Week Adjourned: 10.17.14 – GM, LinkedIn, Extendicare Health

Top Class Action Lawsuits

General Motors Co. Better Buckle Up because they are facing the mother of defective automotive class actions… two consumer fraud class action lawsuits to be precise, which combined, seek to represent drivers of 27 million vehicles in the US.

Thought to be the largest lawsuits brought against GM to date, they stem from GM’s series of recalls prompted by 60 serious defects in 27 million vehicles, according to legal documents. The plaintiffs are seeking $10 billion in compensation for reduced values of their vehicles.

The proposed GM lawsuits seek to represent owners who bought or leased a GM recalled vehicle between July 2009 and July 2014 and either still have it, sold it after mid-February, when the recalls started, or had an accident that destroyed it after that date. More than 20 million customers could join the lawsuit, according to the attorneys representing the plaintiffs.

According to the complaints filed on Tuesday in federal court in Manhattan, “New GM repeatedly proclaimed that it was a company committed to innovation, safety and maintaining a strong brand.” “New GM” is the re-branded name for automaker after its 2009 bankruptcy and government bailout. “The value of all GM-branded vehicles has diminished as a result of the widespread publication of those defects and New GM’s corporate culture of ignoring and concealing safety defects.”

Hundreds of individual complaints against GM about vehicle values were combined in two class actions, with the larger suit involving vehicles made after the bankruptcy. The smaller suite focused on ignition-switch faults in vehicles made before the bailout. Both complaints say the vehicles at issue started losing value in February 2014, a situation that continues, affecting Chevy Camaros with model years 2010 and 2011 that lost $2,000 in value, and the 2009 Pontiac Solstice, which has lost almost $3,000 in value, according to the suits.

More than 27 deaths have been attributed to the defects, according to the latest claims report released earlier this week by the attorney overseeing the compensation fund for victims of crashes stemming from the defects.

The cases are In re: General Motors LLC Ignition Switch Litigation, case number 1:14-md-02543, in the U.S. District Court for the Southern District of New York.

On LinkedIn? Heads Up—the social networking site is facing a proposed class action alleging that the “trusted reference” reports offered through the 300 million-member professional social network don’t comply with the Fair Credit Reporting Act (FCRA) certification and disclosure requirements. Oops.

All kidding aside, the alleged breach could have far reaching effects, not surprisingly. The LinkedIn lawsuit, filed in California federal court, claims LinkedIn must comply with the same standards mandated by the FCRA for credit reporting agencies who furnish consumer reports for employment purposes. The lawsuit contends that the company has filed to do so, by not maintaining reasonable procedures to limit the furnishing of consumer reports containing inaccurate information to potential employers. This could, in turn, potentially harm job applicants who are evaluated based on that information. Got it?

Here’s the skinny: filed on behalf of plaintiff Tracee Sweet and others, the complaint states that LinkedIn offers a premium service allowing users to click on a member’s profile and select a “search for references” link. The site then generates a reference report containing the names, locations, employment areas, current employers and current positions of all persons in the user’s network who may have worked with that individual.

According to the lawsuit, any potential employer using these reports can anonymously dig into the employment history of any LinkedIn member, and make hiring and firing decisions without the knowledge of the member, without any safeguards in place to ensure the potential employer received accurate information.

“Such secrecy in dealing in consumer information directly contradicts the express purposes of the FCRA, which was enacted to promote accuracy, fairness and the privacy of personal information assembled by credit reporting agencies,” the lawsuit states.

Further, the lawsuit states that the information regarding employment history, including job titles is supplied by each individual member, and LinkedIn therefore relies solely on each of its members to accurately input and update their own employment history. If a LinkedIn member misrepresented his or her job title from a past employer or included other fabricated employment information in their profile, that information would appear on a reference report for any other LinkedIn member who may have worked at the same employer with that individual.

“Such inaccurate information could lead to negative consequences for any job applicant whose potential employer contacts that reference,” the complaint states.

The lawsuit seeks to represent all LinkedIn users in the United States who had a reference report generated on from their profile within the last two years, and a subclass of anyone who also applied for employment through a LinkedIn job posting.

The case is Tracee Sweet et al. v. LinkedIn Corp., case number 3:14-cv-04531, in the U.S. District Court for the Northern District of California.

Top Settlements

Extendicare Didn’t Care? This settlement hits a number of buttons—for all the wrong reasons. Extendicare Health Services Inc. and its subsidiary Progressive Step Corporation (ProStep) have agreed to pay $38 million to the United States and eight states to resolve allegations that Extendicare billed Medicare and Medicaid for materially substandard elder care nursing services that were so deficient that they were effectively worthless and billed Medicare for medically unreasonable and unnecessary rehabilitation therapy services, the Justice Department and the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) jointly announced today. This resolution is the largest failure of care settlement with a chain-wide skilled nursing facility in the department’s history. Investigators were tipped off by whistleblowers at Extendicare.

As part of this settlement, Extendicare has also been required to enter into a five year chain-wide Corporate Integrity Agreement with HHS-OIG. Extendicare is a Delaware corporation that, through its subsidiaries, operates 146 skilled nursing facilities in 11 states. No small operation. ProStep provides physical, speech, and occupational rehabilitation services.

This settlement resolves allegations that between 2007 and 2013, in 33 of its skilled nursing homes in eight states, Extendicare billed Medicare and Medicaid for materially substandard skilled nursing services and failed to provide care to its residents that met federal and state standards of care and regulatory requirements. The government alleges, for example, that Extendicare failed to have a sufficient number of skilled nurses to adequately care for its skilled nursing residents; failed to provide adequate catheter care to some of the residents and failed to follow the appropriate protocols to prevent pressure ulcers or falls. The eight states involved in this component of the settlement are Indiana, Kentucky, Michigan, Minnesota, Ohio, Pennsylvania, Washington and Wisconsin.

Additionally, this settlement resolves allegations that between 2007 and 2013, in 33 of its skilled nursing homes, Extendicare provided medically unreasonable and unnecessary rehabilitation therapy services to its Medicare Part A beneficiaries, particularly during the patients’ assessment reference periods, so that it could bill Medicare for those patients at the highest per diem rate possible.

As a result of the settlement, the federal government will receive $32.3 million and the eight state Medicaid programs will receive $5.7 million. The Medicaid program is funded jointly by the federal and state governments.

Hokee Dokee—Time to adjourn for the week. Have a fab weekend—See you at the bar!