House v. Hillhaven, Inc.

• Decision Date: 21 January 1992
• Docket Number: No. 903SC1286,903SC1286
• Citation: 105 N.C.App. 191,412 S.E.2d 893
• Parties: Frank HOUSE, Guardian ad Litem for Addie Moye, and Carolyn F. James, Guardian ad Litem for Agnes Fullilove, et al. v. HILLHAVEN, INC.; David T. Flaherty, in his official capacity as Secretary of the North Carolina Department of Human Resources; and I.O. Wilkerson, Jr., in his official capacity as Director of the Division of Facility Services of the North Carolina Department of Human Resources.
• Court: North Carolina Court of Appeals

Page 893

412 S.E.2d 893

105 N.C.App. 191

Frank HOUSE, Guardian ad Litem for Addie Moye, and Carolyn

F. James, Guardian ad Litem for Agnes Fullilove, et al. v. HILLHAVEN, INC.; David T. Flaherty, in his official

capacity as Secretary of the North Carolina Department of

Human Resources; and I.O. Wilkerson, Jr., in his official

capacity as Director of the Division of Facility Services of

the North Carolina Department of Human Resources.

No. 903SC1286.

Court of Appeals of North Carolina.

Jan. 21, 1992.

Attorney General Lacy H. Thornburg by Meg Scott Phipps, Asst. Atty. Gen., Raleigh, for State.

Carolina Legal Assistance by Christine O'Connor Heinberg, Raleigh, and Pamlico Sound Legal Services by Jack Hansel, Greenville, for plaintiffs-appellants.

JOHNSON, Judge.

Plaintiffs alleged in their amended complaint that defendants repeatedly failed to enforce the provisions of the Nursing Home Patients Bill of Rights, G.S. § 131E-117 (1988 and Cumm.Supp.1990), and state licensing rules and regulations, N.C.Admin.Code tit. 10 (May 1991), which are intended to insure quality of care and protect the dignity of patients. Defendants, the Department of Human Resources (DHR), the Division of Facility Services (DFS), David T. Flaherty, and I.O. Wilkerson, Jr. (hereafter also referred to as state defendants), are responsible for enforcement of the plaintiffs' rights under the previously mentioned statutes. This appeal, however, deals only with the issue of awarding attorney's fees. The relevant facts pertaining to this issue are set out below.

Plaintiffs' prayer for relief requested that the court (1) certify the action as a class action; (2) enter a declaratory judgment stating that defendants Flaherty and Wilkerson violated their duties under former G.S. § 131E-126 (now G.S. § 131E-129) by failing to impose administrative penalties against the nursing home when violations of G.S. § 131E-117, creating a substantial risk of death or harm, were found; (3) enter a declaratory judgment stating that the failure of the defendant-owner to provide, and the failure of defendants Flaherty and Wilkerson to require it to provide care, conditions and treatment in accordance with federal Medicaid and Medicare standards violate the rights of plaintiffs who are Medicare or Medicaid recipients under 42 C.F.R. §§ 405.1101-1137, 442.200-202, 442.250-254, and 442.300-346; (4) enter preliminary and permanent injunctions requiring the defendant-owner to comply with all state and federally mandated statutes for the treatment, conditions and care of the nursing home residents and ordering it to comply with the conditions of its contractual arrangements with the Department of Human Resources relating to patient care; (5) enter preliminary and permanent injunctions requiring defendants to properly monitor conditions, treatment and care at the nursing home and to enforce all state and federally mandated standards governing the care, conditions and treatment of residents of the nursing home; (6) enter an order appointing a receiver to administer and operate the nursing home until further order of the court; (7) enter an order requiring defendant-owner of the nursing home to submit to the court for its approval and to counsel for the plaintiffs, a plan for the fulfillment of their responsibilities under the injunction requested in paragraph four above; (8) enter an order requiring defendants Flaherty and Wilkerson to submit to the court for its approval and to counsel for plaintiffs, a plan for the fulfillment of their responsibilities under the injunction requested in paragraph five above; (9) enter an order granting plaintiffs their costs; and (10) grant plaintiffs all other just and equitable relief. No preliminary or permanent injunctions were granted, and no declaratory judgments or any other orders prayed for were entered.

On 3 June 1987, plaintiffs filed a motion for partial summary judgment against state defendants and renewed the motion based on the amended complaint in 1988. Because the judge found that genuine issues of material fact existed as to whether state defendants had adequately discharged their duties, the motion was denied.

Plaintiffs also filed a motion for a preliminary injunction against defendant Hillhaven in June, 1987, requiring it to suspend admissions to the facility, provide care to patients at the facility in accordance with requirements of the law, and provide its staff with independent training in order to provide better care. This request was denied on 9 July 1987, based upon a finding that state defendants had inspected the facility on 11 June 1987 and had found the facility in substantial compliance with licensing regulations. The court did find, however, that independent training was needed. Hillhaven agreed to arrange such training, and no injunction was granted.

State defendants filed a motion to dismiss for mootness on 3 August 1987, based on the implementation of the new Administrative Penalty Act, G.S. § 131E-129, effective 1 October 1987. The court granted the motion to dismiss as to the plaintiffs' prayer for relief in paragraph two of the complaint where plaintiffs asked for a declaratory judgment regarding state defendants' failure to impose administrative penalties in situations which endangered the health, safety or welfare of patients.

On 19 August 1988, state defendants filed a motion in limine to limit the evidence presented at trial to events occurring on or after 1 October 1987 and to the new statute which became effective on that date. The court granted the motion, stating that no evidence regarding defendants' failure to impose administrative penalties prior to 1 October 1987 could be admitted. The court reserved ruling on whether plaintiffs could introduce evidence as to events occurring prior to 1 October 1987 for other purposes.

Affidavits presented by state defendants show that they had been working on guidelines for the implementation of the statute since its enactment in July, 1987. An affidavit from Darius Wells, dated 7 April 1988, stated that on 5 February 1988, Wells sent to his staff a memorandum providing guidelines for implementation of the new law. In the memorandum, Wells stated that with experience, the penalty amounts will be more refined and specific.

Settlement negotiations were encouraged by the presiding judge, and a settlement conference was held on 18 March 1988 in Greenville, North Carolina. Following the conference, counsel for state defendants wrote plaintiffs' counsel, stating that settlement negotiations were possible. Defendants' counsel then submitted the guidelines, which Wells had been preparing for his staff, to plaintiffs' counsel.

On 13 October 1988, the parties entered an initial settlement agreement. On 16 March 1989, the parties entered a final settlement agreement as to all claims. The State did not admit or concede any of plaintiffs' allegations. On 1 November 1989, plaintiffs filed a motion for attorney's fees and costs. The trial judge denied the motion on the basis that plaintiffs were not the prevailing party and had not met their burden of proof.

Plaintiffs contend that they are entitled to an award of attorney's fees and costs pursuant to G.S. § 6-19.1. We disagree based upon the premise that plaintiffs are not the prevailing party.

North Carolina General Statute § 6-19.1 (1988) provides:

In any civil action, other than an adjudication for the purpose of establishing or fixing a rate, or a disciplinary action brought by a licensing board, brought by the State or brought by a party who is contesting State action pursuant to G.S. § 150A-43 or any other appropriate provisions of law, unless the prevailing party is the State, the court...