Com. of PA Acting by AG Kathleen Kane v. Golden Gate National Senior Care LLC , 158 A.3d 203 ( 2017 )

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Commonwealth of Pennsylvania :
Acting by Attorney General, :
Kathleen Kane, :
Plaintiff :
:
v. :
:
Golden Gate National Senior Care LLC; :
GGNSC Holdings LLC; GGNSC :
Administrative Services LLC; GGNSC :
Clinical Services LLC; GGNSC Equity :
Holdings LLC; GGNSC Harrisburg LP; :
GGNSC Harrisburg GP, LLC; GGNSC :
Camp Hill III LP; GGNSC Camp Hill :
III GP, LLC; GGNSC Clarion LP; :
GGNSC Clarion GP, LLC; GGNSC :
Gettysburg LP; GGNSC Gettysburg GP, :
LLC; GGNSC Altoona Hillview LP; :
GGNSC Altoona Hillview GP, LLC; :
GGNSC Lansdale LP; GGNSC :
Lansdale GP, LLC; GGNSC :
Monroeville LP; GGNSC Monroeville :
GP, LLC; GGNSC Mt. Lebanon LP; :
GGNSC Mt. Lebanon GP, LLC; :
GGNSC Phoenixville II LP; GGNSC :
Phoenixville II GP, LLC; GGNSC :
Philadelphia LP; GGNSC Philadelphia :
GP, LLC; GGNSC Wilkes-Barre II LP; :
GGNSC Wilkes-Barre II GP, LLC; :
GGNSC Tunkhannock LP; GGNSC :
Tunkhannock GP, LLC; GGNSC :
Erie Western Reserve LP; GGNSC :
Erie Western Reserve GP, LLC; :
GGNSC Pottsville LP; GGNSC :
Pottsville GP, LLC, : No. 336 M.D. 2015
Defendants : Argued: June 8, 2016
BEFORE: HONORABLE MARY HANNAH LEAVITT, President Judge
HONORABLE RENÉE COHN JUBELIRER, Judge
HONORABLE ROBERT SIMPSON, Judge
HONORABLE P. KEVIN BROBSON, Judge
HONORABLE PATRICIA A. McCULLOUGH, Judge
HONORABLE ANNE E. COVEY, Judge
HONORABLE MICHAEL H. WOJCIK, Judge
OPINION BY
JUDGE COVEY FILED: March 22, 2017
Before this Court are Golden Gate National Senior Care, LLC, et al.’s
(Golden Gate) preliminary objections to the Commonwealth of Pennsylvania’s
(Commonwealth) Amended Complaint and Petition for Injunctive Relief addressed to
this Court’s original jurisdiction.1
Golden Gate consists of a group of companies that manage and operate
36 skilled nursing facilities (Facilities) in Pennsylvania. GGNSC Holdings LLC,
Golden Gate National Senior Care LLC, GGNSC Clinical Services LLC, and
GGNSC Administrative Services LLC are described in the pleadings as parent
entities (Parent Entities).2 On July 1, 2015, the Commonwealth, by the Office of
Attorney General (OAG), filed a Complaint and Petition for Injunctive Relief
(Original Complaint) addressed to this Court’s original jurisdiction against 14 of
Golden Gate’s Pennsylvania Facilities. On August 6, 2015, Golden Gate filed
preliminary objections to the Original Complaint setting forth ten objections.
1
A related dispute was before this Court in GGNSC Clarion LP v. Kane, 131 A.3d 1062 (Pa.
Cmwlth. 2016) (GGNSC Clarion). In GGNSC Clarion, the petitioners and their affiliated entities
are the owners and operators of long-term care facilities, including skilled nursing facilities, who
sought declaratory relief contending that, among other things, the Commonwealth’s Office of
Attorney General (OAG) lacked authority to investigate or pursue litigation concerning staffing
levels at skilled nursing facilities since the Health Care Facilities Act, Act of July 19, 1979, P.L.
130, as amended, 35 P.S. §§ 448.101-448.904b, vested exclusive jurisdiction in the Department of
Health. On January 11, 2016, this Court sustained the OAG’s preliminary objections, granted the
OAG’s motion to dismiss and dismissed petitioners’ amended petition for review. On December
28, 2016, the Pennsylvania Supreme Court affirmed this Court’s decision. See GGNSC Clarion LP
v. Kane (Pa. No. 6 MAP 2016, filed December 28, 2016).
2
Parent Entity Defendants GGNSC Holdings LLC and Golden Gate National Senior Care
LLC, indirectly own and operate the Facilities located in Pennsylvania. Parent Entity Defendant
GGNSC Administrative Services LLC and Parent Entity Defendant GGNSC Clinical Services LLC
exercise operational and management control over the Facilities. Defendant GGNSC Equity
Holdings LLC is a general partner in three of the Facilities and holds a controlling ownership
interest in the Facilities.
2
On September 8, 2015, the Commonwealth filed an Amended Complaint
and Petition for Injunctive Relief (Amended Complaint), naming an additional 11 of
Golden Gate’s Pennsylvania Facilities as defendants.3 Therein, the Commonwealth
asserted the following three claims against Golden Gate: (1) Unfair Trade Practices
and Consumer Protection Law (UTPCPL)4 violations (seeking injunctive relief,
restoration and civil penalties); (2) breach of contract (seeking damages); and (3)
unjust enrichment (seeking disgorgement). The Commonwealth alleged that Golden
Gate engaged in unfair and deceptive acts and practices towards Pennsylvania
3
According to the Amended Complaint:
The [Facilities] located in Pennsylvania include Defendants Golden
LivingCenter - Blue Ridge Mountain (Harrisburg, PA); Golden
LivingCenter - Camp Hill (Camp Hill, PA); Golden LivingCenter -
Clarion (Clarion, PA); Golden LivingCenter - Doylestown
(Doylestown, PA); Golden LivingCenter - East Mountain (Wilkes-
Barre, PA); Golden LivingCenter - Gettysburg (Gettysburg, PA);
Golden LivingCenter - Hillview (Altoona, PA); Golden LivingCenter
- Lancaster (Lancaster, PA); Golden LivingCenter – Lansdale
(Lansdale, PA); Golden LivingCenter - Mansion (Sunbury, PA);
Golden LivingCenter - Monroeville (Monroeville, PA); Golden
LivingCenter - Mt. Lebanon (Pittsburgh, PA); Golden LivingCenter -
Murrysville (Murrysville, PA); Golden LivingCenter – Phoenixville
(Phoenixville, PA); Golden LivingCenter - Reading (Reading, PA);
Golden LivingCenter - Rosemont (Rosemont, PA); Golden
LivingCenter - Scranton (Scranton, PA); Golden LivingCenter -
Shippenville (Shippenville, PA); Golden LivingCenter - Stenton
(Philadelphia, PA); Golden LivingCenter - Summit (Wilkes Barre,
PA); Golden LivingCenter – Tunkhannock (Tunkhannock, PA);
Golden LivingCenter - Uniontown (Uniontown, PA); Golden
LivingCenter - Western Reserve (Erie, PA); Golden LivingCenter -
West Shore (Camp Hill, PA); and Golden LivìngCenter - York
Terrace (Pottsville, PA). . . .
Amended Complaint at 3, ¶ 2. Such Facilities “are licensed by the Department of Health and . . .
are certified under the Medicare and Medicaid programs pursuant to Titles XVIII and XIX of the
federal Social Security Act, 42 U.S.C. §§ 1395[-1395b-10], and 42 U.S.C. §§ 1396[-1396w-5],
administered by the United States Department of Health and Human Services . . . through the
Centers for Medicare and Medicaid Services . . . .” GGNSC Clarion, 131 A.3d at 1064 n.2.
4
Act of December 17, 1968, P.L. 1224, as amended, 73 P.S. §§ 201-1–201-9.3.
3
consumers and the Commonwealth by: (1) making chain-wide misrepresentations in
marketing materials; (2) making Facility-level misrepresentations in its marketing
materials, resident assessments/care plans and billing statements, presenting
misleading appearances during Commonwealth inspections, and creating false
records; (3) making misleading statements about the level of care that would be
provided to residents; and (4) failing to provide basic care. On October 8, 2015,
Golden Gate filed preliminary objections to the Amended Complaint, setting forth
twelve objections (Preliminary Objections).
This Court’s review of preliminary objections is limited to the pleadings.
Pa. State Lodge, Fraternal Order of Police v. Dep’t of Conservation & Natural Res.,
909 A.2d 413 (Pa. Cmwlth. 2006), aff’d, 924 A.2d 1203 (Pa. 2007).
[This Court is] required to accept as true the well-pled
averments set forth in the . . . complaint, and all inferences
reasonably deducible therefrom. Moreover, the [C]ourt
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, where any doubt exists as to
whether the preliminary objections should be sustained, the
doubt must be resolved in favor of overruling the
preliminary objections.
Id. at 415-16 (citations omitted).
I. Preliminary Objections 1 and 2
Golden Gate in its Preliminary Objection 1 alleges that the OAG lacks
statutory authority to pursue this action because it effectively seeks to regulate skilled
nursing facility staffing levels, an area within the Pennsylvania Department of
Health’s (DOH) exclusive purview. In its Preliminary Objection 2, Golden Gate
avers that the Commonwealth is attempting to set new minimum staffing
4
requirements by “completely bypass[ing] the regulatory procedures in place that
govern how changes to laws and regulations are to be made, including the
requirements of public notice and the opportunity for [Golden Gate] and other
interested parties to be heard on any such changes.” Preliminary Objection 2 at 13, ¶
33.
On March 30, 2016, this Court issued an order, wherein it noted the
parties’ agreement that Preliminary Objections 1 and 2 were resolved by this Court’s
opinion in GGNSC Clarion LP v. Kane, 131 A.3d 1062 (Pa. Cmwlth. 2016) (GGNSC
Clarion), which dismissed a declaratory judgment action raising the same issues
presented in Preliminary Objections 1 and 2. For the reasons explained therein,
Preliminary Objections 1 and 2 are overruled.
II. UTPCPL - Preliminary Objections 4, 5, 6, 7, 8 and 10
Golden Gate’s Preliminary Objections 4, 5, 6, 7, 8 and 10 all pertain to
the alleged UTPCPL violations.5
5
Golden Gate’s Preliminary Objections 4, 5, 6, 7, 8 and 10 specify as follows:
 Preliminary Objection 4 – Demurrer - the Amended Complaint fails to state a
claim under Sections 2(4)(v) or 201-2(4)(ix) of the UTPCPL (marketing
materials).
 Preliminary Objection 5 – Demurrer - the Amended Complaint fails to state a
claim under Section 2(4)(x) of the UTPCPL.
 Preliminary Objection 6 – Insufficient Specificity in the Complaint - the
Amended Complaint fails to inform Golden Gate of any specific bases on which
the Commonwealth is seeking recovery under Section 2(4)(xxi) of the UTPCPL
(the catch-all provision).
 Preliminary Objection 7 – Demurrer - the Commonwealth failed to plead any
potential fraud claim under Section 2(4)(xxi) of the UTPCPL with the required
particularity.
5
Initially, we note that Section 3 of the UTPCPL states that “[u]nfair
methods of competition and unfair or deceptive acts or practices in the conduct of any
trade or commerce as defined [in Section 2(4)(i)-(xxi) of the UTPCPL6] . . . are
hereby declared unlawful.” 73 P.S. § 201-3. Section 2(4) of the UTPCPL provides,
in relevant part:
‘Unfair methods of competition’ and ‘unfair or deceptive
acts or practices’ mean any one or more of the following:
....
(v) Representing that goods or services have sponsorship,
approval, characteristics, ingredients, uses, benefits or
quantities that they do not have or that a person has a
sponsorship, approval, status, affiliation or connection that
he does not have;
....
(ix) Advertising goods or services with intent not to sell
them as advertised;
(x) Advertising goods or services with intent not to supply
reasonably expectable public demand, unless the
advertisement discloses a limitation of quantity;
....
(xxi) Engaging in any other fraudulent or deceptive conduct
which creates a likelihood of confusion or of
misunderstanding.
 Preliminary Objection 8 – Insufficient Specificity in the Complaint - the
Amended Complaint fails to set forth with sufficient specificity a claim for false
advertising under the UTPCPL.
 Preliminary Objection 10 – Demurrer - the Commonwealth may not seek
restitution or restoration under Section 4.1 of the UTPCPL, added by the Act of
November 26, 1976, P.L. 1166, 73 P.S. § 201-4.1, because the Commonwealth is
not a “person” as defined in the UTPCPL.
6
73 P.S. § 201-2(4)(i)-(xxi).
6
73 P.S. § 201-2(4). This Court has explained:
An act or a practice is deceptive or unfair if it has the
‘capacity or tendency to deceive.’ Neither the intention to
deceive nor actual deception must be proved; rather, it
need only be shown that the acts and practices are
capable of being interpreted in a misleading way. The
test for the [C]ourt is to determine the overall
impression arising from the totality of what is said, as
well as what is reasonably implied, in the advertisement
or solicitation. In consumer protection cases brought in the
public interest by the Attorney General, where establishing
a violation hinges upon the content of the solicitations
themselves, summary judgment may be granted without the
need for extrinsic evidence and even in the presence of
extrinsic evidence offered by the defense. Moreover, we
are cognizant of our [S]upreme [C]ourt’s directive that the
UTPCPL is to be construed liberally to effectuate its
objective of protecting consumers of this Commonwealth
from fraud and unfair or deceptive business practices.
Commonwealth v. Peoples Benefit Servs. Inc., 923 A.2d 1230, 1236 (Pa. Cmwlth.
2007) (citations omitted; emphasis added) (Peoples Benefit II); see also Pa. Dep’t of
Banking v. NCAS of Del., LLC, 995 A.2d 422 (Pa. Cmwlth. 2010). Nonetheless, the
UTPCPL does not apply to providers of medical services. See Walter v. Magee
Womens Hosp. of UPMC Health Sys., 876 A.2d 400 (Pa. Super. 2005);7 see also
Foflygen v. R. Zemel, M.D. (PC), 615 A.2d 1345 (Pa. Super. 1992). “Nursing homes
are not one-dimensional business enterprises, but instead they are hybrid
organizations, offering both medical and non-medical services.” Zaborowski v. Hosp.
Care Ctr. of Hermitage, Inc., 60 Pa. D. & C.4th 474, 493 (C.P. Mercer 2002). Thus,
courts have held that nursing homes are liable under the UTPCPL only for the non-
medical services they provide. Id.; see also GGNSC Clarion; Goda v. White Cliff
7
In Walter, the Pennsylvania Superior Court found that the trial court had properly rejected
a UTPCPL claim where “processing, review, and analysis of . . . Pap smear reports . . . [were] more
akin to providing medical services than ‘consumer-oriented, non[-]medical activities of a healthcare
administrator.’” Id. at 408.
7
Leasing P’ship, 62 Pa. D. & C.4th 476 (C.P. Mercer 2003);8 Simmons v. Simpson
House, Inc. (E.D. Pa. No. 15-06636, filed December 12, 2016).
A. Preliminary Objection 4 - Puffery
In Preliminary Objection 4, Golden Gate contends that the purported
representations attributed to it in the Amended Complaint do not violate Sections
2(4)(v) and 2(4)(ix) of the UTPCPL because they do not constitute false advertising
since they are puffery rather than material representations.
Courts have held that Sections 2(4)(v) and 2(4)(ix) of the UTPCPL are
limited to false advertising claims. See Seldon v. Home Loan Servs., Inc., 647 F.
Supp. 2d 451 (E.D. Pa. 2009).9 The United States Third Circuit Court of Appeals has
explained: “Material representations must be contrasted with statements of
subjective analysis or extrapolations, such as opinions, motives and intentions,
or general statements of optimism, which constitute no more than puffery . . . .”
EP Medsystems, Inc. v. Echocath, Inc., 235 F.3d 865, 872 (3d Cir. 2000) (emphasis
added; quotation marks omitted). Puffery is not actionable as false advertising. See
Castrol, Inc. v. Pennzoil Co., 987 F.2d 939 (3d Cir. 1993).
Puffery is an exaggeration or overstatement expressed in
broad, vague, and commendatory language.
Such sales talk, or puffing, as it is commonly
called, is considered to be offered and
8
In Goda, a decedent’s husband brought an action against a skilled care nursing home,
alleging, inter alia, violations of the UTPCPL. For purposes of determining the applicability of the
UTPCPL, the trial court described “medical services” as “those evaluative, diagnostic, preventative,
therapeutic and supervisory services that are customarily provided by or at the direction of a
physician or health care worker in order to treat a patient.” Id. at 489. Applying that definition, the
trial court reviewed each of the allegations to determine whether the alleged acts pertained to
medical or non-medical services.
9
Although federal district court decisions are not binding, they may be cited as persuasive
authority. Mannella ex rel. Mannella v. Port Auth. of Allegheny Cnty., 982 A.2d 130 (Pa. Cmwlth.
2009). We find Seldon instructive.
8
understood as an expression of the seller’s
opinion only, which is to be discounted as such
by the buyer[, and on which no reasonable
person would rely]. The ‘puffing’ rule
amounts to a seller’s privilege to lie his head
off, so long as he says nothing specific.
W. Page Keeton, et al., Prosser and Keeton on the Law of
Torts § 109, at 756-57 (5th ed. 1984).[10] Puffery is
distinguishable from misdescriptions or false
representations of specific characteristics of a product.
As such, it is not actionable.
Castrol, Inc., 987 F.2d at 945 (emphasis added). Claims that are not “specific and
measurable by comparative research” are indicative of puffery. Id. at 946. Further:
The conclusion that advertising text can be clear enough
that it simply cannot be challenged as misleading is also
consistent with numerous cases holding that puffery can be
so obviously exaggerated that even credulous consumers
cannot be misled. See, e.g., Am. Italian Pasta[ Co. v. New
World Pasta Co.], 371 F.3d [387,] 389-90, 392-93 [(8th Cir.
2004)] (holding that puffery, including ‘exaggerated
statements of bluster or boast upon which no reasonable
consumer would rely’ are non-actionable statements under
[Section] 43(a)(1)(B)) [of the Lanham Act11]; United States
Healthcare[, Inc. v. Blue Cross of Greater Phila.], 898 F.2d
[914,] 922 [(3d. Cir. 1990)] (‘Mere puffing, advertising that
is not deceptive for no one would rely on its exaggerated
claims, is not actionable under [Section] 43(a) [of the
Lanham Act].’ (internal quotation marks and citations
omitted)); Marriott Corp. v. Ramada Inc., 826 F. Supp. 726,
728 (S.D.N.Y. 1993) (dismissing false advertising claim
because ad was an obvious parody and one that no
‘reasonable person would be misled — even absent the
disclaimer — into believing’); cf. Reilly v. Pinkus, 338 U.S.
269 . . . (1949) (stating that puffery in advertisements goes
10
Bracketed text in original Keeton quotation.
11
The Trademark Act of 1946, 15 U.S.C. §§ 1051-1141n, is commonly referred to as the
Lanham Act. In interpreting the UTPCPL, Pennsylvania Courts look to judicial decisions
interpreting the Lanham Act for guidance. Commonwealth v. Monumental Props., Inc., 329 A.2d
812 (Pa. 1974); see also Boehm v. Riversource Life Ins. Co., 117 A.3d 308 (Pa. Super. 2015).
9
too far if ‘credulous persons’ rely on it as a material
representation of fact).
Pernod Ricard USA, LLC v. Bacardi U.S.A., Inc., 653 F.3d 241, 254 n.17 (3d Cir.
2011).
1. Chain-wide Marketing Statements
In its Amended Complaint, the Commonwealth alleges that Golden
Gate’s alleged “marketing materials [(Marketing Statements)]12 were deceptive and
misleading, because they represented that Golden Gate’s [Facilities] would provide
care that was not, in fact, provided a significant percentage of the time at many of
[the Facilities] due to understaffing.” Amended Complaint at 23, ¶ 85.13 The
Commonwealth also avers that the Marketing Statements included significant
omissions. However, the law dictates that if the Marketing Statements were “offered
and understood as an expression of the seller’s opinion only, which is to be
discounted as such by the buyer[, and on which no reasonable person would rely],”
they are puffery, and may not form the basis for a UTPCPL action. Castrol, 987 F.2d
at 945 (quoting W. Page Keeton, et al., supra at 756-57). “[T]he determination of
whether an alleged misrepresentation ‘is a statement of fact’ or is instead ‘mere
12
The Commonwealth alleges that:
Defendants marketed the Golden Living company and its skilled
nursing facilities in Pennsylvania directly to Pennsylvania consumers,
disseminating brochures, Web sites, videos, advertisements, and other
information containing misrepresentations about the Basic Care
provided at these facilities. On information and belief, printed
marketing materials were also distributed to hospitals and hospital
staff that made referrals to nursing homes.
Amended Complaint at 21, ¶ 82.
13
The Commonwealth does not identify in its Amended Complaint specifically where these
Marketing Statements appear or when they were made. Golden Gate does not explicitly admit
making such Marketing Statements. Thus, hereinafter, we refer to the alleged Marketing
Statements as Marketing Statements.
10
puffery’ is a legal question . . . .” Newcal Indus. v. Ikon Office Solution, 513 F.3d
1038, 1053 (9th Cir. 2008) (quoting Cook, Perkiss, & Liehe v. N. Cal. Collection
Serv., Inc., 911 F.2d 242, 245 (9th Cir. 1990)). Thus, we review those Golden Gate
Marketing Statements the Commonwealth alleges violate the UTPCPL in that
context.
Marketing Statement No. 1: “We have licensed nurses and nursing
assistants available to provide nursing care and help with activities of daily living
(ADLs). Whatever your needs are, we have the clinical staff to meet those needs.”
Amended Complaint at 22, ¶ 83(a). This statement contains “subjective analysis or
extrapolations, such as opinions, motives and intentions, or general statements of
optimism,” EP Medsystems, 235 F.3d at 872, and is “expressed in broad, vague, and
commendatory language.” Castrol, 987 F.2d at 945. It does not contain a “false
representation[] of specific characteristics” of the services offered. Id. (emphasis
added). The Commonwealth does not contend that Golden Gate does not have
licensed nurses and nursing assistants for the purpose of providing nursing care and
helping with ADLs. Rather, it maintains that Golden Gate does not have sufficient
staff to render care. However, Marketing Statement No. 1 makes no representation
that nurses will be immediately available to provide such assistance, or that it will be
provided within a specific time frame. Thus, we conclude that Marketing Statement
No. 1 is puffery.
Marketing Statement No. 2: “Snacks and beverages of various types and
consistencies are available at any time from your nurse or nursing assistant.”
Amended Complaint at 22, ¶ 83(b). This statement contains no more than “broad,
vague, and commendatory language.” Castrol, 987 F.2d at 945. The Commonwealth
does not assert in its Amended Complaint that snacks and beverages were not always
available from staff, but rather, that there was insufficient staffing to timely respond
to residents’ requests. Because Marketing Statement No. 2’s references to the
11
availability of “snacks and beverages of various types” at “any time” are vague and
broad, it is puffery. Marketing Statement No. 2 (emphasis added).
Marketing Statement No. 3: “A container of fresh ice water is put right
next to your bed every day, and your nursing assistant will be glad to refill or refresh
it for you.” Amended Complaint at 22, ¶ 83(c). This Marketing Statement contains
“subjective analysis or extrapolations, such as opinions, motives and intentions, or
general statements of optimism,” EP Medsystems, 235 F.3d at 872 (emphasis
added), and is “an exaggeration or overstatement expressed in broad, vague, and
commendatory language.” Castrol, 987 F.2d at 945. Accordingly, Marketing
Statement No. 3 is puffery.
Marketing Statement No. 4: “Clean linens are provided for you on a
regular basis, so you do not need to bring your own.” Amended Complaint at 22, ¶
83(d). The term “regular basis” is “vague” and undefined. Id.; Castrol, 987 F.2d at
945. The statement does not contain a “false representation[] of specific
characteristics” of the services offered. Castrol, 987 F.2d at 945 (emphasis added).
For these reasons, Marketing Statement No. 4 is puffery.
Marketing Statement No. 5:
Providing exceptional dining is important to us. Not only
do we want to meet your nutritional needs, but we want to
exceed your expectations by offering a high level of service,
delicious food and an overall pleasurable dining experience.
Dining in the LivingCenter is all about choice. With a
variety of flavors, an attractive environment and plenty of
pleasant conversation, we hope the experience will nourish
both your body and your soul, so please join us. We have a
seat reserved for you in our dining room!
Amended Complaint at 22, ¶ 83(e) (emphasis added). The Marketing Statement
primarily expresses Golden Gate’s priorities and intentions for residents, rather than
makes specific objective representations about the quality of the dining experience.
12
This Marketing Statement does not contain a “false representation[] of specific
characteristics” of the services offered. Castrol, 987 F.2d at 945 (emphasis added).
Instead, it encompasses “subjective analysis or extrapolations, such as opinions,
motives and intentions, or general statements of optimism,” EP Medsystems, 235
F.3d at 872 (emphasis added), and is “an exaggeration or overstatement expressed in
broad, vague, and commendatory language.” Castrol, 987 F.2d at 945. Further, the
Commonwealth’s alleged misrepresentations relate to residents’ inability to make use
of the dining facilities due to staffing shortages, rather than the quality of the dining
experience. We do not interpret the statement “[w]e have a seat reserved for you in
our dining room[,]” as a promise that residents will always be brought to the dining
facilities. Amended Complaint at 22, ¶ 83(e). Accordingly, Marketing Statement
No. 5 is puffery.
Marketing Statement No. 6: “[W]e believe that respecting your
individuality and dignity is of utmost importance.” Amended Complaint at 23, ¶
84(a) (emphasis added). Based on the preface alone, “we believe,” it is clear that this
statement contains “subjective analysis or extrapolations, such as opinions, motives
and intentions, or general statements of optimism,” EP Medsystems, 235 F.3d at
872 (emphasis added), and is “an exaggeration or overstatement expressed in broad,
vague, and commendatory language.” Castrol, 987 F.2d at 945. The Marketing
Statement communicated that it was “offered and understood as an expression of the
seller’s opinion only, which is to be discounted as such by the buyer[, and on which
no reasonable person would rely].” Id. at 945 (quoting W. Page Keeton, et al., supra
at 756-57). Therefore, Marketing Statement No. 6 is puffery.
Marketing Statement No. 7: “A restorative plan of care is developed to
reflect the resident’s goals and is designed to improve wellness and function. The
goal is to maintain optimal physical, mental and psychosocial functioning.”
Amended Complaint at 23, ¶ 84(b). First, the Commonwealth makes no allegation
13
that “restorative plan[s] of care” were not developed, or not reflective of resident’s
goals, but rather it alleges that the plans were incomplete or not properly followed or
updated. Amended Complaint at 23, ¶ 84. Next, although the first sentence in the
Marketing Statement is a specific representation that “a restorative plan of care is
developed[,]” the descriptive words that follow – that the plan will “reflect the
resident’s goals and is designed to improve wellness and function[,]” constitute
“subjective analysis or extrapolations, such as opinions, motives and intentions, or
general statements of optimism.” EP Medsystems, 235 F.3d at 872 (emphasis
added). Further, because there is no allegation the promise was not delivered it is not
actionable. The second sentence in the Marketing Statement describing Golden
Gate’s goal contains “subjective analysis or extrapolations, such as opinions, motives
and intentions, or general statements of optimism,” EP Medsystems, 235 F.3d at
872 (emphasis added). Accordingly, Marketing Statement No. 7 is puffery.
Marketing Statement No. 8: “We work with an interdisciplinary team to
assess issues and nursing care that can enhance the resident’s psychological
adaptation to a decrease in function, increase levels of performance in daily living
activities, and prevent complications associated with inactivity.” Amended
Complaint at 23, ¶ 84(c) (emphasis added). This statement contains “subjective
analysis or extrapolations, such as opinions, motives and intentions, or general
statements of optimism,” EP Medsystems, 235 F.3d at 872 (emphasis added).
Further, because the Commonwealth has not alleged that Golden Gate does not “work
with an interdisciplinary team to assess issues and nursing care,” Amended
Complaint at 23, ¶ 84(c), the statement does not contain a “false representation[] of
specific characteristics” of the services offered. Castrol, 987 F.2d at 945. Thus,
Marketing Statement No. 8 is puffery.
Marketing Statement No. 9: “Our goal is to help you restore strength
and confidence so you feel like yourself again and can get back to enjoying life the
14
way you should. That’s The Golden Difference.” Amended Complaint at 23, ¶ 84(d)
(emphasis added). The statement primarily discusses Golden Gate’s priorities and
intentions for residents. It contains “subjective analysis or extrapolations, such as
opinions, motives and intentions, or general statements of optimism,” EP
Medsystems, 235 F.3d at 872 (emphasis added), and is “an exaggeration or
overstatement expressed in broad, vague, and commendatory language.” Castrol,
987 F.2d at 945. For these reasons, we conclude Marketing Statement No. 9 is
puffery.
Because Golden Gate’s chain-wide Marketing Statements quoted in
paragraphs 83 and 84 of the Amended Complaint are puffery and, thus, may not form
the basis of a UTPCPL claim, Preliminary Objection 4 is sustained as it pertains to
those Marketing Statements.
2. Facility-level Representations
In the Amended Complaint, the Commonwealth also alleges that Golden
Gate’s individual Facilities “made deceptive, misleading, and unfair
misrepresentations to the Commonwealth and to consumers regarding the care they
provided in [M]arketing [Statements], resident assessments[,] care plans[] and bills,
creating a likelihood of confusion and misunderstanding.” Amended Complaint at
24, ¶ 88.
a. Marketing Statements
For the reasons discussed above, the Marketing Statements are puffery
and do not support the Commonwealth’s UTPCPL claim.14
14
As previously explained, the UTPCPL does not apply to medical services; thus Marketing
Statements 7, 8 and 9 would not form the basis for a UTPCPL claim. See Goda; see also GGNSC
Clarion; Walter; Zaborowski.
15
b. Resident Assessments,15 Care Plans and Bills
The Commonwealth, in its Amended Complaint, alleges violations of
Sections 2(4)(v), 2(4)(ix), 2(4)(x), and 2(4)(xxi) of the UTPCPL, resulting from the
Facilities’ failure to adhere to numerous patient-specific representations made in
resident assessments and care plans. Rather than quote the specific wording therein,
the Commonwealth describes numerous instances where care purportedly promised
in resident care plans was not provided. See, e.g., Amended Complaint at 34, ¶ 120;
35-37, ¶ 121; 41, ¶ 125; 48-52, ¶ 135; 68, ¶ 153; 73-76, ¶ 159; 88-91, ¶ 182; 93, ¶
185; 99-102, ¶ 192; 116-118, ¶ 208; 125, ¶ 214. The Commonwealth also alleges that
it was billed for services that were not provided.
15
The Amended Complaint alleges:
Under federal and state law, nursing homes are required to complete a
resident assessment, known as a Minimum Data Set [(MDS)], for
each resident within 14 days of his arrival at the facility. The MDS is
an individualized, date-specific assessment of each resident’s needs; it
must be updated each quarter while the resident is at the facility, or
whenever a significant change in the resident’s health or capabilities
is observed. Among other things, the MDS evaluates each resident’s
functional capabilities to perform activities of daily living (‘ADLs’).
The MDS is based on actual observations of resident care provided
over a seven-day period, not a prospective assessment of what care a
resident will need. It describes the actual assistance the facility
provided and will provide going forward, and that the resident
received. The MDS reflects, for each ADL, whether the resident could
complete the ADL independently, required assistance (supervision
only, limited assistance, or extensive assistance), or was totally
dependent on staff. If the resident required assistance with a
particular ADL, the MDS also reflects whether the resident needed
set-up help only, the assistance of one staff member, or the assistance
of two staff members.
Amended Complaint at 25-26, ¶ 92. Accordingly, our discussion of resident assessments includes
MDS.
16
In Seldon, the United States District Court for the Eastern District of
Pennsylvania addressed a similar situation. There, the plaintiffs brought an action
against a lender and a loan servicing company, alleging, inter alia, a claim for
fraudulent and deceptive conduct pursuant to the UTPCPL. Specifically, after falling
behind in their mortgage payments, the plaintiffs contacted the defendants and the
parties reached an agreement on an alternative payment plan intended to bring the
plaintiffs current on their mortgage. However, the plaintiffs alleged in their
complaint that the defendants made material misrepresentations concerning the
repayment plan. The defendants filed a motion to dismiss. The court addressed the
relevant UTPCPL claims as follows:
[The p]laintiffs . . . allege violations of [Sections 2(4)(v)
and (ix) [of the UTPCPL]. Section []2(4)(v) [of the
UTPCPL] forbids ‘[r]epresenting that goods or services
have . . . characteristics, . . . benefits or quantities that they
do not have.’ Section []2(4)(ix) [of the UTPCPL]
prohibits ‘[a]dvertising goods or services with intent not to
sell them as advertised.’ Pennsylvania state and federal
courts have ruled that both of these subsections apply only
to claims of false advertising. Karlsson v. [Fed. Deposit
Ins. Corp.], 942 F. Supp. 1022, 1023 (E.D. Pa. 1996), aff’d,
107 F.3d 862 (3d Cir. 1997); Weinberg v. Sun Co., 740
A.2d 1152, 1167 (Pa. Super. 1999), rev’d on other grounds,
. . . 777 A.2d 442 ([Pa.] 2001).[16] To set forth a claim for
false advertising under these provisions of the UTPCPL, a
plaintiff must allege: (1) ‘a defendant’s representation is
false’; (2) ‘it actually deceives or has a tendency to
deceive’; and (3) ‘the representation is likely to make a
difference in the purchasing decision.’ Fay v. Erie Ins.
Gr[p.], 723 A.2d 712, 714 (Pa. Super. 1999) (listing
elements for violation of [Section] 2(4)(v)[ of the
UTPCPL]); see Weinberg, 740 A.2d at 1167 (stating same
elements apply to [Section] 2(4)(ix)) [of the UTPCPL].
Seldon, 647 F. Supp. 2d at 466 (emphasis added).
16
See also Commonwealth v. Percudani, 844 A.2d 35 (Pa. Cmwlth. 2004).
17
We note that a claim of false advertising, by its very nature, requires that
a representation be advertised. Since the UTPCPL does not define “advertising,” we
consider judicial interpretation of the term under the Lanham Act.17
The United States District Court for the Eastern District of Pennsylvania
explained:
‘The threshold matter in addressing an alleged false
statement actionable . . . is whether the statement constitutes
‘commercial advertising or promotion.’’ Premier Comp
Solutions, LLC v. Penn Nat’l Ins. Co., No. Civ.A.07–1764,
2012 WL 1038818, at *7 (W.D. Pa. Mar. 28, 2012) (quoting
15 U.S.C. § 1125(a)(1)(B)). In the absence of an express
definition of ‘commercial advertising or promotion’ in the
Lanham Act, courts have developed a four element test to
define these terms in accordance with the Act’s language
and congressional intent. Bracco Diagnostics, Inc. v.
Amersham Health, Inc., 627 F. Supp. 2d 384, 455–56 (D.
N.J. 2009); Caldon, Inc. v. Advanced Measurement &
Analysis Grp., Inc., 515 F. Supp. 2d 565, 578 (W.D. Pa.
2007). ‘Commercial advertising or promotion for purposes
of the Lanham Act consists of (1) commercial speech; (2)
by a defendant in commercial competition with [others in
the market]; (3) designed to influence customers to buy the
defendant’s products; (4) that is sufficiently disseminated
to the relevant purchasing public to constitute
advertising or promotion within the industry.’ Synygy,
Inc. v. Scott-Levin, Inc., 51 F. Supp. 2d 570, 576 (E.D. Pa.
1999). Only after determining that the relevant
statement constitutes commercial advertising or
promotion does a court consider the remaining elements
of a Lanham Act claim based on a false or misleading
17
Section 1903(a) of the Statutory Construction Act of 1972 provides that when words in a
statute are undefined, they must be accorded “their common and approved usage[.]” 1 Pa.C.S. §
1903(a). “Where a court needs to define an undefined term, it may consult definitions in statutes,
regulations or the dictionary for guidance, although such definitions are not controlling.” Adams
Outdoor Adver., LP v. Zoning Hearing Bd. of Smithfield Twp., 909 A.2d 469, 483 (Pa. Cmwlth.
2006). Black’s Law Dictionary (9th ed. 2009) defines “advertising” as “[t]he action of drawing the
public’s attention to something to promote its sale.” Id. at 63. Further, according to Merriam-
Webster’s Collegiate Dictionary (11th ed. 2004), “advertising” is “the action of calling something to
the attention of the public esp[ecially] by paid announcements.” Id. at 19.
18
representation of a product under 15 U.S.C. §
1125(a)(1)(B). Premier Comp Solutions, 2012 WL
1038818, at *7. While courts disagree about whether the
Lanham Act reaches certain oral statements, it is well-
settled that the challenged statements, at the very least,
must be ‘widely disseminated’ and ‘part of an organized
campaign to penetrate the relevant market.’ Fashion
Boutique v. Fendi USA, Inc., 314 F.3d 48, 56-57 (2d Cir.
2002). ‘Although advertising is generally understood to
consist of widespread communication through print or
broadcast media, ‘promotion’ may take other forms of
publicity used in the relevant industry, such as displays at
trade shows and sales presentations to buyers.’ Id. at 57.
Notably, it is well[-]established that ‘isolated statements
to potential customers generally do not constitute
sufficient dissemination to be defined as advertising
within the meaning of the Lanham Act’ and ‘private
statements to competitors—without more—falls short of
commercial advertising as defined in the Act.’ Pitney
Bowes, Inc. v. ITS Mailing Sys. Inc., No. Civ.A.09–5024,
2010 WL 1005146, at *5 (E.D. Pa. Mar. 17, 2010)
(emphasis omitted) (citing Schmidt, Long & Assoc., Inc. v.
Aetna U.S. Healthcare, Inc., No. Civ.A.00–3683, 2001 WL
856946, at *11 (E.D. Pa. July 26, 2001) (‘Generally,
isolated private statements are not sufficiently disseminated
to constitute advertising.’)). Thus, ‘[p]roof of widespread
dissemination within the relevant industry is a normal
concomitant of meeting this requirement,’ and ‘isolated
disparaging statements do not have redress under the
Lanham Act.’ ConsulNet Computing, Inc. v. Moore, No.
Civ.A.04–3485, 2007 WL 2702446, at *11 (E.D. Pa. Sept.
12, 2007) (quotations omitted).
Synthes, Inc. v. Emerge Med., Inc., 25 F. Supp. 3d 617, 716-17 (E.D. Pa. 2014)
(emphasis added).
Consistent with the above, the Seldon Court concluded:
Here, plaintiffs have presented no facts regarding
defendants’ production of any false advertising. Instead,
plaintiffs allege that defendants misrepresented the
benefits, fees, and amounts owed concerning the loan
and misrepresented the scheduled monthly payments
under the repayment plan. Because individual
19
employees or agents of defendants made these
representations, they do not qualify as advertising and
cannot constitute a violation of the UTPCPL’s false
advertising prohibition. See Thompson v. The Glenmede
Trust Co., No. 04428, 2003 WL 1848011, at *1 (Pa. Ct.
Com. Pl. Philadelphia County Feb. 18, 2003) (‘Individual
representations made by [defendants] upon which
[p]laintiffs allegedly relied do not constitute ‘advertising’ as
intended by the UTPCPL.’). For plaintiffs’ claim under
[Section] 2(4)(ix)[ of the UTPCPL], plaintiffs have also
failed to allege that defendants intentionally engaged in
false advertising. See Karlsson, 942 F. Supp. at 1023
(noting that [Section] 2(4)(ix) [of the UTPCPL] requires
element of intent). Because plaintiffs do not allege the
elements of a false advertising claim under [Section 2(4)](v)
or (ix) [of the UPTCPL], plaintiffs have failed to set forth a
claim on which this court can grant relief.
Seldon, 647 F. Supp. 2d at 466 (emphasis added).
Similarly, in the instant matter, as described in the Amended Complaint,
resident care plan development involves assessment and representations made by the
Facilities’ staff. Specifically, the resident and his or her
‘care team’ will sit down together (called a ‘care
coordination’ meeting), usually within 72 hours of
admission, and review what the assessments say, including
what you can do for yourself and what you may need
assistance with. Your care team will consist of key
members of our staff, like the nurses, social worker,
dietitian, etc. In effect, the care plan you develop together
becomes your personal ‘road map for success.’
Amended Complaint at 28-29, ¶ 96. Further, with respect to Sections 2(4)(v) and
2(4)(ix) of the UTPCPL, “[b]ecause individual employees or agents of defendants
allegedly made these representations, they do not qualify as advertising and cannot
constitute a violation of the UTPCPL’s false advertising prohibition.” Seldon, 647 F.
Supp. 2d at 466. Moreover, representations made in resident care plan
development are not likely to make a difference in the purchasing decision, since
such representations are made after an individual is admitted and becomes a
20
resident. Further, these “‘isolated statements to . . . [customers and] potential
customers . . . do not constitute sufficient dissemination to be defined as
advertising . . . .’” Synthes, Inc., 25 F. Supp. 3d at 717 (emphasis added) quoting
Pitney Bowes, Inc. at 5. For the same reasons, resident assessments and alleged
employee misrepresentations in billing do not qualify as advertising under those
UTPCPL sections. Accordingly, Golden Gate’s Preliminary Objection 4 is
sustained.
B. Preliminary Objections 5, 6, 7 and 8 – Insufficient Pleadings
Golden Gate further argues that, even if the alleged representations do
not constitute puffery, the Commonwealth failed to sufficiently plead facts to support
the alleged UTPCPL violations. It then sets forth separate arguments which comprise
Preliminary Objections 5, 6, 7 and 8.
1. Preliminary Objection 5
Golden Gate contends that the facts set forth in the Amended Complaint
do not support a claim that it violated Section 2(4)(x) of the UTPCPL by advertising
goods or services while intending not to reasonably supply public demand. Although
the aforementioned discussion in Seldon does not address Section 2(4)(x) of the
UTPCPL, the language used therein - “[a]dvertising goods or services with intent not
to . . . ” - is almost identical to that in Section 2(4)(ix) of the UTPCPL. 73 P.S. §
201-2(4)(x) (emphasis added). Therefore, we similarly interpret Section 2(4)(x) of
the UTPCPL to “apply only to claims of false advertising.” Seldon, 647 F. Supp. 2d
at 466. For the reasons previously discussed herein, the Marketing Statements are
puffery, and the representations made in resident care plans and bills do not constitute
advertising. Because the alleged conduct is not false advertising, the Commonwealth
failed to plead facts sufficient to support the alleged violation claim. Accordingly,
Preliminary Objection 5 is sustained.
21
2. Preliminary Objection 6
Golden Gate also argues that the Amended Complaint fails to comply
with the Pennsylvania Rules of Civil Procedure which require specificity in
pleadings. Specifically, Golden Gate contends that the Commonwealth failed to
plead facts necessary to support its claim that Golden Gate violated Section 2(4)(xxi)
of the UTPCPL. Further, Golden Gate asserts that “[the Commonwealth’s] Amended
Complaint fails to set forth specific factual allegations regarding [Golden Gate’s]
deviation from any particular resident’s care plan or [resident assessment], or a single
instance when [Golden Gate] billed a resident or the Commonwealth for services that
were not actually provided.” Preliminary Objections at 20, ¶ 63. Golden Gate claims
that “the only factual support [the Commonwealth] provides for [its] conclusory
allegations takes the form of vague, general and non-specific statements attributed to
unnamed, former employees and other ‘Confidential Witness[es].’” Preliminary
Objection 6 at 20, ¶ 62 (quoting Amended Complaint at 34-147, ¶¶ 119-239).
We acknowledge:
[Pennsylvania Rule of Civil Procedure] No. [(Rule)]
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.’ This rule requires a plaintiff to plead all
the facts that must be proved in order to achieve recovery
on the alleged cause of action. Moreover, the pleading must
be sufficiently specific so that the defending party will
know how to prepare his defense.
Commonwealth v. Peoples Benefit Servs. Inc., 895 A.2d 683, 689 n.10 (Pa. Cmwlth.
2006) (Peoples Benefit I). “It may be granted that ‘the lower court has broad
discretion in determining the amount of detail that must be averred since the standard
of pleading set forth in Rule 1019(a) is incapable of precise measurement. Goodrich-
Amram § 1019(2)-10&11.’ United Refrigerator Co. v. Applebaum, 410 Pa. 210, 213,
22
189 A.2d 253, 255 (1963).” Pike Cty. Hotels Corp. v. Kiefer, 396 A.2d 677, 681 (Pa.
Super. 1978).
In the instant case, the Amended Complaint sets forth numerous
examples of instances where Golden Gate allegedly failed to comply with resident
care plans. See, e.g., Amended Complaint at 34, ¶ 120; 35-37, ¶ 121; 41, ¶ 125; 48-
52, ¶ 135; 68, ¶ 153; 73-76, ¶ 159; 88-91, ¶ 182; 93, ¶ 185; 99-102, ¶ 192; 116-118, ¶
208; 125, ¶ 214. However, there are no allegations specifically identifying any
particular resident care plan or MDS from which the Facility deviated, or any
allegation identifying any specific bill for services that were not provided. The
Commonwealth asserts that “[t]here is no requirement in Pennsylvania law that the
Commonwealth set forth specific deviations from any particular resident’s care plan
or MDS, or that the Commonwealth identify in its complaint individual bills for
services to individual residents that were not actually provided.” Commonwealth’s
Answer to Preliminary Objections at 28. It further contends that this Court may
“reasonably infer that the pervasive and significant omissions of care alleged . . .
reflect deviations from care contemplated in residents’ MDS assessments and care
plans[.]” Id. at 28-29. The Commonwealth asks this Court to make assumptions
based on general allegations describing documents it has not provided. This, the
Court is not prepared to do.
Section 2(4)(xxi) of the UTPCPL prohibits “[e]ngaging in any . . .
fraudulent or deceptive conduct which creates a likelihood of confusion or of
misunderstanding.” 73 P.S. § 201-2(4)(xxi). Golden Gate contends that while the
Commonwealth in the Amended Complaint asserts that deceptive resident
assessments and billing statements were submitted to it and/or the insurers, the
Commonwealth failed to allege how documents not issued to consumers could
deceive consumers. Golden Gate further maintains that the Amended Complaint does
not reflect facts explaining how a consumer could be misled by a billing statement to
23
believe that he received services or assistance that he had not in fact received, or how
an un-itemized per diem charge could convey to a consumer that a particular service
had been provided in the first place.
Notably, Rule 1019(i) states:
When any claim or defense is based upon a writing, the
pleader shall attach a copy of the writing, or the material
part thereof, but if the writing or copy is not accessible to
the pleader, it is sufficient so to state, together with the
reason, and to set forth the substance in writing.
Pa. R.C.P. No. 1019(i) (emphasis added).
The general allegations of wrongdoing pertaining to unidentified
Marketing Statements, resident care plans, billing statements and MDSs are not
sufficiently specific to meet the pleading requirement, especially given that the
documents were not attached to the Amended Complaint, and neither the patients nor
the documents were sufficiently described to permit Golden Gate to prepare a
defense.18 Accordingly, Preliminary Objection 6 is sustained.19
18
The Commonwealth did not state in the Amended Complaint that the Marketing
Statements, resident care plans, billing statements or MDSs were not accessible and the reason
therefor in accordance with Rule 1019(i).
19
The Concurrence/Dissent maintains that the Majority has, sua sponte, raised the issue of
the Commonwealth’s failure to attach the subject documents. Such is not the case. Golden Gate
explicitly raised the issue of the Commonwealth’s lack of specificity in its pleading in accordance
with the Pennsylvania Rules of Civil Procedure. Indeed, Golden Gate contends that the
Commonwealth
asserts that Golden Living made deceptive representations in three
forms: (1) ‘care plans shared with residents that outlined the care that
the Facilities promised to provide;’ (2) ‘billing statements that
included a per diem charge leading recipients to believe that all
services had been provided;’ and (3) . . . ‘MDSs’[] that were
submitted to the Commonwealth on a quarterly basis (or more
frequently) for each resident covered by Medicaid and monthly billing
statements submitted for Medicaid payments’ which ‘created the
impression that the Golden Living Facilities had provided, and would
continue to provide, a level of care that was not provided.’
24
3. Preliminary Objection 7
Golden Gate asserts in Preliminary Objection 7 that “[t]o the extent [the
Commonwealth’s] Amended Complaint alleges a claim for fraud against [Golden
Gate under the UTPCPL’s catch[-]all provision (Section 2(4)(xxi) of the UTPCPL)],
that claim should be dismissed pursuant to [Pennsylvania Rule of Civil Procedure]
Nos. 1028(a)(4) and 1019(b) for failure to plead the claim with particularity.”
Preliminary Objection 7 at 22, ¶ 71.
Rule 1019(b) provides, in relevant part, that “[a]verments of fraud or
mistake shall be averred with particularity.” Pa.R.C.P. No. 1019(b). Rule 1028(a)(4)
permits a party to file preliminary objections on the basis of a pleading’s legal
insufficiency. Notwithstanding, in Commonwealth v. Percudani, 825 A.2d 743 (Pa.
Cmwlth. 2003), amended, 851 A.2d 987 (2004), this Court held that a claim under
Section 2(4)(xxi) of the UTPCPL is subject to a lesser standard than common law
fraud.20 As this Court later explained in Commonwealth v. Manson, 903 A.2d 69 (Pa.
Cmwlth. 2006):
Prior to the 1996 amendments to the [UTPCPL], [S]ection
2(4)(xxi) [of the UTPCPL] merely prohibited ‘fraudulent
Preliminary Objection 6 at 19-20, ¶ 61 (emphasis added) (quoting Amended Complaint at 157, ¶¶
267, 269). Accordingly, Golden Gate’s assertion that, “the only factual support [the
Commonwealth] provides for [its] conclusory allegations takes the form of vague, general and non-
specific statements attributed to unnamed, former employees and other ‘Confidential Witness[es]’”
expresses the very deficiency resulting from the Commonwealth’s failure to attach the documents.
Preliminary Objection 6 at 20, ¶ 62 (quoting Amended Complaint at 34-147, ¶¶ 119-239). Further,
the Concurrence/Dissent’s speculation that the Commonwealth might not have attached the
documents based on privacy concerns is simply conjecture on its part. Nonetheless, it is clear that
the Commonwealth gave no written explanation for its failure to so attach the documents, and thus
it did not comply with Rule 1019(i).
20
“[T]o establish fraud, a plaintiff must prove: (1) the misrepresentation of a material fact;
(2) scienter; (3) intention by the declarant to induce action; (4) justifiable reliance by the party
defrauded upon the misrepresentation; and (5) damage to the party defrauded as a proximate result.”
Commonwealth v. Manson, 903 A.2d 69, 74 n.5 (Pa. Cmwlth. 2006).
25
conduct,’ and a plaintiff had to establish the elements of
common law fraud to prove a claim. [Percudani]. The
1996 amendments revised the provision to prohibit
‘fraudulent or deceptive conduct.’ Id.
Even after the 1996 amendments became effective, our
[S]uperior [C]ourt has continued to interpret [S]ection
2(4)(xxi) [of the UTPCPL] to require that a plaintiff
establish the elements of common law fraud to prove a
claim. Id. However, this court has rejected that
interpretation because: (1) the statute is to be liberally
construed to effectuate the legislative goal of consumer
protection; (2) the legislature’s addition of the words ‘or
deceptive’ signals a less restrictive interpretation; and (3)
maintaining the pre-1996 requirement would render the
words ‘or deceptive conduct’ redundant and superfluous,
contrary to the rules of statutory construction. Id.
The question, then, is not whether a company or corporate
officer engaged in conduct that was intended to deceive
consumers. Rather, the question is whether the company
or corporate officer engaged in conduct that might be
‘deceptive to the ordinary consumer.’ Id. at 746.
Manson, 903 A.2d at 74 (emphasis added; footnotes omitted); see also Peoples
Benefit I; Bennett v. A.T. Masterpiece Homes at Broadsprings, LLC, 40 A.3d 145 (Pa.
Super. 2012).
The Commonwealth reaffirms in its brief that it is “proceeding under
[Section 2(4)(xxi) of the UTPCPL’s] ‘deceptive’ prong[.]” Commonwealth’s Br. at
22 n.7. Accordingly, because the Commonwealth was not required to meet the
particularity requirements for common law fraud claims, Preliminary Objection 7 is
overruled.
4. Preliminary Objection 8
Lastly, Golden Gate contends that although the Commonwealth alleges
in its Amended Complaint false advertising claims under Sections 2(4)(v) and
2(4)(ix) of the UTPCPL and that deceptive, misleading and unfair statements
appeared in the Marketing Statements to Pennsylvania consumers and hospital staff,
26
the Commonwealth failed to specify: (1) who was allegedly deceived by the
Marketing Statements; (2) the particular Marketing Statements in which each
allegedly deceptive statement appeared; (3) where those Marketing Statements were
allegedly disseminated; and, (4) when those Marketing Statements were allegedly
disseminated. According to Golden Gate, a false advertising claim under the
UTPCPL requires the Commonwealth to demonstrate that the false advertisement
actually deceived or had a tendency to deceive a substantial segment of its audience.
Having already determined that the Marketing Statements constitute puffery and are
not material misrepresentations, Golden Gate’s Preliminary Objection 8 is sustained.
C. Preliminary Objection 1021
21
The Concurrence/Dissent asserts that because the Majority dismisses the underlying
substantive claims, “there is no need to decide whether the Commonwealth is a ‘person in interest
entitled to restitution or restoration under Section 4.1 of the UTPCPL and, therefore, the question is
moot and the discussion related thereto is merely dicta.” Concurring/Dissenting Op. at 3. The
Concurrence/Dissent similarly objects to the Majority’s discussion of Preliminary Objection 12.
However, “[p]reliminary objections are permissible in an original jurisdiction action,
[Pennsylvania Rule of Appellate Procedure] 1516[(b)], and are to be made in accordance with the
appropriate Rule of Civil Procedure. See Pa.R.A.P. 1517; see also Pa.R.C.P. [No.] 1028
(Preliminary Objections).” Uniontown Newspapers, Inc. v. Roberts, 839 A.2d 185, 190 (2003),
aff’d, 909 A.2d 804 (Pa. 2006). Rule 1028(c)(2) specifically requires, in pertinent part, that “[t]he
court shall determine promptly all preliminary objections.” Pa.R.C.P. No. 1028(c)(2) (bold and
italic emphasis added).
Moreover:
According to Black’s Law Dictionary, ‘dictum,’ is generally used as
an abbreviated form of ‘obiter dictum,’ or ‘a remark by the way.’ To
elaborate, it is described as[:]
[A]n observation or remark made by a judge in
pronouncing an opinion upon a cause, concerning
some rule, principle, or application of law, or the
solution of a question suggested by the case at bar, but
not necessarily involved in the case or essential to
its determination. . . . Statements and comments in
27
In Preliminary Objection 10, Golden Gate avers that the Commonwealth
may not recover restoration under Section 4.1 of the UTPCPL. Under the UTPCPL,
only a “person in interest” may seek restoration. 73 P.S. § 201-4.1. The UTPCPL
defines “person” as “natural persons, corporations, trusts, partnerships, incorporated
or unincorporated associations, and any other legal entities.” 73 P.S. § 201-2(2).
According to Golden Gate, since the UTPCPL’s definition of “person” does not
include the Commonwealth, it may not seek restoration on its own behalf.
In support of its position, Golden Gate relies on Meyer v. Community
College of Beaver County, 93 A.3d 806 (Pa. 2014) (Meyer II), wherein our Supreme
Court considered whether the UTPCPL “defines a ‘person’ subject to liability as
including both private entities and political subdivision agencies.” Id. at 808. The
Supreme Court therein explained:
Where the words of the statute at issue are not explicit, this
Court may consider, inter alia, the following criteria: ‘[t]he
circumstances under which it was enacted,’ ‘[t]he mischief
to be remedied,’ ‘[t]he object to be attained,’ ‘[t]he former
law, if any, including other statutes upon the same or
similar subjects,’ and ‘[t]he consequences of a particular
an opinion concerning some rule of law or legal
proposition not necessarily involved nor essential to
determination of the case in hand are obiter dicta, and
lack the force of adjudication.
Black’s Law Dictionary 409 (5th ed. 1979). See also Stellwagon v.
Pyle, . . . 133 A.2d 819 ([Pa.] 1957) (language in judicial opinion
going beyond issue decided is considered dictum); O’Neill v.
Metropolitan Life Ins. Co., . . . 26 A.2d 898 ([Pa.] 1942) (statement of
court on an issue not raised is dictum).
Giffear v. Johns-Manville Corp., 632 A.2d 880, 884 n.6 (Pa. Super. 1993) (emphasis added), aff’d
sub nom. Simmons v. Pacor, Inc., 674 A.2d 232 (Pa. 1996). Clearly, addressing and deciding a
preliminary objection presented to the Court is not dicta.
In addition to the Majority addressing and resolving all the preliminary objections raised as
directed by Rule 1028(c)(2), because the Commonwealth may choose to seek leave of Court to
refile its Amended Complaint or bring similar complaints against other providers there is a
likelihood that this or other similar matters may return to this Court.
28
interpretation.’ 1 Pa.C.S.[] § 1921(c). In our view,
although it is a close question, the aforementioned
factors suggest that the legislature did not intend to
define ‘person’ as including political subdivisions and
their agencies.
First, at the time of the UTPCPL’s adoption, the common
law provided both a doctrine of sovereign immunity, as well
as a derivative interpretive presumption against depriving
the state of sovereign rights or property, both of which
arguably extended to political subdivision agencies. Given
the extant ubiquity of these doctrines, we find it unlikely
that the legislature would depart from them with such
general language as ‘any other legal entities.’
Furthermore, . . . the legislature enacted the UTPCPL to
account for the fundamental inequality between buyer and
seller, and to protect consumers from exploitative
merchants. The parties offer, and we discern, no evidence
to suggest that, in enacting the UTPCPL, the General
Assembly was concerned with and, thus, sought to
eliminate unfair trade practices in the public sphere.
Finally, the consequences of adopting an interpretation of
‘person’ to include political subdivision agencies strongly
suggest to us that the General Assembly did not intend their
inclusion. First, in the context of public enforcement
actions, the UTPCPL provides that the Attorney General or
a District Attorney may obtain, ‘on behalf of the
Commonwealth,’ civil penalties in varying amounts, up to
$5,000 per violation. [Section 8 of the UTPCPL,] 73 P.S. §
201-8. Likewise, in the context of private actions, plaintiffs
may recover treble damages in an amount up to three times
the amount of their actual damages, as well as costs and
attorney fees. See [Section 9.2 of the UTPCPL, added by
the Act of November 24, 1976, P.L. 1166, as amended,] 73
P.S. § 201-9.2. These damages, although designed, in part,
for other more remedial purposes, do contain a deterrent,
punitive element. See Schwartz v. Rockey, . . . 932 A.2d
885, 898 ([Pa.] 2007) (noting the treble damage provisions
are ‘a hybrid,’ with both punitive and remedial aspects)
(internal quotations and citations omitted). Although the
legislature certainly has the authority to impose punitive
sanctions and damages upon its political subdivisions, the
proceeds of which would go to its own treasury, we are of
29
the opinion that it would not take such an uncharted course
without making a clearer statement, particularly given our
longstanding precedent that governmental agencies are
ordinarily immune from common[]law punitive damages.
Moreover, under certain circumstances, the Attorney
General may seek the ‘dissolution, suspension or forfeiture
of the franchise or right to do business’ of a ‘person’ who
violates a court’s injunction against an unfair or deceptive
practice, as well as the appointment of a receiver to manage
the party’s affairs. See [Section 9 of the UTPCPL,] 73 P.S.
§ 201-9. In our view, it is incongruous that the General
Assembly would adopt a provision effectively authorizing
the Attorney General, with court approval, to eliminate
political subdivisions.
In sum, we hold the UTPCPL is ambiguous as to whether
political subdivision agencies constitute ‘persons.’
However, based on our consideration of the law prior to the
UTPCPL’s enactment, the UTPCPL’s purpose, and the
consequences of a holding that it applies to such agencies,
we conclude the legislature did not intend for the
definition of ‘person’ to include political subdivision
agencies.
Meyer II, 93 A.3d at 814-15 (citations omitted; emphasis added).
Although, in Meyer II, the issue was whether a political subdivision
agency can be a person liable under the UTPCPL, Golden Gate argues that the
Supreme Court’s pronouncement also precludes the Commonwealth from being a
“person in interest,” entitled to seek restoration under the UTPCPL. 73 P.S. § 201-
4.1 (emphasis added). When presented with the issue of giving “person” different
meanings in various sections of the statute, both this Court’s majority and (now)
President Judge Leavitt’s dissenting opinion in Meyer v. Community College of
Beaver County, 30 A.3d 587 (Pa. Cmwlth. 2011) (Meyer I), rev’d, Meyer II,
concluded that the term “person” must have a consistent meaning throughout the
UTPCPL.22
22
In her dissenting opinion, (now) President Judge Leavitt stated:
30
On the same date the Supreme Court issued the Meyer II decision, it
decided Commonwealth v. TAP Pharmaceutical Products, 94 A.3d 350 (Pa. 2014).
I agree with the majority that if the Commonwealth or a local agency
is a person for purposes of being a plaintiff under the [UTPCPL], then
it follows that either must also be a ‘person’ for purposes of being a
defendant. Stated otherwise, the word ‘person’ must have one
meaning for all purposes of the statute.
Meyer I, 30 A.3d at 604 (Leavitt, J., dissenting).
The Concurrence/Dissent essentially argues that the word “person” should be interpreted
differently under different sections of the UTPCPL. It asserts that the reasoning in Meyer II is
inapplicable to the instant matter since “no liability will be imposed upon a government entity;
instead, the Commonwealth is seeking restitution and restoration from Golden Gate, a merchant, for
money the Commonwealth paid as a result of the alleged deception.” Concurring/Dissenting Op. at
4. However:
It is axiomatic that in determining legislative intent, all sections of a
statute must be read together and in conjunction with each other, and
construed with reference to the entire statute. When the meaning of
a word or phrase is clear when used in one section, it will be
construed to mean the same thing in another section of the same
statute. A conflict between various statutes or parts thereof is to be
avoided and, if possible, the apparently conflicting provisions must be
construed together with the more specific provisions prevailing over
the general ones.
Housing Authority of County of Chester v. Pennsylvania State Civil Service Comm’n, 730 A.2d 935,
945-46 (Pa. 1999) (citations omitted; emphasis added). Accordingly, the Court may not interpret
the word “person” to exclude the Commonwealth under the liability provisions of the UTPCPL and
then interpret it to include the Commonwealth under the restoration provision of the same statute.
Notably, the Supreme Court in Meyer II did not limit its definition of the word “person” to a
particular section of the UTPCPL, and, in fact, the Court’s language implies broad application of
the definition:
the UTPCPL is ambiguous as to whether political subdivision
agencies constitute ‘persons.’ However, based on our consideration
of the law prior to the UTPCPL’s enactment, the UTPCPL’s
purpose, and the consequences of a holding that it applies to such
agencies, we conclude the legislature did not intend for the
definition of ‘person’ to include political subdivision agencies.
Meyer II, 93 A.3d at 815 (emphasis added).
31
In TAP, the Commonwealth challenged pharmaceutical companies’ prescription drug
pricing claiming that the defendant companies engaged in deceptive practices.
Among the claims advanced by the Commonwealth were multiple UTPCPL
violations. This Court ultimately found that one of the TAP defendants violated the
UTPCPL and, inter alia, awarded restoration under Section 4.1 of the UTPCPL. On
review, the Supreme Court vacated this Court’s order and remanded the matter
because the Commonwealth had not properly accounted for prescription drug rebates.
The Supreme Court did not address whether the Commonwealth was entitled to
restoration under the UTPCPL as a “person in interest.” 73 P.S. § 201-4.1.
Therefore, there is no binding Pennsylvania authority directly addressing whether the
Commonwealth is a “person” in interest entitled to restoration under the UTPCPL.
However, the United States District Court for the Southern District of
New York addressed this very issue in In re: Methyl Tertiary Butyl Ether (MTBE)
Products Liability Litigation, (S.D.N.Y. Master File No. 1:00-1898, MDL 1358
(SAS), M21-88, filed July 2, 2015), 2015 U.S. Dist. LEXIS 88035, 2015 WL
4092326. Therein, the District Court considered a similar Commonwealth argument,
reviewed the relevant case law, and explained:
The Commonwealth’s entitlement to restoration under the
UTPCPL turns on whether it qualifies as a ‘person’ under
the restoration provision of the statute. The Pennsylvania
courts have not provided a clear answer to this question. In
Commonwealth v. TAP Pharmaceutical Products, [36 A.3d
1112 (Pa. Cmwlth. 2011), vacated and remanded, 94 A.3d
350 (Pa. 2014),] the trial court analyzed the term ‘person’
and concluded that the Commonwealth was a public entity
entitled to restoration under the statute. This decision was
later vacated and remanded by the Pennsylvania Supreme
Court because the Commonwealth failed at trial to provide
a rational accounting of the relevant state agency’s
damages. The Pennsylvania Supreme Court did not, in
remanding TAP, address the Commonwealth’s entitlement
to restoration as a ‘person’ under the statute.
32
The very day that it remanded TAP, the Pennsylvania
Supreme Court issued a decision in [Meyer II], holding that
‘political subdivision agencies’ do not constitute ‘persons’
under the UTPCPL. In Meyer [II], the court confronted the
definition of ‘person’ under the UTPCPL in a slightly
different context: whether a public entity was a ‘person’
that could be sued under the statute, not whether a public
entity was a ‘person’ entitled to restoration. Context aside,
the statutory provision the Meyer [II] court interpreted —
which defines ‘person’ under the UTPCPL — was the same
one at issue in TAP.
The Commonwealth urges the Court to ascribe different
meanings to the word ‘person’ across different sections of
the UTPCPL, arguing principally that the Commonwealth’s
broad enforcement power under the statute militates in
favor of an expansive definition of ‘person’ in the context
of recovering damages, and a narrower definition of
‘person’ in deciding whether to hold a public entity liable
under the statute. For additional support, the
Commonwealth juxtaposes [S]ection 4 of the [UTPCPL],
which permits the Attorney General to ‘bring an action in
the name of the Commonwealth’ to restrain violations of
the statute, with the restoration provision — [S]ection 4.1
[of the UTPCPL] — which gives the court discretion to
direct that defendants ‘restore any person in interest’
whenever a court ‘issues a permanent injunction . . . as
authorized in [S]ection 4 [of the UTPCPL].’ [73 P.S. §§
201-4, 4.1 (emphasis added)]. Reading these contiguous
provisions of the statute together and accounting for its
overall purpose of ‘policing the marketplace and remedying
unfair and deceptive conduct,’ the Commonwealth
concludes that restoration must be available to it as a
remedy under the statute.
This is a fair interpretation — and perhaps a more appealing
one from a policy perspective — but still remains at odds
with the Pennsylvania Supreme Court’s pronouncement in
Meyer [II]. Further, as defendants point out, counting the
Commonwealth as a ‘person in interest’ would stretch the
statutory definition beyond its plain meaning. It is even
more troubling to give ‘person’ different meanings in
different sections of the same statute, especially after the
Pennsylvania Supreme Court recently defined the term
without explicitly limiting its meaning. After considering
33
various statutory interpretation arguments, the Meyer [II]
Court excluded the Commonwealth and its agencies as
‘persons’ under the UTPCPL and gave no indication that
the result would or should be different in the enforcement
context. A contrary ruling in this case would appear to defy
Meyer [II] and do violence to the UTPCPL’s statutory
scheme.
MTBE, Slip Op. at 19-22, 2015 U.S. Dist. LEXIS 88035 at 21-23, 2015 WL 4092326
at 5-6 (emphasis added; footnotes omitted). Accordingly, the District Court
concluded that the Commonwealth was prohibited from seeking restoration under the
UTPCPL. We find the District Court’s analysis compelling and, for the reasons
stated therein, similarly conclude that the Commonwealth may not seek restoration
under the UTPCPL in this case.23 Thus, Golden Gate’s Preliminary Objection 10 is
sustained.
III. Breach of Contract – Preliminary Objection 924
Golden Gate argues that the Commonwealth’s common law contract
claim should be stricken from the Amended Complaint and dismissed with prejudice
because the Department of Human Services’25 (DHS) Nursing Facility Provider
23
Notably, the District Court acknowledged its difficulty reconciling the TAP and Meyer II
decisions:
[T]his issue is an important one that the Pennsylvania Supreme Court
should squarely address. Only adding to the confusion of the conflict
in authorities is the [C]ourt’s decision to remand TAP on unrelated
grounds on the same day it issued Meyer [II], without any mention in
TAP of the overlapping issue at the heart of Meyer [II]. The upshot is
two rulings, issued on the same day, that may contradict each other.
MTBE, Slip. Op. at 22, 2015 U.S. Dist. Lexis 88035 at 23, 2015 WL 4092326 at 6 (footnote
omitted).
24
Preliminary Objection 9 – Demurrer - the Amended Complaint fails to state a viable
breach of contract claim.
25
Effective November 24, 2014, the Department of Public Welfare was officially renamed
the Department of Human Services.
34
Agreements (Provider Agreements) are not contracts, as the Provider Agreements do
not require any consideration to be paid to providers. Further, DHS has taken the
position that Provider Agreements “represent nothing more than enrollment forms”
and are “not contractual in character.” Dep’t of Pub. Welfare v. Presbyterian Med.
Ctr. of Oakmont, 877 A.2d 419, 427 (Pa. 2005). The Commonwealth states in its
brief that, after considering Golden Gate’s arguments and authority, it would, with
Golden Gate’s concurrence, agree to withdraw its breach of contract claim (Count II).
Under the circumstances, the Court considers Count II of the Commonwealth’s
Amended Complaint withdrawn and, thus, Preliminary Objection 9 is moot.
IV. Unjust Enrichment - Preliminary Objections 3 and 1126
Golden Gate asserts in Preliminary Objection 3 that because the General
Assembly has provided a statutory remedy, the Commonwealth’s common law cause
of action for unjust enrichment must be dismissed. The unjust enrichment claim
allegedly arises from the Facilities’ “submi[ssion of] billings to the Pennsylvania
Medical Assistance [(MA)] Program.” Amended Complaint at 160, ¶ 279.
Unjust enrichment is an equitable doctrine. See Am. & Foreign Ins. Co.
v. Jerry’s Sport Ctr., Inc., 2 A.3d 526 (Pa. 2010). It “is the retention of a benefit
conferred by another, without offering compensation, in circumstances where
compensation is reasonably expected, for which the beneficiary must make
restitution. An action based on unjust enrichment is an action which sounds in quasi-
26
Preliminary Objection 3 – Demurrer - the common law breach of contract and unjust
enrichment claims are barred by Section 1504 of the Statutory Construction Act of 1972, 1 Pa. C.S.
§ 1504.
Preliminary Objection 11 – Demurrer - if this Court finds that a contract existed between
Golden Gate and the Commonwealth, the unjust enrichment claim should be stricken. Having
accepted the Commonwealth’s withdrawal of its breach of contract claim, we do not address Golden
Gate’s Preliminary Objection 11.
35
contract or contract implied in law.” Id. at 531 n.7 (citation omitted). Our Supreme
Court has
consistently held that where a statutory remedy is provided,
the procedure prescribed therein must be strictly pursued to
the exclusion of other methods of redress. Interstate
Traveller Serv[s.], Inc. v. [] Dep[’t] of Env[tl.] Res[.], . . .
406 A.2d 1020 ([Pa.] 1979); [] Dept. of Env[tl.] Res[.] v.
Wheeling-Pittsburgh Steel Corp., . . . 375 A.2d 320 ([Pa.]
1977); Erie Human Relations Comm[’n] ex rel. Dunson v.
Erie Ins[.] Exch[.], . . . 348 A.2d 742 ([Pa.] 1975); Borough
of Green Tree v. B[d.] of Prop[.] Assessments, . . . 328 A.2d
819 ([Pa.] 1974); Colteryahn Sanitary Dairy v. Milk
Control Comm[’n], . . . 1 A.2d 775 ([Pa.] 1938); Ermine v.
Frankel, . . . 185 A. 269 ([Pa.] 1936); Bowman v. Gum, Inc.,
. . . 184 A. 258 ([Pa.] 1936); White v. Old York R[d.]
Country Club, . . . 178 A. 3 ([Pa.] 1935); Taylor v. Moore, .
. . 154 A. 799 ([Pa.] 1931); Moore v. Taylor, . . . 23 A. 768
([Pa.] 1892).
This theory is also embodied in our Statutory Construction
Act [of 197227] which states:
In all cases where a remedy is provided or a
duty is enjoined or anything is directed to be
done by any statute, the directions of the
statute shall be strictly pursued, and no penalty
shall be inflicted, or anything done agreeably
to the common law, in such cases, further than
shall be necessary for carrying such statute
into effect.
1 Pa.C.S. § 1504 (emphasis added).
Jackson v. Centennial Sch. Dist., 501 A.2d 218, 220 (Pa. 1985); see also White v.
Conestoga Title Ins. Co., 53 A.3d 720 (Pa. 2012). “[B]ut, where the legislature
explicitly reveals in a statute that it does not intend for such exclusivity, a statutory
procedure for dispute resolution does not preempt common law claims.” Id. at 733.
Further:
27
1 Pa. C.S. §§ 1501-1991.
36
When the Legislature has seen fit to enact a pervasive
regulatory scheme and to establish a governmental agency
possessing expertise and broad regulatory and remedial
powers to administer that statutory scheme, a court should
be reluctant to interfere in those matters and disputes which
were intended by the Legislature to be considered, at least
initially, by the administrative agency. Full utilization of
the expertise derived from the development of various
administrative bodies would be frustrated by indiscriminate
judicial intrusions into matters within the various agencies’
respective domains.
Feingold v. Bell of Pa., 383 A.2d 791, 793 (Pa. 1977).
We therefore review relevant statutory and regulatory provisions to
determine whether the Legislature has provided a statutory remedy to address the
alleged overpayment for provider services and, further, whether it “enact[ed] a
pervasive regulatory scheme and . . . establish[ed] a governmental agency possessing
expertise and broad regulatory and remedial powers to administer [it.]” Id.
Section 206 of the Human Services Code (Code)28 describes:
[DHS] shall have the power:
(1) Whenever the General Assembly shall have
appropriated money to [DHS] for public welfare purposes,
to purchase necessary services for individuals entitled to
such services at rates not exceeding those charged the
general public or actual cost; such services may be
purchased directly from agencies or institutions
conforming to minimum standards established by [DHS]
or by law or [DHS] may reimburse local public agencies
which purchase such services from such agencies or
institutions. Except for day care services, this clause shall
not be interpreted to include the direct provision by [DHS]
of services to dependent or neglected children.
(2) To establish rules and regulations not inconsistent
with law prescribing minimum standards of plant,
equipment, service, administration and care and
28
Act of June 13, 1967, P.L. 31, as amended, 62 P.S. §§ 101-1503. Effective December 28,
2015, the Public Welfare Code was renamed the Human Services Code. See 62 P.S. § 101.
37
treatment for agencies and institutions furnishing
service to individuals paid for, in whole or in part, by
money appropriated to [DHS] by the General Assembly,
and when not otherwise established by law, fixing per
diem or other rates for services furnished by such
agencies or institutions.
62 P.S. § 206 (emphasis added). Section 403.1 of the Code29 provides in relevant
part:
(a) [DHS] is authorized to establish rules, regulations,
procedures and standards consistent with law as to the
administration of programs providing assistance . . . that
do any of the following:
(1) Establish standards for determining eligibility and the
nature and extent of assistance.
(2) Authorize providers to condition the delivery of care
or services on the payment of applicable copayments.
(3) Modify existing benefits, establish benefit limits and
exceptions to those limits, establish various benefit
packages and offer different packages to different
recipients, to meet the needs of the recipients.
(4) Establish or revise provider payment rates or fee
schedules, reimbursement models or payment
methodologies for particular services.
(5) Restrict or eliminate presumptive eligibility.
(6) Establish provider qualifications.
(b) [DHS] is authorized to develop and submit State plans,
waivers or other proposals to the Federal Government and
to take such other measures as may be necessary to render
the Commonwealth eligible for available Federal funds or
other assistance.
62 P.S. § 403.1 (emphasis added).
29
Added by Section 2 of the Act of June 30, 2011, P.L. 89.
38
DHS’s Regulations are contained in the Medical Assistance (MA)
Manual (Manual).30 The Manual “sets forth the MA regulations and policies which
apply to providers.” Section 1101.11(a) of the Manual, 55 Pa. Code § 1101.11(a).
Section 1101.11(b) of the Manual provides that “[t]he MA Program is authorized
under Article IV of the [Code] (62 P.S. §§ 401-488) and is administered in
conformity with Title XIX of the Social Security Act (42 U.S.C. §§ 1396-1396[w-5])
and regulations issued under it.” 55 Pa. Code § 1101.11(b).
Section 1101.74 of the Manual provides:
If, after investigation, [DHS] determines that a provider has
submitted or has caused to be submitted claims for
payments which the provider is not otherwise entitled to
receive, [DHS] will, in addition to the administrative action
described in [Sections] 1101.82-1101.84 [of the Manual]
(relating to administrative procedures), refer the case record
to the Medicaid Fraud Control Unit of the Department of
Justice for further investigation and possible referral for
prosecution under Federal, State and local laws. Providers
who are convicted by a Federal court of willfully
defrauding the Medicaid program are subject to a $25,000
fine or up to five years imprisonment or both.
55 Pa. Code § 1101.74. Further, Section 1101.75(a) of the Manual31 enumerates
provider prohibited acts which include submitting false or fraudulent claims. Section
30
55 Pa. Code §§ 1101.11-1251.81
31
Section 1101.75(a) of the Manual states, in relevant part:
An enrolled provider may not, either directly or indirectly, do any of
the following acts:
(1) Knowingly or intentionally present for allowance or payment a
false or fraudulent claim or cost report for furnishing services or
merchandise under MA, knowingly present for allowance or
payment a claim or cost report for medically unnecessary services
or merchandise under MA, or knowingly submit false information,
for the purpose of obtaining greater compensation than that to
which the provider is legally entitled for furnishing services or
merchandise under MA.
39
1101.75(b) of the Manual also mandates that providers or other persons who violate
its provisions are subject to criminal penalties, enforcement actions and restitution
and repayment. See 55 Pa. Code § 1101.75(b).
Section 1101.83 of the Manual specifically provides for restitution and
repayment as follows:
(a) If [DHS] determines that a provider has billed and
been paid for a service or item for which payment
should not have been made, it will review the provider’s
paid and unpaid invoices and compute the amount of
the overpayment or improper payment. [DHS] will use
statistical sampling methods and, where appropriate,
purchase invoices and other records for the purpose of
(2) Knowingly submit false information to obtain authorization to
furnish services or items under MA.
....
(5) Submit a claim for services or items which were not rendered
by the provider or were not rendered to a recipient.
....
(8) Submit a claim which misrepresents the description of the
services, supplies or equipment dispensed or provided, the date of
service, the identity of the recipient or of the attending,
prescribing, referring or actual provider.
....
(12) Enter into an agreement, combination or conspiracy to obtain
or aid another in obtaining payment from the Department for
which the provider or other person is not entitled, that is, eligible.
(13) Make a false statement in the application for enrollment or
reenrollment in the program.
(14) Commit a prohibited act specified in [Section] 1102.81(a) [of
the Manual] (relating to prohibited acts of a shared health facility
and providers practicing in the shared health facility).
55 Pa. Code § 1101.75(a).
40
calculating the amount of restitution due for a service,
item, product or drug substitution.
(b) [DHS] may seek reimbursement from the ordering or
prescribing provider for payments to another provider, if
[DHS] determines that the ordering or prescribing provider
has done either of the following:
(1) Prescribed excessive diagnostic services; or
(2) Ordered diagnostic services or treatment or both,
without documenting the medical necessity for the
service or treatment in the medical record of the MA
recipient.
(c) The amount of restitution demanded by [DHS] will
be the amount of the overpayment received by the
ordering or prescribing provider or the amount of
payments to other providers for excessive or
unnecessary services prescribed or ordered. If the
ordering or prescribing provider is convicted of an
offense under Article XIV of the [Code] (62 P.S. §§
1401-1411), the restitution penalties of that article
applies.
(d) The provider shall pay the amount of restitution
owed to [DHS] either directly or by offset of valid
invoices that have not yet been paid. The method of
repayment is determined by [DHS]. All [DHS] demands
for restitution will be approved by the Deputy Secretary
for [MA] before the provider is notified.
(e) If [DHS] determines that a provider has committed
any prohibited act or has failed to satisfy any
requirement under [Section] 1101.75(a) [of the Manual]
(relating to provider prohibited acts), it may institute a
civil action against the provider in addition to
terminating the provider’s enrollment. If [DHS]
institutes a civil action against the provider, [DHS] may
seek to recover twice the amount of excess benefits or
payments plus legal interest from the date the violations
occurred.
(f) The provider is prohibited from billing an eligible
recipient for any amount for which the provider is required
to make restitution to [DHS].
41
55 Pa. Code § 1101.83 (italic and bold emphasis added).32
Finally, Section 1187.1(c) of the Manual states: “The MA Program
provides payment for nursing facility services provided to eligible recipients by
enrolled nursing facilities. Payment for services is made subject to this chapter and
Chapter 1101 (relating to general provisions).” 55 Pa. Code § 1187.1(c) (emphasis
added).
The Commonwealth admits that “[DHS] has promulgated
comprehensive regulations to implement the [MA P]rogram [that] cover rate-setting .
. . and include mechanisms both for punishing non-compliance . . . and for recovering
overpayments to providers.” Commonwealth’s Br. at 40. Nevertheless, the
Commonwealth contends that it is entitled to pursue its equitable unjust enrichment
claim.
The instant matter is controlled by our Supreme Court’s decision in
Commonwealth v. Glen Alden Corp., 210 A.2d 256 (Pa. 1965).33 In Glen Alden, the
Commonwealth filed an action in the trial court’s equity jurisdiction seeking an order
requiring the defendants to remove burning coal piles, asserting that the coal piles
constituted a public nuisance. The trial court sustained the defendants’ preliminary
objections to the trial court’s equity jurisdiction.
32
The Commonwealth contends that there is no authority for a regulation to displace
common law remedies. However, Sections 1101.75 and 1101.83 of the Manual substantially track
Section 1407 of the Code, 62 P.S. § 1407, added by Section 3 of the Act of July 10, 1980, P.L. 493,
which provides a comprehensive, detailed statutory procedure addressing fraudulent MA claims,
providing criminal penalties therefor, and permitting DHS to pursue civil remedies. Further,
Section 1410 of the Code states “[DHS] shall have the power and its duty shall be to adopt rules
and regulations to carry out the provisions of this article.” 62 P.S. § 1410 (added by Section 3 of
the Act of July 10, 1980, P.L. 493) (emphasis added).
33
In Glen Alden, the Air Pollution Control Act, Act of January 8, 1960, P.L. 2119, 35 P.S.
§§ 4001-4015 was at issue. The Supreme Court’s decision was superseded by the 1968
amendments to the Act, see Act of June 12, 1968, P.L. 163, 35 P.S. § 4012.1, as recognized in
Borough of Brookhaven v. American Rendering, Inc., 256 A.2d 626 (Pa. 1969).
42
On appeal, the Pennsylvania Supreme Court explained: “[W]e have
frequently decided that equity has no jurisdiction to inquire into a controversy where
to do so would obviate a statutory procedure provided by the Legislature for its
resolution.” Id. at 258. Finding that the Air Pollution Control Act set forth a specific
procedure to address the very issue before the trial court in equity, the Court held that
“equity may not inquire into the dispute, notwithstanding the fact that the complaint
may state a cause of action in public nuisance, traditionally cognizable in equity.” Id.
The Court explained: “The Commonwealth, at the instance of the Secretary of Health,
complains that the burning refuse piles maintained by defendants release noxious
gases to the detriment of the health and well[-]being of the surrounding residents.
The Air Pollution Control Act is designed to regulate this very problem.” Id. The
Court further stated: “[W]e do not hesitate to conclude that the Legislature has
provided a statutory method for resolution of the alleged problem set forth in the
Commonwealth’s complaint, and therefore, it must be strictly pursued.” Id. at 259.
The Court concluded: “[W]e see no reason why [the Commonwealth] should be
permitted to short circuit the method provided by the Legislature for resolving the
present controversy.” Id. at 260.
In the case at bar, the Commonwealth contends that the Parent Entities
and GGNSC Equity Holdings LLC were unjustly enriched because the Facilities
submitted billings to the MA Program for care they either did not provide, or was
inadequately rendered. As in Glen Alden, a statutory remedy exists, and “we see no
reason why [the Commonwealth] should be permitted to short circuit the method
provided by the Legislature for resolving the present controversy.” Id. at 260. Both
the Code and the Manual set forth the manner in which MA billing disputes shall be
remedied, and charges DHS with the responsibility of resolving the same. Because
Section 1504 of the Statutory Construction Act of 1972 and the aforementioned case
43
law require those statutory remedies to be strictly pursued, we sustain Golden Gate’s
Preliminary Objection 3 and dismiss the Commonwealth’s unjust enrichment claim.34
V. Preliminary Objection 12
Golden Gate alleges in Preliminary Objection 12 that claims against the
Parent Entities must fail because the Commonwealth has not alleged facts sufficient
to pierce the corporate veil or impose vicarious liability.
Under Pennsylvania law, the existence and extent of shareholder liability
for corporate indebtedness is determined by the law of the state of incorporation.
Broderick v. Stephano, 171 A. 582 (Pa. 1934). The Parent Entities and the Facilities
were incorporated in Delaware. Therefore, in evaluating whether the Commonwealth
has alleged sufficient facts to pierce Golden Gate’s corporate veil, we must apply
Delaware law.
The Delaware Court of Chancery has explained:
In order to state a cognizable claim to pierce the corporate
veil of the [g]eneral [p]artner, plaintiffs must allege facts
that, if taken as true, demonstrate the [o]fficers’ and/or the
[p]arents’ complete domination and control of the
[g]eneral [p]artner. The degree of control required to
pierce the veil is exclusive domination and control . . . to
the point that [the [g]eneral [p]artner] no longer has legal
or independent significance of [its] own.
Piercing the corporate veil under the alter ego theory
requires that the corporate structure cause fraud or
similar injustice.[35] Effectively, the corporation must be a
sham and exist for no other purpose than as a vehicle for
fraud.
34
Having dismissed the Commonwealth’s unjust enrichment claim, we need not address
Golden Gate’s other related arguments.
35
The term “‘[s]imilar injustice’ includes the contravention of law or contract.” Nufarm v.
RAM Research (Del. Ch., C.A. No. 16179, filed Sept. 15, 1998), Ltr. Op. at __.
44
Wallace v. Wood, 752 A.2d 1175, 1183-84 (Del. Ch. 1999) (italic and bold emphasis
added; footnotes and quotation marks omitted); see also Outokumpu Eng’g Enters.,
Inc. v. Kvaerner Enviropower, Inc., 685 A.2d 724, 729 (Del. Super. 1996).
Accordingly, “[t]o state a ‘veil-piercing claim,’ the plaintiff must plead facts
supporting an inference that the corporation, through its alter-ego, has created a sham
entity designed to defraud investors and creditors.” Crosse v. BCBSD, Inc., 836 A.2d
492, 497 (Del. 2003). Notably, “the fraud or similar injustice that must be
demonstrated in order to pierce a corporate veil under Delaware law must, in
particular, ‘be found in the defendants’ use of the corporate form.” Foxmeyer Corp.
v. Gen. Elec. Corp., 290 B.R. 229, 236 (Bankr. D. Del. 2003) (italic and bold
emphasis added) (quoting Mobil Oil Corp. v. Linear Fims, Inc., 718 F. Supp. 260, 269
(D. Del 1989)).36
36
Under Pennsylvania law:
Piercing the corporate veil is an extraordinary remedy reserved for
cases involving exceptional circumstances. There is a strong
presumption against piercing the corporate veil, and the independence
of separate corporate entities is presumed.
The purpose of the doctrine of piercing the corporate veil is to assess
liability for the acts of a corporation to the equity holders in the
corporation by removing the statutory protection otherwise insulating
a shareholder from liability. Where a corporation operates as a mere
façade for the operations of a dominant shareholder, the dominating
shareholder may be held liable for the corporation’s inequitable
conduct perpetrated through the use of the corporate form’s
protections.
While there is no bright-line test for when to pierce the corporate veil,
courts established the following list of factors for consideration: ‘[1]
[u]ndercapitalization, [2] failure to adhere to the corporate formalities,
[3] substantial intermingling of corporate and personal affairs and [4]
use of the corporate form to perpetrate a fraud.’ Lumax Indus., Inc.
[v. Aultman], . . . 669 A.2d [893,] 895 [(Pa. 1995)] (citing Dep’t of
Envtl. Res. v. Reggs Run Coal Co., . . . 423 A.2d 765, 768-69 ([Pa.
Cmwlth.] 1980)).
45
The Commonwealth alleges numerous facts in the Amended Complaint
supporting its assertion that the Parent Entities controlled the Facilities, and that the
Parent Entities siphoned monies from the Facilities.37 The Commonwealth contends
that GGNSC Holdings LLC directly or indirectly owns each of the Parent Entities
and each of the Facilities, and that GGNSC Holdings LLC “exercises pervasive, day-
to-day control over the operations of the [Facilities] through the actions of . . . the
other [Parent Entities].” Amended Complaint at 150, ¶ 253. Further, the
Commonwealth in its Amended Complaint describes the corporate structure as
follows:
[T]he relationship between each of the [Facilities] and
Golden Gate National Senior Care LLC, GGNSC Clinical
Services LLC, and Golden Ventures is not a typical arm’s
length relationship, in which one business contracts with
another to provide services at its direction. On information
and belief, the [Facilities] do not provide direction to or
exercise any measure of control over Golden Gate National
Senior Care LLC, GGNSC Clinical Services LLC, or
Golden Ventures, nor do the [Facilities] direct the services
that these entities provide to them. Rather, these [Parent
Newcrete Prods. v. City of Wilkes-Barre, 37 A.3d 7, 12-13 (Pa. Cmwlth. 2012) (citations omitted).
Importantly, “[t]he corporate form will be disregarded only when the entity is used to defeat
public convenience, justify wrong, protect fraud, or defend crime.” Mosaica Educ., Inc. v. Pa.
Prevailing Wage Appeals Bd., 925 A.2d 176, 184 (Pa. Cmwlth. 2007). Further:
Any inquiry involving corporate veil-piercing must ‘start from the
general rule that the corporate entity should be recognized and upheld,
unless specific, unusual circumstances call for an exception.’ Wedner
v. Unemployment Comp[.] Bd. of Review, . . . , 296 A.2d 792, 794
([Pa.] 1972). One ‘exception’ is the alter ego theory which
requires proof (1) that the party exercised domination and control
over [the] corporation; and (2) that injustice will result if [the]
corporate fiction is maintained despite unity of interests between
[the] corporation and its principal.
Allegheny Energy Supply Co., LLC v. Wolf Run Mining Co., 53 A.3d 53, 58 n.7 (Pa. Super. 2012)
(emphasis added).
37
Importantly, “[t]he Commonwealth has not alleged (and is not suggesting) that the
[Facilities] are deeply in debt or insolvent[.]” Commonwealth’s Br. at 54.
46
Entities] exercise pervasive day-to-day control over the
[Facilities] - at the direction of the ultimate parent company,
[GGNSC Holdings LLC]. The [Facilities] are then, in turn,
required to pay each of these [Parent Entities] for these
services.
Amended Complaint at 152, ¶ 257. The Commonwealth further avers:
The [Parent Entities] exercise control over the [Facilities]
by, for example:
(a) Restricting the ability of the [Facilities’] managers to
increase staffing levels;
(b) Supervising - and in some cases, overriding - the
personnel decisions of the [Facilities];
(c) Visiting facilities, observing care, and enforcing
corporate-level policies;
(d) Preparing and submitting requests for reimbursement
and required cost reports under the [MA] Program in
Pennsylvania;
(e) Creating and implementing company-wide policies and
incentive programs;
(f) Requiring centralized reporting of key data points - such
as daily reporting of census information - from the
[Facilities] to the [Parent Entities];
(g) Maintaining a company-wide Customer Compliance
Hotline for residents to call if they have raised a concern
with [Facilities] staff but still feel that their concern has not
been addressed to their satisfaction.
Amended Complaint at 152-53, ¶ 258.
Clearly absent from the Amended Complaint, however, are allegations
that Golden Gate “use[d] . . . the corporate form” to engage in “fraud or similar
injustice[.]” Foxmeyer, 290 B.R. at 236 (emphasis added). Thus, the
Commonwealth did not allege that the Parent Entities used the particular nature of
Golden Gate’s corporate structure to engage in “fraud or similar injustice.” Id. Nor
47
did the Commonwealth allege in its Amended Complaint facts sufficient to support a
conclusion that “[Golden Gate] [is] a sham and exist[s] for no other purpose than as
a vehicle for fraud.” Id. (emphasis added).38 Accordingly, Golden Gate’s
Preliminary Objection 12 is sustained.39
Conclusion
Based on the foregoing, Preliminary Objections 1, 2, and 7 are
overruled. Preliminary Objections 3, 4, 5, 6, 8, 10, 11 and 12 are sustained.40
Given our disposition of the Preliminary Objections, for all of the above
reasons, the Amended Complaint is dismissed.
___________________________
ANNE E. COVEY, Judge
38
In the Amended Complaint, the Commonwealth alleges that the various Facilities “own[]
and operate[] skilled nursing facilit[ies.]” Amended Complaint at 11-20, ¶¶ 27-76. As such, these
allegations conflict with the premise that the Facilities are “sham[s] and exist for no other purpose
than as a vehicle for fraud.” Wallace, 752 A.2d at 1184 (emphasis added).
39
We also reject the Commonwealth’s assertion that the Parent Entities are vicariously
liable for the acts of the Facilities, given that the argument seeks to disregard the corporate form
without meeting the requirements for piercing the corporate veil.
40
For the reasons stated herein, Preliminary Objection 9 is moot.
48
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Commonwealth of Pennsylvania :
Acting by Attorney General, :
Kathleen Kane, :
Plaintiff :
:
v. :
:
Golden Gate National Senior Care LLC; :
GGNSC Holdings LLC; GGNSC :
Administrative Services LLC; GGNSC :
Clinical Services LLC; GGNSC Equity :
Holdings LLC; GGNSC Harrisburg LP; :
GGNSC Harrisburg GP, LLC; GGNSC :
Camp Hill III LP; GGNSC Camp Hill :
III GP, LLC; GGNSC Clarion LP; :
GGNSC Clarion GP, LLC; GGNSC :
Gettysburg LP; GGNSC Gettysburg GP, :
LLC; GGNSC Altoona Hillview LP; :
GGNSC Altoona Hillview GP, LLC; :
GGNSC Lansdale LP; GGNSC :
Lansdale GP, LLC; GGNSC :
Monroeville LP; GGNSC Monroeville :
GP, LLC; GGNSC Mt. Lebanon LP; :
GGNSC Mt. Lebanon GP, LLC; :
GGNSC Phoenixville II LP; GGNSC :
Phoenixville II GP, LLC; GGNSC :
Philadelphia LP; GGNSC Philadelphia :
GP, LLC; GGNSC Wilkes-Barre II LP; :
GGNSC Wilkes-Barre II GP, LLC; :
GGNSC Tunkhannock LP; GGNSC :
Tunkhannock GP, LLC; GGNSC :
Erie Western Reserve LP; GGNSC :
Erie Western Reserve GP, LLC; :
GGNSC Pottsville LP; GGNSC :
Pottsville GP, LLC, : No. 336 M.D. 2015
Defendants :
ORDER
AND NOW, this 22nd day of March, 2017, we dispose of Defendants
Golden Gate National Senior Care, LLC, et al.’s Preliminary Objections as follows:
Preliminary Objection 1: Overruled.
Preliminary Objection 2: Overruled.
Preliminary Objection 3: Sustained.
Preliminary Objection 4: Sustained.
Preliminary Objection 5: Sustained.
Preliminary Objection 6: Sustained.
Preliminary Objection 7: Overruled.
Preliminary Objection 8: Sustained.
Preliminary Objection 9: Moot.
Preliminary Objection 10: Sustained.
Preliminary Objection 11: Sustained.
Preliminary Objection 12: Sustained.
Based on the disposition of the Preliminary Objections, the Amended
Complaint is hereby dismissed.
___________________________
ANNE E. COVEY, Judge
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Commonwealth of Pennsylvania :
Acting by Attorney General, :
Kathleen Kane, :
Plaintiff :
:
v. : No. 336 M.D. 2015
: Argued: June 8, 2016
Golden Gate National Senior Care :
LLC; GGNSC Holdings LLC; :
GGNSC Administrative Services :
LLC; GGNSC Clinical Services :
LLC; GGNSC Equity Holdings LLC; :
GGNSC Harrisburg LP; GGNSC :
Harrisburg GP, LLC; GGNSC Camp :
Hill III LP; GGNSC Camp Hill III :
GP, LLC; GGNSC Clarion LP; :
GGNSC Clarion GP, LLC; GGNSC :
Gettysburg LP; GGNSC Gettysburg :
GP, LLC; GGNSC Altoona Hillview :
LP; GGNSC Altoona Hillview GP, :
LLC; GGNSC Lansdale LP; GGNSC :
Lansdale GP, LLC; GGNSC :
Monroeville LP; GGNSC :
Monroeville GP, LLC; GGNSC Mt. :
Lebanon LP; GGNSC Mt. Lebanon :
GP, LLC; GGNSC Phoenixville II :
LP; GGNSC Phoenixville II GP, :
LLC; GGNSC Philadelphia LP; :
GGNSC Philadelphia GP, LLC; :
GGNSC Wilkes-Barre II LP; :
GGNSC Wilkes-Barre II GP, LLC; :
GGNSC Tunkhannock LP; GGNSC :
Tunkhannock GP, LLC; GGNSC :
Erie Western Reserve LP; GGNSC :
Erie Western Reserve GP, LLC; :
GGNSC Pottsville LP; GGNSC :
Pottsville GP, LLC, :
Defendants :
BEFORE: HONORABLE MARY HANNAH LEAVITT, President Judge
HONORABLE RENÉE COHN JUBELIRER, Judge
HONORABLE ROBERT SIMPSON, Judge
HONORABLE P. KEVIN BROBSON, Judge
HONORABLE PATRICIA A. McCULLOUGH, Judge
HONORABLE ANNE E. COVEY, Judge
HONORABLE MICHAEL H. WOJCIK, Judge
CONCURRING AND DISSENTING OPINION
BY JUDGE COHN JUBELIRER FILED: March 22, 2017
I, respectfully, cannot completely agree with the thoughtful Majority opinion
and therefore write separately.
I concur with the Majority’s decision insofar as it holds that the
Commonwealth has not stated claims under Sections 2(4)(v), 2(4)(ix), and 2(4)(x)
of the Unfair Trade Practices and Consumer Protection Law (UTPCPL),1 because
the representations in the advertising materials are puffery. I also agree that the
care plans, resident assessments, and bills are not advertising and are, therefore,
not actionable under the above provisions. However, Section 2(4)(xxi) of the
UTPCPL differs from the other provisions relied upon by the Commonwealth as
Section 2(4)(xxi) establishes a cause of action to remedy “any . . . fraudulent or
deceptive conduct which creates a likelihood of confusion or of
misunderstanding.” 73 P.S. § 201-2(4)(xxi). There is no requirement under this
“catch all” provision that the representation be made in an advertisement.
By addressing Section 2(4)(xxi) separately from Sections 2(4)(v), 2(4)(ix),
and 2(4)(x), the Majority recognizes this distinction. However, the Majority, sua
sponte, raises and then sustains a preliminary objection on the basis that the
1
Act of December 17, 1968, P.L. 1224, as amended, 73 P.S. §§ 201-2(4)(v), (ix), (x).
Commonwealth did not attach a copy of the writings that underlie the cause of
action. Commonwealth v. Golden Gate National Senior Care LLC, __ A.3d __, __
(Pa. Cmwlth., No. 336 M.D. 2015, filed March 22, 2017), slip op. at 23. Golden
Gate National Senior Care LLC (Golden Gate) did not raise this as a basis for its
preliminary objections, see Rule 1032(a) of the Pennsylvania Rules of Civil
Procedure, Pa. R.C.P. No. 1032(a) (a “party waives all . . . objections which are not
presented . . . by preliminary objection”), and it is not jurisdictional. Because the
Court addressed an objection not raised by Golden Gate, the Commonwealth could
not respond by either amending its pleading or explaining why the writings could
not be attached. See Pa. R.C.P. No. 1028(c)(1) (“A party may file an amended
pleading as of course within twenty days after service of a copy of preliminary
objections”); Pa. R.C.P. No. 1019(i) (“[w]hen any claim or defense is based upon a
writing, the pleader shall attach a copy of the writing, or the material part thereof,
but if the writing or copy is not accessible to the pleader, it is sufficient so to state,
together with the reason, and to set forth the substance in writing” (emphasis
added)). I note that the writings at issue could contain confidential medical
information. See 42 U.S.C. § 1396r(c)(1)(A)(iii) (Providing residents of skilled
nursing facilities who receive medical assistance through Medicaid with “[t]he
right to privacy with regard to accommodations, medical treatment, written and
telephonic communications, visits, and meetings of family and of resident
groups”). I would therefore not dismiss this claim, pursuant to Section 2(4)(xxi) of
the UTPCPL, insofar as it alleges deceptive conduct involving bills and care plans
which could directly impact purchasing decisions.2
2
I recognize that care plans are created after a resident arrives at a nursing care facility.
However, the relationship between residents, and their representatives, and the facilities are
(Footnote continued on next page…)
RCJ-2
I also question the Majority’s decision to sustain Golden Gate’s Preliminary
Objection X, alleging that the Commonwealth may not recover restitution or
restoration for itself under Section 4.1 of the UTPCPL, 73 P.S. § 201-4.1. Because
the Majority has already dismissed the underlying substantive claims, there is no
need to decide whether the Commonwealth is a “person in interest” entitled to
restitution or restoration under Section 4.1 of the UTPCPL, and therefore the
question is moot and the discussion merely dicta. I do not believe the Court should
address a complex issue of first impression in dicta.3 This is particularly true
where, as here, the resolution of the issue is subject to differences of opinion. I am
not convinced that the Supreme Court’s determination in Meyer v. Community
College of Beaver County, 93 A.3d 806 (Pa. 2014) (Meyer II), that the UTPCPL
_____________________________
(continued…)
ongoing, and the services are arguably continually purchased. In addition, care plans are
amended as needs change. Therefore, I cannot say at this early stage, that the allegations here
could not affect whether residents and/or their representatives can make informed decisions
regarding whether to continue to purchase services from a particular facility. See, e.g., the
federal Resident’s Bill of Rights, 42 U.S.C. §§ 1395i-3(c), 1396r(c), and associated regulations,
which require that residents who receive assistance through Medicare or Medicaid be given care
plans and be provided with the opportunity to be involved in the crafting of and amending of
such plans; 42 U.S.C. § 1395i-3(c)(1)(A)(i) (providing for “[t]he right [of Medicare recipients] to
. . . be fully informed in advance about care and treatment, to be fully informed in advance of
any changes in care or treatment that may affect the resident’s well-being, and (except with
respect to a resident adjudged incompetent) to participate in planning care and treatment or
changes in care and treatment”); 42 U.S.C. § 1396r(c)(1)(A)(i) (providing the same for those
residents that receive assistance through medical assistance programs administered by states
(Medicaid)); see also 42 C.F.R. § 483.10 (detailing the rights of residents in long term care
facilities); 42 U.S.C. §§ 1395i-3(c)(1)(B)(iii), 1396r(c)(1)(B)(iv) (providing for the right to be
informed “periodically during the resident’s stay, of services available in the facility and of
related charges for such services”).
3
The same principle applies to the Majority’s decision to address Golden Gate’s
Preliminary Objection XII. There is no need for the Majority to hold that the Commonwealth
cannot pierce the corporate veil when the Majority already dismissed all the substantive claims
asserted.
RCJ-3
does not include a political subdivision or agency in its definition of “a ‘person’
subject to liability” would necessarily mean that the Attorney General could not be
a “person in interest” here, in bringing a cause of action under Section 4.1. I agree
with the Majority that “[w]hen the meaning of a word or phrase is clear when used
in one section, it will be construed to mean the same thing in another section of the
same statute.” Housing Auth. of Cnty. of Chester v Pa. State Civil Serv. Comm’n,
730 A.2d 935, 945-46 (Pa. 1999) (emphasis added). However, the Supreme Court
has found that the UTPCPL is not clear, but is ambiguous as to the meaning of the
word “person.” Meyer II, 93 A.3d at 814. In Meyer II, the Supreme Court applied
the principles of statutory construction to that ambiguous term and reasoned that
the General Assembly could not have intended to include political subdivisions as
a person subject to liability because imposing liability would violate the long-
standing principle that government entities are not subject to punitive damages,
and because the purpose of the statute is to protect consumers from merchants, not
from the government. Id. at 814-15. That reasoning is not applicable here because
no liability will be imposed upon a government entity; instead, the Commonwealth
is seeking restitution and restoration from Golden Gate, a merchant, for money the
Commonwealth paid as a result of the alleged deception. Given that the Supreme
Court has found the term “person” ambiguous as used in the UTPCPL, an
interpretation that the Commonwealth can be a “person of interest” in the
restoration provision is permissible and consistent with our mandate to construe the
terms of the UTPCPL “liberally to effect its object of preventing unfair or
deceptive practices.” Com., by Creamer v. Monumental Props., Inc., 329 A.2d
812, 817 (Pa. 1974).4
4
I believe that this relief could nonetheless be available under Section 4 of the UTPCPL,
(Footnote continued on next page…)
RCJ-4
For the foregoing reasons, I respectfully dissent to the Majority’s decision to
dismiss the Commonwealth’s claim under Section 2(4)(xxi) of the UTPCPL on the
basis of an objection that was not raised by Golden Gate but raised sua sponte by
this Court. I also disagree that the Court should address a complex and significant
issue of first impression in dicta and question the Majority’s resolution of that
issue. In all other areas, I concur.
___________________________________
RENÉE COHN JUBELIRER, Judge
_____________________________
(continued…)
73 P.S. § 201-4, if the Commonwealth can prove a claim under Section 2(4)(xxi). Section 4
provides the Attorney General with the authority to seek injunctive relief if it has reason to
believe that any person has violated the substantive provisions of the UTPCPL. In interpreting a
similar provision of the Federal Trade Commission Act (FTC Act), 15 U.S.C. §§ 41-58, as
amended, federal courts have uniformly held that because the FTC Act provides the government
with the authority to seek injunctive relief, the panoply of equitable power are also available to
the courts to deprive a defendant of unjust gains. I note that we may look to federal decisions
under the FTC Act for guidance in interpreting similar provisions in the UTPCPL. Com., by
Creamer v. Monumental Props., Inc., 329 A.2d 812, 818 (Pa. 1974). The Attorney General
under the UTPCPL sits in the same position as the FTC sits under the FTC Act. See e.g., Fed.
Trade Comm’n v. Commerce Planet, Inc., 815 F.3d 593, 599 (9th Cir. 2016), cert. denied sub
nom. Gugliuzza v. Fed. Trade Comm’n, 137 S. Ct. 624 (2017), and cert. denied sub nom.
Gugliuzza v. Fed. Trade Comm’n, 137 S. Ct. 624 (2017) (concluding “[t]he equitable jurisdiction
to enjoin future violations of § 5(a) [of the FTC Act, 15 U.S.C. § 53(b)] carries with it the
inherent power to deprive defendants of their unjust gains from past violations”); Fed. Trade
Comm’n v. Mylan Labs., Inc., 62 F. Supp. 2d 25, 37 (D.D.C.), on reconsideration in part sub
nom. Fed. Trade Comm’n v. Mylan Labs., Inc., 99 F. Supp. 2d 1 (D.D.C. 1999) (holding that the
FTC may seek disgorgement or any other form of equitable ancillary relief once an injunction is
issued under Section 13(b) of the FTC Act); Fed. Trade Comm’n v. Sec. Rare Coin & Bullion
Corp., 931 F.2d 1312, 1316 (8th Cir. 1991) (“The [trial court] has broad remedial discretion to
grant an appropriate form of equitable relief under section 13(b) of the [FTC] Act”).
RCJ-5