Court rules management company may be sued due to 'mutually advantageous' relationship with SNF

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A long-term care management company has enough of a relationship with a skilled nursing facility it shares ownership of to be included in a lawsuit against it, a court ruled on Tuesday.

The suit was filed in 2016 by a representative for a deceased resident of Sagecrest Nursing and Rehabilitation Center in Las Cruces, NM, claiming a fall the resident sustained at the facility ultimately led to her death. The complaint also named facility operator Pinnacle Health Facilities, Preferred Care Inc., and related entities as defendants.

PCI is a Delaware-based company with its primary place of business in Texas; the lawsuit was filed in New Mexico.

PCI asked to be dismissed from the suit, arguing that it provides “nominal” legal services to Pinnacle but “does not participate in the day-to-day operation” of the facility or have control over its budgets, policies or staffing. The resident's representative, however, claimed that PCI provided crucial services that affected quality of care and resulted in understaffing at the facility.

In Tuesday's opinion, Judge James A. Parker with the U.S. District Court for the District of New Mexico ruled that PCI's services to Pinnacle were “essential” to Sagecrest's operation. He also noted that the resident's representative had provided evidence of a “mutually advantageous relationship” between Pinnacle and PCI.

“Since most patients at the Sagecrest Center are covered by either Medicare or Medicaid … PCI's legal services related to regulatory compliance at both the federal and state levels, means that PCI provided more than ‘nominal' legal services,” Parker wrote. “Through the provision of regulatory compliance services, PCI played a vital role in the operation and management of the Sagecrest Center.”

Parker denied PCI's motion to dismiss it from the suit due to lack of personal jurisdiction.

Parker's opinion also referenced the lawsuit launched by New Mexico Attorney General Hector Balderas against PCI and other entities over alleged understaffing and failures to provide basic care at 11 nursing homes in the state.