Nonprofit loses immunity ruling in patient death

An Arkansas Court of Appeals panel on Wednesday sent a wrongful-death lawsuit against a Pine Bluff nursing home back to Circuit Court for trial, saying the lower court judge shouldn't have granted Davis Life Care Center's request for immunity as a charity.

Circuit Court Judge Jodi Raines Dennis had sided with the nursing home's claim of charitable immunity in a lawsuit brought by Gracie Neal over her brother's 2011 death.

But the Court of Appeals opinion by Judge Rita Gruber reversed that decision after examining eight standards set by Arkansas courts relating to charitable organizations and immunity from lawsuits.

The findings taken together "could reasonably result in the conclusion that Davis was not truly operating as a charity and, therefore, not entitled to charitable immunity," Gruber's opinion said.

"We are pleased with the ruling," said Neal's attorney, Brian Reddick of Little Rock. "This isn't the first time. The appellate courts have ruled pretty consistently on the issue.

"The effect is we go back to Circuit Court in Pine Bluff and continue on with the case," Reddick said.

The attorney for Davis Life Care Center, David Littleton of Little Rock, could not be reached for comment late Wednesday afternoon.

The lawsuit involves the Dec. 6, 2011, death of Johnny Newborn, who resided at the Davis Life Care Center for about six months, according to court records.

His sister, Gracie Neal, sued in 2013, claiming Newborn suffered injuries that included infected bedsores, improper catheter care, urinary tract infections, malnutrition, dehydration, aspiration and death.

The nursing home, listed by federal Medicare officials as a nonprofit, filed a motion claiming charitable immunity.

After Dennis granted the request, Neal and her attorneys appealed.

Charitable immunity has been recognized in Arkansas since at least 1907, when the state Supreme Court ruled that protecting charities' assets is in the public interest.

Arkansas is one of the "last remaining states that still recognizes this doctrine," said Neal's attorney. "It's uncommon, pretty unique."

The charitable immunity doctrine says that agencies, trusts and other organizations created and maintained exclusively for charity can't be made to forfeit their assets if one of their agents is responsible for an injury.

But judges or juries have to weigh eight factors, including whether the nursing home operated at a profit, provided free care and received charitable donations.

Davis Life Center officials testified that the facility had operated at a loss since 2001.

But Gruber's opinion questioned the nursing home's financial statements and inquired "how Davis has had the ability to remain operational after over a decade of financial losses."

Davis Life Center officials had said in affidavits that the nursing home initially charged all clients for care, but forgave debts of those who couldn't or didn't pay.

But the appeals court found that the bad debt forgiven amounted to less than 1 percent of revenue in 2011, 5.76 percent in 2012 and 2.2 percent in 2013.

"Reasonable minds" could view "this minute amount of debt forgiveness as creating a facade of charity instead of a true charity," Gruber wrote.

The appeals court ruling also said the nursing home had received only $100 in donations each year in 2012 and 2013.

"These paltry donations could not have had any meaningful effect on Davis's finances."

Appeals Court Judges Kenneth Hixson and Mike Kinard agreed with the ruling.

Metro on 09/17/2015

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