Can nursing homes avoid liability through bankruptcy?

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Can nursing homes avoid liability through bankruptcy?

It can be absolutely gutting to discover that a family member was injured or killed as a result of nursing home negligence. What can make this even worse is that more and more nursing homes are looking to Chapter 11 bankruptcy protections to avoid full accountability.

Consulate Health Care

One recent example of this is Consulate Health Care, which owned 140 nursing homes across the country. In the over half a decade prior to its 2021 bankruptcy filing, nearly 150 cases were pending against the company for a variety of nursing home negligence. The company filed for Chapter 11, and then, used it to settle these complaints for pennies on the dollar.

Why do people feel forced to settle?

Chapter 11 bankruptcy protects a company while it reorganizes and works out a plan to pay off creditors. As a result, plaintiffs are left trying to decide if they should take an extremely low settlement offer now, or wait years for a bankruptcy judge to work it out and potentially, be left with nothing.

Bankruptcy not the only stall tactic

Prior to these companies filing Chapter 11, they often create convoluted corporate structures with multiple entities and contractors. This stalled and slowed litigation as just finding out which entities to sue could take months. Plus, nursing homes are routinely underinsured.

Is this legal?

For now, yes. A Chapter 11 filing stops all pending lawsuits, including fraud and negligence lawsuits. Plaintiffs in any such cases must then seek relief from the bankruptcy court, but they are paid after all secured creditors, which means there is little, if any, money left to pay these victims. For the Consulate Health Care bankruptcy, less than 1% of claims were expected to actually be paid as part of the bankruptcy.

What can be done?

The current administration has promised to something, but what that will be is yet unknown. As such, it is on you to research the California nursing homes you utilize before to check their insurance and structure. Then, if nursing home negligence occurs, getting help from an attorney early can help pave the path to getting some semblance of justice.