|! This appeal involves the defense of charitable immunity raised by the operator of a nursing home, appellee Arkansas Elder Outreach of Little Rock, Inc. (AEO). Ann Carnell, special administrator of the estate of William Mason, brings this appeal from the entry of summary judgments for AEO, Healthcare Financial Advisors, LLC (HC Financial), and Charlotte Bas-kins, the administrator of the nursing home, Willowbend at Marion, Arkansas. We affirm the summary judgments for HC Financial and Baskins, and reverse the summary judgment for AEO.
AEO is a not-for-profit, tax-exempt corporation that is the license holder and operator of several nursing homes in Arkansas, including Willowbend, in which Mr. Mason allegedly suffered personal injuries while he was a resident. Appellant offered evidence that a group of investors, including Southern Key Investments, which had owned nursing homes in 1 ^Arkansas, created AEO in 2002 as a charitable organization to stay in business without having to buy liability insurance. HC Financial, which was created in 2003, provided financial, accounting, and information-technology services to AEO. Healthcare Staffing Associates, Inc. (HC Staffing), was created in 2003 to employ the direct-care staff at the nursing homes. In 2005, some of the investors purchased the Johnson-Hobson Care Home, Inc., changed its name to Willowbend, and leased the facility to AEO.
Appellant filed this action in 2007 against AEO, Marion Healthcare Arkansas, LLC (AEO’s landlord at Willowbend), Charlotte Baskins, and Johnson-Hobson Care Home.
Arkansas Elder Outreach of Little Rock, Inc., like Jefferson Hospital in the George case, has met at least three (3) of the factors. However, in the present case Arkansas Elder Outreach of Little Rock, Inc. has satisfied all but one of these factors and that is this Defendant is not dependent on donations and contributions for its existence, Arkansas Elder Outreach of Little Rock, Inc.’s earnings are used to pay reasonable compensation for services rendered to the entity and to make payments in furtherance of its charitable purposes. Any “profit” or surplus is used for charitable purposes such as improving the | ^facilities and services and to maintain the ability to provide services to those unable to pay. As in the George case, the lack of reliance on contributions and donations does not negate the Defendant’s entitlement to charitable immunity-
Appellant filed a motion for ex parte communication with current and former employees of the, corporate defendants, to which AEO objected. The trial court entered an order providing that appellant and her counsel were precluded from mailing ex parte contact with any current employees, and from discussing any matter that was subject to the attorney-client privilege with former employees.
Charlotte Baskins moved for summary judgment on the grounds that she was immune from liability as a member of the board of directors of a nonprofit corporation, that 42 C.F.R. § 483.75, which appellant had alleged she had violated, did not create a private cause of action or set forth a standard of care, and that appellant could not assert a claim against her under the Residents Rights statute. Appellant responded that she was suing Baskins only in her capacity as Willowbend’s administrator. The circuit court granted summary judgment to Baskins, ruling that the direct care of residents was not within the scope of Baskins’s employment, that appellant made no allegation of any specific or direct action that Baskins had taken against Mr. Mason, that AEO’s immunity inured to Baskins’s benefit for actions taken in the scope of her position as a member of its board of directors, and that 42 C.F.R. § 483.75 did not provide for a private right of action against Baskins.
Appellant filed an amended and substituted complaint adding HC Staffing and HC Financial as defendants. HC Financial filed a motion for summary judgment, along with the affidavit and deposition of Doug Walsh (a director of AEO, an employee of HC Financial, Land a part owner of Southern Key). Appellant argued in response that there was a genuine issue of material fact as to whether HC Financial was responsible for ensuring that the care and services set forth in the admission agreement were provided to Mr. Mason and filed an excerpt from the deposition of Chris McMorris (president of HC Staffing and a part owner of that company and HC Financial). The circuit court granted summary judgment to HC Financial, finding no evidence that it had provided any direct care to Mr. Mason or that its actions had proximately caused him any harm, and
Summary judgment may be granted by a trial court only when the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, clearly show that there are no genuine issues of material fact to be litigated and the party is entitled to judgment as a matter of law. Watkins v. Ark. Elder Outreach of Little Rock., Inc.,
Appellant argues that the Residents’ Rights statute abrogated the charitable-immunity doctrine on claims brought against nursing homes under that act. We need not decide this issue because, as explained below, AEO did not prove its entitlement to charitable immunity as a matter of law. See Downing v. Lawrence Hall Nursing Ctr.,
Appellant asserts that the trial court erred in granting summary judgment to Baskins because, as administrator of the nursing home, she was not required to provide direct care to Mr. Mason in order to owe him a duty. She also argues that certain federal and state regulations and statutes imposed a duty of care upon Baskins to ensure that Mr. Mason received proper care. The essential elements of a cause of action for negligence are that the plaintiff show a duty owed and a duty breached, and that the defendant’s negligence was a proximate cause of the plaintiff’s damages. Watkins, supra. Proximate cause is defined, for negligence purposes, as that which, in a natural and continuous sequence, unbroken by any efficient intervening cause, produces the injury, and without which the result would not have occurred. Id. There is no question that an individual employed by a corporation, or officers and directors of corporations, may be personally liable to the extent that their tortious acts resulted in harm to a third party, if they were personally involved in the events ] surrounding an injury, they may be sued. Bayird v. Floyd,
Appellant further challenges the summary judgment granted to HC Financial. She did not, however, establish facts from
Appellant also asks us to reverse the trial court’s order concerning ex parte communication with current and former employees of the corporate defendants, as set forth in Arkansas Rule of Professional Conduct 4.2 (2012), which no longer prohibits communications with a person whose statement may constitute an admission. As we explained in Watkins, the trial court has wide discretion in matters pertaining to discovery and we will not reverse its decision in such matters absent an abuse of discretion. Rule 4.2 provides,
In representing a client, a lawyer shall not communicate about the subject of the representation with a person the lawyer knows to be represented by another lawyer in the matter, unless the lawyer has the consent of the other lawyer or is authorized to do so by law.
Comment 7 to the rule states that, in the case of a represented organization, the rule prohibits communications with a constituent of the organization who has authority to obligate the organization with respect to the matter or whose act or omission in connection with the matter may be imputed to the organization for purposes of civil or criminal liability. Appellant alleged in her complaint that appel-lees “had vicarious liability for the acts and |7omissions of all persons or entities under their control_” We hold that, in light of appellant’s broad allegations of vicarious liability, the trial court did not abuse its discretion in making this ruling.
Appellant also argues that AEO failed to establish its status as a genuine charitable organization as a matter of law. 1 he issue of whether a party is immune from suit is purely a question of law, and is reviewed de novo. Gentry v. Robinson,
An entity’s status as a nonprofit organization is but one of eight factors to be considered in determining whether it is entitled to charitable immunity. To determine whether an organization is entitled to charitable immunity, courts consider the following factors.
(1) whether the organization’s charter limits it to charitable or eleemosynary purposes, (2) whether the organization’s charter contains a “not-for-profit” limitation, (3) whether the organization’s goal is to break even, (4) whether the organization earned a profit, (5) whether any profit or surplus must be used for charitable or eleemosynary | {¡purposes, (6) whether the organization depends on contributions and donations for its existence, (7) whether the organization provides its services free of charge to those unable to pay, and (8) whether the directors and officers receive compensation.
Watkins,
There is no dispute that AEO’s articles of incorporation included the necessary statutory language for a nonprofit and charitable entity and, as admitted by Walsh, it does not depend on contributions or donations for its existence, most of its revenue comes from Medicare and Medicaid programs, with the balance from third-party payors and private patients. Although appellant argues that AEO’s purported “free care” is simply “bad debt” and that very little, if any, care is given free of charge to indigents, this factor is not particularly important in light of the fact that Medicare and Medicaid play such significant roles in funding nursing-home care. See Jackson v. Sparks Reg’l Med. Ctr.,375 Ark. 533 ,294 S.W.3d 1 (2009). Additionally, the directors of AEO receive only $500 for attending each board meeting. See id.
In this case, the third, fourth, and fifth factors are clearly the most relevant. Appellant contends that AEO’s goal was not to break even but to make a healthy profit, which was not used for charitable purposes, and offered evidence of AEO’s net income and retained earnings during the relevant time period. It is true that the existence of profits and retained surplus are not necessarily determinative of charitable status, see Anglin, supra: George, supra, however, what is significant is AEO’s payments to HC Staffing, HC Financial, and especially the owners of the leased facilities, which AEO characterizes as nothing but the reasonable expenses of doing business. Appellant asserts that the earnings are actually being siphoned off, in the guise of expenses, to | smake it appear as if AEO has much less of a profit than it actually does, and that a question of fact remains to be tried as to whether AEO was created, not as a genuine charitable entity, but as one designed to keep substantial profits flowing to the investors without purchasing liability insurance. Her argument includes the principles underlying the “piercing-the-eorporate-veil” doctrine, which provides that, in special circumstances, a court will disregard the corporate facade when the corporate form has been illegally abused to the injury of a third party. K.C. Props. of Nw. Ark., Inc. v. Lowell Inv. Partners, LLC,373 Ark. 14 ,280 S.W.3d 1 (2008).3 The issue of whether the corporate entity has been abused is a question for the trier of fact. Id. AEO responds that it entered into leases with the owners of the facilities in arms-length transactions, with monthly lease payments commensurate with market rates, and that appellant offered no evidence that those payments or its other expenses were unreasonable, exorbitant, or above market rate.
In resolving this issue, however, it is important to keep in mind that AEO, not appellant, bore the burden of establishing its right to summary judgment, that the charitable-immunity doctrine is to be narrowly construed, and that the pivotal issue in this case is whether the charitable-entity form has been abused. AEO convinced the trial court that, as a matter of law, its monthly expenses were reasonable and that the corporate entities and expenses were not intentionally structured as a way to funnel profits to the investors without buying liability insurance. Thus, in deciding this issue on appeal from a summary judgment, we must determine if there is a question of fact as to whether these expenses were reasonable, however, it has long been held that whether something is reasonable is a question of fact. See Ford Motor Credit Co. v. Ellison, 334 Ark. 357 ,974 S.W.2d 464 (1998); Crum v. Craig,2010 Ark. App. 531 ,379 S.W.3d 71 ; Mountain Pure, L.L.C. v. Affiliated Foods Sw., Inc.,96 Ark.App. 346 ,241 S.W.3d 774 (2006). Additionally, whether the charitable form has been abused is a question of fact, see K.C. Props., supra, and summary judgment is improper when there are genuine issues of material fact as to a party’s intent. Mercy Health Sys. [of Nw. Ark., Inc. v. Bicak], supra [2011 Ark. App. 341 ,383 S.W.3d 869 ].
We hold that genuine issues of material fact remain to be tried as to whether AEO is, in fact, a nonprofit, charitable organization. Technically, its originators took the necessary steps to create one on paper. The proof offered by appellant, however, revealed that the primary impetus for AEO’s creation was to enable the nursing homes to continue to operate profitably without purchasing liability insurance, that the creation of AEO did not change the actual operation of the nursing homes, and that, 11()whether the money generated by the nursing homes is labeled “reasonable expenses” or “profits,” it continued to flow in the same direction as it did before .... We offer no opinion as to whether AEO is a genuine charitable organization or merely a device for maximizing profits for the investors by evading the need to purchase liability insurance, that question is for the trier of fact to determine. Accordingly, we reverse and remand the summary judgment as to AEO.
The evidence revealed that various limited partnerships led by David MeCollister, including Southern Key, owned and operated several nursing homes in Arkansas. In 2002, it became extremely expensive to obtain liability insurance in Arkansas, and MeCollister considered selling the nursing homes. As Walsh explained in his depositions, he helped develop a plan for the nursing homes to remain in business without having to purchase liability insurance. AEO was formed as a nonprofit entity to lease the facilities that the limited partnerships owned and to operate the nursing homes. HC Staffing and HC Financial were created in 2003 and share the same address in Baton Rouge, Louisiana. HC Staffing was formed to provide the direct caregivers at the nursing homes, although it prepares the paperwork, the administrator and the director of nursing at each nursing home supervise the direct-care staff. HC financial provides accounting and information technology to AEO. Walsh is a part owner of Southern Key, which owns interests in the limited partnerships that own the facilities, he negotiates the lease agreements on behalf of AEO; and he has been an employee of HC Financial.
Reversed and remanded in part, affirmed in part.
Notes
. The claims against Johnson-Hobson Care Home were dismissed with prejudice.
. Appellant also argues that, even if AEO otherwise established its entitlement to the charitable-immunity defense, the time has come to abolish the doctrine in Arkansas. As we explained n Watkins, the supreme court has refused to abolish the doctrine, and we must follow its precedent.
. See also Advocat, Inc. v. Sauer,