The fate of the class action lawsuit brought against Skilled Healthcare now rests with Humboldt County Superior Court Judge Bruce Watson. On Friday, Watson heard oral arguments on a defense motion for a mistrial that alleged juror misconduct and called for a retrial in the case. After hearing arguments from attorneys in the case, Watson took the matter under submission.

"My intention is to rule speedily on the motion for a mistrial," Watson said, conceding that the definition of "speedily is in the eye of the beholder." After a seven-month trial, a jury found on July 6 that Skilled Healthcare failed to maintain 3.2 nursing hours per patient, per day, as mandated by California statute. In its verdict, the jury voted to impose the maximum amount of damages allowable, a total of nearly $677 million.

The lawsuit covers 2003 through 2009, and represents a class of some 32,000 patients. Skilled Healthcare is one of the largest nursing home chains in the country, employing about 14,000 people and operating 78 facilities - including five in Humboldt County.

The jury in the case was released on July 15 when parties opted to enter into mediation behind closed doors. The investment world has been keeping close tabs on the case, and the consensus is that the nursing home company would need to reach a settlement in order to avoid filing for bankruptcy.
Consequently, the company's stock prices plummeted after the jury verdict, but have rebounded slightly since attorneys for Skilled Healthcare filed a motion for a mistrial Aug. 6.

In the motion, attorneys allege that a juror, April Garwin, came into the case with a bias against Skilled Healthcare. She worked in the Humboldt County Coroner's Office and once dealt with the remains of man who passed away at Granada Healthcare and Rehabilitation Center, one of the facilities named in the suit. Further, the motion alleges that Garwin knows the daughter of the deceased man, Pamlyn Millsap, who is a part of the class-action suit, and lied about it on her jury questionnaire, which explicitly asked jurors if they knew any parties in the case.

Attorneys for the plaintiffs, however, vehemently deny that Garwin had any bias, and accused the defense of having "sunk to a new low" by impugning the good name of a juror who gave up six months of her life to serve on the jury and asking a judge to set aside the verdict based on "hearsay, speculation and outright fabrication of the facts."

Defense attorneys point to a signed declaration by former Humboldt County Coroner Frank Jager, who said Garwin attended a lunch with him and Millsap during which Millsap reportedly talked of her father and criticized the care he received at Granada.

Laura Sitar, one of the attorneys representing Skilled Healthcare in the case, told the court on Friday that Garwin's bias cropped up at various points during the trial. First, Sitar alleged that Garwin wrote "Bulls---" in her notebook as a defense witness was testifying, showing the note to another juror. Then, Sitar said Garwin referred to Skilled Healthcare during jury deliberations as "f------ bastards" and "liars." Finally, Sitar alleged that other jurors overheard Garwin "bragging" after the verdict about how Skilled Healthcare didn't want her on the jury, but had failed to "ask the right questions" that would have prevented her from serving.

Looking at the entirety of Garwin's actions, Sitar said there is only one conclusion. "Together, they are absolutely jury misconduct," she said, adding that Garwin brought a bias with her to the jury box every day and into deliberations at the end of the trial, depriving her client of the right to have the trial heard before 12 neutral jurors.

One of the plaintiffs' attorneys in the case, Christopher Healey, said Friday there is plenty of evidence that the defense's allegations are false, and bordering on reckless. Healey told the court that both Garwin and Millsap have signed declarations stating that they don't know each other and have never met. He said the court also has the declaration of Deputy Coroner Charles Van Buskirk stating that Garwin did not attend the lunch meeting in question. Healey argued that Garwin, in her jury questionnaire, disclosed the fact that she worked at the coroner's office as a forensic consultant, and that the defense had an ample opportunity to question Garwin further before seating her on the jury, but did not.

Further, Healey argued that Garwin showed no bias on the jury, claiming that she filled 10 notebooks with notes during the trial. He also said he has nine declarations from other jurors who attended the post-verdict meeting in which Garwin was allegedly bragging, and that none recall her making the statements alleged by the defense.

As to the allegations of Garwin's writing "bulls---" in her notebook and referring to Skilled Healthcare with expletives during deliberations, Healey said he doesn't see the issue there.
"Jurors are human beings, and they show emotion sometimes," he said. "That's no reason to throw out a verdict."

Watson took the matter under submission and, other than saying he plans on issuing a ruling "speedily," offered no timetable for a decision.

In an unrelated matter, plaintiffs' attorneys argued Friday in favor of the court issuing an injunction in the case requiring Skilled Healthcare to comply with California statute and maintain minimum staffing requirements. Arguing for the people of California, Humboldt County District Attorney Paul Gallegos told the court that Skilled Healthcare has an "incredible history of noncompliance" with the law, adding that the company has a track record of violations and ensuing plans of correction that are never followed. Gallegos said Skilled Healthcare goes back to violating staffing requirement laws whenever regulators turn their backs.

On behalf of Skilled Healthcare, attorney Darryl Ross told the court that the injunction being sought is overly broad, arguing it would apply not just to Skilled Healthcare, but to every other nursing home in the state. Further, Ross argued that the injunction would place questions of which employees count toward staffing requirements and how budget restrictions impact those requirements in the hands of the court, which Ross contended was impractical and, possibly, unlawful.

If the court were to step into the role of being a regulator body, Ross said it would have to look at each of the 22 facilities in the suit individually, as each would be entitled to its own process and analysis. "It's just not practical, your honor," Ross said. "It's not manageable."

The defense further argued that if the court decides oversight is needed, it should delegate the crafting of an injunction to a neutral third party. Gallegos argued that the case simply isn't that complicated. "This injunction only requires one thing ... comply with the law," he said.

All parties are due back in court Aug. 31, when the court is expected to hear oral arguments on other motions in the case. At that time, Watson is also expected to address the issue of punitive damages.
In the meantime, Wall Street will be keeping an eye out for Watson's ruling. Investors have watched Skilled Healthcare stock fluctuate wildly in recent months as a result of the court case. The jury verdict sent the company's stock price plummeting to a low of $1.43 a share, down from a high of $9.36 earlier in the year. On Friday, as attorneys argued over the mistrial motion, the stock's price swung from a low of $3.21 to a high of $3.48, eventually finishing the day at $3.35.

Thadeus Greenson can be reached at 441-0509 or tgreenson@times-standard.com.

Thadeus Greenson/The Times-Standard
Posted: 08/14/2010 12:37:17 PM PDT