Florida court exempts chain parent companies from liability.

A recent Florida court case involving a nursing home and its out-of-state parent company could have important ramifications for the litigation-weary long-term care industry, reports the Mager Law Group, which represented the defense in the case. Plaintiff's attorneys had filed a two-count complaint against the nursing home and had included claims against its parent organization, charging that the parent "established, conducted business as, managed, operated, maintained, and/or assumed liability" for the subsidiary. The state appellate court ruled, however, that subjecting the out-of-state parent company to lawsuits simply because it has ownership in the in-state subsidiary was unreasonable, thus reversing a lower court decision.

"In the long-term care industry, the decision may encourage insurance companies to reconsider their withdrawal from the marketplace, which they've done knowing that parent companies would be liable in these types of cases," said attorney Scott Mager, a senior partner at Mager Law Group and national panel counsel for CNA Health Pro, one of the largest U.S. carriers of long-term care insurance. Mager noted that, although courts in other states will not be bound by this ruling, many agree with the reasoning behind the Florida appellate court's decision.

"It was clear in this case that the parent should never have been sued," Mager added. "Unfortunately, companies in this situation are faced with spending significant time and money defending themselves against baseless accusations or settling, when there is no liability, simply to avoid the intrusion into their business. The decision in this appeal may be a salvation to all parent companies."