Nursing Home And Assisted Living Litigation – Determining Maximum Case Value

When valuing potential nursing home abuse cases, many practitioners focus on standard measures of damages including past and future medical specials, a potential recovery for an elder abuse victim’s pain and suffering, wrongful death damages for the heirs of the elder abuse victim, and attorneys’ fees.  While these are all important components in determining the maximum value of a case, by far the largest potential recovery in an elder abuse case lies with a punitive damages award. 

How can we realistically value punitive damages? 

While we agree that assessing what a jury might award for punitive damages is speculative at most, one cap on punitive damages operates as a hard limit.  Specifically, under California law any punitive damages award is capped at 10% of the net worth of the defendants (Weeks v. Baker).

This hard cap has substantial implications for maximum case value.  For example, assume the damages relating to a particular plaintiff are identical in Case A and Case B at $5 million.  The only difference between the cases is that in Case A the defendant is a stand-alone facility with a value of $10 million, whereas in Case B the defendant is part of a nursing home chain with an enterprise value of $250,000,000.  In Case A the maximum potential value of the overall case is $6,000,000, whereas in Case B the maximum potential value of the overall case is $30 million.  As this example illustrates, enterprise value means everything when it comes to determining the maximum potential value of a case.  Practitioners should conduct at least a back of the envelope enterprise value as part of their intake process.

For Attorneys

Calculating Maximum Permissible Punitive Damages Award In Light Of The “Reasonable Relationship” Test

As most nursing home abuse attorneys know, reviewing courts will only allow an amount of a punitive damage award to stand that is “reasonably related” to the harm suffered by the plaintiff. This typically has been expressed in terms of ratio between the value of the harm and punitive damages. While cases have been all over the map in defining the maximum allowable ratio (ranging from 1:1 to 50:1 or even more (depending on a variety of factors), a fair benchmark under current law is that a single digit multiplier has at least a reasonable chance of surviving appellate scrutiny in elder abuse death cases, given the inherent severity of harm in these cases.

Assuming this is true, how is the practitioner put a number on the harm to plaintiff?

The standard thinking is that the amount of damages awarded by a jury should be used. While this is can be an appropriate starting point, we note three important items.

First, the law is clear that the amount of the unremitted damages awarded by the jury will control. In other words, to the extent that an award of pain and suffering damages gets reduced by operation of law to $250,000 under the Elder Abuse Act, the original amount the jury awarded before reduction will be the key number for punitive damages “reasonable relationship” purposes. For this reason, practitioners should argue for a large pain and suffering award even if they believe the award will be reduced by the Court in post-trial proceedings.

Second, practitioners should remember that wrongful death damages may not be used as part of the analysis. California law is clear that punitive damages cannot be awarded in connection with a wrongful death cause of action.

Third, at least one California case has held that the value to a decedent of years of lost life can be considered in determining the amount of harm suffered. While there is no ability to recover for this loss under California law, it nevertheless can and should be considered in determining the extent of “harm” to be compared to the punitive damages. Practitioners may consider presenting a number to the jury in the punitive damages that equates to the loss of a certain amount of years of life.

For Attorneys