A decade ago, nursing home litigation was an uncharted area.

Now it's a legal cottage industry.

The trend started when firms like Tampa, Fla.'s Wilkes & McHugh began taking on for-profit nursing homes in neglect cases and winning big verdicts.

It started with one case in the mid-1980s, recalled founding partner Jim Wilkes. An elderly woman approached his firm with a packet of horrific photographs that a funeral director had taken of her sister's corpse. The photos showed a malnourished body covered with bedsores.

Wilkes and his partner, Tim McHugh, repeatedly declined the case, saying they had no expertise in the area. But when no other lawyers would take it, they finally dug in, resurrecting a little-known residents' rights law to win the family a substantial confidential settlement.

Nearly 2,000 cases later, Wilkes & McHugh has carved out a niche and a name for itself, growing to more than 60 lawyers with offices in seven states. It has pioneered use of Florida's 1976 residents' rights law to sue for neglect, as a separate cause of action beyond simple negligence. Its success has been noticed by other firms, which have followed its lead.

Today, nursing home litigation is exploding, prompting a number of states to push through damage caps, and the U.S. Senate Special Committee on Aging to convene hearings to examine the impact of litigation on the quality of long-term care.

Wealth, not health

Despite an aging population and a dramatic increase in the number of nursing home residents in the 1980s and early 1990s, the plaintiffs' bar overlooked litigation, believing that the patients were too old and the damages too limited, noted Libby Edwards of Edwards & Associates in Corpus Christi, Texas.

But then a small band of plaintiffs' lawyers, including Wilkes and McHugh, figured out that the key to suing nursing homes is to focus on wealth, not health.

"When you can say to a jury, 'Here is a corporation with billions in assets, yet across the nation they are chronically understaffing their facility, not providing enough nurses' aides and spending $2 per resident on food per day,' it outrages a jury," Edwards said.

And, in case after case, that is just what Wilkes & McHugh, named in The National Law Journal's "Plaintiffs' Hot List," has done.

The firm outraged a jury to the tune of $63 million in punitive damages alone in a total verdict of $78.4 million, which ranked No. 26 on the NLJ's Top 100 verdicts list in 2001. Sauer v. Advocat Inc., No. CIV-2000-5 (Polk Co., Ark., Cir. Ct.).

Despite the tort reform measures and damage caps in a growing number of states, including the firm's home state, Wilkes & McHugh earned a total of $64 million in verdicts in the past two years.

Wilkes credits the firm's success to a good marriage between him and partner McHugh. The two have often been characterized as a balance of opposites, where Wilkes is the charismatic front man and McHugh the behind-the-scenes strategist.

"That image works well for us," Wilkes said. In reality, both have shouldered equal weight in all aspects of building the firm, from trying cases to business management.

"We've put everything back into it for 15 years," Wilkes said.

Both had "real lives" before practicing law together, he added. Wilkes was in the U.S. Army and McHugh was a furniture salesman.

In the early years of the firm, the two partners wrote all their initial pleadings, their arguments and even their appeals. Now they largely work behind the scenes, while their firm's other trial talent take the cases to the jury.

"I went and found guys that were better than me," said Wilkes. They have recruited litigators from all sectors: from the president of a conservative anti-abortion group to a top criminal defense lawyer. They also encourage their lawyers to take the bar in several states.

"We pretty much had a star litigation team out of the first two or three offices we opened," Wilkes said. Typically, the firm has teams of between two to four litigators and four to six paralegals working on a case, and have several cases going at once.

The cases are not cheap to pursue, said Wilkes, and the firm has often invested more than was profitable to win a case. However, information used in one suit can be used in other suits against the same home or operator.

Understaffing is the most common charge against nursing homes, since nurses' aides, typically the lowest-paid workers, provide most of the care to residents. Testimony from employees and experts who say the home was chronically understaffed and had cut workers' hours-despite the corporate wealth of the chain-can be very damning in a jury's mind.

Also, in addition to charges under state and federal laws, litigators may look to criminal codes that protect the elderly. Some states, like Texas, that cap punitive damages exempt awards where a jury finds felony violations.

"I don't think Wilkes nor McHugh has tried a nursing home case in a number of years," said Roger Glasgow of Wright, Lindsey & Jennings in Little Rock, Ark. Glasgow leads a nursing home defense practice and has defended at least 50 cases against the Tampa firm. Many end in confidential settlements a day or two before trial, he said.

Glasgow conceded that Wilkes & McHugh is the pre-eminent plaintiffs' firm for nursing home litigation in the South, and that it has developed a successful trial strategy.

But he's no fan.

"They have single-handedly done the greatest disservice to nursing homes in states where they operate than any other source," Glasgow asserted. The firm has gone after larger chains, he said, a number of which have gone bankrupt or lost their liability coverage.

Frank Petosa, chairman of the nursing home task force for the Academy of Florida Trial Lawyers, bristles at the accusation that the firm's success has been a blight on the nursing home industry. Wilkes & McHugh has gone after the worst offenders and rightfully attacked their "profit over people" motive, said Petosa of Petosa & Associates in Boca Raton, Fla.

Hard economic times

The nursing home industry fell on hard economic times in the mid-1990s, not because of big verdicts but because of changes in the government's Medicare and Medicaid reimbursement system, said Charles Fillmore of the Fillmore Law Firm in Fort Worth, Texas. His firm won a $312 million nursing home verdict in 2001. Fuqua v. Horizon/CMS Healthcare Corp., No. 4-89CV1087Y (N.D. Texas Feb. 9, 2001).

As nursing home care expanded, companies continued to open more facilities and increase their debt, banking on federal money, Fillmore said. But the government's payment plan changed from a cost-based to a fixed-rate system that sent a number of companies into bankruptcy.

The corporate belt-tightening caused companies to cut overhead, which in the health care industry means staff. Fewer staff members means less care for residents, he said.

Yet more and more lawyers, including Fillmore, are moving away from nursing home litigation. Due to tort reform in Texas and a number of other states, most nursing home cases cost more than they're worth.

Wilkes & McHugh, whose nursing home practice has sometimes reached 90% of its overall caseload, has started to expand a smaller practice in commercial litigation and deceptive trade practices.

 

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