GERALDINE L. VANDEVENDER, Administrator of the Estate of Del Ray Baird, deceased, and Jacqueline Ann Baird, deceased; NORWOOD R. JONES, Co-Executor of the Estate of Elizabeth J. Jones, deceased; LISA J. PATE, Co-Executor of the Estate of Elizabeth J. Jones, deceased; JOYCE K. HARRISON, Administrator of the Estate of Bettie Mae Kee, deceased and Samuel Kee, Sr., deceased; RALPH D. JONES, JR., Co-Executor of the Estate of Elizabeth J. Jones, deceased v. BLUE RIDGE OF RALEIGH, LLC, d/b/a Blue Ridge Health Care Center; CARE VIRGINIA MANAGEMENT, LLC, d/b/a Care Virginia; CARE ONE, LLC, d/b/a CareOne
No. 17-1900, No. 17-1951
UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT
August 2, 2018
UNPUBLISHED
GERALDINE L. VANDEVENDER, Administrator of the Estate of Del Ray Baird, deceased, and Jacqueline Ann Baird, deceased; NORWOOD R. JONES, Co-Executor of the Estate of Elizabeth J. Jones, deceased; LISA J. PATE, Co-Executor of the Estate of Elizabeth J. Jones, deceased; JOYCE K. HARRISON, Administrator of the Estate of Bettie Mae Kee, deceased and Samuel Kee, Sr., deceased; RALPH D. JONES, JR., Co-Executor of the Estate of Elizabeth J. Jones, deceased,
Plaintiffs - Appellants,
and
SAMUEL KEE, SR., Individually,
Plaintiff,
v.
BLUE RIDGE OF RALEIGH, LLC, d/b/a Blue Ridge Health Care Center; CARE VIRGINIA MANAGEMENT, LLC, d/b/a Care Virginia; CARE ONE, LLC, d/b/a CareOne,
Defendants - Appellees,
and
RALEIGH REGIONAL REHAB CENTER, LLC, d/b/a Crabtree Valley Rehab Center; NC MANAGEMENT HOLDINGS, LLC,
Defendants.
NORTH CAROLINA ADVOCATES FOR JUSTICE,
Amicus Supporting Appellant.
No. 17-1951
RALPH D. JONES, JR., Co-Executor of the Estate of Elizabeth J. Jones, deceased; GERALDINE L. VANDEVENDER, Administrator of the Estate of Del Ray Baird, deceased, and Jacqueline Ann Baird, deceased; NORWOOD R. JONES, Co-Executor of the Estate of Elizabeth J. Jones, deceased; LISA J. PATE, Co-Executor of the Estate of Elizabeth J. Jones, deceased; JOYCE K. HARRISON, Administrator of the Estate of Bettie Mae Kee, deceased and Samuel Kee, Sr., deceased,
Plaintiffs - Appellees,
and
SAMUEL KEE, SR., Individually,
Plaintiff,
v.
BLUE RIDGE OF RALEIGH, LLC, d/b/a Blue Ridge Health Care Center; CARE VIRGINIA MANAGEMENT, LLC, d/b/a Care Virginia; CARE ONE, LLC, d/b/a CareOne,
Defendants - Appellants,
and
RALEIGH REGIONAL REHAB CENTER, LLC, d/b/a Crabtree Valley Rehab Center; NC MANAGEMENT HOLDINGS, LLC,
Defendants.
NORTH CAROLINA ADVOCATES FOR JUSTICE,
Amicus Supporting Appellant.
Appeals from the United States District Court for the Eastern District of North Carolina, at Raleigh. Terrence W. Boyle, District Judge. (5:14-cv-00150-BO)
Argued: May 10, 2018 Decided: August 2, 2018
Before TRAXLER and DIAZ, Circuit Judges, and Richard M. GERGEL, United States District Judge for the District of South Carolina, sitting by designation.
Affirmed in part, reversed in part, and remanded with instructions by unpublished opinion. Judge Gergel wrote the opinion, in which Judge Traxler and Judge Diaz joined.
ARGUED: Rachel Alexis Fuerst, HENSON & FUERST, PA, Raleigh, North Carolina, for Appellants/Cross-Appellees. Gregory Wenzl Brown, BROWN LAW LLP, Raleigh, North Carolina, for Appellees/Cross-Appellants. ON BRIEF: Thomas W. Henson, Jr., HENSON & FUERST, P.A., Raleigh, North Carolina, for Appellants/Cross-Appellees. Kristi L. Gavalier, BROWN LAW LLP, Raleigh, North Carolina, for Appellees/Cross-Appellants. Burton Craige, Narendra K. Ghosh, Paul E. Smith, PATTERSON HARKAVY LLP, Chapel Hill, North Carolina, for Amicus Curiae.
Unpublished opinions are not binding precedent in this circuit.
After a jury returned verdicts awarding compensatory and punitive damages for each Plaintiff in three wrongful death nursing home malpractice claims, Defendants moved for judgment as a matter of law, arguing Plaintiffs failed to produce evidence of an aggravating factor necessary to support an award of punitive damages under North Carolina law and failed to produce evidence necessary to support a verdict regarding Plaintiff Jones. The district court order granted the motion as to Plaintiffs’ punitive damages awards and denied it as to Plaintiff Jones’ award of compensatory damages. Plaintiffs appeal the grant of judgment for Defendants as to Plaintiffs’ award of punitive damages. Defendants cross-appeal the denial as to Plaintiff Jones’ award of compensatory damages. For the reasons stated below, we affirm the denial of the motion for judgment as a matter of law as to Plaintiff Jones’ award of compensatory damages, reverse as to Plaintiffs’ award of punitive damages, and remand with instructions to enter judgment for Plaintiffs consistent with North Carolina‘s statutory limits on punitive damages.
I.
Defendants operated a long-term skilled nursing facility known as the Blue Ridge Health Care Center (“Blue Ridge“) in Raleigh, North Carolina. Blue Ridge operated a “vent unit,” a special facility for ventilator-dependent patients. North Carolina requires vent units to provide 5.5 hours of nursing care per patient day and that “the direct care nursing staff shall not fall below a registered nurse and a nurse aide I at any time during a 24-hour period.”
At trial, multiple former employees of Blue Ridge testified that Blue Ridge management was repeatedly warned that the staffing levels were a safety risk. In May 2011, the administrator of Blue Ridge, Darryl Taylor, resigned because his superiors
In addition to cutting staff, Blue Ridge management also reduced expenditures on supplies. E.g., “And then [soon after Mr. McGovern took over] we started getting supplies of lesser value and supplies that really didn‘t work well . . . ;” “[T]he bill hadn‘t been paid, so supplies weren‘t coming;” “I [Respiratory Therapist Myra Dotson] spoke with the administrator of the facility about several issues, one in particular was the fact that we did not have adequate equipment and supplies.”
The estates of three decedents who were ventilator-dependent patients at Blue Ridge in late 2011 and early 2012 claim the inadequate staffing and supplies about which Blue Ridge had been repeatedly warned proximately caused decedents’ deaths. Del Ray Baird was admitted to the vent unit on December 29, 2011. He received an anoxic brain injury in the early morning of December 30, 2011. He was found in his room with his ventilator and alarms turned off for an unknown period. Because of understaffing, the respiratory therapist for Mr. Baird could not check the alarms in his room to make sure they were on. Bettie Mae Kee was found dead in the vent unit on March 20, 2012, with her breathing apparatus pulled from her neck and with no alarm or oxygen monitor in use. The standard of care required a sitter for Ms. Kee, but no sitter was provided because of understaffing. Elizabeth Jones died in the vent unit on March 2, 2012, when staff members were unable to replace her tracheostomy tube in a timely manner. The delay was caused by a lack of proper bedside supplies due to budget cuts.
The Plaintiff estates filed suit against three Defendant LLCs: Blue Ridge of Raleigh, the nursing facility; CareOne, which owned Blue Ridge; and CareVirginia Management, which helped manage the facility. The complaint was removed to federal court on March 13, 2014, and trial commenced on February 13, 2017. All former Blue Ridge employees who testified at trial did so for Plaintiffs. Defendants’ only witnesses were two medical experts. After a four-day trial, the jury returned verdicts for Plaintiffs. The jury awarded compensatory damages of $50,000 for Plaintiff Baird, $300,000 for Plaintiff Jones, and $300,000 for Plaintiff Kee. The jury also awarded punitive damages of $1,523,939.16 for each Plaintiff.
Soon thereafter, Defendants filed a motion for judgment as a matter of law on the award of compensatory damages for Plaintiff Jones and on the awards of punitive damages. The district court denied the motion as to Plaintiff Jones’ compensatory damages but granted the motion as to punitive damages, ruling Plaintiffs had failed to present evidence sufficient for a reasonable jury to find Defendants liable under North Carolina‘s punitive damages statute.
II.
North Carolina law allows punitive damages only if a claimant proves that the defendant is liable for compensatory damages and that one of three possible aggravating factors was present and related to the injury for which compensatory damages were awarded.
The amount of punitive damages is limited to three times compensatory damages or $250,000, whichever is greater.
Applying the punitive damages statute to the evidence presented at trial, the district court found Plaintiffs failed to present sufficient evidence to support an award of punitive damages for two reasons. First, the district court found that Plaintiffs failed to present evidence showing Defendants’ officers, directors, or managers participated in or condoned the asserted willful or wanton conduct. Second, the district court found that even if such participation or condonation were assumed, Plaintiffs failed to present sufficient evidence to show they had the requisite state of mind to establish any aggravating factor. For the reasons set forth below, both reasons are in error.
A.
North Carolina does not permit respondeat superior for punitive damages. Companies are liable for punitive damages for the acts or omissions of their employees only if the “officers, directors, or managers” of the company “participated in or condoned the conduct constituting the aggravating factor giving rise to punitive damages.”
The district court found that Plaintiffs failed to present evidence showing Defendants’ managers participated in or condoned the decision-making on staffing and supplies that is asserted to constitute an aggravating factor. That finding was erroneous for three reasons.
First, the record clearly shows that Defendants’ manager—Administrator Ben McGovern—participated in the decisions regarding staffing and supplies asserted to constitute willful or wanton conduct. E.g., Ben McGovern “had said that, you know, he came in to cut staffing and that there was a new sheriff in town—his words—there was a new sheriff in town, and he was going to do whatever he needed to do to cut costs“; “Soon after Ben McGovern arrived as administrator he made a lot of policy changes and began to drastically cut back on staff at Blue Ridge Health Care Center“; testimony that the administrator “runs the nursing home.” The uncontroverted record is that he was jointly employed by all three Defendants. cf. Salinas v. Commercial Interiors, Inc., 848 F.3d 125, 129-30 (4th Cir. 2017) (providing, in the context of the Fair Labor Standards Act, that “joint employment exists when (1) two or more persons or entities share, agree to allocate responsibility for, or otherwise codetermine—formally or informally, directly or indirectly—the essential terms and conditions of a worker‘s employment“).
Indeed, the district court never explicitly held that Mr. McGovern did not participate in staffing decisions or that Mr. McGovern was not a manager for punitive damages purposes. The district court‘s repeated reference to “unidentified officers, directors, or managers,” however, implies that Mr. McGovern (and other Blue Ridge employees) was not identified as Defendants’ officer, director, or manager. Any such implication, however, is belied by the record. Administrator Ben McGovern was identified both as a person participating in conduct constituting an aggravating factor and as the chief administrator of Blue Ridge. His duties satisfy every Everhart factor except possibly the handling of money. If an “assistant dining room manager” is a manager, the chief administrator of a medical facility unquestionably is one too. Cf. Everhart, 683 S.E.2d at 738.
Second, the district court found “there is nothing in the record that shows or would allow the reasonable inference that staffing was cut because of a corporate policy” regardless of whom is identified as a manager. But the extensive trial testimony that Defendants’ policy was to cut staffing to save money, viewed in a light most favorable to Plaintiffs and with all legitimate inferences drawn in Plaintiffs’ favor, clearly and convincingly shows that staffing was cut because of company policy. E.g., Former Blue Ridge Administrator “Darryl Taylor left because he said he was getting pressure from New Jersey to cut staff“; Business Office Manager Peggy Singletary “said that she couldn‘t take it anymore, that she was—because she was doing payroll, and she would see how—how the staffing was so short, but [Administrator] Ben [McGovern] kept telling her
Third, the punitive damages statute is satisfied if a company manager condones conduct constituting an aggravating factor. “The plain meaning of ‘condone’ is to ‘forgive or overlook,’ or ‘permit the continuance of.‘” Miller v. B.H.B. Enters., Inc., 568 S.E.2d 219, 225 (N.C. Ct. App. 2002) (citations omitted). A manager condones employees’ actions when the manager is aware of those actions and fails to intervene. See, e.g., Wallace v. M, M & R, Inc., 600 S.E.2d 514, 518 (N.C. Ct. App. 2004). Here, there was clear and convincing evidence that Defendants were fully aware of the dangerously inadequate staffing levels yet did nothing or worse. E.g., Registered Nurse Kate Cogan testifying that in response to complaints to CareOne from Blue Ridge patient family members about inadequate staffing, Regional Director of Operations Don [McHale] went to Blue Ridge and fired more staff; “I [Respiratory Therapist Myra Dotson] spoke to the administrator and my boss and . . . the supervisor of respiratory [therapy] and told him that this is just—there‘s just—there‘s too many [vent unit] patients to take care of. . . . So I told him that it was just a dangerous situation.” Again, Defendants offered no fact witnesses to dispute this testimony.
B.
Since there was clear and convincing evidence that Defendants’ managers did participate in and condone the conduct asserted to constitute an aggravating factor, we turn to the district court‘s ruling that even if Defendants’ managers did participate in or condone that conduct, Plaintiffs failed to present sufficient evidence to show they did so with the state of mind necessary for that conduct to constitute an aggravating factor. The three possible aggravating factors are “Fraud,” “Malice,” and “Willful or wanton conduct.” Since there is no assertion of fraud or actual malice toward any decedent, the issue is whether the conduct of Defendants’ managers constituted “willful or wanton conduct” as defined by North Carolina law: “the conscious and intentional disregard of and indifference to the rights and safety of others, which the defendant knows or should know is reasonably likely to result in injury, damage, or other harm.”
The evidence produced at trial clearly and convincingly shows that Defendants engaged in willful or wanton conduct by intentionally failing to follow federal and state laws on staffing, by intentionally violating Blue Ridge‘s policy regarding sitters for agitated patients, by intentionally failing to monitor oxygen levels or to provide continuous monitoring of alarms, and by intentionally failing to have necessary bedside
The district court, however, held that evidence insufficient because Plaintiffs failed to show Defendants acted with “malicious intent” or with a “wicked purpose” in causing the decedents’ injuries. But under North Carolina‘s punitive damages statute, willful or wanton conduct does not require proof of malicious intent. Cockerham-Ellerbee v. Town of Jonesville, 660 S.E.2d 178, 181 (N.C. Ct. App. 2008); see also Everhart, 683 S.E.2d at 737 (“[Defendant‘s] claims that ‘there is nothing “wicked” or “needless” about [its conduct] . . . fails to apply
The district court improperly read “willful or wanton conduct” to require proof of “wanton” conduct. At common law, “willful negligence involves a deliberate purpose not to discharge some duty necessary to the safety of the person or property of another, which duty the person owing it has assumed by contract, or which is imposed on the person by operation of law.” Bailey v. N.C. R. Co., 62 S.E. 912, 914 (N.C. 1908). That is virtually synonymous with the statutory definition of “willful or wanton conduct.” But “wanton” conduct arguably does require a wicked purpose: “An act is wantonly done when it is needless for any rightful purpose, and manifests a reckless indifference to the rights and interests of another.” Everett v. Receivers of Richmond & D.R. Co., 27 S.E. 991, 991-92 (N.C. 1897). North Carolina courts continue to apply these definitions today:
In order to warrant punitive damages, an act of negligence must be willful or wanton.
A wanton act is an act done with a “wicked purpose or . . . done needlessly, manifesting a reckless indifference to the rights of others.” An act is willful when there is a deliberate purpose not to discharge a duty, assumed by contract or imposed by law, necessary for the safety of the person or property of another.
Lashlee v. White Consol. Indus., Inc., 548 S.E.2d 821, 827 (N.C. Ct. App. 2001) (quoting Benton v. Hillcrest Foods, Inc., 524 S.E.2d 53, 60 (N.C. Ct. App. 1999)).
Here, Defendants deliberately failed to discharge their duty to provide adequate staff and supplies for their nursing facility. That duty is imposed by state and federal law because it is necessary for patient safety. See
III.
Defendants argue in their cross-appeal that the evidence was insufficient to
IV.
Having determined that the district court correctly found Plaintiffs presented sufficient evidence that Defendants’ negligence proximately caused the death of Elizabeth Jones but erred in finding Plaintiffs failed to present evidence sufficient for a reasonable jury to award punitive damages, we turn to the proper amount of punitive damages for each Plaintiff. The district court held that “should the award of punitive damages stand, such awards must be reduced to comply with North Carolina law.” Plaintiffs concede that is correct. North Carolina limits punitive damages to three times the amount of compensatory damages or $250,000, whichever is greater.
V.
For the reasons set forth above, the judgment of the district court is
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED WITH INSTRUCTIONS.
GERGEL
UNITED STATES DISTRICT JUDGE