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State Farm Mutual Automobile Ins. v. All-Care Chiropractic

United States District Court, E.D. Pennsylvania
Jun 28, 2004
Civil Action No. 04-175 (E.D. Pa. Jun. 28, 2004)

Opinion

Civil Action No. 04-175.

June 28, 2004


MEMORANDUM


State Farm Mutual and Automobile Insurance Company and State Farm Fire and Casualty Company (together, "State Farm") filed a nine-count complaint essentially alleging that All-Care Chiropractic, P.C. ("All-Care") and its owners committed insurance fraud. We granted in part the defendants' motions to dismiss the complaint, and State Farm now asks that we reconsider three portions of our dismissal order. Factual Background

The Court may grant a motion to dismiss under Rule 12(b)(6) "only if, accepting all well pleaded allegations in the complaint as true, and viewing them in the light most favorable to plaintiff, plaintiff is not entitled to relief." In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1420 (3d Cir. 1997). "The issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims." Scheuer v. Rhodes, 416 U.S. 232, 236 (1974). In other words, we will not grant such a motion "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief."Conley v. Gibson, 355 U.S. 41, 45-46 (1957); see also Semerenko v. Cendant Corp., 223 F.3d 165, 173 (3d Cir. 2000) (permitting dismissal "only if it appears that the [plaintiffs] could prove no set of facts that would entitle [them] to relief"). "The complaint will be deemed to have alleged sufficient facts if it adequately put the defendants on notice of the essential elements of the plaintiffs' cause of action." Nami v. Fauver, 82 F.3d 63, 65 (3d Cir. 1996).

We will grant a motion for reconsideration only if "the party seeking reconsideration shows at least one of the following grounds: (1) an intervening change in the controlling law; (2) the availability of new evidence that was not available when the court [rendered its decision]; or (3) the need to correct a clear error of law or fact or to prevent manifest injustice." Max's Seafood Cafe v. Quinteros, 176 F.3d 669, 677 (3d Cir. 1999).

Eileen Nelson Means, D.C., and Richard Walinsky, D.C., provided chiropractic services through All-Care, a company that they owned and operated as a mother-son team. Compl. ¶¶ 3-4, 7. Many of All-Care's patients claimed to have been injured in car accidents or falls, so All-Care often submitted bills to the insurance companies that wrote the policies covering the automobiles or property that caused its patients' injuries. Id. ¶ 7. As a large underwriter of automobile and property insurance policies, State Farm paid nearly $350,000.00 to All-Care between 1997 and 2002. Id. ¶¶ 1, 8, Ex. A.

State Farm claims that the defendants received these substantial payments only because they submitted false and fraudulent bills that did not accurately reflect the treatment that they provided. Id. ¶ 8. For example, the bills allegedly exaggerated the nature and extent of the treatment that All-Care provided and included claims for treatment that was never performed. Id. ¶ 10. According to State Farm, the bills also failed to disclose that unlicensed individuals performed adjunctive procedures on patients and misrepresented the location at which All-Care provided treatment to disguise the fact that supportive personnel performed treatment outside of its offices. Id. ¶¶ 11-12.

Pennsylvania law defines "adjunctive procedures" as "[p]hysical measures such as mechanical stimulation, heat, cold, light, air, water, electricity, sound, massage and mobilization." Pa. Stat. Ann. tit. 63, § 625.102 (West 2004).

From this scheme, State Farm pled nine separate causes of action: (1) declaratory judgment; (2) unjust enrichment; (3) restitution; (4) accounting; (5) constructive trust; (6) common law fraud; (7) negligent misrepresentation; (8) intentional misrepresentation; and (9) statutory insurance fraud. The defendants moved to dismiss the complaint in its entirety, and we granted their motions in substantial part. See Order of May 6, 2004 (docket entry # 9) (our "Order"). State Farm now requests that we reconsider the portion of our Order dismissing its first and third requests for declaratory judgment. See Pls.' Mem. Supp. Mot. to Reconsider at 7-9. Because of some regrettable imprecision in our Order, we shall vacate the portions discussing State Farm's declaratory judgment claim and take this opportunity to revisit the issues presented in the defendants' motions to dismiss.

State Farm also asks us to reconsider our dismissal of the unjust enrichment claim and our partial dismissal of the negligent misrepresentation claim. See Pls.' Mem. Supp. Mot. to Reconsider at 9-15. We dismissed the unjust enrichment claim because, plaintiffs' characterization notwithstanding, its allegations sounded in fraud, not in quasi-contract. See Order ¶ (c). Still, State Farm cites Robbins v. Kristofic, 643 A.2d 1079 (Pa.Super. 1994), for the proposition that an action for unjust enrichment lies even when the law would not imply the existence of a quasi-contract. Although stray dicta in Robbins mentions unjust enrichment, see id. at 1083, that case does not discuss the circumstances in which a plaintiff may appropriately include in its complaint a separate claim for unjust enrichment. Thus, plaintiffs have offered no reason to disturb our original finding that Count II, though styled as a claim for unjust enrichment, actually states a claim for fraud.
As for the negligent misrepresentation claim, we dismissed the portions of that claim related to statements made before January 16, 2002 because State Farm had not shown that the doctrine of fraudulent concealment would apply to this case. See Order at 6 n. 4. State Farm correctly notes, however, that our Order did not consider the applicability of the discovery rule. Cf. Bohus v. Beloff, 950 F.2d 919, 924-26 (3d Cir. 1991) (describing the differences between the discovery rule and the doctrine of fraudulent concealment). Under Pennsylvania law, "the discovery rule applies . . . when the underlying cause of action sounds in fraud," so "the statute of limitations is tolled until the plaintiff learns or reasonably should have learned through the exercise of due diligence of the existence of the claim." Beauty Time v. VU Skin Sys., 118 F.3d 140, 148 (3d Cir. 1997). While "the question whether a plaintiff has exercised reasonable diligence is usually a jury question[,] where the facts are so clear that reasonable minds cannot differ, the commencement period may be determined as a matter of law." Debiec v. Cabot Corp., 352 F.3d 117, 129 (3d Cir. 2003) (quotations and citations omitted). Here, the facts are not yet sufficiently clear for us to hold that plaintiffs failed to exercise reasonable diligence, so we shall vacate the portion of our Order partially dismissing the negligent misrepresentation claim. State Farm may pursue its entire negligent misrepresentation claim — now Count I of the amended complaint — unless the defendants establish a statute-of-limitations defense.

Legal Analysis

A. The Merits

State Farm's complaint requests that we make three specific declarations about Pennsylvania's Chiropractic Practices Act, Pa. Stat. Ann. tit. 63, §§ 625.101 to 625.1106 (West 2004) (the "Act"), but all of their requests revolve around the issue of whether licensed chiropractors may lawfully delegate the performance of adjunctive procedures to unlicensed supportive personnel. Resolution of this issue requires a closer look at the Act.

The Act defines "chiropractic" as "[a] branch of the healing arts dealing with the relationship between the articulations of the vertebral column . . . and the neuro-musculo-skeletal system." § 625.102. Chiropractic often involves "the adjustment or manipulation of such misaligned or displaced vertebrae and other articulations." Id. In addition to run-of-the-mill "adjustment or manipulation" of vertebrae, "chiropractic" also includes "the use of adjunctive procedures in treating misaligned or dislocated vertebrae or articulations." Id.; see also supra note 3. To ensure that only qualified individuals perform chiropractic, the Act establishes a twotiered registration system that requires all chiropractors to be "licensed," see § 625.521, and that mandates an additional "certification" for those licensed chiropractors who perform adjunctive procedures,see §§ 625.102, 625.304.

Notwithstanding these elaborate definitions and detailed registration procedures, the Pennsylvania General Assembly amended the Act in 1996 to emphasize that "[n]othing in th[e A]ct shall prohibit a licensed chiropractor from utilizing the assistance of unlicensed supportive personnel performing under the direct on-premises supervision of a licensed chiropractor, provided that a chiropractor may not delegate any activity or duty to such unlicensed individuals which requires formal education or training in the practice of chiropractic or the knowledge and skill of a licensed chiropractor." § 625.601 ("Section 601"). Because the Pennsylvania Supreme Court has never decided whether this language permits or prohibits unlicensed supportive personnel from performing adjunctive procedures, "we must predict how the state court would resolve these issues should it be called upon to do so." Wiley v. State Farm Fire Casualty Co., 995 F.2d 457, 459 (3d Cir. 1993).

State Farm suggests that Kleinberg v. SEPTA, 765 A.2d 405 (Pa.Commw. 2000), aff'd 810 A.2d 635 (Pa. 2002) (per curiam), should inform our resolution of this case, butKleinberg focused on language in Pennsylvania's Physical Therapy Practice Act, Pa. Stat. Ann. tit. 63, §§ 1301-1313 (West 2004), and thus does not control this case.

The Pennsylvania Supreme Court has explained that "the polestar of statutory construction is to determine the intent of the General Assembly," In re Canvass of Absentee Ballots of Nov. 4, 2003 Gen. Election, 843 A.2d 1223, 1230 (Pa. 2004) (citing 1 Pa. Cons. Stat. § 1921(a)), and "[g]enerally speaking, the best indication of legislative intent is the plain language of a statute," Commonwealth v. Gilmour Mfg. Co., 822 A.2d 676, 679 (Pa. 2003). In support of its argument that chiropractors may not delegate adjunctive procedures to unlicensed supportive personnel, State Farm relies on language in the Act requiring those who perform adjunctive procedures to "be certified in accordance with this act." See § 625.102. This argument, however, fails to recognize that Section 601 — which the General Assembly passed to amend, inter alia, § 625.102 — explicitly emphasizes that "[n]othing in this act shall prohibit a licensed chiropractor" from delegating certain functions. In short, the question presented by State Farm's request for declaratory judgment is not whether only certified chiropractors may perform adjunctive procedures, but whether adjunctive procedures are among the functions that Section 601 permits certified chiropractors to delegate to "unlicensed supportive personnel." The plain language of the Act cannot resolve this question.

When a statute's text does not reveal legislative intent, "courts should look beyond the language and consider a variety of factors, including: the occasion and necessity for the statute; the circumstances under which the legislature enacted it; the mischief to be remedied; the object to be obtained; the former law, if any, including other statutes on the same or similar subjects; the consequence of a particular interpretation; the contemporaneous legislative history; and, when available, legislative and administrative interpretations of the statute."LTV Steel Co. v. Workers' Compensation Appeal Bd. (Mozena), 754 A.2d 666, 674 (Pa. 2000) (citing 1 Pa. Cons. Stat. § 1921(c)).

The legislative history of Section 601 begins with its introduction as SB 1585 on June 5, 1996. Combined History of Senate and House Bills, Final Issue, Sessions of 1995 and 1996, at A-188; see also SB 1585 (printer no. 2078), 180th Sess. (1996). After the Senate Consumer Protection and Professional Licensure Committee made a few stylistic amendments, see SB 1585 (printer no. 2189), 180th Sess. (1996), the Senate unanimously passed the bill. II Senate Legislative Journal, 180th Sess., at 2314 (June 27, 1996).

In the House, the Professional Licensure Committee added language that explicitly permitted a certified chiropractor to "delegate to a chiropractic assistant those activities necessary to assist a chiropractor in the use of adjunctive procedures," provided that other conditions were also met. See SB 1585 (printer no. 2419), 180th Sess. (1996). Within days after the House Professional Licensure Committee added this language, however, the House Appropriations Committee replaced the entire text of the bill with the more nebulous language that now appears in Section 601. See SB 1585 (printer no. 2451), 180th Sess. (1996). Immediately before the House considered the final version of the bill, Representative Civera attempted to explain its genesis:

What we got from the committee was this, that if we did not respond to what SB 1585 and some of the things that the House corrected in that, that those people out there — and rightfully so — if a complaint came in from the general public, that those chiropractors would be cited because they are in violation of the law, and in fact they are.
So what we did here was the procedures, injective procedures, that they are what the chiropractor's assistant is prohibited from doing. They only do assistance, and what I mean by that is that if they turned on a heat pad or they turned it off under the direction of the chiropractor, that basically is what is in SB 1585.

IV House Legislative Journal, 180th Sess., at 2478 (Nov. 25, 1996). We take this statement to mean that at least some members of the legislature believed that, if SB 1585 did not pass, then a chiropractor who directed her assistant to turn a heating pad on or off would have violated the Act. They hoped that SB 1585 would make clear that chiropractors could delegate "injective" — that is, "adjunctive" — procedures to their assistants. The House responded to Representative Civera's comments by passing the bill by a vote of 195-6. Id.

When SB 1585 reached the Senate floor one day later, Senator Afflerbach, one of its original sponsors, explained its purpose:

There had been some confusion about this bill and the substantial amendment that was made by the House of Representatives. I can assure the Members of the Chamber that this bill has now been agreed to by all of the professional associations that are directly affected by it. In addition to that, it has been agreed to by the Governor and the Department of State. Essentially, the bill remedies a legal advisory opinion that was rendered earlier this year in response to an inquiry to the State Board of Licensure and the Bureau of Licensure.
Essentially what the amendment says is that doctors of chiropractic do in fact have authority to utilize assistance and supportive personnel so long as those individuals are not delegated to duties that require the education, training, or skill and knowledge of a doctor of chiropractic. Now, that essentially means that these individuals will be able to do those kinds of things which do not permit discretion or exercise of independent judgment with respect to the application or efficacy of chiropractic treatment, and the doctor of chiropractic indeed remains responsible through direct, on-premise supervision in assuring that the supportive personnel to whom he has delegated duties do not modify or otherwise deviate in the performance of those duties from the explicit instructions of the doctor.
As I indicated, this language now remedies the legal advisory response that was rendered earlier this year and has been agreed to by all parties who have been involved in the formation of the language.

III Senate Legislative Journal, 180th Sess., at 2773 (Nov. 26, 1996). These comments suggest that the affected "professional associations" approved the language in the final version of SB 1585, and they may even have helped draft portions of it. At the risk of understatement, it would surprise us to learn that an association of chiropractors would endorse a bill that was designed to prohibit its members from delegating adjunctive procedures to unlicensed supportive personnel.

Another interesting aspect of Senator Afflerbach's floor statement was its reference to a state agency's 1996 legal advisory opinion. More specifically, the legislature hoped to "remedy" what it perceived as the agency's mistaken interpretation of the Act. Although the official legislative history of SB 1585 does not contain the text of the agency opinion, we have obtained (and attached) a copy of a May 22, 1996 letter from Pennsylvania's Bureau of Professional and Occupational Affairs. The letter explains that "the Chiropractic Practice Act does not authorize chiropractors to delegate functions to or to supervise chiropractic assistants or other unlicensed persons[. A]ll chiropractic procedures and adjunctive procedures must be personally provided by the licensed/certified chiropractor." Less than two weeks after this letter was sent, several senators introduced SB 1585 to "remedy" the errors that they saw in the Bureau's opinion.

We are grateful to then-Senator Afflerbach (who is now the Mayor of Allentown) for providing us with a copy of the May 22, 1996 letter.

At any rate, the Senate unanimously passed SB 1585 moments after Senator Afflerbach's statement. The bill became Section 601 when the Governor signed it into law on December 19, 1996. Combined History of Senate and House Bills, Final Issue, Sessions of 1995 and 1996, at A-188.

As Section 601's legislative history makes clear, the General Assembly intended to authorize chiropractors to delegate adjunctive procedures to unlicensed supportive personnel. There is nothing in that legislative history to suggest another conclusion, and the contemporaneous statements of legislators only support it. Senator Afflerbach's floor statement, which incorporates the May 22, 1996 letter by reference, plainly reveals that the General Assembly intended for chiropractors to be able to delegate adjunctive procedures to unlicensed supportive personnel, and the fairest reading of Representative Civera's comments also supports this conclusion.

It has not escaped our attention that the House Appropriations Committee deleted an explicit reference to "adjunctive procedures" from the version of SB 1585 that it considered, but that deletion appears to have been part of a larger stylistic revision designed to replace ten paragraphs with a single sentence without changing the bill's substance.Compare SB 1585 (printer no. 2419) with SB 1585 (printer no. 2451).

Thus, we predict that the Pennsylvania Supreme Court would interpret Section 601 to permit licensed chiropractors to delegate adjunctive procedures to unlicensed supportive personnel performing under their direct on-premises supervision. Of course, the General Assembly also clearly intended to prohibit (or retain the prohibition on) chiropractors delegating any duties — including adjunctive procedures — that require "formal education or training in the practice of chiropractic or the knowledge and skill of a licensed chiropractor." See § 625.601. Thus, chiropractors may not delegate any such duties, even if they fall within the statutory definition of "adjunctive procedures."

With this prediction in mind, we turn now to the portions of the claim for declaratory relief that our Order dismissed. First, State Farm asked that we "[d]eclare that the Chiropractic Practice Act prohibits a licensed chiropractor from delegation of adjunctive therapy to someone who has not been certified pursuant to 63 P.S. § 625.304." See Compl. at 6. Because this request is incompatible with our interpretation of Section 601, we properly dismissed the first requested declaration.

Plaintiffs' third request asks us to "[d]eclare that State Farm is not obligated to pay Defendants' bills for adjunctive procedures performed by individuals who are not certified pursuant to 63 P.S. § 625.304." See Compl. at 6. At this stage of the litigation, we cannot determine whether the specific adjunctive procedures that defendants' unlicensed employees performed require "formal education or training in the practice of chiropractic or the knowledge and skill of a licensed chiropractor," § 625.601, so it was premature to dismiss State Farm's third requested declaration. Though we shall amend the portions of our Order discussing that part of the declaratory judgment claim, we need not afford State Farm an opportunity to file a second amended complaint because its first amended complaint already includes requests for "such other relief [as] this Court deems proper," see, e.g., Am. Compl. at 8, and we shall treat those requests as if they explicitly included the third requested declaration in State Farm's original complaint.

If we permitted State Farm to file a second amended complaint, the defendants' motions to dismiss the first amended complaint, which are currently pending, would become moot. After State Farm filed its new pleading, the defendants would then have to compose new briefs, and State Farm would have to develop its responses. Our treatment of the first amended complaint as already including a request for declaratory judgment avoids this unnecessary expense and delay.

B. Immediate Appeal

State Farm has suggested that we should either enter final judgment on the declaratory judgment claim pursuant to Federal Rule of Civil Procedure 54(b) or certify the Order for interlocutory appeal pursuant to 28 U.S.C. § 1292(b) (2004).See Pls.' Mem. Supp. Mot. to Reconsider at 15-23. Rule 54(b) would permit us to enter final judgment on the declaratory judgment claim if "there is no just reason for delay." "[I]n deciding whether there are no just reasons to delay the appeal of individual final judgments in a setting such as this, a district court must take into account judicial administrative interests as well as the equities involved," Curtiss-Wright Corp. v. General Elec. Co., 446 U.S. 1, 8 (1980), and must "clearly articulate the reasons and factors underlying its decision to grant 54(b) certification," Allis-Chalmers Corp. v. Philadelphia Elec. Co., 521 F.2d 360, 364 (3d Cir. 1975). Among the relevant factors for us to consider are "(1) the relationship between the adjudicated and unadjudicated claims; (2) the possibility that the need for review might or might not be mooted by future developments in the district court; (3) the possibility that the reviewing court might be obliged to consider the same issue a second time; (4) the presence or absence of a claim or counterclaim which could result in set-off against the judgment sought to be made final; and (5) miscellaneous factors such as delay, economic and solvency considerations, shortening the time of trial, frivolity of competing claims, expense, and the like." Id.

Here, the declaratory judgment claim on which State Farm seeks a Rule 54(b) certification is only one part of the case. State Farm's amended complaint also includes other claims for negligent misrepresentation, intentional misrepresentation, and statutory insurance fraud. Regardless of how the Court of Appeals treats our interpretation of Section 601, its decision would not resolve these other claims, and there is a distinct possibility that the Court of Appeals would face another appeal from the resolution of those claims. Allowing the Court of Appeals to consider all of the issues presented in this case at one time would foster judicial economy, a just reason for delay. Thus, we shall deny State Farm's request to certify the portion of our Order dismissing its declaratory judgment claim pursuant to Rule 54(b).

Even appellate judges sometimes have difficulty predicting the future development of state law. See Dolores K. Sloviter,A Federal Judge Views Diversity Jurisdiction Through the Lens of Federalism, 78 Va. L.Rev. 1671, 1675-82 (1992).

Alternatively, § 1292(b) permits us to certify our Order if it "involves a controlling question of law as to which there is substantial ground for difference of opinion" and if "an immediate appeal from the order may materially advance the ultimate termination of the litigation." For the reasons discussed above, we do not believe that immediate appeal from our Order would materially advance the termination of this case, so we shall not certify this case for interlocutory appeal.

An appropriate Order follows.


Summaries of

State Farm Mutual Automobile Ins. v. All-Care Chiropractic

United States District Court, E.D. Pennsylvania
Jun 28, 2004
Civil Action No. 04-175 (E.D. Pa. Jun. 28, 2004)
Case details for

State Farm Mutual Automobile Ins. v. All-Care Chiropractic

Case Details

Full title:STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, ET AL. v. ALL-CARE…

Court:United States District Court, E.D. Pennsylvania

Date published: Jun 28, 2004

Citations

Civil Action No. 04-175 (E.D. Pa. Jun. 28, 2004)

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