HomeMy WebLinkAbout94-4046 CivilMECHANICSBURG REHAB SYSTEMS, :
Plaintiff :
:
V. :
:
COMMONWEALTH OF PENNSYLVANIA, :
DEPARTMENT OF CORRECTIONS, :
Defendant :
IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
CIVIL ACTION - LAW
NO. 94-4046 CIVIL TERM
IN RE: DEFENDANT'S PRELIMINARY OBJECTIONS
BEFORE SHEELY, P.J., and OLER, J.
AMENDED ORDER OF COURT
AND NOW, this 2~ day of January, 1996, after careful
consideration of Defendant's Preliminary Objections to Plaintiff's
Amended Complaint, as well as the briefs and oral arguments
presented in the matter, and for the reasons stated in the
accompanying opinion, the preliminary objections are GRANTED as
they relate to Plaintiff's breach of contract claim, to the extent
that the claim is transferred to the Board of Claims, and the
preliminary objections are DENIED as they relate to Plaintiff's
fraud claim.
Richard oare, Esq.
1776 South Queen Street
York, PA 17043
Attorney for Plaintiff
Jill A. Devine, Esq.
BY THE COURT,
ji-We~~Oler~,~r.~,'~~?' !~ '
Pennsylvania Department of Corrections
2520 Lisburn Road
P.O. Box 598
Camp Hill, PA 17001-0598
Attorney for Defendant
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MECHANICSBURG REHAB SYSTEMS,
Plaintiff
v.
COMMONWEALTH OF PENNSYLVANIA,
DEPARTMENT OF CORRECTIONS,
Defendant
IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
CIVIL ACTION - LAW
NO. 94-4046 CIVIL TERM
IN RE: DEFENDANT'S PRELIMINARY OBJECTIONS
BEFORE SHEELY, P.J., and OLER, J.
ORDER OF COURT
AND NOW, this ~ day of January, 1996, after careful
consideration of Defendant's Preliminary Objections to Plaintiff's
Amended Complaint, as well as the briefs and oral arguments
presented in the matter, and for the reasons stated in the
accompanying opinion, the preliminary objections are GRANTED as
they relate to Plaintiff's breach of contract claims, to the extent
that the claim is transferred to the Board of Claims, and the
preliminary objections are DENIED as they relate to Plaintiff's
fraud claim.
Richard Oare, Esq.
1776 South Queen Street
York, PA 17043
Attorney for Plaintiff
Jill A. Devine, Esq.
BY THE COURT,
Pennsylvania Department of Corrections
2520 Lisburn Road
P.O. Box 598
Camp Hill, PA 17001-0598
Attorney for Defendant
· re
MECHANICSBURG REHAB SYSTEMS,
Plaintiff
v.
COMMONWEALTH OF PENNSYLVANIA,
DEPARTMENT OF CORRECTIONS,
Defendant
IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
CIVIL ACTION - LAW
NO. 94-4046 CIVIL TERM
IN RE: DEFENDANT'S PRELIMINARY OBJECTIONS
BEFORE SHEELY, P.J., and OLER, J.
OPINION and ORDER OF COURT
Oler, J.
Plaintiff's amended complaint in this civil action for breach
of contract and fraud against the Commonwealth is the subject of
preliminary objections. These preliminary objections may be
classified as (1) a motion to dismiss for lack of jurisdiction over
the subject matter of the action;~ (2) a motion to dismiss for
nonjoinder of an indispensable party;2 (3) a motion to dismiss for
failure of the complaint to conform to rule of court in terms of
pleading material facts;3 (4) a motion to dismiss for insufficient
pleading specificity as to fraud;4 and (5) a motion to dismiss for
legal insufficiency of the pleading (demurrer).s
Plaintiff's claims arise out of the Commonwealth's alleged
refusal to fully pay for certain medical services provided to a
See Pa. R.C.P. 1028(a)(1).
See Pa. R.C.P. 1028(A)(5).
See Pa. R.C.P. 1028(a)(2); Pa. R.C.P. 1019(a).
See Pa. R.C.P. 1028(4); Pa. R.C.P. 1019(b).
See Pa. R.C.P. 1028(a)(4); Defendant's Preliminary
Objections to Plaintiff's Amended Complaint (filed April 12, 1995).
NO. 94-4046 CIVIL TERM
state prisoner. Defendant's preliminary objections are based, more
specifically, upon the following grounds: first, that the Board of
Claims has exclusive jurisdiction over claims against the
Commonwealth arising out of breach of contract; second, that an
entity called Renova Center for Specialized Services is an
indispensable plaintiff, inasmuch as Plaintiff's amended complaint
alleges a default by the Commonwealth in paying for Renova's
services; third, that the amended complaint fails to aver that the
Commonwealth executed the contracts upon which the action is based;
fourth, that averments of fraud by the Commonwealth are overly
broad; and, fifth, that as a matter of law under the Public Welfare
Code Plaintiff can not collect from the Commonwealth at rates, as
it seeks, in excess of those statutorily authorized for medical
assistance patients.
STATEMENT OF FACTS
The facts as averred in Plaintiff's amended complaint are as
follows:6 Plaintiff is Mechanicsburg Rehab Systems, a health care
treatment facility with its principal place of business at 175
Lancaster Boulevard, Mechanicsburg, Cumberland County,
Pennsylvania. Defendant is the Commonwealth of Pennsylvania,
Department of Corrections, Bureau of Community Corrections, with
offices at Harrisburg Community Corrections Center, 27 North
6 The recitation of averments in Plaintiff's amended
complaint is not intended to express a view by the court as to
their accuracy.
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NO. 94-4046 CIVIL TERM
Cameron Street, Harrisburg, Dauphin County, Pennsylvania.
Defendant also operates a facility known as the State Correctional
Institution at Camp Hill (SCI-Camp Hill) at 2500 Lisburn Road, Camp
Hill, Cumberland County, Pennsylvania.
On or about January 26, 1993, Larry Lanehart was an inmate at
SCI-Camp Hill, or otherwise in the protective custody of Defendant.
On or about that same date, ~Defendant requested "wound" care and
rehabilitation services for Mr. Lanehart from Renova in connection
with his condition as a paraplegic. Renova is a subacute care
facility of the Plaintiff. Defendant requested Renova to provide
limited term wound care and rehabilitation services for the purpose
of enabling Mr. Lanehart "to return to the Harrisburg Correction
Center to be productive through developed skills and to function
independently through performing personal hygiene and use of
developed transfer skills."
Plaintiff provided care and medical services to Mr. Lanehart
pursuant to the parties' understanding from January 27, 1993,
through June 18, 1993. In accordance with the terms of a written
agreement, Plaintiff was to provide services to Mr. Lanehart for
thirty days at a rate of $750.00 per day. On or about March 12,
1993, Plaintiff and Defendant entered into a supplemental agreement
for the purchase of additional medical services by Plaintiff for
Mr. Lanehart, for the period February 26, 1993, through and
including March 27, 1993, at the daily rate of $750.00. "By its
NO. 94-4046 CIVIL TERM
actions," Defendant subsequently requested and gave approval for an
extended stay for Mr. Lanehart based upon the previously agreed-
upon rate of $750.00 per day and "in furtherance of the parties'
agreement."
Pursuant to the parties' agreements, Plaintiff submitted an
invoice to Defendant in the amount of $68,891.18. Despite repeated
demands, however, Defendant has failed or refused to pay the amount
currently due and owing. Instead, "Defendant contends that Medical
Assistance benefits should be available for [Mr.] Lanehart, despite
their contractual obligations."
In addition to the aforesaid averments relating to an alleged
breach of contract by Defendant, Plaintiff also makes the following
allegations pertaining to fraud:
20. Defendant allegedly placed Mr.
Lanehart in the Harrisburg Community
Corrections Center for the purpose of
attempting to gain qualification for medical
assistance benefits, which actions were in
direct contravention of the law.
21. It is believed and therefore averred
that the Defendant did not physically place
Mr. Lanehart in the Harrisburg Community
Corrections Center (HCCC).
22. It is believed and therefore averred
that Mr. Lanehart was transported directly
from SCI at Camp Hill to Community General
Osteopathic Hospital in Harrisburg.
23. It is believed and therefore averred
that the Defendant's agents were aware that it
was inappropriate to seek Medical Assistance
benefits for Mr. Lanehart by means of the
fictional transfer to another facility.
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NO. 94-4046 CIVIL TERM
24. The Defendant negotiated with MRS
[Mechanicsburg Rehab Systems] in an effort to
procure medical services for Mr. Lanehart,
with no intention of providing payment for
such services.
25. Defendant prepared official
paperwork and both verbal and written
contracts promising payment for the medical
services provided by MRS to Mr. Lanehart.
26. Defendant gave continued assurances
and made misrepresentations, by and through
its agents and employees that it would provide
payment for the services rendered by MRS to
Defendant.
27. Defendant did not intend to make
payment for the services provided by MRS.
28. In response to the MRS request for
payment, the Harrisburg Community Corrections
Center sent a letter dated June 30, 1993, to
MRS alleging eligibility for Public Assistance
and directed MRS to submit their bill to
Public Assistance.
29. By letter dated March 24, 1994, HCCC
alleged that i[t] was not responsible for
contractual arrangements between MRS (Renova)
and the Department of Corrections. This
letter indicated that "I have forwarded your
correspondence to the other concerned offices
within the Department of Corrections for their
consideration."
30. The Defendant's representations were
knowingly false, made in conscious ignorance
of the truth, or made recklessly without
caring whether they were true or false.
31. Defendant, by and through the
actions and representations made by its
representatives, intended to induce MRS to
provide medical services and accommodations to
Mr. Lanehart.
32. MRS justifiably relied upon the
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NO. 94-4046 CIVIL TERM
Defendant's misrepresentations to its
detriment.
33. Despite its contractual obligations,
repeated assurances and expressions of
intention to provide payment, Defendant failed
and, by their actions, refused to provide
payment for MRS's services.
34. Defendant's actions were malicious,
willful, outrageous or so careless as to
indicate wanton disregard of the rights of
MRS.
STATEMENT OF LAW
Subject matter jurisdiction. "The Board of Claims shall have
exclusive jurisdiction to hear and determine all claims against the
Commonwealth arising from contracts hereafter entered into with the
Commonwealth, where the amount in controversy amounts to $300.00 or
more." Act of May 20, 1937, P.L. 728, §4, as amended, 72 P.S.
S4651-4. However, the jurisdiction of the Board of Claims does not
extend to claims sounding in trespass. Fred S. James & Co. v.
Commonwealth of Pennsylvania, Bd. of Arbitration of Claims, 44 Pa.
Commw. 289, 403 A.2d 1051 (1979). An action for fraud and deceit
was traditionally brought in trespass, in contradistinction to an
action for breach of contract, which was traditionally brought in
assumpsit. Hardy v. Pennack Ins. Agency, Inc., 365 Pa. Super. 206,
529 A.2d 471 (1987).
With regard to the original jurisdiction of courts of common
pleas, the general rule is as follows:
(a) General rule.-- Except where exclusive
original jurisdiction of an action or
NO. 94-4046 CIVIL TERM
proceeding is by statute or by general rule
adopted pursuant to section 503 (relating to
reassignment of matters) vested in another
court of this Commonwealth, the courts of
common pleas shall have unlimited original
jurisdiction of all actions and proceedings,
including all actions and proceedings
heretofore cognizable by law or usage in the
courts of common pleas.
Act of July 9, 1976, P.L. 586, ~2, as amended, 42 Pa. C.S.A.
~931(a).
Where a claim within the jurisdiction of the Board of Claims
is brought in a court of common pleas, it should be transferred to
the Board. Act of July 9, 1976, P.L. 586, ~2, as amended, 42 Pa.
c.a.A. §5103(a), (d) (1995 Supp.).7
7 ~5103. Transfer of erroneously filed matters.
(a) General rule. -- If an appeal or other'
matter is taken to or brought in a court ...
of this Commonwealth which does not have
jurisdiction [of the matter], the court ...
shall not ... dismiss the matter, but shall
transfer the record thereof to the proper
tribunal of this Commonwealth, where the
matter shall be treated as if originally fi~
in the transferree tribunal on the date when
the ... matter was first filed in a court ...
of this Commonwealth.
(d) Definition. -- As used in this section
"tribunal" means a court or district justice
or other judicial officer of this Commonwealth
vested with the power to enter an order in a
matter, the Board of Claims, the Board of
Property, the Office of Administrator for
Arbitration Panels for Health Care and any
other similar agency.
Act of July 9, 1976, P.L. 586, S2, as amended, 42 Pa. C.S.A.
~5103(a), (d) (1995 Supp.).
NO. 94-4046 CIVIL TERM
Failure to join an indispensable party. Pennsylvania Rule of
Civil Procedure 2227(a) provides that "[p]ersons having only a
joint interest in the subject matter of an action must be joined on
the same side as plaintiffs or defendants." Pennsylvania Rule of
Civil Procedure 1032(b) further states that "[w]henever it appears
by suggestion of the parties or otherwise that ... there has been
a failure to join an indispensable party, the court shall order ...
that the indispensable party be joined, but if that is not
possible, then it shall dismiss the action."
"An indispensable party is one whose rights are so connected
with the claims of the litigants that no relief can be granted
without impairing or infringing upon those rights." 3 Goodrich-
Amram 2d S1032.13, at 151 (1991). Where an indispensable party is
not joined, the court is not required to dismiss the action in the
first instance, but may grant leave to the plaintiff to join the
absent party. Id., at 152-53.
Failure to plead material facts. Pennsylvania Rule of Civil
Procedure 1019(a) provides that "[t]he material facts on which a
cause of action or defense is based shall be stated in a concise
and summary form." "Material facts are those which are essential
to show the liability which is sought to be enforced." 2 Goodrich-
Amram 2d §1019(a):l, at 316 (1991).
Failure to plead fraud with particularity. Pennsylvania Rule
of Civil Procedure 1019(b) provides that "[a]verments of fraud ...
NO. 94-4046 CIVIL TERM
shall be averred with particularity." "The requirements of Rule
1019(b) are satisfied if a party pleads facts sufficient to permit
an opponent to prepare his or her response to an averment of fraud.
A party must set forth the exact statements or actions which the
party alleges constitute the fraudulent misrepresentations." 2
Goodrich-Amram 2d ~1019(b):l, at 328-29 (1991). "When the
sufficiency of a paragraph of a pleading is being considered, a
court may take into consideration the averments of other paragraphs
dealing with the same subject matter. Thus, in determining whether
fraud has been pleaded with the required particularity, a court
must examine a pleading as a whole." 2 Goodrich-Amram 2d §1019:4,
at 313-14 (1991).
Demurrer. "In order to sustain a demurrer, it is essential
that an opponent's pleading indicate on its face that his claim ...
cannot be sustained. The question to be decided is ... whether,
upon the facts averred, it shows with certainty that the law will
not uphold the pleading. Since sustaining a demurrer results in a
denial of a pleader's claim ... a preliminary objection in the
nature of a demurer should be sustained only in cases that clearly
and without a doubt fail to state a claim for which relief may be
granted. If the facts as pleaded state a claim for which relief
may be granted under any theory of law, then there is sufficient
doubt to require that a preliminary objection in the nature of a
demurrer be rejected." 2 Goodrich-Amram 2d ~1017(b):27, at 271-72
NO. 94-4046 CIVIL TERM
(1991). "When a doubt exists as to whether a demurrer should be
sustained, this doubt should be resolved in favor of overruling
it." Snyder v. Speciality Glass Products, Inc., Pa. Super.
· , 658 A.2d 366, 368 (1995).
Section 444.1 of the Public Welfare Code provides,
pertinent part, as follows:
in
As a condition of participation in the
medical assistance program, vendors of
services shall agree to accept the rates of
payment authorized by this article and shall
not seek nor accept additional payments. The
department shall permit each person eligible
for assistance under this act freedom to
choose whichever practitioner and/or vendor of
the services, care or prescribed drugs he
shall desire so long as such practitioner or
vendor is entitled to participate in the
assistance program provided for in this act.
Act of June 13, 1967, P.L. 31, §441.1, as added, 62 P.S. §444.1
(1995 Supp.).
Elements of a fraud claim. "The elements of a fraud and
deceit action in trespass may be said to consist of: (1) a false
representation of an existing fact; (2) if the misrepresentation is
innocently made, then it is actionable only if it relates to a
matter material to the transaction involved; while, if the
misrepresentation is knowingly made ... materiality is not a
requisite to the action; (3) scienter, which may be either actual
knowledge of the truth or falsity of the representation, reckless
ignorance of the falsity of the matter, or mere false information
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NO. 94-4046 CIVIL TERM
where a duty to know is imposed on a person by reason of special
circumstances; (4) reliance, which must be justifiable, so that
common prudence or diligence could not have ascertained the truth;
and, (5) damage to the person relying thereon." Smith v. Renaut,
387 Pa. Super. 299, 306, 564 A.2d 188, 192 (1989).
APPLICATION OF LAW TO FACTS
Plaintiff's breach of contract claim. With regard to
Defendant's motion to dismiss for lack of subject matter
jurisdiction, the law appears to be clear that the Board of Claims
has exclusive jurisdiction to hear and determine Plaintiff's
contractual claim against the Commonwealth, and that the proper
course of action in such a case is a transfer of the matter to the
Board. Therefore, Plaintiff's claim for breach of contract will be
transferred to the Board of Claims pursuant to the Act of July 9,
1976, P.L. 586, §2, as amended, 42 Pa. C.S.A. §5103(a), (d) (1995
Supp.). Defendant's additional preliminary objections as to this
claim are more appropriately to be considered by the tribunal
having jurisdiction over the claim.
Plaintiff's claim for fraud. Having found no case law which
would sanction the transfer of a trespass action to the Board of
Claims on a theory of ancillary jurisdiction, the court is
constrained to retain the portion of Plaintiff's action relating to
fraud in this forum. In so doing, the court will refrain from
considering sua sponte the application of the doctrine of sovereign
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NO. 94-4046 CIVIL TERM
immunity to this aspect of Plaintiff's action.8
After carefully reviewing the balance of Defendant's
preliminary objections as they may apply to Plaintiff's claim for
fraud, the court does not believe that further relief is warranted.
With respect to the fraud claim the amended complaint does not
appear to contain deficiencies in terms of an absence of an
indispensable party, the omission of material facts, a lack of
particularization as to fraud, or preemption by a statutory scheme
applicable to services provided to medical assistance recipients
that would justify dismissal of the claim.
For the foregoing reasons, the following order will be
entered:
ORDER OF COURT
AND NOW, this 25th day of January, 1996, after careful
consideration of Defendant's Preliminary Objections to Plaintiff's
Amended Complaint, as well as the briefs and oral arguments
presented in the matter, and for the reasons stated in the
accompanying opinion, the preliminary objections are GRANTED as
they relate to Plaintiff's breach of contract claims, to the extent
that the claim is transferred to the Board of Claims, and the
~ See Wilson v. Philadelphia Housing Auth., 99 Pa. Commw.
508, 513 A.2d 586 (1986).
12
NO. 94-4046 CIVIL TERM
preliminary objections are DENIED as they relate to Plaintiff's
fraud claim.
BY THE COURT,
s/ J. Wesley Oler, Jr.
J. Wesley Oler, Jr., J.
Richard Oare, Esq.
1776 South Queen Street
York, PA 17043
Attorney for Plaintiff
Jill A. Devine, Esq.
Pennsylvania Department of Corrections
2520 Lisburn Road
P.O. Box 598
Camp Hill, PA 17001-0598
Attorney for Defendant
: rc
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