Reversal: COA reinstates default judgment against nursing facilities

The Indiana Court of Appeals has reinstated default judgement against three nursing facilities after concluding the defendants couldn’t explain why their response was so late and that the underlying complaint was not “insufficient.”

Innovative Therapy Solutions Inc. filed a complaint in January 2019 alleging skilled nursing facilities Greenhill Manor Management, Hanover Nursing Management and Wintersong Village Management had failed to provide compensation for $52,400.61 worth of goods and services provided by ITS. The complaint requested the full amount owed, plus prejudgment interest at an 8% rate.

Summonses were sent to each of the defendants, but ITS later filed for default judgment, alleging all three failed to timely file a responsive pleading. Default judgment was ultimately ordered against the three defendants, but defense counsel responded by filing a motion to set aside the default judgment pursuant to Trial Rule 60(B).

Specifically, the defendants alleged that because ITS originally failed to attach the Affidavit of Debt to the complaint it served on defendants, the service of process was “inadequate. They also claimed the Hamilton Superior Court lacked personal jurisdiction over defendants and the default judgment was void pursuant to Rule 60(B)(6), and that the default judgment should be set aside pursuant to Rule 60(B)(8) because of “equitable considerations.”

The trial court ordered that the default judgment be set aside, but the Indiana Court of Appeals reversed in Innovative Therapy Solutions Incorporated, D/B/A Innovative Pharmacy Solutions v. Greenhill Manor Management, LLC, et al., 19A-CC-1717.

In its defense, the defendants contended that inadequate service produced by ITS’ initial failure to attach the Affidavit of Debt to the complaint rendered the latter insufficient and that the trial court was therefore without personal jurisdiction over them. They further argued the default judgment was therefore void and should be vacated.

“However, ‘it is well established that non-compliance with Rule 9.2(A) is not a per se bar to the action.’ … Rather, Trial Rule 9.2(F) — which Management Defendants only selectively quote — plainly states that a trial court faced with non-compliance with 9.2(A), ‘in its sound discretion, may order compliance, the reasons for non-compliance to be added to the pleadings, or allow the action to continue without further pleading,’” Judge L. Mark Bailey wrote for the appellate court.

The COA found that because the trial court issued a notice to the parties in which it decided to allow ITS to submit an Affidavit of Debt without amending the complaint, the court acted within its discretion. Thus, it concluded, Trial Rule 60(B)(6) did not afford Greenhill, Hanover and Wintersong relief from the default judgment.

Additionally, the appellate court found the defendants failed to allege facts that would indicate a reasonable basis for why they waited more than seven weeks from the date of the default judgment to file a motion to set aside that judgment.

“Management Defendants failed to allege facts showing the default judgment was void or any other reason justifying relief from judgment,” Bailey wrote. “Therefore, the trial court order setting aside the default judgment was clearly against the logic and effect of the facts and circumstances before the court.

“A default judgment is an ‘extreme remedy,’ and we prefer to decide cases on the merits where possible,” the panel concluded. “…However where, as here, there is no explanation at all for an untimely response, ‘[t]he judicial system simply cannot allow its processes to be stymied by simple inattention.’”

The case was remanded for proceedings consistent with the opinion.