August 5, 2019

The Supreme Court of the State of Alaska (“Alaska Supreme Court”), in its opinion issued on July 12, 2019, affirmed a judge’s verdict for the plaintiff in the amount of $4,315,007 in damages for his breach of contract claim, which was trebled under Alaska’s Unfair Trade Practices and Consumer Protection Act (UTPA) to total $12,945,021, as well as $400,000 in damages for intentional infliction of emotional distress and $500,000 in punitive damages. However, the Alaska Supreme Court reversed the trial judge’s award of $5,676,668.17 in attorney’s fees, and remanded that issue to the trial court to calculate its award of attorney’s fees consistent with its opinion.

The plaintiff was 21-years-old in May 2009 when he was permanently injured in a bicycle accident that left him a C-1 quadriplegic, paralyzed from the neck down, and dependent on a ventilator to breathe. Because long-term care facilities in Anchorage, Alaska were not prepared to serve a ventilator-dependent individual such as the plaintiff, he sought in-home health care from the defendant home health care company, to provide his nursing care.

In late 2011, issues arose between the plaintiff and the defendant over the defendant’s management of his care. One of the issues involved how the nurses were supplying the plaintiff with insulin as well as other scheduling and dosage discrepancies.

The plaintiff’s contract with the defendant included a form that provided that he had the following right: “Not to be transferred or discharged unless: a. The individual’s medical needs require transfer; b. The individual’s health and safety or that of another person requires transfer or discharge; or c. The individual fails to pay for services, except as such transfer or discharge is prohibited by law. d. The individual does not meet any criteria for continued service set forth by [the defendant], federal, state, or local statute or regulation.”

The plaintiff’s care plan was subject to routine recertification every 60 days. The defendant’s Alaska Director of Clinical Services visited the plaintiff’s house to complete the review necessary for this recertification and three days later, she submitted the recertification paperwork, noting that “discharge is not warranted.” That same day, the defendant’s Alaska office managers requested that the defendant’s legal department provide her a draft discharge letter for the plaintiff, which letter stated that the discharge had been discussed with the plaintiff’s physician and care coordinator and that they agreed with the discharge decision. In fact, neither approved the discharge. The draft discharge letter also included a space for names of other entities that could provide the care needed by the patient, although the defendant knew that there are no providers in the plaintiff’s area that provide the service to the plaintiff. The discharge letter delivered to the plaintiff filled in the blank with four agency names.

The plaintiff sued the defendant in early 2014, alleging breach of contract and fraudulent misrepresentation, resulting in a bench trial (no jury) and the verdict mentioned above. The defendant appealed.

Alaska Supreme Court Opinion

The defendant argued on appeal that the UTPA does not apply to its conduct because the plaintiff’s UTPA claim was exempt from the Act’s coverage because it involved conduct already prohibited by statute or regulation. The Alaska Supreme Court stated that to qualify for the statutory exemption, the defendant must show both that its conduct is subject to ongoing, careful regulation and that such regulation prohibits the conduct the superior court identified as violating the UTPA — the defendant’s failure to follow its own policies and procedures and its misrepresentations to the plaintiff about his discharge. The Alaska Supreme Court held that the defendant has not established the exemption provision’s second prong, that the regulations governing home health agencies prohibit the specific conduct at issue. Although the regulations require home health agencies to adopt a set of policies and procedures, they do not explicitly require home health agencies to comply with these policies and procedures, and the defendant failed to provide evidence at trial or in briefing to show that the Department of Health and Social Services interprets or enforces the regulations as if they impose such an obligation. “As a result [the defendant] has not established that the regulations governing home health agencies prohibit noncompliance with a home health agency’s own procedures.”

With regard to the defendant’s argument that there is a general healthcare exemption from the UTPA (i.e., that health professionals should be subject to the UTPA only for conduct related to the business or “entrepreneurial” aspects of the health profession — not conduct involving the provision of medical care), the Alaska Supreme Court stated, “we are not convinced that we should adopt this proposed common law exclusion on the facts of this case.”

With regard to the trial judge’s award of attorney’s fees under the UTPA, the Alaska Supreme Court stated, “the modified lodestar method does not invite a situation in which fees could vary widely depending on the plaintiff’s recovery. We are convinced that Alaska courts should employ it when determining “full reasonable attorney fees” under the UTPA’s fee-shifting provision.” The Alaska Supreme Court held: “the superior court erred in its assessment of full reasonable attorney’s fees. It did not complete the first step in a modified lodestar determination: calculating a baseline award based on an approximation of hours reasonably worked multiplied by a reasonable hourly rate.” The Alaska Supreme Court therefore held, “We reverse the superior court’s attorney’s fee award and remand for an award based on a reasonable rate for the services, as calculated using the modified lodestar method outlined above.”

Adkins v. Cullens, Supreme Court No. S-16930.

If you or a loved one may have suffered serious harm as a result of home health negligence in Alaska or in another U.S. state, you should promptly find an Alaska medical malpractice attorney, or a medical malpractice attorney in your state, who may investigate your home health malpractice claim for you and represent you or your loved one in a home health malpractice case, if appropriate.

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