Loading...
HomeMy WebLinkAbout92-99 Civil9� ERMINIA LEONE and LUIGI LEONE, Her Husband, Plaintiffs �le STATE FARM INSURANCE COMPANIES, Defendant J IN THE COURT OF �OMMON PLEAS OF CUMBERLAND COUNT , PENNSYLVANIA CIVIL ACTION - NO. 99 CIVIL 1912 BEFORE BAYLEY, HESS, and_OLER. JJ. OPINION AND ORDER OF COURT AND NOW, this LSJ4 day of October, 1992, he Defendant's Preliminary Objection in the form of a demurrer to Count IV of Plaintiffs' Complaint, setting forth a claim ba: law tort of bad faith, is SUSTAINED, and the Col The Defendant's Preliminary Objections are otherw� the Defendant is granted 20 days within which to Timothy A. Shollenberger, Esq. Myers, Desfor & Shollenberger 410 North Second Street P.O. Box 1062 Harrisburg, PA 17108-1062 Rolf Kroll, Esq. Foulkrod, Reynolds & Havas 101 Pine Street P.O. Box 932 Harrisburg, PA 17108-0932 BY THE COURT, J. Wesley Oler,-Jr, l upon a common is DISMISSED. ;DISMISSED, and ile an Answer. J. 1 � V�� --I C, i h" st t ERMINIA LEONE and LUIGI IN THE COURT OF OMMON PLEAS OF LEONE, Her Husband, CUMBERLAND COUNTY, PENNSYLVANIA Plaintiffs V. CIVIL ACTION - LAW STATE FARM INSURANCE : NO. 99 CIVIL 19 2 COMPANIES, Defendant JURY TRIAL DE DED r BEFORE BAYLEY, HESS, and OLER, JJ. OPINION AND ORDER OF COURT Oler, J. At issue in the present case are preliminary complaint against an insurance company. The actic the company's alleged refusal to pay certain treatment of an insured plaintiff following an aut The complaint, filed by Erminia Leone (Plaintiffs) against State Farm Insurance Comp bjections to a arises out of al charges for )bile accident. i Luigi Leone s (Defendant), contains counts alleging breach of an insurance contract within the scope of 42 Pa. C.S. §8371,' relating to bad faith 1 Act of February 7, 1990, P.L. 11, §3, 42 (1992 Supp.); see Plaintiffs' Complaint, Count II. 2 The statutory provision reads as follows: by an insurer,2 Pa. C.S. §8371 In an action under an insurance p licy, if the court finds that the insurer has acted in bad faith toward the insured, the court may take all of the following actions: (1) Award interest on the amount of the claim from the date the claim was made by the insured in an amount equal to the prime rate of interest plus 3%. (2) Award punitive damages against the insurer. (3) assess court costs and attorne fees against the insurer. Act of February 7, 1990, P.L. 11, §3, 42 Pa. CI. S. §8371 (1992 Supp.). No. 99 Civil 1992 named health care providers for treatment rendered o Ms. Leone." The Defendant, which paid Ms. Leone's medical bills through September 10, 1990, informed the Plaintiffs by way of correspondence dated April 11 1991, that it was den ing payment of various medical bills because the treatment regimer was deemed to be excessive by a Peer Review Organization (PRO). Use of a PRO is authorized by 75 Pa. C.S. §1797 (Act 6);13 Act 6 carries an effective date of April 15, 1990.14 It is notew rthy that the effective date of this act was after the Plaintiffs entered into the Policy with the Defendant and after the date of the accident. Subsequent to the denial of payment by he Defendant, Plaintiffs requested a reconsideration of the PRO's iecision, which is provided for under 75 Pa. C.S. §1797(b)(2) and, again, the PRO determined that the treatment regimen was excessive consequently, payment was denied by the insurer." 11 See Plaintiffs' Complaint, paragraphs 10, 1. 12 Plaintiffs' Complaint, paragraphs 12, 18-1). 13 Act of February 12, 1984, P.L. 53, §3, as unended, Act of February 7, 1990, P.L. 11, §18, 75 Pa. C.S. §1797 1992 Supp.). The PRO legislation provides that an insurer may submit the records of medical treatment relating to a claim made by an insured to a PRO, which then reviews the records and determines whether the "treatment, products, services or accommodations conform to the professional standards of performance and are medically necessary." Id., §1797(b)(1). 14 Act of February 7, 1990, P.L. 11, §32(2). 3:5 See Plaintiffs' Complaint, paragraphs 20-24. 3 No. 99 Civil 1992 Thereafter, Plaintiffs filed the Complaint n the present action. Defendant has interposed the following Preliminary Objections: (1) a motion to strike, or in the alternative a demurrer to, the entire complaint for lack of subject matter jurisdiction, it being argued that Act 6 sets fo th a procedure free of judicial oversight for determination f Defendant's responsibility for payment of medical bills; (2) a motion to strike, or in the alternative a demurrer to, the entire complaint for lack of standing to sue on the part of Plain iffs, it being argued that under Act 6 no liability for medical b'lls can accrue to an insured in the present circumstances; (3) a motion to strike, or in the alternative a demurrer to, (a) the count of the complaint asserting breach of an insurance contract within the scope of 42 Pa. C.S. §8371, relating to bad faith by an insurer, it being argued that the said statute is inapplicable herein, and (b) the count of the complaint asserting commission of the common law tort of bad faith," it being argued that no such tort his existed as to insurers; and (4) a motion to strike, or in the alternative a demurrer to, the counts of the complaint based upon alleged violation of Pennsylvania's Unfair Trade Practices and Consumer Protection Law and upon deceit, it being argue that remedies available under Act 6 are exclusive in nature. Several principles of law with respect to preliminary objections to a, complaint in the form of motion to strike and demurrers may be noted. As to the former, it haj been said that 4 No. 99 Civil 1992 "[a] motion to strike is limited to errors of form. It cannot be used for other objections." 5 Standard Pennsylvania Practice §25:44, at 196 (1982). Moreover, because the rules f pleading are to be construed liberally, ,[m]otions to strike are sparingly granted." Id. §25:51, at 207 (1982); see Pa. R.C.11. 126. As to demurrers, it has been stated that [t]he question presented by a demurrer is whether, on the facts averred in the complaint, the law says with certainty that ro recovery is possible." Vattimo v. Lower Bucks Hospital, Inc , 502 Pa. 241, 244, 465 A.2d 1231, 1232 (1983). Moreover, 11[a]iLy doubts as to whether a demurrer should be sustained should be xesolved against the moving party." David v. Commonwealth, 143 Pa. ommw. 161, 169, 598 A.2d 642, 647 (1991). Thus, in ruling or, a preliminary objection in the form of a demurrer, the court nust sustain the demurrer only if it finds that "a cause of actio [has not been] properly made out in the complaint; and ... the plaintiff would be unable to state a proper claim even on a different statement of facts." Nagy v. The Bell Telephone Company of Pennsylvania, 292 Pa. Super. 24, 27, 436 A.2d 701, 703 (1989). Initially, it is apparent that Defendant's preliminary objections are in large measure dependent upon the premise that Act 6 is applicable to the instant medical bills. At the same time, it is also apparent that an element of legislative retroactivity is implicit in the premise; both the policy and the ccident predated the effective date of Act 6. 5 No. 99 Civil 1992 The law in Pennsylvania is clear that a statuta is not to be retroactively applied unless the legislature indicates such through the use of clear and unambiguous language.16 More ver, "[w]here the language of the statute is general, and might be given both retroactive and prospective operation, it will ... be held to be prospective only." Krenzelak v. Krenzelak, 503 Pa 373, 380, 469 A.2d 987, 990 (1983) (citations omitted). A law is given retroactive effect where a "contractual obligation is altered or affected." Rudolph Rosa, Inc. v. Latrobe Brewing Company, 347 Pa. Super. 551, 562, 500 A.2d 1194, 1199-1200 (1 85) (citation omitted). The Defendant's position is that the legislature intended Act 6, as an amendment to the Pennsylvania Motor Vehicle Financial Responsibility Law, 17 to be applied to policies Existing on the effective date of the statute. 18 For several reasons, however, this position is subject to challenge. First, th re is no clear and unambiguous language in Act 6 which compelE a retroactive application; in this regard, it may be noted that the clear and unambiguous language standard, and the presumption against retroactive application, apply to amendatory statutes as well as 16 Act of December 6, 1972, P.L. 1339, §3, Pa. C.S. §1926 (1992 Supp.). 17 Act of February 12, 1984, P.L. 26, §3, 75 Pa. C.S. §51701 et seq. (1992 Supp.). 18 See Defendant's Brief in Support of Preli'nary Objections 24-25. 6 No. 99 Civil 1992 nonamendatory legislation.19 Second, it has been said that "legislative intent is only relevant to statutory co struction when the statutory language is ambiguous." Garcia v. Community Legal Services Corp., 362 Pa. Super. 484, 491, 524 A.2d 9E0, 983 (1987). It is doubtful that the absence of specific language indicating that Act 6 may be applied retroactively should in itself be construed as an ambiguity. And, third, an application of Act 6, subjecting the instant medical records to review under the PRO process as proposed, can be said to substantiv ly affect the contractual rights of both parties.20 Furthermor , as a factual matter in the present case it may be argued that the Policy had expired prior to the effective date of Act 6, subje t to renewal." Under these circumstances, it cannot be said that �he validity of Defendant's position on retroactivity is so clea as applied to this case that the stringent test for disposition o the litigation 19 DeMatteis v. DeMatteis, 399 Pa. Super. 421, 434, 582 A.2d 666, 672 (1990). 20 Act 6 prescribes a statutory process by uhich an insurer may challenge the reasonableness and necessity of m dical treatment sought under a policy; no such process existed with respect to the present Policy at the time it was entered into. The Act defines the amount an insurer must pay a health care pr 3vider if it is determined that the insurer denied payment for medical treatment without utilization of the PRO process. And the Act provides a process by which an insured's right to treatment ander the policy may be limited. Act of February 12, 1984, P.L. 53, §3, as amended, Act of February 7, 1990, P.L. 11, §18, 75 Pa. C.S. §1797 (1992 Supp.); see Harper v. Pennsylvania National Ins. Cqmpanies, No. 91- 923 (Blair Co.) (filed October 9, 1991). 21 See Plaintiffs' Complaint, Exhibit A (re �wal notice). 7 No. 99 Civil 1992 on the basis of a preliminary objection so premise has been met. See McKee v. State Farm Mutual Automobile Insurance Company, No. 90 -SU -05089-01, (York Co.) (filed October 31, 199P; Harper v. Pennsylvania National Insurance Companies, No. 91-923 (Blair Co.) (filed October 9, 1991); Henry v. State Farm Insurance Co., Civ. Act. No. 91-2594 (E.D. Pa. filed March 25, 1992) (LEXIS, Genfed library, Dist. file); but see Snyder v. State Farm Insurance Co., No. 91 -SU- 05676-01 (York Co.) (filed October 1, 1)92). Consistent with the foregoing conclusion, he Defendant's preliminary objections will be discussed individually and subjected to supplemental analysis hereinafter. The first olijection, in the form of a motion to strike, or in the alternative a demurrer to, the entire complaint, is based upon an alleged lack of subject matter jurisdiction due to procedures set forth in Act 6. The function of a court presented with an ob ection based on an alleged lack of subject matter jurisdiction is to "determine whether the law will bar recovery due to the lack of such jurisdiction." Philadelphia Housing Authority v. Barbour, 405 Pa. Super. 140, 143, 592 A.2d 47, 48 (1991). Furthe ore, "[a] court has jurisdiction of the subject matter if it is em3owered, [by the legislature], to enter upon an inquiry for the competent hearing and determination of a controversy of such charac er. ,22 The Defendant argues that Section 1797(4) v is jurisdiction 22 1 Standard Pa. Practice 2d S§2:52, 2:54, a- 8 .109-112 (1981). No. 99 Civil 1992 in the courts only when an insurer denies payment for medical treatment without using the PRO process .23 Although it is true that Section 1797(4) contains an express grant of jurisdiction, 24 Act 6, as a whole, is silent as to whether an-insureff may appeal to the courts. When statutory language is not explicit, administrative interpretation may be used to ascert in legislative intent.25 The legislative grant of jurisdiction in the present context may be interpreted in conjunction with the pertinent administrative regulation, which provides that after a "determination of a reconsideration of a PRO, an insurer, provider n26 or insured may appeal the determination to the co rts. In the instant case, Plaintiffs brought suit after a reconsideration of a PRO; consequently, even should Act 6 be deemed retroactive it cannot be said with certainty that the law wil 1 bar recovery because of a lack of subject matter jurisdiction in the courts. See Snyder v. State Farm Insurance Co., No. 91 S 05676 01 (York 23 See Defendant's Brief in Support of Prelimi ary Objections. 24 In relevant part, Section 1797(4) reads as follows: [An] ... insured may challenge before a court an insurer's refusal to pay for past or future medical treatment, the reasonableness or necessity of which the insurer Ms not challenged before a PRO. Act of February 12, 1984, P.L. 53, §3, as amended Act of February 7, 1990, P.L. 11, §18, 75 Pa. C.S. §1797(4) (1992 Supp.). 25 1 Pa. C.S. §1921(c)(8) (1992). 26 31 Pa. Code §69.52(m) (1992). 9 No. 99 Civil 1992 Co.) (filed October 1, 1992); Henry v. State Farm insurance Co., Civ. Act. No. 91-2594 (E.D. Pa.) (filed March 25, 1992) (LEXIS, Genfed library, Dist. file). Defendant's second objection, in the form of a motion to strike, or in the alternative a demurrer to the entire complaint, is based upon Plaintiffs' alleged lack of standing o sue and the allegation that the Plaintiffs are not the al party in interest." Defendant argues that Plaintiffs lack s anding to sue because under Act 6 they have no pecuniary interest ith respect to the medical bills in question and are not the "real party in interest" because they cannot control all as ects of the prosecution of this action.27 These matters will) be discussed seriatim. In order to have standing under Pennsylvania lai a party must have an interest in the controversy that is substantial, direct and immediate. In Re Francis Edward McGillick Found tion, 406 Pa. Super. 249, 260-261, 594 A.2d 322, 328 (1991). Fu thermore, our Supreme Court has stated that "it is clear that sometinterests will suffice to confer standing even though they are neiher pecuniary nor readily translatable into pecuniary terms." Wm. Penn Parking Garage, Inc. v. City of Pittsburgh, 464 Pa. 168, 193 346 A.2d 269, 281 (1975). Although the Plaintiffs' interest may of be readily translatable into pecuniary terms, it is substantial, direct and 27 Defendant's Brief in Support of Preliminary 7-8. 10 jections, 4, No. 99 Civil 1992 immediate because it is in the form of continued medi al treatment. When considering this precise issue, the United States District Court for the Eastern District of Pennsylvania has held that Act 6 has not "taken away any right of the insured to sue for actions adverse to the insured by the insurance company." Jack A. Danton, D.O, P.C. v. State Farm Mutual Automobile Insurance Company, 769 F. Supp. 174, 176 (1991); Henry v. State Farm Insurance Co., Civ. Act. No. 91-2594 (E.D. Pa.) (filed March 25, 1992) LEXIS, Genfed library, Dist. file). Accordingly, even should Act 6 be deemed retroactive, it cannot be said to be clear that P aintiffs lack standing to pursue the present action. See Snyder v. State Farm Insurance Co., No. 91 SU 05676 01 (York Co.) (Octob r 1, 1992). Under the Pennsylvania Rules of Civil Procedure, "all actions shall be prosecuted by and in the name of the real party in interest ....i2' Although the rule does not define a "real party in interest," a fairly certain legal meaning has evolved, which may be stated as follows: "[a] real party in interest is the party who has the power to discharge the claim upon which the suit is brought and to control all aspects of the prosecution." Teklinsky v. Friedland, 11 D. & C. 3d 325, 326 (Philadelphia Co. 1978). The Defendant argues that Plaintiffs are not tie "real party in interest" because under Act 6 "they are axpressly and unequivocally protected from charges associated with reasonable and 28 Pa. R. Civ. P. 2002(a). 11 No. 99 Civil 1992 necessary medical bills for care and treatment arising from injuries sustained in a motor vehicle accident," and thus cannot "give a complete acquittance or discharge" to efendant upon performance .29 To the extent that the issues of standing and real party in interest are to be considered distinguishab Le, the lack of certain retroactivity of Act 6 with respect to the present bills militates against sustaining a preliminary objection based on Plaintiffs' alleged lack of interest under the act. Defendant's third objection is in the form cf a motion to strike, or in the alternative a demurrer to, (a) t e count of the complaint asserting breach of an insurance contract within the scope of 42 Pa. C.S. §8371, relating to bad faith by an insurer, and (b) the count asserting commission of the "co on law tort of bad faith." It is argued that the said statutory provision is inconsistent with, and cannot prevail over, the provisions of Act 6, "[a]ll federal courts" having held that "Sectior 8371 does not apply to claims for medical benefits under the Pennsylvania Motor Vehicle Financial Responsibility Law, ,30 and that P nnsylvania has not historically recognized a common law tort of bad faith as to insurers. 31 With respect to the alleged preclusion of the instant action 29 Defendant's Brief in Support of Preliminar3 30 Defendant's brief in Support of Preliminary 31 Id. at 23. 12 Objections 8. Objections 14. No. 99 Civil 1992 under Section 8371 of the Judicial Code by virtue of Act 6, the matter of the latter's retroactivity for present pu poses has been previously discussed and will not be here reexamin d. Defendant's assertion that the former statute has been invariably found inapplicable to claims for benefits under the Motor Vehicle Financial Responsibility Law is overly broad, howEver.32 With respect to the alleged lack of a common law action for bad faith applicable in the instant circumstances, it is correct that in Pennsylvania no common law action for bad faith against an insurer has been recognized. D'Ambrosia v. Pennsylvania, National Mutual Casualty Co., 494 Pa. 501, 507, 431 A.2d 966, 970-72. "[T]here is no common law action for bad faith against an insurer in Pennsylvania." American Franklin Life insurance Co. v. Galati, 776 F. Supp. 1054, 1062 (E.D. Pa. 1991). For the foregoing reasons, the count of Plaintiffs' complaint asserting breach of an insurance contract within the scope of 42 Pa. C.S. §8371 will not be stricken or dismissed at this time; but the count asserting commission of the "common law tort of bad faith" w 11 be dismissed. 32 See, e.g., Seeger v. Allstate Ins. Co., 776 F. Supp. 986 (M.D. Pa. 1991); Henry v. State Farm Insurance Co., Civ. Act. No. 91-2594 (E.D. Pa.) (filed March 25, 1992) (LEXIS Genfed library, Dist. file); but see Snyder v. State Farm Insurance Co., No. 91 SU 05676 01 (York Co.) (October 1, 1992). On another subject, there is authority for the proposition that an action under Section 8371 car be brought where the alleged bad faith occurred after the effective date of the statute. Coyne v. Allstate Ins. Co., 771 F. Su p. 673 (E.D. Pa. 1991). 13 No. 99 Civil 1992 Defendant's final objection, in the form o strike, or in the alternative a demurrer to, the complaint asserting violation of Pennsylvania's Practices and Consumer Protection Law and deceit, a motion to counts of the Unfair Trade is based upon alleged preemption by Act 6. The matter of this act's retroactivity for present purposes has been previcusly discussed and will not be here reexamined. See Henry v. State Farm Insurance Co., Civ. Act. No. 91-2594 (E.D. Pa. filed March 25 1992) (LEXIS, Genfed library, Dist. file). In view of the general rules that a motion to strike is limited to errors of form, that such motions are my sparingly granted, and that a preliminary objection in the nature of a demurrer is to be sustained only in the clearest of cases, the Court will enter the following Order: ORDER OF COURT AND NOW, this 151t�IL day of October, 1992, t] Preliminary Objection in the form of a demurrer t Plaintiffs' Complaint, setting forth a claim based law tort of bad faith, is SUSTAINED, and the Count The Defendant's Preliminary Objections are otherwise the Defendant is granted 20 days within which to fi BY THE COURT, Defendant's Count IV of upon a common is DISMISSED. DISMISSED, and le an Answer. J. Wesley Oler, Jr., �- 14 No. 99 Civil 1992 Timothy A. Shollenberger, Esq. Myers, Desfor & Shollenberger 410 North Second Street P.O. Box 1062 Harrisburg, PA 17108-1062 Rolf Kroll, Esq. Foulkrod, Reynolds & Havas 101 Pine Street P.O. Box 932 Harrisburg, PA 17108-0932 :rc 15