$1.1 Billion Verdict Over a Nursing Home Resident's 17 Falls, Awarded Against Defaulted, Insolvent Companies That Never Paid It

Say the number first, then say what it was worth. In July 2013 a Polk County jury returned a verdict of $1.1 billion, $110 million in compensatory damages and $1 billion in punitive damages, over the death of Arlene Townsend. The companies on the losing end, Trans Healthcare Inc. and Trans Health Management Inc., had defaulted two years earlier, had stopped defending the case, and were insolvent, with the parent already under a court-appointed receiver. Nobody involved expected a check for a billion dollars, and none ever came. What the verdict did was put a jury's number on what happened to one woman inside one Florida nursing home, and hand her family a judgment they could carry into a years-long fight over where the chain's money had actually gone.

Arlene Townsend, from Lake Wales, lived at the Auburndale Oaks Healthcare Center from 2004 until her death in 2007 at age 69. According to the lawsuit her son Gary filed in 2009, she fell 17 times at the facility because supervision was inadequate, and after the last fall, which fractured her hip, she was left in bed for days before anyone took her to a hospital. The suit, brought by Bennie Lazzara Jr. and Joseph Ficarrotta of Tampa's Wilkes & McHugh, the firm now known as Wilkes & Associates, alleged the chain's owners had pulled money out of the operating companies while care at the bedside collapsed.

The defendants litigated for a while, then stopped. In 2011 Circuit Judge J. Dale Durrance entered defaults against Trans Healthcare Inc. and Trans Health Management, and later refused to set them aside. The companies maintained they had only operated the facility through September 2004, but by then the corporate picture had dissolved into something stranger: Trans Health Management had been emptied out in a 2006 transaction, and a Maryland court had placed Trans Healthcare Inc. and its related entities into receivership in 2009. So when the case finally reached a jury in July 2013, it was a damages trial against absent, judgment-proof defendants, one of a string of verdicts a federal appeals court would later describe, bluntly, as empty-chair verdicts.

The jury awarded $110 million in compensatory damages and $1 billion in punitive damages. Lazzara was candid about what came next, telling reporters the firm would now work to collect however it could, and calling the verdict one step in the fight, but a significant one.

That fight is the real second act. The Townsend estate joined five other estates of deceased Trans Healthcare residents, all represented by the same firm, as the chief creditors in an involuntary bankruptcy in Tampa targeting the successor entity Fundamental Long Term Care Inc. The estates spent years litigating the claim that the chain's liabilities had been shuffled into an empty shell while the valuable assets were moved beyond reach. After a twelve-day bench trial, the estates settled with the remaining defendants, the private equity players, executives, and related entities behind the 2006 transaction, for a combined $23.7 million, per the Eleventh Circuit's later opinion. Split among six estates, that is a tiny fraction of the combined verdicts, which ran well past a billion dollars. The $1.1 billion figure was never real money. It was a public verdict about how Arlene Townsend spent her last three years, rendered because the companies responsible chose not to show up and answer for it.