No. 3 M.D. Appeal Docket 1984, Appeal from the November 15, 1983 final Order of the Commonwealth Court (No. 2952 C.D. 1981),
Nix, C.j., and Larsen, Flaherty, McDermott, Hutchinson, Zappala and Papadakos, JJ.
Appellant Thomas J. Judge, Sr., director of the Medical Professional Catastrophe Loss Fund ("Fund")*fn1 initiated an action in assumpsit in Commonwealth Court against Appellees Allentown and Sacred Heart Hospital Center ("Hospital Center") and the Hartford Insurance Group ("Hartford"). This is a direct appeal from the Commonwealth Court's order sustaining Appellees' preliminary objections in the nature of a demurrer and dismissing Appellant's amended complaint. 78 Pa. Commw. 373, 467 A.2d 899. We now reverse.
The amended complaint sets forth the following allegations. On March 4, 1977, an operation to correct a facial spasm was performed on Eugene Issermoyer at the Hospital Center. Issermoyer failed to recover as anticipated from a general anesthesia which had been administered, and is now paralyzed in both legs and his left arm. In 1978, a complaint was brought in Lehigh County, Pennsylvania before the Arbitration Panels for Health Care by Issermoyer and his wife for injuries sustained as a result of the operation. The Hospital Center and two of its staff physicians, the anesthesiologist and neurosurgeon involved in the operation, were among those named as defendants. After extensive discovery and negotiations, the action was settled for $1,503,935 on behalf of the Fund and the staff physicians. Each of the physicians contributed $100,000 to the settlement by their basic coverage insurance carrier, the Argonaut Insurance Company. The Fund provided the
difference.*fn2 Although the Issermoyers executed releases in favor of all defendants as part of the settlement, the Hospital Center and its insurance carrier, Hartford, opposed, and failed to contribute to, the settlement.
The first count of the complaint alleges that the Hospital Center was negligent, inter alia, in failing to properly supervise its physicians and in failing to diagnose relevant factors in the patient's condition, and that its conduct was a substantial contributing factor to Issermoyer's paralysis. It is asserted that the Fund was secondarily liable to Issermoyer and that it acquired the defendant physicians' right of contribution as joint tortfeasors against the Hospital Center and Hartford through indemnity and equitable subrogation. It is further alleged that the Hospital Center and Hartford failed to make a good faith investigation and determination of the Hospital Center's exposure to liability, and of the resulting exposure of the Fund to excess liability. The Appellee's preliminary objections asserted that the complaint failed to state a claim upon which relief could be granted, because the Fund lacked statutory authority to pursue the claim. This reasoning was adopted by the Commonwealth Court.
The scope of review of a challenge to the sustaining of a preliminary objection in the nature of a demurrer is limited. As we stated in Vattimo v. Lower Bucks Hospital, Inc., 502 Pa. 241, 244, 465 A.2d 1231, 1232-33 (1983):
[a]ll material facts set forth in the complaint as well as all inferences reasonably deducible therefrom are admitted for [the purpose of this review]. Clevenstein v. Rizzuto, 439 Pa. 397, 266 A.2d 623 (1970). The question presented by the demurrer is whether, on the facts averred, the law says with certainty that no recovery is possible. Hoffman v. Misericordia Hospital of Philadelphia, 439 Pa. 501, 267 A.2d 867 (1970). Where a doubt exists as to
whether a demurrer should be sustained, this doubt should be resolved in favor of overruling it. Birl v. Philadelphia Electric Co., 402 Pa. 297, 167 A.2d 472 (1960).
The Commonwealth Court concluded that the Health Care Services Malpractice Act did not expressly or impliedly confer upon the Fund a right of action against a basic insurance coverage carrier and its insured for refusing to approve and contribute to a settlement. The Appellees argue that the Commonwealth Court did not err in so holding because an agency may only exercise those powers which have been conferred upon it by the Legislature. In Green v. Milk Control Commission, 340 Pa. 1, 3, 16 A.2d 9 (1940), cert. denied, 312 U.S. 708, 61 S.Ct. 826, 85 L.Ed. 1140 (1941), we held that
[t]he power and authority to be exercised by administrative [agencies] must be conferred by legislative language clear and unmistakable. A doubtful power does not exist. Such tribunals are extra judicial. They ...