Lawyer Brian Reddick says he has amassed more than $100 million from jury awards in nursing-home suits. Karen E. Segrave for The Wall Street Journal
Arkansas lawyer Brian Reddick has found a lucrative niche as America ages: suing big nursing-home chains.
Mr. Reddick and other alumni of a Florida law firm that pioneered the approach have taken those tactics on the road. They are filing neglect and abuse cases in places like Pennsylvania, where the country’s fourth-largest concentration of residents aged 85 and older has spurred a litigation boom aimed largely at for-profit nursing-home operators.

More

The lawsuits typically allege that patients were harmed not just by neglect or medical errors but because the corporate owners skimp on patient care to boost profits—what Mr. Reddick, a former litigator for a large nursing-home chain, calls “putting revenue over residents.”
Two decades after its start in Florida, the legal strategy has moved into tort-friendly states and receded from others as patient care improves or lawmakers institute caps on noneconomic damages in court decisions.
Major nursing-home operators and industry groups say many of the lawsuits line attorneys’ pockets while doing little to improve the quality of care. They cite aggressive tactics by some law firms, such as drumming up clients by blanketing areas with ads citing health violations at individual nursing homes, and say a handful of recent landmark verdicts are driving up the cost of settling other suits that may have little merit.
The push—coming as nursing-home operators grapple with falling reimbursement rates from the government—has prompted some chains to abandon certain states.
In August, Canadian-owned Extendicare Health ServicesInc. said it would lease its 22 skilled-nursing homes in Pennsylvania, Delaware and West Virginia to a third-party operator. It cited a fourfold increase in liability claims in those states in recent years “despite a strong and improving quality record.” The company similarly pulled out of Kentucky in 2012. A company spokeswoman declined to comment further.
The plaintiffs’ attorneys say they want to help patients who are victims of care facilities that make billions of dollars by allegedly cutting corners, most notably on staff. “I think we have made a noticeable difference,” said Mr. Reddick, who by his count has amassed more than $100 million in jury awards.
More than 1.4 million people live in U.S. nursing homes, 69% of which are run by for-profit entities.The stakes are rising as the pool of older Americans expands. By 2030 nearly one of every five Americans, or 72.1 million people, will be 65 or older, according to U.S. Census Bureau projections. Many will end up with chronic diseases and conditions that require the kind of help nursing homes provide.
Lawyers for nursing-home operators say the concentration of cases filed in states with limited or nonexistent curbs on noneconomic damages means lawsuits that elsewhere might be settled for $50,000 can generate much larger settlements or verdicts.
Lawsuits alleging abuse and neglect may be driving up insurance costs, but they haven’t driven any big chains out of business, nor have they demonstrably diminished the supply of nursing home beds, which dipped less than 3% between 1995 and 2012, according to data from the Centers for Disease Control and Prevention. And industry groups say that some of the suits have merit.
But the aggressive litigation, they say, is putting the screws to an industry already bedeviled by slim margins. Some states have frozen or slashed Medicaid payments to nursing homes. In 2011, the federal government announced an 11.1% cut in Medicare reimbursements, which then saw an additional 2% decrease in 2013 under mandated budget cuts known as the sequester.
“This is a sector that is 80% reliant on state and federal payments,” said Greg Crist, a spokesman for the American Health Care Association, which represents both for-profit and nonprofit nursing homes. “Our members are looking around, saying we need to survive.”
In West Virginia, operators of a Charleston nursing home fought for years to overturn a $91.5 million verdict that came down in 2011. The suit was filed by McHugh Fuller Law Group, another spinoff of the same Florida law firm where Mr. Reddick once worked, Wilkes & McHugh P.A.
The case involved Dorothy Douglas, an 87-year-old patient with Alzheimer’s and Parkinson’s disease. She died after a short stay at the Heartland Nursing Home during which, according to court filings, she “become dehydrated, malnourished, bedridden and barely responsive.”
This past summer, the Supreme Court of Appeals of West Virginia cut the award to about $36.5 million, but said the penalty was warranted. “Heartland Nursing Home was chronically understaffed to the point that it was not able to provide even a life-sustaining amount of water to Ms. Douglas during the 19 days she resided in that facility,” the court ruled.
The home has since been sold. Its former owner, HCR ManorCare Inc., which operates 283 nursing homes, said its employees “are victim to the disheartening growth of advertisement-driven lawsuits…in states with a friendly environment for trial lawyers.”
McHugh Fuller didn’t respond to requests for comment.
Much of the payout from nursing-home litigation goes to lawyers, who take the cases on a contingency basis, paying the upfront costs in exchange for a cut of any settlement or award—generally 30% to 45%—plus expenses. Taking a case to trial could cost anywhere from $100,000 to $150,000, Mr. Reddick said.
While large nursing-home operators have beefed up staffing and made other improvements, for-profit facilities are still more likely to be cited for severe health deficiencies than other types, according to survey data compiled by the Centers for Medicare and Medicaid Services. In the government’s fiscal 2013, 19% of for-profit homes had a health deficiency of actual harm or immediate jeopardy to residents, compared with 15% of nonprofit homes and 17.7% of government-run ones. The national rate is 18.1%.
Their patients also get less time with caregivers. Total nursing staff at for-profit homes spend about four hours each day tending to the needs of a patient—about half an hour less than at nonprofit facilities, according to an analysis of federal data by the American Health Care Association. Registered nurses at for-profit homes spend around 38 minutes per patient, while those at nonprofits spend an hour; the national average is 49 minutes per patient.
There didn’t used to be much money in suing nursing homes. Residents were typically at their end of their lives, with their prime earning years behind them, limiting plaintiffs’ ability to identify economic damages.
That changed in the 1990s, when a pair of lawyers, James Wilkes and Tim McHugh, pioneered a strategy that involved a largely overlooked Florida law that set standards for nursing-home care and allowed plaintiffs to sue for legal fees. Nursing-home operators began to settle, and the firm expanded operations, hiring more lawyers and pursuing cases across the country.
Nursing-home litigation has contracted somewhat since Wilkes & McHugh’s peak years, attorneys said, but suits continue because they often succeed.
Right now ground zero for the continuing tussle appears to be Northern Appalachia: Kentucky, West Virginia and Pennsylvania. Mr. Reddick’s firm is staffing up in Philadelphia, as well as pursuing matters in Colorado and Arkansas.
“Just about any state is good for nursing-home litigation if you have a good case,” said Mr. Reddick. “Jurors are very sympathetic.”
Write to Jennifer Smith at jennifer.smith@wsj.com