Corporate Negligence vs. Vicarious Liability In Nursing Home Abuse Lawsuits

Earlier this week, The Legal Intelligencer filed a report about the Pennsylvania Supreme Court’s hearing on the Scampone v. Highland Park Care Center case:

In the apparent headliner of last week’s Supreme Court oral arguments in Harrisburg — a case dealing with whether a nursing home can be held liable under the theory of corporate negligence — the attorneys representing the plaintiffs told the justices they simply wanted to hold it responsible.

It didn’t have to be “corporate negligence,” the lawyers told the justices.

The acknowledgment came after several on the high court bench asked Peter D. Giglione and Stephen Trzcinski, both representing the plaintiff in Scampone v. Highland Park Care Center, what was stopping them from suing nursing home Highland Park Care Center under ordinary negligence at common law. …

Giglione argued vicarious liability for the nursing home would not be sufficient because, in this case, it was the larger company making the decisions that led to the underlying problem.

The Pennsylvania Superior Court agreed with the Plaintiffs (that court’s opinion is available here).

It sounds like an argument that only lawyers could dream up: whether you can only sue a corporation for negligence or whether you can also for corporate negligence.  To understand why that question matters, and why the Pennsylvania Supreme Court should allow the survivors of nursing home abuse to sue managed care facilities for corporate negligence, we need to review some background. There’s more than enough misconceptions about nursing home litigation.

If John Roberts’ tenure as Chief Justice of the United States could be summed up in one sentence, it would be “corporations have all the same rights as real people, plus a couple more.”  The mere notion of corporate personhood is silly — a corporation exists to make money, and can be born, die, and merge with other corporations at will — but the law in most states treats corporations as if they were people. (Stephen Colbert rightfully wants to put “corporations are people” versus “only people are people” to a vote.)

That concept of the corporation as a single person can pose a problem when it comes time to hold companies accountable for the actions of many employees and affiliated corporations.  If the driver of the car speeds through a stop light and hits someone, it’s quite obvious where blame starts: the driver of the car.  It’s far more difficult to assign that sort of individual blame when, for example, multiple care managers at a residential care facility ignore a resident’s dehydration or infection.  Many nursing home companies deliberately try to evade responsibility for these types of systemic problems by operating their facilities through multiple shell companies, many of which are created for the sole purpose of frustrating residents’ families and lawyers in the course of a lawsuit.

In Pennsylvania, the idea of a specific “corporate negligence” claim was recognized by the Pennsylvania Supreme Court in the Thompson v. Nason Hosp., 591 A.2d 703 (Pa. 1991) case. The Thompson case described the claim quite clearly (a rarity for an appellate court), so I’ll quote them liberally:

Corporate negligence is a doctrine under which the hospital is liable if it fails to uphold the proper standard of care owed the patient, which is to ensure the patient’s safety and well-being while at the hospital. This theory of liability creates a nondelegable duty which the hospital owes directly to a patient. Therefore, an injured party does not have to rely on and establish the negligence of a [doctor or nurse].

The hospital’s duties have been classified into four general areas: (1) a duty to use reasonable care in the maintenance of safe and adequate facilities and equipment; (2) a duty to select and retain only competent physicians; (3) a duty to oversee all persons who practice medicine within its walls as to patient care; and (4) a duty to formulate, adopt and enforce adequate rules and policies to ensure quality care for the patients.

Thompson, 591 A.2d at 339-340 (citations omitted). The Pennsylvania Supreme Court reasoned that the particular claim was needed (as compared to standard common law negligence claims) in the context of hospitals “in full recognition of the corporate hospital’s role in the total health care of its patients.”

As tort claims go, corporate negligence claims against hospitals are comparatively rare.  When a patient suffers an avoidable injury in a hospital, it’s more likely that the appropriate claim is one for medical malpractice against the particular doctor or nurse who caused the injury by not following the standard of care, as compared to a corporate negligence claim against the hospital for not establishing and enforcing appropriate protocols and procedures.

In the nursing home neglect and abuse context, however, I think there are far more instances in which primary responsibility lies with the managed care company, rather than the individual resident care managers and nurses.  In my experience, most serious nursing home neglect injuries arise from either inadequate staffing or negligent hiring or supervision of employees or both.  In each instance, although you can typically find one or more nursing home employees at fault, the real problem originated with the management company itself.  They’re exactly the sort of problems sought to be addressed by “corporate negligence” claims.

Why the difference between nursing homes and hospitals?  Most hospitals are tightly regulated, with the Joint Commission on Accreditation of Hospitals (JCAHO) and various government authorities all prescribing detailed guidelines and regulations for the operation of various hospital departments.  Hospitals, too, share successful guidelines on one another, resulting in some uniformity of staffing and procedures across the United States.  It is thus rare to find a hospital that, for example, chronically understaffed their nurses or routinely keeps on the payroll employees with multiple complaints of abusive behavior.  Hospitals generally hold themselves to higher standards than that.

The nursing home industry, however, doesn’t hold itself to the same ideals as most of the medical profession.  They exist to make money, pure and simple, and they often don’t even pretend to care about anything else.  If a regional manager brings in a couple extra percentage points of profit by routinely having too few nurses on their shifts, by assigning a single nurse to do the work of two or three nurses, or by hiring dangerous individuals because they work for the lowest pay, the regional manager will often be rewarded. To me, then, there’s an even greater need for corporate negligence claims in the nursing home abuse context than in the hospital context, because as a factual matter there’s a lot more routine mismanagement in the residential care industry and in the hospital industry.

Can all of the same allegations fit under the rubric of common law negligence?  In my mind, yes, but I don’t decide cases.  Judges do.  Some don’t understand that the corporation is not only responsible for the actions of each of its employees, but is also responsible as a whole for its own conduct as a corporation.  The clearer we can make those principles, the safer, fairer, and more accountable our society will be.

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  • Guest

    Congrats on your listing as a top torts blog. It’s well deserved.

    The “corporate negligence” doctrine here is poorly named because it applies only to hospitals (and other like organizations), not all corporations. The title also gives the doctrine an air of specialty, which is undeserved since it just enumerates the duties owed by hospitals to their patients. I don’t think it’s necessary to justify such an enumeration on the basis that hospitals are sophisticated or profit seeking. All you need show in order for duty to attach is that the patient is under the hospital’s care and is a business invitee on its property. Of course, a patient is owed a duty under those circumstances; it’s common sense! I have no issue with the Pennsylvania appellate courts actually enumerating these factors, since their purpose is to issue decisions that guide and limit such claims.

    Please don’t mistake my complaint as one regarding the distinction between vicarious liability and a claim that the corporation forumlated bad policy (or ignored problems in its operations). That distinction is conceptually accurate. I just see no reason to deem these latter claims as ones of “corporate negligence,” which suggests that corporations are particularly apt to have these sorts of problems, moreso than any other sort of organization (non-profit, governmental, or otherwise). Any group can set a policy that harms someone. And, anyone thus harmed can bring a negligence claim against the group. Hooray for negligence law! Its flexibilty has ensured its survival through the ages, and there is no need to give this particular type of negligence claim a fancy name.

    • Anonymous

      I agree in theory, but not practice. I’ve seen more than one defense lawyer argue that a corporation cannot be held directly liable for negligence, but rather only vicariously through individual acts of negligence by individual employees. This argument makes no sense at all, but it gets plenty of traction with some judges. If giving that type of a negligence claim helps clarify that, so be it. I don’t see what the harm might be.