Foothill Ranch-based nursing home operator Skilled Healthcare Group Inc. has entered into settlement talks in a lawsuit that brought a potentially crippling jury award earlier this month.
Skilled said Thursday it reached an agreement with litigants to put court proceedings on hold and pursue settlement talks through Aug. 9.
A Northern California jury on July 7 decided the company should pay $671 million in damages for providing inadequate staffing at California facilities.
The jury award caused a one-day 75% drop in Skilled’s stock and raised the possibility of bankruptcy for the company.
Skilled, which has a market value of about $100 million, saw a big jump in its shares on word of the settlement talks.
The talks could result in a settlement of the suit or a rehearing of the case in front of a judge, rather than a jury.
An appeal of the jury award is unlikely. To appeal, Skilled would have to post a bond for 150% of the final judgment amount, which analysts peg at about $1 billion.
Skilled operates 100 nursing homes in California and other states and has yearly sales of about $760 million.
The company has about $2 million in cash on hand and access to about $100 million in financing.
Skilled said its insurance won’t cover the potential court damages since its professional liability coverage is exhausted for the policy year covering the case.
The litigation covers 2003 to 2009 and contends Skilled didn’t provide adequate staffing for patients at several California facilities.
State law requires nursing homes maintain 3.2 nursing hours per-patient, per-day.
Skilled Healthcare owns 22 facilities in the state.
