On Appeal from the United States District Court for the Western District of Pennsylvania, D.C. Civil No. 86-926.
Sloviter, Stapleton and Mansmann, Circuit Judges.
Brownsville Golden Age Nursing Home, Inc. filed an action alleging that defendants engaged in a civil conspiracy, tortious interference with business relations, and malicious use of process designed to lead to the revocation of its nursing home license by the Commonwealth of Pennsylvania. The district court granted summary judgment in favor of the defendants, and Brownsville appeals. Our review is plenary. See Hollinger v. Wagner Mining Equipment Co., 667 F.2d 402, 405 (3d Cir. 1981).
Brownsville operated a nursing home for the elderly in Fayette County, Pennsylvania. Under state law, facilities such as Brownsville must be licensed by the Department of Health (DOH). DOH regulations for skilled nursing facilities cover ownership and management, 28 Pa. Code § 201 (1988), physical plant and equipment, id. § 205 (1987), housekeeping and maintenance, id. § 207, fire protection and safety, id. § 209, infection control, medical services, dietary and pharmaceutical services and standards for patient care, id. § 211. A facility's eligibility for participation in the Medicare and Medicaid programs is jointly monitored by DOH and the federal Health Care Financing Administration (HCFA), an agency of the Department of Health and Human Services, to insure that the facility is complying with the detailed conditions of participation established by federal regulations. See 42 U.S.C. § 1395x (j)(15) (1982); 42 C.F.R. §§ 405.1101-.1137, -.1901(b) (2) (1986). Compliance with both federal and state regulations is determined through inspection of the facility by authorized personnel.
A federal survey conducted at Brownsville on May 30, 31, and June 1, 1984 uncovered serious violations of the applicable regulations. In June 1984, state surveyors also found serious violations and deficiencies. The HCFA notified Brownsville that its Medicare agreement was terminated as a result of the reports of the inspections made by it and by the state DOH. The following month, the Pennsylvania Department of Public Welfare notified Brownsville that its termination from Medicare required its termination from Medicaid.
In July 1984, the DOH, based on both the state and federal inspections of Brownsville conducted in May and June, 1984 revealing deficiencies in that home, suspended all new admissions to Brownsville, and ordered Brownsville to show cause why its license should not be suspended. These orders were based on the DOH's determination that Brownsville was guilty of (1) a serious violation of the provisions of the state Health Care Facilities Act and the regulations for licensure, (2) a cyclical pattern of deficiencies over a period of two or more years, and (3) serious violation of laws relating to medical assistance and medicare reimbursement. Brownsville appealed these orders to the Pennsylvania State Health Facility Hearing Board (State Board), which held a hearing in March 1985. The State Board ruled that DOH had failed to prove its charges, refused to revoke Brownsville's license, and lifted the suspension on new admissions to the home. The DOH appealed the State Board's decision to the Commonwealth Court of Pennsylvania.
The Commonwealth Court overturned the State Board's decision, Commonwealth v. Brownsville Golden Age Nursing Home, Inc, 103 Pa. Commw. 449, 520 A.2d 926 (1987). The court detailed the serious deficiencies in the operation of Brownsville as reflected in the inspection reports prepared by state arid federal inspectors. These included, among other serious violations, inadequate programs on infection control and the psychosocial needs of patients, id. at 931, the failure to treat patients with "consideration, respect, and full recognition of [their] dignity and individuality," id., unsanitary conditions, such as the failure to handle linen in a manner to prevent the spread of infection, id. at 932, "a generally dirty and unkempt dietary facility," id. at 933, "serious violations of the laws relating to medical assistance and medicare reimbursement," id., and delays or omissions in notifying attending physicians of significant changes in patients' physical, mental or emotional status, id. at 934. In light of these reported conditions, the Commonwealth Court found that the State Board's decision not to revoke Brownsville's license was unsupported by substantial evidence, and it therefore ordered the revocation of that license. Id. at 939. The Supreme Court of Pennsylvania denied Brownsville's petition for allowance of appeal of the Commonwealth Court's decision, Brownsville Golden Age Nursing Home v. Commonwealth, Dept. of Health, No. 126 W.D. Allocatur Docket (Pa. July 14, (1987) (per curiam), thereby rendering that decision final under the state's law.
While the state proceedings were underway, Brownsville pursued its federal remedies and appealed from its Medicare decertification. An administrative law judge, giving collateral estoppel effect to the then outstanding State Board's decision not to revoke Brownsville's license, ordered that Brownsville's Medicare reimbursement be restored. However, when the Commonwealth Court reversed the State Board's decision, Brownsville again lost its Medicare certification.