Practicing Law With a Passion for the Rights of the Individual

Firm Recognized For Successful Suits Against Nursing Homes
Firm Recognized For Successful Suits Against Nursing Homes
08/09/2004
Mississippi Business Journal
By: Lynne Jeter

Hattiesburg — Last month, the National Law Journal listed Wilkes & McHugh, P.A., a pioneer in filing nursing home abuse and neglect lawsuits, as one of the top 20 plaintiff’s firms in the nation, primarily because of the $23.5 million in Mississippi courtroom verdicts in the last two years. “It’s great to be honored in this way, but it’s really about protecting this country’s elderly and making sure their quality of life is not compromised,” said James McHugh, an associate of the firm. “I’d like to think we’ve made a substantial difference in the way nursing homes operate.”

The $23.5 million in Mississippi jury verdicts is part of the $64 million the law firm has earned for nursing home clients in three states since 2002. “The conduct of the nursing homes would have meant jail time in a criminal setting,” added McHugh.

James Wilkes II of Tampa, Fla., and Tim McHugh of Hattiesburg [sic] initially joined forces in 1985, around the same time an elderly woman approached Wilkes with a stack of horrific photographs that a funeral director had taken of her sister’s corpse, depicting a malnourished body covered with bedsores.

Because neither partner had expertise in nursing home neglect, they turned down the case. But when no other attorneys would take the case, primarily because aged clients don’t represent significant economic loss and therefore fetch smaller jury awards, Wilkes and McHugh reconsidered. By resurrecting Florida’s little-known 1976 residents’ rights law to sue for neglect, as a separate cause of action beyond simple negligence, the firm won the family a substantial confidential settlement, and unwittingly began a legal cottage industry.

“Jim (Wilkes) told us nursing home neglect bothered him so much because of a negative experience he had with his grandmother,” said James McHugh, Tim’s brother, who joined the firm in 1988. “He had been out of town serving in the military and returned home to find his grandmother soaking wet and curled up beneath her bed. He immediately took her home and tried to take care of her himself. Unfortunately, he had a short leave of absence and had to make other arrangements.

“Also, our father was a disabled veteran who could only use half his body. The situation made us keenly aware of vulnerable people and their needs.”

Today, nursing home litigation comprises about 85% of the firm’s caseload, with Wilkes, known as the nursing home industry’s most hated man, as the front man, and Tim McHugh, a former furniture salesman, as the chief strategist.

Of the more than 2,000 lawsuits filed against nursing homes since 1986, they have lost only a handful of cases. The law firm has grown to 60 attorneys with offices in seven states, but the duo remain the only partners and “call every shot,” said Wilkes.

“True, over the years, nursing home litigation has proven to be a profitable venture,” said James McHugh. “But pursuing those causes is consistent with our own personal belief that life is sacred from the moment of conception to the moment of natural death. It should never be disrespected.”

First, a little history

In the U.S., the nursing home industry exploded in the early 1990s, after the government recognized that per diem costs in nursing homes were substantially lower than in hospitals. Publicly traded corporations scooped up mom-and-pop operations and nonprofit homes and subsequently squeezed out the competition. They continued to open more facilities and increase debt, banking on federal money.

Then in 1995, a General Accounting Office report alleged widespread fraud and chronic overbilling — sometimes double and triple the allotted amount — in the nursing home industry. (Some states, including Mississippi, do not allow on-site bookkeeping audits.) Soon after the report was released, Congress changed the payment plan from cost-based to fixed-rate. The new system was included in the Balanced Budget Act of 1997.

The dramatic change forced a number of companies into bankruptcy, and corporations that survived increased belt-tightening measures, namely, cutting payroll. In 2001, the U.S. House of Representatives released an investigative report that chronicled the increased number of nursing home abuse violations resulting from, among other problems, understaffing and fraud.

The report, “Abuse of Residents is a Major Problem in U.S. Nursing Homes,” showed that between January 1999 and January 2001, more than 30% of the nation’s 5,283 nursing homes were cited for an abuse violation — physical, sexual or verbal — with the potential to cause harm. The report also said that 92% of the nation’s nursing homes were understaffed and 54% were "dangerously understaffed."

An increase in abuse violations led to a flurry of lawsuits filed against nursing homes. From April 2000 to October 2001, record verdicts of $312 million and $82 million in Texas and $20 million in Florida were awarded.

The worst offenders? For-profit nursing homes, said James McHugh.

“For-profit chains have vast organizational charts they must support with large paychecks, bonuses and perks,” he said. “They are also publicly traded, and have to answer to stockholders, so their solutions are usually ones of immediacy.”

Soon, the U.S. Senate Special Committee on Aging is expected to convene hearings to examine the impact of litigation on the quality of long-term care.

The tort reform impact

The National Law Journal selected Wilkes & McHugh for the Plaintiff’s Hot List in part because verdicts came “despite the tort reform measures and damage caps in a growing number of states...”

During the recent special session of the Legislature, Mississippi lawmakers approved a bill that provided for venue reform, limits on non-economic damage awards of $500,000 for the medical industry and $1 million for general businesses, joint and several liability reform, innocent retailer provisions, and protections against punitive damages for medium and small businesses.

“We haven’t made up our minds how to deal with tort reform in Mississippi, though we’re saddened that rights have been taken away from people that need them the most,” said James McHugh. “There’s always a need for balance, and I don’t think this legislation reflected the balance of all sides.”

Steve Browning, executive director of Mississippians for Economic Progress, responded: “For many years, Mississippi’s business climate has been harmed by frivolous lawsuits and outrageous verdicts. The newly-enacted legislation, which goes into effect on September 1, will improve our state’s image, thereby increasing prospects for job creation and access to healthcare. We are confident that this reform package will more fairly balance the interest of the plaintiff with the interest of the defendant.”

Seeking solutions

States like Oregon have found alternatives to nursing home care.

“In Oregon, they stopped building nursing homes in 1990,” said Wilkes & McHugh spokesperson Steve Vancore. “Since that time, the over 65 population has increased 50%. Yet they have fewer beds and one of the lowest occupancy rates in America. They give families a voucher and tell them to find a service that they like and the government pays for it. When the family has more control over the selection process and holds the providers accountable, the care improves tremendously. Right now, most states pay the nursing homes, not the families, and that’s the difference.”

In Mississippi, the primary funding source for nursing home patients is the Medicaid program, a division of the Governor’s Office. It is funded by state appropriations and matching federal funds. The Mississippi State Department of Health (MSDH) Division of Health Facilities Licensure and Certification certifies nursing homes for participation in the Medicaid and Medicare programs. The MSDH Office of Health Regulation (OHR) oversees the state’s nursing homes. MSDH has come under scrutiny because of conflicts of interest on the state health board.

“It would be better served not necessarily to eliminate healthcare providers and nursing home owners from the state health board, but to balance them with true advocates for the elderly, people who are not tied in any way to the industry,” said James McHugh.

MSDH spokesperson Liz Sharlot said the department “takes our direction from whatever state statute dictates. That’s a legislative issue.” MSDH currently oversees 214 licensed nursing homes, representing 18,895 beds; 175 licensed personal care homes, with 4,793 beds; and 75 licensed hospice facilities, with 174 beds. By press time, the state health department could not provide the number of complaints received during the last fiscal year on these facilities.

Three years ago, MSDH supervised 183 nursing home (17,356 beds), 207 personal care homes (4,942 beds) and 43 hospice care facilities. Of the 669 complaints received that fiscal year, all but 10 complaints involved nursing homes, according to OHR.

Cited for serving the underserved

The National Law Journal also recognized Wilkes & McHugh because of the firm’s work outside of the courtroom, such as establishing the Coalition to Protect America’s Elders, an independent advocacy group.

“Our organization has been quite successful in bringing about changes in laws,” said James McHugh. “For example, when lawmakers passed tort reform in Florida, the coalition was able to show that nursing home care would not improve without better staffing and monitoring, and both items were made part of the new law.”

Despite progress, James McHugh doesn’t believe the public is aware of the totality of nursing home abuse.

“Sadly, we’re only touching the tip of the iceberg,” he said. “There’s an organized pattern of behavior in the large nursing home chains to teach upper-level employees at individual facilities to persuade family members that these events are a normal part of the aging process, such as falls that result in fractured hips,” he said. “They usually only believe there’s a problem after a loved one is brought to an emergency room and a doctor or nurse brings to their attention that it’s not normal. Also, not everyone has a family member that can visit frequently enough to determine if anything is wrong. Those people, I’m afraid, are victims we never hear about.”

James McHugh was quick to point out that many nonprofit nursing homes in America “actually care and attempt to do the right thing.”

“Occasionally, a not-for-profit will make a mistake, or one is in disarray with multiple problems,” he said. “And sometimes you’ll have a not-for-profit that is nothing but a shell for a huge for-profit corporation.

“If I found, after careful research, a qualified nonprofit nursing home, I would consider placing a loved one there. However, people should be able to safely put family members in a nursing home without having to ask these questions.”

 

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