decided: January 20, 1981.
CARMELLO MARQUEZ, A MINOR, BY DIONISIA MARQUEZ, HIS GUARDIAN AND DIONISIA MARQUEZ, IN HER OWN RIGHT
HAHNEMANN MEDICAL COLLEGE AND HOSPITAL OF PHILADELPHIA AND DOUGLAS HOLSCLAW, M.D. AND BONITA FALKNER, M.D. ATTORNEY GENERAL, EDWARD BIESTER, APPELLANT
Appeal from the Order of the Court of Common Pleas of Philadelphia County in the case of Carmello Marquez, a minor, by Dionisia Marquez, his guardian and Dionisia Marquez, in her own right v. Hahnemann Medical College and Hospital of Philadelphia, and Douglas Holsclaw, M.D. and Bonita Falkner, M.D., No. 1246 December Term, 1977.
Gwendolyn T. Mosley, Deputy Attorney General, with her Harvey Bartle, III, Acting Attorney General, for appellant.
Harry Lore, with him Robert F. Simone, and Martin Heller for appellee.
President Judge Crumlish and Judges Mencer, Rogers, MacPhail and Palladino. Judges Wilkinson, Jr., Blatt, Craig and Williams, Jr. did not participate. Opinion by Judge Mencer. Concurring Opinion by Judge MacPhail.
[ 56 Pa. Commw. Page 190]
Carmello Marquez, a minor, by Dionisia Marquez, his guardian, and Dionisia Marquez, in her own right, filed a complaint with the Administrator for Arbitration Panels for Health Care (Administrator) under the provisions of the Health Care Services Malpractice Act (Act), Act of October 15, 1975, P.L. 390, as amended, 40 P.S. § 1301.101 et seq.*fn1 This complaint
[ 56 Pa. Commw. Page 191]
stated a claim for damages resulting from the furnishing of medical services which were provided by Hahnemann Medical College and Hospital of Philadelphia and Douglas Holsclaw, M.D., and Bonita Falkner, M.D.
Prior to the first meeting of the arbitration panel to which the Administrator referred this complaint, the parties agreed to settle the claim for the sum of $1 million. At this point, because a minor was involved, the parties should have sought approval of the settlement from the Administrator, as provided in
[ 56 Pa. Commw. Page 192]
Section 307(b) of the Act, 40 P.S. § 1301.307(b).*fn2 However, a different course was pursued which produced this appeal.
Martin Heller, Esquire, and Robert F. Simone, Esquire, attorneys for the plaintiffs, filed a petition with the Court of Common Pleas of Philadelphia County (Court) seeking to obtain an order of court approving the settlement and fixing counsel fees pursuant to the provisions of Pa. R.C.P. No. 2039.*fn3 This petition led to the entry of an order, on December 15, 1977, which approved the settlement and authorized a fee to attorneys Heller and Simone in the amount of $333,333.
Following this court order, the settlement was submitted to the Administrator for approval, as provided in Section 307(b) of the Act. The Administrator initially declined to approve the settlement until attorneys' fees were in conformance with Section 604(a)
[ 56 Pa. Commw. Page 193]
of the Act, 40 P.S. § 1301.604(a), which limits attorneys' fees in medical malpractice cases as follows:
(a) When a plaintiff is represented by an attorney in the prosecution of his claim the plaintiff's attorney fees from any award made from the first $100,000 may not exceed 30%, from the second $100,000 attorney fees may not exceed 25%, and attorney fees may not exceed 20% on the balance of any award.
Thus, this section would limit attorney fees on a settlement of $1 million to $215,000.
The Administrator eventually approved the settlement after counsel agreed to place in escrow the sum of $110,610.77, that being the difference between the $333,333 attorneys' fee authorized by the Court and the $215,000 attorneys' fee authorized by Section 604(a) of the Act, less costs of $7,722.23. The Administrator then filed a petition with the Court seeking modification of the Court's order which authorized attorneys' fee of $333,333. On October 2, 1979, the Court entered an order denying the petition to modify and directed that the $110,610.77 being held in escrow be remitted to counsel for plaintiffs. This appeal followed.
The basis for the Court's order was that Sections 307(b) and 604(a) of the Act are inconsistent with Pa. R.C.P. No. 2039 and therefore are suspended pursuant to the Act of June 21, 1937, P.L. 1982, as amended (Act of 1937), 17 P.S. § 61 et seq. We conclude that there are two reasons why the Court was in error.
A reasonable construction of the Act of 1937, which authorizes our Supreme Court to prescribe rules of practice and procedure, precludes our holding that Pa. R.C.P. No. 2039 provisions can deny to plaintiffs substantive rights created by the General Assembly. The Supreme Court was authorized by the Act of 1937 to suspend the operation of any act of assembly relating
[ 56 Pa. Commw. Page 194]
to practice or procedure which is inconsistent with such rule, but we fail to comprehend how it could be contended that the Health Care Services Malpractice Act is an "act relating to practice or procedure." The substantive right to terminate one's cause of action by an approved settlement prior to arbitration and before access to the courts could not be abrogated by a rule of court. As stated in Pittsburgh Parking Garages, Inc. v. Urban Redevelopment Authority, 370 Pa. 578, 580, 88 A.2d 780, 781 (1952), "[t]he procedural rules were not intended to change the substantive rights of the parties: Act of June 21, 1937, P.L. 1982, 17 P.S. § 61, as amended."
Accordingly, we recognize that a rule of civil procedure cannot suspend a substantive right legislatively conferred. Templeton Appeal, 399 Pa. 10, 159 A.2d 725 (1960); Commonwealth v. Smith, 73 Pa. D. & C.2d 421 (1975). See Nosal v. Nosal, 410 Pa. 304, 189 A.2d 262 (1963) (act of 1937 limited to the practice and procedure in the courts and not intended to enlarge jurisdiction of the courts).
However, a more fundamental reason exists for concluding that the Court was in error when it acted upon the petition of plaintiffs' counsel to invoke the provisions of Pa. R.C.P. No. 2039. At the time the Court's involvement in the instant case was sought, the matter was not within the court system and the Court had no jurisdiction over the case and therefore could not act in regard to it or make orders in accord with the provisions of the Pennsylvania Rules of Civil Procedure. The correctness of this reasoning was established by our Supreme Court in Parker v. Children's Hospital of Philadelphia, supra note 1, when, discussing the Act, it stated: "This Act provides that all claims for malpractice against doctors of medicine, osteopathy, and podiatry, as well as hospitals, nursing homes, health maintenance organizations and their
[ 56 Pa. Commw. Page 195]
officers, employees or agents must, in the first instance, be submitted to arbitration before access to the courts is permitted." 483 Pa. at 113, 394 A.2d at 936 (emphasis added).
Section 307(b) provides the Administrator the authority to consider and approve the settlement of minors' actions. This section is part of a comprehensive statutory scheme with a stated purpose to make available professional liability insurance at a reasonable cost and to establish a system through which a person who has sustained injury as a result of tort or breach of contract by a health care provider can obtain a prompt determination and adjudication of his claim and the determination of fair and reasonable compensation.
Under this statutory scheme, a compulsory arbitration system was created which requires claimants to first submit their claims to arbitration before they may proceed to court. The requirement that claimants arbitrate is the condition precedent to obtaining access to the courts. At the time that the Administrator approves settlement of minor actions in accord with Section 307(b) of the Act, the action is within the arbitration process, and the Administrator is the only one competent to consider and approve the settlement. The courts have jurisdiction over minors' settlements only after an appeal has been effected under the provisions of Section 509 of the Act, 40 P.S. § 1301.509, and the case has entered the court system and has for the first time come within the jurisdiction of the court.*fn4
[ 56 Pa. Commw. Page 196]
Accordingly, the Court, in the instant case, lacked jurisdiction to entertain the petition seeking its approval of the settlement in question here and requesting it to fix attorneys' fees. Therefore, its orders pertaining to these matters must be vacated.
And Now, this 20th day of January, 1981, the orders of the Court of Common Pleas of Philadelphia County, dated December 15, 1977 and October 2, 1979, approving a settlement in the above captioned case and authorizing attorneys' fees and payment to attorneys of money held in escrow, are hereby vacated.
Concurring Opinion by Judge MacPhail:
While I join in the result reached by the majority that the Court of Common Pleas of Philadelphia County erred, I regret that this Court has not addressed the constitutionality of Section 604(a) of the Act, 40 P.S. § 1301.604(a) inasmuch as I feel that that issue was properly before us and was extensively briefed and argued by counsel.
Our order reversing the Court of Common Pleas means that the parties will now be bound by the administrator's
[ 56 Pa. Commw. Page 197]
implementation of Section 604(a). Inasmuch as counsel for the minor claimants argued vigorously that the statutory limitations on counsel fees was unconstitutional, there can be no doubt that the case will be back before us again with the same arguments and briefs seeking a resolution of that issue. I do not believe that such a procedure constitutes judicial economy nor do I think that the litigants should be put to the additional effort and expense involved in a second appeal.