violations of the Illinois Nursing Home Care Act. • Reaching out to former employees of the LTC Facility to obtain statements. • Getting involved with and obtaining the documents from the IDPH concerning their investigations. • Aggressive and relentless.

Example of type of advertisements that are out there concerning claims against LTC Facilities. When you place a loved one in the care of a nursing home, you expect that their needs will be met and that they be cared for. Unfortunately, negligence and outright abuse in nursing homes are all too common. Although many state and federal regulations, such as the Illinois Nursing Home Care Act , have been established to protect the elderly in these settings, gross violations occur every single day, tragically compromising the health, well-being and dignity of some of our society's most vulnerable members.

Two examples of reported verdicts against LTC Facilities. • LTC resident William (84 years old) was left “unsupervised” in the cafeteria while CNAs were putting other residents to bed in the LTC Facility. William, who had obtained cigarettes and matches from an unknown source, dropped a lit match on his lap and set himself on fire. The chart stated that William had a prior instance of violating the facilities’ smoking policy and that William required direct supervision while smoking. As a result of the fire, William sustained burns to over 30% of his body, which allegedly led to his death 22 months later.

LTC resident Roberto (54 years old) was admitted to the LTC Facility. Roberto was legally blind and diagnosed with paranoid schizophrenia. The LTC Facility placed Roberto in its secure unit on the 5th floor. Roberto’s door had alarms and his windows were properly restricted. Approximately a year after arriving at the LTC Facility, Roberto had adjusted to the facility and received medication in accordance with his doctors’ orders. One spring night, Roberto told a CNA he wanted to stay in his room while the other residents went to dinner. A CNA checked on Roberto an hour later and found him missing. Roberto was found an hour later on the ground outside the LTC Facility. He died about a hour later.

Statute Overview • Resident’s Rights 210 ILCS 45/2-101 through 210 ILCS 45/2-114. • 210 ILCS 45/2-107. “An owner, licensee, administrator, employee or agent of a facility shall not abuse or neglect a resident. It is the duty of any facility employee or agent who becomes aware of such abuse or neglect to report it as provided in ‘The Abused and Neglected Long Term Care Facility Residents Reporting Act.’”

210 ILCS 45/3-601: “The owner and licensee are liable to a resident for any intentional or negligent act or omission of their agents or employees which injures the resident.” • 210 ILCS 45/3-602: “The licensee shall pay the actual damages and costs and attorney's fees to a facility resident whose rights, as specified in Part 1 of Article II of this Act, are violated. “

Key Regulatory Schemes • OBRA – Omnibus Budget Reconciliation Act of 1987 (42 CFR 483). • Illinois Nursing Home Care Act (210 ILCS 45) • Illinois Assisted Living and Shared Housing Act (210 ILCS 9/1) • Illinois Administrative Code.

Helpful Websites • Illinois Department of Public Health (IDPH) – www.idph.state.il.us • United States Center for Medicare and Medicaid (CMS) Database on Nursing Homes – www.medicare.gov/nursing • Illinois Department of Aging – www.state.il.us/aging

Cases that are DOA • Single violation of a resident’s rights can mean a violation of the statute. • One minor charting or staffing issue can make your facility liable for compensatory damages and attorney’s fees. • Important that you take steps during your investigation to not create documents that establish a violation. • Important that you know what you are doing and that you are protecting your facility’s rights during an investigation.

Insurance issues for lawsuits involving the Illinois Nursing Home Care Act • Insurance companies will try to avoid paying these types of claims. • Declaratory Judgment lawsuits can occur. • Reservation of rights letters occur frequently in these types of cases • Some damages available under the Illinois Nursing Home Care Act might not be covered by insurance. • The attorney’s fees available under the Illinois Nursing Home Care Act might not be covered by insurance.

Important steps that LTC Administrators should take to be prepared for an investigation. • Have an incident/accident response plan in place. • Have an investigation procedure in place. • Take ownership and control of an investigation. • Know the strengths and weaknesses of your staff. • Designate chosen staff members with specific responsibilities when performing investigations. • Keep information for former staff.

Important steps that LTC Administrators should take to be prepared for an investigation. • Ensure staff understands that only the designated staff members should address issues concerning an incident and investigation. • Craft and control the messages and statements coming from your LTC Facility. • Have a relationship with an attorney who specializes in defending LTC Facilities. • Have a set procedure in place to notify your insurance broker/carrier. • Check with your insurance broker to ensure that your coverage includes attorney representation for investigations, administrative actions and litigation.

Three investigation areas where the steps you take can limit your facility’s potential exposure to lawsuits. • Interviewing witnesses. • Recording statements and information in resident charts. • Contact with residents or their families post-incident.

Interviewing witnesses • Before interviewing anyone, tour the area where the incident happened to gain your own understanding of what occurred. • Identify key personnel and residents who have information concerning the incident. • Understanding the strengths and weaknesses of the person you are interviewing. • Take notes only to the extent that you need them to recall what was said by whom. • Try to avoid taking notes while the interview is occurring, but draft them immediately afterward.

Interviewing witnesses • Designate one person to conduct the interviews. • Understand that any notes you take might be used against your facility, so only record the information that is essential for your memory and in a manner that is good for facility. • Ask leading questions based on your observations. • To the extent possible, do not make the interview a threatening procedure for the interviewee. • Take your time, exhaust the interviewee’s memory and understand what that person knows.

Recording statements and information in resident charts. • Understand that in every circumstance you must record all incidents and accidents involving resident safety or injury in a chart. • Develop an approved protocol at your facility for how incidents are to be recorded. • Conduct in-house training on that protocol. • Ensure skilled staff are the only persons recording the information concerning incidents in charts. • Do not just have staff or residents write statements to be included in the chart.

Recording statements and information in resident charts. • Review entries in charts concerning incidents to ensure that you understand what is being recorded and why. • Advise your skilled staff to only record factual information. • Stay away from words like “understaffed,” “abused” or “neglected.” • Stay away from phrases like “left unattended” or “left unsupervised.” • Understand that everything in the chart will be scrutinized following an incident.

Recording statements and information in resident charts. Admission: Any statement or assertion made by a party to a case and offered against that party; an acknowledgment of facts are true. Statement: A verbal assertion or nonverbal conduct intended as an assertion. Black’s Law Dictionary, 8th Addition

Recording statements and information in resident charts. Example of the difference between a Statement and an Admission: Resident A sustained an injury falling in a LTC Facility. During the investigation, the LTC Administrator interviews Resident B. Resident B states that she saw Resident A slip on water leaking from a water fountain in the LTC Facility. Based on interview with Resident B, the LTC Administrator recorded in Resident A’s chart that “Resident A slipped on water leaking from water fountain.”

Recording statements and information in resident charts. During the litigation that followed the incident, attorney for Resident A moved for a legal ruling on the basis that the LTC Administrator's report of the incident in the chart constituted an admission of neglect by the LTC Facility. As a result of comments made by the court indicating that it was inclined to agree with Resident A’s attorney, LTC Facility had to move to settle the matter before court could enter an adverse ruling.

Recording statements and information in resident charts. • Admission: “Resident A slipped on water leaking from the water fountain.” • Statement: “Resident B reported to me that she believes thatResident A slipped on water leaking from the water fountain.”

Contact with residents or their families post-incident. • Craft and control the messages and statements coming from your LTC Facility. • Ensure staff understands that only the designated staff members should address issues concerning an incident and investigation. • Designate a point person from the LTC Facility to handle these issues and make sure she knows what she is doing. • Continue to treat the resident and their family with dignity and respect regardless of what they state to you or accuse your facility of doing.

Contact with residents or their families post-incident. • Understanding that everything discussed with a resident and their family post-incident may be used against you in subsequent litigation. • Understand that a resident’s family is going to take notes concerning everything you or your staff says to them post-incident. • Indicate that you feel sorry that the incident occurred, but do not admit that your LTC Facility caused or contributed to the incident.

Contact with residents or their families post-incident. • Instances when you should absolutely get an attorney involved: • Request for a face to face meeting with you and your staff to discuss the incident. • Resident or resident’s family makes statement about a lawsuit. • Resident or resident’s family makes a scene at your facility. • Requests for the chart. • In instances where the chart is requested, best practice is to have an attorney review it before producing it. • Contacted by an attorney for the resident. • Contacted by the IDPH regarding the incident for a no-knock type investigation.

“The Circle of Trust”The Attorney-Client Privilege • To be entitled to the protection of the attorney-client privilege, a claimant must show that the statement originated in confidence that it would not be disclosed, was made to an attorney acting in his legal capacity for the purpose of securing legal advice or services, and remained confidential. Rounds v. Jackson Park Hosp., 319 Ill.App.3d 280, 285-86 (1st Dist. 2001).

“The Circle of TrustThe Attorney-Client Privilege • The general rule with respect to discovery in Illinois is stated in the heading to Supreme Court Rule 201(b)(1): “Full disclosure required.” In Illinois the assertion of privilege is governed by Supreme Court Rule 201(b)(2), which in relevant part states: All matters that are privileged against disclosure in the trial, including privileged communications between a party or his agent and the attorney for the party, are privileged against disclosure through any discovery procedure. Material prepared by or for a party in preparation for trial is subject to discovery only if it does not contain or disclose the theories, mental impressions, or litigation plans of the party’s attorney.

“The Circle of Trust”The Attorney-Client Privilege • What does that mean? • The communication that is sought to be protected must be made privately. • The communication cannot be shared with others not covered by the privilege.

“The Circle of Trust”Who is in the Circle? • In the corporate context only communications with those within the “control group” are covered by the attorney-client privilege. Consolidation Coal Co. v. Bucyrus-Erie Co., 89 Ill.2d 103, 118-19 (1982). • The “control group” is a small group of people.

“The Circle of Trust”Who is in the Circle? • The Illinois courts hold that the following are in the “control group”: (1) the agent served as an advisor to top management of the corporate client; (2) this advisory role was such that the corporate principal would not normally have made a decision without the agent's advice; and (3) the agent's opinion or advice in fact formed the basis of the final decision made by those with actual authority within the corporate principal. Archer Daniels Midland Company, 138 Ill.App.3d at 279-280.

“The Circle of Trust”Who is in the Circle • In order to determine who is and who is not in control group Illinois courts have looked at the role that the individual played in the organization and not that individual’s title. In Knief v. Sotos, 181 Ill.App.3d 959, 964 (2nd Dist. 1989), the court held that a head waitress and a bar manager were not in the control group with respect to litigation decisions, and therefore, those individuals’ communications with counsel representing the restaurant/bar were not protected from disclosure.

“The Circle of Trust”Who is in the Circle? • Communications with the following individuals are likely covered by the attorney-client privilege: 1. Board Members; 2. C-Level officers 3. Individuals just below C-Level Officers in the area in which they have authority 4. Insurers and representative of insurers. People v. Ryan, 30 Ill.2d 456 (1964).

“The Circle of Trust”Who is Outside the Circle • Communications with the following individuals are likely not covered under the attorney-client privilege. This is a non-exhaustive list of examples: 1. insurance brokers; 2. employees without decision making authority; 3. the patient and the patient’s family; and 4. representatives of the patient and the patient’s family

Limits to Communications Protected by Privilege • Not every disclosure from client to attorney is entitled to protection from discovery. The attorney-client privilege protects only those disclosures necessary to obtain informed legal advice which might not have been made absent the privilege. Cangelosi v. Capasso, 366 Ill.App.3d 225, 228-29 (2nd Dist. 2006). • Furthermore, the attorney-client privilege does not protect communications primarily regarding business advice. CNR Inv., Inc. v. Jefferson Trust & Sav. Bank., 115 Ill.App.3d 1071, 1076 (3rd Dist. 1983). Thus, for the privilege to apply, the confidential communications must be primarily legal in nature.

“The Circle of Trust”Work Product Doctrine • The work product doctrine protects “material prepared by or for a party in preparation for trial” that contains “theories, mental impressions, or litigation plans of the party’s attorney.” See Ill. Sup. Ct. Rule 201(b)(2). • Materials are protected if they are prepared for any litigation or trial as long as they were prepared by or for a party to the subsequent litigation. Fischel & Kahn, Ltd v. van Straaten Gallery, Inc. 189 Ill.2d 579, 591 (2000).

“The Circle of Trust”Work Product Doctrine • What constitutes “work product” under Illinois Rules is narrower than what is protected from discovery in the federal system. Milynarski v. Rush-Presbyterian St. Lukes Med. Ctr., 213 Ill.App.3d 427, 432 (1st Dist. 1991). • Illinois only protects “opinion work product,” i.e., matter which discloses the theories, mental impressions or litigation plans of a party’s attorney. Id. Examples of documents prepared “in preparation for trial” include: Memoranda made by counsel of his impression of a prospective witness, as distinguished from verbatim statements of such witness, trial briefs, documents revealing a particular marshaling of the evidentiary facts for presentment at the trial, and similar documents which reveal the attorney's ‘mental processes' in shaping his theory of his client's cause. Monier v. Chamberlain, 35 Ill.2d 351, 359-60 (1966).

“The Circle of Trust”Work Product Doctrine • Generally, where there is a mixture of unprivileged factual material and protected opinion work product such as “attorneys’ notes and memoranda of oral conversations with witnesses or employees,” then these are not routinely discoverable unless the party seeking discovery can show that “it is absolutely impossible to secure the factual information from other sources.” Mlynarski, 213 Ill.App.3d at 433.

“The Circle of Trust”Work Product Doctrine • Because of the limits of work product doctrine, any statements of employees or other witnesses to an incident taken should be taken by counsel so that the attorney’s mental impressions are intermixed with the facts contained, making it very difficult to disclose.

Arbitration Clauses • Many facilities have chosen to use arbitration clauses as means to insulate themselves from runaway jury verdicts. • It is our view that while there is good reason to be concerned about jury verdicts, arbitration may not be the best way to insulate from that risk. • There are several considerations that should be made before deciding to require arbitration.

Considerations Before Requiring Arbitration • First, as evidenced by the spate of recent decisions from both the Illinois courts and the federal courts, including the United States Supreme Court, whether an arbitration clause is enforceable is one of the first hurdles the proponent of arbitration must overcome. • This is particularly so in the context of contracts with long term care facilities.

Considerations Before Requiring Arbitration • Second, if successful in navigating a case to arbitration, the costs of the arbitration process can be quite high. • Third, one of the common reasons for choosing arbitration is its speed. However, a speedy result is not necessarily the best result. • Fourth, if a party is dissatisfied with the outcome of an arbitration there is usually no meaningful right to appeal the decision of an arbitrator.

Considerations Before Requiring Arbitration • The principal advantage of arbitration in any context is that it can be made a confidential process. • If confidentiality is the primary litigation strategy, and it could be a legitimate concern in an effort to make a facility less likely to be sued, then arbitration may be a way to proceed.

Specific Issues of Enforcement of Arbitration Clauses • In Marmet Health Care Center, Inc. v. Brown, the United States Supreme Court held that a West Virginia state court had improperly held that the Federal Arbitration Act (“FAA”) does not apply to consideration of the enforceability of arbitration agreements in the face of a West Virginia statute that barred such agreements.

Specific Issues of Enforcement of Arbitration Clauses • In Curto v. Illini Manors, the Third District held that the trial court did not err in refusing to enforce an arbitration provision in a nursing home contract signed by a wife who brought an action based upon Wrongful Death Act, Survival Act, violation of the Nursing Home Care Act, and Family Expense Act as a result of the death of her husband.

Specific Issues of Enforcement of Arbitration Clauses • The Curto court found that the wife, who executed the agreement as representative of her husband, was not the express or implied actual agent of the husband in signing the agreement. • The Curto court left open the possibility to prevail in showing actual agency, but in this case there were no facts to support that conclusion. The Court also held that the wife was not the apparent agent of the husband.

Specific Issues of Enforcement of Arbitration Clauses • Ironically, and indicative of how hostile Illinois courts are to arbitration clauses, the Curto court held that the wife’s personal claims were also not subject to the arbitration agreement, because she signed the agreement in her capacity as representative of her husband, not individual capacity.

Specific Issues of Enforcement of Arbitration Clauses • This case is interesting because it seems to conflict with the ruling in Fosler v. Midwest Care Center II, 398 Ill.App.3d 563 (2010), which held that an arbitration agreement executed by the patient’s daughter was enforceable under the FAA pursuant to the preemption doctrine. It is important to note that the issue of preemption does not appear to have been raised by the parties and was not addressed by the Curto court.

Specific Issues of Enforcement of Arbitration Clauses • In Carter v. SSC Odin, the Illinois Appellate Court, Fifth District addressed the applicability of two arbitration agreements between a nursing home and its resident following remand from the Illinois Supreme Court after reversal of the trial court and the Fifth District.

Specific Issues of Enforcement of Arbitration Clauses • The Supreme Court ruled that the Federal Arbitration Act preempted the Nursing Homes Care Act and remanded to the Fifth District to consider the following issues: whether the parties’ arbitration agreements evidence a transaction involving interstate commerce within the meaning of Section 2 of the FAA, whether the arbitration agreements are void for a lack of mutuality, and whether the arbitration agreements apply to the plaintiff's claim under the Wrongful Death Act.

The Impact of Investigations on LTC Facility Litigation