2017-00220058-CU-NP

Gloria Single vs. Congregational Church Retirement Community

Nature of Proceeding: Hearing on Demurrer

Filed By: Westhoff, Michele

** If any party requests oral argument, then at the time the request is made, the

requesting party shall inform the court and opposing counsel of the specific issue(s) on which oral argument is sought. **

The demurrer of Defendants Cathedral Pioneer Church Homes II; Congregational Church Retirement Community; Bixby Knolls Towers, Inc.; Gold Country Health Center; Mayflower Gardens Health Facilities, Inc.; Stockton Congregational Homes, Inc.; Foundation Property Management, Inc.; RFH Management, Inc. and RHF Foundation (collectively “Defendants”) is SUSTAINED in part and OVERRULED in part.

Overview

The plaintiffs in this case are Gloria Single (Single) and California Long Term Care Ombudsman Association (CLTCOA) (collectively “Plaintiffs”). CLTCOA consists of local long-term care ombudsman programs, staff, volunteers and supporters.

CLTCOA advocates for long-term care recipients such as Single. Single is in her 80s.

Plaintiffs allege that Defendants engage in the “illegal practice of dumping vulnerable nursing facility residents into hospitals.” (2nd Am. Compl. (SAC), ¶ 1.) According to Plaintiffs, Defendants “dump” their neediest residents and, to maximize profits, refuse to readmit them. Such a practice allegedly violates state and federal law, which require “facilities to hold open beds of residents who have been temporarily hospitalized.” (Id., ¶ 3.) Plaintiffs allege illegal dumping occurs routinely and should be enjoined. (Id., ¶ 8.)

With respect to Single, Plaintiffs allege the California Department of Health Care Services (DHCS) ordered Pioneer House or readmit her after she was dumped, but she was not readmitted. (SAC, ¶¶ 6, 7.) Although Single allegedly was a resident of Pioneer House, Plaintiffs characterize all the Defendants as “part of the same commonly owned and operated chain of assisted living and skilled nursing facilities that is held in an impenetrable labyrinth of legal entities designed to hide money and evade legal and tax obligations.” (Id., ¶ 14.) Single’s husband allegedly resides at Pioneer House, but Single is unable to see him given Defendants’ refusal to readmit her. (Id., ¶ 7.) Single alleges that her lack of human interaction after being dumped in a hospital caused her to stop talking. (Id., ¶ 57.)

The SAC contains causes of action for Violation of California Health & Safety Code § 1430(b), Violation of Business & Professions Code §§ 17200 et seq., and Declaratory ReIief. Defendants demur solely on grounds CLTCOA is not a proper party to the SAC and lacks standing. CLTCOA opposes.

Discussion

CLTCOA’s standing allegations appear primarily in paragraphs 11 through 13:

11. Plaintiff…[CLTCOA] is a membership organization made up of local Long-Term Care Ombudsman Programs, their staff, certified volunteers and program supporters. … CLTCOA’s members are established pursuant to 42 U.S.C. § 3058g, which requires States to create an Ombudsman program to, inter alia, “identify, investigate, and resolve complaints” by residents which “relate to action, inaction, or decisions, that may adversely affect the health, safety, welfare, or rights of the

residents,” to “provide services to assist the residents in protecting the health, safety, welfare, and rights of the residents” and to “analyze, comment on, and monitor the development and implementation of Federal, State, and local laws, regulations, and other governmental policies and actions, that pertain to the health, safety, welfare, and rights of the residents, with respect to the adequacy of long-term care facilities and services in the State.” As explained in its mission statement…

CLTCOA’s mission is “to provide a unified voice in advocacy and assistance to Local Long-Term Care Ombudsman Programs in California to enable the local programs to provide Ombudsman services to the residents of long term care facilities.” One of the purposes of the Association is to “act as an effective statewide professional association” for the Local Ombudsman Programs. (Emphasis added.)

12. CLTCOA has extremely limited resources to devote to the wide range of services that it provides. In 2016, local Long-Term Care Ombudsman received, investigated and resolved 41,788 complaints made by or on behalf of the nearly 300,000 residents. These complaints concerned the spectrum of issues that nursing facility residents face. In 2016, California Long-Term Care Ombudsman provided over 14,100 consultations to facility staff. The top three topics were: (1) Care Issues,

(2) Admission Policies and Practices, and (3) Long-Term Care Structure/Environment. In 2016, California Long-Term Care Ombudsman provided over 52,400 consultations to individuals. … CLTCOA and its members also must address inadequate staffing in nursing facilities that can lead to illegal discharges when a resident demonstrates behavior that the facility lacks sufficient trained staff to handle (for example, when a facility employs an Insufficient number of registered nurses). CLTCOA expends its resources providing support and education to Local Ombudsman programs for all these services. CLTCOA also sponsors and/or supports legislation that impacts quality of life and quality of care for longterm care residents. It often comments on, supports or opposes legislation that affects the health, welfare and safety of facility residents. Further, CLTCOA also expends resources lobbying for funding for local Ombudsman Programs about substantive and procedural due process rights in the event of a discharge or eviction as this issue is a top concern to such programs in California and throughout the country. As a result of Defendants dumping Ms. Single, CLTCOA has been forced to divert resources from its numerous other organizational missions discussed above. (Emphasis added.)

13. Further, CLTCOA’s member organizations expend precious time actively helping residents, including Ms. Single, obtain administrative orders securing readmission to their homes after temporary hospitalization. The individual Ombudsman programs do not have the resources to act as a Plaintiff in a lawsuit like this one because their budgets are stretched to capacity. The Ombudsman Programs collectively fund CLTCOA to address the growing workload caused by problems, like resident dumping, that negatively affect their ability to do their work. The Ombudsman

programs are directly harmed when nursing facilities flagrantly disregard federal and state laws designed to protect vulnerable residents. CLTCOA is acting as a Plaintiff in this matter in furtherance of its mission to provide a unified voice to California’s Long-Term Care Ombudsmen programs so that they can fulfill their statutory mission to provide Ombudsman services. (Emphasis added.)

Defendants’ argue none of these allegations can be construed to establish CLTCOA’s standing in this case. Generally speaking, plaintiffs “’have standing to sue if they or someone they represent have either suffered or are threatened with an injury of sufficient magnitude to reasonably assure the relevant facts and issues will be adequately presented.’” (B. C. Cotton, Inc. v. Voss (App. 3 Dist. 1995) 33 Cal.App.4th 929, 948.) Standing to sue generally requires “injury, that is, an invasion of a legally protected interest.’” (Coldren v. Hart, King & Coldren, Inc. (2015) 239 Cal.App.4th 237, 245; see also Holmes v. Cal. Nat. Guard (2001) 90 Cal.App.4th 297, 315 [“To have standing, a party must be beneficially interested in the controversy; that is, he or she must have ‘some special interest to be served or some particular right to be preserved or protected over and above the interest held in common with the public at large'”].)

Associations like CLTCOA possess legal standing in certain cases. “Associational standing exists when: ‘(a) the association’s members would otherwise have standing to sue in their own right; (b) the interests the association seeks to protect are germane to the organization’s purpose; and (c) neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit.’” (Amalgamated Transit Union, Local 1756, AFL-CIO v. Superior Court [Amalgamated] (2009) 46 Cal.4th 993, 1004, brackets omitted.)

In addition, some courts have referred to “organizational standing” for purposes of Article III of the Federal Constitution: “[A]n organization may satisfy the Article III requirement of injury in fact if it can demonstrate: (1) frustration of its organizational mission; and (2) diversion of its resources to combat the particular housing discrimination in question.” (Smith v. Pac. Props. & Dev. Corp. (9th Cir. 2004) 358 F.3d 1097, 1105.) The court in Animal Legal Defense Fund v. LT Napa Partners LLC [ ALDF] (2015) 234 Cal.App.4th 1270, 1278-1282, applied something akin to organizational standing to an unfair competition claim under California B&P Code §§ 17200 et seq.

Bearing these standing principles in mind, the court turns to CLTCOA’s causes of action in the SAC.

The First Cause of Action for Violation of H&S Code § 1430(b)

The demurrer is SUSTAINED without leave to amend.

Section 1430(b) reads, in relevant part:

A current or former resident or patient of a skilled nursing facility… may bring a civil action against the licensee of a facility who violates any rights of the resident or patient as set forth in the Patients’ Bill of Rights…or any other right provided for by federal or state law or

regulation. […] The licensee shall be liable for the acts of the licensee’s employees. The licensee shall be liable for up to five hundred dollars ($500), and for costs and attorney fees, and may be enjoined from permitting the violation to continue. (Emphasis added.)

As the court has indicated in its rulings on Defendants’ prior demurrers, the text of the statute defines those with standing to sue, i.e., current or former residents or patients. Plaintiffs do not allege that CLTCOA somehow qualifies as a patient or resident, or that Single or any other patient or resident assigned a claim to it or its members. At this point, it is clear that CLTCOA cannot allege facts establishing its standing to sue on the first cause of action, and the demurrer is sustained without leave to amend.

The Second Cause of Action for Unfair Competition under B&P Code §§ 17200 et Seq.

The demurrer is SUSTAINED with leave to amend.

The opinion in ALDF, supra, contains a lengthy discussion about associations’ standing to sue in California for unfair competition. The associational plaintiff in ALDF had advocated for a law banning foie gras in the state. (234 Cal.App.4th at 1275.) After the ban came into effect, the plaintiff paid an investigator to dine at a restaurant owned by one of the ban’s opponents. (Id.) When the investigator was served foie gras, the plaintiff commenced an unfair competition lawsuit. (Id., p. 1276.) In an anti-SLAPP motion to strike the complaint, the restaurateur-defendant argued the plaintiff could not prevail at trial because it lacked standing to sue. The trial court disagreed, and the Court of Appeal affirmed.

As the Court of Appeal explained, California’s unfair competition law codified in the B&P Code has a particular standing requirement drawn partially from federal law. ( ALDF, pp. 1278-1279.) To establish standing, the plaintiff must allege loss of money or property caused by the challenged business practice. (Id., p. 1278.) “[A] plaintiff ‘required to enter into a transaction, costing money or property, that would otherwise have been unnecessary’ would have standing under the UCL. (Id., p. 1280.) On the other hand, an associational plaintiff in an unfair competition case may not predicate economic injury solely on costs incurred to pursue the litigation. (Id., p. 1281-1282.) Because the plaintiff in ALDF produced evidence of investigatory expenditures that were independent of the litigation that ensued, it demonstrated standing. In this regard, the Court of Appeal noted:

[P]laintiff has presented evidence its investigatory expenditures, as well as the resources spent in attempting to persuade the authorities, had a purpose independent of the current litigation and might have rendered such litigation unnecessary. Moreover, Mr. Wells’s declaration indicates that, in addition to general advocacy against foie gras, plaintiff specifically advocated for passage of the California ban on the sale of foie gras and has expended resources on educating the public about the ban, including immediately before the statute’s July 2012 effective date. Plaintiff, thus, has presented evidence of a genuine and long-standing interest in the effective enforcement of the statute and in exposing those who violate it. Plaintiff’s evidence provides a basis to conclude that defendants’ alleged violations of the statute tended to frustrate plaintiff’s advocacy for an effective ban on the sale of foie gras in California, and

tended to impede plaintiff’s ability to shift its focus on advocacy efforts in, for example, other states and at the federal level. [Citation.] In sum, Mr. Wells’s declaration is sufficient to make a prima facie showing of standing to sue.

(Id., pp. 1282-1283; compare Buckland v. Threshold Enterprises, Ltd. (2007) 155 Cal.App.4th 798, 815-816 [costs incurred solely to facilitate unfair competition litigation itself are insufficient to confer standing], overruled in part on another point in Kwikset Corp. v. Superior Court (2011) 51 Cal.4th 310.)

In the case at bench, Plaintiffs allege Defendants are engaged in a pattern of dumping residents such as Single. Although CLTCOA suggests in its opposition papers that it has diverted resources from its other activities to address this pattern, the allegations do not describe such a diversion. Rather, CLTCOA only alleges it has diverted resources in response to Single’s case itself: “As a result of Defendants dumping of Ms. Single, CLTCOA has been forced to divert resources from its numerous other organizational missions[.]” (SAC, ¶ 12.) By itself, this allegation does not support a reasonable inference that CLTCOA’s “response” to Single’s case involved anything more than participating in this litigation. But under ALDF, an association’s diversion of resources to unfair competition litigation does not establish the association’s standing.

Although CLTCOA has already been granted leave to amend its standing allegations, the court will allow CLTCOA one more opportunity to allege a diversion of resources, or other source of standing, under California’s unfair competition law.

In sustaining Defendants’ demurrer to the second cause of action, the court rejects CLTCOA’s alternate theory that it possesses traditional “associational standing” to prosecute the second cause of action. As noted above, this branch of standing involves three elements: (a) the association’s members would otherwise have standing to sue in their own right; (b) the interests the association seeks to protect are germane to the organization’s purpose; and (c) neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit. ( Amalgamated, supra, p. 1004.) CLTCOA’s theory of associational standing to sue for unfair competition lacks merit because the allegations do not establish any of its members’ standing to sue in their own right. Specifically, it is unclear how any of its Local Ombudsman members have suffered the economic injury necessary to state unfair competition. The SAC cites 42 U.S.C. § 3058g, but CLTCOA characterizes that section merely as requiring states to create an Ombudsman program to assist long term care residents. (SAC, ¶ 11.) To the extent a Local Ombudsman within CLTCOA’s membership expended funds assisting Single or other long term care residents, it is unclear how that assistance constitutes an injury.

Elsewhere CLTCOA cites 42 C.F.R. § 483.15(c)(3)(i) as a basis for its members’ economic injury. That subdivision provides:

Before a facility transfers or discharges a resident, the facility must-

(i)(c)(3)(i) Notify the resident and the resident’s representative

(s) of the transfer or discharge and the reasons for the move in writing and in a language and manner they understand. The facility must send a copy of the notice to a representative of the Office of the State Long-Term Care Ombudsman.

(Emphasis added.)

CLTCOA argues that, because Defendants did not issue notices properly under this subdivision, they “prevented CLTCOA’s constituents from doing their jobs.” (Opp. at 8:7-8.) Assuming the argument otherwise has merit, it does not explain how CLTCOA’s constituent members suffered loss of money or property.

Finally, in a supplemental brief, CLTCOA cites W&I Code § 9712.5(e) for the proposition that the State Ombudsman–not alleged to be a member of CLTCOA–is authorized to represent long-term care residents interests and pursue legal remedies for them. Again, however, CLTCOA fails to explain how such authority leads to a conclusion a member of CLTCOA personally suffered a loss of money or property because one or more residents were dumped at hospitals without notice.

The Third Cause of Action for Declaratory Relief

The demurrer is OVERRULED.

The SAC sets up controversies over whether Defendants may discharge patients without following statutory procedures and whether Defendants may “refuse to honor a resident’s bedhold right[.]” (SAC, ¶ 91.) Notwithstanding Defendants’ arguments to the contrary, the allegations can be construed to establish CLTCOA’s associational standing. The interests CLTCOA seeks to protect are germane to its purpose. Furthermore there does not appear to be any need for Local Ombudsmen programs to participate in the action for declaratory relief.

With respect to the third element of associational standing, i.e., that CLTCOA’s members would otherwise have standing to sue in their own right, the court is mindful that Local Long-Term Care Ombudsmen and the programs they operate are a creation of federal law in the first instance. Subdivision (a)(5) of 42 U.S.C. § 3058g empowers State Ombudsmen to designate Local Ombudsmen to perform the following functions:

(i) provide services to protect the health, safety, welfare[,] and rights of residents;

(ii) ensure that residents in the service area of the entity have regular, timely access to representatives of the program and timely responses to complaints and requests for assistance;

(iii) identify, investigate, and resolve complaints made by or on behalf of residents that relate to action, inaction, or decisions, that may adversely affect the health, safety, welfare, or rights of the residents;

(iv) represent the interests of residents before government agencies and seek administrative, legal, and other remedies to protect the health, safety, welfare, and rights of the residents;

[¶¶]

(vii) identify, investigate, and resolve complaints described in clause (iii) that are made by or on behalf of residents with limited or no decisionmaking capacity and who have no known legal representative,

and if such a resident is unable to communicate consent for an Ombudsman to work on a complaint directly involving the resident, the Ombudsman shall seek evidence to indicate what outcome the resident would have communicated (and, in the absence of evidence to the contrary, shall assume that the resident wishes to have the resident’s health, safety, welfare, and rights protected) and shall work to accomplish that outcome[…¶.]

The court is not persuaded that these responsibilities do not provide CLTCOA’s members with a legal interest sufficient to support a declaratory relief cause of action. Hence, the demurrer is overruled.

To the extent Defendants argue H&S Code § 1430(b) bars CLTCOA’s declaratory relief cause of action because it only creates a right of action for residents / patients, the court is not persuaded. Subdivision (c) provides that the remedies in § 1430 are in addition to other legal remedies.

Disposition

Defendants’ demurrer to CLTCOA’s first cause of action is sustained without leave to amend.

The demurrer the second cause of action is sustained with leave to amend.

The demurrer to the third cause action is overruled.

No later than 7/11/18, and only to the extent leave to amend is granted, Plaintiffs may file and serve a third amended complaint (TAC); response(s) due within 30 days thereafter, 35 days if the TAC is served by mail. (See CCP § 430.41.)

Although not required by any statute or rule of court, Plaintiffs are requested to attach a copy of the instant minute order to the TAC to facilitate the filing of the pleading.

If any defendant intends to demur to the TAC or move to strike, it shall determine if any other defendant who has appeared in this action also intends to demur or move to strike. If so, all such defendants shall coordinate a single hearing date for the demurrers and motions to strike. Additionally, a copy of the TAC shall be included with the moving papers.

The minute order is effective immediately. No formal order pursuant to CRC 3.1312 or further notice is required.

Item 4 2017-00220058-CU-NP

Gloria Single vs. Congregational Church Retirement Community

Nature of Proceeding: Motion to Strike

Filed By: Westhoff, Michele

The motion of Defendants Cathedral Pioneer Church Homes II; Congregational Church Retirement Community; Bixby Knolls Towers, Inc.; Gold Country Health Center; Mayflower Gardens Health Facilities, Inc.; Stockton Congregational Homes,

Inc.; Foundation Property Management, Inc.; RFH Management, Inc. and RHF Foundation (collectively “Defendants”) to strike portions of the second amended complaint (SAC) is DENIED.

The plaintiffs in this case are Gloria Single (Single) and California Long Term Care Ombudsman Association (CLTCOA) (collectively “Plaintiffs”). CLTCOA consists of local long-term care ombudsman programs, staff, volunteers and supporters.
CLTCOA advocates for long-term care recipients such as Single. Single is in her 80s.

Plaintiffs allege that Defendants engage in the “illegal practice of dumping vulnerable nursing facility residents into hospitals.” (2nd Am. Compl. (SAC), ¶ 1.) According to Plaintiffs, Defendants “dump” their neediest residents and, to maximize profits, refuse to readmit them. Such a practice allegedly violates state and federal law, which require “facilities to hold open beds of residents who have been temporarily hospitalized.” (Id., ¶ 3.) Plaintiffs allege illegal dumping occurs routinely and should be enjoined. (Id., ¶ 8.)

With respect to Single, Plaintiffs allege the California Department of Health Care Services ordered Pioneer House or readmit her after she was dumped, but she was not readmitted. (SAC, ¶¶ 6, 7.) Although Single allegedly was a resident of Pioneer House, Plaintiffs characterize all the Defendants as “part of the same commonly owned and operated chain of assisted living and skilled nursing facilities that is held in an impenetrable labyrinth of legal entities designed to hide money and evade legal and tax obligations.” (Id., ¶ 14.) Single’s husband allegedly resides at Pioneer House, but Single is unable to see him given Defendants’ refusal to readmit her. (Id., ¶ 7.) Single alleges that her lack of human interaction after being dumped in a hospital caused her to stop talking. (Id., ¶ 57.)

The SAC contains causes of action for Violation of California Health & Safety Code § 1430(b), Violation of Business & Professions Code §§ 17200 et seq., and Declaratory ReIief.

In its ruling on Defendants’ demurrer to the first amended complaint, the court granted leave to amend CLTCOA’s standing allegations. The court did not grant additional leave to amend. Defendants now move to strike portions of the SAC on grounds Plaintiffs amended their allegations beyond the scope of the leave granted. Plaintiffs oppose.

All the disputed allegations concern either Defendants’ chronic failure to issue notices prior to discharging patients, or Defendants’ purported failure to staff their facilities with sufficient personnel. Plaintiffs argue the allegations can all be construed to support CLTCOA’s standing, either by establishing direct injury to its Local Ombudsmen members or by showing that the misconduct implicates CLTCOA’s mission. (See Amalgamated Transit Union, Local 1756, AFL-CIO v. Superior Court [Amalgamated] (2009) 46 Cal.4th 993, 1004 [“Associational standing exists when: ‘(a) the association’s members would otherwise have standing to sue in their own right; (b) the interests the association seeks to protect are germane to the organization’s purpose; and

(c) neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit’”], bold added, brackets omitted; Smith v. Pac. Props. & Dev. Corp. (9th Cir. 2004) 358 F.3d 1097, 1105 [“[A]n organization may satisfy the Article III requirement of injury in fact if it can demonstrate: (1) frustration of its organizational mission; and (2) diversion of its resources to combat the

particular housing discrimination in question”].)

At this juncture, the court must construe the allegations liberally in Plaintiffs’ favor. Although the court did limit the scope of leave to amend the FAC, the new allegations can be construed to bear upon the issue of standing, and leave to amend was granted for such a purpose. Consequently, the court denies the motion in its entirety.

In denying the motion, the court is aware of Defendants’ position that any failure to issue notices prior to discharge is irrelevant to CLTCOA’s standing. Defendants point out that pre-discharge notices must be sent to the State Long-Term Care Ombudsman, not the Local Ombudsmen within CLTCOA’s membership. At this point however, the court cannot rule out the possibility that the failure to send notices to the State Ombudsman nonetheless impairs Local Ombudsmen’s attempts to represent residents’ interest. The relevant statutes and regulations set up overlapping authority among State and Local Ombudsmen, and Plaintiffs’ reference to pre-discharge notice requirements is therefore not improper on its face. The court obviously expresses no opinion about the merits of Plaintiffs’ allegations.