A. Corporate Neglect
In addition to traditional exposure for the acts of the nursing home employees and agents under respondeat superior, there is also a potential direct liability claim if the governing body which owns/manages the facilityfails to operate nursing home in a manner to allocate its resources effectively and efficiently in order to maintain the “highest practicable physical, mental, and psychosocial well-being,” as stated in 42 CFR 483.75; Minn. R. 0405, Subp. 3; Minn. R. 4658.0050, Subp. 3(D); Minn. R. 4658.0520. The governing body is legally responsible for establishing and implementing policies regarding the management and operation of the facility and for appointing the administrator who is responsible for the management of the facility.
The plaintiff in Canavan v. National Healthcare Corp.,[i] also argued two related, separate theories: 1)direct liability of the governing body of the facility for ignoring under- staffing where plaintiff’s harm was direct result of under-staffing; and 2)direct liability of person or entity responsible for approving the budget for the nursing home:
The Estate argued that the concept of piercing the corporate veil does not apply in the case of a tort, and that it presented sufficient evidence of Friedbauer's negligence, by act or omission, for the jury to reasonably conclude that Friedbauer caused harm to Canavan. It argues that Friedbauer had the responsibility of approving the budget for the nursing home. He also functioned as the sole member of the "governing body" of the nursing home, and pursuant to federal regulation, 42 C.F.R. '483.75(d) (2002), the governing body is legally responsible for establishing and implementing policies regarding the management and operation of the facility and for appointing the administrator who is responsible for the management of the facility. Friedbauer was thus required by federal mandate to create, approve, and implement the facility's policies and procedures. Because he ignored complaints of inadequate staffing while cutting the operating expenses, and because the problems Canavan suffered, pressure sores, infections, poor hygiene, malnutrition and dehydration, were the direct result of understaffing, the Estate argues that a reasonable jury could have found that Friedbauer's elevation of profit over patient care was negligent. The court agreed.[ii]