HomeMy WebLinkAbout06-2727TED KOSENSKE, M.D., : IN THE COURT OF COMMON PLEAS OF
Plaintiff CUMBERLAND COUNTY, PENNSYLVANIA
V. NO.
CIVIL ACTION - LAW
BLUE MOUNTAIN ANESTHESIA
ASSOCIATES, P.C.,
Defendant
JURY TRIAL DEMANDED
NOTICE TO DEFEND
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32 South Bedford Street
Carlisle, PA 17013
Telephone No. (717) 249-3166
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TED KOSENSKE, M.D., : IN THE COURT OF COMMON PLEAS OF
Plaintiff : CUMBERLAND COUNTY, PENNSYLVANIA
V. NO.
CIVIL ACTION - LAW
BLUE MOUNTAIN ANESTHESIA
ASSOCIATES, P.C.,
Defendant
JURY TRIAL DEMANDED
COMPLAINT
I . Plaintiff, Ted Kosenske, M.D., (hereinafter Dr. Kosenske) is an adult
individual residing at 4 Carothers Circle, Mechanicsburg, Pennsylvania.
2. Defendant, Blue Mountain Anesthesia Associates, P.C., (hereinafter "Blue
Mountain") is a Pennsylvania professional corporation engaged in the practice
of anesthesiology with its principal place of business located at 8 Sand Pine
Court, Mechanicsburg, Pennsylvania.
3. Dr. Kosenske was employed by Blue Mountain from on or about October 1,
1998 until October 12, 2005.
4. Dr. Kosenske entered into an Employment Agreement with Blue Mountain on
October 1, 1998, a copy of which is attached hereto and incorporated by
reference as Exhibit A.
5. Dr. Kosenske entered into a Stockholders Agreement with Blue Mountain on
October 1, 1999, a copy of which is attached hereto and incorporated by
reference as Exhibit B.
6. In full compliance with the Employment Agreement, Dr. Kosenske gave Blue
Mountain six (6) months notice of his intention to terminate his employment.
7. By letter dated August 21, 2005, Blue Mountain agreed that Dr. Kosenske's
last day of work for Blue Mountain would be September 23, 2005 and that
payment for his accrued vacation days would continue through October 12,
2005. (Attached hereto and incorporated by reference as Exhibit Q.
8. The vacation pay due to Dr. Kosenske is a fringe benefit considered to be
wages under the Pennsylvania Wage Payment and Collection Law.
9. Pursuant to the terms of the Employment Agreement, upon termination by Dr.
Kosenske of his employment, Blue Mountain is obligated to pay any and all
accrued salary or other cash compensation then due.
10. Pursuant to the terms of the Stockholders Agreement, upon termination by Dr.
Kosenske of his employment, Blue Mountain is required to cause its
accountant or auditor to calculate the purchase price of the stock and deliver
said calculation to Dr. Kosenske within thirty (30) days of notice of
termination. (See Exhibit B at Paragraph 5).
IL Within sixty (60) days of the calculation, the Stockholders Agreement
requires Blue Mountain to tender to Dr. Kosenske, as a stockholder, payment
in full of the purchase price of the stock owned. (See Exhibit B at Paragraph
5).
12. The stock options due to Dr. Kosenske are considered wages under the
Pennsylvania Wage Payment and Collection Law.
13. Upon the termination by Dr. Kosenske of his employment, the Stockholders
Agreement requires Blue Mountain to pay Dr. Kosenske cash compensation
for his proportionate interest in Blue Mountain's accounts receivable on the
date of termination. (See Exhibit B at Paragraph 7).
14. The accounts receivable due to Dr. Kosenske are considered wages under the
Pennsylvania Wage Payment and Collection Law.
15. The Stockholders Agreement provides that Dr. Kosenske's proportionate
interest in the "Net Accounts Receivable" is to be divided into two funds.
Fund "A" is an estimated maximum amount which would be deposited into
Dr. Kosenske's account within any profit-sharing, pension or other employee
benefit plan for the year 2005. (See Exhibit B at Paragraph 7).
16. Fund A is to be reserved until the contribution to such plan is made for the
fiscal year and any amount exceeding the amount deposited into Dr.
Kosenske's account for that fiscal year with interest shall be paid to Dr.
Kosenske within thirty (30) days after the contribution is made. (See Exhibit
B at Paragraph 7A).
17. Fund B constitutes the balance of Dr. Kosenske's accounts receivable and
shall be paid to him in twelve (12) equal monthly installments, without
interest, with the first monthly installment due on the first day of the month
following the transfer of Dr. Kosenske's stock. (See Exhibit B at Paragraph
7B).
18. Dr. Kosenske and four other physicians each owned twenty percent (20%) of
the stock of Blue Mountain.
19. On October 5, 2005, Blue Mountain sent Dr. Kosenske three checks via its
attorney believed to be Dr. Kosenske's employment pay through the end of
September 2005, a portion of Dr. Kosenke's bonus declared to the
stockholders in September 2005 and a cafeteria expense payment.
20. As required by the Stockholders Agreement, upon notice of Dr. Kosenske's
resignation, Blue Mountain caused its accountant Donald L. DeMuth
professional Management Consultants to make the necessary calculations and
deliver said calculations to Dr. Kosenske and Blue Mountain. (See Exhibit B
at Paragraph 5).
21. By letter dated October 10, 2005, Donald L. DeMuth, from Donald L.
DeMuth Professional Management Consultants, provided Blue Mountain with
his calculation of payments due to Dr. Kosenske for the September 2005
bonus, stockholders buy-out, and accounts receivable per the Stockholders
Agreement. (Attached hereto and incorporated herein by reference as Exhibit
D).
22. In his October 10, 2005 letter, Mr. DeMuth calculated that Dr. Kosenske is
entitled to receive Seven Thousand Seven Hundred Seventy One Dollars
($7,771.00) for his share of the September 2005 bonus, Eighty Five Dollars
and Twenty Five Cents ($85.25) for his stockholders buy-out; and Thirty Six
Thousand Sixty Three Dollars ($36,063.00) for his share of the accounts
receivable.
23. The September 2005 bonus due to Dr. Kosenske is considered wages under
the Pennsylvania Wage Payment and Collection Law.
24. Despite demand, Dr. Kosenske has not received any payment from Blue
Mountain for his accrued vacation days through October 12, 2005.
25. Despite demand, Dr. Kosenske has not received payment from Blue Mountain
for the balance of his share of the September 2005 bonus.
26. Despite demand, Dr. Kosenske has not received any payment from Blue
Mountain for his stockholders buy-out.
27. Despite demand, Dr. Kosenske has not received any payment from Blue
Mountain for his share of the accounts receivable.
28. At all times during and after his employment with Blue Mountain, Dr.
Kosenske complied with the terms of the Employment Contract and
Stockholders Agreement including his resignation from the medical staff at
Carlisle Regional Medical Center as required
29. Blue Mountain does not have a good faith dispute of Dr. Kosenske's claim.
WHEREFORE, Plaintiff demands judgment against Defendant in the amount of Forty
Three Thousand Nine Hundred Nineteen and 25/100 Dollars ($43,919.25), together with
payment of any accrued vacation pay not yet made through October 12, 2005, plus
liquidated damages in the amount of Ten Thousand Nine Hundred Seventy Nine and
81/100 Dollars ($10,979.81) as authorized by 43 P.S. §260.10, together with any and all
interest, costs, reasonable attorney fees and any other remedy this court deems just and
appropriate.
COUNT II - BREACH OF CONTRACT
30. Paragraphs 1 through 29 of this Complaint are incorporated herein by
reference as if fully set forth.
31. Dr. Kosenske entered into an Employment Agreement with Blue Mountain on
October 1, 1998. (Attached as Exhibit A).
32. Dr. Kosenske entered into a Stockholders Agreement with Blue Mountain on
October 1, 1999. (Attached as Exhibit B).
33. The terms of the Employment Agreement require Blue Mountain to pay any
and all accrued salary or other cash compensation then due when Dr.
Kosenske terminated his employment with Blue Mountain.
34. The terms of the Stockholders Agreement require Blue Mountain to tender to
Dr. Kosenske, as a stockholder, payment in full of the purchase price of the
stock owned within sixty (60) days of the calculation made by the accountant,
said calculation being made on October 10, 2005. (See Exhibit B at
Paragraph 5).
35. To this date, Blue Mountain has failed to pay Dr. Kosenske the vacation pay,
balance of the September 2005 bonus, stockholders buyout and accounts
receivable due to him as required by the Employment Agreement and
Stockholders Agreement entered into by the parties.
36. Blue Mountain's breach of the terms of the Employment Agreement and
Stockholders Agreement caused damages to Dr. Kosenske in the amount of
Forty Three Thousand Nine Hundred Nineteen and 25(100 Dollars
($43,919.25), together with payment of any accrued vacation pay not yet
made through October 12, 2005
WHEREFORE, Plaintiff demands judgment against Defendant in the amount of Forty
Three Thousand Nine Hundred Nineteen and 25/100 Dollars ($43,919.25), together with
payment of any accrued vacation pay not yet made through October 12, 2005, and any
and all interest, costs, reasonable attorney fees and any other remedy this court deems just
and appropriate.
Respectfully submitted,
SALZMANN HUGHES, P.C.
James D. Hugh4s, Esquire
Supreme Court I.D. # 58884
Susann B. Morrison, Esquire
Supreme Court I.D. # 77041
354 Alexander Spring Road, Suite 1
Carlisle, PA 17013
(717) 249-6333
Attorneys for Plaintiff
Dated: L d
VERIFICATION
The foregoing document is based upon information that has been gathered by my
counsel and myself in the preparation of this action. I have read the statements made in
this document and they are true and correct to the best of my knowledge, information and
belief. I understand that false statements herein made are subject to the penalties of 18
Pa.C.S.A. § 4904, relating to unworn falsification to authorities.
Ted Kosenske, M.D.
Date:
THIS EMPLOYMENT AGREEMENT is made this 1 t of October, 1998, and is by and
between:
BLUE MOUNTAIN ANESTHESIA ASSOCIATES, P.C., a professional corporation
organized and operating under the laws of the Commonwealth of Pennsylvania with its
registered office at 1111 Sherwood Drive, Carlisle, Pennsylvania (hereinafter "BMA"); and
TED KOSENSKE, M.D., an adult individual who resides at 4 Carothers Circle,
Mechanicsburg, Pennsylvania (hereinafter "Employee")
WITNESSETH:
WHEREAS, BMA is a Pennsylvania professional corporation engaged in the practice of
anesthesiology at offices located in Cumberland County, Pennsylvania, and BMA has
employed Employee in the past and wishes to continue Employee's employment to provide
services as an anesthesiologist in the operation of such practice; and
WHEREAS, Employee and BMA wish to set out in writing the terms and provisions of
BMA's continued employment of Employee and the parties wish, otherwise, to have their
mutual agreement reduced to writing.
NOW, THEREFORE, in consideration of the above recitals and the mutual covenants
{hereinafter set out, the parties hereto, intending to be legally bound and to legally bind their
heirs, successors, and assigns hereby, do hereby covenant, promise, and agree as follows:
1. EMPLOYMENT. BMA does hereby employ Employee. Employee agrees to render
professional services as an anesthesiologist and as an employee of BMA during the term of
this agreement to the best of his professional ability and in accordance with the other terms
and provisions hereof.
2. DUTIES. Employee shall devote his time, skill, and best efforts as an
anesthesiologist in the performance of such duties as may be assigned to him by BMA in the
lloperation of BMA's practice, such services to be rendered under the supervision of, and at
the direction of, BMA's officers and board of directors, provided, however, that the
supervision and direction by BMA of the services performed by Employee shall not be in any
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EXE3IBIT A
way inconsistent with Employee's professional obligations to patients as a physician. With
regard to Employee's services to BMA, the parties further agree:
A. Employee shall not engage in any other employment during the term
of this agreement which shall in any way be inconsistent with the rendition by
Employee of services on a full-time basis for BMA without the prior written
consent of BMA. Provided, however, if Employee becomes partially disabled,
the parties may reduce Employee's working hours and Employee's rate of
compensation proportionate to the reduction in Employee's working hours.
Otherwise, Employee shall devote his or her full-time efforts to Employee's
employment by BMA.
B. All compensation received by Employee for services in anesthesiology
or in any related fields of medicine shall be the sole property of BMA and
Employee shall not negotiate for, enter into, or become party to, contracts with
any other person or entity for the rendition of professional services in the field
of anesthesiology or in any related medical field other than as agent for or on
behalf of BMA. Nothing in this subparagraph, however, shall prohibit Employee
from investing or trading in stocks or securities generally traded on public
markets for Employee's personal interest or benefit nor prohibit Employee from
serving as an officer or director of a business or charitable corporation if the
duties required by such other corporation do not interfere with Employee's
employment by BMA or the performance of Employee's duties as an employee
of BMA.
C. Ali files, reports, and other records produced by Employee during the
term of this agreement shall be and remain the sole property of BMA and
Employee shall have no right, title, or interest therein. Upon the termination of
employment of Employee by BMA for any reason or at any time, Employee shall
not remove such files, reports, or records from BMA's possession or control
and shall return any such items as have been in Employee's possession to BMA
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immediately. Any and all information obtained by Employee about BMA's
professional practice and operations, particularly including its methods of billing,
compensation, and economic operation, to the extent that such information is
not generally known in the medical community, are acknowledged to be trade
secrets and, as such, the property of BMA. Employee agrees that Employee
shall not, during the term of this agreement or any time thereafter, disclose or
make known to any other party any of such trade secrets which belong to BMA
and shall not use or attempt to use such trade secrets to Employee's benefit
and the detriment of BMA upon the termination of Employee's employment by
BMA at any time or for any reason.
D. Employee shall, during the term of this agreement, maintain full and
proper licensure by the Commonwealth of Pennsylvania as a licensed physician
and shall maintain staff privileges at all hospitals and other medical facilities at
which BMA operates. Employee shall take all steps reasonably necessary to
maintain such licensure and staff privileges in good standing, without limitation,
and will promptly notify BMA upon receiving any notice of loss, suspension, or
challenge to such licensure or staff status. Upon the termination of Employee's
employment by BMA, at any time or for any reason, Employee shall immediately
resign or withdraw from the medical staff at all facilities at which BMA then
operates and shall terminate any and all staff privileges at such institutions. In
addition, Employee shall not, for one full year following the termination of
Employee's employment by BMA, apply for, seek, or accept staff privileges at
any of the facilities at which BMA operates during that one year period.
E. Employee shall work such hours and days as BMA, by its board of
II directors, shall schedule, including weekends and holidays. In addition,
Employee will equally share emergency calls and responsibility for coverage of
services provided by BMA on evenings, nights, weekends, and holidays.
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3. COMPENSATION. BMA shall compensate Employee, for Employee's services to
BMA, as follows:
A. BMA shall pay Employee an annual salary, commencing with the first
day of Employee's employment with BMA and continuing through the term of
this agreement unless modified by the mutual agreement of the parties, of Two
Hundred Thousand ($200,000.00) Dollars. Such compensation shall be made
monthly and BMA is authorized to deduct or withhold customary employment,
income, and other taxes and assessments.
B. BMA shall pay Employee such cash bonuses and other cash
compensation as BMA, in its sole discretion, deems appropriate.
C. BMA shall make such contributions to any employee-benefit plans
BMA, in its sole discretion, deems to operate for the benefit of its employees,
including, but not limited to, any pension or retirement plan, profit-sharing plan,
or the like. Nothing in this subparagraph shall obligate BMA to create or
maintain such programs but, to the extent that BMA does have such programs
available for the benefit of its employees, it shall make participation in such
programs available to Employee on the same basis as BMA's other professional
employees.
D. Employee shall receive eight (8) compensated weeks of vacation,
conference, or educational time each year to be taken at such times as is
mutually convenient to BMA and to Employee. Regular meetings of BMA or the
medical staffs at any of the facilities at which BMA operates shall not be
charged against Employee's vacation, conference, or education time.
E. Such medical, hospital, and other insurance, and such other non-cash
compensation or employee benefits as BMA makes available to its other
professional employees, on the same basis as such benefits are available to its
other professional employees.
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F. To the extent that Employee is required to make expenditures for
meal, travel, entertainment, lodging, or similar items to perform his obligations
hereunder, specifically including the use of Employee's automobile to perform
his employment duties hereunder, BMA shall reimburse Employee Employee's
actual expenses incurred for:
(1) Meals and entertainment directly related to or
associated with the development or furtherance of BMA's practice
(provided that BMA has approved such expenditures in advance);
(2) Travel and lodging while away from home overnight in
furtherance of BMA's practice (provided that BMA has approved
such expenditures in advance);
(3) Travel, meals and lodging expenses incurred during
Employee's attendance at professional society meetings,
educational seminars, and conferences (provided that BMA has
approved such expenditures in advance); and
(4) Such other expenses incurred by Employee in
furtherance of BMA's practices, specifically including expenses
incurred in the use of Employee's personal automobile and in
connection with the performance by Employee of his duties of
employment under this agreement. Such expenses shall be
reimbursed in accordance with such uniform policies and
procedures as BMA's board of directors may adopt from time to
time. Employee shall keep such business, financial, and travel
records as BMA may reasonably require to satisfy tax authorities
and record-keeping requirements.
G. In the event of the disability of Employee, as that term is defined
hereinbelow, BMA will continue Employee's full compensation and benefits due
hereunder for a period of three (3) months. At the end of three (3) months,
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however, BMA shall not be obligated to provide further compensation or
benefits to Employee unless and until Employee returns to full-time employment
by BMA. For purposes of this paragraph, "disability" shall mean any
impairment of the physical, emotional, or mental capacities of Employee which
prevents Employee from performing his full, normal employment services and'
activities for BMA on a full-time basis, specifically including emergency,
evening, weekend, and holiday service.
4. TERMINATION. Employee may terminate this agreement, at any time and for any
reason, by giving BMA six (6) months' notice of such termination, in which event Employee
shall continue to provide all obligations and services due BMA under this agreement for the
full six (6) months following delivery of such notice. BMA shall terminate this agreement,
without the mutual consent of Employee, only for one of the following reasons:
A. The death of Employee or dissolution of BMA; or
B. Employee's adjudication of incompetency by a court of appropriate
jurisdiction; or
C. Employee's disability continuing for a period of six (6) months (and,
for purposes of this paragraph, "disability" shall mean any impairment of the
physical, emotional, or mental capacities of Employee which prevents Employee
from performing his full, normal employment services and activities for BMA on
a full-time basis, specifically including emergency, evening, weekend, or holiday
service; or
D. Employee's loss of medical licensure within the Commonwealth of
Pennsylvania; or
E. Employee's loss of medical staff privileges at any of the medical
facilities or hospitals at which BMA then operates; or
F. Employee's incompetence, which shall be defined to mean the
inability of Employee, through inattention, negligence, ignorance, or any other
reason, to provide medical service and care to BMA's patients such that the
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failure of Employee to provide such care represents or creates a reasonable risk
of medical harm to any of BMA's patients.
G. The unanimous vote of all physicians then owning stock in BMA
other than Employee, in which event Employee shall be entitled to payment and
compensation as set forth in Paragraph 5 hereof.
The parties may terminate this agreement, by mutual consent expressed in writing, at any
time, for any reason, and on whatever terms as to notice to which the parties may agree.
5. PAYMENT UPON TERMINATION. In the event that Employee's employment with
BMA is terminated by the unanimous vote of the other stockholders in BMA at that time, in
accordance with Paragraph 4(G) of this agreement, BMA shall pay to Employee the
following:
A. A cash payment, due within one hundred twenty (120) days of the
date that the termination of employment takes.effect, in the amount of One
Hundred Fifty Thousand ($150,000.00) Dollars; and
B. The continuation of any and all hospital, medical, and similar
insurance in effect for Employee and members of his family on the date of such
termination for a period of not less than six (6) months after such termination;
and
C. Any and all accrued salary or other cash compensation due to
Employee on the date of termination.
Otherwise, upon the termination of Employee's employment by BMA for any other reason, or
upon the termination of Employee's employment by Employee or the operation of this
agreement, including death, BMA shall pay to Employee any and all accrued salary or other
cash compensation then due to Employee and Employee shall, in exchange for such
payment, deliver his written release of all claims against BMA for any reason arising out of
his employment or the termination of that employment.
6. TERM. The term of this agreement shall be one (1) year from its date. The
agreement, however, shall automatically renew at the expiration of each successive term
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unless the agreement is terminated at any time pursuant to the provisions of Paragraph 4
hereof.
7. GENERAL. This agreement shall be interpreted, applied, and enforced in
accordance with and by the Courts of the Commonwealth of Pennsylvania. There are no
agreements between the parties, as of the date of this agreement, other than as are,
specifically set forth herein. In the event that any of the terms and provisions of this
agreement are deemed to be unlawful, invalid, or otherwise unenforceable, such invalid
provisions shall be fully severable and the other terms and provisions of this agreement shall
survive and be enforceable independent of such invalid provisions.
IN WITNESS WHEREOF, the parties hereto have set their hands and seals the day and
year first above written.
Witness
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ATTGCT-
BLUE MOUNTAIN ANESTHESIA
STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT is made this 1 st day of October, 1999, and is by
and between:
BLUE MOUNTAIN ANESTHESIA ASSOCIATES, P.C., a professional corporation
organized and operating under the laws of the Commonwealth of Pennsylvania with its
registered office at 4172 Nantucket Drive, Mechanicsburg, Pennsylvania (hereinafter "BMA");
- and -
HOWARD L. ALSTER, M.D., of 4172 Nantucket Drive, Mechanicsburg, Pennsylvania;
JULIO IVAN SOLA, M.D., of 1181 York Road, Mechanicsburg, Pennsylvania;
TED KOSENSKE, M.D., of 4 Carothers Circle, Mechanicsburg, Pennsylvania; and
DANIEL CHESS, M.D., of 1301 Sadler Drive, Carlisle, Pennsylvania; and
ARUN KAPOOR, M.D., of 9 Todd Road, Carlisle, Pennsylvania, all being adult
individuals and hereinafter referred to individually and collectively as "Stockholders".
WITNESSETH:
WHEREAS, BMA is a professional corporation organized and conducting business
under the laws of the Commonwealth of Pennsylvania and Stockholders own all of the
outstanding stock in BMA; and
WHEREAS, the provisions of Pennsylvania law prohibit ownership of stock of a
professional corporation by any person who is not licensed to render professional services
within that profession; and
WHEREAS, the parties have reached agreement providing for a restriction upon the
sale or transfer of Stockholders' stock in BMA and for the orderly transfer of such stock
upon the occurrence of certain events in the future and the parties wish to have their
agreement reduced to writing.
NOW, THEREFORE, in consideration of the above recitals and the mutual covenants
11 hereinafter set out, the parties hereto, intending to be legally bound and to legally bind their
heirs, successors and assigns hereby, do hereby covenant, promise and agree as follows:
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EXHIBIT B
1. RESTRICTION ON TRANSFER. So long as this agreement shall remain in effect,
Iders, and none of them, shall sell, assign, transfer, mortgage, alienate, or otherwise
er or dispose of the stock of BMA which he or she now owns or may hereafter
uire except in strict accordance with the terms and provisions of this agreement.
2. PURCHASE DURING LIFETIME OF STOCKHOLDER. If the employment of any
ckholder by BMA is terminated, at any time or for any reason other than by death, BMA
II purchase, and the Stockholder, or his or her successor, shall sell all of the stock of
A which said Stockholder shall own. The purchase price, terms of payment, and
for such sale and transfer shall be as set out in Paragraph 4 hereof.
3. DISPOSITION UPON DEATH OF STOCKHOLDER. Upon the death of any
ckholder, BMA shall purchase and the personal representative or estate of the deceased
ckholder shall sell to BMA all of the stock of BMA which said Stockholder owned. The
price, terms of payment, and the procedure for such sale and transfer shall be as
out in Paragraph 4 hereof
4. PURCHASE PRICE AND PAYMENT.. The purchase price of the of the shares of
Stockholder sold or transferred to BMA in accordance with the terms of this agreement
I be determined by multiplying the net book value of BMA on the date that the "triggering
nt" (as that term is defined in Paragraph 6 hereinbelow) by a fraction, the denominator of
ch shall be all of the shares of stock of BMA outstanding on the date of such triggering
nt and the numerator of which shall be the number of shares of stock owned by the
der whose stock is being transferred. "Net book value" shall be defined and
ated as follows:
A. All of the assets of BMA shall be valued. Any real estate owned by
BMA shall be appraised by a qualified real estate appraiser selected by the
accountant regularly serving BMA on the date of the triggering event. Any
tangible personal property reasonably capable of appraisal shall be appraised by
a qualified appraiser selected by the said accountant. All other assets, tangible
and intangible (excluding accounts receivable and goodwill) shall be valued as
" shown on BMA's balance sheet at the end of the last accounting period for
which a balance sheet was prepared by BMA's accountant.
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B. The total value of all assets (excluding accounts receivable and
goodwill) shall then be reduced by all of BMA's liabilities owed on the date of
the triggering event, provided, however, that if the liabilities of BMA exceed the
value of its assets on the date of the triggering event, the purchase price for
the Stockholder shall be set at zero; that is, there shall be no negative value
calculated for such Stockholder's stock and he shall not be obligated to pay to
BMA any sum as a result of such negative value.
C. There shall be no allowance for or value set upon the accounts
receivable of BMA or any goodwill for BMA in the determination of net book
value.
In determining the net book value for purposes of this paragraph, BMA's accountant shall
use the same accounting methods used in the preparation of similar balance sheets for BMA
prior accounting periods and the determination of such accountant shall be final,
and binding on all parties; provided, however, that any and all accounts
able owed to BMA, whether or not shown on BMA's balance sheets or other financial
nents in prior accounting periods, and goodwill shall not be included as an asset of
and shall be excluded entirely from the calculation of the purchase price for stock
nder this agreement.
5. PROCEDURE FOR PURCHASE. Upon occurrence of any "triggering event", as
fined hereinbelow, BMA or Stockholder or Stockholder's representative shall give notice to
a other parties to this agreement of the occurrence of such event in writing. BMA shall
use its accountant or auditor to calculate the purchase price of the stock to be acquired by
AA from the Stockholder affected by such triggering event and provide copies of such
Iculations to the parties to this agreement within thirty (30) days of the said notice.
ithin sixty (60) days following such calculation by BMA's accountant or auditor, BMA shall
ider to the Stockholder affected by the triggering event, or the representative of such
ockholder, payment in full of the purchase price as calculated by the said accountant or
ditor. Contemporaneous with the tender of such payment, BMA shall provide its written
iemnify to the affected Stockholder or his or her representative of all debts and liabilities
BMA which the affected Stockholder may have assumed or may otherwise be liable for,
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the affected Stockholder or his or her personal representative shall make, execute,
and deliver all stock certificates and other documents reasonably required, in
opinion of BMA's counsel, to transfer all of the affected Stockholder's interest in or
n against BMA to BMA or its assigns.
6. TRIGGERING EVENT. For purposes of this agreement, a "triggering event" shall
any one of the following:
A. The death of any Stockholder; or
B. The adjudication, by any court of appropriate jurisdiction, of
incompetency of any Stockholder; or
C. The termination, by either BMA or the Stockholder, of any
Stockholder's employment by BMA.
a triggering event with regard to any two or more Stockholders occur within sixty
60) days of each other, the remaining Stockholders shall have the option, at their sole
;lection, to terminate this agreement and dissolve BMA, in which event no payments shall
)e due to any Stockholder under.the terms of this agreement other than the distribution to
ill Stockholders, as may result to them from the dissolution of the corporation.
7. TRANSFER OF STOCK TO BMA. In the event that the shares of any Stockholder
are sold or transferred to BMA in accordance with the terms of this agreement, BMA shall
)ay to such Stockholder, or the estate of such Stockholder, in addition to the payment of his
)r her stock as provided in Paragraphs 4, 5, and 6 hereinabove, cash compensation for that
Stockholder's proportionate interest in BMA's accounts receivable on the date of the
triggering event. BMA shall pay to such Stockholder, or his or her personal representative, a
>um determined by multiplying BMA's Net Accounts Receivable (as hereinafter defined) by a
fraction, the denominator of which shall be the number of physicians then employed by BMA
vvho are Stockholders of BMA and the numerator of which shall be one. "Net Accounts
Receivable" shall be determined by multiplying the total accounts receivable shown on
BMA's financial records at the end of the month preceding the date of the triggering event
;and "net accounts receivable" shall only include work for which the Corporation has
d bills and shall not include unbilled work, work in progress, or the like) by the
percentage of accounts receivable actually collected by BMA during the first six
4
s of the twelve-month period immediately preceding the date of such termination,
billing costs on net receivables and minus a sum necessary to equalize corporate
;es for direct benefits to professional employees. The amount so determined ("Net
ables") shall be divided into two parts, Fund A and Fund B, and paid or held as
A. An amount estimated by the accountant then regularly employed by
BMA to be the maximum amount which would be deposited into the account of
the Stockholder within any profit-sharing, pension, or other employee benefit
plan operated by Corporation for the year of the triggering event shall constitute
Fund A. Fund A shall be reserved and held by BMA until the contribution to
such plan is made for the fiscal year of the triggering event following which
BMA shall pay over to Stockholder any amount in Fund A, including any
accrued interest, which exceeds the amount deposited into the Stockholder's
said account for thaffiscal year. Any remainder in Fund A shall be paid to the
Stockholder within. thirty (30) days after BMA makes the contribution to such
plan.
B. The balance of Net Receivables shall constitute Fund B, which shall
be paid to the Stockholder in twelve (12) equal monthly installments, without
interest, the first said installment being due on the first day of the month
following the transfer of the Stockholder's stock as required by Paragraph 5
hereof and the payment shall continue on the first day of twelve consecutive
months thereafter. For tax purposes, the Stockholder and BMA shall both treat
such payments as compensation, which shall be fully taxed to the Stockholder
and deducted by BMA and BMA shall be entitled to withhold such income and
other tax payments and assessments as may be required by law or may be
otherwise reasonably necessary for BMA to comply with all tax laws,
regulations, and the like; provided, however, that the payment from Fund B
shall not be considered compensation or salary for purposes of calculating the
" deposit into any profit-sharing, pension, or other employee benefit plan then
5
operated by BMA or in calculating the payments from or vesting of the
Stockholder's account within said plan.
8. RESIGNATION FROM MEDICAL STAFF. Upon the occurrence of any triggering
event as defined herein, the Stockholder affected by such triggering event shall promptly
resign from the medical staff of all facilities at which BMA then provides medical services
and such Stockholder shall not, for a period of one (1) year following such triggering event,
apply for medical staff privileges at any such facility or otherwise practice or attempt to
practice anesthesiology or pain management at any such facility or be employed by or
associated with a group or entity which does so practice at such facility.
9. VOTING RIGHTS. The parties agree that all of the corporate decisions shall be
made by a majority vote of the directors and/or shareholders, with the exception of the
following two items:
A. The corporation may not be dissolved except upon the unanimous
consent and affirmative vote for dissolution of all persons then owning stock in
the Corporation; and
B. The employment of any Stockholder may not be terminated in
accordance with the Employment Agreement then in effect between the
Corporation and the Stockholder-Employee, except upon the unanimous vote of
all physicians then owning stock in the Corporation other than the physician-
stockholder whose employment is being affected by such vote.
10. TERM. This agreement shall continue in full force and effect until terminated
upon the occurrence of any of the following events:
A. The dissolution, which can only be accomplished by unanimous vote
of all shareholders, of BMA; or
B. The filing of a petition in bankruptcy by BMA, an adjudication in
bankruptcy of BMA, or the appointment of a receivership for the assets of
BMA; or
C. The purchase by BMA of all of its outstanding stock; or
D. The voluntary agreement of all persons then owning stock in BMA as
evidenced by a written agreement signed by all such persons.
6
11. GENERAL. This agreement shall be interpreted, applied, and enforced in
accordance with and by the Courts of the Commonwealth of Pennsylvania. There are no
agreements between the parties, as of the date of this agreement, other than as are
specifically set forth herein. In the event that any of the terms and provisions of this
agreement are deemed to be unlawful, invalid, or otherwise unenforceable, such invalid
provisions shall be fully severable and the other terms and provisions of this agreement shall
survive and be enforceable independent of such invalid provisions.
IN WITNESS WHEREOF, the parties hereto have set their hands and seals the day and
year first above written.
ATTEST:
Witness
Witness
Witness
Witness
Witness
BLUE MOUNTAIN ANESTHESIA ASSOCIATES, P.C.
i
Howard . Alster, M.D., President
7
Ted Kosenske, M.D. l
Daniel Chess, M.D ?I ????..-??
? ze-?
Arun Kapoor, M.0.
August 21, 2005
Dear Dr. Kosenske,
Howard L. Alster M.D.
DEWVi NT CH RM
Ted Kosenske M.D.
DIRMOR OF MN SER ES
Julio Ivan SoIA M.D.
Daniel Chess M.D.
Arun Kapoor M.D.
717 245-5300
We have agreed that your last day of work for Blue Mountain Anesthesia will be
September 23, 2005. After that date, you will be paid your accrued vacation days, which
will continue through October 12, 2005.
We understand you plan to commence work for another employer in late
September, after your last day of work for Blue Mountain. That is, at least technically
prohibited by your Employment Agreement. So there will be no problem or confusion,
we will consider your resignation as an employee of Blue Mountain to take effect on
September 23, 2005. After that date, you are free to work for another employer or for
yourself and you may retain as your separate monies any fees you generate by that work.
However, Blue Mountain will not be responsible to provide your own professional
liability insurance and any other insurance you wish to maintain.
If you have any questions about the provisions of this letter, or any problems with
the matters outlined in the letter, please contact the undersigned immediately. Otherwise,
we will proceed as outlined above and you will cease to be an employee of Blue
Mountain Anesthesia at the end of the work day on September 23, 2005.
Blue Mountain Anesthesia Associates, P.C. by
Ok 4
Howard L. Alster MD President
Julio Ivan Sola MD Vice President
Daniel Chess MD
CARLISLE REGIONAL MEDICAL CENTER
Arun Kaooor. MD
EXHIBIT C
246 PARKER STREET CARLISLE, PA 17013
DONALD L. DEMUTH PROFESSIONAL MANAGEMENT CONSULTANTS
940 CENTURY DRIVE
MECHANICSBURG, PA 17055
(717) 790-9001
FAX: (717) 790-9031
DONALD L. DEMUTH, C.H.B.C., M.B.A., C.P.AJP.F.SJA.B.V.
WILLIAM R. KAUFMAN, C.P.A., J.D.
October 10, 2005
Howard L. Alster, M.D.
J. Ivan Sola, M.D.
Ted D. Kosenske, M.D.'"
Daniel J. Chess, M.D.
Arun Kapoor, M.D.
Blue Mountain Anesthesia Associates, P.C.
246 Parker Street
Carlisle, PA 17013
Dear Howard, Ivan, Ted, Dan, and Arun:
This letter discusses the calculation of Ted Kosenske's buy-out according to your
Stockholders Agreement.
Bonus
Although a bonus is not required as part of your Stockholders Agreement or
Employment Agreements, the group decided to pay a bonus to reduce the corporation's
stockholders' equity to the point that there would be little gain or loss to Ted for his
stockholders' equity payment at this time.
The initial calculation of the bonuses paid on September 30 is shown below:
Initial Calculation
Cash Distribution $ 69,402
Kosenske Sidesheet Items 15,638
Divisible Income $ 85,040
=5
Divisible Income per Doctor $ 17,008
Alster Sola Kosenske Chess Kapoor Total
Divisible Income $ 17,008 $ 17,008 $ 17,008 $ 17,008 $ 17,008 $ 85,040
Sidesheet Items (15,638 ) 15,638
9/30 Bonus $ 17,008 $ 17,008 $ 1,370 $ 17,008 $ 17,008 $ 69,402
EXHIBIT D
Blue Mountain Anesthesia Associates, P.C.
October 10, 2005
Page -2-
To calculate the bonus for each doctor, I added Ted's sidesheet items for the year
totaling $15,638 to the total $69,402 cash distribution. Since the other stockholders were
not submitting their personally paid sidesheet items at the present time, I only utilized
Ted's sidesheet items in determining the September 30 bonus for all of you.
This resulted in the $15,638 of Ted's sidesheet items for the first nine months of
2005, which included $9,871 for medical insurance and $5,767 of personally paid
expenses reimbursed to him, being subtracted from his bonus.
This resulted in Ted receiving a bonus of $1,370, which was $15,638 less than the
$17,008 the other four of you received.
Upon reflection I realized that the calculation should have considered those
sidesheet items, which were already paid for the other four doctors in determining the
bonus. If those expenses had not already been paid by the corporation, the amount of
stockholders' equity available to be distributed would have been greater. Therefore, the
chart below shows the revised calculation of the bonus taking into consideration all
sidesheets items paid for all of the doctors in the practice for the first nine months of
2005:
Revised Calculation
Cash Distribution $ 69,402
1/1-9/30/05 Sidesheet Items Paid 54,492
Divisible Income $ 123,894
=5
Divisible Income per Doctor $ 24,779
Divisible Income
Sidesheet Items
Revised Bonus
9/30 Bonus
Difference
Alster Sola
$ 24,779 $ 24,779
10,681 8,431
$ 14,098 $ 16,348
17,008 17,008
$ (2,910) $ (660)
Kosenske Chess
$ 24,779 $ 24,779
15,638 (9,871)
$ 9,141 $ 14,908
1,370 17,008
$ 7,771 $ (2,100)
Kapoor Total
$ 24,779 $ 123,895
(9,871 54,492
$ 14,908 $ 69,403
17,008 69,402
$ (2,100) $ 1
When the $69,402 of cash distributed is added to the $54,492 of sidesheet items
for all five doctors, a total of divisible income of $123,894 is calculated. This is an
average divisible income of $24,779 per doctor.
When each of your sidesheet items is subtracted from it, the revised bonuses
which should have been paid are recalculated between $9,141 for Ted and $16,348
for Ivan.
. I, ,
Blue Mountain Anesthesia Associates, P.C.
October 10, 2005
Page -3-
The amount of bonus each of you received is subtracted from that. Ted should be
paid an additional bonus of $7,771 to equalize this. The other four of you have been paid
between $660 and $2,910 more than you were paid with the initial bonus calculation. I
suggest adjusting the bonus differences among you when the year end bonus is paid at
December 31.
Stock
14 of your Stockholders Agreement stipulates that the purchase price of the shares
of stock transferred to Blue Mountain Anesthesia Associates is determined by
multiplying the net book value of Blue Mountain Anesthesia Associates on the date of the
triggering event (September 30, 2005) by the fraction of shares owned by the stockholder
whose stock is being transferred. There shall be no adjustment for accounts receivable or
goodwill. The chart below shows the calculation of Ted's buyout:
9/30/05 Stockholders' Buy-Out
9/30/05 Net Book Value of P.C. Stockholders' Equity $ 426.26
Stockholders _ 5
9/30/05 Kosenske Stockholder's Equity $ 85.25
At September 30, 2005, the corporation's net book value was $426.26. There are
five equal stockholders in the professional corporation. Therefore, Ted's stockholders'
equity is $85.25.
Accounts Receivable
¶7 of your Stockholders Agreement stipulates that the accounts receivable at the
end of the month preceding the date of the triggering event (October 12, 2005) is to be
multiplied by the average percentage of accounts receivable actually collected during the
first six months of the 12-month period immediately preceding October 12, 2005
(October 1, 2004-March 31, 2005) and paid in 12 equal monthly payments commencing
November 12, 2005.
At September 30, 2005 the corporation's accounts receivable were $614,355. The
chart below calculates the collection percentage for the corporation from October 1,
2004-March 31, 2005:
Collection Percentage Calculation
10/1/04-3/31/05
Net Patient Receipts (Collections) $ 1,098,598
Charges _3.743.613
Collection Percentage 29.35%
Blue Mountain Anesthesia Associates, P.C.
October 10, 2005
Page -4-
The chart below shows the calculation of the monthly payments due to Ted
Kosenske for patient accounts receivable:
Kosenske Accounts Receivable Compensation
9/30/05 Accounts Receivable $614,355
10/1/04-3/31/05 Collection Percentage x 29.35%
9/30/05 Estimated Collectible Patient Accounts Receivable $180,313
Stockholders - 5
9/30/05 Estimated Collectible Accounts Receivable per Stockholder $ 36,063
Months _ 12
Monthly Compensation $
When the September 30 $614,355 accounts receivable are multiplied by the
collection percentage for the first 6 of the past 12 months, 29.35%, the product is
$180,313. This is divided by the 5 equal stockholders in the group, since you each own
20% of the stock. Each doctor's share of the collectible patient accounts receivable is
$36,063. This amounts to $3,005 monthly for 12 months.
You charged over $100,000 less this quarter than you have been averaging this
year, $1,686,000. You had over 100 fewer hospital cases this quarter than the annual
average and you had over 600 fewer hospital units than the year-to-date average, too,
with 9,650: Your collections were good this quarter at $580,000, about $10,000 more
than the year-to-date average and close to $80,000 better than you typically enjoyed last
year. Your collections amounted to 34% of your charges and 144% of your $403,000 of
adjusted charges this quarter. The collection effort boosted the year-to-date collection
percentage to 32% and the adjusted collection percentage to 119%.
Your practice operating expenses of $64,000 only consumed 11% of what you
collected. On a quarterly basis expenses ha--.:e averaged $84,000 this year and last year.
The amount paid the billing service was $30,000 and 5% of what was collected, which
was higher than it had been as a result of the increase in the collections.
Since you are all over the Social Security wage base, your Taxes were just $6,000
and 1 % of collections for the quarter.
Insurance Expense was pretty much just the medical insurance and this cost you
$16,000 and 3% of your collections in the third quarter. It has cost you an average of
$31,000 per quarter so far this year. The Transportation, Telephone, and Medical
Reimbursement Expenses paid this quarter were for Ted's sidesheet items and represent
the total amount of these expenses so far this year.
This left you with a net operating income of $516,000 for the quarter. This is
nearly $100,000 better than you averaged last year and is $30,000 better than the
$486,000 you have averaged this year.
L , . .
Blue Mountain Anesthesia Associates, P.C.
October 10, 2005
Page -5-
You made the rest of your profit sharing plan contribution for the year, $105,000.
This gave each of you a contribution of $41,000 for the year, a total of $205,000 for all of
you. Note that your profit sharing plan continues to have an October 31 year-end.
Your salaries and bonuses totaled $444,000 for the quarter and you ended up with
a net loss of $33,000 for the quarter after paying your bonuses.
As always, please let me know if you have any questions or would like to discuss
this further.
DLD/pab
cc: Samuel L. Andes
BLUE MOUNTAIN ANESTHESIA ASSOCIATES, P.C.
Tax Basis Statement of Revenues and Expenses and Additional Information
For the Three Months and Nine Months Ended September 30, 2005
REVENUES Three Months Nine Months
Patient Revenue $ 579,508 100.0% $ 1,719,446 100.6%
Patient Refunds (151) (10,541) -0.6%
Interest and Miscellaneous Income 356 0.1% 972 0.1%
Total Revenues $ 579,713 100.0% $ 1,709,877 100.0%
OPERATING EXPENSES
Office Supplies $ 549 0.1% $ 1,711 0.1%
Conferences, Dues and Journals 4,629 0.3%
Telephone 908 0.2% 908 0.1%
Billing Service 29,253 5.0% 84,567 4.9%
Transportation Expense 2,700 0.5% 2,700 0.2%
Taxes 6,444 1.1% 46,382 2.7%
Insurance Expense 15,658 2.7% 92,131 5.4%
Interest Expense 1,448 0.1%
Professional Expense 5,881 1.0% 14,931 0.9%
Medical & Dental Reimbursement 2,158 0.4% 2,158 0.1%
Total Operating Expenses $ 63,551 11.0% $ 251,565 14.7%
Net Operating Income $ 516,162 89.0% $ 1,458,312 85.3%
Before Other Expenses
-Other Expenses
Profit Sharing Plan Expense 105,000 18.1% 205,000 12.0%
Physicians Salaries 444,402 76.7% 1,194,402 69.9%
Net Income before Income Tax $ (33,240) -5.7% $ 58,910 3.4%
Income Tax 493
Net Income (Loss) (33.2401 -5.7% $ 58.417 314YQ
STATISTICS
Charges to Patients $ 1,686,392 $ 5,385,860
Adjustments 1,283,251 3,944,181
Adjusted Charges $ 403,141 $ 1,441,679
Collection Percentage 34% 32%
Adjusted Collection Percentage 144% 119%
Overhead Percentage 11% 15%
Accounts Receivable, End of Quarter $ 614,355
Available Cash, End of Quarter $ (24,873)
PREVIOUS YEAR'S QUARTERLY AVERAGES
Charges $ 1,719,232
Adjusted Charges $ 561,398
Revenue $ 501,729 100%
Expenses 83,798 17%
Net Income $ 417.931 M
Year Ended October 31, 2004
SEE COMPILATION REPORT
BLUE MOUNTAIN ANESTHESIA ASSOCIATES, P.C.
Balance Sheet
September 30, 2005
Assets
Current Assets $ (24,873)
Prepaid Tax 114
Total Current Assets $ (24,759)
Other Assets
Investment 25,585
Total Assets L --K6
Liabilities and Stockholders' Equity
Current Liabilities
Payroll Tax Liability
Stockholders' Equity
Common Stock $ 40,000
Treasury Stock (89,700)
Retained Earnings 50,126
Total Stockholders' Equity
Total Liabilities and Stockholders' Equity
$ 400
$ 426
$ 826
SEE COMPILATION REPORT
4 . 1 6
BUSINESS ANALYSIS THREE MONTHS ENDED SEPTEMBER 30, 2005
BLUE MOUNTAIN ANESTHESIA ASSOCIATES, P.C. Business Days:
Quarter 64
Year-to-Date 192
BUSINESS uarter Year-to-Date
Charges $ 1,686,392 $ 5,385,860
Adjustments 1,283,251 3,944,181
Adjusted Charges $ 403,141 $ 1,441,679
Revenue $ 579,713 $ 1,709,877
Operating Expenses 63,551 251,565
Net Operating Income
PATIENTS
Total Patient Cases 1,933 6,125
Average Charges Per Day $ 26,350 $ 28,051
Average Adjusted Charges Per Day $ 6,299 $ 7,509
Average Revenue Per Day $ 9,058 $ 8,906
Gross Collection Percentage 34% 32%
Adjusted Collection Percentage 144% 119%
Overhead Percentage 11% 15%
Hospital Hospital
Charges Cases Units
July $ 613,251 678 3,409
August 557,383 651 3,239
September 515,758 604 3,002
1,686,392 1,933 9,650
Prior Year-to-Date 3,699,468 4,192 21,165
$ 5,385,860 6,125 30,815
SEE COMPILATION REPORT
1 •. . I
DONALD L. DEMUTH PROFESSIONAL MANAGEMENT CONSULTANTS
940 CENTURY DRIVE
MECHANICSBURG, PA 17055
(717) 790-9001
FAX: (717) 790-9031
DONALD L. DEMUTH, C.H.B.C., M.B.A., C.P.A?P.F.SJA.B.V.
WILLIAM R. KAUFMAN, C.P.A., J.D.
October 10, 2005
Blue Mountain Anesthesia Associates, P.C.
Carlisle, Pennsylvania
We have compiled the accompanying balance sheet at September 30, 2005 and tax basis
statement of revenues and expenses and additional information for the three months and
nine months ended September 30, 2005 in accordance with the Statements on Standards
for Accounting and Review Services issued by the American Institute of Certified Public
Accountants.
A compilation is limited to presenting in the form of financial statements, information
that is the representation of management. We have not audited or reviewed the
accompanying financial statements and, accordingly, do not express an opinion or any
other assurance on them.
Management has elected to omit substantially all of the disclosures (and the statements of
changes in financial position) required by generally accepted accounting principles. If
the omitted disclosures were included in the financial statements, they might influence
the user's conclusions about the company's financial position, results of operations and
changes in financial position. Accordingly, these financial-statements are not designed
for those who are not informed about such matters. ; /
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TED KOSENSKE, M.D.,
Plaintiff
VS.
BLUE MOUNTAIN ANESTHESIA
ASSOCIATES, P.C.,
Defendant
IN THE COURT OF COMMON
PLEAS OF CUMBERLAND
COUNTY, PENNSYLVANIA
CIVIL ACTION - LAW
NO. 06-2727 CIVIL TERM
JURY TRIAL DEMANDED
PRELIMINARY OBJECTIONS OF DEFENDANT.
BLUE MOUNTAIN ANESTHESIA ASSOCIATES P.C.
AND NOW comes the above-named Defendant, by its attorney, Samuel L. Andes,
and makes the following Preliminary Objections to Plaintiff's Complaint:
1. MOTION TO STRIKE
1. Plaintiff's Complaint seeks to recover payments for stock owned by Plaintiff in
Defendant Corporation, pursuant to the terms of a Stockholders Agreement between
Plaintiff and the other shareholders and Defendant dated 1 October 1999.
2. Plaintiff seeks an award of counsel fees and costs and payment of liquidated
damages, under the Pennsylvania Wage Payment and Collection Law because he claims the
Defendant failed to properly pay him for his stock in Defendant.
3. Plaintiff's claim for the payment of stock arises under the Stockholders
Agreement between the parties and is not part of the Employment Agreement between the
parties.
4. Payment for Defendant's stock does not constitute "wages" under the
Pennsylvania Wage Payment and Collection Law and, as a result, Plaintiff is not entitled to
the payment of attorney's fees and costs or liquidated damages or other remedies available
to him under the Act for his claim for the payment for his stock.
5. As a result, Plaintiff's claim under the Pennsylvania Wage Payment and
Collection Law is contrary to the law and, as such, should be stricken.
WHEREFORE, Defendant moves this Court to strike Plaintiff's claims under the
Pennsylvania Wage Payment and Collection Law for payment for his stock.
II. MOTION TO STRIKE
6. The averments set forth in the foregoing paragraphs are incorporated herein by
reference.
7. Plaintiff seeks recovery for payments he claims he is due under the terms of the
Stockholders Agreement between Plaintiff and Defendant and the other stockholders in
Defendant for a portion of the accounts receivable owed to the corporation.
8. Plaintiff contends that the accounts receivable payment due him under the
stockholders agreement are "wages" under the Pennsylvania Wage Payment and Collection
Law and, therefore, seeks an award of attorney's fees and liquidated damages under that
law.
9. Payment to Plaintiff for his portion of the accounts receivable, if it is owed at
all, does not constitute "wages" under the Pennsylvania Wage Payment and Collection Law
and, as a result, Plaintiff is not entitled to recover attorney's fees and costs or liquidated
damages.
WHEREFORE, Plaintiff moves this Court to strike that portion of Plaintiff's complaint
seeking relief under the Pennsylvania Wage Payment and Collection Law for accounts
receivable.
Az,? kR??JL
amuel L. Andes
Attorney for Defendant
Supreme Court ID 17225
525 North 12th Street
Lemoyne, PA 17043
(717) 761-5361
CERTIFICATE OF SERVICE
I hereby certify that on .3 1 Nay 2006, 1 served a copy of the foregoing
document upon counsel for Plaintiff by U.S. Mail, postage prepaid, addressed as follows:
James D. Hughes, Esquire
354 Alexander Spring Road, Suite 1
Carlisle, PA 17013
amuel L. Andes
Attorney for Defendant
Supreme Court ID 17225
525 North 12th Street
Lemoyne, PA 17043
(717) 761-5361
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TED KOSENSKE, M.D.,
Plaintiff
V.
BLUE MOUNTAIN ANESTHESIA
ASSOCIATES, P.C.,
Defendant
: IN THE COURT OF COMMON PLEAS OF
: CUMBERLAND COUNTY, PENNSYLVANIA
NO. 06-2727
CIVIL ACTION - LAW
JURY TRIAL DEMANDED
PLAINTIFF'S RESPONSE TO
DEFENDANT'S PRELIMINARY OBJECTIONS
AND NOW, come the Plaintiff, Ted Kosenske, M.D., by and through his
attorneys, SALZMANN HUGHES, P.C., and respectfully files this Response to
Defendant's Preliminary Objections, and in support thereof avers the following:
Admitted.
2. Admitted in part and denied in part. Due to Defendant's failure to tender the
sums due to Plaintiff for Plaintiff's stock as required under the Stockholder
Agreement, Plaintiff is also seeking applicable interest together with
liquidated damages, costs, reasonable attorney fees and any other remedy the
Court deems just and appropriate.
3. Admitted.
4. Denied. Plaintiff's claim for stock repurchase payments constitute wages
and/or fringe benefits under the Wage Payment and Collection Law in that
they are payments required pursuant to a binding agreement, therefore,
Plaintiff is entitled to the payment of attorney's fees, costs, interest, liquidated
damages and other remedies under the Wage Payment and Collection Law.
5. Denied. Plaintiff's claim is valid under the Pennsylvania Wage Payment and
Collection Law.
WHEREFORE, Plaintiff respectfully requests this Court to deny Defendant's
request to strike Plaintiff's claims under the Pennsylvania Wage Payment and
Collection Law for payment of his stock.
6. No response is required.
Admitted in part and denied in part. While it is admitted that the Stockholders
Agreement requires Defendant to pay Dr. Kosenske "cash compensation" for
his proportionate interest in Blue Mountain's accounts receivable, the
Employment Agreement also requires Defendant to pay Plaintiff any and all
accrued salary or other "cash compensation" then due.
8. Admitted. It is admitted that Plaintiff contends that the accounts receivable
payment due to him constitute wage and/or fringe benefits under the
Pennsylvania Wage Payment and Collection Law. Therefore, Plaintiff is
entitled to the payment of attorney's fees, costs, interest, liquidated damages
and other remedies under the Wage Payment and Collection Law.
9. Denied. Payments of accounts receivable due to Plaintiff constitute wages
and/or fringe benefits under the Wage Payment and Collection Law in that
they are payments of cash compensation related to Dr. Kosenske's
employment that are required pursuant to a binding agreement, therefore,
Plaintiff is entitled to the payment of attorney's fees, costs, interest, liquidated
damages and other remedies under the Wage Payment and Collection Law.
WHEREFORE, Plaintiff respectfully requests this Court to deny Defendant's
request to strike Plaintiffs claims under the Pennsylvania Wage Payment and Collection
Law for payment of accounts receivable.
Respectfully submitted,
SALZMANN HUGHES, P.C.
r
James D. Hughes, Esquire
Supreme Court I.D. # 58884
Susann B. Morrison, Esquire
Supreme Court I.D. # 77041
354 Alexander Spring Road, Suite 1
Carlisle, PA 17013
(717) 249-6333
Attorneys for Plaintiff
Dated:
TED KOSENSKE, M.D.,
Plaintiff
V.
: IN THE COURT OF COMMON PLEAS OF
: CUMBERLAND COUNTY, PENNSYLVANIA
NO. 06-2727
CIVIL ACTION - LAW
BLUE MOUNTAIN ANESTHESIA
ASSOCIATES, P.C.,
Defendant
JURY TRIAL DEMANDED
CERTIFICATE OF SERVICE
I, the undersigned, hereby certify that on this 22nd day of June, 2006, a copy of
Plaintiff's Response to Defendant's Preliminary Objections was served via first class
U.S. mail upon the following:
Samuel L. Andes, Esquire
Attorney for Defendant
525 North 12a' Street
Lemoyne, PA 17043
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Susann B. Morrisok, Esquire
Salzmann Hughes, P.C.
Supreme Court I.D. # 77041
354 Alexander Spring Road, Suite 1
Carlisle, PA 17013
(717) 249-6333
Attorney for Defendant
Date: June 22, 2006
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SHERIFF'S RETURN - REGULAR
CASE NO: 2006-02727 P
COMMONWEALTH OF PENNSYLVANIA:
COUNTY OF CUMBERLAND
KOSENSKE TED MD
VS
BLUE MOUNTAIN ANESTHESIA ASSOC
MICHAEL BARRICK
Sheriff or Deputy Sheriff of
Cumberland County,Pennsylvania, who being duly sworn according to law,
says, the within COMPLAINT & NOTICE was served upon
BLUE MOUNTAIN ANESTHESIA ASSOCIATES P C
the
DEFENDANT
at 1310:00 HOURS, on the 17th day of May , 2006
at 8 SAND PINE COURT
MECHANICSBURG, PA 17055 by handing to
ROSE ALSTER, ADULT IN CHARGE
a true and attested copy of COMPLAINT & NOTICE
together with
and at the same time directing Her attention to the contents thereof.
Sheriff's Costs:
Docketing
Service
Postage
Surcharge
So Answers:
18.00
12.32
.39
10.00
r% n R. Thomas Kline
(? g11.s/v4 emu. /l
Sworn and Subscribed to before Subscribed to before
me this day of
A. D.
05/18/2006
SALZMANN HUGHES -- `?
By:
Deputy Sh i. f f
Prothonotary
y
TED KOSENSKE, M.D., IN THE COURT OF COMMON PLEAS
Plaintiff CUMBERLAND COUNTY, PENNSYLVANIA
V. DOCKET NO: 06-2727
BLUE MOUNTAIN ANESTHESIA CIVIL ACTION - LAW
ASSOCIATES, P.C.,
Defendant JURY TRIAL DEMANDED
PRAECIPE FOR ENTRY OF APPEARANCE
TO THE PROTHONOTARY OF CUMBERLAND COUNTY:
Kindly enter the appearance of E. Ralph Godfrey as counsel for Plaintiff in the above-
referenced matter.
Date: detadez 12, 2006
Respectfully submitted,
Salzmann Hughes, P.C.
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B
EeR-alph , squire
Attorney I.D. #77052
354 Alexander Spring Road
Carlisle, Pennsylvania 17013
717.249.6333
R og dfreyksalzmannhughes.com
Counsel for Plaintiff,
Ted Kosenske, M.D.
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TED KOSENSKE, M.D., IN THE COURT OF COMMON PLEAS
Plaintiff CUMBERLAND COUNTY, PENNSYLVANIA
V. DOCKET NO: 06-2727
BLUE MOUNTAIN ANESTHESIA CIVIL ACTION - LAW
ASSOCIATES, P.C.,
Defendant JURY TRIAL DEMANDED
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that I served a true and correct copy of the foregoing Praecipe for
Entry of Appearance on all counsel of record and parties of interest by placing the same in the United
States Mail, first-class, postage pre-paid, at Carlisle, Pennsylvania on this 12'4 day of October, 2006,
and addressed as follows:
Samuel L. Andes, Esquire
525 North 12`" Street
Lemoyne, Pennsylvania 17043
Salzmann Hughes, P.C.
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TED KOSENSKE, M.D.,
Plaintiff
V.
BLUE MOUNTAIN ANESTHESIA
ASSOCIATES, P.C..,
Defendant
IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
NO. 06-2727
CIVIL ACTION - LAW
JURY TRIAL DEMANDED
PRAECIPE TO LIST CASE FOR ARGUMENT
TO THE PROTHONOTARY OF CUMBERLAND COUNTY:
1. State the matter to be argued (i.e., plaintiff's motion for new trial, defendant's demurrer to
complaint, etc.):
Preliminary Objections of Defendant Blue Mountain Anesthesia Associates, P.C.
2. Identify counsel who will argue cases:
Samuel L. Andes, Esquire
525 North 12`h Street
Lemoyne, PA 17043
Counsel for Defendant
E. Ralph Godfrey, Esquire
Salzmann Hughes, P.C.
354 Alexander Spring Road
Carlisle, Pennsylvania 17015
Counsel for Plaintiff
3. I will notify all parties in writing within two days that this case has been listed for argument.
4. Argument Court Date: December 6, 2006
Respectfully submitted,
P.C.
By:
Attorney I.D. #770!
354 Alexander Spri
Carlisle, Pennsylva
717.249.6333
ad
Date: October 19, 2006 Attorneys for Plaintiff
t N
CERTIFICATE OF SERVICE
I, the undersigned, hereby certify that on this 19th day of October, 2006, a copy of Plaintiff's
Praecipe to List for Argument was served via first class U.S. mail upon the following:
Samuel L. Andes, Esquire
Attorney for Defendant
525 North 12`h Street
Lemoyne, PA 17043
354 Alexander Spring Road, Suite 1
Carlisle, PA 17013
(717) 249-6333
Attorney for Plaintiff
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TED KOSENSKE, M.D., IN THE COURT OF COMMON PLEAS
Plaintiff CUMBERLAND COUNTY, PENNSYLVANIA
V. DOCKET NO: 06-2727
BLUE MOUNTAIN ANESTH]SSIA CIVIL ACTION - LAW
ASSOCIATES, P.C.,
Defendant JURY TRIAL DEMANDED
PRAE11IPE FOR ENTRY OF APPEARANCE
TO THE PROTHONOTARY OF CUMBERLAND COUNTY:
Kindly enter the appearance of David H. Martineau, Esquire as additional counsel for Plaintiff
in the above-referenced matter.
Respectfully submitted,
Salzmann Hughes, P.C.
By: ?._...?'?
David H. Martineau, Esquire
Attorney I.D. #84127
354 Alexander Spring Road, Suite 1
Carlisle, Pennsylvania 17013
(717) 249-6333
daineau@salzmannhughes.com
Date: December 6, 2006 Counsel for Plaintiff,
Ted Kosenske, M.D.
CERTIFICATE OF SERVICE
AND NOW, this, 6th day of December, 2006, I, David H. Martineau of the law firm of
Salzmann Hughes, P.C., attorney for Plaintiff, hereby certify that I served the within Praecipe for
Entry of Appearance This day by depositing the same in the United States mail, postage prepaid, in
Carlisle, Pennsylvania, addressed to:
Samuel L. Andes, Esquire
P.O. Box 168
Lemoyne, Pennsylvania 17043
Salzmann Hughes, P.C.
2"'/ x
David H. Martineau, Esquire
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PRAECIPE FOR LISTING CASE FOR ARGUMENT
(Must be typewritten and submitted in duplicate)
TO THE PROTHONOTARY OF CUMBERLAND COUNTY:
Please list the within matter for the next:
TED KOSENSKE, M.D.,
Plaintiff
PENNSYLVANIA
v.
BLUE MOUNTAIN ANESTHESIA
ASSOCIATES, P.C.,
. Defi:ndant
Pre-Trial Argument Court
X Argument Court
IN THE COURT OF COMMON PLEAS
CUMBERLAND COUNTY,
DOCKET NO: 06-2727
CIVIL ACTION - LAW
JURY TRIAL DEMANDED
1. Matter to be Argued: Defendant's Preliminary Objections
2. Identify counsel who will argue case:
(a) for Plaintiff: David II, Martineau
(b) for Defendant: Samuel L. Andes
3. I will notify all parties in writing within two days that this case has been
listed for argument.
SALZMA?NN HUGHES, P.C.
By: ?a
David H. Martineau, Esquire
Attorney I.D. No. 84127
354 Alexander Spring Road, Suite 1
Carlisle, PA 17015
(717) 249-6333
Attorneys for Intervenor
Dated: December 6, 2006
.01
CERTIFICATE OF SERVICE
I hereby certify that on the day of December 2006, I served a true and correct copy
of the foregoing document via United States mail, first class, postage prepaid, addressed as
follows:
Samuel L. Andes, Esquire
P.O. Box 168
Lemoyne, PA 17043
Respectfully submitted,
SALZMANN HUGHES, P.C.
By: ?'.....?? 1?
David H. Martineau, Esquire
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13
Ted Kosenske, M.D.
IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
V.
Blue Mountain Anesthesia Associates, P.C.
NO. 06-2727 CIVIL TERM
ORDER OF COURT
AND NOW, December 7, 2006, by agreement of counsel, the above-captioned
matter is continued from the December 6, 2006 Argument Court list. Counsel is directed to relist
the case when ready.
By the Court,
Edgar B. Bayley, I
E. Ralph Godfrey, Esquire
For the Plaintiff /
Samuel L. Andes, Esquire
For the Defendant
Court Administrator
,ors
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:-IjHi 40
TED KOSENSKE, M.D., IN THE COURT OF COMMON PLEAS OF
Plaintiff CUMBERLAND COUNTY, PENNSYLVANIA
V.
BLUE MOUNTAIN
ANESTHESIA
ASSOCIATES, P.C.,
Defendant
: CIVIL ACTION - LAW
NO. 06-2727 CIVIL TERM
IN RE: DEFENDANT'S PRELIMINARY
OBJECTIONS TO PLAINTIFF'S COMPLAINT
BEFORE OLER and GUIDO, JJ.
OPINION OF COURT
AND NOW, this 21" day of February, 2007, upon consideration of
Defendant's preliminary objections to Plaintiff's complaint, and for the reasons
stated in the accompanying opinion, the preliminary objections are denied.
BY THE COURT,
J.
avid H. Martineau, Esq.
Suite 1
354 Alexander Spring Road
Carlisle, PA 17015
Attorney for Plaintiff
vKamuel L. Andes, Esq.
P.O. Box 168
Lemoyne, PA 17043
Attorney for Defendant
9 ti wZ 14J ZZ 933 U01
TED KOSENSKE, M.D., IN THE COURT OF COMMON PLEAS OF
Plaintiff CUMBERLAND COUNTY, PENNSYLVANIA
V.
BLUE MOUNTAIN
ANESTHESIA
ASSOCIATES, P.C.,
Defendant
: CIVIL ACTION - LAW
NO. 06-2727 CIVIL TERM
IN RE: DEFENDANT'S PRELIMINARY
OBJECTIONS TO PLAINTIFF'S COMPLAINT
BEFORE OLER and GUIDO, JJ.
ORDER and OPINION OF COURT
OLER, J., February 21, 2007.
In this civil case, a physician stockholder/employee of a professional
corporation has sued the corporation for breach of contract and violation of
Pennsylvania's Wage Payment and Collection Law. The suit arises out of
Plaintiff's withdrawal from the practice.' For disposition at this time are
preliminary objections filed by Defendant to certain aspects of Plaintiff's claim
under Pennsylvania's Wage Payment and Collection Law.2
For the reasons stated in this opinion, Defendant's preliminary objections
will be denied.
STATEMENT OF FACTS
The facts alleged in Plaintiffs complaint may be summarized as follows:
Plaintiff is Ted Kosenske, M.D., an adult individual residing in Mechanicsburg,
Cumberland County, Pennsylvania.3 Defendant is Blue Mountain Anesthesia
Associates, P.C., a Pennsylvania professional corporation engaged in the practice
' Plaintiffs complaint, filed May 12, 2006.
z Defendant's preliminary objections, filed June 2, 2006.
3 Plaintiffs complaint, para. 1.
of anesthesiology and having its principal place of business in Mechanicsburg,
Cumberland County, Pennsylvania.4
Plaintiff and Defendant entered into an employment agreement on October
1, 1998, whereby Plaintiff was hired as an anesthesiologist by Defendant.5 With
respect to compensation, the agreement provided, inter alia, as follows:
BMA shall compensate Employee, for Employee's services to BMA,
as follows:
A. BMA shall pay Employee an annual salary,
commencing with the first day of Employee's
employment with BMA and continuing through the term
of this agreement unless modified by the mutual
agreement of the parties, of Two Hundred Thousand
($200,000.00) Dollars. Such compensation shall be
monthly and BMA is authorized to deduct or withhold
customary employment, income, and other taxes and
assessments.
B. BMA shall pay Employee such cash bonuses and
other cash compensation as BMA, in its sole discretion,
deems appropriate.
C. BMA shall make such contributions to any
employee-benefit plans BMA, in its sole discretion, deems
to operate for the benefit of its employees, including, but
not limited to, any pension or retirement plan, profit-
sharing plan, or the like. Nothing in this subparagraph
shall obligate BMA to create or maintain such programs
but, to the extent that BMA does have such programs
available for the benefit of its employees, it shall make
participation in such programs available to Employee on
the same basis as BMA's other professional employees.
D. Employee shall receive eight (8) compensated
weeks of vacation, conference, or educational time each
year to be taken at such times as is mutually convenient to
BMA and to Employee. Regular meetings of BMA or the
medical staffs at any of the facilities at which BMA
operates shall not be charged against Employee's
vacation, conference, or education time.
E. Such medical, hospital, and other insurance, and
such other non-cash compensation or employee benefits as
BMA makes available to its other professional employees,
a Plaintiff's complaint, para. 2.
5 Plaintiff's complaint, para. 4 and Exhibit A.
2
on the same basis as such benefits are available to its other
professional employees....b
With respect to the term of the agreement, the contract provided as follows:
The term of this agreement shall be one (1) year from its date. The
agreement, however, shall automatically renew at the expiration of each
successive term unless that agreement is terminated at any time pursuant to
[another provision of the agreement].'
With respect to termination of employment, the agreement provided, in
pertinent part, that "[e]mployee may terminate this agreement, at any time and for
any reason, by giving BMA six (6) months' notice of such termination ...."8
With respect to payment of Plaintiff by Defendant in the event of such
termination, the agreement provided as follows:
[U]pon ... termination of Employee's employment by
Employee ... , BMA shall pay to Employee any and all accrued salary or
other cash compensation then due to Employee and Employee shall, in
exchange for such payment, deliver his written release of all claims against
BMA for any reason arising out of his employment or the termination of
that employment.9
A year later, Plaintiff, other stockholders, and Defendant entered into a
stockholders' agreement, reciting the desirability of an orderly transfer of stock in
the corporation upon the occurrence of certain events. 10 According to Defendant's
brief in support of its preliminary objections, "[t]he 1999 Stockholders Agreement
[was] essentially identical to agreements signed by the stockholders throughout the
existence of the corporation. Each time a new physician was admitted as a
shareholder they simply signed new agreements, on precisely the same terms,
including the new physician as a party."11 However, there is nothing of record to
support this statement.
6 Plaintiff's complaint, Exhibit A.
' Plaintiff's complaint, Exhibit A.
a Plaintiff's complaint, Exhibit A.
9 Plaintiffs complaint, Exhibit A.
10 Plaintiff's complaint, para. 5 and Exhibit B.
" Brief of Defendant in Support of Preliminary Objections to Plaintiff's Complaint, at 2 n.1.
3
The agreement provided for the sale of stock by a shareholder/employee to
the corporation, in the event of a termination of his employment. 12 The terms of
the sale were specified as follows:
The purchase price of... shares of any Stockholder sold or
transferred to BMA in accordance with the terms of this agreement shall
be determined by multiplying the net book value of BMA on the date that
the "triggering event" ... by a fraction, the denominator of which shall be
all of the shares of stock of BMA outstanding on the date of such
triggering event and the numerator of which shall be the number of shares
of stock owned by the Stockholder whose stock is being transferred. "Net
book value" shall be defined and calculated as follows:
A. All of the assets of BMA shall be valued. Any
real estate owned by BMA shall be appraised by a
qualified real estate appraiser selected by the accountant
regularly serving BMA on the date of the triggering event.
Any tangible personal property reasonably capable of
appraisal shall be appraised by a qualified appraiser
selected by the said accountant. All other assets, tangible
and intangible (excluding accounts receivable and good
will) shall be valued as shown on BMA's balance sheet at
the end of the last accounting period for which a balance
sheet was prepared by BMA's accountant.
B. The total value of all assets (excluding accounts
receivable and goodwill) shall then be reduced by all of
BMA's liabilities owed on the date of the triggering event,
provided, however, that if the liabilities of BMA exceed
the value of its assets on the date of the triggering event,
the purchase price for the Stockholder shall be set at zero;
that is, there shall be no negative value calculated for such
Stockholder's stock and he shall not be obligated to pay to
BMA any sum as a result of such negative value.
C. There shall be no allowance for or value set upon
the accounts receivable of BMA or any goodwill for BMA
in the determination of net book value.
In determining the net book value for purposes of this paragraph, BMA's
accountant shall use the same accounting methods used in the preparation
of similar balance sheets for BMA for prior accounting periods and the
determination of such accountant shall be final, conclusive, and binding on
all parties; provided, however, that any and all accounts receivable owed
to BMA, whether or not shown on BMA's balance sheets or other financial
statements in prior accounting periods, and goodwill shall not be included
12 Plaintiff's complaint, Exhibit B.
4
as an asset of BMA and shall be excluded entirely Ifrom the calculation of
the purchase price for stock under this agreement.'
Paragraph 5 of the agreement, entitled "Procedure for Purchase," provided,
in pertinent part, as follows:
Upon [the termination of a stockholder's employment], BMA or
Stockholder Stockholder's representative shall give notice to the other
parties to this agreement of the occurrence of such event in writing. BMA
shall cause its accountant or auditor to calculate the purchase price of the
stock to be acquired by BMA from the Stockholder affected by
such ... event and provide copies of such calculations to the parties to this
agreement within thirty (30) days of the said notice. Within sixty (60)
days following such calculation by BMA's accountant or auditor, BMA
shall tender to the Stockholder affected by the . . . event, or the
representative of such Stockholder, payment in full of the purchase price
as calculated by the said accountant or auditor. Contemporaneous with the
tender of such payment, BMA shall provide its written indemni[t]y to the
affected Stockholder or his or her representative of all debts and liabilities
of BMA which the affected Stockholder may have assumed or may
otherwise be liable for, and the affected Stockholder or his or her personal
representative shall make, execute, acknowledge and deliver all stock
certificates and other documents reasonably required, in the opinion of
BMA's counsel, to transfer all of the affected Stockholder's interest in or
claim against BMA to BMA or its assigns. 14
Paragraph 7 of the stockholders' agreement, entitled "Transfer of Stock to
BMA," provided as follows with respect to accounts receivable:
In the event that the shares of any Stockholder are sold or transferred
to BMA in accordance with the terms of this agreement, BMA shall pay to
such Stockholder ... , in addition to the payment of his or her stock as
provided ... hereinabove, cash compensation for that Stockholder's
proportionate interest in BMA's accounts receivable on the date of the
triggering event. BMA shall pay to such Stockholder, or his or her
personal representative, a sum determined by multiplying BMA's Net
Accounts Receivable (as hereinafter defined) by a fraction, the
denominator of which shall be the number of physicians then employed by
BMA who are Stockholders of BMA and the numerator of which shall be
one. "Net Accounts Receivable" shall be determined by multiplying the
total accounts receivable shown on BMA's financial records at the end of
the month preceding the date of the triggering event (and "net accounts
receivable" shall only include work for which the Corporation has
submitted bills and shall not include unbilled work, work in progress, or
the like) by the average percentage of accounts receivable actually
collected by BMA during the first six months of the twelve-month period
immediately preceding the date of such termination, minus billing costs on
13 Plaintiffs complaint, Exhibit B (emphasis added).
14 Plaintiffs complaint, Exhibit B.
net receivables and minus a sum necessary to equalize corporate expenses
for direct benefits to professional employees. The amount so determined
("Net Receivables") shall be divided into two parts, Fund A and Fund B,
and paid or held as follows:
A. An amount estimated by the accountant then
regularly employed by BMA to be the maximum amount
which would be deposited into the account of the
Stockholder within any profit-sharing, pension, or other
employee benefit plan operated by Corporation for the
year of the triggering event shall constitute Fund A. Fund
A shall be reserved and held by BMA until the
contribution to such plan is made for the fiscal year of the
triggering event following which BMA shall pay over to
Stockholder any amount in Fund A, including any accrued
interest, which exceeds the amount deposited into the
Stockholder's said account for that fiscal year. Any
remainder in Fund A shall be paid to the Stockholder
within thirty (30) days after BMA makes the contribution
to such plan.
B. The balance of Net Receivables shall constitute
Fund B, which shall be paid to the Stockholder in twelve
(12) equal monthly installments, without interest, the first
said installment being due on the first day of the month
following the transfer of the Stockholder's stock as
required by Paragraph 5 hereof and the payment shall
continue on the first day of twelve consecutive months
thereafter. For tax purposes, the Stockholder and BMA
shall both treat such payments as compensation, which
shall be fully taxed to the Stockholder and deducted by
BMA and BMA shall be entitled to withhold such income
and other tax payments and assessments as may be
required by law or may be otherwise reasonably necessary
for BMA to comply with all tax laws, regulations, and the
like; provided, however, that the payment from Fund B
shall not be considered compensation or salary for
purposes of calculating the deposit into any profit-sharing,
pension, or other employee benefit plan then operated by
BMA or in calculating the payments from or vesting of the
Stockholder's account within said plan.15
In 2005, Plaintiff notified Defendant of his intention to terminate his
employment. 16 The parties agreed that Plaintiffs last day of work for Defendant
" Plaintiff's complaint, Exhibit B.
16 Plaintiff's complaint, paras. 6-7.
6
would be September 23, 2005, with vacation days to accrue through October 12,
2005.17
By letter dated October 10, 2005, Defendant's accountant provided the
calculations contemplated by the stockholders' agreement.'8 According to these
calculations, Plaintiff was to receive $85.25 for his stock and $36,063.00 for his
share of the accounts receivable.19 In addition, the accountant in his letter
indicated the following:
Although a bonus is not required as part of your Stockholders Agreement or Employment
Agreement[], the group has decided to pay a bonus to reduce the corporation's stockholders' equity to
the point that there would be little gain or loss to [Plaintiff] for his stockholders' equity at this time.
The initial calculation of the bonuses paid on September 30 is shown below:
Initial Calculation
Cash Distribution $ 69,402
Kosenske Sidesheet Items 15.638
Divisible Income $ 85,040
=5
Divisible Income per Doctor $ 17,008
Alster Sola Kosenske Chess Kapor Total
Divisible Income $ 17,008 $ 17,008 $ 17,008 $ 17,008 $ 17,008 $ 85,040
Sidesheet Item (15,638 ( 15.6381
9/30 Bonus $ 17,008 $17,008 $ 1„370 $ 17,008 $ 17,008 $ 69,40220
To calculate the bonus for each doctor, I added [Plaintiff] sidesheet items for the year totaling
$15,638 to the total $69,402 cash distribution. Since the other stockholders were not submitting their
personally paid sidesheet items at the present time, I only utilized [Plaintiff] sidesheet items in
determining the September 30 bonus for all of you.
This resulted in the $15,638 of [Plaintiff] sidesheet items for the first nine months of 2005,
which included $9,871 for medical insurance and $5,767 of personally paid expenses reimbursed to
him, being subtracted from his bonus.
This resulted in [Plaintiff] receiving a bonus of $1,370, which was $15,638 less than the
$17,008 the other four of you received.
Upon reflection I realized that the calculation should have considered those sidesheet items,
which were already paid for the other four doctors in determining the bonus. If those expenses had not
already been paid by the corporation, the amount of stockholders' equity available to be distributed
would have been greater. Therefore, the chart below shows the revised calculation of the bonus taking
into consideration all sidesheets items paid for all of the doctors in the practice for the first nine months
of 2005:
Revised Calculation
Cash Distribution $ 69,402
1/1-9/30/05 Sidesheet Items Paid 54,492
Divisible Income $ 123,894
.5
Divisible Income per Doctor $ 24,779
17 Plaintiffs complaint, para. 7 and Exhibit C.
18 Plaintiff s complaint, para. 21 and Exhibit D.
19 Plaintiff s complaint, para. 22 and Exhibit D.
20 Plaintiffs complaint, Exhibit D.
7
Alster Sola Kosenske Chess Kaooor Total
Divisible Income $ 24,779 $ 24,779 $ 24,779 $ 24,779 $ 24,779 $ 123,895
Sidesheet Items 1(0.681) 8( 431) 15 638 M871) 9( .871) (54,492)
Revised Bonus $ 14,098 $ 16,348 $ 9,141 $ 14,908 $ 14,908 $ 69,403
9/30 Bonus 17.008 17M 1 370 17.008 17.008 69.402
Difference $ (2,910) $ (660) $ 7,771 $ (2,100) $ (2,100) $ 1
When the $69,402 of cash distributed is added to the $54,492 of sidesheet items for all five
doctors, a total of divisible income of $123,894 is calculated. This is an average divisible income of
$24,779 per doctor.
When each of your sidesheet items is subtracted from it, the revised bonuses which should have
been paid are recalculated between $9,141 for [Plaintiff] and $16,348 for Ivan.
The amount of bonus each of you received is subtracted from that. [Plaintiff] should be paid an
additional bonus of $7,771 to equalize this. The other four of you have been paid between $660 and
$2,910 more than you were paid with the initial bonus calculation. I suggest adjusting the bonus
differences among you when the year end bonus is paid at December 31.21
Notwithstanding his demand, Plaintiff has not received these amounts from
Defendant.22
In addition to these amounts, Plaintiff in the present action claims, inter
alia, an additional statutory "liquidated damages" figure of 25% of $43,919.25
($7,771.00 bonus plus $85.25 stock buy-out plus $36,063.00 accounts receivable),
as well as attorney's fees, in accordance with provisions of Pennsylvania's Wage
Payment and Collection Law. 23 Defendant has filed preliminary objections to the
complaint in the form of motions to strike, contending that the stock buy-out
payment ($85.25) and the accounts receivable payment ($36,063.00) provided for
in the stockholders' agreement do not represent wages under the Wage Payment
and Collection Law, as a result of which Defendant could not be subjected to
liability for statutory "liquidated damages" and attorney's fees in relation thereto.24
21 Plaintiff's complaint, Exhibit D.
22 Plaintiff's complaint, paras. 26-27.
23 Plaintiff's complaint, Count I; Act of July 14, 1961, P.L. 637, 43 P.S. §§260.1 et seq.
24 Defendant's preliminary objections, para. 9. Defendant apparently does not contend that the
"bonus" referred to in the accountant's letter would not be "wages" under the act. See Brief of
Defendant in Support of Preliminary Objections to Plaintiff's Complaint, at 3 n.2 ("Kosenke's
complaint raises claims under the statute for other amounts he claims to be due as "wages",
including bonus, vacation, and other pay. Although BMA denies it breached the agreement
between the parties and is obligated for any of the penalty payments under the statute, it does not
dispute that those items constitute "wages" within the meaning of the statute, and did not file
preliminary objections to those claims.")
8
These issues were argued on January 24, 2007.
DISCUSSION
Demurrer. On a preliminary objection which challenges the legal
sufficiency of a complaint, a court "must accept all material facts set forth in the
complaint as well as all the inferences reasonably deducible therefrom as true."
Powell v. Drumheller, 539 Pa. 484, 489, 653 A.2d 619, 621 (1995) (citations
omitted). A preliminary objection of this type should be sustained only when, "on
the facts averred, the law says with certainty that no recovery is possible." Id. at
489, 653 A.2d at 621.
Wage Payment and Collection Law-General. The purpose and focus of
Pennsylvania's Wage Payment and Collection Law have been summarized by the
Pennsylvania Superior Court in Hartman v. Baker, 2000 PA Super. 140, 766 A.2d
347, as follows:
Pennsylvania enacted the WPCL to provide a vehicle for employees to
enforce payment of their wages and compensation held by their employers.
The underlying purpose of the WPCL is to remove some of the obstacles
employees face in litigation by providing them with a statutory remedy
when an employer breaches its contractual obligation to pay wages. The
WPCL does not create an employee's substantive right to compensation;
rather, it only establishes an employee's right to enforce payment of wages
and compensation to which an employee is otherwise entitled by the terms
of an agreement.
Id., ¶13, 766 A.2d at 352 (citations omitted).
The civil provisions of the act are to be liberally construed to effect its
purpose. Id., ¶14, 766 A.2d at 353; Act of December 6, 1972, P.L. 1339, §3(c), 1
Pa. C.S. §1928(c).
Under the act, "wages" are defined to include:
all earnings of an employe, regardless of whether determined on time, task,
piece, commission or other method of calculation. The term "wages" also
includes fringe benefits or wage supplements whether payable by the
employer from his funds or from amounts withheld from the employes'
pay by the employer.
Act of July 14, 1961, P.L. 637, §2.1, as amended, 43 P.S. §260.2a. "Fringe
benefits or wage supplements" are defined to include:
9
all monetary employer payments to provide benefits under any employe
benefit plan, as defined in section 3(3) of the Employee Retirement
Income Security Act of 1974, 29 U.S.C. § 1001 et seq.; as well as
separation, vacation, holiday, or guaranteed pay; reimbursement for
expenses; union dues withheld from the employes' pay by the employer;
and any other amount to be paid pursuant to an agreement to the employe,
a third party or fund for the benefit of employes.
Act of July 14, 1961, P.L. 637, §2.1, as amended, 43 P. S. §260.2a.
It has been noted that "the courts of Pennsylvania have had little
opportunity to apply the above-mentioned definitions," and that federal decisions
on the statute can thus be particularly instructive. 25
Repurchase of stock. In Bowers v. NETI Technologies, Inc., 690 F. Supp.
349 (E.D. Pa. 1988), a founder/major stockholder/employee of a corporate
defendant sued the defendant under the Wage Payment and Compensation Law for
failure to honor a stock repurchase obligation that was contained in an
"employment agreement." The facts and holding, on a motion for judgment on the
pleadings, of the federal court in Bowers have been summarized by the
Pennsylvania Superior Court as follows:
[T]he plaintiff had entered into a stock repurchase agreement with his
former employer. At trial, the employer argued that the stock repurchase
agreement did not constitute "wages" as set forth in the WPCL. In
rejecting the employer's argument, the district court stated the following:
Like other fringe benefits, which are offered to employees
when they first join a company, the stock repurchase
payments were not provided to the employees on a weekly
basis. Nevertheless, they were certainly "wages" within
the broad definition of the WPCL[,] in that they were
payments pursuant to agreement, and they were offered to
plaintiffj] as [an] employee[], and not for some reason
entirely unrelated to [his] employment ....26
In Hartman v. Baker, 2000 PA Super. 140, ¶21, 766 A.2d 347, 355, the
Pennsylvania Superior Court affirmed a trial court's conclusion following trial that
payment provided for in a stock repurchase agreement constituted "wages" under
25 Hartman v. Baker, 2000 PA Super 140, ¶15, 766 A.2d 347, 353.
26 Hartman v. Baker, 2000 PA Super. 140 ¶15, 766 A.2d 347, 353.
10
the Wage Payment and Collection Law, where the employee accepted the stock
arrangement in return for a reduction in his pay structure. Id.
In the present case, if the facts alleged in Plaintiffs complaint are true, the
stock repurchase payment was "pursuant to an agreement." Whether the payment
can be said to be "for some reason entirely unrelated to [Plaintiff's] employment"
is difficult to determine on the basis of the undeveloped record before the court.
Given the case law related above, including the principle of liberal construction, it
would appear to be premature at this stage of the proceedings to hold with
certainty that the proposed payment to Plaintiff employee of $85.25 for his stock
in Defendant employer is beyond the scope of the Wage Payment and Collection
Law.
Accounts receivable payment. If Plaintiff's complaint is to be credited, the
accounts receivable payments provided for in the parties' stockholders agreement
are also "pursuant to an agreement." Neither payment comprises part of the
"purchase price" for Plaintiff's stock under the agreement alleged by Plaintiff.
The payment provided for in paragraph 7A of the alleged agreement is to be
computed on the basis of the cost of employee fringe benefits. The payment
provided for in paragraph 713 is, according to its terms, to be considered "as
compensation, which shall be fully taxed to the [Plaintiff) and deducted by
[Defendant] and [Defendant] shall be entitled to withhold such income and other
tax payments and assessments as may be required by law or may be otherwise
reasonably necessary for [Defendant] to comply with all tax laws, regulations, and
the like ...." Given the liberal construction to be applied to the civil provisions
of Pennsylvania's Wage Payment and Collection Law, it would be premature at
this stage of the case to hold with certainty that the proposed payments to Plaintiff
employee relating to accounts receivables are beyond the scope of the act. 27
z' It would also, in the court's view, be premature to hold, as Defendant argues in its brief, that
Plaintiff is barred from recovery on the ground that he failed to tender his stock to Defendant.
See Brief of Defendant in Support of Preliminary objections to Plaintiff's Complaint, at 7. The
II
For the foregoing reasons, the following order will be entered:
ORDER OF COURT
AND NOW, this 21S` day of February, 2007, upon consideration of
Defendant's preliminary objections to Plaintiff's complaint, and for the reasons
stated in the accompanying opinion, the preliminary objections are denied.
BY THE COURT,
s/ J. Wesley Oler, Jr.
J. Wesley Oler, Jr., J.
David H. Martineau, Esq.
Suite 1
354 Alexander Spring Road
Carlisle, PA 17015
Attorney for Plaintiff
Samuel L. Andes, Esq.
P.O. Box 168
Lemoyne, PA 17043
Attorney for Defendant
record is silent on this point, nor was the issue included in Defendant's preliminary objections.
Defendant's reliance upon Ka/ando v. Erie Ceramic Arts Co., 2000 PA Super. 377, 764 A.2d 59
(holding that an employee in breach of an agreement allegedly within the purview of the Wage
Collection and Payment Law can not prevail under the act), is similarly premature.
12
TED KOSENSKE, M.D.,
Plaintiff
Vs.
BLUE MOUNTAIN ANESTHESIA
ASSOCIATES, P.C.,
Defendant
NOTICE
TO PLAINTIFF NAMED HEREIN:
IN THE COURT OF COMMON
PLEAS OF CUMBERLAND
COUNTY, PENNSYLVANIA
CIVIL ACTION - LAW
NO. 2006-2727 CIVIL TERM
JURY TRIAL DEMANDED
YOU ARE HEREBY NOTIFIED TO RESPOND TO THE ENCLOSED ANSWER AND
NEW MATTER COUNTERCLAIM WITHIN TWENTY (20) DAYS FROM SERVICE HEREOF
OR A DEFAULT JUDGMENT MAY BE ENTERED AGAINST YOU.
Date: t. t , , Ckla-Q-"?
rQ --
I L. An es
Attorney for Defendant
Supreme Court ID 17225
525 North 12th Street
Lemoyne, PA 17043
(717) 761-5361
TED KOSENSKE, M.D.,
Plaintiff
vs.
BLUE MOUNTAIN ANESTHESIA
ASSOCIATES, P.C.,
Defendant
IN THE COURT OF COMMON
PLEAS OF CUMBERLAND
COUNTY, PENNSYLVANIA
CIVIL ACTION - LAW
NO. 2006-2727 CIVIL TERM
JURY TRIAL DEMANDED
DEFENDANT'S ANSWER WITH NEW MATTER AND COUNTERCLAIM
AND NOW comes the above-named Defendant, by its attorney Samuel L. Andes,
and makes the following Answer, with New Matter, to Plaintiff's Complaint and makes
the following Counterclaim against Plaintiff:
COUNTI
VIOLATION OF THE PENNSYLVANIA WAGE PAYMENT AND COLLECTION LAW
1. Admitted.
2. Admitted.
3. Denied. Dr. Kosenske was employed by the Defendant Blue Mountain
Anesthesia Associates, P.C., (hereinafter "BMA") since its formation in approximately
1992. His employment continued through sometime in October 2005.
4. Admitted. By way of further answer, however, the Employment Agreement
dated 1 October 1998 replaced a prior agreement which contained much the same terms.
Dr. Kosenske had an employment agreement with BMA throughout the time he was
employed by the corporation and the terms of the successive employment agreements
were substantially the same throughout his employment.
5. Admitted. However, the stockholders agreement of 1 October 1999 replaced a
stockholders agreement which was substantially identical in its terms. In fact, throughout
the time he was employed by and a stockholder in BMA, Dr. Kosenske was a party to a
series of stockholders agreements which were substantially identical in their terms, but
which were revised and replaced with new agreements every time a new physician
became a stockholder in the corporation.
6. Denied. To the contrary, Dr. Kosenske initially notified the corporation that he
would determine his employment without the required six month notice. Only after his
failure to comply with the terms of the employment agreement was brought to his
attention, did Dr. Kosenske decide to continue his employment by the corporation for the
six months required by the employment agreement. It is denied that Dr. Kosenske ever
gave the written notice required by the agreement or otherwise complied with the terms
and provisions of the agreement regarding the termination of his employment.
7. Admitted. By way of further answer, BMA states that it issued this letter to Dr.
Kosenske in an effort to determine and confirm when his employment would end and that
such letter was necessary because Dr. Kosenske failed to comply with the provisions of
his employment agreement regarding the termination of his employment.
8. The statements in Paragraph 8 of Plaintiff's Complaint are conclusions of law to
which no factual response is required. Accordingly, BMA makes no factual response to
those statements.
9. Admitted. However, byway of further answer, BMA states that the
employment agreement obligates Kosenske to deliver a release of all claims to BMA upon
his receipt of that compensation and obligates him to do other things under the
agreement as a result of his termination of his employment by BMA.
10. Admitted with clarification. BMA admits that Paragraph 5 of the stockholders
agreement requires it to have its accountant calculate certain payments due to Kosenske
upon his resignation. BMA denies, however, that Kosenske performed his obligations
under that paragraph which would have entitled him to the payment he has demanded.
11. Admitted with clarification. BMA admits that Paragraph 5 of the stockholders
agreement contains the language quoted by Plaintiff. However, BMA denies that
Kosenske performed his obligations under that paragraph which would entitle him to the
payment he has demanded.
12. The statements in Paragraph 12 of Plaintiff's Complaint are conclusions of law
to which no factual response is required. To the extent that a factual response is deemed
to be required, BMA denies that Dr. Kosenske held stock options or that any obligation by
BMA to purchase Dr. Kosenske's stock is, or should be, considered "wages" under the
Pennsylvania Wage Payment and Collection Law.
13. Admitted.
14. The statements in Paragraph 14 of Plaintiff's Complaint are conclusions of law
to which no factual response is required. To the extent that a factual response is deemed
necessary or appropriate, BMA denies that any payments due to Dr. Kosenske for his
portion of the accounts receivable of the corporation are "wages" under the Pennsylvania
Wage Payment and Collection Law.
15. Admitted.
16. Admitted.
17. Admitted.
18. Admitted.
19. Admitted. By way of further answer, BMA states that, at the time the checks
were delivered to Dr. Kosenske, BMA believed that the payments had been calculated
correctly and that these payments represented the full amount Dr. Kosenske was due for
those items.
20. Denied as stated. It is admitted that BMA's accountant performed certain
calculations but is denied that they were done upon BMA receiving the notice from Dr.
Kosenske required by the stockholders agreement. To the contrary, BMA believes that
Dr. Kosenske had direct contact with BMA's accountant and requested that the
calculations be performed.
21. Admitted.
22. Admitted.
23. The statements in Paragraph 23 of Plaintiff's Complaint are conclusions of law
and no factual response is required.
24. Denied. BMA has tendered payment to Dr. Kosenske of the accrued vacation,
and various other payments claimed by him, but Dr. Kosenske has refused payment
because of the continuing dispute between the parties about what is owed. By way of
further answer, BMA states that Dr. Kosenske has not complied with the provisions of his
employment agreement and the shareholders agreement and, as such, is not yet entitled
to payment of the various sums he demands in this action. By way of further answer,
BMA incorporates herein by reference, the averments made in its New Matter and
Counterclaim.
25. Denied for the same reasons described in BMA's answer to Paragraph 24
regarding Dr. Kosenske's claim for accrued vacation pay, the averments of which are
incorporated herein by reference.
26. Denied for the same reasons described in BMA's answer to Paragraph 24
regarding Dr. Kosenske's claim for accrued vacation pay, the averments of which are
incorporated herein by reference.
27. Denied for the same reasons described in BMA's answer to Paragraph 24
regarding Dr. Kosenske's claim for accrued vacation pay, the averments of which are
incorporated herein by reference.
28. Denied. Dr. Kosenske failed to comply with the requirements of his
employment agreement and the stockholders agreement and, as such, is not entitled to
the payments he seeks. BMA incorporates herein, by reference, the averments set out in
its new matter and counterclaim.
29. Denied. BMA is justified in not making the payments to Dr. Kosenske that he
demands. Moreover, in an effort to resolve this matter without unnecessary litigation,
BMA has tendered to Dr. Kosenske the payments he demands. BMA has proceeded in
good faith in all of its actions with regard to Dr. Kosenske.
WHEREFORE, BMA prays this court to dismiss Dr. Kosenske's claim and to enter
judgment in favor of BMA on Count I of Plaintiff's Complaint.
COUNT II
BREACH OF CONTRACT
30. No answer required. To the extent that an answer is deemed appropriate or
necessary, BMA incorporates herein the averments set out in Paragraphs 1 through 29 of
its Answer and the averments set out in its New Matter and Counterclaim.
31. Admitted. By way of further answer, however, BMA states the agreement
dated 1 October 1998 was simply the latest in a succession of employment agreements,
all of which contain substantially the same or similar provisions.
32. Admitted. By way of further answer, BMA states that the stockholders
agreement dated 1 October 1999 was the latest in a succession of stockholders
agreement to which Dr. Kosenske was a party, all of which had substantially similar or
identical provisions.
33. Admitted. However, those agreements required Dr. Kosenske to perform
certain duties and obligations which BMA believes he failed to complete or perform. BMA
incorporates herein, by reference, the averments set out in its New Matter and
Counterclaim.
34. Admitted with clarification. The payment claim by Dr. Kosenske was due him
after he was to give formal notice of his termination of his employment to BMA, which
notice he never formally provided. Moreover, Dr. Kosenske's claim for breach of contract
is barred by his own failure to comply with the agreements and to perform his obligations
thereunder. BMA incorporates herein, by reference, the averments set out in its new
matter and counterclaim.
35. Denied. BMA denies that it owes those payments to Dr. Kosenske because of
his violation of the employment agreement and the stockholders agreement and his
violation of his duty to BMA. Notwithstanding that, BMA has tendered payment of the
sums claimed by Dr. Kosenske and he has refused to accept those payments.
36. Denied. Any damage to Dr. Kosenske was caused by his own violation of the
agreements between him and BMA and his own decision not to accept payment tendered
to him by BMA.
WHEREFORE, BMA prays this court to dismiss Count II of Plaintiff's Complaint and
enter judgment in favor of BMA on Plaintiff's claims set out in his Complaint and on
BMA's Counterclaims which are set forth below.
NEW MATTER
By way of further answer to Plaintiff's Complaint, BMA sets out the following New
Matter:
37. The averments set forth in the foregoing Answer are incorporated herein by
reference.
38. Dr. Kosenske failed to comply with and perform his obligations under his
employment agreement with BMA. The duties which he failed to perform include:
A. Dr. Kosenske failed to give BMA notice of his termination of his
employment by BMA in accordance with the terms of the agreement.
B. Dr. Kosenske failed to deliver his written release of all claims
against BMA in exchange for the payments tendered to him by BMA
following his termination of his employment.
C. Dr. Kosenske attempted to form a new entity which would
compete with BMA and interfere with his obligations, under the employment
agreement, not to engage in any other employment during the term of the
employment by BMA.
39. Dr. Kosenske failed to comply with the terms and provisions of the
stockholders agreement and violated that agreement by doing so. His acts which
violated that agreement include the following:
A. Dr. Kosenske failed to give the notice of his termination of his
employment required by the stockholders agreement.
B. Dr. Kosenske failed to deliver the stock certificates evidencing his
ownership of stock in BMA to BMA as required by the stockholders
agreement.
C. Dr. Kosenske violated the provisions of Paragraph 8 of the
agreement by attempting to reverse his resignation from the medical staff of
the hospital at which BMA operates.
40. In September of 2005 and for at least for one year prior to that time, Dr.
Kosenske was an officer, director, and shareholder of BMA.
41. In addition to his violation of the employment agreement and the stockholders
agreement described above, Dr. Kosenske violated his fiduciary duty to BMA, which he
owed to BMA as a shareholder, director, and officer of the corporation. His violation of
that duty include the following:
A. He attempted to form a new and separate entity which would
compete with and take business from, BMA and which would, at least
potentially, disrupt BMA's business relationship at the hospital at which it
operates.
B. He brought an action against the hospital at which BMA operates
in which he made claims which BMA believes to be false and unfounded, to
the effect that BMA and the hospital conspired to violate federal law. The
action filed by Kosenske represents an attempt to interfere with, disrupt, and
perhaps terminate BMA's working relationship with that hospital.
C. He failed and refused to resign his position as an officer and
director of BMA and his position as a trustee or director of BMA's retirement
plans.
42. BMA has repeatedly attempted to resolve the dispute between BMA and Dr.
Kosenske by tendering payment of the amounts claimed by Dr. Kosenske, by reminding
him of his obligations under the stockholders agreement and the employment agreement,
and by preparing various documents for Dr. Kosenske to sign to complete and fulfill his
obligations under those agreements.
43. Dr. Kosenske has not executed and delivered to BMA the documents it
prepared and which it believes are necessary to complete the orderly termination of Dr.
Kosenske's employment and the orderly transfer of his ownership interest in BMA back to
the corporation.
44. Dr. Kosenske's actions as described in this New Matter constitute serious
breaches of his obligations and duties to the corporation, and the agreements between
BMA and Dr. Kosenske and bar his claims against the corporation because of his breach
of those contracts and duties.
WHEREFORE, BMA prays this court to dismiss Plaintiff's Complaint and enter
judgment in favor of BMA on Plaintiff's claims and on BMA's counterclaim, set out below.
COUNTERCLAIM
In addition to the foregoing, BMA makes the following Counterclaim against Dr.
Kosenske in this matter:
45. The averments set forth in the foregoing Answer and New Matter are
incorporated herein by reference.
46. At all times relevant to this claim, Dr. Kosenske was a shareholder in BMA.
47. At all times relevant to this matter, Dr. Kosenske was a director of BMA
48. At all times relevant to this matter, Dr. Kosenske was an officer of BMA
49. At all times relevant to this matter, Dr. Kosenske was a trustee of the
retirement plan or plans maintained by BMA for the benefit of its employees.
50. As a result of the positions he held with BMA, as described above, Dr.
Kosenske owed a fiduciary duty to BMA, its other shareholders, and its employees.
51. At various times both prior to October of 2005 and following that date, Dr.
Kosenske violated the fiduciary duty he owed to BMA. His actions which violated that
duty include:
A. He attempted to organize a business entity which would compete
with the Carlisle Regional Medical Center, at which BMA practiced medicine
and would, directly, and indirectly, take patients and potential patients from
the hospital and from BMA itself; and
B. He attempted to put himself in a position where he could offer
professional medical services which would directly compete with BMA and
take patients, and revenue from BMA; and
C. He took various steps to implement his plan to create and take
business from both the hospital and from BMA; and
D. He instigated and filed a legal action against the Carlisle Regional
Medical Center in which he falsely accused BMA and some of its other
officers, directors, and physicians, of violating federal law by offering or
accepting monetary and non-monetary benefits in exchange for illegally
referring and directing patients to the Carlisle Regional Medical Center.
52. The actions described in the foregoing paragraphs also violated Dr. Kosenske's
fiduciary duty to the other shareholders and employees of BMA.
53. The actions taken by Dr. Kosenske in violation of his fiduciary duties have
caused and will continue to cause harm and injury, both monetary and non-monetary, to
BMA. The injuries that BMA has suffered and will continue to suffer include, but are not
limited to, the following:
A. BMA has been compelled to expend attorneys fees and other
professional fees because of a Subpoena served upon it in the federal
litigation commenced by Kosenske; and
B. BMA anticipates it will continue to incur legal and other
professional fees as a result of the federal litigation commenced by Dr.
Kosenske against the Carlisle Regional Medical Center; and
C. The reputation of BMA has been impugned by the accusations
made against BMA by Dr. Kosenske in the federal litigation he commenced;
and
D. BMA's working relationship with the hospital and with other
physicians who work at the hospital has been strained and damaged by the
accusations made by Dr. Kosenske in his federal litigation and by his efforts
to create an entity to compete with the hospital and with BMA.
The injuries caused by Dr. Kosenske's conduct continue for BMA.
54. BMA believes that Dr. Kosenske undertook these various actions, which then
caused injury and damage to BMA, for his own monetary, financial, and pecuniary gain.
55. BMA believes that Dr. Kosenske undertook the actions described above, in
addition to his goal of financial gain, in a bad faith effort to injry BMA, its reputation, its
working relationship with the Carlisle Hospital, and its reputation with other physicians
and patients.
56. At the time he undertook these actions, Dr. Kosenske knew, or should have
known, that the statements and claims which he made as part of his federal litigation, at
least as they related to BMA, were false and could not be substantiated.
57. At the time he undertook the actions described above, Dr. Kosenske knew or
should have known that his injuries would cause substantial and continuing damage and
injury to BMA.
58. Dr. Kosenske, by his conduct, has injured BMA, and continues to injure BMA,
in an sum which cannot, at this preliminary time, be precisely liquidated.
WHEREFORE, BMA demands judgment against Dr. Kosenske for a sum in excess of
the arbitration limits imposed by the local rules of the Court of Common Pleas of
Cumberland County, Pennsylvania, plus interest, plus costs of suit.
4Z:::Z fv'c-?? - -
ue . An
Attorney for Defendant
Supreme Court ID # 17225
525 North 12th Street
Lemoyne, Pa 17043
(717) 761-5361
I verify that the statements made in this document are true and correct. I
understand that any false statements in this document are subject to the penalties of 18
Pa. C.S. 4904 (unsworn falsification to authorities).
BLUE MOUNTA ANESTHESIA ASSOCIATES, P.C.,
Date: 3 - 5--0 Lx?
oward Alster, President
-10-
CERTIFICATE OF SERVICE
I hereby certify that I served a copy of the foregoing document upon counsel for
the Plaintiff by regular mail, postage prepaid, addressed as follows:
E. Ralph Godfrey, Esquire
Salzmann Hughes, P.C.
354 Alexander Spring Road, Suite
Carlisle, PA 17013
Date: '12 iQmr-7- Amy M. ?iArkins
S "r tary for Samuel L. Andes
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4'..;7
David H. Martineau, Esquire
Attorney I.D. No. 84127
Susann B. Morrison, Esquire
Attorney I.D. No. 77041
Salzmann Hughes, P.C.
354 Alexander Spring Road, Suite 1
Carlisle, PA 17015
(717) 249-6333
TED KOSENSKE, M.D., : IN THE COURT OF COMMON PLEAS OF
Plaintiff : CUMBERLAND COUNTY, PENNSYLVANIA
V.
NO. 2006-2727
CIVIL ACTION - LAW
BLUE MOUNTAIN ANESTHESIA
ASSOCIATES, P.C.,
Defendant
JURY TRIAL DEMANDED
NOTICE
TO: Blue Mountain Anesthesia Associates, P.C.
c/o Samuel L. Andes, Esquire
525 North 12th Street
P.O. Box 168
Lemoyne, PA 17043
YOU ARE HEREBY NOTIFIED TO RESPOND TO THE ENCLOSED PLAINTIFF'S
RESPONSE TO NEW MATTER AND PLAINTIFF'S ANSWER WITH NEW MATTER TO
DEFENDANT'S COUNTERCLAIM WITHIN TWENTY (20) DAYS FROM SERVICE
HEREOF OR A DEFAULT JUDGMENT MAY BE ENTERED AGAINST Y
Date: April 4, 2007
David H. Martineau, Esquire
Attorney I.D. No. 84127
354 Alexander Spring Road, Suite 1
Carlisle, PA 17015
(717) 249-6333
Attorney for Plaintiff
David H. Martineau, Esquire
Attorney I.D. No. 84127
Susann B. Morrison, Esquire
Attorney I.D. No. 77041
Salzmann Hughes, P.C.
354 Alexander Spring Road, Suite I
Carlisle, PA 17015
(717) 249-6333
TED KOSENSKE, M.D., : IN THE COURT OF COMMON PLEAS OF
Plaintiff : CUMBERLAND COUNTY, PENNSYLVANIA
V. NO. 2006-2727
CIVIL ACTION - LAW
BLUE MOUNTAIN ANESTHESIA
ASSOCIATES, P.C.,
Defendant
JURY TRIAL DEMANDED
PLAINTIFF'S RESPONSE TO NEW MATTER AND PLAINTIFF'S
ANSWER WITH NEW MATTER TO DEFENDANT'S COUNTERCLAIM
AND NOW, comes Plaintiff, Ted Kosenske, by and through his attorneys, Salzmann
Hughes, P.C. and provides the following Response to New Matter and Answer with New Matter
to Defendant's Counterclaim:
RESPONSE TO DEFENDANT'S NEW MATTER
37. The averments of Paragraphs 1 though 36 of Plaintiff's Complaint are
incorporated herein as if set forth in full.
38. Paragraph 38 contains a legal conclusion to which no responsive pleading is
required. To the extent any responsive pleading is required:
A. Denied. Plaintiff gave all notices of his intent to resign required by his
employment agreement.
B. Denied. Defendant has not tendered such payment and Plaintiff is under
no obligation to execute any release as a condition precedent to Defendant's obligation to
tender payment.
C. Denied. Plaintiff did not engage in any other employment during the term
of his employment with Defendant, excepting only service in the United States Army
Reserve.
39. Paragraph 39 contains a legal conclusion to which no responsive pleading is
required. To the extent any responsive pleading is required:
A. Denied. Plaintiff gave all notices of his intent to resign required by the
stockholder's agreement.
B. Denied. Defendant's obligation to surrender any stock certificates does
not arise under the stockholder's agreement until payment under that agreement is
tendered by Defendant. To date, Defendant has failed to tender such payment.
C. Denied. In accordance with the terms of the Stockholder's Agreement,
Plaintiff did resign from the staff at the Carlisle Regional Medical Center and did not
apply for medical staff privileges within one (1) year from the date of termination of
Plaintiff's employment with Defendant.
40. Admitted.
41. Paragraph 41 contains legal conclusions to which no responsive pleading is
required. To the extent any responsive pleading is required:
A. Denied. It is denied that a director, officer or stockholder of Defendant
has such a fiduciary duty not to file articles of incorporation for a non-operational
business entity which is not competing with Defendant.
B. Denied. It is denied that any director, officer or stockholder of Defendant
has such a fiduciary duty to refrain from bringing potential malfeasance to light. By way
of further answer, no federal action was filed while Plaintiff was an officer or director of
Defendant. Additionally, pursuant to the protection provided for under 31 U.S.C.A.
§3730(h), Defendant is prohibited from retaliating against Plaintiff on account of his role
in the federal litigation.
C. Denied. It is denied that any director, officer or stockholder of Defendant
has a fiduciary obligation to resign his position. Further, Plaintiff has resigned his
position with BMA's retirement plans.
42. Denied. Defendant has not tendered to Plaintiff payment due under either the
employment agreement or the stockholder's agreement. Rather, Defendant has attempted to
withhold the same, offering to pay money unconditionally owed to Plaintiff only in exchange for
his agreement to drop the aforementioned federal law suit. No such waiver of rights under the
False Claims Act is contemplated as a condition of payment under either the employment
agreement or the stockholder's agreement. It is admitted only that Defendant inadvertently paid
the sum of $3,000.25 in partial payment of Defendant's obligations without conditioning the
same on the aforementioned waiver of Plaintiff's rights, which payment has been accepted by
Plaintiff. By way of further response, Defendant has knowingly filed a false IRS Form 1099
indicating that payment has been made to Plaintiff and to date, despite requests, Defendant has
not provided any evidence of an amended filing of said 1099, such uncorrected and knowingly
false filing constituting fraud and a being subject to the penalties of Section 7207 of the Internal
Revenue Code.
43. Admitted that Plaintiff has not executed all of the documents prepared by
Defendant, some of which contain a waiver of Plaintiff's rights not contemplated under any
agreement between Plaintiff and Defendant. It is denied that Plaintiff is under any obligation to
execute the documents prepared by Defendant. Additionally, Plaintiff is not required to execute
any release until all compensation has been paid to Plaintiff, which has not yet occurred.
44. Paragraph 44 contains a conclusion of law to which no responsive pleading is
required. To the extent any responsive pleading is required, it is denied that Plaintiff has failed
to perform any obligation under either his employment agreement or the stockholder's
agreement.
WHEREFORE, Plaintiff prays this Honorable Court to enter judgment in favor of
Plaintiff and against Defendant as set forth in Plaintiff s Complaint.
ANSWER TO DEFENDANT'S COUNTERCLAIM
45. The averments and answers contained in paragraphs 1 through 36 of Plaintiffs
- Complaint and 37 through 44 of Plaintiffs Response to Defendant's New Matter are
incorporated herein as if set forth in full.
46. Admitted that during all time periods relevant hereto, Plaintiff was a minority
shareholder in Defendant.
47. After reasonable investigation, it is unknown to Plaintiff what time periods
Defendant feels are relevant to the matters set forth in Defendant's Counterclaim. Therefore
Paragraph 47 is denied and strict proof is required at trial.
48. After reasonable investigation, it is unknown to Plaintiff what time periods
Defendant feels are relevant to the matters set forth in Defendant's Counterclaim. Therefore
Paragraph 48 is denied and strict proof is required at trial.
49. After reasonable investigation, it is unknown to Plaintiff what time periods
Defendant feels are relevant to the matters set forth in Defendant's Counterclaim. Therefore
Paragraph 49 is denied and strict proof is required at trial.
50. Paragraph 50 contains a conclusion of law to which no responsive pleading is
required. To the extent that any responsive pleading is required, Plaintiffs obligations were
limited to only those set forth in Pennsylvania law.
51. Paragraph 51 contains conclusions of law to which no responsive pleading is
required. To the extent that any responsive pleading is required:
A. Denied. At no time prior to his resignation from Defendant did Plaintiff
take any action in competition with either Carlisle Regional Medical Center or
Defendant, nor take any patient.
B. Denied. At no time prior to his resignation from Defendant did Plaintiff
take any action in competition with Defendant. Further, Plaintiff is not under any
obligation not to compete with Defendant at any time after his resignation from
Defendant.
C. Denied. At no time prior to his resignation from Defendant did Plaintiff
take any action in competition with either Carlisle Regional Medical Center or
Defendant.
D. Denied. The legal action filed by Plaintiff is of public record and such
records speak for themselves regarding the allegations made therein. It is further denied
that such allegations were made falsely. By way of further answer, as of the date of this
pleading, Defendant is not a named defendant in the federal action. Additionally,
pursuant to the protection provided for under 31 U.S.C.A. §3730(h), Defendant is
prohibited from retaliating against Plaintiff on account of his role in the federal litigation.
52. Paragraph 52 contains a conclusion of law to which no responsive pleading is
required. To the extent that. any responsive pleading is required, Paragraph 52 is denied for the
reasons stated in Paragraphs 50 and 51 above.
53. Denied. After reasonably investigation, Plaintiff is without knowledge of any of
the damages alleged by Defendant and strict proof is required at trial. By way of further answer,
the damages alleged by Defendant, if actually sustained, are the result of Defendant's own
actions and the actions of the Carlisle Regional Medical Center and not Plaintiff. Additionally,
pursuant to the protection provided for under 31 U.S.C.A. §3730(h), Defendant is prohibited
from retaliating against Plaintiff on account of his role in the federal litigation.
54. Denied. After reasonably investigation, Plaintiff is without knowledge regarding
what Defendant does or does not believe. Paragraph 54 is therefore denied and strict proof is
required at trial.
55. Denied. After reasonably investigation, Plaintiff is without knowledge regarding
what Defendant does or does not believe. Paragraph 55 is therefore denied and strict proof is
required at trial.
56. Denied. At the time of filing the federal litigation and continuing through the
time of this pleading, the allegations presently made regarding Defendant in said federal lawsuit
are true and correct to the best of Plaintiffs knowledge, information and belief. Additionally,
pursuant to the protection provided for under 31 U.S.C.A. §3730(h), Defendant is prohibited
from retaliating against Plaintiff on account of his role in the federal litigation.
57. Denied. Plaintiff's injuries are set forth in Plaintiff's Complaint and do not relate
or have any causal connection with the allegations made in Defendant's Counterclaim.
58. Denied. Paragraph 58 contains a conclusion of law to which no responsive
pleading is required. To the extent that any responsive pleading is required, Paragraph 58 is
denied and strict proof is required at trial. By way of further response, Plaintiff's actions have
not caused any damage to Defendant. If Defendant has suffered any damages, such damages are
caused by Defendant's own actions.
WHEREFORE, Plaintiff prays this Honorable Court to enter judgment in favor of
Plaintiff and against Defendant with respect to Defendant's Counterclaim.
PLAINTIFF'S NEW MATTER TO DEFENDANT'S COUNTERCLAIM
59. The averments and answers contained in paragraphs 1 through 36 of Plaintiff's
Complaint and 37 through 44 of Plaintiff's Response to Defendant's New Matter and 45 through
58 of Plaintiff's Answer to Defendant's Counterclaim are incorporated herein as if set forth in
full.
60. Defendant's counterclaims are barred by the applicable statute of limitations.
61. Plaintiff's duty to surrender his stock certificates is contingent upon Defendant
tendering payment of the monies owed under to Plaintiff under the stockholder's agreement.
62. Any attempts by Defendant to tender payment to Plaintiff have been conditioned
upon Plaintiff waiving certain rights that are not related to Plaintiff's right to receive such
payments.
63. Specifically, Defendant's attempt to tender payment to Plaintiff have been
conditioned upon Plaintiff withdrawing the federal law suit referred to in Defendant's
Counterclaim.
64. Any offer of payment conditioned upon a waiver of rights unrelated to the
payment does not constitute a tender of payment.
65. Defendant failed to mitigate its alleged damages.
66. Plaintiff has never entered into any agreement which would restrict Plaintiffs
right to compete directly, or indirectly with Defendant after Plaintiff's resignation.
67. Prior to his resignation, Plaintiff has taken no action to interfere with the actions
of Defendant.
68. Prior to his resignation, Plaintiff took no action that competed with Defendant.
69. Prior to his resignation, Plaintiff did not solicit any patients.
70. Prior to his resignation, Plaintiff did not enter into any agreement which acted to
deprive Defendant of any opportunity.
71. Prior to Plaintiff's last day as an employee of Defendant, Defendant
acknowledged and accepted that Plaintiff would start a competing practice upon his leaving his
position with Defendant.
72. Conditions precedent to Plaintiff's contractual obligations that Defendant alleges
to have been breached have not yet occurred.
73. Defendant withholding of payment due to Plaintiff and conditioning such
payment on Plaintiff withdrawing the federal law suit constitutes retaliatory action against
Plaintiff, in violation of 31 U.S.C.A. §3730(h).
74. Defendant's Counterclaim against Plaintiff, demanding compensation from
Plaintiff by reason of Plaintiff s role in the federal litigation constitutes retaliatory action against
Plaintiff, in violation of 31 U.S.C.A. §3730(h).
WHEREFORE, Plaintiff prays this Honorable Court to enter judgment in favor of
Plaintiff and against Defendant with respect to Defendant's Counterclaim and to award Plaintiff
reasonable attorney fees and other costs of defending Defendant's retaliatory actions in violation
of the False Claims Act.
Respectfully Submitted,
SALZMANN HUGHES, P.C.
David H. Martineau, Esquire
Attorney I.D. No. 84127
354 Alexander Spring Road, Suite 1
Carlisle, PA 17015
Date: ?1 14 ?2 d (717) 249-6333
Attorneys for Plaintiff
VERIFICATION
I verify that all the statements made in the foregoing document are true and
correct to the best of my knowledge, information and belief and that any false statements
made are subject to the penalties of 18 Pa.C.S.A. § 4904, relating to unsworn falsification
to authorities.
Ted Kosenske, M.D.
5 Tyler Court
Carlisle, PA 17015
Date: 7 " ?" MJ
CERTIFICATE OF SERVICE
I, David H. Martineau, hereby certify that I served a copy of the foregoing document
upon counsel for the Defendant by regular United States Mail, postage prepaid, addressed as
follows:
Samuel L. Andes, Esquire
525 North 12a' Street
P.O. Box 168
Lemoyne, PA 17043
Date: 41X IQ
David H. Martineau, Esquire
C ? ? c?
CD
ED
Salzmann Hughes, P.C.
BY: David H. Martineau, Esquire
Attorney I.D. No. 84127
354 Alexander Spring Road, Suite 1
Carlisle, PA 17015
Telephone: 717-249-6333
Fax 717-249-7334
Attorney for Plaintiff
E-mail: dmartineau@salunannhughes.com
TED KOSENSKE, M.D., : IN THE COURT OF COMMON PLEAS OF
Plaintiff : CUMBERLAND COUNTY, PENNSYLVANIA
V. NO. 2006-2727
CIVIL ACTION - LAW
BLUE MOUNTAIN ANESTHESIA
ASSOCIATES, P.C.,
Defendant
JURY TRIAL DEMANDED
NOTICE TO PLEAD
YOU ARE HEREBY NOTIFIED TO PLEAD TO THE WITHIN MOTION FOR
JUDGMENT ON THE PLEADINGS PURSUANT TO PA.R.CIV 1026(A) WITHIN
TWENTY (20) DAYS FROM THE DATE HEREOF OR A DEFAULT JUDGMENT
MAY BE ENTERED AGAINST YOU.
SALZMANN HUGHES, P.C.
David H. Martineau, Esquire
Attorney I.D. No. 84127
354 Alexander Spring Road, Suite 1
Carlisle, PA 17015
(717) 249-6333
Date: /-z- g/ 7 Attorney for Plaintiff
David H. Martineau, Esquire
Attorney I.D. No. 84127
Susann B. Morrison, Esquire
Attorney I.D. No. 77041
Salzmann Hughes, P.C.
354 Alexander Spring Road, Suite 1
Carlisle, PA 17015
(717) 249-6333
TED KOSENSKE, M.D., : IN THE COURT OF COMMON PLEAS OF
Plaintiff : CUMBERLAND COUNTY, PENNSYLVANIA
V. NO. 2006-2727
CIVIL ACTION - LAW
BLUE MOUNTAIN ANESTHESIA
ASSOCIATES, P.C.,
Defendant
JURY TRIAL DEMANDED
PLAINTIFF'S MOTION FOR JUDGMENT ON THE PLEADINGS
AND TO STAY DISCOVERY WITH RESPECT TO
DEFENDANT'S COUNTERCLAIM
AND NOW, comes Plaintiff, Ted Kosenske, by and through his counsel,
Salzmann Hughes, P.C., and files this Motion for Judgment on the Pleadings with
Respect to Defendant's Counterclaim, in support of which he avers as follows:
1. On May 12, 2006, Plaintiff filed a Complaint claiming certain amounts
due to Plaintiff from Defendant relating to Plaintiff's separation from employment and
ownership of Defendant corporation.
2. On or about March 8, 2007, Defendant filed an Answer with New Matter
and Counterclaim.
3. Defendant's Counterclaim alleges, inter alia, that Plaintiff "instigated and
filed a legal action against the Carlisle Regional Medical Center in which he falsely accused
[Defendant] and some of its other officers, directors, and physicians, of violating federal law
by offering or accepting monetary and non-monetary benefits in exchange for illegally
referring and directing patients to the Carlisle Regional Medical Center." Answer with New
Matter and Counterclaim ¶51.D.
4. Defendant's Counterclaim alleges that allegations made in the federal
litigation instituted by Plaintiff were taken to cause harm and injury to Defendant and for
Plaintiff's own monetary gain. See Answer with New Matter and Counterclaim, ¶¶ 54, 55.
5. Defendant's Counterclaim alleges that at the time Plaintiff instituted the
federal litigation, Plaintiff knew or should have known that the allegations relating to BMA
made therein were false and could not be proven. See Answer with New Matter and
Counterclaim, ¶ 56.
6. The federal litigation referred to in Defendant's Counterclaim is United
States of America, ex rel, and Ted Kosenske, M.D. v. Carlisle, HMA, Inc., Carlisle Regional
SgMM Center, Carlisle Regional Medical Center, and Hospital Management Associates,
Inc., a Civil Action filed in the United States Court for the Middle District of Pennsylvania
on October 26, 2005 at Docket No. 1:05-CV-2184 (the "Federal Action").
7. Defendant's Counterclaim as it relates to the Federal Action constitutes a
claim for the wrongful use of a civil proceeding.
8. Defendant does not allege that Defendant is a party to the Federal Action.
9. Defendant is not a party to the Federal Action.
10. Defendant does not allege that the Federal Action has terminated in favor of
the defendants in the Federal Action.
11. The Federal Action is ongoing.
12. Pursuant to Pennsylvania Rule of Civil Procedure 1034, a motion for
judgment on the pleadings may be granted in cases the facts that are not at issue a clear
right to judgement and that a trial would be a fruitless exercise. Matthew-Landis v.
Housing Authority, 240 PA. Super. 541, 361 A.2d 742 (1976).
13. The motion for judgment on the pleadings was created to permit an overall
examination of pleadings in the action, on application of any party, after the pleadings are
closed, to determine whether judgment should be entered upon the pleadings prior to
trial. Beardell v. Western Wayne School District, 91 Pa.Cmwlth 348, 352, 496 A.2d
1373, 1375 (1985).
14. The Honorable J. Wesley Oler, Jr. has previously ruled on issues involved
in this case.
15. Concurrence of opposing counsel is not required to be sought under
Cumberland County Rule 208.2(d) for Motions for Judgment on the Pleadings.
Motion for Judgment on Pleadings
Dragonetti Act
16. Paragraphs 1 through 15 above are incorporated herein as if set forth in
full.
17. Defendant's Counterclaim, as it is relates to the Federal Action, constitutes
an action for the wrongful use of civil proceedings.
18. A party's right to bring an action for the wrongful use of civil proceedings
is codified in the act commonly referred to as the Dragonetti Act, 42 Pa.C.S.A. §8351, et
seq.
19. In order to sustain a cause of action under the Dragonetti Act, the underlying
litigation must be terminated in favor of the party against whom it is brought. 42 Pa.C.S.A.
§8351(a)(2).
20. The underlying litigation has not been terminated and Defendant has not
made such a claim in the Pleadings.
21. An action for wrongful use of civil proceedings cannot be brought by a
person or entity not a party to the underlying litigation. 42 Pa.C.S.A. §8351(a), see also
Rosen v. American Bank of Rolla, 426 Pa.Super. 376, 627 A.2d 190 (1993).
22. Defendant has plead, correctly, that the Federal Action was brought against
the Carlisle Regional Medical Center.
23. Defendant is not the Carlisle Regional Medical Center.
24. It is clear on the face of the Pleadings that Defendant has failed to plead facts
sufficient to establish a cause of action for wrongful use of civil proceedings.
WHEREFORE, Plaintiff, Ted Kosenske, respectfully requests this Honorable Court
to enter judgment in favor of Ted Kosenske and against Defendant, Blue Mountain
Anesthesia, P.C. with respect to Defendant's Counterclaim for wrongful use of civil
proceedings.
Motion for Judgment on Pleadings
Breach of Fiduciary Duty
25. Paragraphs 1 through 24 are incorporated herein as if set forth in full.
26. Defendant claims that Plaintiff breached a fiduciary duty owed to Defendant
by initiating and pursuing the Federal Action.
27. Defendant's claim for breach of fiduciary duty is based upon the existence of
a fiduciary duty on behalf of Plaintiff not to bring illegal activity to light.
28. Defendant's claim for breach of fiduciary duty suggests that Plaintiff has an
obligation to Defendant to conceal illegal activity.
29. Pennsylvania law does not recognize the duty the Defendant claim Plaintiff
to have breached.
WHEREFORE, Plaintiff, Ted Kosenske, respectfully request this Honorable Court
to enter judgment in favor of Ted Kosenske and against Defendant, Blue Mountain
Anesthesia, P.C. with respect to Defendant's Counterclaim for breach of fiduciary duty
relating to the Federal Action.
Motion to Stay Discovery
Pending Resolution of this Motion
30. Paragraphs 1 through 29 are incorporated herein as if set forth in full.
31. Defendant has served requests for the production of documents upon
Plaintiff, which include requests for all documents relating to the Federal Action.
32. Plaintiff has served responses to Defendant's requests, excluding
documents relating to the Federal Action.
33. Defendant's requests for the production of documents relating to the
Federal Action are not discoverable as they relate to any claim or defense of Defendant
other than Defendant's claims for wrongful use of civil proceedings and breach of
fiduciary duty relating to the Federal Action, both of which are subjects of Plaintiffs
Motion for Judgement on the Pleadings.
WHEREFORE, Plaintiff prays this honorable Court to stay Plaintiffs obligation
to respond to Defendant's requests for documents relating to the federal litigation filed
with the United States District Court for the Middle District of Pennsylvania at Docket No.
1:05-CV-2184 until such time as the issues raised in this Motion are resolved.
Respectfully submitted,
SALZMANN HUGHES, P.C
B
Y•
David H. Martineau, Esquire
Attorney I.D. No. 84127
354 Alexander Spring Road, Ste 1
Carlisle, PA 17015
(717) 249-6333
Dated: 01 "I "ll
1 7 Attorneys for Plaintiff 01 IF
CERTIFICATE OF SERVICE
I, David H. Martineau, hereby certify that on June Z ? 2007, 1 served a copy of
the foregoing document upon counsel for the Defendant by regular United States Mail,
postage prepaid, addressed as follows:
Samuel L. Andes, Esquire
525 North 12a` Street
P.O. Box 168
Lemoyne, PA 17043
David H. Martineau, Esquire
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1
TED KOSENSKE, M.D.,
Plaintiff
V.
BLUE MOUNTAIN ANESTHESIA
ASSOCIATES, P.C.,
Defendant
IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
NO. 06-2727
CIVIL ACTION - LAW
JURY TRIAL DEMANDED
PRAECIPE TO LIST CASE FOR ARGUMENT
TO THE PROTHONOTARY OF CUMBERLAND COUNTY:
1
2.
3.
4.
State the matter to be argued (i.e., plaintiff's motion for new trial, defendant's demurrer to
complaint, etc.):
Plaintiff's Motion for Judgment on the Pleadings and to Stay Discovery with Respect to
Defendant's Counterclaim
Identify counsel who will argue cases:
David H. Martineau, Esquire
Salzmann Hughes, P.C.
354 Alexander Spring Road
Carlisle, Pennsylvania 17015
Counsel for Plaintiff
Samuel L. Andes, Esquire
P.O. Box 168
Lemoyne, PA 17043
Counsel for Defendant
I will notify all parties in writing within two days that this case has been listed for argument.
Argument Court Date: August 15, 2007
Respectfully submitted,
Salzmann Hughes, P.C.
By: % .01
David H. Martineau, Esquire
Attorney I.D. #84127
354 Alexander Spring Road
Carlisle, Pennsylvania 17015
717.249.6333
Date: July 12, 2007
Attorneys for Plaintiff
1
CERTIFICATE OF SERVICE
I, the undersigned, hereby certify that on this 12th day of July, 2007, a copy of Plaintiff's
Praecipe to List for Argument was served via first class U.S. mail upon the following:
Samuel L. Andes, Esquire
Attorney for Defendant
P.O. Box 168
Lemoyne, PA 17043
David H. Martineau, Esquire
Salzmann Hughes, P.C.
Supreme Court I.D. # 84127
354 Alexander Spring Road, Suite 1
Carlisle, PA 17015
(717) 249-6333
Attorney for Plaintiff
_3
'"
<° rr
TED KOSENSKE, M.D.,
Plaintiff
VS.
BLUE MOUNTAIN ANESTHESIA
ASSOCIATES, P.C.,
Defendant
NOTICE
TO PLAINTIFF NAMED HEREIN:
IN THE COURT OF COMMON
PLEAS OF CUMBERLAND
COUNTY, PENNSYLVANIA
CIVIL ACTION - LAW
NO. 2006-2727 CIVIL TERM
JURY TRIAL DEMANDED
YOU ARE HEREBY NOTIFIED TO RESPOND TO THE ENCLOSED ANSWER AND NEW
MATTER WITHIN TWENTY (20) DAYS FROM SERVICE HEREOF OR A DEFAULT JUDGMENT
MAY BE ENTERED AGAINST YOU. -7 ?L
Date: 7 2 a
S el L. An &s
Attorney for Defendant
-1-
TED KOSENSKE, M.D.,
Plaintiff
VS.
BLUE MOUNTAIN ANESTHESIA
ASSOCIATES, P.C.,
Defendant
IN THE COURT OF COMMON
PLEAS OF CUMBERLAND
COUNTY, PENNSYLVANIA
CIVIL ACTION - LAW
NO. 2006-2727 CIVIL TERM
JURY TRIAL DEMANDED
DEFENDANT'S ANSWER TO MOTION FOR JUDGMENT
ON THE PLEADINGS AND TO STAY DISCOVERY
AND NOW comes the above-named Defendant, by its attorney Samuel L. Andes, and makes the
following Answer to Plaintiff's Motion:
1. Admitted.
2. Admitted.
3. Admitted in part and denied in part. Although it is admitted that the language quoted by
Plaintiff in this paragraph appears in Defendant's Counterclaim, it is denied that that language is presented
here in its full context.
4. Admitted in part and denied in part. Although it is admitted that the language quoted by
Plaintiff in this paragraph appears in Defendant's Counterclaim, it is denied that that language is presented
here in its full context.
5. Admitted.
6. Admitted.
7. Denied. To the contrary, Defendant's Counterclaim states a claim against Plaintiff for the
violation of Plaintiff's fiduciary duty owed to Defendant as a director, officer, and shareholder in
Defendant and the fraudulent, false, and injurious statements and actions made and taken by Plaintiff in
his violation of that duty.
8. Admitted.
-2-
9. Admitted.
10. Admitted.
11. Defendant has no direct knowledge of this statement but believes it to be accurate and will
admit it for purposes of this motion.
12. The statements in this paragraph set forth a conclusion of law to which no factual answer is
required.
13. The statements in this paragraph set forth a conclusion of law to which no factual answer is
required.
14. Admitted.
15. Admitted.
MOTION FOR JUDGMENT ON PLEADINGS - DRAGONETTI ACT
16. No answer required. To the extent an answer is deemed appropriate, Defendant incorporates
herein by reference the averments set forth in the foregoing paragraphs of this answer.
17. Denied. To the contrary, Defendant's Counterclaim is based upon a claim that Plaintiff
violated the fiduciary duty it owed to Defendant because Plaintiff was a shareholder, officer, and director
of Defendant at the time he took the alleged actions, and further states a claim for injuries done to
Defendant by Plaintiffs false statements and misconduct.
18. Admitted.
19. Admitted.
20. Plaintiff believes this to be accurate and will admit as much for purposes of this motion.
21. Admitted.
22. Admitted.
23. Admitted.
24. Denied. A review of Plaintiffs Counterclaim makes it clear that Defendant's Counterclaim
is based upon the alleged misconduct of Plaintiff in violation of his fiduciary duty to Defendant and is not
a claim for wrongful use of civil proceedings.
WHEREFORE, Defendant prays this Court to dismiss Plaintiff s motion.
-3-
MOTION FOR JUDGMENT ON PLEADINGS
BREACH OF FIDUCIARY DUTY
25. No answer required. To the extent that an answer is required, Defendant incorporates herein
by reference the averments in the foregoing paragraphs of this Answer.
26. No characterization of Defendant's pleading is necessary. Defendant incorporates herein the
averments set out in its Counterclaim.
27. Denied. Defendant's claim is based upon the misconduct of Plaintiff in violation of his
fiduciary duty as a shareholder, director, and officer of Plaintiff including false statements made about
Defendant and its other officers and directors, as well as other improper actions of Plaintiff, all as more
specifically set forth in Defendant's Counterclaim, the averments of which are incorporated herein by
reference.
28. Denied. To the contrary, Defendant's pleading is based upon Defendant's allegation that
Plaintiff made false statements about Defendant and its other officers and directors, as well as allegations
of other misconduct of Plaintiff in violation of his fiduciary duty.
29. The statements in Paragraph 29 represent conclusions of law to which no factual response is
required. To the extent a factual response is appropriate, Defendant denies that the law of Pennsylvania
does not recognize the fiduciary duty which Plaintiff owed to Defendant while serving as its officer and
director.
WHEREFORE, Defendant prays this Court to deny Defendant's motion.
MOTION TO STAY DISCOVERY
30. No answer required. To the extent that an answer is required, Defendant incorporates herein
by reference the averments in the foregoing paragraphs of this Answer.
31. Admitted.
32. Admitted. By way of further answer, Defendant states that Plaintiff has, at no time, raised
any objections to Defendant's request for this information and has, to the contrary, stated that it will
provide such information to Defendant when Plaintiffs counsel obtains it from the attorney representing
Plaintiff in the federal litigation.
-4-
33. Denied. Defendant's Counterclaim is valid and Defendant is entitled to the discovery it has
requested, without any stay or delay. Without the information which Defendant has sought in its
discovery, Defendant, and in fact this Court, cannot properly evaluate Defendant's Counterclaim and
Plaintiffs defenses to it.
WHEREFORE, Defendant prays this Court to deny Plaintiff s Motion.
NEW MATTER
By way of fiarther answer, Defendant sets out the following New Matter:
Plaintiff filed no preliminary objections to Defendant's Counterclaim.
2. In his Answer to Defendant's Counterclaim, Plaintiff raised no objection to the Counterclaim
and made no effort to characterize it as a claim for misuse of civil process.
3. Plaintiff has engaged in discovery in this case in which Plaintiff has requested, and Defendant
has provided, information regarding Defendant's Counterclaim, including the averments in its
Counterclaim regarding Plaintiffs action in the federal litigation.
4. Plaintiff has waived his right to object to Defendant's Counterclaim or seek its dismissal at
this time because of Plaintiff s prior actions in this litigation.
5. Plaintiff is estopped from seeking now to have Defendant's Counterclaim dismissed for the
reasons set forth in Plaintiffs Motion.
WHEREFORE, Defendant prays this Court to deny Plaintiffs motion.
Sam L. Andes
Attorney for Defendant
-5-
CERTIFICATE OF SERVICE
I hereby certify that I served a copy of the foregoing document upon counsel for the Plaintiff by
regular mail, postage prepaid, addressed as follows:
David H. Martineau, Esquire
Salzmann Hughes, P.C.
354 Alexander Spring Road, Suite 1
Carlisle, PA 17013
Date: 1
S r- - NJ
1 L. Andes
Attorney for Defendant
-6-
T?? c:7 m
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F
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I j
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? .1J
TED KOSENSKE, M.D.,
Plaintiff
VS.
BLUE MOUNTAIN ANESTHESIA
ASSOCIATES, P.C.,
Defendant
NOTICE
TO PLAINTIFF NAMED HEREIN:
IN THE COURT OF COMMON
PLEAS OF CUMBERLAND
COUNTY, PENNSYLVANIA
CIVIL ACTION - LAW
NO. 2006-2727 CIVIL TERM
JURY TRIAL DEMANDED
YOU ARE HEREBY NOTIFIED TO RESPOND TO THE ENCLOSED ANSWER AND NEW
MATTER WITHIN TWENTY (20) DAYS FROM SERVICE HEREOF OR A DEFAULT JUDGMENT
MAY BE ENTERED AGAINST YOU.
Date: g12107
Sam 1 L. Andes
Attorney for Defendant
-I-
TED KOSENSKE, M.D.,
Plaintiff
VS.
BLUE MOUNTAIN ANESTHESIA
ASSOCIATES, P.C.,
Defendant
IN THE COURT OF COMMON
PLEAS OF CUMBERLAND
COUNTY, PENNSYLVANIA
CIVIL ACTION - LAW
NO. 2006-2727 CIVIL TERM
JURY TRIAL DEMANDED
DEFENDANT'S ANSWER TO MOTION FOR JUDGMENT
ON THE PLEADINGS AND TO STAY DISCOVERY
AND NOW comes the above-named Defendant, by its attorney Samuel L. Andes, and makes the
following Answer to Plaintiff's Motion:
1. Admitted.
2. Admitted.
3. Admitted in part and denied in part. Although it is admitted that the language quoted by
Plaintiff in this paragraph appears in Defendant's Counterclaim, it is denied that that language is presented
here in its full context.
4. Admitted in part and denied in part. Although it is admitted that the language quoted by
Plaintiff in this paragraph appears in Defendant's Counterclaim, it is denied that that language is presented
here in its full context.
5. Admitted.
6. Admitted.
7. Denied. To the contrary, Defendant's Counterclaim states a claim against Plaintiff for the
violation of Plaintiff s fiduciary duty owed to Defendant as a director, officer, and shareholder in
Defendant and the fraudulent, false, and injurious statements and actions made and taken by Plaintiff in
his violation of that duty.
8. Admitted.
9. Admitted.
10. Admitted.
-1-
11. Defendant has no direct knowledge of this statement but believes it to be accurate and will
admit it for purposes of this motion.
12. The statements in this paragraph set forth a conclusion of law to which no factual answer is
required.
13. The statements in this paragraph set forth a conclusion of law to which no factual answer is
required.
14. Admitted.
15. Admitted.
MOTION FOR JUDGMENT ON PLEADINGS - DRAGONETTI ACT
16. No answer required. To the extent an answer is deemed appropriate, Defendant incorporates
herein by reference the averments set forth in the foregoing paragraphs of this answer.
17. Denied. To the contrary, Defendant's Counterclaim is based upon a claim that Plaintiff
violated the fiduciary duty it owed to Defendant because Plaintiff was a shareholder, officer, and director
of Defendant at the time he took the alleged actions, and further states a claim for injuries done to
Defendant by Plaintiff's false statements and misconduct.
18. Admitted.
19. Admitted.
20. Plaintiff believes this to be accurate and will admit as much for purposes of this motion.
21. Admitted.
22. Admitted.
23. Admitted.
24. Denied. A review of Plaintiffs Counterclaim makes it clear that Defendant's Counterclaim
is based upon the alleged misconduct of Plaintiff in violation of his fiduciary duty to Defendant and is not
a claim for wrongful use of civil proceedings.
WHEREFORE, Defendant prays this Court to dismiss Plaintiff's motion.
-2-
MOTION FOR JUDGMENT ON PLEADINGS
BREACH OF FIDUCIARY DUTY
25. No answer required. To the extent that an answer is required, Defendant incorporates herein
by reference the averments in the foregoing paragraphs of this Answer.
26. No characterization of Defendant's pleading is necessary. Defendant incorporates herein the
averments set out in its Counterclaim.
27. Denied. Defendant's claim is based upon the misconduct of Plaintiff in violation of his
fiduciary duty as a shareholder, director, and officer of Plaintiff including false statements made about
Defendant and its other officers and directors, as well as other improper actions of Plaintiff, all as more
specifically set forth in Defendant's Counterclaim, the averments of which are incorporated herein by
reference.
28. Denied. To the contrary, Defendant's pleading is based upon Defendant's allegation that
Plaintiff made false statements about Defendant and its other officers and directors, as well as allegations
of other misconduct of Plaintiff in violation of his fiduciary duty.
29. The statements in Paragraph 29 represent conclusions of law to which no factual response is
required. To the extent a factual response is appropriate, Defendant denies that the law of Pennsylvania
does not recognize the fiduciary duty which Plaintiff owed to Defendant while serving as its officer and
director.
WHEREFORE, Defendant prays this Court to deny Defendant's motion.
MOTION TO STAY DISCOVERY
30. No answer required. To the extent that an answer is required, Defendant incorporates herein
by reference the averments in the foregoing paragraphs of this Answer.
31. Admitted.
32. Admitted. By way of further answer, Defendant states that Plaintiff has, at no time, raised
any objections to Defendant's request for this information and has, to the contrary, stated that it will
provide such information to Defendant when Plaintiff s counsel obtains it from the attorney representing
Plaintiff in the federal litigation.
-3-
33. Denied. Defendant's Counterclaim is valid and Defendant is entitled to the discovery it has
requested, without any stay or delay. Without the information which Defendant has sought in its
discovery, Defendant, and in fact this Court, cannot properly evaluate Defendant's Counterclaim and
Plaintiff s defenses to it.
WHEREFORE, Defendant prays this Court to deny Plaintiff's Motion.
NEW MATTER
By way of further answer, Defendant sets out the following New Matter:
1. Plaintiff filed no preliminary objections to Defendant's Counterclaim.
2. In his Answer to Defendant's Counterclaim, Plaintiff raised no objection to the Counterclaim
and made no effort to characterize it as a claim for misuse of civil process.
3. Plaintiff has engaged in discovery in this case in which Plaintiff has requested, and Defendant
has provided, information regarding Defendant's Counterclaim, including the averments in its
Counterclaim regarding Plaintiffs action in the federal litigation.
4. Plaintiff has waived his right to object to Defendant's Counterclaim or seek its dismissal at
this time because of Plaintiff's prior actions in this litigation.
5. Plaintiff is estopped from seeking now to have Defendant's Counterclaim dismissed for the
reasons set forth in Plaintiff s Motion.
WHEREFORE, Defendant prays this Court to deny Plaintiffs motion.
uel L. An s
Attorney for Defendant
-4-
I verify that the statements made in this document are true and correct. I understand that any false
statements in this document are subject to the penalties of 18 Pa. C.S. 4904 (unsworn falsification to
authorities).
BLUE MOUNTAIN ANESTHESIA ASSOCIATES, P.C.,
l
Date: - "? -0 -??
How d Alst P esident
-5-
CERTIFICATE OF SERVICE
I hereby certify that I served a copy of the foregoing document upon counsel for the Plaintiff by
regular mail, postage prepaid, addressed as follows:
David H. Martineau, Esquire
Salzmann Hughes, P.C.
354 Alexander Spring Road, Suite 1
Carlisle, PA 17013
Date: S? 2,1 07 C,- "US
Samu . Andes
Attorney for Defendant
-6-
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TED KOSENSKE; M.D., )
Plaintiff )
VS. )
BLUE MOUNTAIN ANESTHESIA )
ASSOCIATES, P.C., )
Defendant )
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IN THE COURT OF'COMMC
PLEAS OF CUMBERLAND
COUNTY, PENNSYLVANIA
CIVIL ACTION - LAW
NO. 2006-2727 CIVIL TERM
JURY TRIAL DEMANDED
DEFENDANT'S REPLY TO PLAINTIFF'S NEW MATTER
TO DEFENDANT'S COUNTERCLAIM
AND NOW comes the above-named Defendant, by its attorney Samuel L. Andes, and
makes the following Reply to Plaintiff s New Matter:
59. No answer required. To the extent that an answer is required, Defendant incorporates
herein, by reference, the averments made in its other pleadings in this case.
60. The statement in Paragraph 60 sets out a conclusion of law to which no factual
response is required. To the extent a response is required, Defendant denies that its Counterclaim
is barred by any statute of limitations.
61. Denied as stated. Plaintiff s duty to surrender his stock certificate is no more
contingent upon Defendant's payment than Defendant's payment is contingent upon Plaintiff's
surrender and delivery of his stock certificate. Plaintiff made it clear, throughout Defendant's
efforts to resolve this matter, that he would not surrender his stock certificate at the appropriate
time.
62. Denied. Defendant has repeatedly offered to make payment, and has only requested
that the parties sign a document confirming the details of their settlement, as Defendant has
required with other former members or employees. Defendant has not attempted to impose
conditions that waived rights of Plaintiff to get this matter resolved.
-1-
U
63. Denied. Defendant did not condition its payment to Plaintiff on Plaintiff's
withdrawing his federal action. In fact, when the parties were negotiating about payment in the
early stages of this dispute, Defendant was not even aware of Plaintiff's federal action.
64. Statements contained in this paragraph consist of conclusions of law to which no
factual answer is required. To the extent a factual response is appropriate, Defendant denies that
it conditioned its offer of payment upon a waiver by Plaintiff of any rights unrelated to the
payment.
65. Denied. Defendant did not fail to mitigate its damages and acted prudently at all
times.
66. Denied. Plaintiff was a party to the original agreements between Defendant and the
Carlisle Hospital which required Plaintiff to resign from the medical staff upon his resignation
from employment by Defendant. Moreover, even in the absence of such an agreement, Plaintiff,
as an officer and director of Defendant, owed the corporation a fiduciary duty not to compete with
or otherwise act adversely to the interests of Defendant.
67. Denied. Defendant believes that Plaintiff took several steps prior to his resignation
which were contrary to the interests of, and injurious to the interests of, Defendant. Defendant
incorporates herein, by reference, the averments set out in Defendant's New Matter and
Counterclaim.
68. Denied for the reasons set forth in Paragraph 67 and the averments of Defendant's
New Matter and Counterclaim which are incorporated herein by reference.
69. Denied. After reasonable investigation, Defendant is without any knowledge as to
the truth or accuracy of the averments in this paragraph because such information is exclusively
within the control of the Plaintiff, and so Defendant denies the same and demands proof thereof at
trial.
-2-
70. Denied for the same reasons set forth in the answer to Paragraph 69 above, which is
incorporated herein by reference.
71. Denied as stated. It is admitted that Defendant was aware that Plaintiff had plans to
engage in a medical practice in the Carlisle area following his resignation. Defendant denies,
however, that such practice, as it understood Plaintiff intended to pursue such practice, would
directly compete with Defendant.
72. The statements in Paragraph 72 represent conclusions of law to which no factual
response is required. To the extent such a factual response is deemed appropriate, Defendant
denies that conditions precedent have not yet occurred.
73. The statements in Paragraph 73 represent conclusions of law to which no factual
answer is required. To the extent that a factual response is appropriate, Defendant denies that it
withheld payment to Plaintiff as a condition on Plaintiff withdrawing his federal lawsuit or that is
has taken any other retaliatory action against Plaintiff.
74. The statements in Paragraph 74 represent conclusions of law to which no factual
answer is required. To the extent that a factual response is appropriate, Defendant denies that its
counterclaim against Plaintiff, seeking damages for Plaintiffs violation of his fiduciary duty to
Defendant, of which Plaintiff had been an officer and director, constitutes retaliatory action
against Plaintiff or that Defendant is guilty of any retaliatory conduct toward Plaintiff.
WHEREFORE, Defendant prays this Court to deny Plaintiff's original claim and to enter
judgment in favor of Defendant on its counterclaims.
-3-
Attorney for Defendant
w
I verify that the statements made in this document are true and correct. I understand that
any false statements in this document are subject to the penalties of 18 Pa. C.S. 4904 (unworn
falsification to authorities).
BLUE MOUNTAIN ANESTHESIA ASSOCIATES, P.C.,
Date:
How d , President
-4-
CERTIFICATE OF SERVICE
I hereby certify that I served a copy of the foregoing document upon counsel for the Plaintiff by
regular mail, postage prepaid, addressed as follows:
David H. Martineau, Esquire
Salzmann Hughes, P.C.
354 Alexander Spring Road, Suite 1
Carlisle, PA 17013
Date: $t2IU-)
S Andes
Attorney for Defendant
-6-
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,
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David H. Martineau, Esquire
Attorney I.D. No. 84127
Susann B. Morrison, Esquire
Attorney I.D. No. 77041
Salzmann Hughes, P.C.
354 Alexander Spring Road, Suite I
Carlisle, PA 17015
717 249-6333
TED KOSENSKE, M.D., : IN THE COURT OF COMMON PLEAS OF
Plaintiff : CUMBERLAND COUNTY, PENNSYLVANIA
V.
BLUE MOUNTAIN ANESTHESIA
ASSOCIATES, P.C.,
Defendant
NO. 2006-2727
CIVIL ACTION - LAW
JURY TRIAL DEMANDED
PLAINTIFF'S RESPONSE TO DEFENDANT'S ANSWER TO MOTION
FOR JUDGMENT ON THE PLEADINGS AND TO STAY DISCOVERY
WITH NEW MATTER
AND NOW comes the Plaintiff, Ted Kosenske, by and through his attorneys, Salzmann
Hughes, P.C. and responds to Defendant's New Matter to Plaintiff's Motion for Judgment on the
Pleadings and to Stay Discovery as follows:
Admitted.
2. Plaintiff's Answer with New Matter to Defendant's Counterclaims are writings which
speak for themselves.
3. Admitted that Plaintiff has served such discovery. By way of further response, such
discovery has gone unanswered.
4. Denied. Paragraph 4 contains legal conclusions which are contrary to the express
language of the Pennsylvania Rules of Civil Procedure and are denied.
5. Denied. Paragraph 5 contains a legal conclusion to which no responsive pleading is
required. To the extent that a response is required, Paragraph 5 is denied.
?ft
Respectfully Submitted,
SALZMANN HUGHES, P.C.
David H. Martineau, Esquire
Attorney I.D. No. 84127
354 Alexander Spring Road, Suite
Carlisle, PA 17015
Date: (717) 249-6333
Attorneys for Plaintiff
CERTIFICATE OF SERVICE
I, David H. Martineau, hereby certify that I served a copy of the foregoing document
upon counsel for the Defendant by regular United States Mail, postage prepaid, addressed as
follows:
Samuel L. Andes, Esquire
P.O. Box 168
Lemoyne, PA 17043
Date:
David H. Martineau, Esquire
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TED KOSENSKI, M.D.,
Plaintiff
V.
BLUE MOUNTAIN
ANESTHESIA
ASSOCIATES, P.C.,
Defendant
IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
CIVIL ACTION - LAW
NO. 0602727 CIVIL TERM
IN RE: PLAINTIFF'S MOTION FOR JUDGMENT ON
THE PLEADINGS AND TO STAY DISCOVERY WITH
RESPECT TO DEFENDANT'S COUNTERCLAIM
BEFORE HESS, OLER, and GUIDO, JJ.
ORDER OF COURT
AND NOW, this 24 h day of August, 2007, upon consideration of Plaintiff's
Motion for Judgment on the Pleadings and To Stay Discovery with Respect to
Defendant's Counterclaim, and following oral argument held on August 15, 2007, the
motion for judgment on the pleadings is denied and, pursuant to an agreement reached at
oral argument between counsel, pending further order of court, the motion to stay
discovery with respect to Defendant's Counterclaim is granted as it relates to the pending
federal litigation, with the understanding that any penalties or interest under the
Pennsylvania Wage Payment and Collection Act will not accrue against Defendant
during the period of the stay.
BY THE COURT,
esley
avid H. Martineau, Esq.
354 Alexander Spring Road
Suite 1
Carlisle, PA 17013
Attorney for Plaintiff
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s'
amuel L. Andes, Esq.
525 N. 12'' Street
P.O. Box 168
Lemoyne, PA 17043
Attorney for Defendant
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David H. Martineau, Esquire 3
Attorney I.D. No. 84127
E. Lee Stinnett 11, Esquire 'L
Attorney I.D. No. 307128
Salzmann Hughes, P.C. ,
354 Alexander Spring Road, Suite 1 °
Carlisle, PA 17015
(717) 249-6333
TED KOSENSKE, M.D., : IN THE COURT OF COMMON PLEAS OF
Plaintiff : CUMBERLAND COUNTY, PENNSYLVANIA
V. NO. 2006-2727
CIVIL ACTION - LAW
BLUE MOUNTAIN ANESTHESIA
ASSOCIATES, P.C.,
Defendant
JURY TRIAL DEMANDED
PLAINTIFF'S MOTION TO LIFT STAY
AND NOW, comes Plaintiff, Ted Kosenske, by and through his counsel at Salzmann
Hughes, P.C. and moves this Honorable Court to lift the stay imposed by the Court's Order of
August 24, 2007, in support of which, Plaintiff avers as follows:
1. On August 24, 2007, this Honorable Court issued an Order staying discovery in the above
captioned matter pending the outcome of federal litigation docketed at 1:05-CV-2184. A
true and correct copy of Order staying discovery is attached hereto as Exhibit "A" and
incorporated herein by this reference.
2. The Order of August 24, 2007 also stayed the accrual of interest and penalties under the
Wage Payment and Collection Law during the period of the stay.
3. This Court's August 24, 2007 Order indicates that the stay will remain, pending further
Order of this Court.
4. The federal litigation docketed at 1:05-CV-2184 is now complete.
5. Plaintiff has provided an advance copy of this Motion to counsel for Defendant, who
does concur with this Motion.
WHEREFORE, Plaintiff, Ted Kosenske, M.D., respectfully requests this Honorable Court
lift the stay of discovery, interest and penalties in the above captioned matter.
Respectfully submitted,
SALZMANN HUGHES, P.C.
David H. Martineau, Esquire
Attorney I.D. No. 84127
354 Alexander Spring Road, Ste 1
Carlisle, PA 17015
(717) 249-6333
Dated: October 8, 2010 Attorneys for Plaintiff
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that I served a true and correct copy of the foregoing Motion to
Lift Stay on all counsel of record and parties of interest by placing the same in the United States
Mail, first-class, postage pre-paid, at Carlisle, Pennsylvania on this 8th day of October, 2010,
and addressed as follows:
Samuel L. Andes, Esquire
525 North 12th Street
Lemoyne, Pennsylvania 17043
Respectfully Submitted,
SALZMANN HUGHES, P.C.
N _
David H. Martineau, Esquire
Attorney I.D. No. 84127
354 Alexander Spring Road, Suite 1
Carlisle, PA 17015
Date: October 8, 2010 (717) 249-6333
Attorneys for Plaintiff
EXHIBIT "A"
COURT ORDER IMPOSING STAY
AUGUST 24, 2007
TED KOSENSKI, M.D.,
Plaintiff
V.
BLUE MOUNTAIN
ANESTHESIA
ASSOCIATES, P.C.,
Defendant
IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
CIVIL ACTION - LAW
NO. 0602727 CIVIL TERM
IN RE: PLAINTIFF'S MOTION FOR JUDGMENT ON
THE PLEADINGS AND TO STAY DISCOVERY WITH
RESPECT TO DEFENDANT'S COUNTERCLAIM
BEFORE HESS, OLER, and GUIDO, JJ.
ORDER OF COURT
AND NOW, this 24th day of August, 2007, upon consideration of Plaintiff's
Motion for Judgment on the Pleadings and To Stay Discovery with Respect to
Defendant's Counterclaim, and following oral argument held on August 15, 2007, the
motion for judgment on the pleadings is denied and, pursuant to an agreement reached at
oral argument between counsel, pending further order of court, the motion to stay
discovery with respect to Defendant's Counterclaim is granted as it relates to the pending
federal litigation, with the understanding that any penalties or interest under the
Pennsylvania Wage Payment and Collection Act will not accrue against Defendant
during the period of the stay.
BY THE COURT,
/David H. Martineau, Esq.
lexander Spring Road
Suite 1
Carlisle, PA 17013
Attorney for Plaintiff
Samuel L. Andes, Esq.
525 N. 12'x' Street
P.O. Box 168
Lemoyne, PA 17043
Attorney for Defendant
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N
ffGHES,P.C.
ttorneys at Law
EXPERIENCE • INTEGRITY • INNOVATION
79 St. Paul Drive • Chambersburg, PA • 17201 • (717) 263-2121 • Fax: (717) 263-0663
354 Alexander Spring Road • Suite 1 • Carlisle, PA • 17015 • (717) 249-6333 • Fax: (717) 249-7334
239 E. Main St. • Waynesboro, PA • 17268 • (717) 762-3170 • Fax: (717) 762-0988
105 N. Front St. • Suite 401 • Harrisburg, PA • 17101 • (717) 234-6700 • Fax: (717) 249-7334
Tlease reply to Carlisle Office
Office of the Prothonotary
Cumberland County Courthouse
One Courthouse Square
Carlisle, PA 17013
October 8, 2010
Re: Kosenske v. Blue Mountain Anesthesia
Docket No. 2006-2727
To the Prothonotary:
Enclosed for filing is an original Plaintiff's Motion to Lift Stay. Also enclosed is a copy of the
motion which I ask that you time stamp and return to me in the self addressed, postage pre-paid
envelope that I have provided.
Thank you for your assistance in this matter. If you require anything further with this filing, please
feel free to contact me.
Sincerely,
David H. Martineau
Enclosures
cc: Samuel Andes, Esquire
ATTORNEYS
G. Bryan Salzmann, Esq.
James D. Hughes, Esq.
Adam R. Schellhase, Esq.
Charles E. Zaleski, Esq.
Thomas J. Finucane, Esq.
Eileen C. Finucane, Esq.
Stephen E. Patterson, Esq.
Nancy H. Meyers, Esq.
Ann E DePaulis, Esq.
Patricia R. Brown, Esq.
William W. Thompson, Esq.
Rebecca R. Hughes, Esq.
Susann B. Morrison, Esq.
Laura Rebecca Ables, Esq.*
David H. Martineau, Esq.
Kurt E. Williams, Esq.
Samuel E. Wiser, Jr., Esq.
George R Douglas, III, Esq.
WWW. SALZMANNHUGHES.COM
Donald E. Lefever, Esq.
E. Lee Stinnett, Esq.
Michad J. Imbornone, Esq.
*Also Admitted to C*Orxia Bar
OCT 14 2010
TED KOSENSKE, M.D.,
Plaintiff
v.
BLUE MOUNTAIN ANESTHESIA
ASSOCIATES, P.C.,
Defendant
IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
. NO. 2006-2727
CIVIL ACTION -LAW
. JURY TRIAL DEMANDED
IN RE: PLAINTIFF'S MOTION TO LIFT STAY
ORDER OF COURT
AND NOW, this ~ day of L. , 2010, upon consideration of Plaintiff s
.Motion to Lift Stay, the Motion to Lift Stay is GRANTED and the stay imposed by this Court's
Order of August 24, 2007 is hereby lifted.
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BY THE COURT,
TED KOSENSKE, M.D.,
Plaintiff
V.
BLUE MOUNTAIN ANESTHESIA
ASSOCIATES, P.C.,
IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
NO. 2006-2727
CIVIL ACTION - LAW
Defendant
PRAECIPE TO DISCONTINUE
To the Prothonotary:
Kindly mark the above captioned case as settled and discontinued with prejudice, including all
claims and counterclaims.
SALZMANN HUGHES, P.C.
James D ughes, Esquire
Attorn I.D. No. 58884
35J Alexander Spring Road
rite 1
Carlisle, PA 17015
Attorneys for Plaintiff
Date: lylArCA 1O, 00 //
S el L. An s, Esquire
Attorney I.D. No. 17225
525 North Twelfth Street
P.O. Box 168
Lemoyne, PA 17043
Attorney for Defendant
Date: 2jj1 l
u