Watkins v. Arkansas Elder Outreach of Little Rock, Inc.

420 S.W.3d 477, 2012 Ark. App. 301, 2012 Ark. App. LEXIS 430
CourtCourt of Appeals of Arkansas
DecidedMay 2, 2012
DocketNo. CA 11-767
StatusPublished
Cited by28 cases

This text of 420 S.W.3d 477 (Watkins v. Arkansas Elder Outreach of Little Rock, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals of Arkansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Watkins v. Arkansas Elder Outreach of Little Rock, Inc., 420 S.W.3d 477, 2012 Ark. App. 301, 2012 Ark. App. LEXIS 430 (Ark. Ct. App. 2012).

Opinion

LARRY D. VAUGHT, Chief Judge.

11 This case involves a nursing home’s defense of charitable immunity in a negligence action brought against it. Donna Watkins, Special Administrator of the Estate of Frances Watkins, and on behalf of the wrongful-death beneficiaries, appeals from summary judgments awarded to ap-pellees, Arkansas Elder Outreach of Little Rock, Inc. (AEO), d/b/a Willowbend at Marion, a nursing home; David Threlkeld, administrator of Willowbend; Healthcare Financial Advisors, LLC (HC Financial); and Douglas Walsh, a director of AEO and an employee of HC Financial. Appellant sued appellees, along with Healthcare Staffing Associates, Inc. (HC Staffing, with which appellant has settled), for negligence that allegedly caused the injuries that Frances Watkins suffered while she was a resident at Willowbend. The circuit court granted summary judgment to AEO on the basis of charitable immunity. It awarded summary judgments to HC Financial, Threlkeld, and Walsh on other grounds. We |2affirm the summary judgments in favor of HC Financial, Threlkeld, and Walsh, and reverse the summary judgment awarded to AEO.

AEO holds the license and operates Wil-lowbend, along with four other nursing homes in Arkansas. There is no dispute that AEO’s articles of incorporation provide that it is a not-for-profit corporation and that it is a tax-exempt section 501(c)(3) organization according to the Internal Revenue Service. Appellant offered evidence that a group of Louisiana investors, led by David McCollister, which had owned the other four nursing homes in Arkansas, created AEO in 2002 as a purportedly charitable organization in order to stay in business without having to purchase increasingly expensive liability insurance. HC Financial provided financial, accounting, and information-technology services to the four nursing homes; it also provided such services to AEO after it was created. In 2005, some of the Louisiana investors purchased a nursing home in Marion, changed its name to Willowbend, and leased the facility to AEO. HC Staffing ostensibly employed the personnel who directly cared for patients at the nursing homes. However, Chris McMorris, the president of HC Staffing (and a part owner in both HC Financial and HC Staffing), admitted that HC Staffing did not actually hire or fire its employees; in fact, AEO made those decisions.

Appellant sued AEO and Walsh for negligence in September 2008. In amended complaints, she added Threlkeld, HC Financial, and HC Staffing as defendants. Appellant alleged that they had breached their duty of care to Ms. Watkins in a number of ways, including failing to comply with the rules and regulations promulgated by the Arkansas Office of Long Term Care, the standards imposed by the United States Department of Health and | ¡¡Human Services, and Arkansas’s Long Term Care Residents’ Rights Act. Among other affirmative defenses, AEO invoked the charitable-immunity doctrine. In October 2008, appellant filed a motion for ex parte communication with current and former employees of the corporate defendants, to which AEO objected. The circuit court granted this motion as it related to current employees and set conditions on any ex parte communication with former employees.

AEO moved for summary judgment on the basis of charitable immunity and filed copies of its articles of incorporation and bylaws; the IRS’s section 501(c)(3) determination; and an affidavit by Walsh, who stated,

[AEO] accepts patients that cannot pay, for whom they then attempt to obtain Medicaid payments. [AEO] retains care of such residents even if Medicaid benefits are not obtained. [AEO] does not earn a “profit” and any “surplus” is used to operate and improve nursing and facility services and to offset the cost of those residents who are unable to pay or fully pay. [AE O’s] monetary goal is to break even while providing its nursing care services.

In response, appellant asserted that the doctrine of charitable immunity should be abolished; that public policy should not allow an entity that chose to operate in such a poor manner and without insurance to escape liability under the guise of charitable immunity; and that genuine issues of material fact existed regarding the application of the charitable-immunity doctrine to this case. Appellant filed a number of exhibits, including the deposition of Walsh, the nursing homes’ balance sheets, Willow-bend’s departmental-income statements, and records from the Office of Long Term Care.

On March 5, 2009, the circuit court granted summary judgment to AEO:

|4However, in the present case Arkansas Elder Outreach of Little Rock, Inc. has satisfied all but one of these factors [that courts consider to determine charitable-immunity status] and that is this Defendant is not dependent on donations and contributions for its existence. Arkansas Elder Outreach of Little Rock, Inc.’s earnings are used to pay reasonable compensation for services rendered to the entity and to make payments in furtherance of its charitable purposes. Any “profit” or surplus is used for charitable purposes such as improving the facilities and services and to maintain the ability to provide services to those unable to pay. As in the George [v. Jefferson Hospital Association, 387 Ark. 206, 987 S.W.2d 710 (1999)] case, the lack of reliance on contributions and donations does not negate the Defendant’s entitlement to charitable immunity.
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Plaintiff encourages the Court to overrule the charitable immunity doctrine. The applicable law in Arkansas is that charitable entities are immune not only from executions of judgments but from being sued. Sowders v. St. Joseph’s Mercy Health Center, 368 Ark. 466, 247 S.W.3d 514 (2007). It is for the legislature and not the courts to determine whether the doctrine of charitable immunity should be abolished in Arkansas. This long standing precedent must be followed. The Court is without authority and is obliged to follow the decisions of the Arkansas Supreme Court. Breckenridge v. Ashley, 55 Ark.App. 242, 934 S.W.2d 536 (1996).

Walsh also moved for summary judgment, arguing that he could only be liable for his own actions and not those of the corporation; that appellant provided no evidence that he failed to fulfill his obligations; and that, because he was not a licensee, he could not be liable under the residents’ rights statute, citing his deposition and his supplemental affidavit:

3. In my position as a director of Arkansas Elder Outreach, I perform oversight and administrative functions for all five of the nursing facilities run by Arkansas Elder Outreach, including Willowbend. In such role, I have not in the past, nor do I presently, take any part in the day-to-day operations of any facility, nor do I participate in any way with the decisions relating to care and/or treatment of any individual residents of any of the facilities. Other than facility administrators and the director of nursing, I take no role in the staffing of any of the facilities, nor do I participate in the training or supervision of facility staff.
4.Concerning a former resident of Willowbend, Frances Watkins, I was never personally involved in any way regarding care or treatment of Ms.

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Bluebook (online)
420 S.W.3d 477, 2012 Ark. App. 301, 2012 Ark. App. LEXIS 430, Counsel Stack Legal Research, https://law.counselstack.com/opinion/watkins-v-arkansas-elder-outreach-of-little-rock-inc-arkctapp-2012.