The Melito & Adolfsen Law Firm

In People v Highgate LTC Managemnt LLC, _____AD 3d_______(3rd Dep't., October 22, 2009), the Court held that  a Limited Liability Company ("LLC") can be criminally liable and lose its license -- for simply being aware of chronic overstaffing -- after its employees were found guilty of falsifying records as to a patient's care.     

This is truly a "cautionary tale" about a Nursing  Home that was held criminally liable for the acts of an employees. The  legal issue is whether that an LLC that owns the  Nursing Home can be criminally liable for the acts of employees. The law  is already established that a corporation can be held criminally liable. But there is more to this case than that....     

An equally important issue not discussed by the Court is that the  Nursing Home itself (or any business - see below) can be held  criminally liable if its employees falsify records. What was the Nursing  Home's crime? The Court did not say that the Nursing Home knew the  employees were falsifying records.  According to the decision, the  Nursing Home "was aware of chronic understaffing resulting in deficiencies in care." This type of knowledge does not seem at all  equivalent to the criminal intent exhibited by the employees who, the  Nursing Home conceded, were acting within the scope of their employment.  Nevertheless, the Nursing Home was criminally convicted, fined $15,000,  and its operations suspended for a year because it knew of "chronic  understaffing."    

This decision should be troubling for any Nursing Home because the mere  knowledge of understaffing can result in criminal  charges if its  employees falsify records as to the care of residents. Unless the decision is reversed by New York's highest Court, which seems unlikely  since an LLC should be treated like a corporation in these  circumstances, we can anticipate more criminal charges against Nursing Homes.     

One more point. This decision is about whether an LLC, like a  corporation, can be held criminally liable when its employees falsify  records and all it was aware of was chromic understaffing. It is not  limited to Nursing Homes.  Any LLC, any corporation, any business for  that matter, presumably, can be criminally liable in these  circumstances. Hospitals are likely candidates and have already been the  targets of civil complaints about understaffing (Remember the case  involving Sidney Zion's daughter and New York Hospital where the interns worked 36 hours or more each shift?). But the same can be said of any business where chronic understaffing, perhaps more common in this  economic climate, allegedly results in employees falsifying records that  relate to care or safety.    

This is why this decision is a "cautionary tale."