Lawyers representing the families of nursing home patients in upstate South Carolina say that a company’s recent bankruptcy filing in Texas has put pending medical malpractice and wrongful death litigation on hold.
The automatic stay has halted all pending litigation against Orianna Health, owners of nursing home facilities in Anderson, Pickens, Aiken and Greenville counties.
“We’ve retained bankruptcy counsel in Texas to help navigate the bankruptcy system and the bankruptcy proceedings,” Lee Cope, a Hampton attorney representing clients with malpractice cases against the company, said. “At some point I would hope the stay would be lifted and we’ll be able to litigate our claims.”
Since late last year, 11 cases have been stayed in Anderson County, along with three in Greenville County and one in Aiken County.
“The net effect for our clients as unsecured creditors is that they probably won’t be able to recover fully for the damages that their loved ones have suffered, and that’s a shame,” Cope said. “At this point, there’s really nothing we can do about it, it stays the case completely so we can’t move forward with our litigation at all.”
Greenville attorney Matthew Christian, who represents multiple clients with complaints against the nursing home company, said the problem also impacts cases that were previously decided.
“They also have defaulted on payments on previous cases they agreed to settle and are not paying the money that is due,” Christian said.
According to a press release, Orianna filed for Chapter 11 bankruptcy on March 6. As a result, the company announced they will begin transitioning 23 facilities to other operators, and that they will restructure their remaining 19 facilities.
Much of the debt stems from an inability to pay rent to landlord Omega Healthcare Investors Inc.
Court records show that Orianna owes Omega $52 million in rent, as well as an additional $67 million to vendors.
“These bankruptcy filings just prove what we’ve said all along,” Cope said. “Not only are they not utilizing funds in a responsible manner to take care of residents, but they also are not doing it in a way to stay operating as a legitimate business.”
Court documents also show that part of the company’s financial hardship was caused by the assumption on liability for claims when they merged with Ark Holding Company in 2013. In the merger, Orianna took on about $6.5 million in professional, general and employment-related liability costs, resulting from 40 lawsuits.
Additionally, court records from South Carolina show that between 2011 and 2017, the nursing homes agreed to pay $4.46 million to settle lawsuits stemming from nursing and administrative negligence.
One such case was that of James Jones, whose wife sued Orianna for medical malpractice and wrongful death.
The complaint alleged that Jones, then a resident at Glorified Health and Rehab in Greenville, was neglected and often left to lie in his own urine and feces, exacerbating problems caused by pressure sores. Eventually, his leg was amputated due to infections, which led to falls, and ultimately, his death, according to the complaint.
All sides eventually agreed to a $225,000 settlement which was to paid in installments from October 2017 until March 2018. A separate lawsuit filed by Christian alleges that the company failed to pay the final installment in March.
Christian said he wants to hold the company responsible for this case and others like it where Orianna was negligent in providing care.
“It’s really unfortunate because not only are they subject to abuse and neglect and poor care, now they’re left with settlements that are not being paid by the company,” Christian said. “They have little to no recourse because [Orianna is] protected by the bankruptcy court.”
Christian said that while Orianna may be protected by the court, some of the parent companies that own Orianna may still be held responsible.
“The ultimate parent companies do not receive protection unless they apply for that and receive special protection from bankruptcy court not usually enacted for non-debtor parties,” Christian said. “We can’t go after the nursing homes, but we can go against parent entities not part of the bankruptcy filing.”
As a result, he has filed motions to sever those parent companies from the suits and continue litigation against them. However, Orianna has a pending motion in front of the bankruptcy court to extend the stay to non-debtor parties of the lawsuits.
Christian said that the parent companies’ requests will be heard by the bankruptcy court on May 22.
Cope said that he also has filed motions to sever non-related entities to pursue claims against them independently, but that he is also waiting to hear back from the bankruptcy court.
South Carolina Lawyers Weekly reached out to several lawyers involved in defending Orianna in medical malpractice suits in the upstate region, but did not receive a response.
The company said in a press release on their website that they anticipate day-to-day operations to remain the same during bankruptcy proceedings.
“[O]ur top priority remains the same: ensuring that we surpass our residents’ needs and expectations with the empathy, compassion, dignity and integrity that you have come to expect from Orianna,” the company said in a statement.