Maxwell vs. Beverly Enterprises

We are pleased to (finally!) post one of our outstanding victories on behalf of social worker Sharon Maxwell. This case made and clarified the law in California on punitive damages. Defendants appealed this attached decision to the California Supreme Court who refused to reverse it, and, along with the “lead” case of White vs Ultramar, redefined the law in California regarding who is a “managing agent” for purposes of imposing punitive (ie, exemplary) damages. Enjoy the read! The case remains good law in Califonria.

MAXWELL v. BEVERLY ENTERPRISES CALIFORNIA INC

Sharon MAXWELL, Plaintiff and Appellant, v. BEVERLY ENTERPRISES-CALIFORNIA, INC., Defendant and Appellant.Sharon MAXWELL, Plaintiff and Appellant, v. BEVERLY ENTERPRISES-CALIFORNIA, INC., Defendant and Respondent.Nos. A073149, A074535. — May 28, 1998 Law Offices of Stephen F. Danz, Stephen F. Danz, Sherman Oaks, and David A. Lerman, Berkeley, Pine & Pine, Norman Pine and Beverly Tillett Pine, Encino, for Plaintiff and Appellant.Littler, Mendelson, Fastiff, Tichy & Mathiason, Henry D. Lederman, Walnut Creek, David S. Durham and Arthur M. Eidelhoch, San Francisco, for Defendant and Appellant and for Defendant and Respondent.

INTRODUCTION

Beverly Enterprises-California, Inc., (hereafter “Beverly”) a wholly-owned indirect subsidiary of Beverly Enterprises, Inc., appeals from an adverse judgment in a wrongful termination case.

1.  It argues that its employees were not “managing agents” for purposes of an award of punitive damages pursuant to Civil Code section 3294.   We conclude that Beverly’s administrative employees were clearly “managing agents” and affirm the judgment.** IBACKGROUND

2. Beverly Enterprises is a large nationwide operator of nursing home facilities.   It indirectly owns appellant Beverly, which does business in San Francisco as Beverly Manor Convalescent Hospital (hereafter “Beverly Manor”). Sara Thomas, the Director of Operations for Beverly, interviewed and hired respondent Sharon Maxwell in March of 1992 as the social services director for Beverly Manor. Thomas was responsible for the eight nursing homes in area 9, which includes Monterey, San Jose and San Francisco. She ensures that the staff follow the regulations imposed by state and federal guidelines, and is the “consultant” and supervisor to the eight administrators of the nursing homes in her area. Thomas told Maxwell that Beverly Manor was a troubled facility that had been in a decertification process and had no social service department. The result of the decertification was that the facility was unable to obtain Medi-Cal and other government funding. Maxwell was told that it would be a tough job, with little cooperation. Maxwell understood that her foremost job duty was to be an advocate for the residents of the nursing home. Thomas told her she would be responsible for making sure the psychosocial assessments, care plans, social histories, quarterly and annual notes were complete. Maxwell initiated a monthly family council, which is an organization of the families and friends of residents. Maxwell was a member of the psychosocial team, which monitored problem residents, and the fall assessment committee, which evaluated and attempted to remedy the causes of residents falling and injuring themselves. The same month that Maxwell was hired, Jeffrey Sherman was hired as administrator of the nursing home. In June of 1993, Maxwell received a positive annual evaluation from Sherman. Sherman particularly complemented her performance during a survey in which Maxwell was required to assess each resident personally to get an accurate description of the resident’s condition and to document changes in condition. Maxwell and her team documented over 100 changes in condition. Judith Pleshek was hired as administrator of Beverly Manor in October of 1993. Sherman left Beverly Manor the same day that Judith Pleshek took his place as administrator. Pleshek, as administrator, was the highest ranking member of management at the nursing home. Her duties included overseeing operations at the nursing home, supervising, evaluating, and counseling approximately 10 department heads, including Maxwell, and monitoring the quality of care given to the residents of the home. Pleshek immediately determined that Maxwell was not a team player, and was uncooperative with Pleshek’s attempts to upgrade the facility. Pleshek observed Maxwell huddled in the lobby with other department heads, “with looks on their face of complaining.” The following month, Charles Cornelius became the director of nursing. Cornelius eliminated Maxwell’s positions on the psychosocial task force and the fall committee.The Medicare Utilization Issue Three events involving Pleshek led to Maxwell’s termination in April of 1994. One clash with Pleshek centered around Maxwell’s criticism of what she believed to be a policy of keeping residents on Medicare status until their benefits were exhausted, and then transferring them from the Medicare bed to a regular bed, regardless of the actual medical status of the patient.

3. Maxwell had asked, during daily admissions meetings, why all Medicare residents seemed to use the entire allotted 100 days of Medicare coverage. The only response was from Cornelius, who told her it was because Rita Coomler said to keep them on Medicare.

4.  Employees were trained to write that a patient’s condition had stabilized and he or she no longer required skilled services as the reason for a transfer out of a Medicare bed. Around January of 1994, Maxwell realized that patients were transferred solely because they had exhausted their 100 days of eligibility. She refused to write that patients were moved for medical reasons, and wrote “resident has exhausted allocated Medicare benefits” on the transfer forms. In April of 1994, when management conducted a comprehensive quality assurance audit (“QA”), Maxwell’s score for compliance with policy was lowered to zero, out of a possible 20 points, because she had not used the recommended transfer language. In the course of the QA, Maxwell was told that other social workers agreed with her about using the recommended language, “but they do it anyway.”   Although Pleshek denied that anyone ever raised concerns about utilization of Medicare beds, former administrator Jeffrey Sherman confirmed that Maxwell questioned the retention of patients in Medicare beds who had no medical need for skilled services.   Sherman also confirmed that people in the nursing department said that Coomler’s philosophy was to do everything possible to maximize the number of Medicare patients. Gretchen Douglas, former recreation director at Beverly Manor, testified that Maxwell frequently raised concerns to Pleshek about use of Medicare beds.   Douglas agreed that residents were being kept on Medicare too long. One aspect of Maxwell’s concern was highlighted by the example of a patient who had a broken hip. Prior to her admission to Beverly Manor, she was scheduled for additional surgery which would necessitate extensive rehabilitation. However, on her first admission to Beverly Manor, she was put in a Medicare bed, and exhausted her allotted days prior to the scheduled surgery.   Because of this policy, the patient was readmitted to a noncertified bed, and was unable to get the intensive therapy that she required.Reporting Patient Neglect The second instance of a clash between Maxwell and Pleshek involved Maxwell’s report of neglect of a patient.

5  Pleshek testified that the social worker is the liaison person with the state ombudsman.

6. As such, the social worker was generally the one who would use the elder abuse report form to make the required report in the event of an instance of abuse or neglect of a resident.

7.  Pleshek stated that reporting was mandatory, and a reporting person had 48 hours after they became aware of the abuse to report the incident to the ombudsman. Maxwell’s understanding, based on documents provided to her when she started working at Beverly Manor, was that she was a mandated reporter and that she could be fined and jailed if she failed to report a reportable incident.On March 2, 1994, Gretchen Douglas told Maxwell about Patient C, who had been transferred to an acute care hospital two days earlier. Patient C had been a resident when Maxwell began working at Beverly Manor. Although she had osteoarthritis and was confined to a wheelchair, she was mentally alert, oriented and always cheerful.   Maxwell learned that Carol Coffman, a volunteer visitor who had been visiting C since 1992, visited on Sunday, February 27, 1994, and found Patient C in such a changed condition that she believed C had suffered a stroke. Coffman testified that prior to the February visit, Patient C was vivacious, talkative and cheerful, and that they discussed a range of subjects including music, poetry, and her family. Coffman had last seen C on the previous weekend, when she was acting normal. When Coffman entered the room, C did not know she was there. C was lying in bed, awake but nonresponsive, her eyes were not focused, she was red all over and very flushed, with scaly, flaky skin. Coffman thought she looked like she had suffered a stroke.

8.  Coffman hurried to the nurse’s station and informed the supervising nurse, Belarose Baclig, that C was babbling incoherently and it looked like C had had a stroke. Baclig confirmed that Coffman was upset, testifying that she came “screaming to the desk” very upset about Patient C.Coffman testified that Baclig looked in C’s chart, and then told Coffman that the doctor had been called and C’s family had been notified. Baclig asked if Coffman was a family member, and when Coffman responded that she was a volunteer visitor, she was told that was all she needed to know. In fact, Baclig had neither called the doctor nor notified C’s family.

9.  Coffman spoke with Gretchen Douglas early the next morning and learned that C had been taken to the hospital.

10.  Coffman visited C at the hospital that night and learned from Dr. Killpack that C had not had a stroke, but was suffering from severe dehydration and infections resulting from the dehydration.

11. When Coffman told Douglas about Baclig’s lack of response to her report of C’s change in condition, Douglas went to check C’s chart twice and found that there were no notes in the chart for February 27 or 28.

12.  Responding to a call from Brent Nettles, the director of the San Francisco Ministry to nursing homes, for a meeting regarding the lack of response to Coffman’s warning about C’s condition, Douglas met with Nettles. Douglas was very concerned that Beverly staff had not responded appropriately. On Tuesday or Wednesday, Douglas called Maxwell to tell her about the events surrounding C’s emergency hospitalization.

13. Douglas told Maxwell that Coffman was very distressed about C’s status on Sunday, that the charge nurse refused to take any action, and that C was taken to the hospital the next day. Douglas also told Maxwell that Dr. Killpack had told Coffman that Beverly Manor might have jeopardized C’s chances of survival by waiting too long to get her to the hospital. Douglas advised Maxwell that she thought the matter should be reported. Douglas was concerned that Nettles might report the incident and felt that it was more appropriate for Beverly staff to report it first. Maxwell and Douglas again checked C’s medical record and found no notes for the Sunday and Monday prior to C’s transfer to the hospital. Douglas asked the dietitian to look at the record as a witness to the fact that there was nothing in the notes. Maxwell and Douglas went to the director of nursing, Chuck Cornelius. Maxwell related the events regarding Patient C and indicated that they needed to report the incident.   Cornelius said he would call his consultant and Maxwell should call hers. Maxwell’s consultant told her that the incident was reportable “like any other incident.” Cornelius told Maxwell he had not heard from his consultant.Maxwell related her consultant’s comment to Cornelius and told him that she was concerned that time was running on the need to report. Cornelius called Pleshek to his office, and Maxwell related the events regarding C and told Pleshek of her consultant’s advice. Cornelius then placed a call to Sara Thomas on the speakerphone. Maxwell related the events and her concerns to Thomas, and Thomas stated:  ”Sharon, you know it is an industry standard. You never report a nurse.” Thomas told Cornelius to investigate, adding:  ”you know what I mean.” As Pleshek and Maxwell left the meeting, Pleshek said she hoped Maxwell would support her in whatever decision she made about the incident.   Later that afternoon, Pleshek called Maxwell to her office and said:  ”I need to know that you are going to support me in my decision not to report this.” Maxwell asked “are you asking me to break the law?” This exchange was repeated three times, at which point Pleshek replied:  ”your vacation is denied.” When Maxwell saw Cornelius, she told him her vacation had been denied and that she thought it was retaliatory.The next day, Maxwell discussed the incident, including the speakerphone conversation, with the volunteer ombudsman. The ombudsman confirmed the fact that nurses were reportable. Towards the end of March, after Maxwell reported Baclig, an exchange occurred between Pleshek and Maxwell when Maxwell was helping Pleshek open an office safe. As Maxwell worked on the combination to the safe, Pleshek asked her if her shoes were new. When Maxwell said no, Pleshek replied:  ”I wouldn’t buy anything new, if I were you.” Around the same time, Pleshek made the comment that she read an article that said “people with your color eyes are good liars.” The following month, Pleshek gave Maxwell an unsatisfactory performance evaluation and denied her annual pay raise. Pleshek offered no plan for correcting the perceived deficiencies in Maxwell’s job performance. Maxwell’s Termination and Patient S The final incident leading to Maxwell’s termination involved Patient S. Patient S was a problem for the facility, in that he engaged in inappropriate behavior which necessitated a private room. Pleshek and Thomas had previously instructed Maxwell to write a discharge order for Patient S. Maxwell wrote the order, brought it to Patient S, advised him of his right to appeal, and notified the ombudsman that the patient wanted to appeal. There was a hearing, and the transfer was denied.   Pleshek, Thomas and Maxwell met after the hearing, and Thomas told Maxwell that Patient S would be in the surveyor’s mind, and that there could be no mistakes in S’s documentation. On April 21, 1994, Maxwell met with Thomas and Amy Brom, the Beverly California Corporation quality assurance program manager. Brom discussed splitting the workload of the social workers and hiring another social worker. No one mentioned Patient S to Maxwell.   After Maxwell was excused from the meeting, Thomas “suddenly remembered” Patient S, and even though it was late, asked Brom to stay while she went upstairs to look at S’s chart.   Thomas later testified that she was “thunderstuck” and “dumbfounded” to see that Maxwell’s assistant, Montreal Blakeley, had authored a psychosocial assessment in S’s chart, dated March 10, 1994. Thomas discussed the document with Brom, Pleshek, and Cornelius, and the decision was made to suspend Maxwell.Thomas and Pleshek testified that Maxwell was suspended because allowing the assistant to do the psychosocial assessment was gross misconduct. There was evidence at trial that Beverly policy allowed use of the assistant to do psychosocial assessments. The following day, Pleshek called Maxwell into her office, handed her termination papers and said “I believe you have been expecting this.” Pleshek offered no explanations and did not seek Maxwell’s side of the story. The maintenance man was waiting outside the door with a box. He escorted Maxwell to her office, where she was asked to pack her belongings in front of a number of staff members. She was then escorted out of the building while the patients and staff watched. The previous administrator testified that he had never heard of a policy of forcing an employee to remove personal items in the event of a suspension. On April 26, Maxwell sent a letter to Pleshek, denying any misconduct, stating that documentation Pleshek said was missing from S’s chart was contained in his previous chart, and alleging that her termination was unlawful. On April 27, Pleshek called Maxwell and told her the termination was permanent. In a memo from Thomas dated April 22, Maxwell was informed that she was terminated because allowing her assistant to write a psychosocial assessment could subject the nursing home to three “level A” citations. Maxwell understood that level A citations were only issued when a resident’s life was in imminent danger. Even Pleshek confirmed that a level A citation only issued in the case of serious harm or danger to the safety of the residents. On June 13, a letter signed by Pleshek, which had been authored by Julia Halladay, the human resources consultant, was sent to Maxwell, responding to some of Maxwell’s contentions about her termination.The Instant Litigation On July 25, 1994, Maxwell filed a complaint against several of the Beverly corporate entities, Beverly Manor, Pleshek and Thomas, alleging wrongful termination (breach of public policy), violation of Labor Code section 1102.5 (“whistleblower” statute), and other tort causes of action.14  Following a month-long trial, the jury returned a verdict for Maxwell on the claims of wrongful termination in violation of public policy, and violation of the whistleblower statute. The jury awarded economic damages of $44,300 and damages of $25,000 for emotional distress. The jury also found that Maxwell proved by clear and convincing evidence that Beverly was guilty of oppression or malice.Phase two of the trial, regarding punitive damages issues, began the following day. Beverly stipulated that the net value of the Beverly entity that owns Beverly Manor was $71,000,000. On November 14, 1995, the jury returned a verdict in phase two of the trial finding that punitive damages should be assessed in the amount of $1,550,000. Beverly filed a motion for a new trial and for a judgment notwithstanding the verdict (JNOV), based on irregularities during the trial and insufficiency of the evidence to support the verdict and the punitive damages award. The court denied the motion for a JNOV, and granted the motion for a new trial, with the condition that if Maxwell consented to a reduction in the amount of punitive damages to $500,000, on the grounds that the amount of punitive damages awarded was excessive, the motion for a new trial was denied. Maxwell consented to the reduction of damages.   Beverly appealed from the judgment and the order denying its post-trial motions. Maxwell cross-appealed from the trial court’s remittitur order.On April 1, 1996, the court denied Maxwell’s motion for an award of attorneys’ fees pursuant to Code of Civil Procedure section 1021.5. Maxwell appealed from the denial of her request for attorneys’ fees. On September 20, 1996, we granted a stipulated request to consolidate the appeals for purposes of briefing, oral argument, and decision.

II DISCUSSION

Beverly argues that neither Thomas nor Pleshek was a managing agent of the company.   After a review of the case law and the 1980 amendment to Civil Code section 3294, we conclude that both Thomas and Pleshek are managing agents.*** B. Pleshek and Thomas Are Managing Agents under Any Standard Civil Code section 3294, subdivision (b) provides the circumstances in which a corporate employer may be liable for punitive damages.  ”An employer shall not be liable for [punitive] damages ․ based upon acts of an employee of the employer, unless the employer had advance knowledge of the unfitness of the employee and employed him or her with a conscious disregard of the rights or safety of others or authorized or ratified the wrongful conduct for which the damages are awarded or was personally guilty of oppression, fraud, or malice.   With respect to a corporate employer, the advance knowledge and conscious disregard, authorization, ratification or act of oppression, fraud, or malice must be on the part of an officer, director, or managing agent of the corporation.”   Beverly argues that Pleshek and Thomas were not managing agents and therefore could not subject Beverly to punitive damages. In support of this contention, Beverly notes that an employee’s position in the corporate hierarchy does not determine whether or not the employee is a managing agent.   Beverly relies on legislative history, a comment in College Hospital, Inc. v. Superior Court (1994) 8 Cal.4th 704, 34 Cal.Rptr.2d 898, 882 P.2d 894, and Kelly-Zurian v. Wohl Shoe Co. (1994) 22 Cal.App.4th 397, 27 Cal.Rptr.2d 457 to argue that authority to terminate or supervise others does not make an employee a managing agent for purposes of the statute.   Although we agree that not every supervisor is necessarily a managing agent, we do not agree that there were no managing agents involved in Maxwell’s termination.Regarding the legislative history of Civil Code section 3294, prior to the amendments of 1980, our Supreme Court in Egan v. Mutual of Omaha Ins. Co. (1979) 24 Cal.3d 809, 169 Cal.Rptr. 691, 620 P.2d 141 and Agarwal v. Johnson (1979) 25 Cal.3d 932, 160 Cal.Rptr. 141, 603 P.2d 58 [hereafter Egan or Agarwal ] stated that California follows the rule of the Restatement Second of Torts regarding punitive damages.  Egan quoted that rule as follows:  ” ’Punitive damages can properly be awarded against a master or other principal because of an act by an agent if, but only if, (a) the principal authorized the doing and the manner of the act, or (b) the agent was unfit and the principal was reckless in employing him, or (c) the agent was employed in a managerial capacity and was acting in the scope of employment, or (d) the principal or a managerial agent of the principal ratified or approved the act.’  (Rest.2d Torts (Tent. Draft No. 19, 1973) § 909.)”  (Egan v. Mutual of Omaha Ins. Co., supra, 24 Cal.3d 809, 822, 169 Cal.Rptr. 691, 620 P.2d 141.) 19  The employees determined to be acting in a managerial capacity in Egan were an insurance agency claims manager and an agency claims adjuster.  (Id. at pp. 815-817, 169 Cal.Rptr. 691, 620 P.2d 141.)   The court reviewed the nature of the authority vested in the defendants and found that they possessed broad discretion which resulted in the formulation of policy.  (Id. at p. 823, 169 Cal.Rptr. 691, 620 P.2d 141.) The year after Egan and Agarwal, the Legislature amended Civil Code section 3294 to provide specific language regarding when a principal might be liable for punitive damages.  (Stats.1980, ch. 1242, § 1, p. 4217.)   The bill amending section 3294 went through several revisions before the current language was enacted.   As amended by the Senate in May of 1980, the bill provided that “the advance knowledge, ratification or act of oppression, fraud or malice must be on the part of a senior executive officer or officers of the corporation in order for it to be liable for [punitive] damages.”  (Sen. Amend. to Sen. Bill. No.1989 (1979-1980 Reg. Sess.) May 6, 1980.)   The Assembly amended the bill to codify section 909 of the Restatement, allowing punitive damages if the agent “was employed in a managerial capacity” or “the principle or a managerial agent of the principal ratified or approved the act.”  (Assem.   Amend. to Sen. Bill. No.1989 (1979-1980 Reg. Sess.) July 2, 1980.)   The Senate refused to concur in the Assembly amendment, and the matter was sent to a conference committee.  (Sen. Bill No.1989, Sen. Final Hist. (1979-1980 Reg. Sess.) p. 1135.)   The committee revised the bill to provide the language that was eventually enacted:  ”[w]ith respect to a corporate employer, the advance knowledge, ratification, or act of oppression, fraud, or malice must be on the part of an officer, director, or managing agent of the corporation.”  (Conf. Amend. to Sen. Bill. No.1989 (1979-1980 Reg. Sess.) August 27, 1980.)   Senator Maddy wrote to the governor on September 2, 1980, to explain the committee’s amendment.20  On the issue of damages against a corporate principal, Maddy noted that the concern about the Restatement view as explained in Egan, supra, was that an employer may be found to have authorized an employee’s outrageous acts merely by authorizing the employee to act on its behalf.   Maddy stated that Senate Bill No.1989 repudiated the Restatement standard “by dispensing with the vague term ‘managerial capacity.’   In its place the term ‘managing agent’ is used to describe the lowest level person within a corporation who must be ‘personally guilty of oppression, fraud or malice’ ․ before punitive damages can be assessed against the corporation.” Civil Code section 3294 does not include the language regarding an agent acting in a “managerial capacity.”   It retained, however, the concept that a managing agent may subject the employer to punitive damages.  Egan itself found that the managing agents in that case were policy-making individuals.21  We see no indication by the Legislature that it meant to repudiate Egan, but only concern that language from the Restatement might be misconstrued.   To eliminate this possibility, the Legislature deleted the “capacity” language, but retained the managing agent concept.   Our Supreme Court has recognized that the 1980 modification of Civil Code section 3294 “limited the circumstances under which an employer could be held liable for punitive damages ‘based upon acts of an employee.’   [Citation.]”  (College Hospital Inc. v. Superior Court, supra, 8 Cal.4th 704, 712-713, 34 Cal.Rptr.2d 898, 882 P.2d 894.)   We conclude, however, that the limits are consistent with the actual result in Egan:  that the employer’s liability does not depend on the managerial classification of an employee, but on the extent of the employee’s discretion.Nothing in Kelly-Zurian v. Wohl Shoe Co., supra, 22 Cal.App.4th 397, 27 Cal.Rptr.2d 457, cited by Beverly, requires a different conclusion.   In Kelly-Zurian, the defendant employee was a company administrator in charge of plaintiff with the power to terminate those he supervised.  (Id. at pp. 406, 422, 27 Cal.Rptr.2d 457.)   The evidence showed that, aside from having the power to hire and fire, the agent had little authority and lacked even the discretion to set plaintiff’s salary or give her a raise without authorization from the corporation’s main office.   The agent had no discretion in making decisions that would ultimately determine corporate policy and no authority to change or establish such policy.   Citing Egan, the Kelly-Zurian court correctly held that the supervisor in that case was not a managing agent.   (Id. at pp. 421-422, 27 Cal.Rptr.2d 457.) In the instant case, we look to the record to discern whether Pleshek and Thomas had the discretion characteristic of the policy-making employees whose acts could subject an employer to punitive damages.   Beverly relies only on evidence in the record that would support its argument.   For example, it argues that Thomas and Pleshek were merely carrying out (as opposed to determining) company policy when they took the following actions:  denied Maxwell’s vacation request;  investigated allegations of neglect before reporting Nurse Baclig;  fired Maxwell;  forced Maxwell to remove her belongings from the facility in full view of staff and residents;  and made staffing decisions.   When confronted with contradictory evidence that there was no policy of forcing removal of belongings, refusing to report a nurse for neglect, firing someone for gross misconduct when sufficient documentation was present in the medical records, and other contradictory evidence, Beverly argues that if Pleshek and Thomas took those actions, they were violating company policy.   Beverly’s argument would absolve a corporate employer from responsibility for punitive damages in almost every case because it is a rare employer who has approved policies allowing malicious and oppressive acts. The focus on formal company policy is not productive in this case, since an employee could always be said to be either following or disobeying company policy.   The correct focus is on the evidence of the degree of authority and discretion that Thomas and Pleshek possessed in carrying out their job duties.   Pleshek was administrator of Beverly Manor.22  As such, she was the highest ranking member of management at Beverly Manor.   Pleshek testified that Beverly consultants gave her their input, but she was not required to follow their advice.   Although staff persons were assigned consultants to assist them in performing their duties, Pleshek testified that it was she or Thomas who made the ultimate decisions, and not the consultants.   She also testified, more than once, that each administrator of a Beverly nursing home “runs their building differently.”   She did not consult with the prior administrator about the facility because she had her own way of running Beverly Manor.   Regarding her termination of Maxwell, Pleshek testified that she did not need to consult with corporate headquarters in Fort Smith, Arkansas about a termination unless the employee had been with the company for more than 10 years.   Pleshek herself made the decision to terminate Maxwell.Regarding her discretion in the day-to-day operation of Beverly Manor, Pleshek testified that she was not required to obtain consent from Rita Coomler, the corporate regional Medicare specialist, to transfer a patient, but that she and the director of nursing made the decision and informed Coomler of the transfer.   Pleshek made the decision to terminate the contract of Novacare, a fiscal care provider, and decided to use a company that she knew in Texas.   In addition to running the facility, Pleshek supervised the staff, assigned individuals to positions on the staff, conducted staff performance appraisals, administered warnings about poor job performance, and had discretion to waive the notice requirements regarding vacation requests.   Although official Beverly policy allowed the reporting of incidents of patient neglect, Pleshek’s policy was that such incidents would be investigated within the facility.The foregoing evidence supports the determination that Pleshek was a managing agent.   She was vested with the authority to manage and control the operations of Beverly Manor.   She had broad discretionary powers which extended to all areas of the staffing, management, hiring, firing, contracting, supervising, assessing and establishing of policy and practice in the facility.23  There was no error in the assessment of this issue.† IIICONCLUSIONThe judgment is affirmed.   The parties shall bear their own costs on appeal.FOOTNOTES1.  The parent company was dismissed from the action pursuant to a motion for nonsuit during the trial.FOOTNOTE.  See footnote *, ante.2.  The facts were sharply disputed at trial, with defendants denying most of the statements and actions attributed to them by plaintiff and plaintiff’s witnesses.   We have related the facts in the light most favorable to the judgment.   Beverly’s opening brief sets out the facts in an extremely argumentative fashion, in the light most favorable to Beverly’s contentions at trial.   This is an inappropriate technique, in light of the applicable standard of review, discussed later in this opinion.3.  Medicare paid 100 percent of the bill for the first 20 days of an eligible resident’s stay, and all but approximately $87 a day from day 21 to day 100.   To be eligible, the resident had to come from an acute care hospital within 30 days, with a qualifying diagnosis, and the physician had to certify the need for specified skilled nursing services, such as physical therapy, speech therapy, or other skilled services.   Once a resident exhausted the 100 days, the resident had to go to a lesser level of care for 60 consecutive days, suffer a three-day hospital admission, and again be certified for Medicare services in order to receive an additional 100 days of coverage.   Thirty-eight of the 168 beds at Beverly Manor were certified for Medicare patients.   Beverly Manor received $278 a day for Medicare patients, and $86 to $88 a day for non-Medicare patients.4.  Coomler testified that she was employed by “Beverly of California” as the Medicare Nurse Specialist for the West Coast Region.   As such, she did Medicare training for all Beverly facilities in Washington, Idaho, California, Arizona, and Hawaii.   In its brief on appeal, Beverly argues that Coomler worked for a non-party corporation named Beverly California Corp., rather than Beverly Enterprises-California, the defendant herein.   In its summary judgment motion, Beverly argued that “Beverly California, Inc.,” did not exist, and should be dismissed as a defendant.   There are references during the trial to employees of “Beverly of California,” but the exact identity of each of Beverly’s corporate entities is not clear.5.  For purposes of privacy, we refer to this patient as “Patient C.”6.  Pleshek explained that the state ombudsman is a patient advocate.   Beverly also had a volunteer attorney who visited the facility weekly and talked to the patients.7.  Welfare and Institutions Code section 15600 et seq. provide for mandatory reporting of observations reasonably suspected to be incidents of physical abuse.   Section 15630 provides for immediate reports by telephone, followed by a written report within two working days.   The statute provides for permissive reporting of other types of abuse or endangerment of emotional well-being.  (Welf. & Inst.Code, § 15630, subd. (c).)  Welfare and Institutions Code section 15610.63, subdivision (d) includes within the definition of physical abuse, “prolonged or continual deprivation of food or water.”8.  Coffman was not a medical person but had been a volunteer visitor since 1992.   She had an undergraduate degree in education and a master’s degree in counseling.9.  Baclig testified that she went to check on C, but that C was sleeping while Baclig was talking to her.   Baclig tried, unsuccessfully, to wake her up, and did not think there had been any change in C’s condition.10.  C’s condition was discovered by Douglas’s assistant on Monday morning, who reported to Douglas “there is something dreadfully wrong with [C].” Douglas ran to the room, and found C mumbling gibberish, with her eyes rolling in her head.   She immediately summoned a nurse.   The nurse believed C had suffered a stroke.11.  Beverly had been ranked “0” out of a possible 20 points on a quality assurance report for failing to keep water pitchers in several rooms on the third floor.12.  At the time of trial, there were nurse’s notes in Baclig’s handwriting, which noted that C was confused and disoriented, and was transferred to the hospital pursuant to Dr. Killpack’s order.   Baclig testified that she entered those notes in the medical records on the morning of February 28.13.  Dr. Killpack characterized C’s hospitalization as an emergency.   Beverly interprets a portion of the expert testimony as an affirmative statement that C’s condition was not serious and that her hospitalization was merely coincidental and unrelated to Coffman’s observations.   The portion of the testimony referred to was a hypothetical question posed to Beverly’s medical expert about how the doctor would verify a volunteer’s report on a patient’s condition.   The doctor merely stated that the fact a patient went to the hospital would be irrelevant in assessing a volunteer’s report because he was only concerned with the report of the nurse on the scene.   Beverly’s expert testified that C was not very ill, and that hospitalizing her was “excessively careful.”   This opinion was expressed despite the fact that Dr. Killpack had discussed with C’s family the fact that C could die from her condition.14.  Pleshek and Thomas were dismissed from the action following successful summary judgment motions.   Beverly Enterprises, Inc., was dismissed following the close of Maxwell’s evidence.FOOTNOTE.  See footnote *, ante.19.  The Agarwal court, using a slightly different wording of the Restatement as it was set out in a 1976 case stated:  ” ’ ”California follows the rule laid down in Restatement of Torts, section 909, which provides punitive damages can properly be awarded against a principal because of an act by an agent if, but only if ‘(a) the principal authorized the doing and the manner of the act, or (b) the agent was unfit and the principal was reckless in employing him, or (c) the agent was employed in a managerial capacity and was acting in the scope of employment, or (d) the employer or a manager of the employer ratified or approved the act.’   [Citations.]” ’ ”  (Agarwal v. Johnson,supra, 25 Cal.3d at pp. 932, 950, 160 Cal.Rptr. 141, 603 P.2d 58.)20.  We have taken judicial notice of several documents evidencing the Legislature’s intent in enacting Senate Bill No.1989.   We agree with Beverly that statements of individual legislators may be considered in interpreting intent when they recount legislative discussions or events which resulted in adoption of the bill.  (California Teachers Assn. v. San Diego Community College Dist. (1981) 28 Cal.3d 692, 700-701, 170 Cal.Rptr. 817, 621 P.2d 856.)   Beverly argues that we should ignore a letter from Senator Roberti, a member of the conference committee, which was printed in the Senate Journal.  (8 Sen. J. (1979-1980 Reg. Sess.) dated Aug. 28, 1980, p. 14548.)   Roberti’s letter, based on representations made to him during committee proceedings, stated that the committee intended no alteration in the Egan interpretation of “managing agent.”   The Maddy and Roberti letters are not necessarily contradictory because Senator Maddy took issue with the “managerial capacity” language, and the statute, as amended, retained only the “managing agent” language.   Since neither letter sheds much light on the content of committee debates or specific arguments raised in the committee hearings, we are not inclined to place a great deal of weight on either letter.  (In re Marriage of Bouquet (1976) 16 Cal.3d 583, 590-591, 128 Cal.Rptr. 427, 546 P.2d 1371 [a motion to print a letter and an “individual legislator’s recount of the argument preceding the passage of a bill probably merits less weight than extensive committee reports on the bill or a formal record of the legislative debates”].)   Because the legislative history materials submitted by Beverly adequately illuminate the intent in passing Senate Bill No.1989, we deny Maxwell’s post-briefing request for judicial notice of additional items of legislative history.21.  The defendants in Agarwal were plaintiff’s supervisor, the manager of project services (3 departments, 20-25 employees) and his assistant.  (Agarwal v. Johnson,supra, 25 Cal.3d 932, 939, 160 Cal.Rptr. 141, 603 P.2d 58.)   Defendants had the discretion to assign plaintiff to menial projects, evaluate his performance, change his office location, deny permission to attend educational seminars, and to fire plaintiff on a pretextual reason.  (Id. at pp. 939-942, 160 Cal.Rptr. 141, 603 P.2d 58.)   The Agarwal court stated that the defendants were employed in a managerial capacity.  (Id. at pp. 951-952, 160 Cal.Rptr. 141, 603 P.2d 58.)   To the extent that Agarwal sets out a different standard than Egan, the “managerial capacity” concept discussed in Agarwal no longer applies.22.  We focus on Pleshek, whom we find to be a managing agent, although Thomas was her supervisor and the director of operations for the entire geographical area.   Thomas hired Maxwell, apparently because there was no permanent administrator at Beverly Manor at the time.   Pleshek consulted Thomas when she disciplined and fired Maxwell.   Thomas concurred in Pleshek’s decisions.   The corporate headquarters of the parent corporation, Beverly Enterprises, is located in Fort Smith, Arkansas.   Thomas never had occasion to go to Fort Smith and did not meet with or routinely talk on the telephone to anyone from Fort Smith.   Neither of these employees was merely a supervisor, as Beverly argues.23.  See, e.g., Bechtel etc. Corp. v. Ind. Acc. Com. (1944) 25 Cal.2d 171, 153 P.2d 331, a workers’ compensation case cited by Beverly, which states that a managing agent has “general discretionary powers of direction and control․”  (Id. at p. 174, 153 P.2d 331, italics omitted.)FOOTNOTE.  See footnote *, ante.DOSSEE, Associate Justice.STEIN, Acting P.J., and SWAGER, J., concur.


Attorney Stephen Danz

Stephen Danz has over 30 years of practical legal experience, trying hundreds of cases within that time. Regularly appearing before the state and federal courts throughout the state of California, Mr. Danz has earned a reputation as a leading attorney for plaintiffs employment law. He is admitted to practice law in ALL federal and state courts of California. For the federal bar, that includes the Northern, Southern, Eastern and Central Districts of California. He is authorized to practice in all 52 counties of California.