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HomeMy WebLinkAbout02-3188F\FILES\DATAF6105PMAL.DOC\84'5 ' Crtaud ROacd. 20198 111 2 09 2 59 AM CARLISLE AREA HEALTH AND WELLNESS FOUNDON' plaintiff OURT OF COMMON PLEAS OF N THE CERa CONY, PENNSYLVANIA CUMB CIVIL ACTION - LAW V. CENTRAL PENNSYLVANIA HEMATOLOGY & MEDICAL p.C. ONCOLOGY ASSOCIATES, Defendant NO. - !P e0Cc'bl-n NO_ T ICE you wish to defend against the claims set forth in the 20 days after this Complaint and Notice are You have been sued in court. If y and filing it writing with the court , you must take action within olY or by attorney served, by entering a written appearance p r by you. You are warmed that if you the following pages fail to do court ainst you by s w the claims set forth against your defenses or objection ou and a judgment may be entered ag relief other for rights any imp other claim or so, the case may proceed without y octant to you. money claimed in the Complaint without further notice for any lose money or property or int or requested by the Plaintiffs. You may R YOU SHOULD AT ONCE. IF YOU DO NOT T THIS PAPER TO Y TO OR TELEPHONE THE OFFICE SET HAVE ALAWYER OR CANNOT AFFORD ONE YOU CAN GET LEGAL HELP FORTH BELOW TO FIND OUT WHERE Cumberland County Bar Association 2 Liberty Avenue Carlisle, Pennsylvania 17013 Telephone (717) 249-316r M TSON DEARDORFF WILLIAMS & OTTO By Esquire No V. Otto, ID No. 27763 PA Attorney Carl C. Risch,, F squire PA Attorney ID No. Ten East High Street Carlisle, PA 17013 (717) 243-3341 Attorneys for Plaintiff Date: July 2, 2002 CARLISLE AREA HEALTH AND WELLNESS FOUNDATION, Plaintiff V. CENTRAL PENNSYLVANIA HEMATOLOGY & MEDICAL ONCOLOGY ASSOCIATES, P.C. Defendant IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW NO. °02 COMPLAINT AND NOW, comes the Plaintiff, Carlisle Area Health and Wellness Foundation, by and through its attorneys, Martson Deardorff Williams & Otto, and hereby avers as follows: 1. Plaintiff is a nonprofit, non-stock corporation incorporated under the laws of the Commonwealth of Pennsylvania with its principle place of business at 274 Wilson Street, Carlisle, Cumberland County, Pennsylvania 17013. 2. Plaintiff was formerly known as the Carlisle Hospital and Health Services which, due to a sale of assets, changed its name to the Carlisle Area Health and Wellness Foundation effective June 19. 2001. 3. Defendant is a professional corporation incorporated under the laws of the Commonwealth of Pennsylvania with its principle place of business at 20 Erford Road, Lemoyne, Cumberland County, Pennsylvania 17043. 4. On or about December 22, 1998, Defendant entered into a written agreement with Plaintiff concerning the establishment and operation of an outpatient cancer treatment facility in South Middleton Township, Cumberland County, Pennsylvania, known as the Carlisle Hospital Cancer Center (the "Agreement") (a copy of the Agreement, with an Amendment thereto dated December 14, 2000, is attached hereto as Exhibit "A"). 5. This Agreement incorporated the terms of various other documents including, but not limited to, a Lease Agreement dated June 1, 1999 (a copy of this Lease Agreement is attached hereto as Exhibit "B") and a Start Up Agreement dated June 1, 1999 (a copy of this Start Up Agreement is attached hereto as Exhibit "C"). i 6. Under the Agreement, and incorporated Lease Agreement, Defendant agreed to rent from Plaintiff 5,210 square feet of the Carlisle Hospital Cancer Center in South Middleton Township, Pennsylvania (the "Premises"), as well as rent equipment from Plaintiff, all in conjunction with its delivery of oncology and hematology services to patients for a term of five (5) years. 7. The agreed upon monthly rent was $8,683.33 for the Premises and $2,930.14 for the equipment which was to be paid to Plaintiff on the first day of each month in advance. 8. Defendant possessed both the Premises and the equipment under the Lease Agreement from June 1, 1999 until, at least, June 19, 2001, when Plaintiff conveyed the Premises and equipment to Health Management Associates. 9. Defendant has never made any rental payments to Plaintiff under the Agreement and therefore owes Plaintiff $285,691.36, which represents 24 months and 18 days of possession under the Lease Agreement. 10. Moreover, under the Agreement and incorporated Start Up Agreement, Defendant agreed to establish an oncology and hematology practice at the Carlisle Hospital Cancer Center in exchange for cash payments from Plaintiff, including an initial payment of $39,495.00. 11. On December 14, 2000, $39,495.00 was paid to Defendant as required by Paragraph 2 of the Start Up Agreement. 12. In March 2002, Defendant ceased to maintain a hematology or oncology practice on the Premises as mandated by the Agreement and the Start Up Agreement. 13. Because Defendant ceased to maintain a practice for three (3) years after the 24 month anniversary of the date of the Start Up Agreement, i.e., June 1, 2001, Defendant is obligated by Paragraph 4 of the Start Up Agreement to repay $39,495.00 to Plaintiff together with 6% simple interest. COUNTI BREACH OF CONTRACT 14. Plaintiff hereby incorporates by reference the averments contained in paragraphs 1 through 13 of the Complaint. 15. Defendant has breached the Agreement, the Lease Agreement, and the Start Up Agreement by refusing to pay rent for the Premises and equipment and by failing to repay $39,495.00 plus interest after ceasing to maintain a hematology and medical oncology practice of the Premises for three (3) years after June 1, 2001. WHEREFORE, Plaintiff demands judgment against Defendant in the amount of $325,186.36 plus pre judgment and post judgment interest and costs. COUNT H QUANTUM MERUIT 16. Plaintiff hereby incorporates by reference the averments contained in paragraphs 1 through 15 of the Complaint. 17. Defendant is liable to Plaintiff and/or has been unjustly enriched in the amount of $325,186.36 plus pre judgment and post judgment interest and costs. WHEREFORE, Plaintiff demandsjudgment against Defendant in the amount of $325,186.36 plus pre judgment and post judgment interest and costs. MARTSON DEARDORFF WILLIAMS & OTTO i By No V. Otto, III, Esquire PA Attorney I.D. No. 27763 Carl C. Risch, Esquire PA Attorney I.D. No. 75901 Ten East High Street Carlisle, PA 17013 (717) 243-3341 Attorneys for Plaintiff Date: July 2, 2002 Exhibit A P'\MLRSDATA LE OSPITAL.DOC945AGR3. This Agreement is entered into as of this 2?2 day of 0,9 ? , 1998, by and between Carlisle Hospital, a Pennsylvania nonprofit corporation, 246 Parker Street, Carlisle, Pennsylvania ("the Hospital"), John D. Conroy, Jr., D.O., F.A.C.P. ("Convoy"), Joyce McCorkle, R.N. ("McCorkle"), Alfred Leal, M.D. ("Leal"), and Central Pennsylvania Hematology & Medical Oncology Associates, P.C. ("CPHMON ), a Pennsylvania professional corporation, 50 North 12th Street, Lemoyne, Pennsylvania 17043. WHEREAS, the Hospital owns certain property located in South Middleton Township, Cumberland County, Pennsylvania, upon which the Hospital intends to construct medical offices for use as an outpatient cancer treatment center ("the Facility"); WHEREAS, the Hospital recognizes that the Facility, as an outpatient cancer treatment facility, will require space for both the provision of radiation therapy services and the provision of hematology and medical oncology services; WHEREAS, the Hospital recognizes that the proper functioning of the hematology and medical oncology portion of the Facility requires the supervision and direction of physicians who have the training, experience, and qualifications necessary to practice medicine in the specialty of hematology and oncology; WHEREAS, the Hospital has determined that the Facility should be constructed and designed for the delivery of radiation therapy, oncology, and hematology services to patients in the 1 most effective manner possible and has determined that this can best be achieved by entering into a consulting agreement with Conroy and McCorkle under which Conroy and McCorkle will provide professional consulting services related to the overall Facility design, the selection and location of equipment, the interior design and layout, communications, structure, and other relevant aspects; WHEREAS, Conroy and McCorkle are willing to accept the responsibility of providing professional consulting services related to the overall Facility; WHEREAS, The Hospital has determined that the proper, orderly, and efficient delivery of quality oncology and hematology services to patients can best be accomplished by entering into an exclusive management, operation, and service provision arrangement with CPHMOA under which CPHN40A's employed physicians will provide professional management, supervisory, and oncology and hematology services at the portion of the Facility dedicated to the provision of these services; WHEREAS, CPHMOA is willing to accept the responsibility of providing management, supervision, and oncology and hematology services to patients at the Facility in accordance with recognized medical standards, the Bylaws of the Medical Staff of the Hospital ("Medical Staff'), the Bylaws of the Hospital, and the terms and conditions set forth in this Agreement; WHEREAS, all agree that there are opportunities in the Carlisle area to provide oncology and hematology services to patients and all desire to provide such services in that area by establishing a hematology and oncology practice in the Facility; WHEREAS, CPHMOA is willing to lease space and equipment from the Hospital as owner of the Facility for the purposes of providing oncology and hematology services to patients in the Carlisle area; 2 WHEREAS, CPHMOA recognizes that the provision of management, supervision, and oncology and hematology services at the Facility will best be served by the residential relocation of at least one (1), but no more than two (2), physicians associated with CPHMOA to the primary service area of the Hospital, including Alfred Leal, M.D.; WHEREAS, CPHMOA is willing to arrange for the relocation of no more than two (2) associated physicians to the primary service area of the Hospital in compliance with the terms of this Agreement, including Alfred Leal, M.D.; WHEREAS, the Hospital recognizes that the provision of oncology and hematology services by CPHMOA in the Carlisle area is both a new practice and medically necessary for persons living in the primary service area of the Hospital and that the start up of such a new practice will require the expenditure of significant funds; WHEREAS, the Hospital is willing to provide remuneration to CPHMOA for the start up of the new practice in accordance with the terms of this Agreement; WHEREAS, the payment of certain start-up expenses will advance the Hospital's desire to attract a quality hematology and medical oncology practice at the Facility; and WHEREAS, the Hospital, CPHMOA, Conroy, McCorkle, and Leal desire to provide a full statement of their agreement in connection with the operation of the Facility during the term of this Agreement. OBLIGATION OF ONROY A M . -O KL .. Conroy and McCorkle have agreed to provide consulting services to the Hospital, and its employees and agents, for the overall design of the Facility, the selection and location of equipment, the interior design and layout of the Facility, the communications systems, and other aspects of the Facility as determined and required by the Hospital and as more fully outlined in the consulting agreement dated July 1, 1997, and attached hereto as "Exhibit A" and incorporated herein. Any future amendments to the Consulting Agreement will likewise be attached and incorporated herein. 2. OBLIGATIONS OF CPHMOA. CPHMOA agrees to operate a hematology and oncology practice at the Facility during the term of this Agreement including, but not limited to, the provision of hematology and oncology medical services to patients. The practice will remain, at all times, part of CPHMOA and will not constitute a separate practice. CPHMOA agrees to the following: A. Medical Standards. CPHMOA will use proper professional standards and devote such time as necessary to provide oncology and hematology services to patients and provide oncology and hematology consultation to other physicians on the Medical Staff as needed. B. Medical Practice. CPHMOA agrees to provide oncology and hematology services at the Facility and will use the Facility solely for the practice of oncology and hematology. CPHMOA will plan, implement, operate, and manage the portion of the Facility dedicated to oncology and hematology including, but not limited to, the initial evaluation of patients. CPHMOA will conduct and professionally staff the Facility in such a manner that the Hospital, its Medical Staff, and its patients will be adequately served, provided that an employed physician will medically manage the practice. Physicians employed by CPHMOA and assigned to the Facility will confine their practices to oncology and hematology at the 4 Facility except when practicing at other institutions or locations does not impair the fulfillment of their and CPHMOA's obligations under this Agreement. CPHMOA's practice of oncology and hematology shall be in accordance with recognized medical standards, the Bylaws of the Medical Staff, the Bylaws of the Hospital, and the terms and conditions set forth in this Agreement. Notwithstanding anything herein to the contrary, the Hospital will not have or exercise control over the manner in which the medical duties of CPHMOA are performed as would jeopardize the status of CPHMOA and its employed physicians as independent contractors or would interfere with the professional judgment and ethics of the physicians employed by CPHMOA. The CPHMOA practice at the Facility and its employed physicians shall, at all times, actively participate in any health plans in which the Hospital participates, unless CPHMOA has reasonable objections to participating in one or more said health plans. C. T.COM. CPHMOA and the Hospital will enter into a lease agreement whereby CPHMOA will agree to lease space and equipment at the Facility sufficient to house the hematology and oncology practice. The lease shall contain usual business terms with no confession of judgment clause and no requirement of personal guarantees. The lease shall be for a term of five (5) years with three (3) five (5) year options to renew. Moreover, if this Agreement is terminated for any reason, the lease agreement will automatically terminate in ninety (90) days. The cost of the rent under the lease agreement will be determined after the Facility has been designed and estimates as to the fair market rental value of the Facility have been 5 made. The cost of the rent shall not unreasonably deviate from the fair market rental value estimate of the Facility. Once written, the lease will be attached to this Agreement as "Exhibit B" and incorporated herein. Any future amendments to the Lease will likewise be attached and incorporated herein. D. Consultation. CPHMOA shall ensure that its physician employees are available at reasonable times for consultations with individual members of the Medical Staff, and nursing and administrative employees of the Hospital. CPHMOA shall ensure that it participates actively in the affairs of the Medical Staff and performs such tasks and provides such services as the Medical Staff or any committee thereof may from time to time request. E. Li en .r and Ethics, CPHMOA shall ensure that its physician employees, in performing services under this Agreement, shall be licensed in accordance with Section 3.3-1(a) of the Medical Staff Bylaws and will use their best and most diligent efforts and professional skills, perform professional and supervisory services, and render care to patients in accordance with and in a manner consistent with the standards of the specialties of oncology and hematology, conduct themselves in a manner consistent with the principles of medical ethics of the American Medical Association, and comply with the Bylaws, rules, and regulations of the Medical Staff of the Hospital. F. Insurance Coveraee. At all times during the term of this Agreement, CPHMOA and all persons providing services hereunder through or for CPHMOA will carry professional liability insurance in the amount as required by Section 6.2-2(f) of the Bylaws of the Medical Staff at CPHMOA's expense. CPHMOA will provide a certificate of 6 insurance to the President of the Hospital on an annual basis evidencing such coverage and will notify the President of the Hospital immediately if any change in coverage occurs for any reason. It is further agreed that in the event of cancellation or termination of the Agreement, CPHMOA shall purchase the Optional Extension Period Coverage available to it under its medical malpractice insurance policy for each physician performing services pursuant to this Agreement. Evidence of such coverage shall be furnished to the Hospital. G. The Johns Honkies University Affiliation Agreement. CPHMOA and Conroy agree that their practice of oncology and hematology at the Facility shall be in accordance with the terms and conditions of the Affiliation Agreement between The Johns Hopkins University and the Hospital, attached hereto as "Exhibit C" and incorporated herein. Any future amendments to the Affiliation Agreement will likewise be attached and incorporated herein. 3. RELOCATION EXP N . REMM IRS .MF.NT OF PHYSICIANS BY HO PTT T. A. Practice Sunnort. In consideration for the establishment and maintenance of a full-time private hematology and oncology practice in the primary service area at the Facility, the Hospital agrees to pay for relocation of no more than two (2) physicians employed by CPHMOA, including Leal, and assigned full-time to the Facility for the practice of hematology and/or oncology. The relocation must be to the primary service area of Carlisle Hospital. The relocation expenses may include moving expenses, closing costs on a residence purchased by the physician(s), and reimbursement of any capital loss sustained by the relocating physician(s) in connection with sale of the personal residence currently owned by the physician outside of the primary service area of Carlisle Hospital. 7 The sum of all payments which may be provided by the Hospital directly to the physicians under this section shall not exceed those amounts set forth in the Relocation Expense Reimbursement Agreement, thus establishing a fixed ceiling amount on the "Allowable Expenses." Specific terms governing this arrangement are included in the Relocation Expense Reimbursement Agreement attached hereto as Exhibit "D" and incorporated herein. Any future amendments to the Relocation Expense Reimbursement Agreement will likewise be attached and incorporated herein, including the addition of any additional physicians receiving relocation expense reimbursement under this Agreement. B. Referral . It is stipulated and agreed by the parties hereto that nothing herein shall be construed, implicitly or otherwise, to induce CPHMOA, or its employed physicians, to refer patients to the Hospital or in any way affect CPHMOA's, or its employed physicians', treatment and practices concerning patients, which should always be guided by the physicians' independent professional judgment. 4. COMPENSATION OF CPHMOA BY HOSPITAL FOR START 1P EXP NS S. A. Pa 3 ment of Compensation. In order to assist CPHMOA in establishing a full- time private hematology and oncology practice in the primary service area at the Facility, the Hospital agrees to partially compensate CPHMOA for expenses related to establishing this practice. The payment of these start-up expenses will advance the Hospital's desire to attract a quality hematology and medical oncology practice at the Facility. This compensation will be paid to CPHMOA on a monthly basis for twenty-four (24) months from the date the hematology and oncology practice commences practice at the Facility. 8 B. Amount of Compensati on. The initial monthly payments to CPHMOA by the Hospital will be in those amounts set forth in the Start Up Agreement which is attached hereto as Exhibit "B" and incorporated herein. After six (6) months of making these payments to CPHMOA under this Agreement, CPHMOA will review and disclose to the Hospital its revenues for this six (6) month period for its practice at the Facility. If the total revenues of CPHMOA for its practice at the Facility for this six (6) period exceed that amount set forth in the Start Up Agreement (the "threshold amount"), then the remaining monthly payments to CPHMOA by the Hospital will be decreased by that amount specified in the Start Up Agreement. If the total revenues do not meet the threshold amount after the first six (6) months of practice, then the initial monthly payment amount will remain unchanged. An identical review and revenue disclosure will be made for each subsequent six (6) month period following this initial review provided that CPHMOA does not meet the revenue threshold amount after the initial review . Once the revenue threshold amount is met for any one subsequent six (6) month period, all remaining monthly payments to CPHMOA by the Hospital will be decreased accordingly and no further revenue reviews will be required. C. Documentation. The above revenue review(s) and disclosure(s) will be made by an independent certified public accounting firm of CPHMOA's choosing at CPHMOA's expense. If the quality of the review(s) and/or disclosure(s) do not reasonably satisfy the Hospital, the Hospital may, at its expense, employ an independent certified public accounting firm to conduct a second revenue review of CPHMOA. 9 D. Renavment of Pa n s. 1) If this Agreement shall have terminated due to the expiration of the above twenty-four (24) month period, and if at any time during the three (3) year period immediately following such termination, CPHMOA shall cease to maintain a hematology and oncology practice at the Facility under this Agreement, CPHMOA shall at such time repay to the Hospital the total amount paid by the Hospital under this Agreement, plus simple interest thereon at six percent (6%) APR; provided, however, that the amount of such obligation under this sub-subsection, shall be reduced by twenty percent (20%) for each full one year period that CPHMOA maintains a private practice at the Facility. 2) The obligations of CPHMOA under paragraph 4(D) shall be continuing obligations and shall not be extinguished by the termination or expiration of this Agreement. E. $cf=lg, It is stipulated and agreed by the parties hereto that nothing herein shall be construed, implicitly or otherwise, to induce CPHMOA to refer patients to the Hospital or in any way affect CPHMOA's treatment and practices concerning its patients, which should always be guided by the physicians' independent professional judgment. Moreover, it is stipulated and agreed by the parties hereto that the payments made to compensate CPHMOA for expenses related to the establishment of its practice at the Facility are not related in any way to the provision of any designated health service. F. Written Agreement, Specific terms governing this compensation arrangement are included in the Start Up Agreement attached hereto as Exhibit "E" and incorporated 10 herein. Any future amendments to the Start Up Agreement will likewise be attached and incorporated herein. 5. EXCLUSIVITY. During the term of this Agreement and any renewals thereof, CPHMOA will be the sole provider of outpatient chemotherapy and medical oncology services at the Facility with which the Hospital will have a relationship. 6. MEDICAL STAFF APPOINTMENT. At all times during the term of this Agreement, each Physician employee of CPHMOA who renders services hereunder on behalf of CPHMOA shall be responsible for maintaining his or her appointment as a member of the Active Medical Staff of the Hospital, with clinical privileges sufficient to perform all services required of him or her under this Agreement. 7. PARTIES' RELATIONSHIP. CPHMOA, Conroy, McCorkle, and Leal at all times will act as independent contractors practicing medicine or providing consulting services, either individually or through its employed physicians, and will not act or hold itself, himself, or herself out to third parties as an employee or agent of the Hospital in the provision of consulting or medical services under this Agreement. The Hospital shall have no control or direction over the manner in which the duties of CPHMOA and its employed physicians, Conroy, McCorkle, and Leal are performed, the sole interest and responsibility of the Hospital being to assure that the medical and consulting services covered by this Agreement are performed in a competent, efficient, and satisfactory manner. 8. TAXES BENEFITS The Hospital will not withhold income tax or Social Security tax on behalf of Conroy, McCorkle, Leal, or CPHMOA's employees, subcontractors, or agents. In addition, none of the foregoing will have any claim under this Agreement or otherwise 11 against the Hospital for vacation pay, sick leave, unemployment insurance, worker's compensation, retirement benefits, disability benefits, or employee benefits of any kind. CPHMOA, Conroy, McCorkle, and Leal will have the exclusive responsibility for the payment of all such taxes and arrangements for insurance coverage and will discharge such responsibility fully. 9. INCURRING FINANCIAL OBLIGATION. CPHMOA, Conroy, McCorkle, and Leal will incur no financial obligation on behalf of the Hospital without prior written approval of the President of the Hospital. CPHMOA, Conroy, McCorkle, and Leal will be responsible for all personal and professional expenses, including, but not limited to, membership fees and dues and expenses of attending conventions and meetings. 10. FEES. BILLING_ COLLECTION. AND REMUNERATION. CPHMOA will be responsible for all fees, billing, collection, and remuneration connected to its provision of medical services to patients at the Facility. 11. ACCESS TO BOOK A RECORDS. Upon the written request of the Secretary of Health and Human Services or the Comptroller General or any of their duly authorized representatives, CPHMOA will make available those contracts, books, documents, and records necessary to verify the nature and extent of the costs of providing services under this Agreement. Such inspection shall be available up to 4 years after the rendering of such services. If CPHMOA carries out any of the duties of this Agreement through a subcontract with a value of $10,000 or more over a 12-month period with a related individual or organization, CPHMOA agrees to include this requirement in any such subcontract. This section is included pursuant to and is governed by the requirements of Public Law 96-499, Sec. 952 (Sec. 1861(v)(1) of the Social Security Act) and the regulations promulgated thereunder. No attorney-client, accountant-client, or other legal 12 privilege will be deemed to have been waived by the Hospital, CPHMOA, Conroy, McCorkle, or Leal by virtue of this Agreement. 12. NON-DISCRIMINATION. CPHMOA, Conroy, McCorkle, and Leal will not discriminate on the basis of gender, race, color, sex, age, religion, national origin, or handicap in providing services under this Agreement or in the selection of employees or independent contractors. 13. REGULATORY REQUIREMENTS. CPHMOA will operate at the Facility at all times in compliance with federal, state, and local law, rules, and regulations, the policies, rules, and regulations of the Hospital, the applicable standards of the Joint Commission on the Accreditation of Health Organizations, and all currently accepted and approved methods and practices of the professional specialty of hematology and oncology. 14. HOLD HARMLESS, A. Indemni of the Hospital. CPHMOA, Conroy, McCorkle, and Leal will indemnify and hold the Hospital harmless from any and all claims, actions, liability, and expenses (including costs of judgments, settlements, court costs, and attorneys fees, regardless of the outcome of such claim or action) caused by, resulting from, or alleging negligent or intentional acts or omissions or any failure to perform any obligation undertaken or any covenant in this Agreement, whether such act, omission, or failure was CPHMOA's, Conroy's, McCorkle's, Leal's, or that of any person providing services hereunder through or for Conroy, McCorkle, Leal, or CPHMOA. Upon notice from the Hospital, CPHMOA, Conroy, McCorkle, Leal will resist and defend at its, his, or her own expense, and by counsel reasonably satisfactory to the Hospital, any such claim or action. CPHMOA, Conroy, 13 McCorkle, and Leal will carry proper insurance with the Hospital as an additional named insured to the extent such insurance is reasonably available. Moreover, CPHMOA will indemnify and hold the Hospital harmless from any and all claims, actions, liability, and expenses (including costs of judgments, settlements, court costs, and attorneys fees, regardless of the outcome of such claim or action) caused by, resulting from, or alleging negligent or intentional acts or omissions or any failure to perform any obligation undertaken or any covenant in the Affiliation Agreement made applicable to CPHMOA by section 2(G), supra, whether such act, omission, or failure was CPHMOA's or that of any person providing services hereunder through or for CPHMOA. B. Indemnity of CPHMOA Conroy_ Mc .orkle and Leal. Hospital will indemnify and hold CPHMOA, Conroy, McCorkle, and Leal harmless from any and all claims, actions, liability, or expenses (including costs of settlements, judgments, court costs, and attorneys' fees, regardless of the outcome of such claim or action) caused by, resulting from, or alleging the negligent or intentional actions or omissions of the Hospital's employees or any failure to perform any obligation undertaken or any covenant made by the Hospital under this Agreement. Upon notice from CPHMOA, Conroy, McCorkle, or Leal the Hospital will resist and defend at its own expense, and by counsel reasonably satisfactory to CPHMOA, Conroy, McCorkle, or Leal, such claim or action. Moreover, Hospital will indemnify and hold CPHMOA harmless from any and all claims, actions, liability, or expenses (including costs of settlements, judgments, court costs, and attorneys' fees, regardless of the outcome of such claim or action) caused by, resulting 14 from, or alleging the negligent or intentional actions or omissions of the Hospital's employees or any failure to perform any obligation undertaken or any covenant made by the Hospital under the Affiliation Agreement. 15. TERMINATION OF AGREEMENT. A. Tenn. The term of this Agreement will be for five (5) years commencing MAA& S 199 , with three (3) five (5) year options to renew, unless otherwise terminated as provided herein. B. Termination With Cause. 1) Termination by Hosipital. Subject to sub-subsection 3) below, the Hospital may terminate this Agreement upon the occurrence of any of the following events: (a) Any conduct of CPHMOA or its employees which jeopardizes the health, safety, or welfare of any person, or the safety, reputation, or the regular functions of the Hospital, excluding clinical matters. (b) The loss of or the failure of CPHMOA to provide insurance coverage as required by this Agreement. (c) The resignation, expulsion, or suspension of any of CPHMOA's employed physicians from the Medical Staff, the disciplining of any of such physicians, the loss of any of such physicians' clinical privileges in hematology or oncology, or the loss of any license to practice medicine, if any of the foregoing events shall be reasonably likely to lead to the inability 15 of CPHMOA or Conroy to perform services under this Agreement for a period in excess of thirty (30) days. (If such an event occurs, however, CPHMOA may cure any alleged default by promptly terminating the employment of such physician and hiring a replacement physician within a reasonable period of time provided that CPHMOA continues to perform the services required under this Agreement.) (d) The conviction of any of CPHMOA's employed physicians of any crime punishable as a felony involving moral turpitude or immoral conduct. (If such an event occurs, however, CPHMOA may cure any alleged default by promptly terminating the employment of such physician and hiring a replacement physician within a reasonable period of time provided that CPHMOA continues to perform the services required under this Agreement.) (e) The death of any of CPHMOA's employed physicians or the occurrence of illness or injury reasonably likely to lead to the inability of CPHMOA to perform services under this Agreement for a period in excess of thirty (30) days. (If any such event occurs, however, CPHMOA may cure any alleged default by hiring a replacement physician within a reasonable period of time provided that CPHMOA continues to perform the services required under this Agreement.) (f) The failure of CPHMOA immediately to bar any employed physician from performing services under this Agreement if such physician 16 does not meet the qualifications required by this Agreement, if such physician commits a material breach of one of the terms of this Agreement, or if one of the events listed in (a) through (d) above occurs with respect to such physician. (g) In addition, if CPHMOA breaches any material term of this Agreement, other than those listed in (a) through (f) above, then the Hospital may terminate this Agreement. 2) Termination by CPHMOA. In the event the Hospital breaches any material term of this Agreement, then CPHMOA may terminate this Agreement. 3) Notice and Cure. Notwithstanding anything here to the contrary, in the event of a material breach by one party, the other party may terminate this Agreement by giving the breaching party ninety (90) days written notice of the breach and intent to terminate. After the receipt of such notice, the breaching party shall have thirty (30) days in which to cure the breach or, if such breach is not reasonably susceptible to cure within thirty (30) days, to commence efforts within thirty (30) days to cure such breach and thereafter to pursue diligently such efforts to cure such breach. Termination of this Agreement for any reason shall not deprive or relieve either party of any right or obligation accrued prior to termination. Before the Hospital may terminate this Agreement as a result of a material breach by CPHMOA, the physician-employees of CPHMOA who are shareholders, shall have the opportunity to present their case to a joint meeting of the Board of Trustees of the 17 Hospital. Before the Hospital may terminate this Agreement as a result of a material breach by CPHMOA relating to matters of clinical competency or clinical service, the Hospital shall consider the recommendations of the Medical Staff concerning any proposed termination of this Agreement or prohibition of any physician employee's right to practice medicine at the Hospital. The foregoing shall not be interpreted to permit a challenge or review of such matters and CPHMOA for itself, and its employed physicians, expressly waives any such right pursuant to the fair hearing plan or otherwise. The terms of this Agreement will take precedence over any inconsistent terms which may be found in the Bylaws of the Medical Staff or the Hospital, presently existing as amended. C. Non-Interference. Following the expiration of this Agreement or its termination for any reason, CPHMOA and its employees agree to do nothing in the exercise of their hospital privileges that may interfere with any Hospital contract with any other individual or entity for the provision of hematology or oncology services. 16. NOTICES. Any notices or payments permitted or required by this Agreement shall be deemed made on the day personally delivered in writing or mailed by certified mail, postage prepaid, to the other party at the address set forth below or to such other persons and address as either party may designate in writing: 18 If to Conroy, McCorkle, Leal, or John D. Conroy, Jr., D.O., F.A.C.P. or CPHMOA: Central Pennsylvania Hematology & Medical Oncology Associates, P.C. 50 North 12th Street Lemoyne, PA 17043 With a copy to: David R. Getz, Esquire Wix, Wenger & Weidner 508 North Second Street P. O. Box 845 Harrisburg, PA 17108-0845 If to Hospital: Carlisle Hospital & Health Services 246 Parker Street Carlisle, PA 17013 Attention: President With a copy to: No V. Otto III, Esquire Martson, Deardorff, Williams & Otto Ten East High Street Carlisle, PA 17013 17. j 8}y. The interpretation and enforcement of this Agreement shall be governed by the laws of the Commonwealth of Pennsylvania. 18. SEVERABILITY. The invalidity or unenforceability of any provisions of this Agreement will not affect the validity or enforceability of any other provision. 19. ASSIGNABILITY. The right and obligations of the Hospital hereunder shall inure to the benefit of and be binding upon the successors and assigns of the Hospital. CPHMOA may not assign its rights or obligations under this Agreement without the Hospital's written consent unless the assignment is to an affiliate of CPHMOA. Any assignment in violation of this provision shall give the Hospital the right to terminate this Agreement immediately, upon written notice to 19 CPHMOA. This restriction on assignment does not include the addition or withdraw of physicians to or from CPHMOA. 20. AMENDMENTS. Any amendments to this Agreement will be effective only if in writing and signed by the Hospital and CPHMOA. 21. ENTIRE AGREEMENT . This Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof except to the extent that this Agreement expressly incorporates other agreements between the parties. 22. INTERPRETATION. The defined terms used herein are for convenience only and do not limit the contents of this Agreement. 23. NAME CHANGE. This Agreement shall continue in full force and effect should a change in the name of the Hospital or CPHMOA occur. 24. NO WAIVER. No waiver of a breach of any provision of this Agreement shall be construed to be a waiver of any breach of any other provision. No delay in acting with regard to any breach of any provision of this Agreement shall be construed to be a waiver of such breach. 25. VARIATIONS OF PRONOIT_NC. All pronouns and all variations thereof shall be deemed to refer to the masculine, feminine or neuter, singular or plural, as the identity of the person or persons or entity may require. 26. AUTHORIZATION FOR AGREEMENT. The execution and performance of this Agreement by CPHMOA and the Hospital have been duly authorized by all necessary laws, resolutions, or corporate action, and this Agreement constitutes the valid and enforceable obligations of CPHMOA and the Hospital in accordance with its terms. 20 IN WITNESS WHEREOF, Hospital, CPHMOA, Conroy, and McCorkle have caused their names to be hereunto subscribed by a duly authorized officer, as appropriate, as of the day and year first above written. Attest: Attest: CARLISLE HOSPITAL By: President CENTRAL PENNSYLVANIA HEMATOLOGY AND MEDICAL ONCOLOGY ASSOCIATES, P.C. By: sident t6- Conroy, Jr., D . .A.C.P. yd McCorkle, R.N. JYI-k ?.IL;IA-0 Alfred ea], M.D. 21 FIRST AMENDMENT TO AGREEMENT FIRST AUENDMENT TO AGREEMENT ("First Amendment") is entered into this -day of , 2000 by and between Carlisle Hospital, a Pennsylvania non-profit corporation, 246 Parker Street, Carlisle, Pennsylvania (the "Hospital"), and Central Pennsylvania Hematology & Medical Oncology Associates, P.C. ("CPHMOA"), a Pennsylvania professional corporation, 50 North 12"' Street, Lemoyne, Pennsylvania 17043. RECITALS R-1. The parties and other individuals entered into an Agreement dated December 22, 1998 (the "Agreement"). R-2. The parties hereto desire to amend the Agreement as set forth in Paragraph 20 of the Agreement. R-3. The individual parties to the Agreement are not joining in this First Amendment, as it does not affect their rights or obligations. NOW THERFORE, and intending to be legally bound hereby, the parties hereto amend the Agreement as follows: Recitals. The above Recitals are incorporated herein by reference. 2. Paragraph 7 of the Agreement is hereby amended by adding at the end of said Paragraph the following sentence: All books and records and medical records of CPHMOA shall remain the property of CPHMOA after the expiration, termination or conclusion of this Agreement. 3. Paragraph 15 A of the Agreement is hereby amended and restated in its entirety, as follows: A. Term. The term of this Agreement will be for five (5) years commencing March 8, 1999, with three (3) five (5) year options to renew, unless otherwise terminated as provided herein. In the event that the Hospital does not renew the Agreement at the end of the initial five (5) year term, and in the event the Hospital has no right to terminate for cause as set forth in Paragraph 15 B(1), the Hospital shall pay to CPHMOA the sum of $35,000.00, which represents CPHMOA's unamortized expenses in opening its medical facility as contemplated by the Agreement. 4. Ratification. Expect as herein modified, the Agreement is hereby ratified and confirmed. IN WITNESS WHEREOF, the Hospital and CPHMOA have executed this First Amendment as of the day and year first above written. ATTEST: CARLISLE HOSPITAL By: (Asst.) Secretary Presid n ATTEST: CENTRAL PENNSYLVANIA HEMATOLOGY AND MEDICAL ONCOLOGY ASSOCIATES, P.C. (Asst.) Secretary By: (.U M? /l (Vi resident F:\drg\1538 . CPHMOA\9417 - Carlisle Project\Documents\First Amendment.doc Exhibit B F:\FILES\DATAFILE\HOSPrrAL. DOC\845LEA. I 845LEA.1 LEASE AGREEMENT This Lease made as of the 1st day of June, 1999, by and between CARLISLE HOSPITAL, a Pennsylvania nonprofit corporation, of 246 Parker Street, Carlisle, Pennsylvania (hereinafter "Landlord") and CENTRAL PENNSYLVANIA HEMATOLOGY & MEDICAL ONCOLOGY ASSOCIATES, P.C., a Pennsylvania professional corporation, of 50 North 12th Street, Lemoyne, Pennsylvania (hereinafter "Tenant"). 1. Leased Premises. Intending to be legally bound hereby, and upon the terms and subject to the conditions hereinafter set forth, Landlord does hereby rent, demise and lease unto Tenant that certain space containing approximately five thousand two hundred ten (5,210) square feet situate within Carlisle Hospital Cancer Center, Carlisle, Cumberland County, Pennsylvania, hereinafter referred to as the "Leased Premises" 2. Leased Equipment. Intending to be legally bound hereby, and upon the terms and subject to the conditions hereinafter set forth, Landlord does hereby rent, demise and lease unto Tenant that certain equipment situate within Carlisle Hospital Cancer Center, Carlisle, Cumberland County, Pennsylvania, as further described below and hereinafter referred to as the "Leased Equipment": • Allegiance Diagnostic Set • Two (2) Allegiance Exam Lights • Allegiance Stool • Allegiance Exam Table • Allegiance Thermometer • Baring Industries -- Coffee Maker and Microwave Oven • Tangers -- Three (3) Refrigerators • U.S. Office Supplies -- TV/VCR Carts • Carlisle Electronics -- TV/VCR Stand • Custom Comfort -- Draw Chair • Celtech Laboratory -- Refrigerator • Commonwealth Office Systems -- Lektreiver • Delta Scientific -- Hematology System • Delta Scientific -- Chemistry Analyzer • Delta Scientific -- Chemistry Module • Delta Scientific -- Laboratory Information System • Delta Scientific -- Centrifuge • Delta Scientific -- Microscope • Delta Scientific -- Blood Mixer • Delta Scientific -- Slide Stainer • Detecto Scale • GEM Refrigerator Company -- Laboratory Refrigerator • Germfree Labs -- Benchtop Hood • Getinge Castle -- Mayo Stand • Good's Furniture -- LazyBoy Recliners • Edwards Business Equipment -- Copiers (leased) • Phillips Office Products -- Furnishings • Scotsman Supply -- Icemaker • Sears -- Carts; Vacuum • Storage Systems -- Lockers; Shelving • Zeplin Security -- Alarm Monitoring (shared use 50%) • Zoll -- Defibulator (shared use 50%) 3. Term. This Lease shall remain in full force and effect for an initial term of five (5) years, beginning on June 1, 1999 and ending May 31, 2004 (hereinafter the "Initial Term") and shall automatically renew for three (3) succeeding periods of five (5) years each (hereinafter the "Renewal Term(s)") unless terminated hereunder (collectively the "Term"). Any termination of this Lease shall be governed by the terms and conditions contained in the Agreement between the parties dated December 22, 1998 (the "Master Agreement"). 4. Use. Tenant shall use the Leased Premises and Lease Equipment primarily for the purpose of delivering oncology and hematology services to patients and the activities customarily associated therewith. 2 5. Rent. The monthly rent shall be Eight Thousand Six Hundred Eighty-three and 33/100 Dollars ($8,683.33) per month). Rent is due on the first day of each month in advance at Landlord's address as set forth above. Equipment rental shall be Two Thousand Nine Hundred Thirty and 14/100 Dollars ($2,930.14) per month for the first eighty-four months of the initial term and first renewal term. Ownership of the equipment shall then be turned over to Tenant and rental therefor shall cease. 6. Utilities. Landlord shall be solely responsible for and shall promptly pay all charges for all utility services, except for telephone and cable television. 7. Additional Rent. Landlord, at its election, shall have the right to pay or do any act which requires the expenditure of any sum of money by reason of the failure or neglect of Tenant to perform any of the provisions of this Lease, and in the event Landlord shall at its election pay such sums or do such acts requiring the expenditure of monies; Tenant agrees to pay Landlord, as Additional Rent, all such sums so paid by Landlord. 8. No Partnership. Landlord shall in no event be construed, held or become in any way or for any purpose a partner, associate or joint venturer of Tenant or any party associated with Tenant in the conduct of its business or otherwise. 9. Compliance with Laws. Tenant shall, at its own cost and expense: (a) comply with all governmental laws, ordinances, orders and regulations affecting the Leased Premises and Equipment now in force or which hereafter may be in force; (b) not suffer, permit, or commit any waste or nuisance; and (c) not voluntarily conduct any auction, distress, fire or bankruptcy sale from the Leased Premises. 10. Assignment. Tenant shall not, without Landlord's written consent, transfer, assign, sublet, mortgage, enter into license or concession agreements, or change ownership of this Lease or Tenant's interest in and to the Leased Premises or Equipment. The foregoing shall not prohibit the addition or withdrawal of physicians to or from Tenant. 11. Repairs. Tenant shall repair and maintain the Leased Equipment. Landlord shall be responsible for structural and mechanical system maintenance and repair, removal of snow and ice, maintenance of landscaping and parking areas and any repairs occasioned by any 3 condition pre-existing Tenant's occupancy. Tenant shall use all reasonable precaution to prevent waste, damage or injury to the Premises. Tenant shall be responsible for all repairs to the interior of the Premises occasioned by the acts or omissions of Tenant and/or Tenant's invitees. Further, all damages or injuries done by Tenant, its agents, employees or invitees to the Premises, or the structural or mechanical systems or grounds or parking areas (other than those caused by ordinary wear and tear or the acts or omissions of Landlord) shall be repaired by Tenant. 12. Liens. Should any judgment be entered against the Leased Premises, or the premises of which the Leased Premises is a part, or any part thereof by reason of Tenant's acts or omissions or because of a claim against Tenant, Tenant shall cause the same to be canceled and discharged of record by bond or otherwise within forty-five (45) days after Tenant's receipt of a notice by Landlord. Tenant's failure to do so shall constitute a material default under this Lease without the necessity for any further notice by Landlord to Tenant. 13. Liability. Landlord and Tenant shall indemnify each other, and save each other harmless from suits, actions, damages, liability and expense in connection with loss of life, bodily or personal injury or property damage arising from or out of the use or occupancy of the Leased Premises, the premises of which the Leased Premises is a part, or any part thereof, or occasioned wholly or in part by any act or omission of Landlord, Tenant, their agents, contractors, employees, servants, invitees, licensees or concessionaires, whether occurring in or about the Leased Premises or elsewhere within the premises of which the Leased Premises is a part, but neither Landlord nor Tenant shall be liable for damage or injury proximately caused by the negligence of the other's agents, servants or employees, unless such damage or injury is covered by insurance that each is required to provide or does provide. This obligation to indemnify shall include reasonable attorneys' fees and investigation costs and all other reasonable costs, expenses and liabilities from the first notice that any claim or demand is to be made or may be made. Landlord shall not be responsible or liable to Tenant or to those claiming by, through or under Tenant for any loss or damage to either the person or to Tenant that may be occasioned by or through the acts or omissions of persons occupying adjacent, connecting or otherwise adjoining premises. 4 14. Insurance. Landlord shall maintain such insurance on the Leased Premises and Equipment as shall be reasonably acceptable to Landlord. Such insurance may be part of Landlord's policy on the premises of which the Leased Premises are a part. Tenant may, at its own expense, maintain such additional insurance with respect to the Leased Premises and the contents thereof as it may desire. 15. Destruction. If the building or other improvements located on the Leased Premises, or the Leased Equipment, should be damaged by fire or other casualty so that in the reasonable judgment of Tenant the business conducted on the Leased Premises could not be conducted in a normal manner until the building and/or improvements are repaired or reconstructed, then Tenant may, at its option, return possession of the Leased Premises to Landlord. If the building or other improvements located on the Leased Premises, or the Leased Equipment, should be damaged by fire or other casualty but the damage is sufficiently limited that in the reasonable judgment of Tenant the business conducted on the Leased Premises can continue to be conducted in a normal manner while the buildings and improvements are being repaired, then Landlord shall repair the buildings and/or improvements and this Lease shall continue in force and effect. In any event Landlord shall be entitled to receive the entire insurance proceeds payable as a result of any damage to the buildings or improvements on the Leased Premises occurring during the term of this Lease or any renewal term. 16. Condemnation. If all or any part of the Leased Premises shall be appropriated or condemned by any public or quasi-public authority in the exercise of its right of condemnation or eminent domain, both Tenant and Landlord shall have the right to prosecute a claim for an award and to share in the proceeds of any and all awards based upon their respective interests. 17. Default. Remedies. If Tenant shall default in any payment required for a period of thirty (30) days after receipt by Tenant of written demand from Landlord for the same, or if Tenant shall abandon the Leased Premises or fail to use the Leased Premises for the purpose intended herein for a period of ninety (90) consecutive business days (except as a result of a condition beyond Tenant's reasonable control, or for repairs or restoration of the Leased Premises) or if default shall be made by Tenant in any of the other covenants and agreements herein contained to be kept and fulfilled on the part of Tenant for a period of forty-five (45) days 5 after receipt by Tenant of written notice from Landlord of such default without action by Tenant to remedy such default and continuance of such action to remedy such default to conclusion with reasonable diligence, Landlord may, at anytime thereafter during the continuance of such default, terminate this Lease. All of the remedies given to Landlord in this Section or elsewhere in this Lease in the event of default by Tenant are in addition to and not in derogation of all other rights or remedies to which Landlord may be entitled pursuant to this Lease or otherwise and all such remedies shall be deemed cumulative such that the election of one shall not be deemed a waiver of any other or further rights or remedies. 18. Bankruptcy. To the full extent permissible under the United States Bankruptcy Code or any successor thereto, if Tenant shall file a voluntary petition in bankruptcy or take the benefit of any insolvency act or be dissolved or adjudicated a bankrupt, or if a receiver shall be appointed for its business or its assets and the appointment of such receiver is not vacated within sixty (60) days after such appointment, or if it shall make an assignment for the benefit of its creditors, and any such petition, adjudication, declaration, or appointment of a receiver shall continue without cure or resolution for a period of more than ninety (90) days, then and forthwith thereafter Landlord shall have all of the rights provided above in the event of default in payment due. 19. Access to Premises. Landlord shall have the right to enter the Leased Premises at all reasonable times to inspect or exhibit the same to prospective purchasers, mortgagees, and tenants. 20. Quiet Enjoyment. Landlord represents and warrants that Landlord is the fee simple owner of the Leased Premises subject to certain liens and encumbrances and that Landlord has full right and authority to enter into this Lease. Landlord covenants and agrees that Tenant shall and may peacefully and quietly hold and enjoy the Leased Premises throughout the Term hereof without hindrance by Landlord or any other person claiming through or under Landlord. Should Landlord fail to make any payment of taxes, assessments, mortgage payments or any other payment in respect of any other lien or encumbrance against the Leased Premises, Tenant shall have the right, but not the obligation, to make any such payment on behalf of 6 Landlord, and any sum so advanced by Tenant, including costs and attorneys' fees in defending the title to or claims against the Leased Premises, shall be immediately payable by Landlord to Tenant. Tenant may offset against such payments any payments due to Landlord. 21. Force Maieure. Landlord shall be excused for the period of any delay in the performance of any obligations hereunder, when prevented from so doing by cause or causes beyond Landlord's control which shall include, without limitation, all labor disputes, civil commotion, war, war-like operations, invasion, rebellion, hostilities, military or usurped power, sabotage, governmental regulations or controls, fire or other casualty, adverse weather conditions, inability to obtain any material or services, or through acts of God. Tenant shall similarly be excused for delay in the performance of its obligations hereunder. 22. End of Term. Upon expiration of the Term, Tenant shall surrender the Leased Premises and Tenant shall deliver all keys and combinations to locks to Landlord. Tenant's obligations to perform this provision shall survive the end of the Term. Tenant will deliver up and surrender possession of the Leased Premises to Landlord upon the expiration of this Lease or its termination in any way in the condition and state of repair then existing. 23. Waiver. Failure of Landlord or Tenant to insist upon the strict performance of any provision of this Lease shall not be construed as a waiver for the future of any such provision. 24. Notices. Any notice, demand, request or other instrument which may be or is required to be given under this Lease shall be delivered in person or sent by United States Certified or Registered Mail, postage prepaid and shall be addressed to the respective addresses of Landlord and Tenant as given in the Master Agreement. 25. Partial Invalidity. If any provision of this Lease or application thereof to any person or circumstances shall to any extent be invalid, the remainder of this Lease or the application of such provision to persons or circumstances other than those as to which it is held invalid shall not be affected thereby and each provision of this Lease shall be valid and enforced to the fullest extent permitted by law. 26. Successors and Assigns. Except as otherwise expressly provided, all provisions herein shall be binding upon and shall inure to the benefit of the parties, their legal representatives, successors and assigns. 7 IN WITNESS WHEREOF, the parties set their respective hands and seals hereto, intending to be legally bound hereby. ATTEST: CARLISLE HOSPITAL By: Aa-46 Tit e: CENTRAL PENNSYLVANIA HEMATOLOGY & MEDICAL ONCOLOGY ASSOCIATES, P.C. FIFO.E5IOATAF MOSPITALDOCWSLEA.1 895 By: /"V, Till . 8 Exhibit C START UP AGREEMENT THIS AGREEMENT ("Agreement") is made this 1st day of June, 1999, and is between CARLISLE HOSPITAL (the "Hospital'), 246 Parker Street, Carlisle, Pennsylvania 17013 and CENTRAL PENNSYLVANIA HEMATOLOGY &MEDICAL ONCOLOGY ASSOCIATES, P.C. ("CPHMOA"), 50 North 12th Street, Lemoyne, Pennsylvania 17043. WHEREAS, the Hospital has identified a strong, demonstrable need for a hematology and medical oncology practice in the community; and WHEREAS, the Hospital recognizes that the provision of hematology and medical oncology services in the Carlisle area is both a new practice and is medically necessary for person living in the primary service area of the Hospital and that the start up of such a new practice will require the expenditure of significant funds; and WHEREAS, the Hospital is willing to provide remuneration to CPHMOA for the start up of the new practice in accordance with the terms of the Agreement between the parties dated December 22, 1998 (the "Master Agreement"); and WHEREAS, the payment of certain start up expenses will advance the Hospitars desire to attract a quality hematology and medical oncology practice at the Carlisle Hospital Cancer Center; and WHEREAS, CPHMOA is willing to start up a hematology and medical oncology practice in the Carlisle area at the Carlisle Hospital Cancer Center. NOW, THEREFORE, the parties hereto, intending to be legally bound, do hereby agree as follows: CPHMOA agrees to establish a hematology and medical oncology practice at the Carlisle Hospital Cancer Center allin accordance with the applicable laws, regulations, rules of ethics, and terms and conditions of the Master Agreement. 2. As of the date hereof, Hospital agrees to pay CPHMOA the sum of $39,495.00. Thereafter, Hospital agrees to pay CPHMOA the sum of $12,863.47 per month for a period of twenty four (24) months, payments being due on the 1st day of each month. After six (6) months, CPHMOA shall review and disclose to the Hospital its revenues for the initial six (6) month period for its practice at the Carlisle Hospital Cancer Center. If the total revenues of CPHMOA for its practice at the Center exceed $550,000.00 (the "threshold amount"), then the remaining monthly payments to CPHMOA by the Hospital shall be reduced to $625.00 per month. If the total revenues do not meet the threshold amount, then the initial monthly payment amount shall remain unchanged. An identical review and revenue disclosure shall be made for each subsequent six (6) month period following this initial review provided that CPHMOA does not meet the revenue threshold amount after the initial review. Once the revenue threshold amount is met for any one subsequent six (6) month period, all remaining monthly payments to CPHMOA by the Hospital shall be decreased to $625.00 per month and no further reviews will be required. 3. All revenue reviews and disclosures shall be made by an independent certified public accountant of CPHMOA's choosing at CPHMOA's expense. If the quality of any review or disclosure does not reasonably satisfy the Hospital, the Hospital may, at its expense, employ an independent certified public accountant to conduct a second revenue review of CPHMOA. 4. If this Agreement shall have terminated due to the expiration of the above twenty-four (24) month period, and if at any time during the three (3) year period immediately following such termination, CPHMOA shall cease to maintain a hematology and oncology practice at the Carlisle Hospital Cancer Center under this Agreement, CPHMOA shall at such time repay to the Hospital the total amount paid by the Hospital under this Agreement, plus simple interest thereon at six percent (6%) APR; provided, however, that the amount of such obligation under this sub-subsection, shall be reduced by twenty percent (20%) for each full one year period that CPHMOA maintains a private practice at the Facility. The obligations of CPHMOA under paragraph 4 shall be continuing obligations and shall not be extinguished by the termination or expiration of this Agreement or the Master Agreement. 5. It is stipulated and agreed by the parties hereto that nothing herein shall be construed, implicitly or otherwise, to induce the CPHMOA to refer patients to the Hospital or in any way affect the CPHMOA's treatment and practices concerning his patients, which should always be guided by the independent professional judgment CPHMOA's employed physicians. 6. This Agreement shall be interpreted, construed, and governed according to the laws of the Commonwealth of Pennsylvania. 7. Each party's rights and obligations under this Agreement are personal and not assignable. 8. All notices, requests, demands, and other communications hereunder shall be in writing, and shall be deemed to have been duly given if delivered or mailed to the parties at their 2 respective business addresses set forth in the Master Agreement or to such other address as either party shall designate to the other party in writing. IN WITNESS WHEREOF, the Hospital and CPHMOA have caused this Agreement to be executed by its duly authorized officers and its corporate seals to be affixed. Attest: Secretary Attest: CENTRAL PENNSYLVANIA HEMATOLOGY & MEDICAL ONCOLOGY ASSOCIATES, P.C. ..? (SEAL) CARLISLE HOSPITAL £' . CARLISLE AREA HEALTH AND WELLNESS FOUNDATION, Plaintiff CIVIL ACTION - LAW V. CENTRAL PENNSYLVANIA HEMATOLOGY & MEDICAL ONCOLOGY ASSOCIATES, P.C. Defendant IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA VERIFICATION William R. Keen, who is Chairman of the Board of Trustees of the Carlisle Area Health and Wellness Foundation and acknowledges that he has the authority to execute this Verification on behalf of the Carlisle Area Health and Wellness Foundation certifies that the foregoing Complaint is based upon information which has been gathered by my counsel in the preparation of the lawsuit. The language of this document is of counsel and not my own. I have read the document and to the extend that the document 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 is 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. Date: z ° Z CARLISLE AREA HEALTH AND WELLNESS FOUNDATION, Plaintiff V. CENTRAL PENNSYLVANIA HEMATOLOGY & MEDICAL ONCOLOGY ASSOCIATES, P.C. Defendant IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW NO. Qa,' ATTORNEYS ACCEPTANCE OF SERVICE I, David R. Getz, Esquire, attorney for Defendant Central Pennsylvania Hematology & Medical Oncology Associates, P.C. in the above-captioned action, hereby accept service of the Complaint in the above action on July, 2002, on its behalf and certify that I am authorized to do so. WIX, WENGER & WEIDNER By David R. Getz, Esquire 508 North Second Street Post Office Box 845 Harrisburg, PA 17108-0845 717) 234-4182 Attorneys for Central Pennsylvania Hematology & Medical Oncology Associates, P.C. c o T?(j` r, t mr,' = ` _.;_ ?- r - -r, , ;? _ ;c ?, . ?. _,, : ?; c_ z? ? : ?, -;- ti Ca N ? ? ? cr c? `J a O n. (YJ -? CARLISLE AREA HEALTH AND WELLNESS FOUNDATION, Plaintiff V. CENTRAL PENNSYLVANIA HEMATOLOGY & MEDICAL ONCOLOGY ASSOCIATES, P.C., Defendant To the Prothonotary: : CIVIL ACTION - LAW : IN THE COURT OF COMMON PLEAS : CUMBERLAND COUNTY, PENNSYLVANIA JURY TRIAL DEMANDED NO. 02-3188 CIVIL TERM PRAECIPE Please note that Defendant demands a jury trial in the above-captioned action. ??wa DATE: WIX, WENGER & WEIDNER g?'. j- ?2 2??2-L By: David R. Getz, Esquire I.D. #34838 508 North Second Street P.O. Box 845 Harrisburg, PA 17108-0845 (717) 234-4182 F:\drg\1538 - CPHMOA\9417 - Carlisle Project\Documents\Praecipe.doc 4=3 CD J7 ? ?y CARLISLE AREA HEALTH AND WELLNESS FOUNDATION, Plaintiff IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW v. CENTRAL PENNSYLVANIA HEMATOLOGY & MEDICAL ONCOLOGY ASSOCIATES, P.C., Defendant : JURY TRIAL DEMANDED NO. 02-3188 CIVIL TERM NOTICE TO PLEAD TO: Carlisle Area Health and Wellness Foundation c/o No V. Otto, III, Esquire Carl C. Risch, Esquire Martson, Deardorff, Williams & Otto Ten East High Street Carlisle, PA 17013 YOU ARE HEREBY NOTIFIED to plead to the within New Matter and Counterclaim within twenty (20) days from service hereof, or a default judgment may be entered against you. WIX, WENGER & WEIDNER Y: r/ David R. Getz, Esquire I.D. #34838 508 North Second Street P.O. Box 845 Harrisburg, PA 17108-0845 (717) 234-4182 DATE: A?V"4- 'a) C2-60 9- CARLISLE AREA HEALTH AND WELLNESS FOUNDATION, Plaintiff IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW V. CENTRAL PENNSYLVANIA HEMATOLOGY & MEDICAL ONCOLOGY ASSOCIATES, P.C., Defendant : JURY TRIAL DEMANDED NO. 02-3188 CIVIL TERM ANSWER WITH NEW MATTER AND COUNTERCLAIM AND NOW COMES the Defendant, Central Pennsylvania Hematology & Medical Oncology Associates, P.C., by its attorneys, Wix, Wenger & Weidner and files the following Answer with New Matter and Counterclaim to the Plaintiff's Complaint as follows: ANSWER Admitted on information and belief. 2. Admitted on information and belief. 3. Admitted. 4. Admitted in part and denied in part. It is admitted that Defendant and Plaintiff were two of the parties to an Agreement dated December 22, 1998 related to the Carlisle Hospital Cancer Center. It is denied that the Agreement attached as Exhibit A is complete. To the contrary, Paragraph 1 of the Agreement refers to Exhibit A, which Plaintiff has failed to attach to the Agreement. The Agreement also refers to other documents, specifically an Affiliation Agreement (Exhibit C) and a Relocation Expense Reimbursement Agreement (Exhibit D) that Plaintiff has failed to attach to the Agreement. The other exhibits (Exhibit B, which is a Lease Agreement and Exhibit E, which is a Start-Up Agreement) are attached as Exhibit B and C, respectively, to the Complaint. 5. Admitted that the documents are dated as of June 1, 1999. Defendant did not receive copies of said documents executed by Plaintiff until December 2000. 6. Admitted in part and denied in part. It is admitted that the original lease term was five years and that the original agreement was to rent 5,210 square feet of space and to rent certain equipment. It is denied that Defendant in fact occupied 5,210 square feet of space, as Defendant was required by Plaintiff to surrender over 3,000 square feet of space to Plaintiff. It is also denied that all of the equipment as designated in the Lease Agreement was rented as Plaintiff removed certain of the equipment from the premises and, because of Plaintiff's actions, some of the equipment was not able to be used by Defendant. 7. Denied. It is denied that the amount of rent and equipment rental stated in this paragraph are the correct amounts. To the contrary, because Defendant, at the behest of Plaintiff, only occupied 2,156 square feet of space, the amount of rent allegedly owed was substantially reduced. Even this amount is not owed because of the breaches of Plaintiff under the Start-Up Agreement (Exhibit C to Plaintiff's Complaint). Further, because not all of the equipment was used, the amount of rent identified in the Lease Agreement is not correct. 8. Admitted in part and denied in part. It is admitted that the Defendant possessed 2,156 square feet of the Premises and portions of the equipment from June 1, 1999 until at least June 19, 2001: As to the remaining allegations of this paragraph concerning Plaintiff's conveying certain assets to Health Management Associates (" HMA"), after reasonable investigation, Defendant is without information sufficient to form a belief as to the truth of these averments, and the same are therefore denied and proof thereof is demanded. 9. Denied. It is denied that Defendant owes Plaintiff $285,691.36 because Plaintiff reduced the size of the Premises from 5,210 square feet to 2,156 square feet and some of the equipment was not rented. Further, Plaintiff failed to make payments to Defendant in accordance with the Start-Up Agreement attached as Exhibit C to Plaintiff's Complaint, thereby breaching its obligations to Defendant. Defendant intended to make the reduced rental payments using the money paid to it by Plaintiff pursuant to the Start-Up Agreement, which payments Plaintiff failed to make. Further, Plaintiff is in breach of the various agreements between the parties for the reasons set forth more fully in the New Matter and Counterclaim, so no rental payments are due to Plaintiff. 10. Admitted in part and denied in part. It is admitted that the parties entered into a Start-Up Agreement dated as of June 1, 1999 whereby Plaintiff was to make an initial payment to Defendant of $39,495.00. Further, Plaintiff was to pay Defendant $12,863.47 per month for a period of 24 months, which payments Plaintiff failed to make. 11. Admitted. By way of further answer, Plaintiff failed to make the 24 subsequent payments in the amount of $12,863.47 each as required by the Start-Up Agreement, for a total of $308,723.28. 2 12. Admitted in part and denied in part. It is admitted that Defendant ceased to maintain a hematology and oncology practice in 2,156 square feet of the Premises in March 2002. It is denied that Defendant was in breach of any agreements between the parties. By the time that Defendant reached its decision to close its practice in Carlisle, Plaintiff had breached the agreements between the parties on multiple occasions. Furthermore, after June 19, 2001, Defendant was no longer entitled to the protections of the Lease Agreement attached as Exhibit B to the Complaint because Plaintiff failed to assign that Lease Agreement to HMA. 13. The averments of this paragraph contain conclusions of law to which no responsive pleading is required. To the extent that a responsive pleading is required, it is denied that Defendant is obligated to repay any amounts to Plaintiff because of Plaintiff's breaches of the Agreement, the Lease Agreement and the Start-Up Agreement. 14. No response required. 15. The averments of this paragraph contain conclusions of law to which no responsive pleading is required. To the extent that a responsive pleading is required, it is denied that Defendant is obligated to pay or to repay any amounts to Plaintiff because of Plaintiff's breaches of the Agreement, the Lease Agreement and the Start-Up Agreement. 16. No response required. 17. The averments of this paragraph contain conclusions of law to which no responsive pleading is required. To the extent that a responsive pleading is required, it is denied that Defendant is obligated to pay or to repay any amounts to Plaintiff because of Plaintiff's breaches of the Agreement, the Lease Agreement and the Start-Up Agreement. WHEREFORE, Defendant demands this action be dismissed, awarding to Defendant its costs of suit. NEW MATTER 18. Defendant hereby incorporates by reference the averments contained in Paragraphs 1 through 17 of its Answer. 19. Pursuant to the Start-Up Agreement (Exhibit C of Plaintiff's Complaint), Plaintiff was obligated to pay Defendant the sum of $12,863.47 per month for a period of 24 months beginning in June 1999. 20. Plaintiff has failed to make even one of the required 24 payments. 3 21. Plaintiff has failed to make payments to Defendant pursuant to the Start- Up Agreement in the total amount of $308,723.28. 22. On information and belief, Plaintiff sold the Carlisle Hospital Cancer Center to HMA on or about June 19, 2001. 23. Plaintiff did not assign the Lease Agreement (Exhibit B to Plaintiff's Complaint) to HMA. 24. The Plaintiff's failure to assign the Lease Agreement to HMA was in no way caused by Defendant. 25. As Plaintiff did not assign the Lease Agreement to HMA, Defendant had no written legal relationship with HMA. 26. After June 19, 2001, Plaintiff was no longer a responsible party under the Lease Agreement. 27. Plaintiff did not assign the Agreement (Exhibit A to Plaintiff's Complaint) to HMA. 28. On December 14, 2000, Plaintiff and Defendant entered into a First Amendment to Agreement ("First Amendment") (a copy of which is attached to Plaintiff's Complaint as part of Exhibit A). 29. The First Amendment provided that Defendant would receive $35,000.00 from Plaintiff in payment of unamortized expenses in opening its medical practice, if Plaintiff did not renew the Agreement at the end of the initial five year term. 30. Plaintiff has no ability to renew or not renew the Agreement or the Lease Agreement after it sold its assets to HMA, nor does Plaintiff have any ability to control the landlord/tenant relationship between HMA and Defendant, as it did not assign the Lease Agreement to HMA. 31. Plaintiff placed its agent and employee, Jean E. Ball, as the Administrator of the Carlisle Hospital Cancer Center. 32. At all times during her employment by Plaintiff, Jean E. Ball was an employee and agent of Plaintiff who was vested with authority by Plaintiff to administer the Carlisle Hospital Cancer Center. 33. Beginning with the date that Defendant opened its practice at the Carlisle Hospital Cancer Center, Plaintiff's agent, Jean E. Ball, required Defendant to vacate portions of the 5,210 square feet of space. 4 34. The portions of space vacated by Defendant were then taken over by Carlisle Hospital Health Services, Plaintiff's predecessor, to be used for medical office space for a radiation therapy practice owned and operated by the Hospital. 35. Accordingly, the square footage that Defendant occupied was reduced at Plaintiff's direction from 5,210 square feet to 2,156 square feet. 36. The actions and directions of Plaintiff's agent with respect to the size of the leasehold premises served to amend the Lease Agreement. 37. Defendant cannot be required to pay rent for space it did not occupy at Plaintiff's direction. 38. If Defendant owes rent to Plaintiff, the amount owed must be based on the reduced square footage of 2,156 square feet. 39. Alternatively, Plaintiff's action in unilaterally reducing Defendant's leasehold space was a breach of the Lease Agreement. 40. Further, Jean E. Ball removed some of the equipment designated in the Lease Agreement from the Premises and took other actions that prevented Defendant from utilizing some of the equipment. 41. The actions and directions of Plaintiff's agent with respect to the equipment served to amend the Lease Agreement. 42. Defendant cannot be required to pay rent for equipment that it did not have or use at Plaintiff's direction. 43. If Defendant owes rent to Plaintiff for equipment, the amount owed must be reduced to reflect equipment removed or made not useful by Plaintiff's agent. 44. Alternatively, the actions and directions of Plaintiff's agent with respect to the equipment was a breach of the Lease Agreement. 45. After HMA became the owner of the Carlisle Hospital Cancer Center, Defendant and HMA/Carlisle Hospital Management Associates, Inc. d/b/a Carlisle Regional Medical Center ("CRMC") entered into a Medical Office Building Lease (the New Lease Agreement") dated as of June 19, 2001. 46. The New Lease Agreement with CRMC was for 2,156 square feet of rental space, which was the area then being occupied and utilized by Defendant, which space was calculated by Defendant's architect and confirmed by CRMC. 47. Defendant paid rent to CRMC pursuant to the New Lease Agreement in full from June 19, 2001 until March 10, 2002. 5 48. In September 1998, Plaintiff's agent met with Defendant in order to solicit Defendant to open a medical practice in Carlisle. 49. The initial contact between the parties was initiated by Plaintiff. 50. During the very first meeting, the agent and representative of the Plaintiff guaranteed Defendant that Defendant would incur no expenses for the first two years of operation in Carlisle in order to permit Defendant to attempt to establish a financially viable practice in Carlisle. 51. All negotiations and agreements between the parties were based on Plaintiff's guarantee that Defendant would incur no expenses for the first two years of operation in Carlisle. 52. The Agreement, Lease Agreement and Start-Up Agreement (Exhibits A, B and C to Plaintiff's Complaint) were all prepared by Plaintiff's counsel with the exception of the First Amendment to Agreement, which was prepared by Defendant's counsel. 53. Defendant had the right to terminate its relationship with Plaintiff and to terminate the Agreement because the Plaintiff breached the Agreement. 54. Plaintiff agreed to have the Carlisle Hospital Cancer Center open for business on January 1, 1999. 55. In anticipation of the guaranteed opening date, Defendant hired staff and spent substantial sums training the staff and preparing them to begin work on the date announced by the Plaintiff. 56. Plaintiff failed to have the Carlisle Hospital Cancer Center completed on the date promised. 57. When the facility was not ready to be opened, due to no fault of Defendant, Defendant incurred additional staff time and was forced to pay the excess employees for several months until the Plaintiff was able to complete the facility. 58. The Plaintiff knew that Defendant, as part of Defendant's budgeted operations, intended to construct and operate a laboratory at the Carlisle Hospital Cancer Center for the purpose of doing blood tests, complete blood counts, etc. (the "Laborator)"). 59. Before the Carlisle Hospital Cancer Center was open, Plaintiff agreed to recommend to its radiation therapy patients that they use the Laboratory that was co- located in the same building as was the radiation therapy practice owned by the Plaintiff. 60. With Plaintiff's knowledge and acquiescence, Defendant planned the size of its Laboratory to do blood work for its patients and for patients of Plaintiff who desired that service. 6 61. On the day that Defendant opened its practice at the Carlisle Hospital Cancer Center, Plaintiff's agent, Jean E. Ball, announced that the Plaintiff would withdraw all radiation therapy blood tests, CBCs, etc. from Defendant's Laboratory and would instead send the Plaintiff's patients to the Carlisle Hospital for blood work. 62. This decision by Ms. Ball made Defendant's Laboratory uneconomical to operate and necessitated closing the Laboratory. 63. Plaintiff was aware that the decision by Jean E. Ball was contrary to Plaintiff's agreements with Defendant and would damage the financial viability of Defendant's practice in Carlisle. 64. Plaintiff's agent, Jean E. Ball, repeatedly harassed Defendant's front desk staff concerning regarding issues related to Defendant's internal procedures and unrelated to the operation of the Carlisle Hospital Cancer Center. 65. The actions by Plaintiff's agent interfered with the operation of Defendant's practice. 66. Defendant informed Plaintiff of the problems being caused by Plaintiff's agent. 67. Plaintiff did nothing to resolve the problems being caused by Plaintiff's agent. 68. The actions of Plaintiff's agent, combined with the failure of Plaintiff to address or remedy the problems, created a difficult work environment for Defendant's employees and were in breach of Plaintiff's covenant of quiet enjoyment contained in the Lease Agreement. 69. As part of the initial negotiations between the parties, the Plaintiff promised Defendant that it would encourage doctors on the medical staff of the Carlisle Hospital to refer patients to Defendant. 70. Plaintiff knew that Defendant would require Plaintiff's assistance in encouraging physicians to make referrals to Defendant so that Defendant would have sufficient patients to justify maintaining staffing levels at the Carlisle Hospital Cancer Center as desired by Plaintiff. 71. Plaintiff did not adequately encourage doctors on the medical staff at the Carlisle Hospital to refer patients to Defendant. 72. While negotiating with Defendant, and assuring Defendant that Plaintiff had selected Defendant to open an oncology practice in Carlisle, Plaintiff was negotiating with other oncology practices to open a practice in the Carlisle Hospital Cancer Center instead of Defendant. 7 73. Plaintiff engaged one of Defendant's physicians and Defendant's practice manager to provide consulting services to Plaintiff for the overall design of the Carlisle Hospital Cancer Center and other aspects of the facility. 74. Acting as a consultant, Dr. John Conroy recommended to Plaintiff the deletion of an oxygen system and an internal communications system from the draft architectural plans as expensive and unnecessary equipment. 75. Plaintiff ignored that advice and installed an expensive internal communications system and an expensive oxygen system, both of which were not necessary. 76. Dr. Conroy made other recommendations to reduce the cost of the facility, many of which were ignored by Plaintiff, resulting in a more expensive building. 77. The increased costs of the building resulted in the Plaintiff seeking higher lease payments from Defendant than would have been necessary had Plaintiff taken Dr. Conroy's recommendations to reduce construction costs. WHEREFORE, Defendant demands this action be dismissed, awarding to Defendant its costs of suit. COUNTERCLAIM COUNTI BREACH OF CONTRACT 78. Defendant hereby incorporates by reference the averments contained in Paragraphs 1 through 17 of its Answer and Paragraphs 18 through 77 of its New Matter. 79. Defendant has performed all obligations on its part to be performed pursuant to the Agreement, the Lease Agreement and the Start-Up Agreement. 80. The Start-Up Agreement provided that practice support paid by Plaintiff to Defendant would be reduced if Defendant achieved certain monthly income levels for a six month period. 81. Defendant never remotely approached the monthly threshold contained in the Start-Up Agreement, so Plaintiff had no right to reduce the amount of practice support Plaintiff was obligated to pay Defendant. 82. Plaintiff has breached the Agreement, the Lease Agreement and the Start- Up Agreement by failing to pay practice support in the amount of $308,723.28 as required by the Start-Up Agreement, and by failing to assign the Lease Agreement to HMA and CRMC. 8 83. Plaintiff breached the Lease Agreement by unilaterally reducing Defendant's leasehold space and removing equipment. 84. Plaintiff's breaches of the various agreements between the parties also caused Defendant to lose its right to an additional sum of $35,000.00 upon the occurrence of certain events as provided in the First Amendment to Agreement. 85. Plaintiff is in breach of various oral and written agreements between the parties by failing to have the Carlisle Hospital Cancer Center open on the date promised to Defendant, thereby causing Defendant to incur staff expenses in excess of $30,000.00. 86. Plaintiff is in breach of various oral and written agreements between the parties in that Plaintiff removed radiology blood tests, complete blood counts, etc. from Defendant's Laboratory, depriving Defendant of substantial revenues and impacting cash flow in an amount to be determined. 87. Plaintiff breached its covenant of quiet enjoyment pursuant to the Lease Agreement by failing to control its employee, Jean E. Ball. 88. Plaintiff breached its oral agreement with Defendant to encourage doctors on the medical staff of the Carlisle Hospital to refer patients to Defendant. 89. Because of Plaintiff's numerous actions and inactions as described in the New Matter and Counterclaim, Defendant was justified in closing its medical offices in Carlisle. WHEREFORE, Defendant demands judgment against Plaintiff in an amount in excess of $373,723.28, plus pre-judgment and post-judgment interest and costs. COUNT 11 QUANTUM MERUIT 90. Defendant hereby incorporates by reference the averments contained in Paragraphs 1 through 17 of its Answer, Paragraphs 18 through 77 of its New Matter and Paragraphs 78 through 89 of its Counterclaim. 91. Plaintiff is liable to Defendant and/or has been unjustly enriched in an amount in excess of $373,723.28 plus pre-judgment and post-judgment interest and costs. 9 WHEREFORE, Defendant demands judgment against Plaintiff in an amount in excess of $373,723.28, plus pre-judgment and post-judgment interest and costs. Respectfully submitted, WIX, WENGER & WEIDNER t 1 By: David R. Getz, Esquire I.D. #34838 Dean A. Weidner, Esquire I . D. #06363 508 North Second Street Post Office Box 845 Harrisburg, PA 17108-0845 (717) 234-4182 DATE: N'? ?&J ;?- 10 VERIFICATION I, John D. Conroy, Jr., President of Central Pennsylvania Hematology & Medical Oncology Associates, P.C., a Pennsylvania corporation, Defendant in the foregoing pleading, have read the foregoing pleading and hereby affirm and verify that it is true and correct to the best of my personal knowledge, information and belief. I verify that all of the statements made in the foregoing are true and correct and that false statements made therein may subject me to the penalties of 18 Pa.C.S.A. Section 4904, relating to unsworn falsification to authorities. Central Pennsylvania Hematology & Medical Oncology Associates, P.C. By: n D. Conroy, Jr., P si t DATE: us`t o? ?ic;W; CARLISLE AREA HEALTH AND WELLNESS FOUNDATION, Plaintiff V. CENTRAL PENNSYLVANIA HEMATOLOGY & MEDICAL ONCOLOGY ASSOCIATES, P.C., Defendant : IN THE COURT OF COMMON PLEAS : CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW JURY TRIAL DEMANDED : NO. 02-3188 CIVIL TERM CERTIFICATE OF SERVICE I hereby certify that a copy of the foregoing document was hand delivered this day to the following: No V. Otto, III, Esquire Carl C. Risch, Esquire Martson, Deardorff, Williams & Otto Ten East High Street Carlisle, PA 17013 Respectfully submitted, WIX, WENGER & WEIDNER David R. Getz, Esquire I.D. #34838 508 North Second Street Post Office Box 845 Harrisburg, PA 17108-0845 (717) 234-4182 DATE: XjiA M),-?1W 9 - F:\drg\1538 - CPHMOA\9417 - Carlisle Project\Documents\Answer with New Matter and Counterclaim.doc f-0 ?. Ti LC ? rr, e ' T cY ? , F:FILE SIDATAFILE\H OSPITAL. DOC1845POs 1 Created: 02/25/9812:5259 PM Revised: 09/04/02 10:0121 AM CARLISLE AREA HEALTH AND WELLNESS FOUNDATION, Plaintiff V. CENTRAL PENNSYLVANIA HEMATOLOGY & MEDICAL ONCOLOGY ASSOCIATES, P.C. Defendant IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW JURY TRIAL DEMANDED NO. 02-3188 CIVIL TERM TO: CENTRAL PENNSYLVANIA HEMATOLOGY & MEDICAL ONCOLOGY ASSOCIATES, P.C. AND ITS COUNSEL, WIX, WENGER & WEIDNER YOU ARE HEREBY NOTIFIED TO PLEAD TO THE WITHIN PRELIMINARY OBJECTIONS TO COUNTERCLAIMS WITHIN TWENTY (20) DAYS FROM SERVICE HEREOF, OR A JUDGMENT MAY BE ENTERED AGAINST YOU. PRELIMINARY OBJECTIONS TO DEFENDANT'S ANSWER WITH NEW MATTER AND COUNTERCLAIM AND NOW, comes the Plaintiff, Carlisle Area Health and Wellness Foundation, by and through its attorneys, Martson Deardorff Williams & Otto, and hereby preliminarily objects as follows: On August 29, 2002, Defendant filed an Answer with New Matter and Counterclaim to Plaintiffs Complaint. 2. While Count I of Defendant's Counterclaim purports to be one action for breach of contract, it is actually based on at least two separate alleged contracts, one written contract (Plaintiff s Exhibit A) and between one and three oral contracts. See Paragraphs 84, 85, 86, and 88. 3. In Paragraph 4 of Plaintiffs Complaint, Plaintiff made reference to an omnibus Agreement dated December 22, 1998, which was attached to the Complaint as Exhibit "A." In Paragraph 4 of the Answer and implicitly throughout, Defendant has admitted that it entered into this Agreement, and incorporated attachments, with Plaintiff 4. Defendant has failed to question any relevant portion of Plaintiff's Exhibit A, including Paragraph 21, which is an integration clause indicating that the written Agreement incorporates all agreements between the parties, and Paragraph 20, which indicates that all amendments to the Agreement must be in writing. 5. Despite this admission to entering into the integration and written amendment clauses in the Agreement, Defendant has brought the following four (4) counterclaims against Plaintiff: a. Paragraph 84: Plaintiff's breaches of the various agreements between the parties also caused Defendant to lose its right to an additional sum of $35,000.00 upon the occurrence of certain events as provided in the First Amendment to Agreement. (Emphasis Added). b. Paragraph 85: Plaintiff is in breach of various oral and written agreements between the parties by failing to have the Carlisle Hospital Cancer Center open on the date promised to Defendant, thereby causing Defendant to incur staff expenses in excess of $30,000.00. (Emphasis Added). C. Paragraph 86. Plaintiff is in breach of various oral and written agreements between the parties in that Plaintiff removed radiology blood tests, complete blood counts, etc. from Defendant's Laboratory, depriving Defendant of substantial revenues and impacting cash flow in an amount to be determined. (Emphasis Added). d. Paragraph 88. Plaintiff breached its oral agreement with Defendant to encourage doctors on the medical staff of the Carlisle Hospital to refer patients to Defendant. (Emphasis Added). OBJECTION 1 LEGAL INSUFFICIENCY UNDER PA.R.C.P. 1028(a)(4) 6. Paragraphs 1 through 5 are incorporated herein as if fully set forth. 7. Assuming all the facts set forth and/or admitted in Defendant's Answer with New Matter and Counterclaim are true, no theory of law will permit Defendant to recover under the other contracts, including oral contracts, Defendant claims existed between the parties. 8. Assuming all the facts set forth in paragraph 88 are true, no theory of law will permit Defendant to recover under a contract for referrals since such a contract would be void as illegal. WHEREFORE, this Court is asked to sustain Plaintiff s preliminary objections on the ground of legal insufficiency to Defendant's four counterclaims identified in paragraphs 84, 85, 86, and 88 of Defendant's Answer with New Matter and Counterclaim. OBJECTION H FAILURE TO CONFORM TO LAW UNDER PA.R.C.P. 1028(a)(2) 9. Paragraphs 1 through 8 are incorporated herein as if fully set forth. 10. Several causes of action based on several distinct contracts are set forth or attempted to be set forth in a single count of Defendant's Counterclaim. 11. The causes of action set forth in paragraphs 79 through 89 constitute at least 2, but perhaps as many as 5, separate causes of action for breach of contract depending on how many oral, or prior written, contracts Defendant alleges existed between the parties. 12. Count I of Defendant's Counterclaim fails to conform to the requirements of Pa.R.C.P. 1020. 13. Moreover, the counterclaims in paragraphs 79 through 89, and the overall claim for damages, fail to plead the proper measure of damages by indicating unsubstantiated amounts, that the Defendant's cash flow was impacted "in an amount to be determined," and, in the case of paragraphs 83 and 88, pleading no damages at all. WHEREFORE, this Court is asked to sustain Plaintiffs preliminary objections on the ground offailure to conform to law and to strike paragraphs 79 through 89 ofDefendant's Answer with New Matter and Counterclaim. OBJECTION III INSUFFICIENT SPECIFICITY IN PLEADING UNDER PA.RC.P. 1028(a)(3) 14. Paragraphs 1 through 13 are incorporated herein as if fully set forth. 15. Paragraphs 79 through 89 of Defendant's Counterclaim fail to identify the contracts in question, fail to attach copies of other alleged written agreements (if any), fail to explain the circumstances surrounding the creation of the alleged contracts, fail to identify whether these contracts are separate agreements or the relevant consideration, fail to set forth a proper measure of damages for each alleged violation, and/or use imprecise language, such as "etc." as shown in paragraph 86. 16. The lack of specificity in the counterclaims is so great that Plaintiff cannot adequately prepare a defense to the claims. WHEREFORE, this Court is asked to sustain Plaintiff s preliminary objections on the ground of lack of specificity and to strike paragraphs 79 through 89 ofDefendant's Answer with New Matter and Counterclaim. OBJECTION IV INCLUSION OF SCANDALOUS MATTER UNDER PA.R.C.P. 1028(8)(2) 17. Paragraphs 1 through 16 are incorporated herein as if fully set forth. 18. Paragraphs 69, 70, 71, and 88, Defendant alleges without factual basis that an oral agreement existed between the parties requiring Plaintiff to refer patients to Defendant. 19. Such an agreement would be void as a matter of law as illegal under both state and federal statutes. 20. Plaintiff strongly denies that any such arrangement existed, expressed or implied. 21. The unsubstantiated allegation ofthe ultimate fact that a referral arrangement existed between the parties is prejudicial to Plaintiff as libelous and potentially damaging to Plaintiffs reputation. WHEREFORE, this Court is asked to sustain Plaintiffs preliminary objections on the ground of inclusion of scandalous matter and to strike paragraph 69, 70, 71, and 88 of Defendant's Answer with New Matter and Counterclaim. WILLIAMS & OTTO MART=re By No , , squPA Attorney I.D. No. 27763 Carl C. Risch, Esquire PA Attorney I.D. No. 75901 Ten East High Street Carlisle, PA 17013 (717) 243-3341 Date: September 4, 2002 Attorneys for Plaintiff CARLISLE AREA HEALTH AND WELLNESS FOUNDATION, Plaintiff V. CENTRAL PENNSYLVANIA HEMATOLOGY & MEDICAL ONCOLOGY ASSOCIATES, P.C. Defendant IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW JURY TRIAL DEMANDED NO. 02-3188 CIVIL TERM CERTIFICATE OF SERVICE I, Carl C. Risch, certify that a copy of the foregoing was served by First Class Mail as follows: David R. Getz, Esquire Wix, Wenger & Weidner 508 North Second Street P.O. Box 845 Harrisburg, PA 17108-0845 Date: September 4, 2002 __Uc? n {Y of CARLISLE AREA HEALTH AND WELLNESS FOUNDATION, Plaintiff IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA : CIVIL ACTION -LAW V. JURY TRIAL DEMANDED CENTRAL PENNSYLVANIA HEMATOLOGY & MEDICAL ONCOLOGY ASSOCIATES, P.C., Defendant NO. 02-3188 CIVIL TERM NOTICE TO PLEAD TO: Carlisle Area Health and Wellness Foundation c/o No V. Otto, III, Esquire Carl C. Risch,'Esquire Martson, Deardorff, Williams & Otto Ten East High Street Carlisle, PA 17013 YOU ARE HEREBY NOTIFIED to plead to the within Amended New Matter and Counterclaim within twenty (20) days from service hereof, or a default judgment may be entered against you. WIX, WENGER & WEIDNER By: J " '4?0? David R. Getz, Lsquii6e? I.D. #34838 508 North Second Street P.O. Box 845 Harrisburg, PA 17108-0845 (717) 234-4182 DATE: September 23, 2002 CARLISLE AREA HEALTH AND WELLNESS FOUNDATION, Plaintiff : IN THE COURT OF COMMON PLEAS : CUMBERLAND COUNTY, PENNSYLVANIA : CIVIL ACTION - LAW V. CENTRAL PENNSYLVANIA HEMATOLOGY & MEDICAL ONCOLOGY ASSOCIATES, P.C., Defendant JURY TRIAL DEMANDED NO. 02-3188 CIVIL TERM AMENDED ANSWER WITH NEW MATTER AND COUNTERCLAIM AND NOW COMES the Defendant, Central Pennsylvania Hematology & Medical Oncology Associates, P.C., by its attorneys, Wix, Wenger & Weidner and files the following Amended Answer with New Matter and Counterclaim to the Plaintiff's Complaint as follows: ANSWER Admitted on information and belief. 2. Admitted on information and belief. 3. Admitted. 4. Admitted in part and denied in part. It is admitted that Defendant and Plaintiff were two of the parties to an Agreement dated December 22, 1998 related to the Carlisle Hospital Cancer Center. It is denied that the Agreement attached as Exhibit A is complete. To the contrary, Paragraph 1 of the Agreement refers to Exhibit A, which Plaintiff has failed to attach to the Agreement. The Agreement also refers to other documents, specifically an Affiliation Agreement (Exhibit C) and a Relocation Expense Reimbursement Agreement (Exhibit D) that Plaintiff has failed to attach to the Agreement. The other exhibits (Exhibit B, which is a Lease Agreement and Exhibit E, which is a Start-Up Agreement) are attached as Exhibit B and C, respectively, to the Complaint. 5. Admitted that the documents are dated as of June 1, 1999. Defendant did not receive copies of said documents executed by Plaintiff until December 2000. 6. Admitted in part and denied in part. It is admitted that the original lease term was five years and that the original agreement was to rent 5,210 square feet of space and to rent certain equipment. It is denied that Defendant in fact occupied 5,210 square feet of space, as Defendant was required by Plaintiff to surrender over 3,000 square feet of space to Plaintiff. It is also denied that all of the equipment as designated in the Lease Agreement was rented as Plaintiff removed certain of the equipment from the premises and, because of Plaintiff's actions, some of the equipment was not able to be used by Defendant. 7. Denied. It is denied that the amount of rent and equipment rental stated in this paragraph are the correct amounts. To the contrary, because Defendant, at the behest of Plaintiff, only occupied 2,156 square feet of space, the amount of rent allegedly owed was substantially reduced. Even this amount is not owed because of the breaches of Plaintiff under the Start-Up Agreement (Exhibit C to Plaintiff's Complaint). Further, because not all of the equipment was used, the amount of rent identified in the Lease Agreement is not correct. 8. Admitted in part and denied in part. It is admitted that the Defendant possessed 2,156 square feet of the Premises and portions of the equipment from June 1, 1999 until at least June 19, 2001. As to the remaining allegations of this paragraph concerning Plaintiff's conveying certain assets to Health Management Associates (" HMA"), after reasonable investigation, Defendant is without information sufficient to form a belief as to the truth of these averments, and the same are therefore denied and proof thereof is demanded. 9. Denied. It is denied that Defendant owes Plaintiff $285,691.36 because Plaintiff reduced the size of the Premises from 5,210 square feet to 2,156 square feet and some of the equipment was not rented. Further, Plaintiff failed to make payments to Defendant in accordance with the Start-Up Agreement attached as Exhibit C to Plaintiff's Complaint, thereby breaching its obligations to Defendant. Defendant intended to make the reduced rental payments using the money paid to it by Plaintiff pursuant to the Start-Up Agreement, which payments Plaintiff failed to make. Further, Plaintiff is in breach of the various agreements between the parties for the reasons set forth more fully in the New Matter and Counterclaim, so no rental payments are due to Plaintiff. 10. Admitted in part and denied in part. It is admitted that the parties entered into a Start-Up Agreement dated as of June 1, 1999 whereby Plaintiff was to make an initial payment to Defendant of $39,495.00. Further, Plaintiff was to pay Defendant $12,863.47 per month for a period of 24 months, which payments Plaintiff failed to make. 11. Admitted. By way of further answer, Plaintiff failed to make the 24 subsequent payments in the amount of $12,863.47 each as required by the Start-Up Agreement, for a total of $308,723.28. 2 12. Admitted in part and denied in part. It is admitted that Defendant ceased to maintain a hematology and oncology practice in 2,156 square feet of the Premises in March 2002. It is denied that Defendant was in breach of any agreements between the parties. By the time that Defendant reached its decision to close its practice in Carlisle, Plaintiff had breached the agreements between the parties on multiple occasions. Furthermore, after June 19, 2001, Defendant was no longer entitled to the protections of the Lease Agreement attached as Exhibit B to the Complaint because Plaintiff failed to assign that Lease Agreement to HMA. 13. The averments of this paragraph contain conclusions of law to which no responsive pleading is required. To the extent that a responsive pleading is required, it is denied that Defendant is obligated to repay any amounts to Plaintiff because of Plaintiff's breaches of the Agreement, the Lease Agreement and the Start-Up Agreement. 14. No response required. 15. The averments of this paragraph contain conclusions of law to which no responsive pleading is required. To the extent that a responsive pleading is required, it is denied that Defendant is obligated to pay or to repay any amounts to Plaintiff because of Plaintiff's breaches of the Agreement, the Lease Agreement and the Start-Up Agreement. 16. No response required. 17. The averments of this paragraph contain conclusions of law to which no responsive pleading is required. To the extent that a responsive pleading is required, it is denied that Defendant is obligated to pay or to repay any amounts to Plaintiff because of Plaintiff's breaches of the Agreement, the Lease Agreement and the Start-Up Agreement. WHEREFORE, Defendant demands this action be dismissed, awarding to Defendant its costs of suit. NEW MATTER 18. Defendant hereby incorporates by reference the averments contained in Paragraphs 1 through 17 of its Answer. 19. Pursuant to the Start-Up Agreement (Exhibit C of Plaintiff's Complaint), Plaintiff was obligated to pay Defendant the sum of $12,863.47 per month for a period of 24 months beginning in June 1999. 20. Plaintiff has failed to make even one of the required 24 payments. 3 21. Plaintiff has failed to make payments to Defendant pursuant to the Start- Up Agreement in the total amount of $308,723.28. 22. On information and belief, Plaintiff sold the Carlisle Hospital Cancer Center to HMA on or about June 19, 2001. 23. Plaintiff did not assign the Lease Agreement (Exhibit B to Plaintiff's Complaint) to HMA. 24. The Plaintiff's failure to assign the Lease Agreement to HMA was in no way caused by Defendant. 25. As Plaintiff did not assign the Lease Agreement to HMA, Defendant had no written legal relationship with HMA. 26. After June 19, 2001, Plaintiff was no longer a responsible party under the Lease Agreement. 27. The Lease Agreement terminated on June 19, 2001 as Plaintiff no longer owned the Carlisle Hospital Cancer Center and the Lease was not assigned to HMA. 28. The Agreement (Exhibit A to Plaintiff's Complaint) specifically contemplates there existing a lease between the parties as set forth on Page 5 of the Agreement. 29. As the Lease Agreement was terminated by Plaintiff, the Agreement (Exhibit A to Plaintiff's Complaint) likewise terminated. 30. Plaintiff did not assign the Agreement (Exhibit A to Plaintiff's Complaint) to HMA. 31. On December 14, 2000, Plaintiff and Defendant entered into a First Amendment to Agreement ("First Amendment") (a copy of which is attached to Plaintiff's Complaint as part of Exhibit A). 32. The First Amendment provided that Defendant would receive $35,000.00 from Plaintiff in payment of unamortized expenses, including staffing costs incurred because the Center was not open on time, incurred by Defendant in opening its medical practice, if Plaintiff did not renew the Agreement at the end of the initial five year term. 33. Plaintiff has no ability to renew or not renew the Agreement or the Lease Agreement after it sold its assets to HMA, nor does Plaintiff have any ability to control the landlord/tenant relationship between HMA and Defendant, as Plaintiff did not assign the Lease Agreement to HMA. 34. Plaintiff placed its agent and employee, Jean E. Ball, as the Administrator of the Carlisle Hospital Cancer Center. 4 35. At all times during her employment by Plaintiff, Jean E. Ball was an employee and agent of Plaintiff who was vested with authority by Plaintiff to administer the Carlisle Hospital Cancer Center. 36. Beginning with the date that Defendant opened its practice at the Carlisle Hospital Cancer Center, Plaintiff's agent, Jean E. Ball, required Defendant to vacate portions of the 5,210 square feet of space that Defendant was occupying. 37. The portions of space vacated by Defendant were then taken over by Carlisle Hospital Health Services, Plaintiff's predecessor, to be used for medical office space for a radiation therapy practice owned and operated by the Hospital. 38. Accordingly, the square footage that Defendant occupied was reduced at Plaintiff's direction from 5,210 square feet to 2,156 square feet. 39. The actions and directions of Plaintiff's agent with respect to the size of the leasehold premises served to amend the Lease Agreement, to the extent that the Lease Agreement exists. 40. Defendant cannot be required to pay rent for space it did not occupy at Plaintiff's direction. 41. If Defendant owes rent to Plaintiff, the amount owed must be based on the reduced square footage of 2,156 square feet. 42. Alternatively, Plaintiff's action in unilaterally reducing Defendant's leasehold space was a breach of the Lease Agreement, to the extent that the Lease Agreement exists. 43. Further, Jean E. Ball removed some of the equipment designated in the Lease Agreement from the Premises and took other actions that prevented Defendant from utilizing some of the equipment. 44. The actions and directions of Plaintiff's agent with respect to the equipment served to amend the Lease Agreement, to the extent that the Lease Agreement exists. 45. Defendant cannot be required to pay rent for equipment that it did not have or use at Plaintiff's direction. 46. If Defendant owes rent to Plaintiff for equipment, the amount owed must be reduced to reflect equipment removed or made not useful by Plaintiff's agent. 47. Alternatively, the actions and directions of Plaintiff's agent with respect to the equipment was a breach of the Lease Agreement. 5 48. After HMA became the owner of the Carlisle Hospital Cancer Center, Defendant and HMA/Carlisle Hospital Management Associates, Inc. d/b/a Carlisle Regional Medical Center ("CRMC") entered into a Medical Office Building Lease (the "New Lease Agreement") dated as of June 19, 2001. 49. The New Lease Agreement with CRMC was for 2,156 square feet of rental space, which was the area then being occupied and utilized by Defendant, which space was calculated by Defendant's architect and confirmed by CRMC. 50. Defendant paid rent to CRMC pursuant to the New Lease Agreement in full from June 19, 2001 until March 10, 2002 51. Some time in or before September 1998, Plaintiff determined that it should build, own and operate an outpatient cancer treatment center in the vicinity of Carlisle in order to address what Plaintiff perceived to be the medical needs of persons in the Carlisle area. 52. Subsequently, the Plaintiff Hospital determined that it would build an outpatient cancer treatment facility that would include radiation therapy services and hematology and medical oncology services. 53. Plaintiff determined that it would own the radiation therapy portion of the cancer center and employ physicians and staff to operate the radiation therapy portion of the facility. 54. The Hospital attempted to but was unable to recruit qualified medical oncologists as employees, so it began negotiations with Defendant to open a practice in the cancer center. 55. In September 1998, Plaintiff's agent met with Defendant in order to solicit Defendant to open a medical practice in Carlisle. 56. The initial contact between the parties was initiated by Plaintiff. 57. During the very first meeting, the agent and representative of the Plaintiff guaranteed Defendant that Defendant would incur no expenses for the first two years of operation in Carlisle in order to permit Defendant to attempt to establish a financially viable practice in Carlisle. 58. All negotiations and agreements between the parties were based on Plaintiff's guarantee that Defendant would incur no expenses for the first two years of operation in Carlisle. 59. Plaintiff, when it owned and operated the Carlisle Hospital, recognized that the provision of oncology and hematology services in the Carlisle area would be of benefit to the hospital owned and operated by Plaintiff. 6 60. After the Plaintiff sold many of its assets, including the Carlisle Hospital Cancer Center and the Carlisle Hospital, to HMA, Plaintiff no longer had any interest in the Agreement, the Lease Agreement or the Start-Up Agreement, as it no longer operated a hospital in Carlisle. 61. The Agreement, Lease Agreement and Start-Up Agreement (Exhibits A, B and C to Plaintiff's Complaint) were all prepared by Plaintiff's counsel with the exception of the First Amendment to Agreement, which was prepared by Defendant's counsel. 62. Defendant had the right to terminate its relationship with Plaintiff and to terminate the Agreement because the Plaintiff breached the Agreement. 63. Plaintiff agreed to have the Carlisle Hospital Cancer Center open for business on January 1, 1999. 64. In reliance on the guaranteed opening date, Defendant hired staff and spent substantial sums training the staff and preparing them to begin work on the date set by the Plaintiff. 65. Plaintiff failed to have the Carlisle Hospital Cancer Center completed on the date promised. 66. When the facility was not ready to be opened, due to no fault of Defendant, Defendant incurred additional staff time and was forced to pay the excess employees for several months until the Plaintiff was able to complete the facility. 67. When Plaintiff failed to have the Carlisle Hospital Cancer Center completed on the date promised, January 1, 1999, negotiations between the parties had reached a point where Defendant could no longer withdraw from the Agreement, as amended, the Lease Agreement and the Start Up Agreement that had not yet been executed, and Defendant was therefore forced to acquiesce in the late opening and incur substantial damages. 68. The Plaintiff knew that Defendant, as part of Defendant's budgeted operations, intended to construct and operate a laboratory at the Carlisle Hospital Cancer Center for the purpose of doing blood tests, complete blood counts, and other tests related to Defendant's practice and related to the practice of radiation therapy. (the "Laboratory"). 69. Before the Carlisle Hospital Cancer Center was open, Plaintiff agreed to recommend to its radiation therapy patients that they use the Laboratory that was co- located in the same building as was the radiation therapy practice owned by the Plaintiff. 70. With Plaintiff's knowledge and acquiescence, Defendant planned the size of its Laboratory to do blood work for its patients and for patients of Plaintiff who desired that service. 7 71. On the day that Defendant opened its practice at the Carlisle Hospital Cancer Center, Plaintiff's agent, Jean E. Ball, announced that the Plaintiff would withdraw all radiation therapy blood tests, CBCs, and other tests from Defendant's Laboratory and would instead send the Plaintiff's patients to the Carlisle Hospital for blood work. 72. This decision by Ms. Ball made Defendant's Laboratory uneconomical to operate and necessitated closing the Laboratory. 73. Plaintiff was aware that the decision by Jean E. Ball was contrary to Plaintiff's agreements with Defendant and would damage the financial viability of Defendant's practice in Carlisle. 74. Plaintiff's agent, Jean E. Ball, repeatedly harassed Defendant's front desk staff concerning issues related to Defendant's internal procedures and unrelated to the operation of the Carlisle Hospital Cancer Center. 75. The actions by Plaintiff's agent interfered with the operation of Defendant's practice. 76. Defendant informed Plaintiff of the problems being caused by Plaintiff's agent. 77. Plaintiff did nothing to resolve the problems being caused by Plaintiff's agent. 78. The actions of Plaintiff's agent, combined with the failure of Plaintiff to address or remedy the problems, created a difficult work environment for Defendant's employees and were in breach of Plaintiff's covenant of quiet enjoyment contained in the Lease Agreement, to the extent that the Lease Agreement exists. 79. Many doctors in the Carlisle region who had admission privileges to the Carlisle Hospital but who were not employed by or paid by the Hospital formerly operated by Plaintiff are referred to herein as being on the medical staff of the Carlisle Hospital. 80. As part of the initial negotiations between the parties, the Plaintiff promised Defendant that it would encourage but not require doctors who were not employed by Plaintiff but who were on the medical staff of the Carlisle Hospital to refer patients to Defendant. 81. Plaintiff knew that Defendant would require Plaintiff's assistance in encouraging physicians who were not employed by the Plaintiff to make referrals to Defendant so that Defendant would have sufficient patients to justify maintaining staffing levels at the Carlisle Hospital Cancer Center as desired by Plaintiff. 82. Plaintiff did not adequately encourage doctors on the medical staff at the Carlisle Hospital to refer patients to Defendant. 8 83. While negotiating with Defendant, and assuring Defendant that Plaintiff had selected Defendant to open an oncology practice in Carlisle, Plaintiff was negotiating with other oncology practices to open a practice in the Carlisle Hospital Cancer Center instead of Defendant. 84. Plaintiff engaged one of Defendant's physicians and Defendant's practice manager to provide consulting services to Plaintiff for the overall design of the Carlisle Hospital Cancer Center and other aspects of the facility. 85. Acting as a consultant, Dr. John Conroy recommended to Plaintiff the deletion of an oxygen system and an internal communications system from the draft architectural plans as expensive and unnecessary equipment. 86. Plaintiff ignored that advice and installed an expensive internal communications system and an expensive oxygen system, both of which were not necessary. 87. Dr. Conroy made other recommendations to reduce the cost of the facility, many of which were ignored by Plaintiff, resulting in a more expensive building. 88. The increased costs of the building resulted in the Plaintiff seeking higher lease payments from Defendant than would have been necessary had Plaintiff taken Dr. Conroy's recommendations to reduce construction costs. WHEREFORE, Defendant demands this action be dismissed, awarding to Defendant its costs of suit. COUNTERCLAIM COUNTI BREACH OF CONTRACT - STARTUP AGREEMENT 89. Defendant hereby incorporates by reference the averments contained in Paragraphs 1 through 17 of its Answer and Paragraphs 18 through 88 of its New Matter. 90. Defendant has performed all obligations on its part to be performed pursuant to the Agreement, the Lease Agreement and the Start-Up Agreement. 91. The Start-Up Agreement provided that practice support paid by Plaintiff to Defendant would be reduced if Defendant achieved certain monthly income levels for a six month period. 92. Defendant never remotely approached the monthly threshold contained in the Start-Up Agreement, so Plaintiff had no right to reduce the amount of practice support Plaintiff was obligated to pay Defendant. 9 93. Plaintiff has breached the Agreement, the Lease Agreement and the Start- Up Agreement by failing to pay practice support in the amount of $308,723.28 as required by the Start-Up Agreement, and by failing to assign the Lease Agreement to HMA and CRMC. WHEREFORE, Defendant demands judgment against Plaintiff in the amount of $308,723.28, plus pre-judgment and post-judgment interest and costs. COUNT II BREACH OF CONTRACT - LEASE AGREEMENT 94. Defendant hereby incorporates by reference the averments contained in Paragraphs 1 through 17 of its Answer, Paragraphs 18 through 88 of its New Matter and Paragraphs 89 through 93 of its Counterclaim. 95. Plaintiff breached the Lease Agreement by unilaterally reducing Defendant's leasehold space and removing equipment. 96. 97. Plaintiff breached its covenant of quiet enjoyment pursuant to the Lease Agreement by failing to control its employee, Jean E. Ball. 98. Because of Plaintiff's numerous breaches of the Lese Agreement and other actions and inactions as described in the New Matter and Counterclaim, Defendant was justified in closing its medical offices in Carlisle. WHEREFORE, Defendant demands judgment against Plaintiff in an amount in excess of $308,723.28, plus pre-judgment and post-judgment interest and costs. COUNT III BREACH OF CONTRACT - FIRST AMENDMENT TO AGREEMENT 99. Defendant hereby incorporates by reference the averments contained in Paragraphs 1 through 17 of its Answer, Paragraphs 18 through 88 of its New Matter and Paragraphs 89 through 98 of its Counterclaim. 100. Plaintiff's breaches of the Agreement, as amended, the Lease Agreement, and the Start-Up Agreement (attached to Plaintiff's Complaint as Exhibit's A, B and C, respectively) between the parties also caused Defendant to lose its right to an additional sum of $35,000.00 upon the occurrence of certain events as provided in the First Amendment to Agreement. WHEREFORE, Defendant demands judgment against Plaintiff in the amount of $35,000.00, plus pre-judgment and post-judgment interest and costs. 10 COUNT IV RECISSION 101. Defendant hereby incorporates by reference the averments contained in Paragraphs 1 through 17 of its Answer, Paragraphs 18 through 88 of its New Matter and Paragraphs 89 through 100 of its Counterclaim. 102. Plaintiff is in breach of Agreement, as amended, the Lease Agreement, and the Start-Up Agreement (attached to Plaintiff's Complaint as Exhibits A, B and C, respectively) between the parties by failing to have the Carlisle Hospital Cancer Center open on the date promised to Defendant, thereby causing Defendant to incur staff expenses in excess of $30,000.00. 103. Plaintiff is in breach of Agreement, as amended, the Lease Agreement, and the Start-Up Agreement (attached to Plaintiff's Complaint as Exhibits A, B and C, respectively) between the parties in that Plaintiff removed radiology blood tests, complete blood counts, and other tests from Defendant's Laboratory, depriving Defendant of substantial revenues and negatively impacting Defendant's cash flow in an amount in excess of $20,000.00. 104. Plaintiff breached its oral agreement with Defendant to encourage doctors who were not employed by Plaintiff but who were on the medical staff of the Carlisle Hospital to refer patients to Defendant. 105. There existed an implied duty of good faith on Plaintiff in all of its dealings with Defendant, including the oral promises and under the Agreement, as amended, the Lease Agreement and the Start-Up Agreement. 106. The oral promises made to Plaintiff at the beginning of the negotiations that Plaintiff guaranteed that Defendant would incur no expenses for the first two years of operation in Carlisle was part of the basis upon which Defendant entered into the Agreement, as amended, the Lease Agreement and the Start-Up Agreement. 107. Plaintiff's promise that it would encourage but not require doctors who were not employed by Plaintiff but who where on the medical staff at the Carlisle Hospital to refer patients to Defendant was part of the basis upon which Defendant entered into the Agreement, as amended, the Lease Agreement and the Start-Up Agreement. 108. Defendant would not have entered into the Agreement, as amended, the Lease Agreement and the Start-Up Agreement had it know that Plaintiff would not honor the underlying promises that it made to Defendant in order to induce Defendant to open a medical practice in the Carlisle Hospital Cancer Center. 109. Defendant is entitled to rescind the Agreement, as amended, the Lease Agreement and the Start-Up Agreement that it entered into with Plaintiff because 11 Plaintiff breached the underlying agreements between the parties and the Agreement, as amended, the Lease Agreement and the Start-Up Agreement. 110. In the alternative, if Defendant is not entitled to rescind, Defendant is entitled to damages for Plaintiff's breach of the Agreement, as amended, the Lease Agreement and the Start-Up Agreement that it entered into with Plaintiff. WHEREFORE, Defendant prays that this Honorable Court rule that Defendant is entitled to rescind the Agreement, as amended, the Lease Agreement and the Start-Up Agreement. Alternatively, Defendant demands judgment against Plaintiff in the amount of $393,723.28, plus pre-judgment and post-judgment interest and costs. COUNT V QUANTUM MERUIT 111. Defendant hereby incorporates by reference the averments contained in Paragraphs 1 through 17 of its Answer, Paragraphs 18 through 88 of its New Matter and Paragraphs 89 through 110 of its Counterclaim. 112. Plaintiff is liable to Defendant and/or has been unjustly enriched in an amount in excess of $393,723.28 plus pre-judgment and post-judgment interest and costs. WHEREFORE, Defendant demands judgment against Plaintiff in an amount in excess of $373,723.28, plus pre-judgment and post-judgment interest and costs. Respectfully submitted, WIX, WENGER & WEIDNER By: David R. Getz, Esquire I.D. #34838 Dean A. Weidner, Esquire I. D. #06363 508 North Second Street Post Office Box 845 Harrisburg, PA 17108-0845 (717) 234-4182 DATE: September 23, 2002 12 VERIFICATION I, John D. Conroy, Jr., President of Central Pennsylvania Hematology & Medical Oncology Associates, P.C., a Pennsylvania corporation, Defendant in the foregoing pleading, have read the foregoing pleading and hereby affirm and verify that it is true and correct to the best of my personal knowledge, information and belief. I verify that all of the statements made in the foregoing are true and correct and that false statements made therein may subject me to the penalties of 18 Pa.C.S.A. Section 4904, relating to unsworn falsification to authorities. Central Pennsylvania Hematology & Medical Oncology Associates, P.C. DATE: JIvet .2pi By: *6-CLo'nroy, Jr., Pr s ent CARLISLE AREA HEALTH AND : IN THE COURT OF COMMON PLEAS WELLNESS FOUNDATION, : CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff CIVIL ACTION -LAW V. CENTRAL PENNSYLVANIA :JURY TRIAL DEMANDED HEMATOLOGY & MEDICAL ONCOLOGY ASSOCIATES, P.C., Defendant NO. 02-3188 CIVIL TERM CERTIFICATE OF SERVICE I hereby certify that a copy of the foregoing document was served by First Class Mail this day to the following: No V. Otto, III, Esquire Carl C. Risch, Esquire Martson, Deardorff, Williams & Otto Ten East High Street Carlisle, PA 17013 DATE: September 23, 2002 Respectfully submitted, squire I.D. #34838 508 North Second Street Post Office Box 845 Harrisburg, PA 17108-0845 (717) 234-4182 WIX, NGER & WEIDNER By: David R. Getz E F:\drg\1538 - CPHMOA\9417 - Carlisle Project\Documents\Amended Answer with New Matter and Counterclaim.doc 9/20/02 -- t`, r _i4E {,. n F:\FILESIDATAFILEVHOSPITAL.DOC\945POs2 Created: 02/25/98 12:52:59 PM Revised: 09/26/02 01:37:54 PM CARLISLE AREA HEALTH AND WELLNESS FOUNDATION, Plaintiff V. CENTRAL PENNSYLVANIA HEMATOLOGY & MEDICAL ONCOLOGY ASSOCIATES, P.C. Defendant IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW JURY TRIAL DEMANDED NO. 02-3188 CIVIL TERM TO: CENTRAL PENNSYLVANIA HEMATOLOGY & MEDICAL ONCOLOGY ASSOCIATES, P.C. AND ITS COUNSEL, WIX, WENGER & WEIDNER YOU ARE HEREBY NOTIFIED TO PLEAD TO THE WITHIN PRELIMINARY OBJECTIONS TO COUNTERCLAIMS WITHIN TWENTY (20) DAYS FROM SERVICE HEREOF, OR A JUDGMENT MAY BE ENTERED AGAINST YOU. PRELIMINARY OBJECTIONS TO DEFENDANT'S AMENDED ANSWER WITH NEW MATTER AND COUNTERCLAIM AND NOW, comes the Plaintiff, Carlisle Area Health and Wellness Foundation, by and through its attorneys, Martson Deardorff Williams & Otto, and hereby preliminarily objects as follows: On September 23, 2002, Defendant filed an Amended Answer with New Matter and Counterclaim to Plaintiffs Complaint. 2. In Paragraph 4 of Plaintiffs Complaint, plaintiff made reference to an omnibus Agreement dated December 22, 1998, which was attached to the Complaint as Exhibit "A." In Paragraph 4 ofthe Answer and implicitly throughout, Defendant has admitted that it entered into this Agreement, and incorporated attachments, with Plaintiff. 3. Defendant has failed to question any relevant portion of Plaintiffs Exhibit A, including Paragraph 21, which is an integration clause indicating that the written Agreement incorporates all agreements between the parties, and Paragraph 20, which indicates that all amendments to the Agreement must be in writing. 4. Despite this admission to entering into the integration and written amendment clauses in the Agreement, Defendant's Counterclaim IV alleges the existence of various oral agreements in existence before and after the execution ofthe written Agreement which act as "amendments" to the Agreement: a. Paragraph 102: An agreement to "have the Carlisle Hospital Cancer Center open on the date promised to Defendant;" b. Paragraph 103: An agreement to utilize Defendant's laboratory; C. Paragraphs 104 and 107: An oral agreement to encourage doctors to refer patients to Defendant; and d. Paragraph 106: An oral promise that the Defendant would not incur expenses for the first two years of operation. Defendant claims that Plaintiffs breach of the above oral agreements/amendments entitles it to rescission of the Agreement. 5. In Paragraph 12 of the Complaint, Plaintiff alleged that Defendant ceased to maintain a hematology and medical oncology practice in Carlisle in March 2002. Defendant admitted this fact in Paragraph 12 of its Amended Answer with New Matter and Counterclaim. OBJECTION 1 LEGAL INSUFFICIENCY UNDER PA.R.C.P. 1028(a)(4) 6. Paragraphs 1 through 5 are incorporated herein as if fully set forth. 7. Assuming all the facts set forth and/or admitted in Count IV of Defendant's Answer with New Matter and Counterclaim are true, no theory of law will permit Defendant to recover under the alleged oral contracts, amendments, or preexisting inducements Defendant claims existed between the parties. 8. Assuming all the facts set forth in paragraphs 104 and 107 are true, no theory of law will permit Defendant to recover under a contract for referrals since such a contract would be void as illegal. 9. Assuming all the facts set forth in Count III of Defendant's Amended Answer with New Matter and Counterclaim are true, no theory of law will permit Defendant to recover under the First Amendment to the Agreement where five years have not elapsed and the Defendant admits that it ceased maintaining a hematology and medical oncology practice in Carlisle in March 2002. WHEREFORE, this Court is asked to sustain Plaintiffs preliminary objections on the ground of legal insufficiency to Defendant's Counts III and IV of Defendant's Amended Answer with New Matter and Counterclaim and dismiss these Counts with prejudice. OBJECTION II FAILURE TO CONFORM TO LAW UNDER PA.R.C.P. 1028(a)(2) 10. Paragraphs 1 through 9 are incorporated herein as if fully set forth. H. Counts II and IV ofDefendants Amended Answer with New Matter and Counterclaim fail to plead the proper measure of damages by indicating unsubstantiated amounts not related to any allegations in the pleadings or the Agreement attached to Plaintiff s Complaint. WHEREFORE, this Court is asked to sustain Plaintiffs preliminary objections on the ground of failure to conform to law and to strike Counts II and IV of Defendant's Answer with New Matter and Counterclaim. OBJECTION III INCLUSION OF SCANDALOUS MATTER UNDER PA.R.C.P. 1028(a)(2) 12. Paragraphs 1 through 11 are incorporated herein as if fully set forth. 13. In Paragraphs 80, 81, 82, 104, and 107, Defendant alleges without factual basis that an oral agreement existed between the parties requiring Plaintiff to refer patients to Defendant. 14. Such an agreement would be void as a matter of law as illegal. 15. The unsubstantiated allegation of the ultimate fact that a referral arrangement existed between the parties is prejudicial to Plaintiff as libelous and potentially damaging to Plaintiffs reputation. WHEREFORE, this Court is asked to sustain PWntifFs preliminary objections on the ground of inclusion of scandalous matter and to strike paragraphs 80, 81, 82, 104, and 107 of Defendant's Amended Answer with New Matter and Counterclaim. MARTSON DEARDO 7AMS & OTTO T?It By No V. Otto, III, Esquire PA Attorney I.D. No. 27763 Carl C. Risch, Esquire PA Attorney I.D. No. 75901 Ten East High Street Carlisle, PA 17013 (717) 243-3341 Attorneys for Plaintiff Date: October 4, 2002 CARLISLE AREA HEALTH AND IN THE COURT OF COMMON PLEAS OF WELLNESS FOUNDATION, CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff CIVIL ACTION - LAW V. JURY TRIAL DEMANDED CENTRAL PENNSYLVANIA HEMATOLOGY & MEDICAL ONCOLOGY ASSOCIATES, P.C. Defendant NO. 02-3188 CIVIL TERM CERTIFICATE OF SERVICE I, Carl C. Risch, certify that a copy of the foregoing was served by First Class Mail as follows: David R. Getz, Esquire Wix, Wenger & Weidner 508 North Second Street P.O. Box 845 Harrisburg, PA 17108-0845 Date: October 4, 2002 C n ? ;? ' l ',.. C,. r L ? •. ?Ir PRAECIPE FOR LISTING CASE FOR ARGUMENT (Must be typewritten and submitted in duplicate) TO THE PROTHONOTARY OF CUMBERLAND COUNTY: Please list the within matter for the next Argument Court. CAPTION OF CASE (entire caption must be stated in full) Carlisle Area Health and Wellness Foundation VS. Central Pennsylvania Hematology and Medical Oncology Associates, P.C. (Defendant) No. 3188 Civil Term Yj 2002 1. State matter to be argued (i.e., plaintiff's motion for new trial, defendant's demurrer to complaint, etc.): Plaintiff's Preliminary Objections to Defendant's Amended Answer with New Matter and Counterclaim 2. Identify counsel who will argue case: (a) for plaintiff: Carl C. Risch, Esquire Address: Ten East High Street Carlisle, PA 17013 (b) for defendant: David R. Getz, Esquire Address: Wix, Wenger & Weidner 508 North 2nd Street, P.O. Box 845 Harrisburg, PA 17108-0845 3. I will notify all parties in writing within two days that this case has been listed for argument. 4- Argument Court Date: 12/4/02 Dated: 11/12/02 aw a+-+.,n, fnr• Plaintiff CARLISLE AREA HEALTH AND WELLNESS FOUNDATION, PLAINTIFF V. CENTRAL PENNSYLVANIA HEMATOLOGY & MEDICAL ONCOLOGY ASSOCIATES, P.C., DEFENDANT IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA 02-3188 CIVIL TERM ORDER OF COURT AND NOW, this day of January, 2003, IT IS ORDERED: (1) That part of paragraph 102, which avers a "date promised to Defendant" to have the Carlisle Hospital Cancer Center open, is stricken to the extent that it refers to an oral promise as contrasted to any date set forth in the parties' written Agreement, as amended, the Lease Agreement, and Start-Up Agreement." (2) Paragraphs 104, 105 with respect to the allegation of an oral promise, 106, 107, 108, and 109 with respect to an alleged breach of "the underlying agreements between the parties," ARE STRICKEN.' (3) All other preliminary objections of plaintiff to defendant's amended answer with new matter and counterclaim, ARE DISMISSED. ' Defendant has not pleaded fraud, accident or mistake. All of the material stricken violates the parol evidence rule and is properly stricken on preliminary objections. National Cash Register Company v. Modern Transfer Co. Inc., 224 Pa. Super. 138 (1973). ocrvKt BAYLEY J. AND HESS J. Carl C. Risch, Esquire For Plaintiff David R. Getz, Esquire 508 North Second Street P.O. Box 845 Harrisburg, PA 17108-0845 For Defendant 3 -as :sal t?',?If??.?g;?t??? I'? ;?;:?; ??d ZLa?i'?? ,_, U3Yt.?..?.5 ???} ? .?`? F:\FILES\DATAFILEIHOSPITAL.DOC\845answer Created: 02/25/98 12:52:59 PM Revised: 02119/03 09:06:13 AM CARLISLE AREA HEALTH AND WELLNESS FOUNDATION, Plaintiff IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW V. JURY TRIAL DEMANDED CENTRAL PENNSYLVANIA HEMATOLOGY & MEDICAL ONCOLOGY ASSOCIATES, P.C. Defendant NO. 02-3188 CIVIL TERM TO: CENTRAL PENNSYLVANIA HEMATOLOGY & MEDICAL ONCOLOGY ASSOCIATES, P.C. AND ITS COUNSEL, WIX, WENGER & WEIDNER YOU ARE HEREBY NOTIFIED TO PLEAD TO THE WITHIN NEW MATTER TO COUNTERCLAIMS WITHIN TWENTY (20) DAYS FROM SERVICE HEREOF, OR A JUDGMENT MAY BE ENTERED AGAINST YOU. PLAINTIFF'S REPLY TO NEW MATTER AND COUNTERCLAIMS WITH NEW MATTER AND NOW, comes the Plaintiff, Carlisle Area Health and Wellness Foundation, by and through its attorneys, Martson DeardorffWilliams & Otto, and hereby replies to Defendant's Answer with New Matter and Counterclaims as follows: 18. Plaintiff hereby incorporates the averments contained in Paragraphs 1 through 17 of its Complaint. 19. Denied. The Start-Up Agreement, attached as Exhibit "C" to Plaintiff s Complaint, speaks for itself and any attempt to characterize the terms of this writing are denied. By way of further answer, Defendant's averment distorts the terms of the Start-Up Agreement and ignores the fact that the $12,863.47 monthly payments were tied to, and conditioned upon, certain revenue thresholds. Because Defendant met these necessary revenue thresholds, Plaintiff was not obligated to make $12,863.47 monthly payments to Defendant for 24 months. 20. Denied. Plaintiff was not required to make the payments described in Paragraph 19 of Defendant's New Matter as explained above. 21. Admitted in part, denied in part. It is admitted that Plaintiff has not made payments to Defendant under the Start-Up Agreement other than the initial $39,495.00 paid to Defendant on March 14, 2000 (which was admitted by Defendant in Paragraph 11 of its Answer). It is denied that Plaintiff is obligated to pay $308,723.28 to Defendant under the Start-Up Agreement. 22. Denied. Plaintiff sold most of its assets on June 19, 2001, including the Carlisle Hospital Cancer Center. However, Plaintiff currently owns the building now known as the Carlisle Regional Medical Center. 23. Denied. The allegation in Paragraph 23 of Defendant's New Matter is a conclusion of law to which no response is required. By way of further answer, Plaintiffs conveyance of its reversionary interest in the Cancer Center caused an assignment of the Lease to the new owner by operation of law. 24. Denied. It is denied that the Lease was not assigned. By way of further answer, Defendant is estopped from challenging the assignment of the Lease be operation of law by choosing to remain in the leased space after the Cancer Center was sold, i.e., from June 19, 2001 until March 2002. 25. Denied. The allegation in Paragraph 25 of Defendant's New Matter is a conclusion of law to which no response is required. By way of further answer, it is denied that the Lease was not assigned. 26. Denied. The allegation in Paragraph 26 of Defendant's New Matter is a conclusion of law to which no response is required. 27. Denied. The allegation in Paragraph 27 of Defendant's New Matter is a conclusion of law to which no response is required. By way of further answer, it is denied that the Lease was not assigned. 28. Admitted. 29. Denied. The allegation in Paragraph 29 of Defendant's New Matter is a conclusion of law to which no response is required. By way of further answer, it is denied that the Lease was not assigned. Likewise, it is denied that the Agreement terminated. 30. Denied. The allegation in Paragraph 30 of Defendant's New Matter is a conclusion of law to which no response is required. By way of further answer, it is denied that the Lease and/or the Agreement was not assigned or has otherwise terminated. 31. Admitted. 32. Denied. The Amendment speaks for itself and any attempt to characterize, or improperly interpret, the terms of this writing are denied. 33. Admitted in part, denied in part. It is admitted that Plaintiff was no longer the owner of the Cancer Center after June 19, 2001. The other allegations are denied as conclusions of law. Moreover, Plaintiff denies that an assignment of the Lease did not occur by operation of law or that the Agreement has terminated. 34. Admitted in part, denied in part. While it is admitted that Ms. Ball was an administrative employee of Plaintiff with responsibilities related to the Cancer Center, it is denied that she was the "administrator." 35. Admitted in part, denied in part. It is admitted that Jean Ball was an employee of Plaintiff during requisite period. Any attempt to classify the extent of her authority or agency is denied as a conclusion of law. 36. Denied. Plaintiff did not require Defendant to vacate space within the Cancer Center on the date Defendant opened its practice. By way of further answer, any adjustments to the space occupied by Defendant was done with Defendant's acquiescence and/or at the request of Defendant and was done incrementally over a two year period. 37. Admitted in part, denied in part. It is admitted that a minor portion of the space initially occupied by Defendant was ceded to Plaintiff for radiation therapy. It is denied that Defendant was not provided additional space to compensate for the adjustment. It is also denied that any of these changes were made without Defendant's knowledge and permission. 38. Denied. It is denied that Defendant's square footage was ever reduced to 2,156 square feet. 39. Denied. The allegations in Paragraph 39 are denied as conclusions of law. 40. Denied. The allegations in Paragraph 40 are denied as conclusions of law. 41. Admitted in part, denied in part. It is admitted that Defendant owes rent to Plaintiff. It is denied that this amount should be reduced. It is also denied that Defendant's square footage was ever reduced to 2.156 square feet. 42. Denied. The allegations in Paragraph 42 are denied as conclusions of law. By way of further answer, Plaintiff denies that it ever unilaterally adjusted Defendant's leasehold space. 43. Denied. After reasonable investigation, Plaintiff can neither admit nor deny the allegations in Paragraph 43 and, therefore, those allegations are denied. 44. Denied. The allegations in Paragraph 44 are denied as conclusions of law. 45. Denied. The allegations in Paragraph 45 are denied as conclusions of law. 46. Denied. The allegations in Paragraph 46 are denied as conclusions of law. 47. Denied. The allegations in Paragraph 47 are denied as conclusions of law. 48. Denied. After reasonable investigation, Plaintiff can neither admit nor deny the allegations in Paragraph 48 and, therefore, those allegations are denied. 49. Denied. After reasonable investigation, Plaintiff can neither admit nor deny the allegations in Paragraph 49 and, therefore, those allegations are denied. 50. Denied. After reasonable investigation, Plaintiff can neither admit nor deny the allegations in Paragraph 50 and, therefore, those allegations are denied. 51. Admitted. 52. Admitied. 53. Admitted. 54. Denied. Plaintiff never attempted to employ medical oncologists. Plaintiff always intended on attracting an independent practice to the Cancer Center. 55. Admitted. 56. Admitted. 57. Denied. The allegations in Paragraph 57 are specifically denied. No such guarantee was ever made by Plaintiff. Additionally, those claims referring to oral promises and/or inducements to contract have been struck by Order of Court dated January 22, 2003. 58. Denied. After reasonable investigation, Plaintiff can neither admit nor deny the allegations in Paragraph 58 and, therefore, those allegations are denied. By way of further answer, those claims referring to oral promises and/or inducements to contract have been struck by Order of Court dated January 22, 2003. 59. Denied. Plaintiff recognized that the provision of competent oncology and hematology services at the Cancer Center would benefit the people living in the service area of the Carlisle Hospital. Plaintiffs ability to profit by Defendant's presence in Carlisle was not a material concern. 60. Denied. Upon the sale of the bulk of its assets on June 19, 2001, including the Cancer Center, the Plaintiff, as a charitable foundation dedicated to furthering access to healthcare to persons living in the former service area of Carlisle Hospital, was keenly interested in Defendant's ongoing contractual commitment to provide oncology and hematology services in Carlisle. This was Plaintiffs interest both before and after the sale of its assets. 61. Admitted in part, denied in part. It is admitted that counsel to Plaintiff physically typed and printed the Agreement (except the Amendment), the Lease, and the Start-Up Agreement. It is denied that counsel to Plaintiff alone drafted these documents. Defendant's attorneys drafted substantial portions of the documents, supplied language to be inserted into the documents, and heavily edited numerous drafts and re-drafts. Moreover, attorneys for Defendant participated in the negotiation and drafting of the documents from start to finish. 62. Denied. The allegations in Paragraph 62 are denied as conclusions of law. 63. Denied. This allegation is specifically denied. By way of further answer, those claims referring to oral promises and/or inducements to contract have been struck by Order of Court dated January 22, 2003. 64. Denied. After reasonable investigation, Plaintiff can neither admit nor deny the allegations in Paragraph 64 and, therefore, those allegations are denied. 65. Denied. No date was ever promised for the opening of the Cancer Center. 66. Denied. After reasonable investigation, Plaintiff can neither admit nor deny the allegations in Paragraph 66 and, therefore, those allegations are denied. 67. Denied. It is denied that Plaintiff ever made a promise as described by Defendant. The remaining allegations are denied as conclusions of law. B;y way of further answer, the Court, by Order dated January 22, 2003, struck Defendant's counterclaim based on this alleged oral promise to have the Cancer Center open by a date other than that identified in the written Agreement. 68. Denied. It is denied that Plaintiff had such knowledge as described by Defendant. By way of further answer, the written Agreement between the parties does not call for the creation or staffing of a laboratory by Defendant. 69. Denied. Plaintiff never agreed to engage in a patient referral relationship with Defendant. By way of further answer, the Court, by Order dated January 22, 2003, struck Defendant's counterclaim based on this alleged oral promise to refer patients to Defendant. 70. Denied. After reasonable investigation, Plaintiff can neither admit nor deny the allegations in Paragraph 70 and, therefore, those allegations are denied. 71. Denied. Plaintiff could not have withdrawn patients from Defendant's laboratory on the day it opened its practice because there were no radiation therapy patients at the Cancer Center at that time as the radiation oncologist had not yet been employed. 72. Denied. After reasonable investigation, Plaintiff can neither admit nor deny the allegations in Paragraph 72 and, therefore, those allegations are denied. By way of further answer, Defendant's laboratory was not closed until spring 2001, over two years after the actions alleged in ¶ 71 to have caused the laboratory to close occurred. 73. Denied. It is denied that Plaintiff had knowledge as described by Defendant. By way of further answer, referral of patients to Defendant's laboratory was not a part of the written Agreement between the parties. 74. Denied. After reasonable investigation, Plaintiff can neither admit nor deny the allegations in Paragraph 74 and, therefore, those allegations are denied. 75. Denied. After reasonable investigation, Plaintiff can neither admit nor deny the allegations in Paragraph 75 and, therefore, those allegations are denied. 76. Denied. After reasonable investigation, Plaintiff can neither admit nor deny the allegations in Paragraph 76 and, therefore, those allegations are denied. 77. Denied. After reasonable investigation, Plaintiff can neither admit nor deny the allegations in Paragraph 77 and, therefore, those allegations are denied. 78. Denied. The allegations in Paragraph 78 are denied as conclusions of law. 79. Denied. The statement in Paragraph 79 does not appear to be an averment of fact requiring an admission or denial. 80. Denied. It is denied that any such agreement existed. By way of further answer, the Court, by Order dated January 22, 2003, struck Defendant's counterclaim based on this alleged oral promise to refer patients to Defendant. 81. Denied. It is denied that Plaintiff had any such knowledge or belief. 82. Admitted in part, denied in part. It is admitted that Plaintiff refused to engage in an illegal referral scheme with Defendant. It is denied that Plaintiff was contractually required to engage is such behavior or that this behavior materially effected Defendant's practice. 83. Denied. It is denied that Plaintiff ever failed to negotiate with Defendant in good faith or that it violated the written Agreement. 84. Admitted in part, denied in part. It is admitted that Plaintiff, John D. Conroy, Jr., D.O., F.A.C.P., and Joyce McCorkle were all parties to the written Agreement under Paragraph 1 and a separate written consulting agreement. Defendant's attempt to characterize the terms of this engagement without attaching the relevant document is denied. 85. Denied. After reasonable investigation, Plaintiff can neither admit nor deny the allegations in Paragraph 85 and, therefore, those allegations are denied. By way of further answer, Plaintiff installed a more expensive "colored light" communication system at the request of John D. Conroy, Jr., D.O., F.A.C.P., instead of a standard intercom system. 86. Denied. It is denied that the Cancer Center was designed or constructed in any way to detrimentally effect Defendant. By way of further answer, the Agreement and Lease required that the space and equipment be leased to Defendant at fair market value, which was determined by an independent consultant. If any improvements to the space had been unnecessary, the fair market value rent of the space would have reflected this superfluousness by eliminating the improvements from the appraisal. 87. Denied. After reasonable investigation, Plaintiff can neither admit nor deny the allegations in Paragraph 87 and, therefore, those allegations are denied. 88. Denied. The space and equipment were leased to Defendant at fair market value. Any over-improvements would not have increased the rent. COUNTERCLAIMS COUNTI 89. Plaintiff hereby incorporates the averments contained in Paragraphs 1 through 17 of its Complaint and Paragraphs 18 through 88 of its Reply. 90. Denied. Defendant is in breach of the Agreement, Lease, and Start-Up Agreement as explained in Plaintiffs Complaint. 91. Denied. The Start-Up Agreement, attached as Exhibit "C" to Plaintiff s Complaint, speaks for itself and any attempt to characterize the terms of this writing are denied. 92. Denied. Defendant met the six month revenue threshold unambiguously described in the Start-Up Agreement and Plaintiff was permitted to reduce the amount of practice support paid to Defendant after the initial six month period. 93. Denied. Defendant met the six month revenue threshold unambiguously described in the Start-Up Agreement and Plaintiffwas permitted to reduce the amount of practice support paid to Defendant after the initial six month period. Moreover, Plaintiff is excused from paying any practice support under Paragraph 4 of the Start-Up Agreement because Defendant failed to maintain an oncology and hematology practice at the Cancer Center for even one full year after the initial 24 month term of the Agreement and Start-Up Agreement. COUNT II 94. Plaintiff hereby incorporates the averments contained in Paragraphs 1 through 17 of its Complaint and Paragraphs 18 through 93 of its Reply. 95. Denied. The allegations in Paragraph 95 are denied as conclusions of law. 96. [No response required]. 97. Denied. The allegations in Paragraph 97 are denied as conclusions of law. 98. Denied. The allegations in Paragraph 98 are denied as conclusions of law. By way of further answer, Defendant did not close its medical offices at the Cancer Center until March 2002, almost 9 months after the Cancer Center was sold to Health Management Associates, Inc. COUNT III 99. Plaintiff hereby incorporates the averments contained in Paragraphs 1 through 17 of its Complaint and Paragraphs 18 through 98 of its Reply. 100. Denied. The allegations in Paragraph 100 are denied as conclusions of law. By way of further answer, Defendant's decision to cease operations at the Cancer Center in March 2002 has made it impossible for Plaintiff, or the current owner of the Cancer Center, to perform under the Amendment. Therefore, Defendant has forfeited any rights under the Amendment by ceasing to provide services at the Cancer Center. COUNT IV 101. Plaintiff hereby incorporates the averments contained in Paragraphs 1 through 17 of its Complaint and Paragraphs 18 through 100 of its Reply. 102. [Struck by Order of Court -- January 22, 2003]. 103. Denied. The allegations in Paragraph 103 are denied as conclusions of law. By way of further answer, it is denied that Defendant suffered any damage as a result of the alleged occurrence or that Plaintiff was in any way obligated, contractually or otherwise, to refer business to Defendant's laboratory. 104. [Struck by Order of Court -- January 22, 2003]. 105. Denied. The allegations in Paragraph 105 are denied as conclusions of law. Additionally, those claims referring to oral promises have been struck by Order of Court dated January 22, 2003. 106. [Struck by Order of Court -- January 22, 2003].. 107. [Struck by Order of Court -- January 22, 2003]. 108. [Struck by Order of Court -- January 22, 2003]. 109. [Struck by Order of Court -- January 22, 2003]. 110. Denied. The allegations in Paragraph 110 are denied as conclusions of law. COUNT V 111. Plaintiff hereby incorporates the averments contained in Paragraphs 1 through 17 of its Complaint and Paragraphs 18 through 110 of its Reply. 112. Denied. The allegations in Paragraph 112 are denied as conclusions of law. WHEREFORE, Plaintiff demandsjudgment against Defendant in the amount of $325,186.36 plus pre judgment and post judgment interest and costs. Plaintiff demands that all counterclaims be dismissed with prejudice. NEW MATTER TO COUNTERCLAIMS 113. Plaintiff hereby incorporates the averments contained in Paragraphs 1 through 17 of its Complaint and Paragraphs 18 through 112 of its Reply. 114. The Start-Up Agreement, attached as Exhibit "C" to Plaintiffs Complaint, states as follows in paragraph 2: As of [June 1, 1999], Hospital [Plaintiff] agrees to pay CPHMOA [Defendant] the sum of $39,495.00. Thereafter, Hospital agrees to pay CPHMOA the sum of $12,863.47 per month for a period of twenty-four (24) months, payments being due on the I' day of each month. After six (6) months, CPHMOA shall review and disclose to the Hospital its revenues for the initial six (6) month period for its practice at the Carlisle Hospital Cancer Center. If the total revenues of CPHMOA for its practice at the Center exceed $550,000.00 (the "threshold amount"), then the remaining monthly payments to CPHMOA by the Hospital shall be reduced to $625.00 per month. If the total revenues do not meet the threshold amount, then the initial monthly payment amount shall remain unchanged. An identical review and disclosure shall be made for each subsequent six (6) month period following this initial review provided that CPHMOA does not meet the revenue threshold amount after the initial review. Once the revenue threshold is met for any one subsequent six (6) month period, all remaining monthly payments to CPHMOA by the Hospital shall be decreased to $625.00 per month and o further reviews will be required. (emphasis added). 115. Because Defendant met the "threshold amount" of $550,000.00 for the initial six month period of operation at the Cancer Center, Plaintiff s practice support obligation fell to $625.00 per month beginning January 1, 2000. 116. Paragraph 2 ofthe Start-Up Agreement unambiguously defines the threshold amount as $550,000.00 in revenue for an entire six month period, not $550,000.00 for each month of operation. 117. Defendant's proposed interpretation of the Sl:art-Up Agreement to require a $550,000.00 per month revenue threshold is entirely unreasonable given the plain language of the Start-Up Agreement. 118. Defendant's proposed interpretation of the Start-Up Agreement to require a $550,000.00 per month revenue threshold is entirely unreasonable given what a similarly situated oncology and hematology medical practice could expect to generate as revenue at the Cancer Center. 119. Defendant's proposed interpretation of the Start-Up Agreement to require a $550,000.00 per month revenue threshold is entirely unreasonable given that the parties negotiated their relationship to be commercially reasonable in view of the federal Anti-Kickback Statute and Defendant was specifically advised by its counsel that the revenue thresholds must be commercially reasonable to withstand scrutiny under federal law. 120. To adopt Defendant's unrealistic interpretation of the revenue threshold in the Start- Up Agreement would cause the agreement to become illegal and unenforceable under the Anti- Kickback Statute. 121. It is against public policy for a contract to be construed to be illegal when a valid, unambiguous interpretation is available. 122. The Start-Up Agreement, attached as Exhibit "C" to Plaintiffs Complaint, states as follows in paragraph 4: If this Agreement shall have terminated due to the expiration of the above twenty-four (24) month period, and if at any time during the three (3) year period immediately following such termination, CPHMOA shall cease to maintain a hematology and oncology practice at the Carlisle Hospital Cancer Center under this Agreement, CPHMOA shall at such time repay to the Hospital the total amount paid by the Hospital under this Agreement.... (emphasis added). 123. Because Defendant ceased to maintain an oncology and hematology practice at the Cancer Center after March 2002, Plaintiff is excused from paying any practice support under the Agreement. Additionally, Defendant is obligated to repay the $39,495.00 given to Defendant on December 14, 2000. 124. Paragraph 4 ofthe Start-Up Agreement states that Defendant's obligation to maintain this practice is ongoing even if the Agreement should terminate or expire. 125. As a charitable foundation dedicated to improving the public's access to healthcare, Plaintiff was, and is, keenly interested in seeing Defendant fulfill its obligation to maintain a practice in Carlisle even after the Cancer Center was sold in June 2001. 126. Upon the sale of the Cancer Center to Health. Management Associates, Inc., the written agreements between the parties did not terminate. Rather, the Lease and other agreements were assigned by operation of law and/or remained intact after the sale. Defendant has never been released from its obligations under the agreements, either by Plaintiff or by any successor in interest. 127. Defendant is estopped from challenging the assignment of the agreements to HMA, and/or the viability of its obligations to Plaintiff, by virtue of its continued performance thereunder and adherence thereto. It has waived any right to challenge its obligations under the written agreements. 128. All changes to the space occupied by Defendant at the Cancer Center under the Lease Agreement were made incrementally and with the advice and consent of Defendant. 129. Defendant was never forced to vacate space or equipment at the Cancer Center. 130. Any relinquishment of space or equipment by Defendant was either voluntary or with Defendant's consent, including the space once used for Defendant's laboratory. 131. Defendant fully enjoyed the space leased to it by Plaintiff 132. Even if Defendant had been deprived of some of the space covered by the Lease Agreement, Defendant's medical practice was not materially harmed by this immaterial change. 133. Any change to the leased space did not affect the overall value of the lease space to Defendant, nor would it have affected any similarly situated medical practice. 134. The terms of the Lease Agreement flexibly defined the leased space as "approximately 5,210 square feet," thus anticipating slight fluctuations as the Cancer Center opened and developed. 135. Plaintiff did not breach the First Amendment to Agreement by failing to renew the Agreement on March 8, 2004. 136. Because the time to renew the Agreement under the terms of the First Amendment has not yet arrived, it is not possible for Plaintiff to have breached the First Amendment. 137. Plaintiff has not anticipatorily breached the First Amendment to Agreement through its sale of the Cancer Center to BMA in June 2001 or at any other time. 138. Defendant's voluntary cessation of providing services at the Cancer Center in March 2002 has made it impossible for Plaintiff, or any successor in interest, including BMA, to renew the Agreement between the parties; therefore, Defendant has made it impossible for the contracted to be renewed, not Plaintiff. 1139. Defendant's continued performance under the agreements through its presence at the Cancer Center almost nine months after the sale to BMA acts as a waiver of any right to claim that Plaintiff breached the First Amendment to Agreement and is obligated to pay $35,000.00 to Defendant. 140. The agreements between the parties do not obligate Plaintiff to refer patients to Defendant's laboratory. Additionally, the agreements do not anticipate Defendant's establishment of a laboratory to serve the Hospital's patients. Defendant was contracted to provided oncology and hematology services at the Cancer Center. 141. Any failure of Plaintiff to refer work to Defendant's laboratories could not constitute a breach of the written agreements between the parties because no such obligation existed. 142. Defendant's counterclaim based on an alleged laboratory referral scheme violates the parol evidence rule, the statute of frauds, and/or constitutes an illegal contract under the federal Anti- Kickback Statute. 143. Plaintiff specifically denies the existence of any laboratory referral scheme contract, oral or otherwise. 144. Plaintiff did not violate any implied duty of good faith in dealing with Defendant. 145. Plaintiff did not violate any warranty of quiet enjoyment under the Lease Agreement. 146. At no time has Plaintiff been in breach of the Agreement, the Start-Up Agreement, or the Lease Agreement. Plaintiff has fully complied with its obligations under these written agreements. 147. Defendant's counterclaims are barred by the doctrine of waiver and estoppel. 148. Defendant's counterclaims are wholly or partially barred by the parol evidence rule. 149. Plaintiff has not been unjustly enriched by Defendant's actions. To the contrary, Defendant has been unjustly enriched through its receipt of free rent for its medical practice and practice support even though it ceased providing services in violation of the Start-Up Agreement. 150. Defendant is not entitled to rescission as a matter of law. 151. Plaintiffwas not the scrivener ofthe Agreement; the Lease Agreement, or the Start-up Agreement. Both parties participated equally in the drafting of the documents. WHEREFORE, Plaintiff demands that all counterclaims be dismissed with prejudice. MARTSON DEARDORFF WILLIAMS & OTTO f By No V. Otto, III, Esquire PA Attorney I.D. No. 27763 Carl C. Risch, Esquire PA Attorney I.D. No. 75901 Ten East High Street Carlisle, PA 17013 (717) 243-3341 Attorneys for Plaintiff Date: February 19, 2003 CARLISLE AREA HEALTH AND WELLNESS FOUNDATION, Plaintiff IN THE COURT OF COMMON PLEAS OF CUNOERLAND COUNTY, PENNSYLVANIA. CIVIL ACTION LAW CENTRAL PENNSYLVANIA HEMATOLOGY & MEDICAL ONCOLOGY ASSOCIATES, P_C Defendani : JURY TRIAL DENLkNDF.D NO. 02-3188 CIVIL TERM VERMCATION William R. KeM who is Chairman of the Board of Trustees of the Came Area Health and Wellness Foundation and acknowledges that he has the authority to execute this Verification on behalf ofthe Carlisle Area Health and Wellness Foundation certifies that the foregoing is based upon information which has been gathered by my counsel in the preparation of the lawsuit. The language of this document is of counsel and not my own_ I have read the document and to the exrer# that the document 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 exterA that the content of the document is that of counsel, I have relied upor. counsel in making This Verification This statement and Verification is 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 Date- February 18, 2003 CARLISLE AREA HEALTH AND WELLNESS FOUNDATION, Plaintiff V. CENTRAL PENNSYLVANIA HEMATOLOGY & MEDICAL ONCOLOGY ASSOCIATES, P.C. Defendant IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW JURY TRIAL DEMANDED NO. 02-3188 CIVIL TERM CERTIFICATE OF SERVICE I, Carl C. Risch, certify that a copy of the foregoing was served by First Class Mail as follows: David R. Getz, Esquire Wix, Wenger & Weidner 508 North Second Street P.O. Box 845 Harrisburg, PA 17108-0845 Date: February 19, 2003 ?C? ? r-, C- ,. -- -:? _ t ?.r?? ?; 4 ? -?' . C...a ? _? _ C h' ;??Y;.il _ i T1G CARLISLE AREA HEALTH AND WELLNESS FOUNDATION, Plaintiff V. CENTRAL PENNSYLVANIA HEMATOLOGY & MEDICAL ONCOLOGY ASSOCIATES, P.C., Defendant IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW JURY TRIAL DEMANDED : NO. 02-3188 CIVIL TERM DEFENDANT'S REPLY TO NEW MATTER OF PLAINTIFF Reply to New Matter AND NOW COMES the Defendant, Central Pennsylvania Hematology & Medical Oncology Associates, P.C., and files the within Reply to Plaintiff's New Matter, as follows: 113. No response required. 114. Denied. The Start-Up Agreement speaks for itself and any attempt to characterize the terms of this writing are denied. 115. Denied. The Start-Up Agreement speaks for itself and any attempt to characterize the terms of this writing are denied. By way of further answer, the threshold amount was agreed to be $550,000.00 per month. 116. Denied. The allegations of Paragraph 116 are denied as conclusions of law. By way of further answer, the Start-Up Agreement is not "unambiguous". Quite to the contrary, the threshold amount was agreed to be $550,000.00 per month as set forth in writing from Defendant's counsel to Plaintiff's counsel. 117. Denied. The allegations of Paragraph 117 are denied as conclusions of law. By way of further answer, the Start-Up Agreement is not "unambiguous". Quite to the contrary, the threshold amount was agreed to be $550,000.00 per month as set forth in writing from Defendant's counsel to Plaintiff's counsel. 118. Denied. The allegations of Paragraph 118 are denied as conclusions of law. By way of further answer, the Start-Up Agreement is not "unambiguous". Quite to the contrary, the threshold amount was agreed to be $550,000.00 per month as set forth in writing from Defendant's counsel to Plaintiff's counsel. 119. Denied. The allegations of Paragraph 119 are denied as conclusions of law. By way of further answer, the Start-Up Agreement is not "unambiguous". Quite to the contrary, the threshold amount was agreed to be $550,000.00 per month as set forth in writing from Defendant's counsel to Plaintiff's counsel. Further, commercial reasonableness had to do with the original agreement and not with future thresholds. Defendant objects to answering regarding any advice provided by its counsel because that advice is privileged. 120. Denied. The allegations of Paragraph 120 are denied as conclusions of law. By way of further answer, the commercial reasonableness had to do with the original agreement and not with future thresholds. 121. Denied. The allegations of Paragraph 121 are denied as conclusions of law. By way of further answer, the commercial reasonableness had to do with the original agreement and not with future thresholds. 122. Denied. The Start-Up Agreement speaks for itself and any attempt to characterize the terms of this writing are denied. 123. Denied. The Start-Up Agreement speaks for itself and any attempt to characterize the terms of this writing are denied. By way of further answer, Plaintiff is not excused from paying practice support because the threshold of $550,000.00 per month was not met. Additionally, Defendant is not obligated to repay any money paid to Defendant since Plaintiff is in breach of the various agreements between the parties. 124. Denied. The Start-Up Agreement speaks for itself and any attempt to characterize the terms of this writing are denied. 125. Denied. The Defendant can neither admit nor deny the allegations of Paragraph 125, and therefore, those allegations are denied. By way of further answer, Plaintiff was not a "charitable foundation" at the time that it entered into the various agreements with Defendant. Further, Plaintiff did not contact Defendant to inform Defendant that the parameters of the parties' relationship had changed. 126. Denied. The allegations of Paragraph 126 are denied as conclusions of law. By way of further answer, the Lease and other agreements were not assigned to Health Management Associates, Inc. ("HMA") and/or remained intact. Plaintiff could easily have assigned those documents in writing had Plaintiff chosen to do so. 127. Denied. The allegations of Paragraph 127 are denied as conclusions of law. By way of further answer, Defendant did not know of the sale of the Cancer Center and thus did not waive any rights. 128. Admitted in part and denied in part. It is admitted that all of the reductions of Defendant's space were made at the request of the Plaintiff, and that some of the reductions of Defendant's space were made with the advice and consent of Defendant. It is further admitted that Plaintiff began requesting space shortly months after the Cancer Center opened. Plaintiff further agreed that the rent would be reduced after Defendant no longer received practice support. It is denied that all of the reductions were made with the Defendant's approval. 129. Denied. To the contrary, Defendant was not given the option of regarding some of the space and equipment because of decisions made unilaterally by Plaintiff. 130. Denied. To the contrary, Defendant was not given the option of regarding some of the space and equipment because of decisions made unilaterally by Plaintiff. 131. Denied. By the time that the Plaintiff sold the Cancer Center to HMA, Defendant's leasehold interest had decreased in size from 5,210 square feet to 2,156 square feet. 132. Denied. The reduced space gave Defendant less room for patient care, convenience and comfort. Further, the reductions to Defendant's space were material. 133. Denied. To the contrary, Plaintiff asserts that the fair market value of the leasehold space was determined by an "independent consultant". That consultant arrived at cost per square foot. Accordingly, as Defendant's space was reduced by more than one half at the direction of Plaintiff, the rental value would have had to decrease. 134. Denied. The Lease Agreement speaks for itself and any attempt to characterize the terms of this writing are denied. By way of further answer, no reasonable person could conclude that reducing a leased space from 5,210 square feet to 2,156 square feet was a "slight fluctuation." 135. Denied. The allegations of Paragraph 135 are denied as conclusions of law. By way of further answer, Plaintiff can no longer perform under any of the agreements between the parties because it is no longer the owner of the Cancer Center. 136. Denied. The allegations of Paragraph 136 are denied as conclusions of law. By way of further answer, Plaintiff can no longer perform under any of the agreements between the parties because it is no longer the owner of the Cancer Center. 137. Denied. The allegations of Paragraph 137 are denied as conclusions of law. By way of further answer, Plaintiff has anticipatorily breached the First Amendment to Agreement in that it can no longer perform under that or any other agreement. 138. Denied. The allegations of Paragraph 138 are denied as conclusions of law. By way of further answer, there was no successor in interest to Plaintiff, as Plaintiff failed to assign the Lease. None of the other agreements between the parties were assigned to HMA. Defendant ceased providing services pursuant to its lease with HMA and with the consent of HMA. 139. Denied. The allegations of Paragraph 139 are denied as conclusions of law. By way of further answer, Defendant has not waived any of its rights. Plaintiff is fully liable under the agreements between the parties. Further, Plaintiff did not inform Defendant of the sale to HMA. 140. Denied. The agreements between the parties speak for themselves and any attempt to characterize the terms of these writings are denied. By way of further answer, Defendant would not have built the laboratory to the size it was without Plaintiff's assurances that it would refer patients to the laboratory. 141. Denied. The agreements between the parties speak for themselves and any attempt to characterize the terms of these writings are denied. By way of further answer, Defendant would not have built the laboratory to the size it was without Plaintiff's assurances that it would refer patients to the laboratory. 142. Denied. The allegations of Paragraph 142 are denied as conclusions of law. 143. Denied. The statement in paragraph 143 does not appear to be an averment of fact requiring an admission or denial. To the extent that a response is required, there was no "scheme" between the parties, but the Plaintiff agreed to refer patients to Defendant's laboratory. 144. Denied. The allegations of Paragraph 144 are denied as conclusions of law. By way of further answer, Defendant restates the allegations of its Counterclaim. 145. Denied. The allegations of Paragraph 145 are denied as conclusions of law. By way of further answer, Defendant restates the allegations of its Counterclaim. 146. Denied. The allegations of Paragraph 146 are denied as conclusions of law. By way of further answer, Defendant restates the allegations of its Counterclaim. 147. Denied. The allegations of Paragraph 147 are denied as conclusions of law. By way of further answer, Defendant restates the allegations of its Counterclaim. 148. Denied. The allegations of Paragraph 148 are denied as conclusions of law. By way of further answer, Defendant restates the allegations of its Counterclaim. 149. Denied. The allegations of Paragraph 149 are denied as conclusions of law. By way of further answer, Defendant fully performed all obligations on its part to be performed until the various breaches by Plaintiff. 150. Denied. The allegations of Paragraph 150 are denied as conclusions of law. By way of further answer, Defendant restates the allegations of its Counterclaim. 151. Denied. The allegations of Paragraph 151 are denied as conclusions of law. By way of further answer, the agreements between the parties were prepared by Plaintiff with comment from Defendant. However, Defendant did not "participate equally' in the drafting of the documents. Defendant did advise Plaintiff in writing that the revenue threshold was to be $550,000.00 per month, and Plaintiff agreed to this figure. WHEREFORE, Defendant demands judgment against Plaintiff as set forth in the counterclaims. WIX, WENGER & WEIDNER By: David R. Getz, Esquire I.D. #34838 508 North Second Street P.O. Box 845 Harrisburg, PA 17108-0845 (717) 234-4182 DATE: T"I ) q1 9VV? VERIFICATION I, John D. Conroy, Jr., President of Central Pennsylvania Hematology & Medical Oncology Associates, P.C., a Pennsylvania corporation, Defendant in the foregoing pleading, have read the foregoing pleading and hereby affirm and verify that it is true and correct to the best of my personal knowledge, information and belief. I verify that all of the statements made in the foregoing are true and correct and that false statements made therein may subject me to the penalties of 18 Pa.C.S.A. Section 4904, relating to unsworn falsification to authorities. Central Pennsylvania Hematology & Medical Oncology Associates, P.C. By J n D. Conroy, Jr., Presi nt DATE: M'7 lj U CARLISLE AREA HEALTH AND WELLNESS FOUNDATION, Plaintiff IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW V. JURY TRIAL DEMANDED CENTRAL PENNSYLVANIA HEMATOLOGY & MEDICAL ONCOLOGY ASSOCIATES, P.C., Defendant NO. 02-3188 CIVIL TERM CERTIFICATE OF SERVICE I hereby certify that a copy of the foregoing document was hand delivered this day to the following: Carl C. Risch, Esquire No V. Otto, III, Esquire Martson, Deardorff, Williams & Otto Ten East High Street Carlisle, PA 17013 Respectfully submitted, WIX, WENGER & WEIDNER By. L David R. Getz, Esquir I.D. #34838 508 North Second Street Post Office Box 845 Harrisburg, PA 17108-0845 (717) 234-4182 DATE: is J? 3 F:\drg\1538 - CPHMOA\9417 - Carlisle Project\Documents\Reply to Plaintiffs New Matter.doc ?} `^'i ^ R) 11 I j' ? J _ _.l i . r "4 P.\}9LMZATAP[ BEU iWBW\Doc ,9\e<5.pra CreazeA 9/20/00 0.06PM Revised MW 1127" Jennifer L. Spears, Esquire MARTSON DEARDORFF WILLIAMS & OTTO I.D. 87445 10 East High Street Carlisle, PA 17013 (717) 243-3341 Attorneys for Plaintiff CARLISLE AREA HEALTH AND WELLNESS FOUNDATION Plaintiff V. CENTRAL PENNSYLVANIA HEMATOLOGY & MEDICAL ONCOLOGY ASSOCIATES, P.C., Defendant IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA NO. 02-3188 CIVIL ACTION -LAW JURY TRIAL DEMANDED PRAECIPE TO THE PROTHONOTARY OF CUMBERLAND COUNTY: Please substitute the appearance of Jennifer L. Spears, Esquire, for Carl C. Risch, Esquire, of MARTSON DEARDORFF WILLIAMS & OTTO B 46JL? J i er L. Spears, Esquire 10 East High Street Carlisle, PA 17013 (717) 243-3341 MARTSON DEARDORFF WILLIAMS & OTTO on behalf ofthe Plaintiff, Carlisle Area Health and Wellness Foundation, in the above matter. Date: August 7, 2006 Attorneys for Plaintiff T w CERTIFICATE OF SERVICE I, Tricia D. Eckenroad, an authorized agent for Martson Deardorff Williams & Otto, hereby certify that a copy ofthe foregoing Praecipe was served this date by depositing same in the Post Office at Carlisle, PA, first class mail, postage prepaid, addressed as follows: David R. Getz, Esquire WIX, WENGER & WEIDNER 508 North Second Street P.O. Box 845 Harrisburg, PA 17108-0845 MARTSON DEARDORFF WILLIAMS & OTTO By ricia D. Eckenroad Ten East High Street Carlisle, PA 17013 (717) 243-3341 Dated: August 5, 2006 m ? n W CARLISLE AREA HEALTH AND WELLNESS FOUNDATION vs Case No. CENTRAL PA HEMATOLOGY, ET AL Statement of Intention to Proceed To the Court: 02-3188 Plaintiff intends to proceed with the above captioned matter. Print Name Jennifer L. Spears Sign Name Date: September 19, 2006 Attorney for Plaintiff Explanatory Comment The Supreme Court of Pennsylvania has promulgated new Rule of Civil Procedure 230.2 governing the termination of inactive cases and amended Rule of Judicial Administration 1901. Two aspects of the recommendation merit comment. 1. Rule of civil Procedure New Rule of Civil Procedure 230.2 has been promulgated to govern the termination of inactive cases within the scope of the Pennsylvania Rules of Civil Procedure. The termination of these cases for inactivity was previously governed by Rule of Judicial Administration 1901 and local rules promulgated pursuant to it. New Rule 230.2 is tailored to the needs of civil actions. It provides a complete procedure and a uniform statewide practice, preempting local rules. This rule was promulgated in response to the decision of the Supreme Court in Shop v. Eagle, 551 Pa. 360,710 A.2d 1104 (1998) in which the court held that "prejudice to the defendant as a result of delay in prosecution is required before a case may be dismissed pursuant to local rules implementing Rule of Judicial Administration 1901." Rule of Judicial Administration 1901(b) has been amended to accommodate the new rule of civil procedure. The general policy of the prompt disposition of matters set forth in subdivision (a) of that rule continues to be applicable. 11 Inactive Cases The purpose of Rule 230.2 is to eliminate inactive cases from the judicial system. The process is initiated by the court. After giving notice of intent to terminate an action for inactivity, the course of the procedure is with the parties. If the parties do not wish to pursue the case, they will take no action and "the Prothonotary shall enter an order as of course terminating the matter with prejudice for failure to prosecute." If a party wishes to pursue the matter, he or she will file a notice of intention to proceed and the action shall continue. a. Where the action has been terminated If the action is terminated when a party believes that it should not have been terminated, that party may proceed under Rule230(d) for relief from the order of termination. An example of such an occurrence might be the termination of a viable action when the aggrieved party did not receive the notice of intent to terminate and thus did not timely file the notice of intention to proceed. The timing of the filing of the petition to reinstate the action is important. If the petition is filed within thirty days of the entry of the order of termination on the docket, subdivision (d)(2) provides that the court must grant the petition and reinstate the action. If the petition is filed later than the thirty-day period, subdivision (d)(3) requires that the plaintiff must make a show in to the court that the petition was promptly filed and that there is a reasonable explanation or legitimate excuse both for the failure to file the notice of intention to proceed prior to the entry of the order of termination on the docket and for the failure to file the petition within the thirty-day period under subdivision (d)(2). B. Where the action has not been terminated An action which has not been terminated but which continues upon the filing of a notice of intention to proceed may have been the subject of inordinate delay. In such an instance, the aggrieved party may pursue the remedy of a common law non pros which exits independently of termination under Rule 230.2. Z-? 90 N _? CARLISLE AREA HEALTH & WELLNESS FOUNDATION vs Case No. 02-3188 CENTRAL PENNSYLVANIA HEMATOLOGY & MEDICAL ONCOLOGY ASSOCIATES Statement of Intention to Proceed To the Court: Plaintiff iiqends to proce with the above captioned matter. Print Name David A. Fitzsimons, EsgSign Name Date: October 26, 2009 Attorneyfor Plaintiff Explanatory Comment The Supreme Court of Pennsylvania has promulgated new Rule of Civil Procedure 230.2 governing the termination of inactive cases and amended Rule of Judicial Administration 1901. Two aspects of the recommendation merit comment. 1. Rule of civil Procedure New Rule of Civil Procedure 230.2 has been promulgated to govern the termination of inactive cases within the scope of the Pennsylvania Rules of Civil Procedure. The termination of these cases for inactivity was previously governed by Rule of Judicial Administration 1901 and local rules promulgated pursuant to it. New Rule 230.2 is tailored to the needs of civil actions. It provides a complete procedure and a uniform statewide practice, preempting local rules. This rule was promulgated in response to the decision of the Supreme Court in Shop v. Eagle, 551 Pa. 360,710 A.2d 1104 (1998) in which the court held that "prejudice to the defendant as a result of delay in prosecution is required before a case may be dismissed pursuant to local rules implementing Rule of Judicial Administration 1901." Rule of Judicial Administration 1901(b) has been amended to accommodate the new rule of civil procedure. The general policy of the prompt disposition of matters set forth in subdivision (a) of that rule continues to be applicable. II Inactive Cases The purpose of Rule 230.2 is to eliminate inactive cases from the judicial system. The process is initiated by the court. After giving notice of intent to terminate an action for inactivity, the course of the procedure is with the parties. If the parties do not wish to pursue the case, they will take no action and "the Prothonotary shall enter an order as of course terminating the matter with prejudice for failure to prosecute." If a party wishes to pursue the matter, he or she will file a notice of intention to proceed and the action shall continue. a. Where the action has been terminated If the action is terminated when a party believes that it should not have been terminated, that party may proceed under Rule230(d) for relief from the order of termination. An example of such an occurrence might be the termination of a viable action when the aggrieved party did not receive the notice of intent to terminate and thus did not timely file the notice of intention to proceed. The timing of the filing of the petition to reinstate the action is important. If the petition is filed within thirty days of the entry of the order of termination on the docket, subdivision (d)(2) provides that the court must grant the petition and reinstate the action. If the petition is filed later than the thirty-day period, subdivision (d)(3) requires that the plaintiff must make a show in to the court that the petition was promptly filed and that there is a reasonable explanation or legitimate excuse both for the failure to file the notice of intention to proceed prior to the entry of the order of termination on the docket and for the failure to file the petition within the thirty-day period under subdivision (d)(2). B. Where the action has not been terminated An action which has not been terminated but which continues upon the filing of a notice of intention to proceed may have been the subject of inordinate delay. In such an instance, the aggrieved party may pursue the remedy of a common law non pros which exits independently of termination under Rule 230.2. k FU -OFD OF THE PROTHWTARY 2009 OCT 26 FM 3: 34 CUMBE;' ? j •JD COUN Y PENNSYLVANIA