Risky Business – Skilled Nursing Facilities Under Attack

Have you ever read a brochure for a resort, college, or apartment complex and expected everything it said to be completely and totally accurate without any caveats?  In the Commonwealth of Pennsylvania, a chain skilled nursing facility is under attack for representations it made in its marketing materials.

In July of 2015, the Commonwealth of Pennsylvania, by its Office of Attorney General (“OAG”), filed a Petition for Injunctive Relief against Golden Gate National Senior Care, LLC’s Pennsylvania facilities (“Golden Gate”).  The OAG asserted a claim under the Pennsylvania Unfair Trade Practices and Consumer Protection Law (“UTPCPL”), 73 Pa C.S.A. § 201-1, et seq., as well as claims for breach of contract and unjust enrichment.  More specifically, the OAG claimed that Golden Gate engaged in unfair and deceptive acts and practices towards Pennsylvania consumers and the Commonwealth of Pennsylvania by: (1) making chain-wide misrepresentations in marketing materials; (2) making facility-level misrepresentations in its marketing materials, resident assessments/care plans and billing statements, presenting misleading appearances during state inspections, and creating false records; (3) making misleading statements about the level of care that would be provided to residents; and (4) failing to provide basic care.

In response, Golden Gate filed preliminary objections (Pennsylvania’s version of a motion for judgment based on the pleadings), contending that the UTPCPL was inapplicable, and the Commonwealth Court of Pennsylvania (Pennsylvania’s appellate court) agreed.  It concluded that if “the Marketing Statements were offered and understood as an expression of the seller’s opinion only, which is to be discounted as such by the buyer, and on which no reasonable person would rely, they are puffery, and may not form the basis for a UTPCPL action.”

The court reasoned that “‘[m]aterial representations must be contrasted with statements of subjective analysis or extrapolations, such as opinions, motives, and intentions, or general statements of optimism, which constitute no more than puffery . . .’”  Indeed, puffery is not actionable unlike false advertising.  Two of the statements that the OAG took issue with were:

  1. “We have licensed nurses and nursing assistants available to provide nursing care and help with [activities of daily living (ADLs)].”
  2. “Snacks and beverages of various types and consistencies are available at any time from your nurse or nursing assistant.”

The court ruled that the first statement contains a “subjective analysis” and does not contain a false representation of specific characteristics of the services offered.  For example, the OAG did not contend that Golden Gate does not have licensed nurses and nursing assistants to help residents with ADLs, instead it argues that Golden Gate does not have sufficient staff to render care.  Because this statement made no representation that nurses will be immediately available to provide care or that it would be provided in a specific time frame, the court held it to be mere puffery.

Regarding the second statement, the court found it to be “broad, vague and commendatory language.”  Indeed, the OAG did not assert that snacks and beverages were not always available from staff, but rather, that Golden Gate had insufficient staffing to timely respond to requests for snacks and beverages.  Fortunately for Golden Gate, the court found this statement vague enough to qualify as puffery.

The OAG appealed the decision, and is arguing among other things, that the appellate court interpreted the scope of the UTPCPL too narrowly.  It maintains the UTPCPL covers not only advertising but representations made about goods and services that create a likelihood of confusion or misunderstanding.

The case is currently pending before the Pennsylvania Supreme Court.  Regardless of the outcome, skilled nursing facilities and the like should be put on notice about the representations made in their marketing materials.  Pennsylvania has the fifth highest percentage of elderly residents in the country, and the Pennsylvania Supreme Court’s future holding can have national implications, as it would provide a roadmap for other States to prosecute under their respective UTPCPL.  No matter in what state the facility is situated, the statements in marketing materials should always be accurate.  In other words, it is not best practice to state that you provide a service that is unavailable or to promise that which you know you cannot consistently deliver.

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