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Navigating Landmines In Personal Injury & Wrongful Death Litigation Against Residential Drug & Alcohol Treatment Companies

This article by Jeremiah Lowe and Victoria Lazar was published in the May 2019 issue of Consumer Attorneys of San Diego’s Trial Bar News.

By now the general public is well aware of the opioid crisis, and the countless lives it has taken. There is, however, a lesser known crisis in the multi-billion dollar industry of for-profit residential drug and alcohol treatment, which has led to a significant number of preventable deaths. These drug and alcohol rehab companies operate non-medical inpatient treatment houses located in residential neighborhoods throughout the country. While access to treatment is a key factor in combating the epidemic of addiction, the for-profit residential treatment industry is tainted by fraud, corruption, and profiteering, often treating clients as commodities rather than patients.

When treating addiction, it is essential that a residential treatment provider do all of the following:
1) screen prospective clients to determine whether their non-medical program offers the appropriate level of care
2) refer clients out for needed medical care beyond their licensure
3) monitor clients while in the program.

Numerous deaths have been caused because of the residential treatment providers’ failure to properly screen and monitor clients while under their care. And at the heart of it all is corporate greed.

The problem stems from a business model whereby companies aggressively market and sell medical addiction treatment services for which they are not medically qualified to provide. These businesses commonly utilize call centers to sell addiction treatment. The call centers operate like boiler rooms, staffed by sales people with little to no experience in addiction treatment, who are paid on commission, and who are required to meet sales quotas to remain employed. As a result, there is rampant fraud at the sales level riddled with false promises made to desperate families and addicts to induce commitment to the treatment program. This type of sales environment results in companies admitting individuals into their non-medical “social model” programs, who are not medically fit to participate due to life-threatening withdrawal symptoms or other health conditions.

Furthermore, once clients enter the program, insurance companies often pay exorbitant amounts to the rehab provider. As such, unscrupulous companies have been known to go to great lengths to prevent individuals from leaving their program early, even for needed medical care. And the residential treatment houses are typically managed by recovering addicts, often with felony convictions, who are particularly vulnerable to the pressures of management. This business model, which places profits over client safety, has led to numerous deaths nationwide.

In California, the Department of Health Care Services (DHCS) is responsible for overseeing the residential treatment industry. Unfortunately the DHCS lacks the necessary resources to adequately regulate this booming, multi-billion dollar industry. As such, civil lawsuits against these unscrupulous treatment providers has become an essential tool in raising awareness and combatting this crisis. Such litigation will hopefully make a meaningful change in the industry and save lives.

There are some common challenges bringing a wrongful death or personal injury lawsuit against these corporations. Such landmines include defense claims of protections under MICRA, mandatory arbitration agreements, waivers of liability, and challenges to the existence of a duty to protect against an individual’s self-harming behavior. However, what is possibly the greatest challenge of all in pursuing these cases is facing our own biases surrounding drug and alcohol addiction. Below is a summary of these commonly faced challenges, and best approaches to dealing with them.

MICRA Not Applicable
The Medical Injury Compensation Reform Act, referred to as MICRA, is commonly raised as a defense in drug and alcohol treatment injury cases. At a superficial first glance, a lawsuit against a drug and alcohol treatment provider may appear to be subject to MICRA simply because of how these businesses represent themselves to the public as offering medical services. However, it is critical to understand that these residential treatment companies are not health care providers as defined by MICRA. As such, cases against them are not subject to MICRA.

Under MICRA, “health care provider” means “any person licensed or certified pursuant to Division 2 (commencing with Section 500) of the Business and Professions Code, or licensed pursuant to the Osteopathic Initiative Act, or the Chiropractic Initiative Act, or licensed pursuant to Chapter 2.5 (commencing with Section 1440) of Division 2 of the Health and Safety Code; and any clinic, health dispensary, or health facility, licensed pursuant to Division 2 (commencing with Section 1200) of the Health and Safety Code.” (See Civ. Code, § 3333.1(c)(1), and Civ. Code, § 3333.2(c)(1).)

Residential treatment providers, which are licensed under the DHCS to provide drug and alcohol treatment services, do not meet the definition of a “health facility” pursuant to division 2 (commencing with Section 1200) of the Health and Safety Code. Rather, these businesses are licensed as alcohol and drug abuse recovery or treatment facilities under Health and Safety Code section 11834.01, found in Division 10.5 of the Health and Safety Code, which by definition provides “nonmedical services.” Health and Safety Code Sect. 11834.02 (a) defines the scope of their licensure in relevant part:

As used in this chapter, ‘alcoholism or drug abuse recovery or treatment facility’ or ‘facility’ means any premises, place, or building that provides 24-hour residential nonmedical services to adults who are recovering from problems related to alcohol, drug, or alcohol and drug misuse or abuse, and who need alcohol, drug, or alcohol and drug recovery treatment or detoxification services.

Residential drug and alcohol rehab facilities are analogous to residential care facilities for the elderly. Both drug/alcohol rehabs and elderly residential care facilities may be staffed with nursing and other medical staff, but are only permitted under their license to provide some incidental medical services. Under Kotler v. Alma Lodge (1998) 63 Cal.App.4th 1361 and its related progeny, such companies have long been recognized to be outside the scope of MICRA. In Kotler, the Court held that a residential care facility for the elderly and disabled does not fall under MICRA even if it provides some incidental medical services. The Kotler Court held as follows:

“While residential care facilities may provide incidental medical services, if such services constitute a substantial component of the total services provided, the facility must also become licensed as either a clinic under section 1200 or a health facility under section 1250.” (Id. at p. 1393.) In other words, unless facilities are medically licensed, they are not covered by MICRA, even if they provide some medical services to their clients.

Further, MICRA does not apply to those who render services outside their licensure (See Arroyo v. Plosay (2014) 225 Cal.App.4th 279, 290 [MICRA can only apply when the negligent acts or omissions are within the scope of services for which the health care provider is licensed and they not within a restriction imposed by the licensing agency].) This is important because for the rehab companies, were they to provide a higher level of medical care than their license provides for, such as medical staffing with doctors on site, they would be operating outside their license and consequently violating the law.

As such, absent unique circumstances, a wrongful death and personal injury case against a residential non-medical drug and alcohol treatment providers should not be subject to MICRA. It is important to educate the court regarding two important facts:
1) your case is not a medical malpractice action, and
2) the defendant is not a licensed healthcare provider under the statutory definition of MICRA.

Duty To Prevent Foreseeable Self-Harm
It is typical that wrongful death and personal injury cases against drug and alcohol rehab facilities will involve some act of self-harm, either intentional or unintentional, whether it occurs by overdose or otherwise. The defendant companies typically argue they have no duty to protect against an individual committing self-harm, and point to the self-harming act as a superseding cause. It is critical to understand that by way of the special relationship formed with the client to provide a safe place for rehab, these companies do in fact have a duty to prevent foreseeable harm, including self-harm. See Klein v. BIA Hotel Corporation (1996) 41 Cal. App. 4th 1133 (rev. den. 10/13/10) (“Klein”). In Klein, summary judgment in favor of the defendant residential care facility for the elderly was reversed by the Court of Appeal. Decedent, an 85-year-old resident of the facility, committed suicide by jumping from the roof of the building. Defendants argued that the decedent had the right to take her life, that they had no ability to stop her, and that they had no duty to prevent her suicide.

The court in Klein rejected the defendant’s arguments. The court in Klein acknowledged that, “a duty to prevent a foreseeable suicide (is imposed) only when a special relationship exists between the suicidal individual and the defendant and its agents.” (Id. at pg. 1141, citing Nally v. Grace Community Church (1988) 47 Cal.3d 278, 293.) An entity and its agents engaged in a special relationship may be liable even if the suicidal client’s acts which preceded his death were “voluntary.” (See Klein, supra, 41 Cal.App.4th at p. 1141.) That is, an entity and its agents must use reasonable care to prevent the client from harming himself by his own acts, whether they be “voluntary or involuntary.” (Id., citing Vistica v. Presbyterian Hospital (1967) 67 Cal. 2d 465, 470-471, and Meier v. Ross General Hospital (1968) 69 Cal. 2d 420, 423-424.) The court in Klein further noted that residential care facility was licensed and regulated by the California Department of Social Services, which required them to properly assess clients medically and mentally before admission to determine the appropriate level of care to be provided as well as observe, and document any changes in the resident’s physical, mental and/or social conditions. (Id.)

Analogous to residential care facilities for the elderly, drug and alcohol rehab programs assume a special relationship with the client when the program agrees to admit individuals suffering from addiction as residents in its facility. Thus, the drug and alcohol program expressly, or at least implicitly, agrees to execute the duties imposed on it by the regulations to screen, refer, and monitor clients to ensure they are afforded a safe place during rehab. As such, treatment providers have a duty to take reasonable measures to protect against an individual’s foreseeable self-harming behavior while in treatment.

Arbitration Agreements
When clients enter detoxification, the first phase of drug and alcohol treatment programs, they are typically presented with a stack of documents to sign. Such documents often include an arbitration agreement. One key threshold issue in analyzing the enforceability of these agreements is whether the individual had contractual capacity at the time of signing. Consider the circumstances under which an individual enters drug and alcohol treatment. A large number of these individuals are entering treatment either under the influence of drugs or alcohol, or are in the various stages of withdrawal. Detoxification is a particularly vulnerable time for individuals, and they often do not have all of their mental faculties to make complex decisions.

When faced with an arbitration agreement, start by requesting the full client file, which should include all of the alcohol and drug screening that was done upon admission. You will likely find that the client signed the paperwork when they were acutely intoxicated or in withdrawal. If that is the case, plan to challenge the agreements on the basis that the client did not have contractual capacity.

Further, consider whether the defendant fraudulently induced your client to sign the agreement by mak- ing misrepresentations about the program. Finally, these agreements can, and should, also be challenged on grounds of unconscionability. Given the circumstances under which these agreements are signed, particularly the unequal bargaining power combined with the impaired mental and physical state many of these clients are in, clients are left with no meaningful choice at signing.

Waivers Of Liability
In addition to requiring clients sign arbitration agreements, residential drug/alcohol treatment providers often require clients to execute a release of liability as a condition to admission. The challenges discussed above with respect to arbitration agreements including contractual capacity, fraud, and unconscionability also apply to the enforceability of the waiver. An additional challenge to consider with respect to an express waiver of liability is that the conduct at issue cannot be waived. “All contracts which have for their object, directly or indirectly, to exempt anyone from responsibility for … violation of law, whether willful or negligent, are against the policy of the law.” (Civ. Code § 1668.) Drug and alcohol rehab programs are regulated by law. (See California Code of Regulations, Title 9.) For example, one such regulation obligates a residential treatment provider to accord residents safe and healthful accommodations to meet their needs. (Cal. Code Regs., tit. 9, § 10567.)

Another regulation requires the treatment provider to ensure that residents receive referrals to needed medical services while in treatment. (Cal. Code Regs., tit. 9, § 10569.) Since violations of these regulations and others constitute a violation of law, and any agreement that expressly waives violations of law is invalid, the waiver itself is invalid.

Furthermore, drug and alcohol rehab cases often involve claims of dependent adult neglect, which cannot be waived as a matter of public policy, as the conduct amounts to more than mere negligence. The purpose of the Elder and Dependent Adult Civil Protection Act (“The Act”) is essentially to protect a particularly vulnerable portion of the population from gross mistreatment in the form of abuse and custodial neglect. Delaney v. Baker (1999) 20 Cal.4th 23, 33. Individuals going through detox often meet the definition of “dependent adult” under The Act because they lack the ability to carry out normal activities or protect his or her rights. (Welfare and Institutions Code § 15610.23). Neglect includes the failure to provide medical care for physical and mental health needs or the failure to protect from health and safety hazards. (Welfare and Institutions Code § 15610.57). Such conduct is often at issue in drug and alcohol rehab cases. Thus, even if a court were to determine any such waiver signed by a victim to be valid and enforceable as to some claims, it would not be enforceable as to any claims of dependent adult neglect.

Recognizing Our Own Potential Biases
While there are many hurdles to overcome in successfully obtaining justice for victims of neglect at the hands of residential rehab treatment providers, possibly the greatest hurdle is getting past our own biases. Specifically, our fears, lack of under- standing, and preconceived ideas surrounding drug and alcohol addiction. Due to the opioid crisis, there is now far more public awareness about the need to treat drug and alcohol addiction as a disease rather than a personal choice. However, the stigma remains. In order to help tell our clients’ stories, we need to truly understand and empathize with them. This cannot be accomplished simply by understanding how they were treated in rehab, but also by empathizing with what they experienced during their battle with addiction. Our clients, or the decedents, often have troubling pasts and circumstances surrounding their addiction that may be harshly judged by a jury if not addressed openly and honestly. As attorneys, it is fair to be skeptical of how a jury will perceive our clients and render justice fairly. That concern is only compounded by the fact that we are asking a jury to hold a business accountable for, and to award money for, another individual’s self-harming behavior. However, the truth remains that these are vulnerable people who are being taken advantage of, and they need our help. If you are interested in taking one of these cases, ask yourself this question: Is the company taking advantage of and neglecting someone who desperately needed help? And does that person deserve a voice?

There is no one-size-fits-all answer on how to connect with our clients’ stories and communicate it effectively to the jury. With that said, each of us can do it. However, if we do not introspectively deal with our own feelings, insecurities, and biases about drug and alcohol addiction, we will not be at our best when pursuing these cases and obtaining justice. I recommend spending a significant amount of time with the client and/or their family, and getting to the heart of the story. This includes the addiction, as well as what ultimately what led them to seek help for addiction.

Most importantly, when connecting with our client’s story we must understand that we are representing some of the most vulnerable people in society, who desperately need a voice. These people are being preyed upon, and taken advantage of, by corporate profiteers. Jude Basile, one of the great lawyers of our time, said it best during closing argument in a recent wrongful death case we tried together against a drug addiction treatment company: “One of the hardest things we can do in life is ask for help. One of the best things we can do in life is lend a hand and help someone who asks for help. And the absolute worst thing one can do in life is say they will help someone asking for help, but instead of helping them, simply take their money and take advantage of them without helping.” The jury responded, and we were able to get full justice for a family who needed a voice.

In conclusion, and I say this with absolute conviction and belief to the very core of my being, these are righteous cases. The stories need to be told. My hope in writing this article is to encourage each of us to look at these cases a bit differently, and to understand that there is a path to justice, and one that will undoubtedly save lives.

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