Manor Care, Inc. v. Douglas

234 W.Va. 57

763 S.E.2d 73

MANOR CARE, INC.; HCR Manor Care Services, Inc. ; Health Care and Retirement Corporation of America, LLC; Heartland Employment Services, LLC ; John Does 1 Through 10; and Unidentified Entities 1 Through 10 (As to Heartland of Charleston), Defendants Below, Petitioners

v.Tom DOUGLAS, Individually, and On Behalf of the Estate of Dorothy Douglas, Plaintiffs Below, Respondents.

No. 13–0470.

Supreme Court of Appeals of West Virginia.

Submitted March 5, 2014.

Decided June 18, 2014.

Benjamin L. Bailey, Brian A. Glasser, Bailey & Glasser, LLP, Charleston, WV, Attorneys for the Petitioners.

Thomas J. Hurney, Jr., Alyssa E. Baute, Jackson Kelly PLLC, Charleston, WV, Attorneys for Amici Curiae, The West Virginia Hospital Association and The West Virginia Health Care Association.

James B. McHugh, Michael J. Fuller, Jr., D. Bryant Chaffin, Amy J. Quezon, A. Lance Reins, McHugh Fuller Law Group, LLC, Hattiesburgh, MS, Paul T. Farrell, Jr., Greene, Ketchum, Bailey, Farrell & Tweel, Huntington, WV, Attorneys for the Respondents.

Anthony J. Majestro, Powell & Majestro, PLLC, Charleston, WV, Attorney for Amicus Curiae, West Virginia Association for Justice.

Opinion

DAVIS, Chief Justice:

This action against several corporate entities who operate Heartland Nursing Home in Charleston, West Virginia (hereinafter collectively referred to as “MC Companies”),¹ involves claims of negligence; violations of the West Virginia Nursing Home Act, W. Va.Code § 16–5C–1 et seq.; and breach of fiduciary duty, arising from injuries to and the death of Ms. Dorothy Douglas, who had been a resident of Heartland Nursing Home. MC Companies appeal the circuit court's denial of their “Motion for Judgment as a Matter of Law, or in the Alternative for a New Trial, or in the Further Alterative for Remittitur” (hereinafter “motion for judgment as a matter of law”), entered following a jury trial that resulted in an award of $11.5 million in compensatory damages and $80 million in punitive damages. MC Companies raise several errors: (1) the verdict form disregarded the distinct corporate forms of the defendants; (2) the verdict form improperly allowed the jury to award damages to non-parties; (3) the circuit court erred in finding the Medical Professional Liability Act (hereinafter “MPLA”) did not provide the exclusive remedy for the asserted negligence claims; (4) the circuit court erred in concluding that the Nursing Home Act (hereinafter “NHA”) claim is not governed by the MPLA; (5) the circuit court erred in allowing a breach of fiduciary duty claim against a nursing home; and (6) the punitive damages award was improper and excessive. We conclude, based upon the briefs submitted on appeal, oral arguments, and relevant law, that: (1) MC Companies waived the issue of whether the verdict form disregarded the distinct corporate forms of the defendants; (2) the verdict form did not allow the jury to award damages to non-parties; (3) the MPLA did not provide the exclusive remedy for the asserted negligence claims; (4) because the NHA portion of the verdict form was fatally vague, the claim is dismissed and the accompanying $1.5 million award is vacated; (5) because the circuit court erred in recognizing a breach of fiduciary duty claim against a nursing home, the claim is dismissed and the accompanying $5 million award is vacated; (6) the punitive damages award is reduced proportionate to the reduction in compensatory damages, and the reduced amount of punitive damages, which equals approximately $32 million, passes constitutional muster. Based upon these conclusions, we affirm, in part; reverse, in part; and remand this action to the circuit court for further proceedings consistent with this opinion.²

I.FACTUAL AND PROCEDURAL HISTORY

On September 4, 2009, Dorothy Douglas (hereinafter “Ms. Douglas”) was admitted to Heartland Nursing Home in Charleston, West Virginia. Although Ms. Douglas was eighty-seven years old at the time of her admission to Heartland Nursing Home, and she suffered from Alzheimer's dementia, Parkinson's Disease, and other health issues, she was, nevertheless, able to walk with the use of a walker, able to recognize and communicate with her family, well-nourished, and well-hydrated. After spending nineteen days in Heartland Nursing Home, Ms. Douglas had become dehydrated, malnourished, bed ridden, and barely responsive. In addition, she had fallen numerous times, sustained head trauma and bruises, and suffered from sores in her mouth and throat that required the scraping away of dead tissue and debris. Following her nineteen-day stay at Heartland Nursing Home, Ms. Douglas was transferred to another nursing facility, then to Cabell Huntington Hospital,³ and ultimately to a Hospice care facility where she passed away eighteen days after leaving Heartland Nursing Home. According to her treating physician at Cabell Huntington Hospital, Ms. Douglas died as a result of severe dehydration.

Evidence presented at trial demonstrated that Heartland Nursing Home had been chronically understaffed. There had been numerous complaints from residents and their families, as well as by Heartland Nursing Home employees. At least one employee who complained of understaffing was reprimanded for her complaint, and the complaint was apparently removed from Heartland Nursing Home records. Additionally, and notwithstanding attempts to conceal the understaffing, surveys by the West Virginia Department of Health and Human Services documented Heartland Nursing Home's understaffing and improper records pertaining to staff that occurred prior to Ms. Douglas' admission to that facility. Nevertheless, Heartland Nursing Home remained understaffed and, as a result, Ms. Douglas did not survive the adverse effects of her stay there.

Ms. Douglas' son, Tom Douglas, individually and on behalf of the estate of his mother (hereinafter “Mr. Douglas”), filed suit against various corporate entities related to Heartland: Manor Care, Inc.; HCR Manor Care Services, Inc.; Health Care and Retirement Corporation of America, LLC; and Heartland Employment Services, LLC. Manor Care, Inc., is a holding company that owns the stock of the other named businesses.⁴ HCR Manor Care Services, Inc., was the management company.⁵ Health Care and Retirement Corporation of America, LLC, owned skilled nursing facilities and other health care facilities such as assisted living and hospice facilities⁶ ; this corporate entity apparently also held the operating licenses for Heartland Nursing Home and other nursing homes it owned.⁷ Heartland Employment Services, LLC.,⁸ employed the workers, including administrators and regional directors, who were then leased to Health Care and Retirement Corporation of America, LLC.⁹

Mr. Douglas asserted causes of action including negligence under the MPLA,¹⁰ violations of the NHA,¹¹ an alleged breach of fiduciary duty, and corporate negligence. Following a ten-day trial, the jury returned a verdict in favor of Mr. Douglas in the amount of $11.5 million in compensatory damages¹² and $80 million in punitive damages. MC Companies then filed a motion for judgment as a matter of law, which the circuit court denied. This appeal followed.

II.STANDARD OF REVIEW

MC Companies allege numerous errors in support of their appeal from the trial court's denial of their post-verdict motion for judgment as a matter of law. Specific standards of review for some issues are set out in connection with the particular issues to which they pertain. Generally, however, we are guided by the following principles: “The appellate standard of review for an order granting or denying a renewed motion for a judgment as a matter of law after trial pursuant to Rule 50(b) of the West Virginia Rules of Civil Procedure [1998] is de novo. ” Syl. pt. 1, Fredeking v. Tyler, 224 W.Va. 1, 680 S.E.2d 16 (2009). Moreover,

[w]hen this Court reviews a trial court's order granting or denying a renewed motion for judgment as a matter of law after trial under Rule 50(b) of the West Virginia Rules of Civil Procedure [1998], it is not the task of this Court to review the facts to determine how it would have ruled on the evidence presented. Instead, its task is to determine whether the evidence was such that a reasonable trier of fact might have reached the decision below. Thus, when considering a ruling on a renewed motion for judgment as a matter of law after trial, the evidence must be viewed in the light most favorable to the nonmoving party.

Syl. pt. 2, id. With respect to the circuit court's ruling on a motion for a new trial, our general standard of review is stated thusly:

In reviewing challenges to findings and rulings made by a circuit court, we apply a two-pronged deferential standard of review. We review the rulings of the circuit court concerning a new trial and its conclusion as to the existence of reversible error under an abuse of discretion standard, and we review the circuit court's underlying factual findings under a clearly erroneous standard. Questions of law are subject to a de novo review.

Syl. pt. 3, State v. Vance, 207 W.Va. 640, 535 S.E.2d 484 (2000).

With appropriate consideration for these standards, we will address the issues herein raised.

III.DISCUSSION

MC Companies have raised numerous issues involving the verdict form, the application of the MPLA to this action, the application of the NHA to this case, whether the claim for breach of fiduciary duty is recognized in West Virginia, and the propriety of the punitive damages awarded. We address each of these issues in turn.

A. Verdict Form

We address two errors asserted by MC Companies related to the verdict form: (1) that it deprived them of individual determinations of punitive damages and (2) that it enabled the jury to award damages to non-parties.¹³ Discussion of each of these assigned errors is set out separately after a statement of the general standard for our review of these issues.

1. Standard of Review. “Generally, this Court will...