A California nursing home company has settled a class action law suit for much less than the jury award. The original award, $677 million, would have sent the country's tenth-largest nursing home operator into bankruptcy. While the company has no facilities in Florida, elder law attorneys nationwide have been watching the case closely.

The suit was filed in 2006, and the number of plaintiffs (the "class") eventually grew to include 32,000 patients. The complaint alleged that the company's 22 nursing homes in California did not comply with state-mandated staffing levels. Not enough nurses meant inadequate care, and the patients' families and conservators decided to fight back.

The case went to trial this year, and after hearing evidence for six months, the jury agreed with the plaintiffs. The award was hailed as the "largest anyone's seen this year."

But such a large sum of money would put the company, its facilities, and the patients they serve at considerable risk -- bankruptcy would serve no one. So the parties, with the help of the court, came to an agreement that should prove to be an effective deterrent to other nursing home companies in violation of staffing laws.

First, the award was cut to $50 million, to be distributed through an escrow account. Next, the company will pay attorneys' fees for the plaintiffs. Most importantly, the agreement included an injunction requiring the company's California nursing facilities to maintain staffing levels at the legal level (3.2 hours per patient per day). The injunction will be enforced through reporting to a court-appointed monitor and will stay in place for 24 months. Facilities in violation may see a three-month extension.

The defendants and industry analysts say that staffing is a problem in the nursing home industry. Financial experts tend to blame the flurry of takeovers at the beginning of this century -- companies like the defendant were acquired as part of an investment portfolio, and the new owners were more interested in increasing profit than providing good care or, it seems, complying with state law.

Families contemplating a nursing home facility for a loved one can breathe a little easier. The message from California has been heard nationwide, loud and clear.

Resource: Miami Herald "Nursing Home Co. Settles $677M Lawsuit for $50M" 9/8/10