Skilled nursing facilities and other long-term care establishments are finding their advertising claims under fire as plaintiffs use state consumer protection statutes to lodge malpractice claims against them. Disconcertingly, plaintiffs are increasingly finding support from the courts despite the fact that the claims often stretch the definition of “consumer fraud” beyond a reasonable boundary.
A recent Pennsylvania Supreme Court decision, Commonwealth of Pennsylvania v. Golden Gate National Senior Care, LLC, dramatically demonstrated the drift. The court’s determination — that failure to provide the services documented in a care plan can be alleged as a form of consumer fraud under the UTPCPL (Unfair Trade Practices and Consumer Protection Law) — is bad law for all long-term care providers.
The matter focused on a series of claims that a skilled nursing facility, Golden Gate National Senior Care, made in its marketing materials and documents. Pennsylvania’s Office of Attorney General disputed some of the facility’s statements, including assertions that it has “licensed nurses and nursing assistants available to provide nursing care and help with activities of daily living.”
In the case, the plaintiff’s theory had been rebuffed by the appellate court — the Commonwealth Court of Pennsylvania — which ruled that “the Marketing Statements were offered and understood as an expression of the seller’s opinion only, which is to be discounted as such by the buyer, and on which no reasonable person would rely, they are puffery, and may not form the basis for a UTPCPL action.”
Indeed, state consumer protection acts were originally enacted to address advertising fraud. But many have been expanded to address fraud in consumer transactions. The Pennsylvania high court subsequently made that point in this case by holding that non-advertising marketing materials are also covered by the Pennsylvania Unfair Trade Practices and Consumer Protection Law.
The court broadly swept into the UTPCP claims about resident assessments and care plans, citing the UTPCP sections on representing goods or services as having certain sponsorship, approval, characteristics, ingredients, uses, benefits or quantities that they do not have, and on engaging in any other fraudulent or deceptive conduct. But the court did not address significant aspects of fraud claims that would render care plan and assessment claims not cognizable.
A typical fraud claim requires a material or negligent misrepresentation of existing fact, reasonable reliance on that misrepresentation, and injury to the consumer. Most states also require that the misrepresentation be made intentionally or knowingly.
Actionable fraud involves statements of existing fact and not statements of future facts, opinions or promises of future conduct. Claims that plans setting forth care to be provided in the future are not fraud claims, and claims that the promised care was not provided require that when the misrepresentation was made, it was never intended that the care be provided. The fraud must occur at the time of the representation of fact, not in the future. This temporal element was missing in the Pennsylvania court’s opinion.
It is clear that the court misapprehended the nature of care planning and assessment. Unfortunately, this development has found purchase in almost every state that has adopted tort reform because it takes cases out from under the negligence/malpractice rubric to bypass the damages caps, and allow double and treble damages under consumer protection statutes. The long-term care defense bar must work diligently to foreclose on this line of argument.
This case was particularly important for SNFs and other care facilities because Pennsylvania has the fifth highest percentage of elderly residents in the country. Moreover, the Pennsylvania Supreme Court’s holding can have national implications. It may provide a roadmap for other states to prosecute under their respective UTPCPL, even though a typical fraud claim requires a material or negligent misrepresentation of existing fact, reasonable reliance on that misrepresentation, and injury to the consumer.
At the same time, facilities — regardless of their location — are likely to increasingly face similar litigation as plaintiffs are emboldened by decisions like the Pennsylvania one. As such, SNFs and other establishments may wish to review their marketing materials to ensure the statements are completely accurate. Given the mood of the courts, stating that you provide a service that is unavailable or to promise that which you know you cannot consistently deliver may not be a best practice.
Nancy Reynolds, Esq., is a member in LeClairRyan’s Roanoke, VA office and leader of the national law firm’s Long-Term Care Practice Team. She can be reached at: [email protected]
