The Forum agreed to make immediate changes which should have been completed before Ms. Cote’s admission in November 2011. They claimed that they made these commitments in an attempt to stave off further scrutiny from the government.
Compensatory Result: Before trial, Five Star had offered Ms. Cote’s estate a settlement of $500,000. On May 22, 2012, the 10-member jury deliberated for one day after hearing two weeks of testimony before deciding unanimously that the Forum at Desert Harbor was responsible for Ms. Cote's pain and suffering and returned a verdict of $2.5 million.
Punitive Damages Testimony: This verdict led to the second phase of the trial. Since Mr. Johnson was not available to testify in person regarding punitive damages, he was asked to provide trial preservation testimony a few weeks earlier. Mr. Johnson’s primary task was to frame, in economic terms, the “financial condition” of Five Star Quality Care, Inc. The term “financial condition” encompasses the areas of financial health, wealth and economic status.
Mr. Johnson presented evidence from Five Star's 10-K financial statements filed with the Securities and Exchange Commission (SEC). He explained that Five Star had revenues of $1 billion or more from 2010 to 2014. Their average daily revenue in 2014 was $3.6 million. Although Five Star reported negative net income for the last two years, they had positive cash flow profits of $22 million, $21 million in cash and a net worth of $226 million for 2014. In addition, Five Star had a stock market valuation of $212 million on March 24, 2015.
On May 28, 2015, the jury returned a punitive damages verdict of $16.7 million for the plaintiffs. The compensatory verdict of $2.5 million plus the punitive damages verdict of $16.7 million yielded a total of $19.2 million.
Attorney’s Comments: Immediately after the verdict, Plaintiff’s attorney Arthur Lloyd commented:
"Mr. Johnson’s research of Five Star’s financials was very crucial in the punitive damages phase.
His analysis enabled me to put into perspective what I wanted the jury to award Ms. Cote’s estate. I explained to the jury that Five Star had a valuation on the New York Stock Exchange of over $200 million and annual revenues of over $1 billion.
I asked the jury to force Five Star to reform their practices by returning a verdict that would ‘get past middle management and get into the boardroom.’ I asked the jury to award between $18 and $20 million. The equivalent of a 5 day ‘time-out’ based on their daily revenue of $3.6 million."