NOTICE OF PROPOSED CLASS ACTION SETTLEMENT This notice pertains to the settlement of a class action lawsuit entitled Betty Montreuil v. The Ensign Group, Inc. et al., Los Angeles County Superior Court, Central Civil West, Case No. BC449162 (the “Lawsuit”). The settlement covers all persons who resided in one or more of the following facilities between November 9, 2006, and August 1, 2012, or, if such a resident is now deceased, his or her successors-in-interest: Arbor Glen Care Center Arroyo Vista Nursing Center Atlantic Memorial Healthcare Center Brookfield Healthcare Center Brookside Healthcare Center Bella Vista Transitional Care Center (formerly Cabrillo Healthcare Center) Camarillo Healthcare Center Carmel Mountain Rehab & Healthcare Claremont Care Center Cloverdale Healthcare Center Glenwood Care Center Lemon Grove Care & Rehab Center Mission Care Center Northbrook Nursing and Rehab Palm Terrace Healthcare & Rehab Palomar Vista Healthcare Center
Panorama Gardens, Park View Gardens at Montgomery Plymouth Tower Care & Living Center Premier Care Center for Palm Springs Rose Villa Healthcare Center The Orchard Post-Acute Care (formerly Royal Court Health Care) Sea Cliff Healthcare Center Shoreline Healthcare Center Sonoma Healthcare Center Southland Care Center Summerfield Healthcare Center Ukiah Convalescent Hospital Upland Rehab and Care Center Victoria Care Center Victoria Healthcare Center Vista Knoll Specialized Care Facility Whittier Hills Healthcare Center
The Lawsuit was filed against the above-referenced Facilities and The Ensign Group, Inc.; Ensign Facility Services, Inc.; The Flagstone Group, Inc.; Touchstone Care, Inc.; and Northern Pioneer Healthcare, Inc. (collectively, “Defendants”). The settlement includes two Settlement Classes: (1) The “Resident Class” consists of all persons who resided at one or more of the Facilities at any time between November 9, 2006, through and including August 1, 2012 (the “Settlement Class Period”); (2) the “Successor-in-Interest Class” consists of all persons who are the successors-in-interest (as defined in California Probate Code section 13006) of any Resident Class Member who is deceased as of August 1, 2012. WHAT IS THE LAWSUIT ABOUT? The Lawsuit alleged that the Defendants failed to (1) meet California’s minimum staffing requirements, and (2) employ an adequate number of qualified nursing personnel at the Facilities during the above times. Defendants deny these allegations. After multiple mediation sessions before an experienced mediator, the parties have agreed to settle the Lawsuit. The Court has preliminarily approved the settlement and approved this notice. WHAT ARE THE KEY SETTLEMENT TERMS? 1. Cash Payments: Defendants have agreed to pay up to $5,000,000 total to Settlement Class Members. The specific amount of each payment (each, a “Cash Payment”) will be based on an estimate of the number of days during the resident’s stay at a Facility that the Facility allegedly fell below 3.2 nursing hours per patient day (a “Subject Day”). For purposes of the settlement, the Parties Notice Page 1 of 4
have agreed that 20% of each resident’s stay at a Facility are Subject Days. The number of Subject Days will then be multiplied by the “Subject Day Amount.” The Subject Day Amount is $10 for members of the Resident Class, and $3 for members of the Successor-in-Interest Class. Thus, for example, if you resided at a Facility for 200 days during the Settlement Class Period, you would be eligible to receive $400 (200 days x 20% x $10). The Successor-in-Interest of such a deceased resident would be entitled to receive $120 (200 days x 20% x $3). In the event that all Cash Payments would total more than $5,000,000 based on the $10 and $3 Subject Day Amounts, the Subject Day Amounts will be adjusted downward to ensure all payments total only $5,000,000. 1.1
Current Residents
If you are a current resident of a Facility as of October 5, 2012, and remain a current resident on the Final Effective Date of the Settlement Agreement (defined below), you will receive your Cash Payment automatically and in the form of a credit to your account at the Facility. You do not need to send in a Claim Form. If you are a current resident as of October 5, 2012, but leave a Facility before the Final Effective Date, you will receive a check instead of a credit, but you must submit a Claim Form (described below) within 30 days of leaving the Facility in order to do so. If you are a current resident as of the Final Effective Date, but leave a Facility within six months of the Final Effective Date, you may request a check for the balance of your credit (“Balance Check”), subject to the limitations below. The total amount of Balance Checks paid will be limited to $100,000. If the total amount of Balance Checks requested exceeds $100,000, the Balance Check payment to individual claimants will be reduced on a prorata basis. If the total of the Balance Checks requested is less than $100,000, any remaining funds will be donated to a charity or non-profit association approved by the Court (the “Cy Pres Award”). To obtain any payment, you must submit a timely and complete Claim Form (described below) that is postmarked no later than 60 days from the date you left the Facility. If a current resident leaves a facility more than six months after the Final Effective Date or passes away anytime after the Final Effective Date, neither they nor their successor(s) will receive any Balance Check. 1.2
Former Residents
If you are a former resident of a Facility as of October 5, 2012, you are entitled to a cash payment calculated at $10 per subject day. To obtain any payment, you must submit a timely and complete Claim Form (described below) that is postmarked no later than December 4, 2012. 1.3
Successors-in-Interest
If you are a successor in interest to a current or former resident who passed away prior to August 1, 2012, you must submit a timely and complete Claim Form (described below) postmarked no later than December 4, 2012. If you are a successor in interest to a current resident who passes away between October 5, 2012, and the Final Effective Date, you must submit a timely and complete Claim Form postmarked no later than 30 days from the date of death. Successors-in-Interest are entitled to a cash payment calculated at $3 per subject day. 1.4
Final Effective Date
As used herein, the term Final Effective Date generally means the date the deadline to appeal the Settlement Agreement runs, or if an appeal is taken, the day the appeal process ends. Please see the Settlement Agreement for the precise definition. Notice Page 2 of 4
2. Injunction: Pursuant to a Court-ordered Injunction, the terms of which the Parties negotiated, Defendants will ensure that nurse staffing levels at their Facilities remain at or above the minimum requirement of 3.2 nursing hours per patient day (“NHPPD”). In addition, Defendants have agreed to maintain an average of 3.4 NHPPD at the Facilities during the week, and 3.3 NHPPD on weekends. The Injunction will become effective on the Final Effective Date, and will remain in place for 2.5 years thereafter. Under the Injunction, Defendants will submit quarterly compliance reports to a third party Monitor detailing their nurse staffing during the month. Defendants have agreed to pay for all costs associated with the Injunction and the Monitor. Defendants estimate that the cost of complying with the Injunction is approximately $15 million. Plaintiffs believe that the value conferred on the Settlement Classes is at least that amount, if not higher. 3. Releases: In exchange for these benefits, Settlement Class Members will be releasing all claims against the Defendants that were asserted or could have been asserted in the Lawsuit, subject to specific limitations in the Settlement Agreement. By releasing these claims, you will be giving up important rights and benefits, including the right to assert these or related claims to a jury. Claims for personal injuries are specifically excluded from the Lawsuit and settlement. So, while Settlement Class Members will not release personal injury claims in the settlement, the limitations period for asserting any such claims continues to run. You may wish to consult with your own attorney with respect to participation in the Lawsuit or your legal rights generally. 4. Other Terms: Subject to Court approval, Defendants will pay service payments of $5,000 to each of the nine named plaintiffs, settlement administration expenses not to exceed $150,000, and reimbursement of litigation expenses and attorneys’ fees to Class Counsel not to exceed $2,500,000, with the actual amount of fees and costs to be determined by the Court. Awarded fees will be divided among Class Counsel as described at the settlement website www.cptgroup.com/ensignsettlement. FINAL SETTLEMENT APPROVAL The Court has set the date for hearing on the motion for final settlement approval and the approval of Plaintiffs’ fee and cost application and approval of the service payments to the named class representatives for January 10, 2013, at 10:00 a.m. (the “Final Approval Hearing”). The Final Approval Hearing will occur in Department 308 of the Los Angeles Superior Court located at 600 S. Commonwealth Ave., Los Angeles, CA 90005. WHO REPRESENTS YOU? The Court has appointed Stebner and Associates; The Arns Law Firm; Zimmerman Reed, LLP; The Law Offices of Michael D. Thamer; Janssen, Malloy, LLP; Ridout & Lyon, LLP; and McKenna, Long & Aldridge, LLP to serve as “Class Counsel.” WHAT ARE YOUR OPTIONS? If you wish to participate in the settlement and you are a Current Resident (as defined above), you do not have to do anything. If the Court approves the settlement, you will receive your Cash Payment in the form of a credit to your account, subject to the terms and conditions set forth above. You will be legally bound by all orders and judgment of the Court, and you will not be able to sue, or continue to sue the Defendants related to their staffing levels during the Class Period. If you wish to participate in the settlement and you are a Former Resident or Successor-inInterest (as defined above), you must complete and submit the enclosed Claim Form to CPT Group, Inc. (the “Settlement Administrator”) at: 16630 Aston, Irvine, CA 92606. Successor-in-Interest Notice Page 3 of 4
Class Members must also complete the enclosed Declaration under Probate Code Section 13100 and submit it along with the required documentation set forth therein. Claim Forms and other documents, if necessary, must be received by the Settlement Administrator postmarked on or before December 4, 2012. If the Court approves the Settlement, and you have submitted a timely and complete Claim Form, you will be mailed a check. Before cashing the check, however, you should consider whether the receipt of settlement funds will impact your eligibility for MediCal or other benefits. Information regarding this issue is available by visiting www.canhr.com. You will be legally bound by all orders and judgment of the Court, and you will not be able to sue, or continue to sue the Defendants related to their staffing levels during the Class Period. If you do not want to remain a Class Member, you may choose to exclude yourself from the Lawsuit, by sending a signed letter stating “I hereby opt-out of the Ensign Class Action Settlement” to CPT Group, Inc. at 16630 Aston, Irvine, CA 92606. In that letter, you must include your printed name, address and signature. The request for exclusion (opt-out) letter must be postmarked no later than November 19, 2012, and must be signed by the person(s) to whom this Notice is addressed, or their legally authorized representative. If you opt-out, you will not receive any settlement payment. However, you will retain your right to sue the Defendants for any claims you may have and will not be bound by any Court orders or judgments. If you wish to remain a Settlement Class Member but object to the proposed settlement, you must notify the Court and Counsel for the Parties of your intent to do so. Any objections to the proposed settlement must be in writing. You may also appear at the Final Approval Hearing, either in person or through an attorney at your own expense, provided you notify the Court of your intent to do so. All written objections, supporting papers and/or notices of intent to appear at the Final Approval Hearing: (a) must clearly identify the case name and number (Betty Montreuil v. The Ensign Group, Inc. et al., Los Angeles County Superior Court, Central Civil West, Case No. BC449162); (b) must be submitted to the Court either by mailing to: Clerk of Court, 600 S Commonwealth Ave., Los Angeles, CA 90005, or by filing in person at that location; (c) must be mailed to the law firms identified below; and (d) must be received on or before November 19, 2012, by the Court and by Counsel below: Class Counsel
Defendants’ Counsel
McKenna Long & Aldridge, LLP c/o Todd Kinnear 600 West Broadway, Suite 2600 San Diego, CA 92101
Garcia, Artigliere & Schadrack, LLP c/o Stephen M. Garcia One World Trade Center, Suite 1950 Long Beach, CA 90831
HOW CAN YOU GET MORE INFORMATION? This notice summarizes the Settlement Agreement only. To obtain the complete Settlement Agreement, visit www.cptgroup.com/ensignsettlement or contact the Settlement Administrator (CPT Group, Inc.) at (888) 205-2943, or 16630 Aston, Irvine, CA 92606. The pleadings and other records in this litigation, including the Settlement Agreement, may be examined at the Courthouse located at 600 S Commonwealth Ave., Los Angeles, CA 90005, between the hours of 9:00 a.m. and 4:00 p.m., Monday through Friday, excluding Court holidays. PLEASE DO NOT CONTACT THE COURT. By order of the Honorable Jane L. Johnson, Los Angeles County Superior Court, Central Civil West dated October 1, 2012.
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