Skilled Healthcare Group agrees to settle nursing home lawsuit

Nursing home operator Skilled Healthcare Group Inc. has agreed to a $50-million settlement of a class-action lawsuit, a far cry from the more than $670 million a jury had previously ordered it to pay.

A Humboldt County Superior Court jury had found the healthcare company liable for understaffing its 22 assisted-living facilities in California. State law requires nursing homes to maintain 3.2 nursing hours per patient per day — something the jury said Skilled Healthcare failed to do.

The suit against Skilled Healthcare, based in Foothill Ranch, had been brought by patients and their families. The nursing home operator, which maintained that its facilities had been appropriately staffed, had filed an appeal of the July verdict.

The settlement, in which Skilled Healthcare admitted no wrongdoing, was reached Tuesday and must be approved by the Humboldt County Superior Court.

Skilled Healthcare said in a statement that it would deposit $50 million into escrow accounts to cover the settlement payments.

The company said the jury’s verdict amount would have more than exhausted the company’s credit lines and insurance policies.

Janssen Law Firm, which represented the patients and family members in the suit, said in a statement that, “Although the monetary amount of the settlement is less than the verdict, we are satisfied that it reflects the best possible recovery for our clients taking into consideration the uncertainty, risks and delays associated with proceeding to judgment.”

As part of the proposed settlement, Skilled Healthcare agreed to have an outside monitor track its nurse staffing levels for its 22 California locations for a two-year period.

Skilled Healthcare shares rose 88 cents, or about 25%, to close at $4.38 on Wednesday. The settlement was announced Tuesday after the markets closed.