SNF can recover damages in failed bed sale case

An Indiana nursing home will be able to recover damages from a failed sale of its extra Medicaid-certified beds, a judge ruled last week.

Lutheran Homes Inc. had a surplus of 35 beds with Medicaid certification in 2014, which the state of Indiana requires before it will reimburse a skilled nursing facility for providing services to the residents who occupy the beds. At that time, the state had a moratorium on new nursing home beds, but allowed providers with already certified beds to sell their certification rights.

LHI agreed to sell certification rights from its extra beds to Lock RealtyCorp. for $350,000 shortly before the moratorium on certification rights was lifted. As a result, Lock refused to close the sale, choosing instead to get certification rights from the state.

The nursing home won an initial summary judgement for Lock's breach of contract, but the matter of its damages remained undecided until last week. Lock argued that LHI could not receive damages since the certification rights were no longer worth $350,000 — a “fundamental misunderstanding” of how breach of contract damages were decided, according to Judge Jon E. DeGuilio's opinion Dec. 7 opinion.

“Upon a breach of contract, the non-breaching party is entitled to the amount of damages that will put it in the same position it would have been in ‘if the contract had not been broken,'” the court ruled.

However, it remains to be seen if LHI's damages should be reduced since it retained the certification rights after the contract breach, DeGuilio said.