The Olmstead impact: How class actions affect long-term care facilities

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Robert K. Neiman
Robert K. Neiman
By Robert K. Neiman, Attorney,

Imagine that a class-action lawsuit—to which your long-term care facility isn't even a party—has the potential to disrupt your residents and put you out of business.

When a class action is brought on behalf of residents against a state government for violating the Americans with Disabilities Act (ADA), your facility could face this very real threat. Although long-term care facilities are not parties to these lawsuits, and usually cannot intervene, it is important to monitor these class actions to help minimize harm to your residents, as well as your facility.

In 1999, the United States Supreme Court ruled that the ADA requires state governments to provide housing and services for skilled nursing facility residents, the developmentally disabled, the mentally ill and other disabled groups in the least restrictive environment appropriate for their needs. This decision, widely known as the Olmstead case, has led to a series of class-action lawsuits brought on behalf of long-term care facility residents against various state governments for failing to fund community-based housing and services for the disabled.

The concept of providing state-funded apartments and services for this segment of the population is laudable. In fact, Olmstead cases can prove beneficial to people who require limited nursing care and other services, but do not need full-time, long-term care.

Olmstead settlements and verdicts can, however, be confusing to residents and jeopardize the livelihood of your long-term care facility. If, for example, the parties do not appropriately evaluate the ability of residents to function outside a long-term care environment or fail to provide details about how they will receive services in the community, then your residents and your facility face risks.

Because long-term care facilities are not named as parties to Olmstead lawsuits, and usually do not have the right to intervene, they have a limited ability to influence these class actions, even though the outcome can adversely affect residents and facilities alike. After all, if the state moves a majority of your residents into community-based apartments without consulting with doctors and family members to assess their chances of succeeding in that new environment, then residents' health may suffer. Your facility's census also could undergo a potentially devastating decline.

Monitor cases

There are, however, steps you can take to protect residents and your facility from the possible negative affects of Olmstead lawsuits. First, long-term care facilities, as well as the trade associations that serve them, should monitor Olmstead cases by having a lawyer attend hearings and review any briefs that the parties file. Most of these cases settle, and many courts will insist that the parties meet with counsel for interested facilities to address their concerns with the proposed settlement language.

Facilities should analyze any proposed settlement agreements or consent decrees to determine if their residents' interests are being adequately protected. For example, some settlement agreements will allow a state agent to decide whether a resident can succeed in the community without requiring the state to consult with the resident's doctor, psychiatrist, nurses or social workers. Lacking the practical information needed to make such an important decision, the state agent may end up moving residents into state-supported housing where they cannot realistically succeed.

To avoid this scenario, facilities should try to convince the parties and the court that medical, psychiatric and social-service evaluations are essential.

Facilities also must do their best to ensure that the settlement agreement specifies where residents will move, the method and frequency with which they will receive meals and care, and who will provide such services. If the draft settlement does not include such details, anxious residents may turn to you for answers when they receive notice of the proposed settlement.

Advocate for residents

Furthermore, the settlement notice gives residents the chance to object to the terms in writing. They also can address their concerns in person during a fairness hearing, when the judge will allow all interested parties to voice their approval or objections to the settlement.

Long-term care facilities can provide residents with assistance and protect their interests during this part of the process. For example, you should help residents understand how to object if they want to, and consider providing transportation for residents who want to attend the fairness hearing.

Ultimately, if the state moves enough of your residents to community-based housing, Olmstead cases can jeopardize your facility's very existence. Even though long-term care facilities are not parties to these cases, you still have an obligation to your residents to minimize any harm caused by a settlement—and might even save your business in the process.

The author is a principal at Chicago-based law firm Much Shelist (