Nursing Home Litigation: The Strategy of Adopting the Use of the Single Purpose Entity

In a recent decision from Florida’s Second District Court of Appeals, the appellate court provided an insightful look at nursing home litigation and the trend of private investment groups strategy of using Single Purpose Entities (SEP) to shield their liability. See Schwartzburg v. Knobloch, So.3d 37 FLW D1165 (Fla. 2nd DCA 5-16-2012).

Throughout the opinion the Second DCA provides an explanation of the extensive measures that nursing home owners employ to evade responsibility for their actions. The appellate court noted that “the era of the locally owned, mom and pop nursing facility is gone. Increasingly, private investment groups own large chains of nursing homes ….and it has become common for nursing facilities to have complex ownership and management structures. These complex structures arise because the owners of multiple nursing homes and similar facilities have adopted the use of the single purpose entity (SPE) to minimize the various risks to their businesses.”

The court went on to note that “the benefits of employing these strategies include containing exposure to risk to the facility involved, thereby avoiding the exposure of all of the facilities in the group to liability…When these strategies are employed, the operating company may have minimal assets. If the operating company is effectively judgment proof, an injured resident may find it difficult, if not impossible, to collect on a damages claim.”

The 2nd DCA’s opinion is a well written summary of the state of nursing home litigation and more importantly the huge hurdles that injured parties face when taking on these complex corporate entities. Not only are plaintiff’s now facing defendants who, through the use of corporate strategy, have minimal assets in which to pay damage awards, but it also is becoming increasingly harder for the State of Florida to obtain jurisdiction over the SPE.

In the event you or a loved one has suffered a personal injury as a result of nursing home negligence, we invite you to contact Robert Sparks Attorneys, PLLC for a free case evaluation. Our lawyers have experience as former defense attorneys and understand the complex litany of defenses that nursing home companies use in an effort to deny or minimize their damages.