A major insurance firm is locked in a federal court battle, arguing it shouldn’t have to foot the bill for a settlement reached by one of its client nursing homes. The dispute centers on whether the insurer’s approval was necessary before the settlement could be finalized.
Nightingale Healthcare’s Arlington Health and Rehabilitation faced a negligence lawsuit in county court filed by Donald Stallings, which resulted in a nearly $3.3 million jury verdict against both Nightingale and its management arm. In a move that could have been aimed at mitigating further legal costs and obligations, Nightingale subsequently negotiated a settlement. The exact amount of this settlement, reached on April 1st, remains undisclosed.
Now, National Fire & Marine Insurance Company and its MedPro Group have filed suit in the U.S. District Court for the Western District of Washington, seeking to avoid responsibility for this agreement. While the company acknowledges that it provided senior care liability coverage to Arlington throughout 2023 and 2024, and that its MedPro unit agreed to defend and provide indemnity coverage in the negligence case, National Fire contends that the policy granted MedPro the authority to “appeal any judgment as it deems expedient.” This option, the insurer argues, could have been nullified by a court-approved settlement.
“The company’s duty to defend and pay loss for any claim or potential claim is strictly conditioned upon all insureds’ cooperation with the company in the investigation, defense, and/or settlement,” the insurer stated in its legal filing. “Pursuant to the Policy’s conditions, Nightingale may not make or contract any settlement of the claim or potential claim, except at the insured’s own cost and responsibility, without the written authorization of MedPro.”
The question remains: where does the responsibility ultimately lie?
According to policy documents included in Wednesday’s legal filing, MedPro’s general counsel’s office would typically be responsible for organizing a liability defense and participating in settlement negotiations. However, the point at which this process may have broken down remains unclear.
Emails and phone calls placed by McKnight’s Long-Term Care News to Nightingale’s CEO and a corporate operations employee went unanswered, leaving a void in understanding the nursing home chain’s perspective.
Nightingale Healthcare is a family-operated company with eight skilled nursing and assisted living facilities located in Washington. Founded in 2014 by Andrea Leebron-Clay and James Clay, the company also lists one of Andrea’s sons as its director of operations.
This isn’t the first instance of National Marine taking a hard line with insured nursing homes. Back in 2022, the Berkshire Hathaway-owned company refused to fully pay out on numerous COVID-related claims filed by Genesis Healthcare. In that case, a District Court judge in Pennsylvania sided with the insurer, ruling that the provider was liable for a $3 million self-insured retention for each COVID event before National Fire was obligated to provide coverage for the resulting lawsuits, pre-suit claims, or potential claims.
As of March 2024, the national average cost of a private room in a nursing home was $9,793 per month, according to Genworth’s Cost of Care Survey. This significant expense underscores the financial pressures facing nursing homes and the potential impact of large settlements and insurance disputes.
McKnight’s was unable to reach a public relations representative for MedPro, and a message left for the company’s general counsel also went unanswered, leaving the industry to speculate on the implications of this unfolding legal battle. This case could set a precedent for how insurance companies interact with nursing homes in settlement negotiations, potentially impacting the financial stability of facilities and the resolution of future liability claims.