Baskin, Boreman & Tive, Harrisburg, Harold Gondelman, Pittsburgh, Ralph D. Tive, Philip Baskin, Harrisburg, for appellants.
Howard M. Levinson, J. Justin Blewitt, Jr., Deputy Attys. Gen., Robert P. Kane, Atty. Gen., Harrisburg, for appellee.
Eagen, O'Brien, Roberts, Pomeroy, Nix and Manderino, JJ. O'Brien, J., files an Opinion in Support of Affirmance in which Eagen, C. J., and Pomeroy, J., join. Roberts, J., files an Opinion in Support of Reversal in which Nix, J., joins. Manderino, J., files an Opinion in Support of Reversal. Jones, former C. J., took no part in the consideration or decision of this case.
The Court being equally divided, the Order of the Commonwealth Court is affirmed.
OPINION IN SUPPORT OF AFFIRMANCE
This appeal arises from an order of the Commonwealth Court sustaining the preliminary objections of appellee, Commonwealth of Pennsylvania, Department of Public Welfare, to "answer and new matter" of appellants, Ludlow Clinical Laboratories, Inc. (hereinafter "Ludlow"), Leonard Edelman, and Joseph C. Mogil. Commonwealth Court sustained the preliminary objections because of a lack of subject matter jurisdiction, but granted appellants leave to file new pleadings. Such new pleadings would allow the defense of "recoupment" to be put forth by appellant.*fn1
The facts surrounding this appeal are as follows: On February 27, 1975, the Commonwealth of Pennsylvania, Department of Public Welfare, filed a four-count complaint against Ludlow Clinical Laboratories, Inc., and against Leonard Edelman and Joseph C. Mogil, both in their capacities as officers of Ludlow Clinical Laboratories, Inc. and as individuals. Counts I and II of the Commonwealth's complaint were filed in assumpsit.
Count I alleges that Ludlow was accredited by the Federal Department of Health, Education and Welfare to provide laboratory testing services to eligible recipients under the Health Insurance for Aged and Disabled Program and the Social Security Act. Ludlow was also certified by the Commonwealth as a participant in the Pennsylvania Medical Assistance Program. The Commonwealth provided a maximum fee schedule for billing of laboratory services. This maximum fee schedule was, however inoperative if the certified laboratory charged its private client a lesser fee for the same service. The Commonwealth would then pay only the amount charged the private client rather than the maximum fee provided for in the schedule. The Commonwealth contends that Ludlow overbilled by $1,301,579.44 and seeks recovery in that amount.
Count II of the Commonwealth's complaint, also in assumpsit, avers that if a recipient qualifies for both the state medical assistance program and the federal medicare program, federal regulations require that the testing laboratory initially bill the federal government for all persons over sixty-five years of age. The Commonwealth contends that Ludlow fraudulently altered the age records to lower ages to under sixty-five, thereby making the Commonwealth initially liable. The Commonwealth seeks damages in the amount of $43,263.50 as a result of the alleged improper payments.
Counts III and IV of the complaint are in trespass and are factually based on the above transactions. The Commonwealth avers that "Edelman and Mogil, as individuals," directed the above "fraudulent" billing and damages in identical amounts are sought.
Appellants filed an "answer and new matter." The "answer" denies any fraudulent misrepresentation or alteration of the billing system of Ludlow. It also avers that the Commonwealth owes Ludlow $1,421,916.56. Appellants
in "new matter" itemized the $1,421,916.56 as follows.
1. $1,063,891.18 -- for the period of August 13, 1974 through November 30, 1974 for laboratory services.
2. $323,394.50 -- for the period of December 1, 1974 through January 10, 1975 for laboratory services.
3. $34,630.88 -- for the period of January 1, 1974 through June 1, 1974 for laboratory work for ...