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Home My WebLink About06-4123F.4'ILEB~DATAFILE1Genual\Curtenr\12110.1.com.llemm ~' Crumd' 1289/07 e'.24AM Reviud' 78N06 4'.OIPM Christopher E. Rice, Esquire MARTSON DEARDORFF WILLIAMS & OTTO I.D. 90916 10 East High Street Carlisle, PA 17013 (717)243-3341 Attorneys for Plaintiff RESPITECH MEDICAL, INC. Plaintiff v. SLEEP DISORDER CENTERS OF CENTRAL PENNSYLVANIA, INC. Defendant IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA NO. 06 - f~/ ~3 CIVIL TERM CIVIL ACTION -LAW NOTICE You have been sued in court. If you wish to defend against the claims set forth in the following pages, you must take action within twenty (20) days after this Complaint and Notice are served, by entering a written appearance personally or by attorney and filing in writing with the court your defenses or objections to the claims set forth against you. You aze warned that if you fail to do so, the case may proceed without you and a judgment may be entered against you by the court without further notice for any money claimed in the Complaint or for any other claim or relief requested by the Plaintiffs. You may lose money or property or other rights important to you. YOU SHOULD TAKE THIS PAPER TO YOUR LAWYER AT ONCE. IF YOU DO NOT HAVE A LAWYER, GO TO OR TELEPHONE THE OFFICE SET FORTH BELO W. THIS OFFICE CAN PROVIDE YOU WITH INFORMATION ABOUT HIRING A LAWYER. IF YOU CANNOT AFFORD TO HIRE A LAWYER, THIS OFFICE MAYBE ABLE TO PROVIDE YOU WITH INFORMATION ABOUT AGENCIES THAT MAY OFFER LEGAL SERVICES TO ELIGIBLE PERSONS AT A REDUCE FEE OR NO FEE: Cumberland County Baz Association 32 South Bedford Street Cazlisle, PA 17013 (717) 249-3166 RESPITECH MEDICAL, INC. IN THE COURT OF COMMON PLEAS OF Plaintiff CUMBERLAND COUNTY, PENNSYLVANIA v. NO. 06 - y~~-'~ CIVIL TERM SLEEP DISORDER CENTERS OF CIVIL ACTION -LAW CENTRAL PENNSYLVANIA, INC. Defendant COMPLAINT IN REPLEVIN Plaintiff, RESPITECH MEDICAL, INC., by and through its attorneys, MARTSON DEARDORFF WILLIAMS & OTTO, and pursuant to Rule 1073.1 ofthe Pennsylvania Rules of Civil Procedure, hereby files this Complaint in Replevin against Defendant, SLEEP DISORDER CENTERS OF CENTRAL PENNSYLVANIA, INC., and avers as follows: Plaintiff, Respitech Medical, Inc, is a Pennsylvania corporation with offices located at 250 Ranck Avenue, Lancaster, Pennsylvania 17602. Defendant, Sleep Disorder Centers of Central Pennsylvania, is a Pennsylvania corporation with its principal place of business located at 2250 Millenium Way, Suite 400, Enola, Pennsylvania 17025. Defendant herein will refer to the corporation, its agents and employees. 3. As is more particulazly described below, Defendant entered into a written Sleep Testing Services Agreement with Plaintiff(herein, the "Agreement"). A true and correct Copy of the Agreement is attached hereto as Exhibit "A" and incorporated herein by reference. 4. As stated in the Agreement, the parties agreed that any litigation under the Agreement would be brought in the Cumberland County Court of Common Pleas. As is more particulazly described below, the cause of action giving rise to the Complaint in Replevin azose in Cumberland County, Pennsylvania. COUNT I - Renlevin 6. Pazagraphs 1 through 5 are incorporated herein by reference. On or about November 3, 2005, Plaintiffentered into an Agreement with Defendant to, among other things, perform sleep studies. 8. In accordance with the Agreement, Plaintiffprovided four complete sleep testing systems with real-time digital video with software and supplies to Defendant (collectively herein, the "Equipment"). A list of the Equipment is attached hereto as Exhibit "B" and incorporated herein by reference. 9. Plaintiff had purchased the Equipment on or about November of 2005 from Stellate Systems, a Montreal company. 10. Plalntiffset up the Equipment at Defendant's principal place of business as set forth herein and the Equipment remains in possession of Defendant at such address. 11. At all relevant times, Plaintiff owned, had title to, and maintained the Equipment. See Paragraph 1(G) and Exhibit A of the Agreement. 12. At no time did Defendant own or acquire any rights in the title to the Equipment. 13. It is believed, and therefore averred, that Defendant has acknowledged thatthe Equipment must be returned to Plaintiff immediately. 14. Both parties acknowledge that the Agreement is no longer in effect. 15. Defendant has been in default of its payment obligations under the Agreement for, among other things, the services of Plaintiff, which included, but were not limited to, the operation and use of the Equipment at Defendant's place of business (herein, "Sleep Study Services"). 16. As ofJune 27, 2006, Defendant notified Plaintiffthat it was no longer in need ofPlaintiff s Sleep Study Services and stated that Plalntiffwas not pemutted on Defendant's principal place of business. 17. Plaintiffhas been unable to gain possession ofthe Equipment from Defendant as Defendant continues to deny access. 18. As of the date of this Complaint, Defendant owes Plaintiff an amount in excess of $139,281.00 under the Agreement. Defendant has only paid $30,600.00 to Plaintiff as of this date. 19. Plaintiff has fully performed its duties and obligations pursuant to the terms of the Agreement. 20. It is believed, and therefore averred, that the Equipment has a value of approximately $88,000. 21. Under the Agreement, by reason of Defendant's default, and under the applicable Pennsylvania law, including the provisions ofthe Uniform Commercial code, Plaintiffis entitled to immediate possession of the Equipment. 22. Notwithstanding repeated demands made by Plaintiff, Defendant has refused to return possession of the Equipment or to permit Plaintiff to peaceably recover possession of the Equipment. 23. Defendant's wrongful detention ofthe Equipment has prevented Plaintifffrom using the same, all to its damage and detriment. WHEREFORE, Plaintiffrespectfully requests that this Honorable Court grant the following relief: (a) Return of the Equipment to Plaintiff; (b) Awazd Damages for the loss of use ofthe Equipment during Defendant's detention thereof; (c) Issue a Writ of Seizure in favor ofPlaintiffupon the filing of an appropriate motion; (d) Waive any form of a bond; (e) Enforcement of the Agreement in all respects, including, but not limited to, Paragraph 7(C) of the Restrictive Covenants of the Agreement. (f) RetainjurisdictionofthisactiontoassessmoneydamagesinfavorofPlaintifffor any unpaid invoices that aze in excess of $139,281.00, any deficiency, and for the special damages suffered by Plaintiff; (g) Awazd interest, costs of this action together with reasonable attorney fees against Defendant; and (h) Grant such other and further relief as the Court seems just, proper and appropriate under the circumstances of this case. COUNT II -BREACH OF CONTRACT 24. Paragraphs 1 - 23 are incorporated herein by reference. 25. As stated herein, Plaintiff and Defendant entered into the Agreement. 26. Plaintiff submitted invoices to Defendant for Sleep Study Services rendered. 27. Defendant was to pay the invoices within 30 days. 28. Defendant failed to make the required payments. 29. Defendant made some late payments, but stopped payment on the checks issued to Plaintiff. See copies of the checks that were stopped that aze attached hereto as Exhibit "C" and incorporated herein by reference. 30. It is believed, and therefore averred, that Defendant solicited for employment Plaintiff s employees. 31. Agreement. 32. Defendant denied access to Plaintiffto perform the sleep studies contemplated in the It is believed, and therefore averred, that Defendant has breached the Agreement by, among other things: (a) (b) (c) (d) (e) (fl (g) Failing to make payments to Plaintiff; Failing to return the Equipment to Plaintiff; Soliciting employees of Plaintiff for employment by Defendant; Failing to compensate Plaintiff for Sleep Study Services; Failing to pemrit Plaintiffto coordinate scheduling of Sleep Study Services directly; Stopping payments on checks that were sent to, received, and deposited by Plaintiff for invoices; and Utilizing the Equipment without permission of Plaintiff. 33. Plaintiff has fully performed its duties and obligations pursuant to the terms of the Agreements. 34. Plaintiff has demanded payment, but Defendant has failed to pay. WHEREFORE, Plaintiffrespectfiillyrequests thatthis Honorable Court gn3ntthe followingrelief: (a) Return of the Equipment to Plaintiff; (b) Award Damages for the loss ofuse of the Equipment during Defendant's detention thereof; (c) Issue a Writ of Seizure in favor ofPlaintiffupon the filing of an appropriate motion; (d) Waive any form of a bond; (e) Enforcement of the Agreement in all respects, including, but not limited to, Pazagraph 7(C) of the Restrictive Covenants of the Agreement. (f) Retainjurisdicrionofthisac6ontoassessmoneydamagesinfavorofPlaintifffor any unpaid invoices that are in excess of $139,281.00, any deficiency, and for the special damages suffered by Plaintiff; (g) Award interest, costs of this action together with reasonable attorney fees against Defendant; and (h) Grant such other and further relief as the Court seems just, proper and appropriate under the circumstances of this case. COUNT III - QUANTUM MERUIT 35. Paragraphs 1 - 34 aze incorporated herein by reference. 36. Plaintiff and Defendant entered into the Agreement where Defar~dant would pay for the Sleep Study Services rendered by Plaintiff. 37. Defendant failed to perform according to the Agreement by not paying for Sleep Study Services performed by Plaintiff. 38. In the alternative, Defendant has been unjustly enriched in an amount in excess of $139,281.00. WHEREFORE, Plaintiffrespectfully requests that this Honorable Court grant the following relief: (a) Return of the Equipment to Plaintiff; (b) Award Damages for the loss of use ofthe Equipment during Defendant's detention thereof; (c) IssueaWritofSeizureinfavorofPlaintiffuponthefilingofanappropriatemotion; (d) Waive any form of a bond; (e) Enforcement of the Agreement in all respects, including, but not limited to, Pazagraph 7(C) of the Restrictive Covenants of the Agreement. (f) RetainjurisdictionofthisactiontoassessmoneydamagesinfavorofPlaintifffor any unpaid invoices that are in excess of $139,281.00, arty deficiency, and for the special damages suffered by Plaintiff; (g) Awazd interest, costs of this action together with reasonable attorney fees against Defendant; and (h) Grant such other and further relief as the Court seems just, proper and appropriate under the circumstances of this case. COUNT IV - FRAUD/MISREPRESENTATION 39. Pazagraphs 1 - 38 aze incorporated herein by reference. 40. Defendant continued to make representations to Plaintiffthat payments for invoices were being sent to Plaintiff. 41 DefendantfraudulentlymisrepresentedtoPlaintiffmaterialfactstlnatpaymentsweremade or scheduled to be made when, in fact, they were not. 42. Plaintiff relied to its detriment by providing additional services to Defendant which Defendant had no intention of paying for. 43. Defendant made payments to Plaintiffand then stopped payment onthe checks before they could be processed by Plaintiff s bank. See Exhibit "D." 44. It is believed, and therefore averred, that Defendant knowingly misrepresented to Plaintiff that payments were being made on time in order to retain possession and gain both control and use over the Equipment. 45. It is believed, and therefore averred, that Defendant made payments knowing it would stop payment on the checks in order to retain possession and gain both control and use over the Equipment. 46. Plaintiffrelied on Defendant's misrepresentations and continued to provide Sleep Study Services based on said misrepresentations. 47. Asaresultofthemisrepresentations,PlaintiffcontinuedtoprovjdeSleepStudyServices to Defendant and has not been paid for said services. 48. Defendant intentionally deceived Plaintiffthroughthe misrepresentations and intentionally induced Plaintiff to provide Sleep Study Services. 49. Defendant actions were dilatory, obdurate and vexatious causing Plaintiffto suffer the damages herein. WHEREFORE, Plaintiffrespectfully requests that this Honorable Court grant the following relief: (a) Return of the Equipment to Plaintiff; (b) Award Damages for the loss of use of the Equipment during Defendant's detention thereof; (c) Issue a Writ of Seizure in favor of Plaintiffupon the filing of an appropriate motion; (d) Waive any form of a bond; (e) Enforcement of the Agreement in all respects, includiAg> but not limited to, Pazagraph 7(C) of the Restrictive Covenants of the Agreement. (f) RetainjurisdictionofthisactiontoassessmoneydamagasinfavorofPlainfifffor any unpaid invoicesthatare inexcess of$134,281.00, any deficiency, andforthe special damages suffered by Plaintiff; (g) Award interest, costs ofthis action together with reasonable attorney fees against Defendant; and (h) Grant such other and further relief as the Court seems just, proper and appropriate under the circumstances of this case. MARTSON DEARDORFF WILLIAMS & OTTO Date: ~~~y Zn ~ Z eon, Christopher E. Rice 10 East High Street Carlisle, PA 17013 (717) 243-3341 Attorneys for Plaintiff ~~p~ SLEEP TESTING SERVICES AGREEMENT THIS AGREEMENT is made and entered into as of the ,3 day of A/oVF~M73Fla , 2005 by and between SLEEP DISORDER CENTERS OF CENTRAL PENNSYLVANIA, INC., hereafter referred to as SDCCP, a Pennsylvania Corporation and RESPITECH MEDICAL, INC., hereafter refemd to as RMI, a Pennsylvania Corporation. WITNESSETH: WHEREAS, RMI is a company that specializes in perfornring sleep testing and SDCCP desires to engage RMI to perform, through duly qualified technologists employed by RMI, sleep testing services subject to the terms and conditions hereinafter set forth and RMI desires to accept such engagement; NOW THEREFORE, in consideration of the foregoing premises and the terms and conditions set forth below, the parties agree as follows: RMISERVICES A. During the term of the Agreement, from time to time, SDCCP will request RMI to perform "Sleep Study Services," including the equipment, staffmg and management, supplies and professional evaluation and scoring of such studies and RMI shall provide the study results to SDCCP. RMI shall also assist SDCCP in the marketing of its Sleep Center. B. The Steep Study Services shall be performed in accordance with Exhibit A and in compliance with all applicable federal, state and local statutes and regulations, including without limitation, all educational requirements, rules and regulations of the federal health care programs, including without limitation, the Medicare and Medicaid programs. RMI shall provide technical and clinical training for technologists rendering Sleep Study Services hereunder for the duration of the term of this Agreement and shall provide satisfactory proof of same prior to commencement of this Agreement. C. RMI represents that it shall perform the Sleep Study Services hereunder in a competent, safe, courteous and professional manner and in accordance with SDCCP standards. D. RMI represents and warrants that neither it nor any individual rendering Sleep Study Services for RMI hereunder is presently or has ever been excluded from participation in a federal health care program nor has ever been sanctioned by a federal health cane program. RMI shall verify that neither it nor its employees have been subject to sanction or exclusion from a federal health care program prior to commencement of this Agreement and will notify SDCCP if such exclusion occurs at any time during the term hereof. E. SDCCP makes no representations regarding the amount of services it will engage RMI to provide during the Term. r F. SDCCP will FAX an order form to RMI Clinical Services in Lancaster, PA when Sleep Study Services are requested. SDCCP will provide appropriate physician order documentation and verify insurance. RMI will then coordinate scheduling the date of the Sleep Study Services directly with the patient. SDCCP will provide facilities to perform sleep studies, interpretations for the studies and medical guidance as needed. G. RMI shall provide four (4) complete sleep testing systems with real-time digital video (owned and maintained by RMI) with software and supplies. RMI shall also provide the sleep technologists to perform and score studies. RMI shall provide credentialed (RPSGT) personnel to supervise sleep technologists. 2. TERM A. The Term of this Agreement will commence on /y o Y ~/1l $~ ( , 2005 and continue until terminated as set forth below. B. Either party may terminate this Agreement at any time upon forty-five (45) days prior written notice to the other party; such notice not to be required in the case of breach as outlined below. C. Any notice required to be given hereunder will be deemed to have been served properly upon mailing by Federal Express, certified or registered mail, postage prepaid, and properly addressed. 3. COMPENSATION A. SDCCP will pay RMl for Sleep Testing Service(s) as quoted in Exhibit A. B. SDCCP will pay RMI within thirty (30) days of receipt of an invoice. C. SDCCP will have the sole and exclusive right to bill the global sleep study fee for all Sleep Study Services performed hereunder. RMI represents and warrants that it will not seek payment from any patient or from any third party for any Slcep Study Service or related service rendered hereunder. 4. INDEPENDENT CONTRACTOR A. It is understood that RMI's services hereunder are to be rendered in the capacity of an independent contractor of SDCCP. Neither RMI nor any employee or agent of RMI is or shall be considered, in any respect or under any circumstances, an employee of SDCCP. Neither party has authority to enter into contracts or assume any obligations for or on behalf of the other party or to make any warranties or representations for or on behalf of the other party. B. RMI shall be solely responsible for any taxes imposed on the performance of services or the payment for such services, including withholding of state and federal income sales or ad valorem, unemployment compensation, worker's compensation, Federal Insurance Contributions Act, Federal Unemployment Tax Act or other taxes, costs or expenses incurred in the performance of any engagement hereunder, where SDCCP has not expressly stated its responsibility in this Agreement. RMI expressly indemnifies, defends and holds SDCCP harmless from any such liabilities. 5. INDEMNIFICATION RMI shall indemnify, defend and save SDCCP harmless from and against any and all losses, claims, suits, damages, liabilities and expenses (including, without limitation, reasonable attorney's fees) based upon, arising out of or attributable to any act or omission of RMI or any employee or agent of RMI. 6. INSURANCE A. RMI shall maintain professional liability insurance in minimum amounts of $1,000,000 per occurrence and $6,000,000 aggregate to cover all Sleep Study Services rendered hereunder and shall name SDCCP an additional insured under such policy. Property and General Liability insurance shall be provided by SDCCP prior to the execution of this Agreement. B. RMI agrees to furnish SDCCP with a current and valid Certificate of Insurance relating to the extent of insurance coverage and agrees to keep and to maintain said insurance coverage in full force and effect during the term of this Agreement. Any modification or alteration in such coverage or program shall be promptly communicated to SDCCP. 7. RESTRICTIVE COVENANTS A. During the term of this Agreement, and for a period of six (6) months following its termination, for whatever cause, RMI shall not establish or maintain a sleep diagnostic center through or in connection with any other hospital, medical facility, clinic or office within a ten (10) mile radius (the way the crow flys) of 2250 Millennium Way, Enola, PA 17025. "Sleep Studies" as used herein shall include, but not be limited to, polysomnograms. Sleep diagnostic center shall mean a center where more than two hundred (200) overnight non-inpatient sleep studies are conducted per calendar year. B. During the term of this Agreement and any extension or renewal thereof, and for a period of six (6) months following the expiration or temrination of this Agreement (the "Restricted Period"), RMI will not solicit for employment any employce of SDCCP to work for RMI or another entity. C. During the term of this Agreement and any extension or renewal thereof, and for a period of six (6) months following the expiration or termination of this Agreement (the "Restricted Period"), SDCCP will not solicit for employment any employee of RMI to work for SDCCP or another entity related to or a subsidiary of SDCCP. D. Survival. The restrictions contained in this Section 7 shall remain in effect during the entire Restricted Period. E. Business Information. RMI agrees that it shall not use or disclose any confidential business information of SDCCP at any time following the temtination or expiration of this Agreement, and that during the tcrm of this Agreement it will maintain confidentiality with respect to such information except for authorized disclosures in the normal course of its duties and except for disclosure that RMI is required by law to disclose or disclosure of information that is in the public domain. 8. ASSIGNMENT This Agreement is not assignable in whole or in part by either party without prior consent of the other party. 9. WAIVER No waiver of any breach or failure by either party to enforce any of the terms or conditions of this Agreement at any time will, in any manner, limit or waive such party's right thereafter to enforce and to compel strict compliance with every term and condition hereof. 10. SEVERABILITY It is the intention of the parties that the Agreement is in compliance with applicable laws and that the provisions of this Agreement will be enforceable to the fullest extent pemtissible under applicable laws, and that the unenforceability of any provisions under such Laws will not render unenforceable, or impair, the remainder of the Agreement. If any provisions hereof are deemed invalid or unenforceable, either in whole or in part, this Agreement will be deemed amended to delete or to modify, as necessary, the offending provisions and to alter the bounds thereof in order to render it valid and enforceable. 11. ENTIRE AGREEMENT This Agreement constitutes the entire Agreement between SDCCP and RMI with respect to the subject matter hereof and supersedes any prior understandings or agreements. No modification of this Agreement will have any force or effect unless such modification specifically indicates it is a modification of this Agreement, is in writing and signed by authorized representatives of both parties. 12. NOTICES Any notification provided for under this Agreement shall be made to the following persons: If to SDCCP: Timothy A. Clark, M.D. Sleep Disorder Centers of Central Pennsylvania, Inc. 2250 Millenium Way Enola, PA 17025 If to RMI: Raymond S. Meck, President Respitech Medical, Inc. 250 Renck Avenue Lancaster, PA 17602 13. BREACH OF AGREEMENT BY RMI If RMI breaches any of its obligations under this Agreement and if the breach is not cured within ten (10) days after receiving written notice from SDCCP of the breach, then RMI shall be in default of this Agreement and the SDCCP shall be entitled to any and all available remedies at law or in equity including, but not limited to damages, specific performance, injunctive relief, and rescission of this Agreement. 14. INSPECTION OF RIVII'S BOOKS AND RECORDS Upon reasonable notice, SDCCP or its professional representatives shall have the right to inspect and audit the books and records of RMI for any and all matters that relate to this Agreement and/or RMI's obligations under this Agreement. 15. REPRESENTATIONS BY RMI RMI hereby represents to SDCCP as follows, which representation shall be deemed effective as of the date of this Agreement: (a) Authority. RMI has full power, authority and legal right to execute and perform and observe the provisions of this Agreement and to otherwise carry out the transaction contemplated hereunder. The signatories on behalf of RMI are authorized. (b) Financial. RMI has the financial resources and commitments necessary to fund RMI's obligations pursuant to this Agreement. (c) Enforceability. This Agreement is a party valid and binding obligations of RMI and enforceable against RMI. (d) No Violation. Execution and delivery by RMI of this Agreement and all other instruments provided herein to which RMI is a party, compliance with the provisions hereof, and the consttmmation of the transactions contemplated herein will not result in the breach or violation of (i) any law, statute, rile or regulation of any court or govemmental authority now in effect and applicable to RMI, (ii) any judgment, order or decree of any court or governmental authority binding on RMI, or (iii) any instrument, contract, or other agreement to which RMI is a party or by which RMI is bound. 16. GOVERNING LAW This Agreement shall be construed under and governed by the laws of the Commonwealth of Pennsylvania Any litigation arising under this Agreement shall be brought in the Court of Common Pleas of Cumberland County, Pennsylvania IN WITNESS WHEREOF, the parties intending to be legally bound have set there hands the date and year first above written. SLEEP DISORDER CE RS OF CENTRAL PENNSYLVANIA, Signed by: Print Name: ~t~ !t ~C ~YD~4 . ~ ~~3 Title: Ptrt t /~f0 ' Date: (!~/ ~D/ RESPITECH MEDICAL, INC. Signed by: _~ Print Name: A-4 n/ ~ S ~ d F ~~, Title: ~f~'oS~91Fa~ ~ Date: 1~~~ EXHIBIT A SLEEP SERVICES SUMMARY - RESPITECH MEDICAL, INC. OMober 28, 2005 Polysomnography includes all night (or day), technologist attended, multi-channel sleep study measuring and recording the following channels: NasaVOral Airflow, 't'horacic Excursion, Abdominal Excursion, Oximetry, Body Position, Heart Rate, EOG, EEG, Submental and Tibialis EMG, Snore, and PAP titration. Real-time Digital Video will also be recorded with each study. Sleep Staging and Scoring to include numeric, graphic, and technical summary reports of the above channels will be provided to the physician; normally, within 24 hours. One (1) technologist will perform testing for two (2) patients concurrently. (One [1] technologist can test no more then two [2] patients at any given time. A ratio of one [] ]technologist to two [2] patients is the Ixdwstry Standard.) $ 850.00 -rate based on one (1) Technologist testing two (2) patients per night. $ 500.00 -rate based on one (1) Technologist testing one (1) patient per night. MSLT Studies -reimbursement rate (Global Fee) will be a 50/50 split. 50% to Respitech Medicat, Inc. 50% to Sleep Disorder Centers of Central Pennsylvania, Inc. (MSLT patients must be scheduled so two [2] studies can be done concurrently.) Quote includes Staging and Scoring of Sleep Studies but does not include Physician Interpretation. In addition, the following support items will be provided by Respitech Medical, Inc. as part of the Sleep Testing Services Package. - Patient Intercom system for each sleep room (Total four [4] each) - One (I) oxygen concentrator - One (1) E size cylinder (with regulator) of medical grade oxygen - Manual resuscitator(s) for emergency use - CPAP unit(s) for titration use - Bi-Level (Bi-PAP) unit(s) for titration use All items (above) will be owned az-d maintained by Respitech Medical, Inc. Respitech Medical, lnc. has the capabilities to provide CPAPBi-Level Therapy as prescribed by the physicians. Equipment list includes but is not limited to. - CPAP Therapy units (Home Model) - Bi-Level Therapy units (Home Model) - Patient interfaces with Headgear (multiple sizes and designs) - Heated Humidifiers - Replacement components, filters, hoses, water chambers, etc. Respitech Medical, Inc. will provide consultation and guidance in setting up Sleep Disorder Centers of Central Pennsylvania, Inc. to meet accreditation guidelines, if requested. (Copy of Guidelines provided.) RESPITECH MEDICAL, INC. 250 RANCK AVENUE LANCASTER, PA 17802 EQUIPMENT LOCATION: Sleep Disorder Centers of Central Pennsylvania, Dr. Clark Clinical #1 hem Serial Number Aopen Monitor 53800492LE46 IBM ThinkCentre Stellate Computer LKHKZ9T IBM Keyboard 4093744 IBM Mouse 23-160236 Stellate Key Harmonie-S Version 6.OaEN-0 2004/12/6 LD# 3763 32ch 3763 DC Interface Box Stellate D01983 Main Head Box Stellate Mounted D01396 Patient Head Box Stellate D01966 Respironics Synchrony BiPAP 4028959 Respironics H2 Humidifier H1285004 Respironics Remote Box AM01966 IR B/W CCD Camera KG-IR60 AP06050022 Louroe Electronics AP-1T6 Intercom 501626 Ultra UPS 20682580510 TrippLite UPS BCPERS300 9445BYOBC423400111 Transformer Stellate D01970 Sleep Disorder Centers of Central Pennsylvania, Dr. Clark Clinical #2 ftem Serial Number Aopen Monitor 53802772LE46 IBM ThinkCentre Stellate Computer LKHKZ9P IBM Keyboard 4088930 IBM Mouse 23-077074 Stellate Key Harmonie-S Version 6.OaEN-0 2004/12/6 LD# 3761 32ch 3761 DC Interface Box Stellate D01973 Main Head Box Stellate Mounted D01982 Patient Head Box Stellate D01981 Respironics Synchrony BiPAP 2605226 Respironics H2 Humidifier H923876 Respironics Remote Box AM015254 IR B/W CCD Camera KG-IR60 AP06050002 Louroe Electronics AP-1T6 Intercom 501627 Ultra UPS 20682570510 TrippLite UPS BCPER300 9445BYOBC423400048 Transformer Stellate D01980 2 each RemStar Prot CPAP units CPAP face and nasal masks Disposable supplies: Electrodes, cannulas, EKG patches, EEG paste, storage containers ~XN-t ~tT ~~8 RESPITECH MEDICAL, INC. 250 RANCK AVENUE LANCASTER, PA 17602 EQUIPMENT LOCATION: Sleep Disorder Centers of Central Pennsylvania, Dr. Clark Clinical #3 Item Serial Number Aopen Monitor 53800426LE46 IBM ThinkCentre Stellate Computer LKHLADW IBM Keyboard 4088955 IBM Mouse 23-160234 Stellate Key Harmonie-S Version 6.OaEN-0 2004/12/6 LD# 3762 32ch 3762 DC Interface Box Stellate D01978 Main Head Box Stellate Mounted D01977 Patient Head Box Stellate D01976 Respironics Synchrony BiPAP 4028960 Respironics H2 Humidifier H1285013 Respironics Remote Box AM015040 IR B/W CCD Camera KG-IR60 AP06050030 Louroe Electronics AP-1TB Intercom 501624 Ultra UPS 20682520510 TrippLite UPS BCPERS300 94456YOBC423400040 Transformer Stellate D01975 Sleep Disorder Centers of Central Pennsylvania, Dr. Clark Clinical 1i4 kem Serial Number Aopen Monitor 53802762LE46 IBM ThinkCentre Stellate Computer LKHLAIF IBM Keyboard 4088913 IBM Mouse 23161408 Stellate Key Harmonie-S Version 6.OaEN-0 2004/12/6 LD# 3763 32ch 3763 DC Interface Box Stellate D01968 Main Head Box Stellate Mounted D01972 Patient Head Box Stellate D01971 Respironics Synchrony BiPAP 4028960 Respironics H2 Humidifier H1285013 Respironics Remote Box AM015040 IR B/W CCD Camera KG-IR60 AP06050014 Louroe Electronics AP-1TB Intercom 501625 Ultra UPS 20682740510 TrippLite UPS BCPERS300 9445by0bc423400039 Transformer Stellate D01965 AirSep New Life Oxygen Concentrator 139982 AirSep New Life Oxygen Concentrator 144908 HP OfficeJet 6210 All in One FAX Machine CN54QCE20N Nonin Patient Simulator 101902525 RETURNED DEPOSITED ITEM NOTICE DATE 06.30-06 AMOUNT REASON MAKER 10.000.00 STOP PAYMENT FEE DEPOSIT DATE REFERENCE • 8.00 06-26-2006 000042617346 10.000.00 TOTAL FOR 1 ITEMS T07AL FEE 6.00 THE ITEM(S) SHOWN AiOVE WA9 DEPOSITED TO YOUR TANK ACCOUNT. BUT IT HAS TEEN RETURNED UNPAID FOR THE REASON INDICATED. WE HAVE ENCLOSED THE ITEM AND SUBTRACTED THE AMOUNT FROM YOUR ACCOUNT BALANCE. AS WELL AS CHARGED YOUR ACCOUNT THE ITEM FEE. PLEASE UPDATE THE BALANCE IN YOUR ACCOUNT. IF YOU HAVE ANY QUESTIONS OR CONCERNS. PLEASE CONTACT US AT THE NUMBER LISTED BELDW. THANK YOU. RESPITECH MEDICAL INC 250 RANCK AVE LANCASTER PA 17602 CITIZENS TANK - 060 CUSTOMER SERVICE 1-B00-922.9999 WAY ~~ :. !__ 'fiP' 60027 June 20.2008 .~'00^ i000000.~' ExH-I g~ i' ~~G RETURNED DEPOSITED ITEM NOTICE. DATE 07-LO-06 AMOUNT REASON MAKER ~ ~ FEE DEPOSIT DATE REFERENCE A 7,800.00 S70P PAYMENT 8.00 06.23-2006 D00041503701 10,000.00 STOP PAYMENT 8.00 06-23-2006 000041503700 17,800.00 TOTAL FOR 2 ITEMS TOTAL FEE 16.00 THE ITEMIS) SHOWN ABOVE WAS DEPOSITED TO YOUR BANK ACCOUNT, BUT IT HAS BEEN RETURNED UNPAID FOR THE REASON INDICATED. WE HAVE ENCLOSED THE ITEM AND SUBTRACTED THE AMOUNT FROM YOUR ACCOUNT 6ALANCE, AS WELL AS CHARGED YOUR ACCOUNT THE ITEM FEE. PLEASE UPDATE THE BALANCE IN YOUR ACCOUNT. IF YOU HAVE ANY QUESTIONS OR CONCERNS. PLEASE CONTACT US AT 7HE NUMBER LISTED BELOW. THANK YOU. RESPITECN MEDICAL 2NC 250 RANCK AVE LANCASTER PA 17602 CITIZENS BANK - CUSTOMER SERVICE 1-800.922-9999 CENTR~AyL~PAAPUIMONARX.ASSOC., L.L.C Yunra,E:Mwc kR~ RBI) WAY _ '""°"°+ew. n` ~ ~~ ENOLA, ~ 17025 ~ 80028 ~.~ ne 1 B 2008 a;!CSP010001AB78458# ~~ O IIJIINIIIIIIIIIIIIIII/IIIIIIIIILIIdIL11111111111dIII11Tl TO THE YYr Is1YE OIOYw lNVANI a>_ *e,wensr oROEROF: RESPITECN MEDICAL, INC. 250 RANCK AVE LANCASTER, PA 1780211-2516 ^ Ifllll~llll ll'11111111111111111111T11111111111111111111111111~ BA Y __ l~.INV •057K _ ,______.._____~ _ AFTER 198UE - SIONATUR.F ON FILE. ~ trmi..r.rrl/lr`fw. III h ~ IINniI~Ig11NIINNNINI~I~ I ~ 111000 If ~l]01]001~ CENTRAL PA PULMONARY ASSOC.. L.L.C. w~naae e.wc TBdOTHYCLARK ,~~rfA, E~ 32U TE ~ IE7M WA1' ENQLA, PA; 17025-; w NCSP010001A8784581M ~ ~ 01 Illllllllllllllltlllllllllllllllllllllllll,I!IIII111111~ TO THE YYIU ,pI1W. YYIYI ENVIIY L`_i3,l3AYY5 oROCROF; RESPITECN MEDICAL, INC. 25U RANCK AVE LANCASTER, PA 17802-2516 IAI"IIIIllll/1111 ll llllllll 11111 lllllllilll 1111 11111 if 111111 NdMI IN1M A5735 ~ 50028 ~ June 19.2008 ~ 1 VOID W OAVS AFTER ISSUE i .SIGNATURE OM FILE nrw~iYwrrlrirww+iEY~r. :. 8• IIIni~IiIN~IIIIINIIIIIiIIIIINiIIIINUIIIII 1110000 780000/11 ' JUL-'10-2D06 02:54PL1 fR01FRESPITECH LEDICAL INC +i 717 3990033 T-902 P.002/002 F-450 V_E.RIFICATION The foregoing Complaint in Replevin is based upon information which has been gathered by my counsel in the preparation of the lawsuit. The language of the document is that of counsel and not my own. I have read the document and to the extent that it is based upon information which I have given to my counsel, it is true and correct to the best of my knowledge, informaton and belief. To the extent that the content of the document is that of counsel, I have relied upon counsel in making this verification. This statement and verification are made subject to the penalties of 18 Pa. C.S. Section 4904 relating to tmswom falsification to authorities, which provides that if I make knowingly false averments, I may be subject to criminal penaltie L ' on Meek, sident of Respitech, Inc. r-, ~ a ..a ~ `6~ s d -,_ , ~-~ ;; _~ ~, _,- -:, __ - . ~ -: G ;;~ ,~ F:\FILES\DATAFILE\GenmllCurtent\ 12137.1. mot.1 /emm Created: 1229/03 8:24AM Revised: 721/oG 2:41PM Christopher E. Rice, Esquire MARTSON DEARDORFF WILLIAMS & OTTO I.D. 90916 10 East High Street Carlisle, PA 17013 (717) 243-3341 Attorneys for Plaintiff RESPITECH MEDICAL, INC Plaintiff v. SLEEP DISORDER CENTERS OF CENTRAL PENNSYLVANIA, INC. Defendant IN THE COURT OF COMII~ON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA NO. 06 - 4123 CIVIL TERM CIVIL ACTION -LAW MOTION FOR ISSUANCE OF WRIT OF SEIZURE Plaintiff, RESPITECH MEDICAL, INC., by and through its attorneys, MART SON DEARDORFF WILLIAMS & OTTO, moves this Honorable Court for the issuance of a writ of seizure pursuant to Rule 1075.1 of the Pennsylvania Rules of Civil Procedure, and in support thereof respectfully represents: On July 20, 2006, Plaintifffiled a Complaint in Replevin (the "Complaint"). A true and correct copy of which is attached as Exhibit "1" and incorporated by reference. 2. As is more fully set forth in the Complaint, Defendant is in default of a Sleep Testing Services Agreement with Plaintiff(herein, the "Agreement"). A copy of the Agreement is attached as Exhibit "A" to the Complaint. 3. Due to Defendant's defaults under the Agreement, Plaintiff is owed in excess of $139,281.81 and as more particularly set forth in the Complaint. 4. so. 5. Equipment. Despite repeated promises to cure the defaults, Defendant now refuses or is unable to do Defendant has advised Plaintiffthat it will resist any attempted peaceful repossession ofthe 6. As demonstrated by the Complaint, Plaintiff is entitled to immediate possession of the Equipment described in Exhibit "B" of the Complaint. 7. As more fully identified in the Complaint, the Equipment is located at Defendant's principal place of business being 2250 Millenium Way, Suite 400, Enola, Pennsylvania 17025. Plaintiff believes and therefore avers that the total value of the Equipment, which is described in the Complaint, is $88,000.00. 9. As long as the Equipment is unlawfully in the possession of Defendant, Plaintiffcontinues to incur damages and lose of profits. 10. It is believed, and therefore averred, that Defendant continues to use and profit from the use of the Equipment without permission from Plaintiff. 11. Plaintiffis requesting that this Court waive the requirement for a bond since the Agreement clearly establishes that the Equipment is the property of Plaintiff. Further, Defendant has stated that the Equipment will be returned (an acknowledgment that Plaintiffowns the Equipment), but has failed to return the same or permit Plaintiff to retrieve the Equipment. 12. Due to the nature of the Equipment, Plaintiff s trained technicians should be permitted to accompany the Sheriffto seize the Equipment and assist in packaging and transpoxEing the Equipment to Plaintiff. WHEREFORE, Plaintiffprays this Honorable Court to grant an Order authorizing the Prothonotary to issue the attached Writ of Seizure (attached hereto as Exhibit " 2") pursuant to Rule 1075.1 of the Pennsylvania Rules of Civil Procedure. MARTSON DEARDORFF WII,LIAMS & OTTO By S /~--~-~ Christopher E. Rice 10 East High Street Carlisle, PA 17013 (717) 243-3341 Date: July 21, 2006 Attorneys for Plaintiff EXHIBIT 1 - ~. F. .FILES\DATAFILE\Grneral\Curreni\ I? 137. I com. I /emm Creaced~ 12/29/03 8.24AM Revised. 7,'20/06 4:OIPM Christopher E. Rice, Esquire MARTSON DEARDORFF WILLIAMS & OTTO I.D. 90916 10 East High Street Carlisle, PA 17013 (717) 243-3341 Attorneys for Plaintiff RESPITECH MEDICAL, INC. IN THE COURT OF COMMON PLEAS OF Plaintiff CUMBERLAND COUNTY, PENNSYLVANIA irn~ {. -rl v. NO. 06 - 1.{(~ CIVIL TERM ~~. ` ~"~ _~+ SLEEP DISORDER CENTERS OF CIVIL ACTION -LAW e CENTRAL PENNSYLVANIA, INC. Defendant =~ ~ , -- _ "~ • _~- NOTICE ~.- You have been sued in court. If you wish to defend against the claims set forth in the following pages, you must take action within twenty (20) days after this Complaint and Notice are served, by entering a written appearance personally or by attorney and filing in writing with the court your defenses or objections to the claims set forth against you. You are warned that if you fail to do so, the case may proceed without you and a j udgment may be entered against you by the court without further notice for any money claimed in the Complaint or for any other claim or relief requested by the Plaintiffs. You may lose money or property or other rights important to you. YOU SHOULD TAKE THIS PAPER TO YOUR LAWYER AT ONCE. IF YOU DO NOT HAVE A LAWYER, GO TO OR TELEPHONE THE OFFICE SET FORTH BELOW. THIS OFFICE CAN PROVIDE YOU WITH INFORMATION ABOUT HIRING A LAWYER. IF YOU CANNOT AFFORD TO HIRE A LAWYER, THIS OFFICE MAY BE ABLE TO PROVIDE YOU WITH INFORMATION ABOUT AGENCIES THAT MAY OFFER LEGAL SERVICES TO ELIGIBLE PERSONS AT A REDUCE FEE OR NO FEE: Cumberland County Bar Association 32 South Bedford Street Carlisle, PA 17013 (717) 249-3166 RESPITECH MEDICAL, INC Plaintiff v. SLEEP DISORDER CENTERS OF CENTRAL PENNSYLVANIA, INC Defendant IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA NO. 06 - CIVIL TERM CIVIL ACTION -LAW COMPLAINT IN REPLEVIN Plaintiff, RESPITECH MEDICAL, INC., by and through its attorneys, MARTSON DEARDORFF WILLIAMS & OTTO, and pursuant to Rule 1073.1 of the Pennsylvania Rules of Civil Procedure, hereby files this Complaint in Replevin against Defendant, SLEEP DISORDER CENTERS OF CENTRAL PENNSYLVANIA, INC., and avers as follows: 1. Plaintiff, Respitech Medical, Inc., is a Pennsylvania corporation with offices located at 250 Ranck Avenue, Lancaster, Pennsylvania 17602. 2. Defendant, Sleep Disorder Centers of Central Pennsylvania, is a Pennsylvania corporation with its principal place of business located at 2250 Millenium Way, Suite 400, Enola, Pennsylvania 17025. Defendant herein will refer to the corporation, its agents and employees. 3. As is more particulazly described below, Defendant entered into a written Sleep Testing Services Agreement with Plaintiff(herein, the "Agreement"). A true and correct copy of the Agreement is attached hereto as Exhibit "A" and incorporated herein by reference. 4. As stated in the Agreement, the parties agreed that any litigation under the Agreement would be brought in the Cumberland County Court of Common Pleas. 5 . As is more particulazly described below, the cause of action giving rise to the Complaint in Replevin azose in Cumberland County, Pennsylvania. COUNT I -Replevin 6. Paragraphs 1 through 5 are incorporated herein by reference. 7. On or about November 3, 2005, Plaintiffentered into an Agreement with Defendant to, among other things, perform sleep studies. 8. In accordance with the Agreement, Plaintiffprovided four complete sleep testing systems with real-time digital video with software and supplies to Defendant (collectively herein, the "Equipment"). A list of the Equipment is attached hereto as Exhibit "B" and incorporated herein by reference. 9. Plaintiff had purchased the Equipment on or about November of 2005 from Stellate Systems, a Montreal company. 10. Plaintiffset up the Equipment at Defendant's principal place of business as set forth herein and the Equipment remains in possession of Defendant at such address. 11. At all relevant times, Plaintiffowned, had title to, and maintained the Equipment. See Paragraph 1(G) and Exhibit A of the Agreement. 12. At no time did Defendant own or acquire any rights in the title to the Equipment. 13. It is believed, and therefore averred, that Defendant has acknowledged that the Equipment must be returned to Plaintiff immediately. 14. Both parties acknowledge that the Agreement is no longer in effect. 15 . Defendant has been in default of its payment obligations under the Agreement for, among other things, the services of Plaintiff, which included, but were not limited to, the operation and use of the Equipment at Defendant's place of business (herein, "Sleep Study Services") 16. As of June 27, 2006, Defendant notified Plaintiffthat it was no longer in need of Plaintiff's Sleep Study Services and stated that Plaintiffwas not permitted on Defendant's principal place of business. 17. Plaintiffhas been unable to gain possession of the Equipment from Defendant as Defendant continues to deny access. 18. As of the date of this Complaint, Defendant owes Plaintiff an amount in excess of $139,281.00 under the Agreement. Defendant has only paid $30,600.00 to Plaintiff as of this date. 19. Plaintiff has fully performed its duties and obligations pursuant to the terms of the Agreement. 20. It is believed, and therefore averred, that the Equipment has a value of approximately $88,000. 21. Under the Agreement, by reason of Defendant's default, and under the applicable Pennsylvania law, including the provisions ofthe Uniform Commercial code, Plaintiffis entitled to immediate possession of the Equipment. 22. Notwithstanding repeated demands made by Plaintiff, Defendant has refused to return possession of the Equipment or to permit Plaintiff to peaceably recover possession of the Equipment. 23. Defendant's wrongful detention of the Equipment has prevented Plaintifffrom using the same, all to its damage and detriment. WHEREFORE, Plaintiffrespectfully requests that this Honorable Court grant the following relief: (a) Return of the Equipment to Plaintiff; (b) Award Damages for the loss of use of the Equipment during Defendant's detention thereof; (c) Issue a Writ of Seizure in favor of Plaintiffupon the filing of an appropriate motion; (d) Waive any form of a bond; (e) Enforcement of the Agreement in all respects, including, but not limited to, Paragraph 7(C) of the Restrictive Covenants of the Agreement. (f J Retain jurisdiction of this action to assess money damages in favor of Plaintifffor any unpaid invoices that are in excess of $139,281.00, any deficiency, and for the special damages suffered by Plaintiff; (g) Award interest, costs of this action together with reasonable attorney fees against Defendant; and (h) Crrant such other and further relief as the Court seems j ust, proper and appropriate under the circumstances of this case. COUNT II -BREACH OF CONTRACT 24. Paragraphs 1 - 23 are incorporated herein by reference. 25. As stated herein, Plaintiff and Defendant entered into the Agreement. 26. Plaintiff submitted invoices to Defendant for Sleep Study Services rendered. 27. Defendant was to pay the invoices within 30 days. 28. Defendant failed to make the required payments. 29. Defendant made some late payments, but stopped payment on the checks issued to Plaintiff. See copies of the checks that were stopped that are attached hereto as Exhibit "C" and incorporated herein by reference. 30. It is believed, and therefore averred, that Defendant solicited foremployment Plaintiffs employees. 31. Defendant denied access to Plaintiff to perform the sleep studies contemplated in the Agreement. 32. It is believed, and therefore averred, that Defendant has breached the Agreement by, among other things: (a) Failing to make payments to Plaintiff; (b) Failing to return the Equipment to Plaintiff; (c) Soliciting employees of Plaintiff for employment by Defendant; (d) Failing to compensate Plaintiff for Sleep Study Services; (e) Failing to permit Plaintiffto coordinate scheduling of Sleep Study Services directly; (f) Stopping payments on checks that were sent to, received, and deposited by Plaintiff for invoices; and (g) Utilizing the Equipment without permission of Plaintiff. 33. Plaintiff has fully performed its duties and obligations pursuant to the terms of the Agreements. 34. Plaintiff has demanded payment, but Defendant has failed to pay. WHEREFORE, Plaintiffrespectfully requests that this Honorable Court grant the following relief: (a) Return of the Equipment to Plaintiff; (b) Award Damages for the loss of use of the Equipment during Defendant's detention thereof; (c) Issue a Writ of Seizure in favor of Plaintiffupon the filing of an appropriate motion; (d) Waive any form of a bond; (e) Enforcement of the Agreement in all respects, including, but not limited to, Paragraph 7(C) of the Restrictive Covenants of the Agreement. (f) Retain j urisdiction of this action to assess money damages in favor of Plaintifffor any unpaid invoices that are in excess of $139,281.00, any deficiency, and for the special damages suffered by Plaintiff; (g) Award interest, costs ofthis action together with reasonable attorney fees against Defendant; and (h) Grant such other and further relief as the Court seems just, proper and appropriate under the circumstances of this case. COUNT III -QUANTUM MERUIT 35. Paragraphs 1 - 34 are incorporated herein by reference. 3 6. Plaintiffand Defendant entered into the Agreement where Defendant would pay for the Sleep Study Services rendered by Plaintiff. 3 7. Defendant failed to perform according to the Agreement by not paying for Sleep Study Services performed by Plaintiff. 38. In the alternative, Defendant has been unjustly enriched in an amount in excess of $139,281.00. WHEREFORE, Plaintiffrespectfially requests that this Honorable Court grant the following relief: (a) Return of the Equipment to Plaintiff; (b) Award Damages for the loss of use of the Equipment during Defendant's detention thereof; (c) Issue a Writ of Seizure in favor of Plaintiffupon the filing of an appropriate motion; (d} Waive any form of a bond; (e) Enforcement of the Agreement in all re"spects, including, but not limited to, Paragraph 7(C) of the Restrictive Covenants of the Agreement. (f) Retain j urisdiction of this action to assess money damages in favor of Plaintifffor any unpaid invoices that are in excess of $139,281.00, any deficiency, and for the special damages suffered by Plaintiff; (g) Award interest, costs of this action together with reasonable attorney fees against Defendant; and (h) Grant such other and further relief as the Court seems just, proper and appropriate under the circumstances of this case. COUNT IV - FRAUD/MISREPRESENTATION 39. Paragraphs 1 - 38 are incorporated herein by reference. 40. Defendant continued to make representations to Plaintiffthatpayments for invoices were being sent to Plaintiff. 41 Defendant fraudulently misrepresented to Plaintiffmaterial facts that payments were made or scheduled to be made when, in fact, they were not. 42. Plaintiff relied to its detriment by providing additional services to Defendant which Defendant had no intention of paying for. 43 . Defendant made payments to Plaintiffand then stopped payment on the checks before they could be processed by Plaintiff's bank. See Exhibit "D." 44. It is believed, and therefore averred, that Defendant knowingly misrepresented to Plaintiff that payments were being made on time in order to retain possession and gain both control and use over the Equipment. 45. It is believed, and therefore averred, that Defendant made payments knowing it would stop payment on the checks in order to retain possession and gain both control and use over the Equipment. 46. Plaintiffrelied on Defendant's misrepresentations and continued to provide Sleep Study Services based on said misrepresentations. 47. As a result ofthe misrepresentations, Plaintiff continued to provide Sleep Study Services to Defendant and has not been paid for said services. 48. Defendant intentionally deceived Plaintiffthrough the misrepresentations and intentionally induced Plaintiff to provide Sleep Study Services. 49. Defendant actions were dilatory, obdurate and vexatious causing Plaintiffto suffer the damages herein. WHEREFORE, Plaintiffrespectfully requests that this Honorable Court grant the following relief: (a) Return of the Equipment to Plaintiff; (b) Award Damages for the loss of use of the Equipment during Defendant's detention thereof; (c) Issue a Writ of Seizure in favor of Plaintiffupon the filing of an appropriate motion; (d) Waive any form of a bond; (e) Enforcement of the Agreement in all respects, including, but not limited to, Paragraph 7(C) of the Restrictive Covenants of the Agreement. (f) Retain jurisdiction of this action to assess money damages in favor of Plaintifffor any unpaid invoices that are in excess of $139,281.00, any deficiency, and for the special damages suffered by Plaintiff; (g) Award interest, costs of this action together with reasonable attorney fees against Defendant; and (h) Grant such other and further relief as the Court seems just, proper and appropriate under the circumstances of this case. MARTSON DEARDORFF WILLIAMS & OTTO By ~ ~. s _ ~'~ Christopher E. Rice 10 East High Street Carlisle, PA 17013 (717) 243-3341 Date: T~ ~ y 2 r' ~ ~, eel,. Attorneys for Plaintiff ~p~ SLEEP TESTIIHG SERVICES AGREEMENT THIS AGREEMENT is wade and entered into as of the ~ day of 1Vo ~~~ T3 F~ , 2005 by and between SLEEP DISORDER CENTERS OF CENTRAL PENNSYLVANIA, INC., hereafter referred to as SDCCP, a Pennsylvania Corporation and RESPITECH MEDICAL, INC., hereafter referred to as RMI, a Pennsylvania Corporation. WITNESSETH: WHEREAS, RMI is a company that specializes in performing sleep testing and SDCCP desires to engage RMI to perform, through duly qualified technologists employed by RMI, sleep testing services subject to the terms and conditions hereinafter set forth and RMI desires to accept such engagement; NOW THEREFORE, in consideration of the foregoing premises and the terms and conditions set forth below, the parties agree as follows: 1. RMI SERVICES A. During the term of the Agreement, from time to time, SDCCP will request RMI to perform "Sleep Study Services," including the equipment, staffmg and management, supplies and professional evaluation and scoring of such studies and RMI shall provide the study results to SDCCP. RMI shall also assist SDCCP in the marketing of its Sleep Center. B. The Sleep Study Services shall be performed in accordance with Exhibit A and in compliance with all applicable federal, state and local statutes and regulations, including without limitation, all educational requirements, rules and regulations of the federal health care programs, including without limitation, the Medicate and Medicaid programs. RMI shall provide technical and clinical training for technologists rendering Sleep Study Services hereunder for the duration of the term of this Agreement and shall provide satisfactory proof of same prior to commencement of this Agreement. C. RMI represents that it shall perform the Sleep Study Services hereunder in a competent, safe, courteous and professional manner and in accordance with SDCCP standards. D. RMI represents and warrants that neither it nor any individual rendering Sleep Study Services for RMI hereunder is presently orhas -ever been excluded from participation in a federal health care program nor has ever been sanctioned by a federal health care program. RMI shall verify that neither it nor its employees have been subject to sanction or exclusion from a federal health care program prior to commencement of this Agreement and will notify SDCCP if such exclusion occurs at any time during the term hereof. E. SDCCP makes no representations regarding the amount of services it will engage RMI to provide during the Term. r F. SDCCP will FAX an order form to RMI Clinical Services in Lancaster, PA when Sleep Study Services are requested. SDCCP will provide appropriate physician order documentation and verify insurance. RMI will then coordinate scheduling the date of the Sleep Study Services directly with the patient. SDCCP will provide facilities to perform sleep studies, interpretations for the studies and medical guidance as needed. G. RMI shall provide four (4) complete sleep testing systems with real-time digital video (owned and maintained by RMI) with software and supplies. RMI shall also provide the sleep technologists to perform and score studies. RMI shall provide credentialed (RPSGT) personnel to supervise sleep technologists. 2. TERM A. The Tenn of this Agreement will commence on iV o~ ~M 8~' I , 2005 and continue until terminated as set forth below. B. Either party may terminate this Agreement at any time upon forty-five (45) days prior written notice to the other party; such notice not to be required in the case of breach as outlined below. C. Any notice required to be given hereunder will be deemed to have been served properly upon mailing by Federal Express, certified or registered mail, postage prepaid, and properly addressed. 3. COMPENSATION A. SDCCP will pay RMl for Sleep Testing Service(s) as quoted in Exhibit A. B. SDCCP will pay RMI within thirty (30) days of receipt of an invoice. C. SDCCP will have the sole and exclusive right to bill the global sleep study fee for all Sleep Study Services performed hereunder. RMI represents and warrants that it will not seek payment from any patient or from any third party for any Sleep Study Service or related service rendered hereunder. 4. INDEPENDENT CONTRACTOR A. It is understood that RMI's services hereunder are to be rendered in the capacity of an independent contractor of SDCCP. Neither RMI nor any employee or agent of RMI is or shall be considered, in any respect or under any circumstances, an employee of SDCCP. Neither party has authority to enter into contracts or assume any obligations for or on behalf of the other party or to make any warranties or representations for or on behalf of the other party. B. RMI shall be solely responsible for any taxes imposed on the performance of services or the payment for such services, including withholding of state and federal income sales or ad valorem, unemployment compensation, worker's compensation, Federal Insurance Contributions Act, Federal Unemployment Tax Act or other taxes, costs or expenses incurred in the performance of any engagement hereunder, where SDCCP has not expressly stated its responsibility in this Agreement. RMI expressly indemnifies, defends and holds SDCCP harmless from any such liabilities. 5. INDEMNIFICATION RMI shall indemnify, defend and save SDCCP harmless from and against any and a111osses, claims, suits, damages, liabilities and expenses (including, without limitation, reasonable attorney's fees) based upon, arising out of or attributable to any act or omission of RMI or any employee or agent of RMI. 6. INSURANCE A. RMI shall maintain professional liability insurance in minimum amounts of $1,000,000 per occurrence and $6,000,000 aggregate to cover all Sleep Study Services rendered hereunder and shall name SDCCP an additional insured under such policy. Property and General Liability insurance shall be provided by SDCCP prior to the execution of this Agreement. B. RMI agrees to furnish SDCCP with a current and valid Certificate of Insurance relating to the extent of insurance coverage and agrees to keep and to maintain said insurance coverage in full force and effect during the term of this Agreement. Any modification or alteration in such coverage or program shall be promptly communicated to SDCCP. RESTRICTIVE COVENANTS A. During the term of this Agreement, and for a period of six (6) months following its termination, for whatever cause, RMI shall not establish or maintain a sleep diagnostic center through or in connection with any other hospital, medical facility, clinic or office within a ten (10) mile radius (the way the crow flys) of 2250 Millennium Way, Enola, PA 17025. "Sleep Studies" as used herein shall include, but not be limited to, polysomnograms. Sleep diagnostic center shall mean a center where more than two hundred (200) overnight non-inpatient sleep studies are conducted per calendar year. B. During the term of this Agreement and any extension or renewal thereof, and for a period of six (6) months following the expiration or termination of this Agreement (the "Restricted Period"), RMI will not solicit for employment any employee of SDCCP to work for RMI or another entity. C. During the term of this Agreement and any extension or renewal thereof, and for a period of six (6) months following the expiration or termination of this Agreement (the "Restricted Period"), SDCCP will not solicit for employment any employee of RMI to work for SDCCP or another entity related to or a subsidiary of SDCCP. D. Survival. The restrictions contained in this Section 7 shall remain in effect during the entire Restricted Period. E. Business Information. RMI agrees that it shall not use or disclose any confidential business information of SDCCP at any time following the termination or expiration of this Agreement, and that during the term of this Agreement it will maintain confidentiality with respect to such information except for authorized disclosures in the normal course of its duties and except for disclosure that RMI is required by law to disclose or disclosure of information that is in the public domain. 8. ASSIGNMENT This Agreement is not assignable in whole or in part by either party without prior consent of the other party. 9. WAIVER No waiver of any breach or failure by either party to enforce any of the terms or conditions of this Agreement at any time will, in any manner, limit or waive such party's right thereafter to enforce and to compel strict compliance with every term and condition hereof. 10. SEVERABILITY It is the intention of the parties that the Agreement is in compliance with applicable laws and that the provisions of this Agreement will be enforceable to the fullest extent permissible under applicable laws, and that the unenforceability of any provisions under such Laws will not render unenforceable, or impair, the remainder of the Agreement. If any provisions hereof are deemed invalid or unenforceable, either in whole or in part, this Agreement will be deemed amended to delete or to modify, as necessary, the offending provisions and to alter the bounds thereof in order to render it valid and enforceable. l 1. ENTIRE AGREEMENT This Agreement constitutes the entire Agreement between SDCCP and RMI with respect to the subject matter hereof and supersedes any prior understandings or agreements. No modification of this Agreement will have any force or effect unless such modification specifically indicates it is a modification of this Agreement, is in writing and signed by authorized representatives of both parties. 12. NOTICES Any notification provided for under this Agreement shall be made to the following persons: If to SDCCP: Timothy A. Clark, M.D. Sleep Disorder Centers of Central Pennsylvania, Inc. 2250 Millenium Way Enola, PA 17025 If to RMI: Raymond S. Meck, President Respitech Medical, Inc. 250 Ranck Avenue Lancaster, PA 17602 13. BREACH OF AGREEMENT BY RMI If RMI breaches any of its obligations under this Agreement and if the breach is not cured within ten (10) days after receiving written notice from SDCCP of the breach, then RMI shall be in default of this Agreement and the SDCCP shall be entitled to any and all available remedies at law or in equity including, but not limited to damages, specific performance, injunctive relief, and rescission of this Agreement. 14. INSPECTION OF RMI'S BOOKS AND RECORDS Upon reasonable notice, SDCCP or its professional representatives shall have the right to inspect and audit the books and records of RMI for any and all matters that relate to this Agreement and/or RMI's obligations under this Agreement. 15. REPRESENTATIONS BY RMI RMI hereby represents to SDCCP as follows, which representation shall be deemed effective as of the date of this Agreement: (a) Authority. RMI has full power, authority and legal right to execute and perform and observe the provisions of this Agreement and to otherwise carry out the transaction contemplated hereunder. The signatories on behalf of RMI are authorized. (b) Financial. RMI has the financial resources and commitments necessary to fund RMI's obligations pursuant to this Agreement. (c) Enfoneability. This Agreement is a party valid and binding obligations of RMI and enforceable against RMI. (d) No Violation. Execution and delivery by RMI of this Agreement and all other instruments provided herein to which RMI is a party, compliance with the provisions hereof, and the consummation of the transactions contemplated herein will not result in the breach or violation of (i) any law, statute, Wile or regulation of any court or governmental authority now in effect and applicable to RMI, (ii) any judgment, order or decree of any court or governmental authority binding on RMI, or (iii) any instrument, contract, or other agreement to which RMI is a party or by which RMI is bound. 16. GOVERNING LAW This Agreement shall be construed under and governed by the laws of the Commonwealth of Pennsylvania. Any litigation arising under this Agreement shall be brought in the Court of Common Pleas of Cumberland County, Pennsylvania. IN WITNESS WHEREOF, the parties intending to be legally bound have set there hands the date and year first above written. SLEEP DISORDER CE RS OF CENTRAL PENNSYLVANIA, Signed by: l Print Name: % ry ~ ~C /~' v~ ~~3 Title: lrt S C'~ Date: (! ~/ lp/ RESPITECH MEDICAL, INC. Signed by: `•~~ Print Name: ~i4~.r/~ 5. ~~j~cj<. Title: ~ ~s~~~ ~J ~ Date: ll ~~~~ EXHIBIT A SLEEP SERVICES SUMMARY - RESPITECH MEDICAL, INC. October 28, 2005 Polysomnography includes all night (or day), technologist attended, multi-channel sleep study measuring and recording the following channels: NasaUOral Airflow, Thoracic Excursion, Abdominal Excursion, Oximetry, Body Position, Heart Rate, EOG, EEG, Submental and Tibialis EMG, Snore, and PAP titration. Real-time Digital Video will also be recorded with each study. Sleep Staging and Scaring to include numeric, graphic, and technical summary reports of the above channels will be provided to the physician; normally, within 24 hours. One (1) technologist will perform testing for two (2) patients concurrently. (One [1] technologist can test no more then two [2] patients at any given time. A ratio of one [1] technologist to two [2] patients is the Indrestry Standard.) $ 850.00 -rate based on one (1) Technologist testing two (2) patients per night. $ 500.00 -rate based on one (1) Technologist testing one (1) patient per night. MSLT Studies -reimbursement rate (Global Fee) will be a 50/50 split. 50% to Respitech Medical, Inc. 50% to Sleep Disorder Centers of Central Pennsylvania, Inc. (MSLT patients must be scheduled so two [2] studies can be done concurrently.) Quote includes Staging and Scoring of Sleep Studies but does not include Physician Interpretation. In addition, the following support items will be provided by Respitech Medical, Inc. as part of the Sleep Testing Services Package. - Patient Intercom system for each sleep room (Total four [4] each) - One (1) oxygen concentrator - One (l) E size cylinder (with regulator) of medical grade oxygen - Manual resuscitator(s) for emergency use - CPAP unit(s) for titration use - Bi-Level (Bi-PAP) unit(s) for titration use All items (above) will be owned and maintained by Respitech Medical, Inc. Respitech Medical, Inc. has the capabilities to provide CPAPBi-Level Therapy as prescribed by the physicians. Equipment list includes but is not limited to. - CPAP Therapy units (Home Model) - Bi-Level Therapy units (Home Model) - Patient interfaces with Headgear (multiple sizes and designs) - Heated Humidifiers - Replacement components, filters, hoses, water chambers, etc. Respitech Medical, Inc. will provide consultation and guidance in setting up Sleep Disorder Centers of Central Pennsylvania, Inc. to meet accreditation guidelines, if requested. (Copy of Guidelines provided.) RESPITECH MEDICAL, INC. 250 RANCK AVENUE LANCASTER, PA 17602 EQUIPMENT LOCATION: Sleep Disorder Centers of Central Pennsylvania, Dr. Clark Clinical #1 Item Serial Number Aopen Monitor 53800492LE46 IBM ThinkCentre Stellate Computer LKHKZ9T IBM Keyboard 4093744 IBM Mouse 23-160238 Stellate Key Harmonie-S Version 6.OaEN-0 2004/12/6 LD# 3763 32ch 3763 DC Interface Box Stellate D01983 Main Head Box Stellate Mounted D01396 Patient Head Box Stellate D01966 Respironics Synchrony BiPAP 4028959 Respironics H2 Humidifier H1285004 Respironics Remote Box AM01966 IR B/V11 CCD Camera KG-IR60 AP06050022 Louroe Electronics AP-1 TB Intercom 501626 Ultra UPS 20682580510 TrippLite UPS BCPERS300 94456YOBC423400111 Transformer Stellate D01970 Sleep Disorder Centers of Central Pennsylvania, Dr. Clark Clinical #2 Item Serial Number Aopen Monitor 53802772LE46 IBM ThinkCentre Stellate Computer LKHKZ9P IBM Keyboard 4088930 IBM Mouse 23-077074 Stellate Key Harmonie-S Version 6.OaEN-0 2004/12/6 LD# 3761 32ch 3761 DC Interface Box Stellate D01973 Main Head Box Stellate Mounted D01982 Patient Head Box Stellate D01981 Respironics Synchrony BiPAP 2605226 Respironics H2 Humidifier H923876 Respironics Remote Box AM015254 IR B/W CCD Camera KG-IR60 AP06050002 Louroe Electronics AP-1T6 Intercom 501627 Ultra UPS 20682570510 TrippLite UPS BCPER300 9445BYOBC423400048 Transformer Stellate D01980 2 each RemStar Prot CPAP units CPAP face and nasal masks Disposable supplies: Electrodes, cannulas, EKG patches, EEG paste, storage containers ~ X~-c ~a t -r" ~~ S N RESPITECH MEDICAL, INC. 250 RANCK AVENUE LANCASTER, PA 17602 EQUIPMENT LOCATION: Sleep Disorder Centers of Central Pennsylvania, Dr. Clark Clinical #3 Item Serial Number Aopen Monitor 53800426LE46 IBM ThinkCentre Stellate Computer LKHLADW IBM Keyboard 4088955 IBM Mouse 23-160234 Stellate Key Harmonie-S Version 6.OaEN-0 2004/12/6 LD# 3762 32ch 3762 DC Interface Box Stellate D01978 Main Head Box Stellate Mounted D01977 Patient Head Box Stellate D01976 Respironics Synchrony BiPAP 4028960 Respironics H2 Humidifier H1285013 Respironics Remote Box AM015040 IR B/W CCD Camera KG-IR60 AP06050030 Louroe Electronics AP-1TB Intercom 501624 Ultra UPS 20682520510 TrippLite UPS BCPERS300 94456YOBC423400040 Transformer Stellate D01975 Sleep Disorder Centers of Central Pennsylvanla, Dr. Clark Clinical #4 Item Serial Number Aopen Monitor 53802762LE46 IBM ThinkCentre Stellate Computer LKHLAIF IBM Keyboard 4088913 IBM Mouse 23161408 Stellate Key Harmonie-S Version 6.OaEN-0 2004/12/6 LD# 3763 32ch 3763 DC Interface Box Stellate D01968 Main Head Box Stellate Mounted D01972 Patient Head Box Stellate D01971 Respironics Synchrony BiPAP 4028960 Respironics H2 Humidifier H1285013 Respironics Remote Box AM015040 IR B/W CCD Camera KG-IR60 AP06050014 Louroe Electronics AP-1TB Intercom 501625 Ultra UPS 20682740510 TrippLite UPS BCPERS300 9445by0bc423400039 Transformer Stellate D01965 AirSep New Life Oxygen Concentrator 139982 AirSep New Life Oxygen Concentrator 144908 HP OfficeJet 6210 All in One FAX Machine CN54QCE20N Nonin Patient Simulator 101902525 RETURNED DEPOSITED ITEM NOTICE DATE 06-30-06 AMOUNT REASON MAKER FEE DEPOSIT DATE REFERENCE li 10,000.00 STOP PAYMENT 8.00 D6-26-2006 000042617346 10,000.00 TOTAL FOR 1 ITEMS TOTAL FEE -5.00 THE ITEM(S) SHOWN ABOVE WAS DEPOSITED TO YOUR BANK ACCOUNT, BUT IT HAS BEEN RETURNED UNPAID FOR THE REASON INDICATED. WE HAVE ENCLOSED THE ITEM AND SUBTRACTED THE AMOUNT FROM YOUR ACCOUNT BALANCE. AS WELL AS CHARGED YOUR ACCOUNT THE ITEM FEE. PLEASE UPDATE THE BALANCE IN YOUR ACCOUNT. IF YOU HAVE ANY QUESTIONS OR CONCERNS, PLEASE CONTACT US AT THE NUMBER LISTED BELOW. THANK YOU. RESPITECH MEDICAL INC 250 RANCK AVE LANCASTER PA 17602 CITIZENS BANK - 060 CUSTOMER SERVICE 1-d00-922-9999 r ~~'000 L000000~~' ~~ ~~ ~xH-I gt 1" G RETURNED DEPOSITED ITEM NOTICE. DATE 07-LO-06 AMOUNT REASON MAKER ~ FEE DEPOSIT DATE REFERENCE B 7,800.00 STOP PAYMENT 8.00 06-23-2006 000041503701 10,000.00 STOP PAYMENT 8.00 06-23-2006 000041503700 --------------- ------ 17,800.00 TOTAL FOR 2 ITEMS TOTAL FEE 16.00 THE ITEMCS) SHOWN ABOVE WAS DEPOSITED TO YOUR BANK ACCOUNT, BUT IT HAS BEEN RETURNED UNPAID FOR THE REASON INDICATED. WE HAVE ENCLOSED THE ITEM AND SUBTRACTED THE AMOUNT FROM YOUR ACCOUNT BALANCE. AS WELL AS CHARGED YOUR ACCOUNT THE ITEM FEE. PLEASE UPDATE THE BALANCE IN YOUR ACCOUNT. IF YOU HAVE ANY QUESTIONS OR CONCERNS, PLEASE CONTACT US AT THE NUMBER LISTED BELOW. THANK YOU. RESPITECH MEDICAL INC 250 RANCK AVE LANCASTER PA 17602 CITIZENS BANK - CUSTOMER SERVICE 1-800-922-9999 Post to Account: SLEEP DISORDER CENTERS ~ X0,000.00 "'T 06/18/2006 CENTRAL PA PULMONARY.A3SOC., L.L.C. ~ TfIlA4'THY RK . "u~-~a°sTea. °r ~ ~ 'JOOZB ~ 2200 k/LLE~M WAY ENOLA, PA 1i0?S .: 11e 19 2006 PAY #CSP010001AB7B456# 10,000.00 Il~llu~lllulllllL~Ihld.l.tLLL~IIL~IIIIII~~J~IIiI~~YI aoa-YSAFTER~ssuE , TO THE ~ta~w ns+Me momw eww.e~ u,_ rs,,.~..~,..r ~ ~~~~ RESPITECH MEDICAL, INC. 250 RANCK AVE ~ LANCASTER, PA 17602-2516 ~ 31C3NAT4141E JN FILE.. Tr.•rslr.frn•witW °I~~~. 1,~n~,~~~,~i„1l,,,,,l,!„1,1,l,+,~„Il,u,,.l.Ln,~~~l~i,l 8. .IIIII~IIIINII~IININIIN~~II~I~ .~~ooo ioooooo,~~ • ... .. Post toAccouM: SLEEP DISORDER CENTERS :7,800.00 ~ 33b 06/19/2006 CENTRAL PA PULMONARY ASSOC.. L,L.C. ca~vara~e ~~ Tfl1AOTl'I1rCUlRK uNCRerEa, v~ 224DAAItt~ENItiM 1NAY 34JITE 400' ENC3LA, PA; 47025-. 50028 s s .:. i i r• June 19,2006 PAY Seven Thousand Eight Hundred and ~ / • #ICSP010001 AB7B456>It lIIII„~IN~~llliii~~ll,l~l~l~ll,I~I„III~~I!Illl~.,t~l voro~oanYSnFTeRissue TO THE na.w~ ~~wE omo+w e,n•ati, a ~._ rs,:4iaax~ ~~ ~~ RESPITECH MEDICAL, INC. 25U RANCK AVE LANCASTER, PA 17602-2516 SIGNATURE ON FILE , l~~lit~~~l~It~~II~~~~~IJ~~LLIJ~~~~II~IL~J~i~ll~~~~l,l~l. '"`""`~"".,~..'".°4y"~"""'. 8• °~ III 111111 II~NIillin~I~IIIiN~INllli~ li tll Nd••~ INV~'a4735 ~~'OOOO 780000.x' JUC~-20-2006 02:54Pfd FROfd-RESPITECH bEDICAL INC +1 717 3990033 T-602 P.002/002 F-450 VF$IFICATION The foregoing Complaint in Replevin is based upon information which has been gathered by my counsel in the preparation of the lawsuit. The language of the document is that of counsel and not my own. I have read the document and to the extent that it is based upon information which I have given to my counsel, it is true and correct to the best of my knowledge, information and belief. To the extent that the content of the document is that of counsel, I have retied upon counsel in making this verification. This statement and verification are made subject to the penalties of 18 Pa. C.S. Section 4904 relating to unsworn falsification to authorities, which provides that if I make lrnowingly false averments, Y may be subject to criminal penaltie on Mock, sident of Respitech, Inc. EXHIBIT 2 Christopher E. Rice, Esquire MARTSON DEARDORFF WILLIAMS & OTTO I.D. 90916 10 East High Street Carlisle, PA 17013 (717) 243-3341 Attorneys for Plaintiff RESPITECH MEDICAL, INC. IN THE COURT OF COMMON PLEAS OF Plaintiff CUMBERLAND COUNTY, PENNSYLVANIA v. NO. SLEEP DISORDER CENTERS OF CENTRAL PENNSYLVANIA, INC. CIVIL ACTION -LAW Defendant WRIT OF SEIZURE TO THE SHERIFF OF CUMBERLAND COUNTY: You are directed to seize the property (referred to as "Equipment" in Plaintiff's Complaint) as described in the Exhibit "B" to Plaintiff s Complaint. Due to the delicate nature ofthe property, Plaintiffs technicians will assist in the packaging and removal of the property. If the property is found in the possession of anyone not already a defendant, you are directed to add him as a defendant, and notify him that he has been added as a defendant and is required to defend the action. You aze directed to take all necessary action, including the breaking of locks, chains, doors or gates in order to enter upon the premises where said property is located and in order to take possession thereof. Possession of the aforesaid property is to be given to Plaintiff. If the property to be seized is located in a county other than Cumberland County, the sheriff of the county where the property is located shall be deputized by you for the purpose of seizing the property and the Sheriff of such Qther county, shall seize the property described in this writ within his jurisdiction. Date: Prothonotary CERTIFICATE OF SERVICE I, Mary M. Price, an authorized agent for Martson Deardori~ W illiams & Otto, hereby certify that a copy of the foregoing Motion was served this date by depositing same in the Post Office at Carlisle, PA, first class mail, postage prepaid, addressed as follows: Andrew J. Giorgione, Esquire BUCHANAN INGERSOLL 17 North Second Street, 15~' Floor Harrisburg, PA 17101-1503 MARTSON DEARDORFF WILLIAMS & OTTO By , M. Price Ten East High Street Carlisle, PA 17013 (717) 243-3341 Dated: 7. L / - 4 ~ -., _.. ~ ' i -'-# r.z +-, .~ JUL 2 12006,1 ~~l RESPITECH MEDICAL, INC. Plaintiff v. IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA NO. 06 - 4123 SLEEP DISORDER CENTERS OF CENTRAL PENNSYLVANIA, INC. CIVIL ACTION -LAW Defendant ORDER OF COURT AND NOW, this Z 5 day of July, 2006, upon consideration of the Motion For Issuance of Writ A of Seizure, a hearing is scheduled for the ~ day of,{~, 2006, at 9 ' (.S ~.m, in Court Room # l ofthe Court of Common Pleas of Cumberland County. Plaintiffis to provide Notice ofthe Hearing for Seizure of Property according to Pa.R.C.P. 1075.1. ,,., T.,~ ,.,,..,,..._ 4 {u -r d r -., ~ , r', 1 ,;. r~= ~~ . ~ \ ,~ f ~ ,., .~, ,•~ ~;~. ~~ ~ , ,~ ~ ~ ~ ;`~~~ i 3' F: \F ILES\DATAFILE\GenerY\Currcm\ I2 U 7. l not. I lemur Cre4tM'. 1229/0] 8:29AM 0.evised'. ]24IOfi 9:94AM Christopher E. Rice, Esquire MARTSON DEARDORFF WILLIAMS & OTTO I.D. 90916 10 East High Street Carlisle, PA 17013 (717)243-3341 Attorneys for Plaintiff RESPITECH MEDICAL, INC. Plaintiff IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA v. SLEEP DISORDER CENTERS OF CENTRAL PENNSYLVANIA, INC. Defendant NO. 06 - 4123 CIVIL TERM CIVIL ACTION -LAW NOTICE OF HEARING FOR SEIZURE OF PROPERTY TO: SLEEP DISORDER CENTERS OF CENTRAL PENNSYLVANIA, INC. You are hereby notified that: (1) Plaintiff has commenced an action of replevin and has filed amotion for seizure ofthe property described in the Complaint. (2) There will be a hearing on this Motion on the 9~' day of August, 2006, in the Cumberland County Court of Common Pleas, Court Room Number 1, at 9:15 a.m. (3) You may appear in person or by a lawyer at the time and place set forth above or file written objections setting forth your reasons why the property should not be seized; (4) Your failure to appear at the hearing may result in the seizure ofthe property claimed by Plaintiff before a final decision in this case. MARTSON DEARDORFF WILLIAMS & OTTO B ~~ ~ ~ Y Christopher E. Rice 10 East High Street Carlisle, PA 17013 (717)243-3341 Date: ~/~~/o~ Attorneys far Plaintiff CERTIFICATE OF SERVICE I, Mary M. Price, an authorized agent for Martson Deazdorff Williams & Otto, hereby certify that a copy of the foregoing Notice of Hearing for Seizure of Property was served this date by depositing same in the Post Office at Cazlisle, PA, first class mail, postage prepaid, addressed as follows: Andrew J. Giorgione, Esquire BUCHANANINGERSOLL 17 North Second Street, 15`h Floor Harrisburg, PA 17101-1503 MARTSON DEARDORFF WILLIAMS & OTTO By ~~ ~ ' M .Price Ten ast High Street Cazlisle, PA 17013 (717) 243-3341 Dated: 7l~`f/~~ C~i ~ ray ~ ... _.7 ~ : ~ 1 _ i ~ _ __ Cam.) I __I RESPITECH MEDICAL, INC. : IN THE COURT OF COMMON PLEAS OF Plaintiff :CUMBERLAND COUNTY, PENNSYLVANIA v. NO. 06 - 4123 CIVIL TERM SLEEP DISORDER CENTERS OF :CIVIL ACTION -LAW CENTRAL PENNSYLVANIA, INC. Defendant ACCEPTANCE OF SERVICE I, Andrew J. Giorgione, Esquire, accept service of the Complaint on behalf of Defendant Sleep Disorder Centers of Central Pennsylvania, Inc., and certify that I am authorized to do so in accordance with Pa. R.C.P. 402. BUCHANAN 1NGERSOLL 8c ROONEY By Andrew i rgione, Esquire AttY• ~ z 7~ 17 N S and Street, 1 S~' Floor H 'sb g, PA 17101 (71 31-3831 Attorney for Defendant ~ ti.. ~ , ` - ' -:- - ~ 0.,_, ~. ... v:-. _ . , : : r.-: {.... . _ _ ~~ V ~'~~ JUL 2 5 ,2~6 ~vvo RESPITECH MEDICAL, INC. IN THE COURT OF COMMON PLEAS OF Plaintiff CUMBERLAND COUNTY,PENNSYLVANIA v. NO. 06 - 4123 CIVIL TERM SLEEP DISORDER CENTERS OF CENTRAL PENNSYLVANIA, INC. CIVIL ACTION -LAW Defendant ORDER OF COURT AND NO W, this 9th day of August, 2006, per the request of the above-referenced parties, the hearing scheduled for August 9, 2006, at 9:15 a.m. is cancelled. BY THE COURT ° ~ C ~ ~ G ~ v _ , r. ~ ~ ~ ; ~ ~ 'i= ' ~ ~D -r ~ ~ ~ g j ~ ii+ . 4 ~.:, ~ y ~ Carol Brayshaw Longwell BUCHANAN INGERSOLL & ROONEY 17 N. Second Street, 15~' Floor Harrisburg, PA 17101 (717) 231-3834 IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA RESPITECH MEDICAL, INC. Plaintiff v. N0.06-4123 CIVIL ACTION -LAW SLEEP DISORDER CENTERS OF CENTRAL PENNSYLVANIA, INC. Defendant NOTICE TO PLEAD TO: Respitech Medical, Inc. c/o Christopher E. Rice, Esquire Martson, Deardorff, Williams & Otto 10 East High Street Carlisle, PA 17013 YOU ARE HEREBY NOTIFIED to file a written response to the enclosed New Matter within twenty (20) days from service hereof or a judgment may be entered against you. An ew J. Giorgibne (~ C of Brayshaw Longwell BIJCHANAN INGERSOLL & ROONEY 17 N. Second Street, 15~' Floor Harrisburg, PA 17101 (717) 231-3834 Attorneys for Defendants KRLSDOCS HARRIS#: 36293v1 IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA RESPITECH MEDICAL, INC. Plaintiff v. SLEEP DISORDER CENTERS OF CENTRAL PENNSYLVANIA, INC. Defendant N0.06-4123 CIVIL ACTION -LAW DEFENDANT'S ANSWER. NEW MATTER AND COUNTERCLAIM ANSWER AND NOW, comes Sleep Disorder Centers of Central Pennsylvania, Inc. ("Defendant"), by its undersigned attorneys, and states the following defenses, in answer to the Complaint filed by Plaintiff Respitech Medical, Inc. Each numbered paragraph below responds to the identically-numbered paragraph of the Complaint. 1. Admitted. 2. Admitted. 3. Admitted. 4. Admitted. 4 5. Admitted. COUNT I -REPLEVIN 6. Paragraphs 1 through 5 are incorporated herein by reference as though set forth in full. 7. Admitted. 8. Admitted. KRLSDOCS_HARRIS#: 36293v1 2 9. Defendant is without knowledge or information sufficient to admit or deny this allegation; therefore, the allegation is denied. 10. Admitted in part; denied in part. Admitted that Plaintiff set up the Equipment at Defendant's principal place of business; denied that said Equipment is in possession of the Defendant. To the contrary, Defendant has returned all Equipment to the Plaintiff, most in July, a couple of additional pieces the first week in August. 11. Admitted in part; denied in part. Admitted that Paragraph 1 G of the Agreement states that "RMI shall provide four (4) complete sleep testing system with real-time digital video (owned and maintained by RMI) with software and supplies." Defendant is without knowledge or information sufficient to admit or deny that the equipment is in fact, "owned" by RMI; therefore, this averment is denied. 12. Admitted. 13. Denied. The Agreement constitutes the entire Agreement between the parties (See Agreement, Paragraph 11). There is nothing in the Agreement about the return of Equipment upon termination of the Agreement. Defendant made the Equipment available to Plaintiff as expeditiously as permitted considering the need to ensure the removal of private health information of patients, the transfer of patients' data to Defendant's server and to avoid disruption to the on-going medical practice. 14. Admitted. The Agreement terminated when Respitech breached the confidentiality conditions of the Agreement and when it failed to perform under the Agreement in the required competent, safe, courteous and professional manner. 15. Denied. Defendant sent invoices to an incorrect address; as a result, these invoices were not received by Defendant in a timely manner. Moreover, Defendant questioned KRLSDOCS_HARRIS#: 36293v1 3 the accuracy of invoices he did receive and was provided no explanation. Further, Defendant cancelled certain payments to Plaintiff upon learning of Plaintiff s breach of the Agreement. 16. Denied as stated. On June 27, 2006, Defendant sent a letter via email and certified mail advising Ray Meck, Plaintiff s President, that Defendant "no longer requires nor desires the services" of Defendant. Defendant further advised that Plaintiff had violated the terms of the Agreement, including, but not limited to, the provision that Plaintiff was to provide services in a "professional manner" and to refrain from disclosing Defendant's confidential business information. See Exhibit "A" attached hereto. 17. Denied. Plaintiff is in full possession of all Equipment. 18. Denied. The Complaint fails to set forth any support for the claim that Defendant owes Plaintiff $139,281. Indeed, Defendant does not owe Plaintiff $139, 281, as evidenced by Plaintiff s own invoice summary, which was obtained by Defendant after the filing of the Complaint. See Exhibit "B" attached hereto. Moreover, as of the date of the filing of the Complaint, Defendant had paid to Plaintiff far more than the claimed $30,600, as documented by Plaintiff s own document, set forth here as Exhibit "B," even though that invoice summary does not fully reflect Defendant's payments. Finally, Defendant believes that Respitech's invoices, including the invoice summary set forth as Exhibit "B", are inaccurate and in violation of the Agreement. 19. Denied. Plaintiff breached the Agreement when it failed to perform in the professional manner required by Paragraph 1 C of the Agreement and when it violated the confidentiality provisions set forth in Paragraph 7E of the Agreement as more fully set forth herein. KRLSDOCS_HARRIS#: 36293v 1 t~ 20. Denied. Defendant is without knowledge or information sufficient to form a belief as to the value of the equipment. Moreover, the value of the Equipment is irrelevant as Plaintiff is in possession of all Equipment. 21. Denied. Plaintiff s averment is a conclusion of law to which no response is required. By way of further answer, all the Equipment is in Plaintiff's possession. Moreover, there is nothing in the Agreement that provides for Plaintiff s immediate possession of the Equipment upon Defendant's alleged default. 22. Denied. All Equipment was returned to Plaintiff in a manner designed to avoid disruption of Defendant's business, to facilitate the on-going treatment of patients and to preserve the confidentiality of private patient information. 23. Denied. Defendant did not "detain" the Equipment, but rather sought to return the Equipment in the most expeditious manner, consistent with Defendant's need to retain copies of its patients' data and comply with privacy laws. Count II -Breach of Contract. 24. Paragraphs 1 through 23 are incorporated herein by reference as though set forth in full. 25. Admitted. 26. Denied. Plaintiff failed to "submit" invoices to the Defendant when it sent invoices to the wrong address causing a delay in receipt by Defendant. 27. Denied as stated. The Agreement provided that Defendant was to pay Plaintiff within 30 days of "receipt" of an invoice. Plaintiff mailed some invoices to the wrong address, thus causing a delay in payment. Defendant stopped payment on other invoices because of Plaintiff s flagrant breach of the Agreement. Finally, Defendant met with Plaintiff and KRLSDOCS_HARRIS#: 36293v1 5 Plaintiff's accountant regarding inaccurate or incomplete invoices. Plaintiff was to "look into" Defendant's concerns, but failed to respond. 28. Denied. Defendant made payments to Plaintiff in the amount of approximately $70,000. 29. Denied as stated. Defendant stopped payment on these checks after learning of Plaintiff s breach of the Agreement. 30. Denied. Defendant did not solicit Plaintiff's employees for employment. To the contrary, at least one of Plaintiff s employees solicited Defendant for employment. 31. Denied. Plaintiff breached the Agreement by delivering services in an unprofessional manner and by disclosing confidential business information, which breach, along with Defendant's unanswered inquiries regarding invoices, precipitated Defendant's termination of the Agreement. 32. Denied. (a) Defendant did not fail to make payments to Plaintiff; (b) Defendant did not fail to return the Equipment to Plaintiff; (c) Defendant did not solicit Plaintiff s employees; (d) Defendant compensated Plaintiff for some services performed; (e) Defendant terminated the Agreement after Plaintiff s breach; moreover, there is nothing in the Agreement that requires Defendant to permit Plaintiff to coordinate scheduling of sleep studies directly; (f) Defendant stopped payment on certain checks upon discovery of Plaintiff s breach; and (g) Defendant did not use the Equipment. KRLSDOCS_HARRIS#: 36293v I 33. Denied. Plaintiff did not fully perform its duties and obligations pursuant to the terms of the "Agreements." There was only one Agreement, and Plaintiff failed to fully perform its duties and obligations under that Agreement and breached certain other provisions of the Agreement. 34. Denied. Defendant has paid Plaintiff approximately $70,000 under the Agreement and has returned the Equipment. COUNT III - QUANTUM MERUIT 35. Pazagraphs 1 through 34 aze incorporated herein by reference as though set forth in full herein. 36. Admitted. 37. Denied. Defendant has paid Plaintiff approximately $70,000 under the Agreement. 38. Denied. Plaintiff has failed to provide any evidence to support a claim for $139,281 in unjust enrichment, and Defendant further denies that it owes the Plaintiff $139,281. COUNT IV - FRAUD/MISREPRESENTATION 39. Paragraphs 1 through 38 are incorporated herein by reference as though set forth in full. 40. Denied. The Complaint sets forth no facts regazding the alleged representations; therefore, Defendant is unable to respond. By way of further answer, Defendant denies making any fraudulent misrepresentations to Plaintiff. 41. Denied. Neither the dates nor the content of these "fraudulent misrepresentations" aze set forth with particularity; therefore, Defendant is unable to respond. By way of further answer, Defendant denies making any fraudulent misrepresentations to Plaintiff. KRLSDOCS_HARRIS#: 36293v 1 7 42. Denied. Defendant is without any knowledge or information sufficient to form a belief regazding Plaintiff s alleged reliance. It is further denied that Defendant did not intend to pay for services. 43. Admitted in part; denied in part. Admitted that Defendant made payments to Plaintiff and then, upon discovering Plaintiff s breach of the Agreement, stopped payment on three checks. Denied to the extent that Defendant did not stop payment on other checks issued prior to Defendant's discovery of Plaintiffls breach of the Agreement. Defendant is without any knowledge or information sufficient to form a belief as to the truth of the allegation regazding the Plaintiffl s bank's processing procedures. 44. Denied. At no time, did Defendant knowingly make misrepresentations to Defendant or seek to "gain both control and use over the Equipment." 45. Denied. Defendant made payments before knowing of Plaintiff's breach of the Agreement. Defendant stopped payment on certain checks because of Plaintiff s breach of the Agreement. At no time did Defendant seek to "gain both control and use over the Equipment." 46. Denied. Defendant is without knowledge or information sufficient to form a belief as to the allegation about Plaintiff's alleged reliance. 47. Denied. Defendant has paid approximately $70,000 to Plaintiff for sleep studies. By way of further answer, Defendant denies it made any misrepresentations to Plaintiff. 48. Denied. Plaintiff fails to set forth the dates and content of any intentional deceptions or intentional inducements; therefore, Defendant is unable to respond. By way of further answer, Defendant denies that it intentionally deceived Plaintiff or made any misrepresentations to Plaintiff. KRLSDOCS_HARRIS#: 36293v 1 8 49. Denied. Given the constraints arising from technological problems caused by Plaintiff's failures in regard to the installation of Equipment, the need to identify certain unidentified Equipment items, Defendant's three-week absence from the office due to illness, and the imperative need to safeguazd confidential information, Defendant made the Equipment available to Plaintiff as soon as reasonably possible. Plaintiff fails to provide evidence of any money damages for the claimed loss of use of the Equipment. The Equipment is in Plaintiff's possession and has been since for weeks. Plaintiff has failed to provide any support for the claim of unpaid invoices in excess of $139,281. Indeed, Plaintiff s own invoice report reflects a balance of $116,243, although that balance itself is disputed. NEW MATTER 1. As a complete and sepazate defense, Defendant states that all Equipment alleged in the Complaint to have been retained by Defendant is in the possession of the Plaintiff. A. The Agreement is silent in regard to the return of Equipment in the event of termination. The Agreement is silent in regazd to the timing of any such return in the event of termination or breach. B. Nevertheless, Defendant timely made the Equipment available to Plaintiff, given the need to install patient data on Defendant's computer, to avoid disruption of an on- going business and his own absence due to illness. 2. As a complete and separate defense, Defendant states that the claims asserted in the Complaint fail in whole or in part to state a claim against Defendant in an amount "in excess of $139, 281. KRLSDOCS_HARRIS#: 36293v1 9 A. Plaintiff failed to attach copies of invoices to the Complaint in support of the claim that Defendant has been unjustly enriched "in an amount in excess of $139,281." (See Complaint, Paragraph 38 et seq.) B. Subsequent to the filing of the Complaint, Defendant sought and received from Plaintiff a copy of Plaintiff s invoice statement summary. See Exhibit "B" attached hereto. C. Without conceding the accuracy of this summary, Defendant notes that the alleged balance due from Defendant as of July 21, 2006, almost one month after the termination of the Agreement, is set forth as $116,243. D. There is no evidence, documentary or otherwise, to support Plaintiff s claim that Defendant owes $139,281. 3. As a complete and separate defense, Defendant states that Plaintiff has failed to plead fraud and misrepresentation with particularity. In Count IV, Plaintiff contends that Defendant made fraudulent "representations" to Plaintiff, and Plaintiff then relied upon those fraudulent representations and continued to provide further services. Plaintiff fails to identify what statements were made, who made the statements, when the statements were made, what was said, and how these statements induced reliance upon Plaintiff's part. 4. As a complete and separate defense, Defendant states that its termination of the Agreement resulted from Plaintiff s breach of the Agreement and was provided for by the Agreement. 5. As a complete and separate defense, Defendant states that any liability on the part of Defendant must be reduced by the damages caused by Plaintiff s breach of the Agreement and the loss of business because Defendant has not been able to provide certain services to patients KRLSDOCS_HARRIS#: 36293v1 1 ~ and because patient volume has significantly declined since Plaintiff s broadcast of confidential information and breach of the Agreement. WHEREFORE, Defendant respectfully requests that this Court: Dismiss those parts of the Complaint related to the charge that Defendant has retained the Equipment and deny the requested relief; 2. Order Plaintiff to provide a complete and accurate accounting, including dates of treatment, identification of services performed and an explanation of the charges to determine exactly how much, if anything, Defendant owes Plaintiff; 3. Award Defendant damages in an amount not to exceed $100,000 for lost business and other expenses due to Plaintiff s breach of the Agreement; 4. Award Defendant its reasonable attorneys' fees, costs and expenses against Plaintiff; and 5. Grant Defendant such further relief as the Court deems just, proper and appropriate under the circumstances of this case. COUNTER-CLAIM COUNT I -BREACH OF CONTRACT A. Plaintiff Breached Confidentiality Provisions Of The Agreement 1. Paragraphs 1 through 49 above are incorporated herein by reference as though set forth in full. 2. The Agreement requires that Plaintiff "shall not use or disclose any confidential business information of [Defendant's] at any time following the termination or expiration of this Agreement, and that during the term of this Agreement it will maintain confidentiality with respect to such information except for authorized disclosures in the normal course of its duties KRLSDOCS_HARRIS#: 36293v1 11 and except for disclosures that Plaintiff is required by law to disclose, or disclosure of information that is in the public domain." (See Agreement, Paragraph 7E). 3. Plaintiff breached the Agreement by discussing Defendant's confidential financial information, Defendant's payment history, and the likelihood of Defendant's business closing, all while treating Defendant's patients and within the hearing of patients who then reported these discussions to Defendant. See Exhibit "A". 4. When confronted by Defendant, Plaintiff s employees confirmed that Plaintiff's President had advised them, on or about the second week of June, that Defendant does not pay his bills and "this lab would likely be closing." Id. Plaintiffls violations of the confidentiality provisions of the Agreement in such a cavalier manner prompted Defendant's concerns regarding whether Plaintiff was also discussing and/or disclosing confidential patient information, thus compromising Defendant's obligations under State and Federal law to maintain the confidentiality of protected health information. 6. Due to Plaintiff s gross violation of the Agreement, as well as other concerns, Defendant immediately terminated the Agreement pursuant to Paragraph 2B of the Agreement ("notice [is] not to be required in the case of breach as outlined below"), and Paragraph 13 of the Agreement, which provides that if Plaintiff "breaches any of its obligations under the Agreement and if the breach is not cured with ten (10) days after receiving written notice from [Defendant] of the breach, then [Plaintiff) shall be in default of this Agreement and [Defendant] shall be entitled to any and all available remedies at law or in equity including, but not limited to damages, specific performance, injunctive relief and rescission of this Agreement." KRLSDOCS_HARRIS#!: 36293v1 12 B. Plaintiff Breached The Agreement By Failins To Provide Services In The Required Comaetent, Safe, Courteous And Professional Manner 7. Under the terms of the Agreement, Plaintiff was required to perform its services in a "competent, safe, courteous and professional manner and in accordance with [Defendant's] "standards". (See Agreement, Paragraph 1C). THEE UIPMENT 8. Paragraphs 1 through 7 are incorporated herein by reference as though set forth in full. 9. Plaintiff failed to perform its services in the required "competent" and "professional manner" in the Plaintiff failed to properly install computer equipment so that essential patient information was available on Defendant's server and so that Defendant could maintain access to essential patient information. 10. Defendant advised Plaintiffs manager of this problem but Plaintiff failed to remedy its failures. 11. After the termination of the Agreement, Defendant was forced to hire a computer consultant to transfer Defendant's data to Defendant's computer system to permit Defendant to access his own patients' information. These efforts were disruptive to Defendant's medical practice, time-consuming and costly. 12. To avoid disruption to his business and to allow time to engage the required computer consultant to remove private personal health information from Plaintiff s hard drive in order to comply with patient record confidentiality laws and to permit Defendant to access his own patients' information, Defendant advised Plaintiff the Equipment would be available to Plaintiff on July 29, 2006. KRLSDOCS_HARRIS#: 36293v1 13 13. Nevertheless, on July 21, 2006, Plaintiff, without notifying Defendant's counsel, filed a Motion for Issuance of Writ Seizure, and the Court scheduled a hearing on the Motion for August 9, 2006. 14. After the Agreement was terminated due to Plaintiff s breach, Defendant became severely ill and was out of the office fortwenty-two days, during which time the Practice Manager kept the office operational. 15. As he said he would, on July 29, 2006, Defendant provided the bulk of the Equipment to Plaintiff. Plaintiff subsequently identified some missing items. 'The remainder of the Equipment was available to Plaintiff on or about August 2, 2006. The hearing on Plaintiffl s Motion was cancelled at Plaintiffl s request. 16. Due to Plaintiff s breach Defendant was deprived of the ability to conduct sleep studies which he advertised as available at his business and for which patients consulted him. 17. The termination occasioned by Plaintiff's breach of the Agreement, the need to engage a computer consultant to retrieve data that Plaintiff was supposed to have made available on Defendant's server, and the deprivation of Defendant's ability to conduct his advertised business resulted in monetary losses to Defendant in an amount not to exceed $90,000. CLAIMS OF SEXUAL HARASSMENT BY PLAINTIFF'S EMPLOYEES 18. Paragraphs 1 through 17 are incorporated herein by reference as though set forth in full. 19. Plaintiff failed to perform its services in the required competent, safe, courteous and professional manner in that one of Plaintiff's employees - a woman who was nine months pregnant -reported to Defendant's practice manager that she was being sexually harassed by one KRLSDOCS_HARRIS#: 36293v1 14 of Plaintiff s employees, and that while she had reported the hazassment to Plaintiff no action was taken. 20. Other of Plaintiff s employees also complained to Defendant of sexual hazassment by Plaintiff s representatives. THE INVOICES 21. Paragraphs 1 through 20 aze incorporated herein by reference as though set forth in full. 22. Defendant advised Plaintiff that he was concerned about the accuracy of PlaintifFs invoices and his belief that Plaintiff was overchazging Defendant. 23. Additionally, invoices failed to identify which sleep study was performed (there aze three possible studies that could have been performed) and some failed to include the date of the performance of the study. 24. Plaintiff further failed to perform its services in the required "professional manner" in that Plaintiff sent invoices to Defendant's previous address, thereby jeopazdizing Defendant's ability to pay invoices in a timely fashion. 25. Defendant requested copies of all invoices that were mailed to the wrong address, but was provided only two. 26. Plaintiff claimed that certain checks were not received requiring Defendant to send copies of checks. 27. These facts caused Defendant concern about the integrity of Plaintiff s records and invoicing system and whether Plaintiff was accurately documenting Defendant's payments. 28. Because of these issues, Defendant requested a meeting with Plaintiff in June of 2006. KRLSDOCS_HARRISI~: 36293v1 15 29. Plaintiff s accountant accompanied Plaintiff to the meeting; however, the accountant was unable to explain the invoices, nor was it clear which of Defendant's payments were properly credited. 30. Plaintiff did not subsequently adjust the invoices to address Defendant's concerns. COUNT II -INTENTIONAL INTERFERENCE WITH BUSINESS RELATIONSHIPS 31. Paragraphs 1 through 30 are incorporated herein by reference as though set forth in full. 32. Defendant had an existing relationship with his patients when he entered into the Agreement with Plaintiff. 33. That relationship is essential to the success of Defendant's business. 34. Plaintiff had knowledge of that relationship and, indeed, the Agreement was premised upon Defendant's relationship with his patients: that Defendant had patients who needed certain services, which Defendant contracted with Plaintiff to provide. 35. In discussing with Defendant's staff, and within the hearing of patients, Defendant's alleged non-payment of bills and likely closure of the business, Plaintiff either intended to cause a breach or a termination of patients' relationship with Defendant or acted in reckless disregard of the effect its actions could have upon those relationships. 36. Plaintiff interfered with Defendant's business relationships by revealing confidential information in violation of the Agreement, and otherwise violating the Agreement. 37. Due to Plaintiff s interference with Defendant's relationship with patients and the subsequent loss of patients and decline in patient volume due to Plaintiff s breach of the Agreement, Defendant has sustained significant financial losses. KRLSDOCS_HARRIS#: 36293v 1 16 WHEREFORE, Defendant respectfully requests this Honorable Court to grant the following relief: a. Award damages to Defendant for lost revenues due to the inability to perform sleep studies in an amount not to exceed $90,000; b. Award damages to Defendant for lost revenues to the loss of patient volume caused by Plaintiff s breach of the Agreement in an amount not to exceed $50,000; c. Award costs and reasonable attorney fees against Plaintiff; and d. Grant such other relief as the Court deems just, proper and appropriate. Respectfully submitted, BUCHANAN INGERSOLL & ROONEY PC Andrew J. Giorgione 17 N. Second Street, 15th Floor Harrisburg, PA 17101 (717) 231-3834 Date: August 23, 2006 KRLSDOCS_HARRIS#: 36293v1 17 VERIFICATION The foregoing Defendant's Answer and Counterclaim is based upon information which has been gathered by my counsel. The language of the document is that of counsel and not my own. I have read the document and to the extent that it is based upon information which I have given to my counsel, it is true and correct to the best of my knowledge, information and belief. To the extent that the content of the document is that of counsel, I have relied upon counsel in making this verification. This statement and verification are made subject to the penalties of 18 Pa.C.S. § 4904 relating to unsworn falsification to authorities, which provides that if I make knowingly false averments, I may be subject to criminal penalties. Dr. Ti o y A. Clark xRr.SDOCS HARRIS#: 36293v1 CERTIFICATE OF SERVICE I, Carol Brayshaw Longwell, an authorized agent for Buchanan Ingersoll & Rooney, hereby certify that a copy of the foregoing Defendant's Answer, New Matter and Counterclaim was served this date via first class mail, postage, prepaid, as follows: Christopher E. Rice, Esquire Martson, Deardorff, Williams & Otto 10 East High Street Carlisle, PA 17013 Date: August 23, 2006 KRLSDOCS_HARRIS#: 36293v 1 19 • .,~~ LEEP ~' ~ ISORDER ~ ,,ENTERS of ~ ,,~ ENTRAL .PENNSYLVANIA Sleep Disorder Specialists Timothy A. Clark, M.D. Medical Director 2250 Millennium Way P.nola, PA 17025 TEL 717.724.2791 PAX 717.724.2798 www.paeleepdocs.com Affiliated with: j;:entral Pennsylvania ?ulmonary -4~ssociates, L.L.C. Timothy A. Clark, M.D. David P. Vogel, M.D. Andrew Anyadiegwu, M.D. Ricardo C. Calla, PA-C west Shore OfHae 2250 Millennium Way, Suite 400 Bnola, PA 17025 Beet shore office 4250 Cruets Mill Road, Suite 101 Harrisburg, PA 17112 Address all rnrrespondence to: 2250 Millennium Way, Suite 400 Enola, PA 17025 TEL 717.724.2791 PAX 717.724.2797 www.centralpapulmonacy.rnm June 27, 2006 SENT VIA E-MAIL AS WELL AS VIA U.S. CERTIFIED MAIL Ray Meck, President Respitech Medical, Inc. 250 Ranck Avenue Lancaster, PA 17602 RE: Sleep Services Agreement/Contract Ray; I was quite dismayed to learn of your gross violation of professional conduct and confidentiality. Recently we were informed by a patient undergoing testing that she overheard a Respitech sleep technologist, whom will remain nameless, stating that, "Ray told us that Dr. Clark has not paid his bill in 3 months and this lab may be closing." This is a long time and loyal patient of mine and there is no way on earth she could have fabricated such. To confirm what she had said...we did ask your techs and they did indeed confirm our suspicions. They said, "Ray told us you don't pay your bills and this lab will likely be closing." Your techs are very honest when questioned. This is very concerning and shocking to say the least. Why would an upper level person like yourself discuss such information with a lower level employee. This is a concern as we wonder what else. you discuss with others that is confidential in nature i.e., patient info etc. Needless to say this transgression is unforgivable and represents a gross breach of professional conduct. This letter received via a-mail as well as via certified mail will serve as your formal notice that Sleep Disorder Centers of Central Pennsylvania, Inc. no longer requires nor desires the services of Respitech Medical, Inc. You are hereby notified that you are not to have any contact with any of our patients either current or past (this includes Sleep Disorder Centers of Central Pennsylvania, Inc. patients as well as Central Pennsylvania Pulmonary Associates, LLC patients respectively). We will be contacting all of our patients and changing their services over to another DME ASAP. SDCCP k June 27, 2006 From this point any communications or questions you may have should be directed to our corporate Attorney listed below. Andrew Giorgione, Esq. Klett, Rooney, Lieber and Schoring 17 North 2" Street, l Sth Floor Harrisburg, PA 17101 Tel: 717-231-7700 No owner, employee, or representative of Respitech Medical, Inc: is permitted to enter our property located at 2250 Millennium Way, Enola, PA 17025 either physically or electronically. Violation of such shall be considered criminal trespass and the appropriate authorities will be notified. Please note we are very serious about this issue. Furthermore, no one associated with or representing Respitech Medical, Inc. is to telephone or a-mail anyone affiliated with Sleep Disorder Centers, Inc. Violation of such will be considered harassment. As stated above all inquires will be directed to our corporate attorney whom is our legal representative. At your earliest convenience please forward an inventory list of the property Respitech Medical, Inc. may have in place at the Sleep Disorder Centers of Central Pennsylvania, Inc. location. Once such has been reviewed and verified, arrangements will be made to return what belongs to Respitech Medical, Inc. This will only be done once such has been verified and signed off by the CEO of Sleep Disorder Centers of Central Pennsylvania, Inc. Regards, ~ ~~~ / ~- `G Timothy A. lark, M.D. President/CEO; Sleep Disorder Centers of Central Pennsylvania, Inc. Cc: Andrew Giorgione, Esq.; Terry Cox; Manager Respitech Respitech Medical, Inc. 250 Ranck Avenue Lancaster PA 17602 Phone : (717) 399-0030 Fax S0141 Sleep Disorder Centers of Central PA 2250 Milienium Way Enola PA 17025 (7L7)399-0033 Statement Closing Date 07/21/06 Page Number 1 Invoice # Date -- Type Disc Date Due Date Reference Amount Days Past Due 0000093776 01/31/06 I 01/31/06 03/02/06 22600.00 03/14/06 P Ol/3I/06 03/02/06 5001 -22600.00 Bal. Due 0.00 0000093781 02/08/06 I 02/08/06 03/10/06 6450.00 05/16/06 P 02/08/06 03/10/06 501? -6450.00 8a1. Due 0.00 0000093959 02/16/06 I 02/16/06 03/18/06 7300.00 05/16/06 P 02/16/06 03/1$/06 5016 -7300.00 Bal. Due 0.00 0000094222 02/28/06 I 02/28/06 03/30/06 16800.00 05/31/06 P 02/28/06 03/30/06 50013 -8000.00 05/31/06 P 02/28/06 03/30/06 50014 -8000.00 Bal. Due 800.00 113 0000095038 03/31/06 Y 03/31/06 04/30/06 SleepStudi 33281.00 05/31/06 C 05/31/06 06/30/06 CancelTax -81.00`-_, 05/31/06 C 05/31/06 06/30/06 Adjust ~1231.D0- Bal. Due 33969.00 82 0000095735 04/30/06 I 04/30/06 05/30/06 27800.00 07/17/06 D 04/30/06 05/30/06 CkReturn 7800.00 07/17/06 D 04/30/06 05/30/06 CkiZeturn 10000.00 07/17/06 D 04/30/06 05/30/06 ReturnFee 16.00 07/05/06 D 04/30/06 05/30/06 50027Retrn 10000,00 07/05/06 D 04/30/06 05/30/06 RetumFee 8.00 06/23/06 P 04/30/06 05/30/06 50026 -10000.00 06/23/06 P 04/30/06 05/30/06 20028 -7$00.00 06/26/06 P 04/30/06 05/30/06 50027 -10000.00 Bal. Due 27824.00 52 0000096377 05/31/06 I 05/31/06 06/30/06 32900.00 21 0000097000 06/27/06 I 06/27/Ob 07/27/06 22750.00 Total Balance 116243.00 Current Past Due 1-30 Past Due 31-60 Past D ue >60 22750.00 32900,00 27824.00 32769.00 h~ r- ci Cz"~ -~ ~/ - ~) f_' ' ' ~ i~ 'CJ i I ~ t~~ r .~ ~ ~t~ ".T: - s's ~° ~ C.~ C..a `. ~ ~ -..1 F: \F(LESIDATAFILEIGeneral\Corrent\ 12137.1. res. res/emm Created: 12/29/03 8:24AM Revised: 9!5/06 4:IlPM Christopher E. Rice, Esquire MARTSON DEARDORFF WILLIAMS & OTTO I.D. 90916 10 East High Street Carlisle, PA 17013 (717) 243-3341 Attorneys for Plaintiff RESPITECH MEDICAL, INC Plaintiff v. SLEEP DISORDER CENTERS OF CENTRAL PENNSYLVANIA, INC. Defendant IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA NO. 06 - 4123 CIVIL TERM CIVIL ACTION -LAW PLAINTIFF'S RESPONSE TO DEFENDANT'S NEW MATTER AND COUNTERCLAIM New Matter Plaintiff s Complaint is incorporated herein by reference. 1. Defendant disingenuously states that the equipment alleged. in the Complaint that was retained by Defendant is in the possession of Plaintiff. It is admitted that Plaintiff is now in possession of the equipment; however, only as a result of the action in replevin and court order. A. Denied. The document speaks for itself. By way of further response, Exhibit A to the Agreement states that the equipment will be owned and maintained by Respitech Medical, Inc. Therefore, Defendant's unauthorized retention ofthe equipment prohibited ownership and maintenance rights. B. Denied. Defendant only turned over the equipment after a Complaint in Replevin was filed and a court order for a hearing was scheduled for August 9, 2006. In addition, Defendant had every opportunity to permit Plaintiffto access the property any time during the day or night but failed to do so. 2. Denied. Plaintiff's investigation is ongoing and Plaintiffbelieves that Defendant utilized the equipment for his own personal gain without compensating Plaintiff for said use. A. Admitted in part and denied in part. It is admitted that Plaintiff did not attach copies of the invoices to the Complaint. It is denied that Defendants are not in receipt of said invoices as they were provided to Defendant. B. Admitted. C. Admitted. By way of further response, Plaintiff's has estimated that Defendant owes in excess of the $139,281.00 due to their use of the equipment for financial gain without compensating Plaintiff per the agreement. D. Denied. Plaintiff has evidence to support their claim. 3. Denied as a conclusion of law. 4. Denied as a conclusion of law. 5. Denied as a conclusion of law. By way of further response, Plaintiffdenies breaching the agreement as Defendant failed to make payments on time. WHEREFORE, Plaintiffrespectfully requests that this Honorable Court grant the outstanding relief requested in Plaintiff s Complaint along with discontinuing Defendant's New Matter and Counterclaim with prejudice. Counterclaim Plaintiff's Responses to Defendant's New Matter are incorporated herein. 2. Denied. The document speaks for itself. Denied. Plaintiff denies this allegation because neither the dates nor the names of the individuals who allegedly discussed such confidential information are set forth therein. By way of further response, Plaintiff is without knowledge or information sufficient to form a belief as to the truth of the averment and therefore it is denied. Strict proof is demanded at trial. 4. Denied. Plaintiffis without knowledge or information sufficient to form a belief as to the truth of the averment and therefore it is denied. Strict proof is demanded at trial. 5. Denied. Plaintiffis without knowledge or information sufficient to form a belief as to the truth of the averment and therefore it is denied. Strict proof is demanded is demanded at trial. 6. Admitted in part and denied in part. It is admitted that Defendant did provide the letter attached to Defendant's Answer as Exhibit "A". The remaining allegations are denied as the Agreement and letter speak for themselves. By way of further response, Plaintiffdid not commit any gross violations of the Agreement. 7. Denied. The document speaks for itself. 8. A response is not required. 9. Denied. Plaintiff performed its services in a competent and professional manner and properly install all computer equipment and he could access patient information. By way of further response and after reasonable investigation, Plaintiffis without knowledge or information sufficient to form a belief as to the truth of the averment and the same is therefore denied. Strict proof is demanded at trial. 10. Denied. After reasonable investigation, Plaintiffis without knowledge or information sufficient to form a belief as to the truth of the averment and the same is therefore denied. Strict proof is demanded at trial. By way of further response, Defendant never advised Plaintiff's manager of this alleged problem. 11. Denied. After reasonable investigation, Plaintiff is without knowledge or information sufficient to form a belief as to the truth of the averment and the same is therefore denied. Strict proof is demanded at trial. By way of further response, Plaintiff offered to Defendant that Defendant could simply keep the four hard drives in an effort to expedite the return of the Equipment and satisfy any concerns Defendant had regarding data, but Defendant refused. It is believed, and therefore averred, that Defendant was not forced to hire a computer consultant as Plaintiffhad offered to and were capable of transferring any data from the computer system and that Defendant's actions were to delay the return of the Equipment to Plaintiff. 12. Denied. After reasonable investigation, Plaintiff is without knowledge or information sufficient to form a belief as to the truth of the averment and the same is therefore denied. Strict proof is demanded at trial. By way of further response, Defendant had postured that the equipment would be returned sooner than July 29, 2006; however, Plaintiffwas forced to file a Complaint in Replevin and have a hearing scheduled to ensure that the equipment was returned in a timely manner. 13. Denied. Plaintiff's counsel notified Defendant's counsel that it would be filing an action against Defendant if they did not return the equipment immediately; however, Defendant's counsel claimed that there was nothing that Plaintiff could do to recover the equipment any sooner per an e-mail dated July 18, 2006, that "IfI refuse to accept service, you will not be able to file the Complaint and serve it by July 29, let alone get the relief you are likely requesting." 14. Denied. After reasonable investigation, Plaintiff is without knowledge or information sufficient to form a belief as to the truth of the averment and the same is therefore denied. Strict proof is demanded at trial. 15. Admitted in part and denied in part. It is admitted that some of the equipment was returned July 29, 2006; however, an essential part of the system was not returned until sometime thereafter. On or about August 4, 2006, it is admitted that Plaintiff then cancelled the Motion even though it was forced to reprogram the computers since the XP program on each computer was removed without permission. 16. Denied. Defendant did conduct unauthorized sleep studies after the termination of the agreement in which Plaintiff is owed money for the services rendered and the use of the equipment. 17. Denied. After reasonable investigation, Plaintiff is without knowledge or information sufficient to form a belief as to the truth of the averment and the same is therefore denied. Strict proof is demanded at trial. By way of further response, Defendant is not entitled to any damages and in fact, have an outstanding balance with Plaintiff. 18. This is not a responsive pleading so no response is required. 19. Denied. After reasonable investigation, Plaintiff is without knowledge or information sufficient to form a belief as to the truth of the averment and the same is therefore denied. Strict proof is demanded at trial. 20. Denied. After reasonable investigation, Plaintiff is without knowledge or information sufficient to form a belief as to the truth of the averment and the same is therefore denied. Strict proof is demanded at trial. 21. This is not a responsive pleading so no response is required. 22. Denied. After reasonable investigation, Plaintiff is without knowledge or information sufficient to form a belief as to the truth of the averment as it pertains to overcharging and the same is therefore denied. Strict proof is demanded at trial. By way of further response, Defendant has never overpaid Plaintiff and has provided no proof of the same. In fact, Defendant still has not satisfied all outstanding invoices as set forth in more detail in Plaintiff's Complaint. 23. Denied. After reasonable investigation, Plaintiff is without knowledge or information sufficient to form a belief as to th'e truth of the averment and the same is therefore denied. Strict proof is demanded at trial. By way of further response, all information that was required on the invoices was present. 24. Denied. Plaintiff performed its services in the required professional manner and sent invoices to the address that was provided to Plaintiff. By way of further response, Defendant changed the billing address. 25. Denied. The invoices were sent to the address provided to Plaintiff. 26. Denied. In fact, Defendant cancelled checks that Plaintiff had already received and deposited. 27. Denied. After reasonable investigation, Plaintiff is without knowledge or information sufficient to form a belief as to the truth of the averment and the same is therefore denied. Strict proof is demanded at trial. 28. Denied. Plaintiffrequested ameeting with Defendant after numerous telephone messages to Defendant, which Defendant failed to respond to. Plaintiffonly received a response after Plaintiffsent an e-mail to Defendant on June 12, 2006. 29. Admitted in part and denied in part. It is admitted that the accountant was present. The remaining allegations are denied as the accountant did not have all the information available to him to properly discuss the invoices as this was not the topic of the conversation. Plaintiff wanted to speak with Defendant for his failure to make payments. 30. Admitted. By way of further response, there were no issues to resolve with the invoices that would cause Defendant to not make his monthly payments on time. 31. This is not a responsive pleading so no response is required. 32. Denied. After reasonable investigation, Plaintiff is without knowledge or information sufficient to form a belief as to the truth of the averment and the same is therefore denied. Strict proof is demanded at trial. 3 3 . Denied. After reasonable investigation, Plaintiff is without knowledge or information sufficient to form a belief as to the truth of the averment and the same is therefore denied. Strict proof is demanded at trial. 34. Denied. Plaintiff was not aware of the relationships that Defendant had with his patients. By way of further response, the Agreement speaks for itself. 3 5. Denied. After reasonable investigation, Plaintiff is without knowledge or information sufficient to form a belief as to the truth of the averment and the same is therefore denied. Strict proof is demanded at trial. Further, it is denied as a conclusion of law. By way of further response, Plaintiff did not breach the Agreement and did not act in reckless disregard. 36. Denied. After reasonable investigation, Plaintiff is without knowledge or information sufficient to form a belief as to the truth of the averment and the same is therefore denied. Strict proof is demanded at trial. Further, it is denied as a conclusion of law. By way of further response, Defendant did not violate the Agreement. 37. Denied. After reasonable investigation, Plaintiff is without knowledge or information sufficient to form a belief as to the truth of the averment and the same is therefore denied. Strict proof is demanded at trial. WI-~REFORE, Plaintiffrespectfully requests that this Honorable Court grant the outstanding relief requested in Plaintii~ s Complaint along with discontinuing Defendant's New Matter and Counterclaim with prejudice. MARTSON DEARDORFF WILLIAMS & OTTO Christopher E. Rice 10 East High Street Carlisle, PA 17013 (717) 243-3341 Date: ~' _ / S' - Q ~' Attorneys for Plaintiff 09/11/2006 14:28 7172431850 I MDWO PAGE 09/09 VERIFICATION The foregoing Response to defendant's New Matter and Counterclaim is based upon information which has been gathered by my counsel in the prepazation of the lawsuit. The language of the document is that of counsel and not my own. I have read the document and to the extent that it is based upon information which I have given to my counsel, it is true and correct to the best of my knowledge, information and belief. To the extent that the content of the document is that of counsel, Ihave relied upon counsel in making this verification. This statement at~d verification aze made subject to the penalties of 18 Pa. C.S. Section 4904 relating to unsworn, falsification to authorities, which provides that if I make knowingly false averments, I ntay be subject to criminal penalties. ~-~ n „ aymo~d Meck,!President of Respitech, Inc. CERTIFICATE OF SERVICE I, Mary M. Price, an authorized agent for Martson Deardorff Williams & Otto, hereby certify that a copy of the foregoing Response to Defendant's New Matter and Counterclaim was served this date by depositing same in the Post Office at Carlisle, PA, first class mail, postage prepaid, addressed as follows: Andrew J. Giorgione, Esquire BUCHANAN INGERSOLL 17 North Second Street, 15t'' Floor Harrisburg, PA 17101-1503 MARTSON DEARDORFF WILLIAMS & OTTO M. Price Ten East High Street Carlisle, PA 17013 (717) 243-3341 Dated: ~'lfS~/Q r'~~ ' ; , _~ - -; _.~ i..: f .- .:;; F:\FII,ES\DATAFILE\Generol\Current\12I 37.1. pet 1 Created: 7/7!04 3:49PM Revised: 2/20107 11:40AM Christopher E. Rice, Esquire MARTSON DEARDORFF WILLIAMS OTTO GILROY & FALLER MARTSON LAW OFFICES I.D. 90916 10 East High Street Carlisle, PA 17013 (717) 243-3341 Attorneys for Plaintiff RESPITECH MEDICAL, INC. IN THE COURT OF COMMON PLEAS OF Plaintiff CUMBERLAND COUNTY, PENNSYLVANIA v. NO. 06 - 4123 CIVIL TERM SLEEP DISORDER CENTERS OF CENTRAL PENNSYLVANIA, INC. CIVIL ACTION -LAW Defendant ~ ~~;~,:: PETITION TO ENFORCE SETTLEMENT AND NOW, comes Plaintiff, RESPITECH MEDICAL, INC., by and through their attorneys, MARTSON DEARDORFF WILLIAMS OTTO GILROY & FALLER, and states as follows: 1. On July 20, 2006, Plaintiff filed a Complaint in replevin against Defendant for possession of certain equipment and outstanding invoices due. The Complaint is incorporated herein by reference as if fully set forth. 2. Defendant filed an Answer with New Matter and Counterclaim to the Complaint. 3. Plaintiff responded by timely filing a Response. The Response is incorporated herein by reference as if fully set forth. 4. Thereafter, plaintiff forwarded discovery to Defendant on or about October 5, 2006. 5. Defendant requested extensions to the discovery requests in hopes of settling this matter, which Plaintiff granted. 6. On January 4, 2007, after settlement negotiations, Defendant proposed a settlement offer. See Exhibit "A" attached hereto. 7. January 9, 2007, Plaintiff accepted the settlement offer of Defendant. See Exhibit "B" attached hereto. 8. Upon information and belief, Defendant's attorney, Carol Brayshaw Longwell, had the authority to settle this matter on behalf of her client. 9. Thereafter, Defendant requested an extension to prepare a Settlement Agreement and Release (herein, "Agreement"). An Agreement was prepared and forwarded to Plaintiff for its review. 10. On or about January 25, 2007, Plaintiff return the Agreement to Defendant with proposed revisions. 11. Via telephone conversations, Defendant, through its counsel, communicated with Plaintiff's counsel to finalize the Agreement, which was completed on or before February 1, 2007. 12. Defendant is in possession of the final Agreement with all agreed upon terms, including, Defendant's payment of $40,000 upon signing the Agreement (herein, "initial deposit"), $40,000 on March 1, 2007;.and $20,000 on April 1, 2007. 13. Since the last conversation and after numerous emails, telephone conversations and letters between Plaintiff s .counsel and Defendant's counsel, Defendant has failed to return the signed Release. 14. Defendant has continued to delay this case and the settlement for no apparent reason. 15. Defendant has breached the Agreement reached between Plaintiff and Defendant and continues to ignore Plaintiff's request to return the signed Agreement with the initial deposit. 16. If the agreed upon settlement is not enforced, Plaintiff will be forced to move this matter to trial. 17. Defendant's behavior with regard to the Agreement has been vexatious, obdurate, and dilatory, and attorneys fees should be awarded. WHEREFORE, in the interests of judicial efficiency, the Plaintiff requests the following: (1) that the Agreement between the parties be enforced pursuant to the terms discussed between the parties and memorialized in the exhibits attached hereto; (2) that this Court execute the draft Order attached; (3) that interest be awarded to Plaintiff on any outstanding amount owed as of February 14, 2007; (4) that this Court retain jurisdiction in order to supervise Defendant's compliance with the Order and the terms to which they had agreed to per the Agreement; and (5) that this Court award costs of suit and attorneys fees to Plaintiff in the amount of $600.00 to compensate it for the cost of bringing this Petition. Respectfully Submitted, MARTSON LAW OFFICES Y• Christopher E. Rice, Esquire I.D. No. 90916 Ten East High Street Carlisle, PA 17013-3093 (717) 243-3341 Attorneys for Plaintiff Date: February 20, 2007 EXHIBIT "A" Buchanan Ingersoll ~~ Rooney Pc Attorneys t Government Relations Professionals Carol Brayshaw Longwell 717 237 4833 carol . tongwell~bipc.com January 4, 2007 VIA FACSIMILE AND REGULAR MAIL Christopher Rice, Esq. Martson Deardorff Williams & Otto 10 East High Street Carlisle, PA 17013 Re: Respitech Medical, Inc. v. Sleep Disorder Centers Central Pennsylvania, Inc Dear Chris: One South Market Square 213 Market Street, 3rd Floor Harrisburg. PA 17101-2121 P.O. Box 12023 Harrisburg, PA 17101-2023 T 717 237 4800 F 717 233 0852 www.buchananingersoll.com This letter is for settlement purposes only, and the information set forth herein, as well as all discussions regarding these issues, are for compromise negotiations only, and cannot be used for any other purpose. I have spoken with Dr. Clark and he has authorized me to extend to your client a final offer in the amount of $100,000 to settle all claims between the parties. This offer is a significant advance on Dr. Clark's last offer, takes into account the damages suffered by Dr. Clark as a result of your client's breach of the Agreement, and is made in recognition of the following facts: After you filed the Complaint, you advised me in an email dated August 15, 2006, that you had discovered that Dr. Clark had paid certain additional Respitech's bills. As a result, you asked that we "reference the amount on the invoices as the actual amount owed, which is less than the amount claimed in the complaint." Reference to Respitech's own invoicing document reflects a claimed total of $116,243. (See Answer, Attachment "B"). Further, the Complaint also underestimates significantly the amounts already paid by Dr. Clark, again as evidenced by Respitech's own invoicing document. (Id.) Given these facts, it appears to be in the parties' best interests to agree to settle their claims without resort to further litigation. This offer will remain open for ten (10) days until the close of business on January 15, 2007, and thereafter be automatically revoked. If your client is unwilling to accept this offer, we will provide Dr. Clark's discovery responses within ten days of the final date for acceptance of this offer. As you know, I will be out of the country next week. In my absence, please contact Andrew Giorgione at 271-4863. Sincerely, ~~~~-~" Carol raysha on ell CL/lap Pennsylvania :: New York :: ~t~'ashington, DC :: Virginia :: Florida :: New Jersey :: Delaware :: Ohio :: California EXHIBTT `B" ti1ART5UV DEARDURFF WILLG11vIS 7TTU IvFc?kMAi':ON • ADVICE • AiSVn~'.1+CY 10 EAST NIGH STREET CARLISLE, PENAiSYLVANIA 17013 TELEPHONE (717)243-3341 F:1CSL1rttLE (717) 243-1850 INTERNET ww~,v.mdwo.com VIA FACSIMILE 231-7712 and FIRST CLASS MAIL Carol Brayshaw Longwell, Esquire BUCHANAN INGERSOLL 17 North Second Street, l5~` Floor Harrisburg, PA 17101-1503 ATTORNEYS 8C COU~+SELLORS ,1T LAW WILLIAM F. MARTSON JOHN B. FOWLF,R III DANIEL K. DEARDORFF THOMAS J. WILLI,-1MS* No V. OT-ro III GEORG£ B. FALLER JR.* CARL C. RfSCH DAVID A. F-TLS[.ViOVS CHRISTOPHER E. RICF. JE:NytFER L. SPE:IRS HILLARY A. DF:t>ti '.NtcHAEL J. COLLIVS SETrt T. MOSEBEY 'BorxD CrxrlFle;u C1ti n. TRIAL. SPFC1,~l.isr January 9, 2007 RE: Respitech Medical, Inc./Sleep Disorder Centers of Central Pennsylvania Our File No. 12137.1 Dear Carol: We are in receipt of your letter dated January 4, 2007, and after discussing the same with my client, Respitech Medical has agreed to accept Dr. Clark's offer of $100,000.00 in the above-referenced matter. Please forward to us a release and settlement agreement for our review. Could you please add a confidentiality provision, along with a provision terminating the Testing Services Agreement dated November 3, 2005, and any future action under said Agreement. We ask that you please forward this release and settlement agreement to us as soon as possible, but no later than January 19, 2007, so that we can conclude this matter in a timely fashion. Thank you and please feel free to contact me with any questions. Very truly yours, CER/mmp MARTSON DEARDORFF WILLIAMS & OTTO Christopher E. Rice cc: Respitech Medical, Inc. (Via facsimile and first class mail) F 1F1LES\DATAFILE\General\Curcent112137 1 cb18 INFORMATION ADVICE • ADVOCACY sM VERIFICATION I, Christopher E. Rice, of the firm of MARTSON DEARDORFF WILLIAMS OTTO GILROY & FALLER, attorneys for Plaintiff in the within action, certify that the statements made in the foregoing document are true and correct to the best of my knowledge, information and belief and understand that false statements herein are made subject to the penalties of 18 Pa. C.S. Section 4904 relating to unsworn falsification to authorities. `~" ~ ~.. ~r~--~ -~%~-, CERTIFICATE OF SERVICE I hereby certify that a copy of the foregoing petition was served on Defendants this date by depositing same in the Post Office at Carlisle, PA, first class mail, postage prepaid, addressed as follows: Carol Brayshaw Longwell, Esquire BUCHANAN INGERSOLL 17 North Second Street, 15th Floor Harrisburg, PA 171010-1503 MARTSON LAW OFFICES By ~~~- S ~---- Christopher E. Rice, Esquire Ten East High Street Carlisle, PA 17013 (717) 243-3341 Attorneys for Plaintiffs Dated: February 20, 2007 C ~ ~~_ ` -,n (F x.5m1 k. .'..; !f'1 , ' ~.ry ~' ' ~ , A [ ~ 1, S_ G 4 ~ ~ '!~r y ~ ~ ~ ~~ ~ wM 1 l t w.t ,I ~f ~~ r ~ .~ ~1} _:r `'i f \ ~ ~ f-~ ~'~.. P s l .. •,~~ ti ~•~ ytJ ~~ .+~ ; ! R FEB ~ 120fl7 D~ RESPITECH MEDICAL, INC. IN THE COURT OF COMMON PLEAS OF Plaintiff CUMBERLAND COUNTY, PENNSYLVANIA ~• NO. 06 - 4123 CIVIL TERM SLEEP DISORDER CENTERS OF CENTRAL PENNSYLVANIA, INC. CIVIL ACTION -LAW Defendant ORDER AND NOW, this 3 r day of ~ ~~, ~ ,, ~, _ ~_, 2007, a Rule is hereby issued upon Defendant to show cause why Plaintiff's Petition to Enforce Settlement requesting that this Court enforce the settlement agreement reached between the parties should not be granted. Rule returnable 2 o days from receipt of this Order. ti ~ C~ f_ ~ c~ ~; -~ ~~ ~=: ~ _~ ~- ~ :.',: ~ ~ . ~ , + Li., O r^-- ~ ' :3 C t .. ~ . RESPITECH MEDICAL, INC., Plaintiff v. SLEEP DISORDER CENTERS OF CENTRAL PENNSYLVANIA, INC., Defendant IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA NO. 06-04123 CIVIL ACTION -LAW DEFENDANT'S RESPONSE TO PLAINTIFF'S PETITION TO ENFORCE SETTLEMENT Defendant Sleep Disorder Centers of Central Pennsylvania, Inc. ("SDCCP"), by and through its attorneys Buchanan Ingersoll & Rooney PC, hereby responds to the Petition to Enforce Settlement of Plaintiff Respitech Medical Inc. ("Respitech") (the "Petition") as follows: 1. Admitted. 2. Admitted. 3. SDCCP admits that Respitech filed a Response to SDCCP's New Matter to the Complaint. SDCCP incorporates its Answer with New Matter to the Complaint herein by reference as if fully set forth. 4. Admitted. 5. Admitted. 6. The document attached to the Petition as Exhibit "A" is a document that speaks for itself and any characterization of the nature or content thereof is denied. 7. The document attached to the Petition as Exhibit "B" is a document that speaks for itself and any characterization of the nature or content thereof is denied. 8. Admitted. 9. Admitted. 10. Admitted. 11. Admitted in part denied in part. SDCCP admits that its counsel engaged in various discussions with counsel for Respitech in an attempt to achieve final settlement terms. SDCCP denies, however, that the parties "finalize[d] the Agreement ... on or before February 1, 2007." Rather, the parties continued to negotiate payment terms as late as February 12, 2007 and did not have a final draft of the agreement until February 13, 2007. Respitech then filed the Petition just one week later, on February 20, 2007. 12. The "final Agreement" is a document that speaks for itself and any characterization of the nature or content thereof is denied. 13. SDCCP admits that additional conversations have occurred between its counsel and counsel for Respitech. By way of further answer, counsel for Respitech has refused to resolve this matter without involvement of this Court unless SDCCP now agrees to new settlement terms more favorable to Respitech. Respitech, however, may not use the Petition to achieve terms more favorable than those contained in the agreement it attempts to enforce. 14. Denied. SDCCP has attempted in good faith to resolve the disagreement with Respitech without further involvement of this Court. Moreover, SDCCP is prepared to proceed with settlement of this action on the terms negotiated and to remit payment to Respitech in furtherance of settlement. 15. Denied. SDCCP has attempted to resolve this dispute in good faith. Although SDCCP was briefly delayed in its ability to deliver the initial payment to Respitech, SDCCP is now prepared to proceed with settlement of this action on the terms negotiated and to remit payment to Respitech in furtherance of settlement of this action. Respitech proceeded with filing the current Petition a mere one week after the parties reached agreement regarding payment terms and despite SDCCP's good faith offers to resolve this dispute regarding consummation of settlement of this action without further involvement of this Court, Respitech has refused to forego pursuance of the Petition unless SDCCP agrees to new terms more favorable of Respitech. 16. SDCCP is without knowledge or information sufficient to form a belief as to the averments in paragraph 16 and the same are therefore denied. 17. Denied. Although SDCCP was briefly delayed in remitting the initial payment to Respitech in furtherance of settlement of this action, SDCCP subsequently attempted to resolve the current dispute without further need for legal proceedings. SDCCP has, in fact, offered to remit payment to Respitech promptly on the terms negotiated; however, Respitech refused to delay its pursuance of the Petition in order to allow SDCCP to attempt to resolve the current dispute unless SDCCP agreed to new settlement terms more favorable to Respitech. Any additional attorneys' fees incurred by Respitech in pursuing the Petition were avoidable. Moreover, Respitech has failed to aver any statutory or factual basis that would warrant an award of attorneys' fees in this matter and Respitech's request for attorney's fees should therefore be denied. Mosaica Academy Charter School v. Dept of Education, 813 A.2d 813, 822 (Pa. 2002); Equibank v. Miller, 619 A.2d 336, 338 (Pa. Super. 1993) (holding under the "American Rule," a party may not recover attorney's fees from its adversary absent an express statutory or contractual provision allowing for recovery of such attorney's fees.). Respitech has further failed to aver any basis in contract or statute for the award of interest in this matter. Respitech has not obtained a judgment against SDCCP which would entitle it to interest (see 42 Pa. C.S. § 8101) and it has not asserted any other basis that would warrant such an award. WHEREFORE, Defendant Sleep Disorder Centers of Central Pennsylvania, Inc. respectfully requests that this Court deny the Petition to Enforce Settlement of Plaintiff Respitech Medical Inc. BUCH AN INGERSOL ROONEY PC By: arol Brayshaw L ell I.D. #35069 One South Market Square 213 Market Street, 3rd Floor Harrisburg, PA 17101-2121 DATE: March 19, 2007 ~ r CERTIFICATE OF SERVICE I, Carol Brayshaw Longwell, certify that I am this day serving a copy of the foregoing document upon the persons and in the manner indicated below which service satisfies the requirements of the Pennsylvania Rules of Civil Procedure via United States mail, first class, postage pre-paid as follows: Christopher E. Rice, Esquire Martson Law Offices Ten East High Street Carlisle, PA 17013 By. arol Brayshaw Long el DATE: March 19, 2007 C"? ~ `i _ ~~` ~ ~ ~., ~'^{~ ~ ~~ ~ -. i ~ .3 ~~. ~N ~~ ...~' ~, . RESPITECH MEDICAL, INC., Plaintiff v. SLEEP DISORDER CENTERS OF CENTRAL: PENNSYLVANIA, INC., Defendant IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION -LAW NO. 06-4123 CIVIL TERM ORDER OF COURT AND NOW, this 21St day of March, 2007, upon consideration of Plaintiff's Petition To Enforce Settlement and of Defendant's Response to Plaintiff's Petition To Enforce Settlement, a hearing is scheduled for Wednesday, April 11, 2007, at 3:00 p.m., in Courtroom No. 1, Cumberland County Courthouse, Carlisle, Pennsylvania. BY THE COURT, ,~hristopher E. Rice, Esq. Ten East High Street Carlisle, PA 17013 Attorney for Plaintiff ~arol Brayshaw Longwell, Esq. One South Market Square 213 Market Street, 3~ Floor Harrisburg, PA 17101-2121 Attorney for Defendant :rc ~ ~ ~ ,~ J Wesley Ole , r., J. J ~~yyhh \~~\S1J111i1~~~~ll'~L7f~tt~^y i Cd 7 `~ i~~ ~ 4 ~~ii L~~6 A~1 G,"~~~~,~ua ~~ ~© ~~I~'~~-Q3~t~3 ~. RESPITECH MEDICAL, INC., Plaintiff v. SLEEP DISORDER CENTERS OF CENTRAL PENNSYLVANIA, INC., Defendant IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION -LAW N0.06-4123 CIVIL TERM IN RE: PLAINTIFF' S PETITION TO ENFORCE SETTLEMENT ORDER OF COURT AND NOW, this 10~' day of April, 2007, upon consideration of the attached letter from Christopher E. Rice, Esq., attorney for Plaintiff, the hearing previously scheduled for April 11, 2007, is rescheduled to Wednesday, June 27, 2007, at 1:30 p.m., in Courtroom No. 1, Cumberland County Courthouse, Carlisle, Pennsylvania. hristopher E. Rice, Esq. Ten East High Street Carlisle, PA 17013 Attorney for Plaintiff ~rol Brayshaw Longwell, Esq. One South Market Square 213 Market Street, 3r Floor Harrisburg, PA 17101-2121 Attorney for Defendant :rc BY THE COURT, ~ • ;~ c: ~~, ~~ v ~~~A 1~~sON E~x1~oxFI~ rLLrA~RS C~}T-rO ~~ILROY ~ FALLER MARTSON LAW OFFICES 1~ EAST HIGH STREET CARLISLE, PENNSYLVANIA 1713 TELEPHONE (717) 243-3341 FACSIMILE (717) 243-t850 INTERNET wwwmarrsonlawcom Honorable J. Wesley Oler Cumberland County Courthouse One Courthouse Square Carlisle, PA 17013 WILLIAM F. MARTSON Jorm~ B. FOWLER III DANIEL K. DEARDORFF THOMAS J. WiLLIAMS` No V. Orro III I-IUBERT X. GILROY GEORGE B. FALLER JR.* April 9, 2007 CARL C. RISCH DAVID A. FITZSIMONS CHRISTOPHER E. RICE ]ENNIFER L. SPEARS MICHAEL J. COLLINS SETH T. MOSEBEY `BOARD CERTIFIED CIVIL TRIAL SPECIALIST RE: Respitech Medical, Inc. v. Sleep Disorder Centers of Central Pennsylvania, Inc. No. 06-4123 Civil Term Our File No. 12137.1 Dear Judge Oler: On March 21, 2007, you signed an Order scheduling ahearing on April 11, 2007, at 3:00 p.m for the above-captioned matter to hear Plaintiff's Petition to Enforce Settlement. The parties hope to reach a final settlement by Apri130, 2007, and request that this Court continue this matter for 30 days. Should this matter be concluded by Apri130, we will then notify the Court of the same and no further action will be necessary. Should you have any. questions, please feel free to contact me. Very truly yours, CER/mmp M RTSON LA~ OFFICES Christopher E. Rice ,~;,>. cc: Court Administrator Andrew J. Giorgione, Esquire `4~~~~~ Carol Brayshaw Longwell, Esquire Mr. Raymond Meck F 1FILE5\DATAFILE\General\Cuvent\1213T12137.1.jwo2 INFORMATION • ADVICE • ADVOCACY Sna * F:\F1LE5\pATAFILE1GeneraPCurcent\1213TI2I37.l.pra2/emm v Created: 12!29103 8:24AM Revised: 5722107 8:16AM Christopher E. Rice, Esquire MARTSON DEARDORFF WILLIAMS OTTO GILROY & FALLER MARTSON LAW OFFICES I.D. 90916 10 East High Street Carlisle, PA 17013 (717) 243-3341 Attorneys for Plaintiff RESPITECH MEDICAL, INC. Plaintiff v. SLEEP DISORDER CENTERS OF CENTRAL PENNSYLVANIA, INC. Defendant To the Prothonotary: IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA NO. 06 - 4123 CIVIL TERM CIVIL ACTION -LAW PRAECIPE Please mark this action settled and discontinued. MARTSON LAW OFFICES By ~ /~.~ Christopher E. Rice 10 East High Street Carlisle, PA 17013 (717) 243-3341 Date: S= ? 2 ~ 07 Attorneys for Plaintiff CERTIFICATE OF SERVICE I hereby certify that a copy of the foregoing Praecipe was served on Defendants this date by depositing same in the Post Office at Carlisle, PA, first class mail, postage prepaid, addressed as follows: Andrew J. Giorgione, Esquire Carol Brayshaw Longwell, Esquire BUCHANAN INGERSOLL 17 North Second Street, 15`h Floor Harrisburg, PA 171010-1503 MARTSON LAW OFFICES By s ~_ Christopher E. Rice, Esquire Ten East High Street Carlisle, PA 17013 (717) 243-3341 Attorneys for Plaintiffs Dated: ~~ 2 Z - 07 t~~ t~? .C --r-t ;I'll _ ~~ {~ _ ^„a~-z Y -'1, -, _ ~.~ _. ..-- ~: RESPITECH MEDICAL, INC., Plaintiff v SLEEP DISORDER CENTERS OF CENTRAL PENNSYLVANIA, INC., Defendant IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION -LAW NO. 06-4123 CIVIL TERM IN RE: PLAINTIFF'S PETITION TO ENFORCE SETTLEMENT ORDER OF COURT AND NOW, this 25th day of May, 2007, a praecipe to settle and discontinue the above matter having been filed on May 23, 2007, the hearing previously scheduled for June 27, 2007, is cancelled. ristopher E. Rice, Esq. Ten East High Street Carlisle, PA 17013 Attorney for Plaintiff ~rol Brayshaw Longwell, Esq. One South Market Square 213 Market Street, 3` Floor Harrisburg, PA 171 O 1-2121 Attorney for Defendant BY THE COURT, J. '~I ~q.0 C5/ rc ~; M _.~.. 'I- n:.1 ,., ~~~. .. ~a-{__ -4.; _}~:~_I