The attorneys who won the verdict Sept. 3 in Rome, a regional medical center that generally is considered hostile to civil actions against medical providers, say they believe the jury was "absolutely disgusted" by the substandard care and neglect of patients in the facility owned by Houser.
Prieto and Lowry say the jury told them in post-trial interviews that they had little sympathy for Houser, who the plaintiffs' lawyers said was spending Medicare and Medicaid money on new cars and personal real estate while his nursing home couldn't even buy diapers or food for its patients.
Prieto, whose firm has offices in Cartersville and Atlanta, and Lowry, whose firm has offices in Atlanta and Savannah, say they believe the verdict is collectible even though Houser and the nursing home don't have insurance. Houser filed for bankruptcy protection after the trial started and listed combined assets for himself and his company of between $20 million and $100 million, according to the attorneys.
The plaintiff is Loretta Terhune, daughter of the late Morris Ellison, who entered Moran Lake Nursing and Rehabilitation Center in 2006 for post-operative recovery. Although he was 82, he was mobile, active and had a busy social life, even a couple of girlfriends, his daughter said. Eight months later, he was dead. The medical examiner testified at the trial that the autopsy revealed Ellison died of malnourishment, dehydration and an undiagnosed, untreated broken hip.
The jury deliberated just 2½ hours before reaching a verdict that included $35 million in punitive damages. Other damages included $2 million for pain and suffering, $800,000 for the value of Ellison's life, $16,636 for medical expenses, $19,879 for contract losses and $5,664 for funeral expenses. The non-punitive portion totaled $2.8 million, but it was tripled because the jury found that Houser intentionally violated the Fair Business Practices Act. Hence, the verdict totaled $43.5 million.
The jury also found that the defendant "exhibited specific intent to cause harm," and was "in breach of a fiduciary duty" by diverting funds intended for patient care to personal use.
In response, Houser told the Daily Report, "I'm innocent."
Houser was led away in handcuffs at the conclusion of the trial and spent two days in jail serving a contempt sentence after disregarding instructions from Floyd County Superior Court Judge J. Bryant Durham Jr. Durham already had struck Houser's answer to the case because he refused to participate in discovery.
After he was released from jail, Houser talked to the Daily Report on a conference call that included his attorney, Christopher P. Twyman of Cox Byington in Rome. Twyman represents Houser in a federal criminal indictment that charges him with defrauding Medicare and Medicaid of more than $30 million and diverting the funds to personal use, as well as failure to pay collected employee payroll taxes and failure to file personal income tax returns.
Asked to clarify whether he was referring to the civil or the criminal matter, Houser said, "I'm innocent of all of it."
Asked why he did not have Twyman represent him in the civil case—particularly since Twyman sat in on part of the trial—Twyman interjected, "You don't have to answer that."
Twyman also advised Houser not to answer questions on the pending criminal case or the civil verdict—which the two said they plan to appeal unless they win approval of a motion for a new trial, which they plan to file.
"You can quote Chris," said Houser. "He's an excellent lawyer, lightning-quick on his feet. Something I am not."
Houser laughed when asked about his reaction to the $43.5 million verdict. And he seemed surprisingly good humored. He also volunteered some comments, including one about the judge who had him led out of court in handcuffs and locked up. "I do want to say on the record that Judge Bryant Durham is a very fine man in the old fashion. I've known him for many years. He represented my mother."
Houser said his mother—Louise Kelly Houser, a former teacher—and father—the late John Wesley Houser, a dentist—started their Rome nursing home in 1963 in response to a need in the community. It was the first nursing home in Georgia to serve black patients. After his father died in 1981, Houser said, his mother continued to manage the business, which grew to two nursing homes in Rome and one in Brunswick. Now 91 and in an Alpharetta assisted living facility, Louise Houser has been retired for several years.
"My mother ran the nursing home for a long time. That's why we never had any suits," Houser said. "We always tried to do right by people. That's why we've never been sued—which was helpful, since we didn't have any insurance."
Houser attended segregated classes through the 10th grade at Rome's Main High School for black students. A counselor there had connections at a New England prep school, Northfield Mount Herman, and recommended Houser go there. From Northfield, he entered Harvard, where he earned a degree in math and philosophy before going on to Harvard's law school.
Houser said he returned home in 1976 and passed the Georgia bar exam on the first try. He said he never practiced law, other than a summer clerkship in California, an estate transaction for a friend of his mother and a three-month stint in a small law firm involved in real estate development. Instead of the law, he worked for his family's nursing home and pursued his interest in real estate.
Houser's real estate interests figured prominently in the civil trial and in the federal indictment, which alleges that he used his family's nursing home Medicare and Medicaid funds to purchase property for himself in the Rome area and a $1.3 million house in Atlanta for his former wife. The indictment also alleges that his current wife, Rhonda Houser, a licensed real estate agent, received "substantial commissions from these purchases."
In the civil trial, plaintiff's lawyers painted a picture of Houser buying real estate with Medicare and Medicaid funds and driving with his wife in "his-and-her Mercedes" while his nursing home became a "house of horrors."
The lawsuit said the nursing home ran out of money for paychecks, food, medicine, electricity, repairs, even disposable diapers. It began using cloth diapers, but then had no place to clean them because the washing machines and the hot water heater broke and were not repaired. Staff members used their own money to buy milk and bread for the patients, and were told by management that they would not be reimbursed. The state finally shut down Houser's company's three nursing homes, which are now operated by a different management entity. But Houser still owns an interest in the Certificate of Need under which the homes operate, according to the plaintiff's attorneys.
The character of a community dominated by Floyd County Medical Center and its medical professionals seems to have played a key role in the case, Prieto said.
"Floyd County is an extremely conservative venue, particularly in medical malpractice cases. Rome right now is ranked the No. 1 small city for medical care in America. Rome has more doctors per capita than any city in the state of Georgia. What traditionally might have been an obstacle we used as a benefit to our clients. A city that takes this kind of pride in their medical care will not tolerate this type of treatment of their elderly," said Prieto, who said this was the message he received from jurors he talked to after the verdict. "That's almost a direct quote from one of the jurors."
"The theme of the case was that George Houser basically drained the assets of the nursing homes in order to make himself very wealthy at the cost of the health of his patients," Lowry said. "A nurse testified to numerous shortages of things like food, water, prescription drugs, staff. Employees weren't getting paid. At the same time, George Houser was becoming more and more wealthy, buying up property, new cars, Mercedes for him and his wife, and a new house for his ex-wife."
Prieto and Lowry split duties in the trial, with both questioning witnesses. Prieto did the opening and Lowry did the closing. Prieto said he believes the jury went from "upset and uncomfortable to angry" during Lowry's cross-examination of Houser.
The plaintiff's lawyers said Houser seemed to think he had a checkmate when he handed over a federal bankruptcy filing he entered on Tuesday after the trial began on Monday, Aug. 30. The bankruptcy stalled the trial, but the plaintiff's lawyers filed for an emergency hearing in bankruptcy court on Thursday and staked a claim, then returned to finish the trial on Friday, Sept. 3. They say their verdict is "non-dischargeable" in federal bankruptcy court.
When they returned to the trial, the plaintiff's lawyers turned Houser's bankruptcy filing to their advantage. "When Steve utilized that filing on cross-examination, there was an audible sigh from the jury," said Prieto. "It was a thing of beauty."
Houser had been claiming he did not even have the money to hire a lawyer for the trial, the plaintiff's attorneys said. But in bankruptcy papers he filed after the trial began, Houser checked the boxes for $10 million to $50 million in assets for both himself personally and his company, meaning the total would be between $20 million and $100 million.
On cross-examination by Lowry, Houser admitted to signing over a Medicaid check to the seller of a piece of real estate he bought for $1.4 million, according to Prieto and Lowery.
Lowry's firm won a $17.5 million verdict in July for Corey Airport Services against the city of Atlanta and Clear Channel related to an airport contract. Harris, Penn & Lowry won a $40 million judgment against Ford Motor Co. that VerdictSearch reported as the 45th largest in the nation in 2009.
Prieto met Lowry through the Georgia Trial Lawyers Association. They became friends and decided they'd like to try a case together. Lowry joined the case just two weeks before trial. Prieto has been working on the case for three years.
Prieto has focused his practice in recent years entirely on nursing home cases. His first nursing home case came after a visit to a nursing home with a men's group from his church. A nurse hinted to him about poor conditions in some other homes. Soon after, a client came to him for help to get her mother out of a substandard nursing home. He was able to get them enough money to provide private care and allow the patient to die at home with her family. "It was the most gratifying work I had ever done in the practice of law," Prieto said.
He said he is at work on more lawsuits against Houser on behalf of other clients, and he will be working to try to collect the Terhune verdict through federal bankruptcy court.
"This isn't just a case. It's a cause," said Prieto. "We're not going to stop with this verdict."
The case is Terhune v. Forum Group et al, No. 09CV01023JFL003.
Correction: The original text of this story mistakenly reversed the names of the two plaintiff's lawyers with regard to how long each had worked on a case that resulted in a $43.5 million verdict. Stephen G. Lowry joined the case just two weeks before trial. Michael A. Prieto had been working on the case for three years. The current version has been modified to reflect the correction.
