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| | State seeks $45 million judgment against nursing home operator
Saturday, Feb 21, 2004 By Wesley Brown Arkansas News Bureau LITTLE ROCK - The state of Arkansas has filed seven lawsuits seeking more than $45 million from Advocat Inc., the Tennessee-based nursing home operator that helped spark the call for nursing home tort reform in Arkansas. The complaints, served Wednesday by Arkansas Attorney General Mike Beebe, allege violations of the Arkansas Abuse of Adults Act and the Arkansas Medicaid False Claims Act. The complaints, in total, seek actual damages of nearly $250,000 and fines and penalties in excess of $45 million. The lawsuits against Advocat of Franklin, Tenn., involves 15 patients at five nursing homes operated by the company in Arkansas. "There were some deaths involved, so it is a pretty big deal," said Matt DeCample, spokesman for the attorney general's office. Last year, Adcovat was involved in the largest personal-injury verdict ever awarded in Arkansas. In that case, a Polk County jury awarded the Greta Sauer family $78.43 million. Sauer was a patient at a Mena nursing home owned by Advocat. That award eventually was reduced by more than $50 million by the Arkansas Supreme Court, but the Sauer family still ended up with an award of $26.4 million, plus interest. In November, the U.S. Supreme Court denied the company's request for review of the Arkansas Supreme Court decision in the Mena case. Advocat CEO William R. Council said after the court's decision that the entire award was covered by insurance. Council was not available for comment concerning the new allegations, however the company issued a statement regarding the lawsuits Thursday after the close of market. "(Advocat) intends to vigorously defend itself against these allegations," said the nursing home operator, which trades over-the-counter as a bulletin board stock. "However, the company cannot currently predict with certainty the ultimate impact of the above cases on the company's financial condition, cash flows or results of operations," At the end of business Friday, Advocat shares had lost nearly a third of their value, sliding 28.1 percent, or 27 cents, to 67 cents. The struggling nursing home operator, which has a market value of only $3.9 million after Friday's close, reported third quarter losses of $2.9 million, or 52 cents per share. The company, which operates 13 nursing homes across Arkansas, reported revenues of $199 million in fiscal 2002. The Arkansas attorney general's Medicaid Fraud Control Unit first filed suit against Advocat in July 2002, alleging that a Carroll County nursing home repeatedly failed to meet demands to improve the care of its residents. That complaint against the Eureka Springs Nursing and Rehabilitation Center, filed in Pulaski County Circuit Court, was one of the first lawsuits filed against an Arkansas nursing home under the Arkansas Abuse of Adults Act of 2001. The original lawsuit described allegations of neglect concerning a patient, identified only as "Resident #1." "Resident #1 was admitted to ESNR on July 1, 1999, and it is alleged that the defendants violated their duty of care to the resident through mistreatment, abuse and neglect," the complaint said. "Treatment plans prescribed by doctors were not carried out, and the patient developed serious complications, injuries and life-threatening infections. "Inappropriate nutrition and inadequate sanitary care also contributed to subsequent health problems and hospitalization." The Polk County case against Advocat involved Sauer, who died July 19, 1998, after suffering from dehydration, malnutrition, bedsores and Alzheimer's disease. Sauer's children sued, alleging wrongful death, medical malpractice, breach of contract and negligence. They alleged that the nursing home's actions caused Sauer to suffer significant weight loss - a 20-pound loss in less than 30 days - renal failure, and chronic urinary tract infections, which accelerated her death. Sauer had been under the nursing home's care for about five years before her death. The $78.43 million Mena verdict, including $63 million in punitive damages, became a rallying cry for proponents of House Bill 1038, the historic general tort reform bill that was passed during the 83rd General Assembly. Act 649 became law on March 25 after it was signed into law by Gov. Mike Huckabee. However, efforts to push for caps on legal damages specifically against nursing homes were thwarted in December, when the nursing lobby backed off its attempts to include the measure in the recently ended special session on education reform. |
