Marcella Nursing & Rehabilitation Center, Cinnaminson Nursing Center, Geriatric & Medical Services

Plain-English summary

Three nursing facilities sought attorney fees and expenses under the Equal Access to Justice Act. Each facility individually met the size and net-worth limits, but their corporate parent, Genesis Health Ventures, did not. On remand, the judge found that Genesis exercised extensive control over the facilities' safety programs and absolute control over the litigation strategy. The fact that Genesis charged the facilities for legal fees did not outweigh that relationship. The parent and subsidiary assets were aggregated, making the facilities ineligible, and the fee application was denied.

Decision snapshot

• Cited standard(s): None; this decision concerns eligibility for an attorney-fee award.
• Outcome: The application for attorney fees and expenses was denied.
• Key point: A parent's assets may be aggregated with affiliated applicants when the parent controlled both the relevant safety program and the litigation.

Full text (OSHRC public release)

MARCELLA NURSING,REHABILITATION CENTER,CINNAMINSON NURSING CENTER,GERIATRIC & MEDICAL SERVICE, Docket No. 00-0918 & 00-0921 & 00-0922

SECRETARY OF LABOR,  

Complainant,

v.

OSHRC DOCKET NOS. 00-0918,

& 00-0921 & 00-0922

MARCELLA NURSING &

REHABILITATION CENTER,

CINNAMINSON NURSING CENTER,

GERIATRIC & MEDICAL SERVICE,

Respondents.

DECISION AND ORDER ON REMAND

This matter is before the undersigned pursuant to a remand order of the Occupational
Safety and Health Review Commission (“the Commission”). In a decision dated December 21,
2001, I found that the above-named Respondents (“Marcella,” “Cinnaminson,” and “Geriatric,”
respectively) were not eligible for an award under the Equal Access to Justice Act (“EAJA”), 5
U.S.C. § 504, because the parent company, Genesis Health Ventures, Inc. (“Genesis”), was not
eligible and the aggregation of the assets of Genesis with those of the Respondents was
appropriate in the circumstances of this case. In its decision dated September 21, 2004, the
Commission vacated my decision and remanded this matter to me for further proceedings.
Specifically, the Commission ordered that, in regard to whether aggregation of the assets of
Genesis with those of the Respondents was appropriate, I consider “the nature and extent to
which Genesis exercised control over the safety program as well as the litigation strategy in this
case.” The Commission also ordered that I consider the affidavit of a Genesis official stating that
Genesis had paid the attorney fees and expenses that had been incurred and then had charged
Marcella, Cinnaminson and Geriatric for those fees and expenses. Finally, the Commission
ordered that I determine whether the Secretary's position in this matter was substantially justified.

It is undisputed that each of the named Respondents in this case is individually eligible for an
EAJA award, in that, at the time the notices of contest were filed, each had fewer than 500
employees and a net worth of less than $7 million. It is also undisputed that all three Respondents
are wholly-owned subsidiaries of Genesis, which had approximately 30,000 employees and a net
worth of over $587 million at the time the notices of contest were filed. The Commission̓s
EAJA rules require the net worth and number of employees of an applicant and all of its affiliates
to be aggregated to determine eligibility, “unless such treatment would be unjust and contrary to
the purposes of the EAJA in light of the actual relationship between the affiliated entities.” See
Commission EAJA Rule 105(f), 29 C.F.R. § 2204.105(f).

With respect to the nature and extent of Genesis’ control over the safety program, Mark
Santoleri, the senior manager of safety and loss control of Genesis, testified at the hearing that he
ran the safety and health programs for Genesis elderly care and multi-care operations. He further
testified about the actions that were taken to convert to the use of safety syringes in all Genesis
facilities. On July 7, 1999, Santoleri drafted C-6, a memo to Genesis management recommending
the transition to safety syringes. He then made a presentation to Genesis’ safety committee, and
he later made presentations to small groups of clinical senior management, after which teams
were formed to oversee the selection and evaluation of products. Vendors were chosen and
products were selected for evaluation, and on October 4, 1999, Genesis issued R- 16, a press
release announcing its decision to begin using safety syringes in all its facilities. The next step
was evaluation and selection of safety syringes, which the teams carried out by testing products in
their regions. In December 1999, Genesis contacted the selected vendors and developed a plan to
ensure the timely distribution of the products in its 340 operations. Genesis began the conversion
to safety syringes in early March 2000 and completed the conversion by early June 2000.
Santoleri noted that Genesis was the first long-term care company to make the transition to safety
syringes; he also noted that the transition cost approximately $265,000.00. (Tr. 207-08; 217-21;
224-26; C-6-7; R-7-16).

In addition to the above, Laura Spina, the OSHA industrial hygienist (“IH”) who inspected
Marcella, testified that when she discussed abatement of the alleged violations with Marcella
management, she was told that final abatement decisions were up to Mark Santoleri. (Tr. 8-10;
26; 30). Similarly, Timothy Louden, the OSHA IH who inspected Cinnaminson and Geriatric,
testified

that when he spoke to Cinnaminson management, he was told that any proposed abatement would
have to be presented to Mark Santoleri. Louden also testified that he spoke mostly to Santoleri
about the safety syringes issue and that Santoleri told him about the plan to begin using the
syringes; Louden further testified that he spoke to Santoleri about the violations he had found at
Cinnaminson and Geriatric. (Tr. 46-49; 53-59; 64).

Upon considering the foregoing, I conclude that Genesis exercised great control over the
safety programs of its facilities.

In particular, I note the testimony of Santoleri that he “ran the
safety and health programs for Genesis elderly care and multi-care operations.” (Tr. 207-08). I
also note his testimony about how Genesis made the decision to convert to the use of safety
syringes in all of its facilities and how that conversion was undertaken. Finally, I note the
testimony of the IH̓s that management officials of the inspected facilities told them that Santoleri
had the final say in regard to any abatement actions; moreover, IH Louden testified that he
discussed the violations he had found at Cinnaminson and Geriatric with Santoleri.

As to the nature and extent of Genesis’ control of the litigation strategy, it is apparent from
the attorney billing records that Mark Santoleri (and therefore Genesis), together with counsel,
exercised absolute control of the litigation strategy in this case. Those records, which were
submitted as Exhibit C, Part 1, to the Respondents̓ application for attorney fees and expenses,
have numerous references to phone calls and meetings between counsel and Santoleri; one such
reference, dated April 28, 2000, describes a “call from Mark regarding meeting to work on
defense,” and another, dated May 1, 2000, describes a “[c]all from Mark regarding meeting to
review strategy regarding citations in New Jersey.” See Exh. C, Part 1, p. 1. Santoleri was the
Genesis representative who accompanied counsel to an informal conference held with OSHA on
May 12, 2000, he was the person with whom counsel spoke when settlement negotiations were
occurring in August and November of 2000, and he was with counsel at a meeting held with
witnesses from the cited facilities on September 25, 2000. See Exh. C, Part 1, pp. 2, 4-5, 9, 11.
Santoleri was also the individual who assisted counsel with discovery, who met with counsel just
before the hearing, and with whom counsel discussed the post-hearing brief and the decision on
the merits in this case. See Exh. C, Part 1, pp. 11-18. In sum, based on Exhibit C, Part 1, Santoleri
was intimately involved in the litigation strategy in this case at every step along the way, and, so
far as I can tell, he was the only person affiliated with Genesis who was so involved. In fact,
except for meeting with witnesses from the cited facilities on September 24 and 25, 2000, and
again on January 4, 2001, and having telephone conferences with some of those witnesses on
January 10, 2001, counsel evidently had no contact with individuals from the cited facilities.

See Exh. C, Part 1, pp. 9, 14-15.

In regard to the affidavit of Santoleri stating that Marcella, Cinnaminson and Geriatric
were charged for the fees and expenses that were incurred in this matter, I note that there is no
assertion that the facilities have paid the amounts they were billed. However, even if they have, I
find that this factor is an insufficient basis upon which to conclude that the assets of Genesis
should not be aggregated with those of the three Respondents, in light of the circumstances of this
case.

For all of the foregoing reasons, and for those set out in the original EAJA decision, I find
that aggregating the assets of Genesis with those of the three Respondents is appropriate.
Respondents are accordingly ineligible for an EAJA award, and the application for attorney fees
and expenses is DENIED.

So ORDERED.

/s/

Irving Sommer

Chief Judge

Dated: October 12, 2004

Washington, D.C.