Albert Einstein Med. Ctr. & J. Tran, M.D. v. MCARE Fund ( 2023 )

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Albert Einstein Medical Center :
and Judith Tran, M.D., :
Petitioners :
:
v. : No. 6 M.D. 2022
: ARGUED: November 6, 2023
Medical Care Availability and :
Reduction of Error Fund, Insurance :
Department, and Commonwealth :
of Pennsylvania, :
Respondents :
BEFORE: HONORABLE RENÉE COHN JUBELIRER, President Judge
HONORABLE STACY WALLACE, Judge
HONORABLE BONNIE BRIGANCE LEADBETTER, Senior Judge
OPINION NOT REPORTED
MEMORANDUM OPINION BY
SENIOR JUDGE LEADBETTER FILED: December 22, 2023
Before this Court for disposition are the preliminary objections filed by
the Medical Care Availability and Reduction of Error Fund (MCARE),1 Insurance
1
MCARE is a statutorily created fund within the State Treasury to
be used to pay claims against participating health care providers for
losses or damages awarded in medical professional liability actions
against them in excess of the basic insurance coverage required by
section 711(d) [(assessments)], liabilities transferred in accordance
with subsection (b) [(transfer of assets and liabilities from the
Medical Professional Liability Catastrophe Loss Fund)] and for the
administration of the fund.
(Footnote continued on next page…)
Department, and Commonwealth of Pennsylvania (collectively, Respondents) to the
petition for review in the nature of a complaint for declaratory judgment filed by
Albert Einstein Medical Center (AEMC) and Judith Tran, M.D. (collectively,
Petitioners). Pending further development of the record, we overrule Respondents’
preliminary objections as to the standing of AEMC and Dr. Tran; overrule the
preliminary objection regarding the effect of the agreement and release document on
recovery; and overrule the preliminary objection as to costs. However, we sustain
the preliminary objection as to attorney’s fees and the preliminary objection
asserting that the Commonwealth of Pennsylvania should not be a party to this
action. Accordingly, the Commonwealth is dismissed as a party to this action.
In the petition for review, Petitioners allege the following facts. They
brought suit against Respondents pertaining to an underlying medical malpractice
action: Charles P. Williams v. Albert Einstein Medical Center (C.C.P. Phila. Cnty.,
May Term 2017, No. 03451). In the action, Plaintiff Williams maintained that
“despite his symptoms and history of mental illness, he was not properly supervised
or medicated when placed under psychiatric care while at AEMC.” Pet. for Rev. ¶
12. He alleged that Dr. Tran was responsible for his overall care and safety at the
time of his injury, self-enucleation (removal) of his left eye. Id. ¶¶ 14-15.
On November 13, 2019, the jury trial commenced. At trial, Plaintiff
“presented substantial evidence regarding Dr. Tran’s recommendations and actions
(or alleged omissions) including, but not limited to, [her] alleged negligence in
failing to appreciate [his] medical history, the medications he was on, how often he
Section 712(a) of the MCARE Act, Act of March 20, 2002, P.L. 154, as amended, 40 P.S. §
1303.712(a). The Insurance Department administers the MCARE Fund. Section 713(a) of the
MCARE Act, 40 P.S. § 1303.713(a).
2
should be observed by staff at AEMC, and how dangerous [he] was to himself.”2 Id.
¶ 16. However, Dr. Tran was dismissed as a party before the jury reached a verdict,
which thus was solely against AEMC, in the amount of $2.75 million. Id. ¶ 17.
Following a post-trial motion requesting that the verdict be molded to include the
liability of Dr. Tran, the trial court entered a February 2020 order directing that the
verdict be molded to include her. Id. ¶ 19. Subsequently, a judgment of $2.75
million was “jointly” entered against Petitioners. Id. ¶ 20. Petitioners eventually
settled for an amount in excess of the limits available to Dr. Tran under MCARE,
which included delay damages. Id. ¶ 22. In March 2020, an agreement and release
document was executed in favor of Petitioners, with the proceeds to be fully funded
by the end of 2020.3 Id. ¶ 23. Dr. Tran’s primary insurance carrier, Broadline Risk
Retention Group, paid its full policy limits of $500,000 but MCARE refused to pay
$500,000 on her behalf. Id. ¶¶ 31-32. AEMC paid what it alleged was MCARE’s
share and submitted a claim to MCARE seeking reimbursement. Id. ¶ 34. “Dr. Tran
and AEMC satisfied any and all requirements set forth by the MCARE Act.” 4 Id. ¶
33.
Following MCARE’s refusal to pay, Petitioners filed the petition for
review seeking an order declaring that MCARE is obligated to reimburse AEMC
$500,000 and awarding fees, costs, and such other relief that we deem appropriate.
Essentially, Petitioners are seeking coverage from MCARE for the post-verdict
2
A substantial evidence determination constitutes a conclusion of law, which this Court need
not accept when considering preliminary objections. Torres v. Beard, 997 A.2d 1242, 1245 (Pa.
Cmwlth. 2010).
In the preliminary objections, Respondents state: “It should be noted that the release was
3
drafted to appear that MCARE was involved with the settlement, however, MCARE was not
involved in the settlement.” Prelim. Objs. at p. 4, n.2.
4
This is a conclusion of law, which the Court need not accept when considering preliminary
objections. Torres, 997 A.2d at 1245.
3
settlement. Notably, we do not have the record from the underlying action, including
the judgment and the agreement and release document, all of which should provide
relevant information.
In considering Respondents’ preliminary objections,
we must accept as true all well-pleaded material
allegations in the petition for review [in the nature of a
complaint], as well as all inferences reasonably deduced
therefrom. The Court need not accept as true conclusions
of law, unwarranted inferences from facts, argumentative
allegations, or expressions of opinion. In order to sustain
preliminary objections, it must appear with certainty that
the law will not permit recovery, and any doubt should be
resolved by a refusal to sustain them.
A preliminary objection in the nature of a demurrer admits
every well-pleaded fact in the [petition for review in the
nature of a] complaint and all inferences reasonably
deducible therefrom. It tests the legal sufficiency of the
challenged pleadings and will be sustained only in cases
where the pleader has clearly failed to state a claim for
which relief can be granted. When ruling on a demurrer,
a court must confine its analysis to the [petition for review
in the nature of a] complaint.
Torres v. Beard, 997 A.2d 1242, 1245 (Pa. Cmwlth. 2010) (emphasis added;
citations omitted).
Standing of AEMC and Dr. Tran
It is well established that
[t]he core concept of standing is that “a party who is not
negatively affected by the matter he seeks to challenge is
not aggrieved, and thus, has no right to obtain judicial
resolution of his challenge.” A litigant is aggrieved when
he can show a substantial, direct, and immediate interest
in the outcome of the litigation. A litigant possesses a
4
substantial interest if there is a discernible adverse effect
to an interest other than that of the general citizenry. It is
direct if there is harm to that interest. It is immediate if it
is not a remote consequence of a judgment.
In re Milton Hershey Sch., 911 A.2d 1258, 1261-62 (Pa. 2006) (citations omitted).
Respondents assert that AEMC lacks standing because there is no duty
between MCARE and AEMC and that Dr. Tran lacks standing because the mere
allegation that a duty at one time existed between MCARE and Dr. Tran is
insufficient. In addition, Respondents assert that Dr. Tran was not harmed and did
not sustain damages in the underlying action or the settlement because AEMC
satisfied the settlement without any contribution from her. Respondents note that
the trial court in its order granting the motion to mold the verdict to include Dr. Tran
did not find that Petitioners were jointly and severally liable or apportion liability
and damages.5 Absent the aforementioned, Respondents contend that nothing
triggered the MCARE layer of coverage.
As a threshold matter, Pennsylvania is a fact-pleading state. Briggs v.
Sw. Energy Prod. Co., 224 A.3d 334, 351 (Pa. 2020). While it would be helpful if
the petition for review contained more specific factual averments, we cannot say at
this point that it appears with certainty that the law will not permit recovery.
Although MCARE avers that there is no duty between MCARE and AEMC, AEMC
avers to the contrary. Pending further development of the record, we cannot
5
The order provides:
And Now, this 6th day of February, 2020, upon
consideration of Defendant’s Motion to Mold the Verdict, it is
hereby ORDERED and DECREED that the verdict is molded to
include Judith Tran, M.D.
Respondents’ Br., Ex. C, Feb. 6, 2020 Trial Ct. Order.
5
ascertain whether there is a factual basis to establish such a duty. In addition, we do
not know the details of the release, such as whether Dr. Tran gave an assignment of
rights against MCARE to AEMC, whether AEMC reserved the right to go back
against Dr. Tran if MCARE refused to pay, or why Dr. Tran was let out of the
underlying action or on what basis she was “molded” back in, nor do we have the
specific language of any final judgment. All of these questions await factual
development.
However, we can now put to rest any issues pertaining to the lack of
specific apportionment and the lack of a determination as to joint and several
liability. Notwithstanding apportionment, joint and several liability is assumed as a
matter of law.
Joint tortfeasors generally are jointly-and-severally liable
for the entire amount of a verdict, albeit that a jury may
assign only a portion of fault to each. The policy
justification for allocating 100 percent liability (from the
plaintiff’s perspective) to one who bears only say, 40
percent of the responsibility is that, as between an innocent
injured party and a culpable defendant, the defendant
should bear the risk of additional loss.
Maloney v. Valley Med. Facilities, Inc., 984 A.2d 478, 489 (Pa. 2009). Accord, e.g.,
Heim v. Med. Care Availability and Reduction of Error Fund, 23 A.3d 506, 507 (Pa.
2011). Consequently, the lack of apportionment in the underlying action is of no
moment and does not necessarily mean that the MCARE layer of coverage was not
triggered.
As Petitioners assert:
Insurers are called upon routinely to contribute to
settlements before cases proceed to trial, obviously
without any finding of liability, let alone a formal
6
allocation of fault among multiple parties. In the
insurance context, if the decision to enter into a settlement
or the reasonableness of a settlement amount is being
challenged, that is a factual issue to be resolved. It does
not affect whether the insurer’s obligation to provide
coverage was triggered in the first instance.
Petitioners’ Br. at 6.
Accordingly, we overrule the preliminary objections as to the standing
of AEMC and Dr. Tran.
Commonwealth as a Party
In an action seeking declaratory relief, “all persons shall be made
parties who have or claim any interest which would be affected by the declaration.”
Section 7540(a) of the Declaratory Judgments Act, 42 Pa.C.S. § 7540(a). Here,
regardless of whether the Commonwealth’s inclusion in the suit has any impact, the
Commonwealth is immune from claims for damages except for very specific
situations where the General Assembly has specifically waived immunity, none of
which is applicable here. The exception to immunity pertaining to medical-
professional liability is limited to “[a]cts of health care employees of Commonwealth
agency medical facilities or institutions or by a Commonwealth party who is a
doctor, dentist, nurse or related health care personnel.” Section 8522(b) of the
Judicial Code, 42 Pa.C.S. § 8522(b) (emphasis added). Further, while some
declaratory and injunctive actions may be asserted against the Commonwealth,
where the relief sought is, as a practical matter, that money be paid or that the
Commonwealth take affirmative action that would involve a cost, its immunity acts
as a bar. Stackhouse v. Pa. State Police, 892 A.2d 54, 62 (Pa. Cmwlth. 2006)
(“[W]here a request for a declaration of rights can have no effect nor serve any
purpose other than as the legal predicate for a damage or other immunity-barred
7
claim in the same action, the demand for declaratory relief ought to fall along with
the claim it serves to support”). Accordingly, the demurrer regarding the
Commonwealth itself is sustained and it is dismissed as a party to this action.
Effect of Agreement and Release Document on Recovery
Noting that the case was resolved via an agreement and release
document between AEMC and Plaintiff, Respondents contend that the law does not
permit recovery where claims cannot be sustained and no recovery is possible.
Respondents allege that the release is the law of Petitioners’ case. Accordingly,
Respondents maintain that the demurrer should be sustained because, on the facts as
alleged, no recovery is possible.
Petitioners emphasize that they are seeking reimbursement from
MCARE for the amounts paid to settle the case. They assert that Plaintiff’s release
excusing them from any future liability to him has nothing to do with their ability to
seek coverage from MCARE. In other words, they maintain that the release executed
by Plaintiff does not relieve MCARE of its obligations to Petitioners.
As noted above, we do not know enough about the facts. It seems that
Plaintiff released AEMC and Dr. Tran but we do not know whether the latter two
released each another, let alone how any such release affected a potential liability of
or payment by MCARE. It simply is not clear whether Dr. Tran is free of any further
liability or may be brought back in, as she was in the underlying medical malpractice
action. Further, the judgment against Dr. Tran raises the specter of MCARE’s
potential duty of indemnification. Accordingly, we overrule the preliminary
objection regarding the effect of the agreement and release document on recovery.
Attorney’s Fees and Costs
8
Respondents assert that there is no statutory authority or an agreement
between the parties that would authorize the award of attorney’s fees and costs in
this declaratory judgment action. Accordingly, Respondents request that we strike
the demand for attorney’s fees and costs from the petition for review.
In Pizzuti v. Pennsylvania Insurance Department (Pa. Cmwlth., No.
206 M.D. 2021, filed March 4, 2022),6 this Court sustained a preliminary objection
requesting that attorney’s fees be stricken in a declaratory judgment action seeking
a determination that MCARE improperly denied coverage and a defense in an
underlying medical malpractice action. In support, we observed that parties
generally bear their own attorney’s fees. Id., slip op. at 14 [citing Dep’t of Env’t
Prot. v. Bethenergy Mines, Inc., 758 A.2d 1168, 1173 (Pa. 2000)]. In addition, we
cited the lack of statutory authority or an agreement between the parties regarding
attorney’s fees in the declaratory judgment action therein at issue. Id., slip op. at 16.
In the present case, Petitioners have not alleged that there was any
agreement as to attorney’s fees in the above-captioned declaratory judgment action.
Consequently, attorney’s fees are not recoverable. However, it is not clear whether
costs may still be in play. See Pennsylvania Rules of Appellate Procedure 2771
(costs on appeal taxable in the lower court) and 3751 (post-decision taxation of
costs). Accordingly, we sustain the preliminary objection as to attorney’s fees but
overrule it as to costs.
Conclusion
For the above reasons, we overrule Respondents’ preliminary
objections as to the standing of AEMC and Dr. Tran; overrule the preliminary
6
See Section 414(a) of the Commonwealth Court Internal Operating Procedures, 210 Pa.
Code § 69.414(a) (“Parties may . . . cite an unreported panel decision of this Court issued after
January 15, 2008, for its persuasive value, but not as binding precedent.”).
9
objection regarding the effect of the agreement and release document on recovery;
and overrule the preliminary objection as to costs. We sustain the preliminary
objection as to attorney’s fees and the preliminary objection asserting that the
Commonwealth of Pennsylvania should not be a party to this action. Accordingly,
the Commonwealth is dismissed as a party from the above-captioned matter.
_____________________________________
BONNIE BRIGANCE LEADBETTER,
President Judge Emerita
10
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Albert Einstein Medical Center :
and Judith Tran, M.D., :
Petitioners :
:
v. : No. 6 M.D. 2022
:
Medical Care Availability and :
Reduction of Error Fund, Insurance :
Department, and Commonwealth :
of Pennsylvania, :
Respondents :
ORDER
AND NOW, this 22nd day of December, 2023, the preliminary
objections in the nature of a demurrer in the above-captioned matter filed by
Respondents (Medical Care Availability and Reduction of Error Fund, Insurance
Department, and the Commonwealth of Pennsylvania) are hereby SUSTAINED IN
PART and OVERRULED IN PART, in accordance with the foregoing opinion. The
Commonwealth of Pennsylvania is DISMISSED as a party to this action. The
remaining Respondents are directed to file an answer to the petition for review within
twenty (20) days.
_____________________________________
BONNIE BRIGANCE LEADBETTER,
President Judge Emerita