The number of class action settlements in 2023 outpaced predictions for the second year in a row, which will likely incentivize the plaintiffs bar to be even more aggressive in seeking class standing, according to the annual Duane Morris Class Action Review.
While the report was not specific to healthcare, it keyed up several litigation themes skilled nursing providers have had to confront more often amid the COVID-19 pandemic and the workforce crisis. It also recognizes the growing scale of awards in such cases, including many that have hit healthcare providers.
Across all areas of litigation, class actions and government enforcement lawsuits garnered more than $51.4 billion in settlements last year, second only to 2022’s $66 billion. Combined, the two-year total was greater than any other two-year period, authors reported last week.
“We have entered a new era of heightened risks and higher stakes in the valuation of class actions,” wrote general editor Gerald Maatman, partner and chair of Duane Morris’ Workplace Class Action group. “Many of these settlements emanated outside of the products and pharmaceutical space, signaling a wider base and greater threat to businesses.”
However, arbitration agreements commonly used by skilled nursing providers remained an effective tool to cut off class actions, the analysis found. Of all defenses, a defendant’s ability to enforce an arbitration agreement containing a class or collective action waiver may have had the single greatest impact in terms of shifting the pendulum of class action litigation.
Maatman called arbitration agreements with such waivers a “bulwark against class actions, at a time when 72% of potential class actions are being certified. But he also said the “moat” that has protected businesses for years is beginning to “leak” as worker groups, especially, seek to weaken arbitration through the courts.
“The future viability of the arbitration defense remains an open question, as advocacy groups, government regulators, and political figures push for a ban on class action waivers in arbitration,” the report stated.
Windfalls reveal potential worries for SNFs
While some of the largest settlement totals came in categories not typically involving skilled nursing providers, several employment categories show the threat operators can face.
In 2023, there were more than $762 million in discrimination settlements, another $742.5 in wage & hour class and collective actions, and $643 million in civil rights class actions. Tech-related issues like data breaches are also ripe for plaintiff’s attorneys, with nearly $516 in settlements, while government enforcement actions netted about $264 million.
“Corporations should expect such numbers to incentivize the plaintiffs’ class action bar to be equally if not more aggressive with their case filings and settlement positions in 2024,” wrote Maatmam and co-editor Jennifer Riley, partner and vice chair of the Workplace Class Action group.
In healthcare legal circles, fears over civil rights class actions, in particular, are growing.
In June, the SupremeCourt upheld the right to sue government-operated and government-regulated facilities in federal court for redress of civil rights violations. The plaintiffs bar didn’t take long to act: By November, lawyers for survivors of more than 100 veterans who died or were sickened at a public veterans home in Queens, NY, were citing the Health and Hospital Corp. of Marion County et al. v. Talevski decision in their class action suit.
“Class action litigation poses some of the most significant legal risks that companies face,” the report said. “By joining the claims of many individuals in a single lawsuit, class actions have the potential to increase potential damages exponentially. A negative ruling in a class action has the potential to reshape a defendant’s business model, to impact future cases, as well as to set guidelines for the entire industry.
In addition to the often-devastating bad publicity that comes with such cases, the Duane Morris attorneys also noted they are costly to defend, time-consuming and resource intensive, diverting management attention away from core business activities.
“Plaintiffs can attempt to leverage this reality to make class actions as expensive and disruptive as possible, in an effort to bring about litigation fatigue and to extract a sizable settlement,” they warned.
One bright spot: Cases brought by residents of their families seeking class status have been rejected by some judges who find the idea of class standing too far a reach. That was the case for one shuttered North Carolina facility, whose owner who faced a potential group suit in a case revolving around reduced staffing levels. A federal judge ruled each plaintiffs’ claims and damages would be too unique.
