In an increasing number of nursing home negligence lawsuits, the issue of personal jurisdiction has become a sticking point. That’s because the corporate structure of many for-profit nursing homes is designed to help the parent company limit liability. Often the parent company will have offices in a state separate from the actual facility. This provides a basis for the company to argue the local court lacks jurisdiction over the case. If the defendant company can force nursing home plaintiffs to file their case in an out-of-state or federal court, it’s one more expensive challenge to be overcome.
Personal jurisdiction refers to the power of a court to hear and determine a lawsuit that involves a defendant by virtue of defendant’s contact with that location. Although states have personal jurisdictions over individuals who are in that territory, states cannot impose personal jurisdiction or authority over those outside that region unless the person/ company has some kind of contact with the state.
This was the issue in the recent Colorado Supreme Court nursing home negligence case of Griffith v. SSC Pueblo Belmont Operating Co . The question here was whether a state court held personal jurisdiction over a non-resident parent company based solely on the in-state contacts of its subsidiary, which is a resident of the state.
According to court records, plaintiff filed her nursing home negligence lawsuit against nine separate entities and two individuals alleging they had caused her father, a nursing home resident, to suffer serious injuries that eventually led to his death. Her lawsuit alleged negligence, wrongful death and violation of the state’s consumer protection act. The two individuals and four of the nine corporate entities conceded the court had jurisdiction and answered the complaint. However, five of the defendants contested jurisdiction, alleging they are aren’t residents and aren’t subject to personal jurisdiction in that state.
All parties agree that the main defendant company is just one piece of a sprawling, complex organizational structure. The limited liability company, whose sole member is an LLC, operates a nursing home in Colorado. That LLC is a wholly-owned subsidiary of a parent company LLC, which in turn is a wholly-owned subsidiary of another LLC. That LLC is the sole member of a health care group which is overseen by a larger parent company. The companies at the top were those seeking to be excused from the nursing home negligence lawsuit based on lack of personal jurisdiction.
An evidentiary hearing on the issue was held, and it was found the non-resident defendants had not:
- Registered to do business in the state;
- Had any registered agents in the state;
- Maintained a bank account in the state;
- Had any employees in the state;
- Solicited business in the state;
- Filed a tax return in the state;
- Held themselves out as doing business in the state.
The court also acknowledged that these were all separate business entities from the nursing home itself. The trial court, however, found that because these other defendants derived financial benefit from the nursing home in Colorado, this “pyramid ownership” gave the court personal jurisdiction.
Defendants appealed to the state supreme court. In review, justices determined the trial court failed to perform a required two-step analysis to determine whether the state had personal jurisdiction. This involved looking at whether the court could pierce the corporate veil to impute the state contacts of the subsidiary to the parent company and secondly whether due process is afforded. The trial court didn’t do this, so the case was remanded for further analysis.
Contact our experienced San Antonio personal injury lawyers at (210) 308-8811.
Griffith v. SSC Pueblo Belmont Operating Co ., Sept. 26, 2016, Colorado Supreme Court
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Nursing Home Abuse: Signs of Financial Exploitation , April 16, 2016, San Antonio Nursing Home Negligence Lawyer Blog