Kindred Healthcare Inc. will pay millions to settle a class-action lawsuit that alleges the Louisville-based post-acute and home health care company violate California labor laws.
The lawsuit, filed U.S. District Court's Northern District Court of California in August 2016, claims that Kindred (NYSE: KND) and its Gentiva Health Services home health care subsidiary failed to pay health care workers overtime, provide meal and rest breaks, pay the state's minimum wage, and keep accurate payroll records, among other things, from 2012 to 2016.
Kindred will set up a $12 million settlement fund, according to a copy of the settlement agreement.
The plaintiff who brought the case, Valerie Cashon, was an occupational therapist with Gentiva before Kindred acquired Gentiva in 2015.
The settlement fund will pay out no more than $3 million in attorney fees; about $8.7 million will be paid to the class of some 1,600 party members; and the remainder will go to other administrative and legal fees.
The award to class members will be based on a formula established by the settlement agreement, with an average recovery of $5,415.
Cashon will receive recovery of no more than $20,000, according to the agreement.
The agreement states that Kindred denies all allegations but that the company "concluded that that further proceedings in the action would be protracted and expensive."
Requests for comment from Kindred were not returned.
The case first went to mediation on April 3, 2017, but the effort was unsuccessful. Kindred and the plaintiff's counsel eventually conducted successful mediation on Nov. 20, 2017.
Kindred Healthcare is in the midst of an acquisition that will take the company to private ownership and split off the company's home health business. Kindred's shareholders recently approved the company's sale to a consortium made up of Humana Inc. and two private equity firms.