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Lee v. Mihalich

argued: February 25, 1988.

WILLIAM LEE AND DENVER NURSING HOME, INC.
v.
LEONARD MIHALICH, INDIVIDUALLY AND IN HIS OFFICIAL CAPACITY; BRADFORD KING, INDIVIDUALLY AND IN HIS OFFICIAL CAPACITY; LEROY ZIMMERMAN, INDIVIDUALLY AND IN HIS OFFICIAL CAPACITY; ROBERT GENTZEL, INDIVIDUALLY AND IN HIS OFFICIAL CAPACITY; AND LESLIE SOLOVE LEONARD MIHALICH, J. BRADFORD KING AND LESLIE SOLOVE, APPELLANTS



On Appeal from the United States District Court for the Eastern District of Pennsylvania, D.C. Civil Action No. 83-2093.

Becker, Hutchinson and Scirica, Circuit Judges

Author: Hutchinson

Opinion OF THE COURT

HUTCHINSON, Circuit Judge.

William Lee and the Denver Nursing Home, Inc., brought suit in the district court against Leonard Mihalich and Bradford King seeking damages for abuse of process and malicious prosecution under 42 U.S.C.A. § 1983 (West 1981).*fn1 Both Mihalich and King are investigators in the Medicaid Fraud Control Unit of the Office of the Pennsylvania Attorney General. Lee and the home brought suit seeking damages and attorney's fees after the Court of Common Pleas of Lancaster County held that a criminal prosecution against them for Medicaid fraud was time-barred. In this civil proceeding, King and Mihalich brought a motion before the district court seeking dismissal of the actions against them on the grounds of qualified immunity. The district court denied the motion; the investigators appeal. The trial court has jurisdiction under 28 U.S.C.A. § 1331 (West Supp. 1988). An order denying a summary judgment motion for qualified immunity is an appealable final order. Mitchell v. Forsyth, 472 U.S. 511, 530, 86 L. Ed. 2d 411, 105 S. Ct. 2806 (1985); Hynson v. City of Chester, 827 F.2d 932, 933 (3d Cir. 1987), cert. denied, 484 U.S. 1007, 108 S. Ct. 702, 98 L. Ed. 2d 653 (1988). Therefore, we have jurisdiction pursuant to 28 U.S. C.A. § 1291 (West Supp. 1987).

Because Mihalich and King seek review of the district court's order denying their motion for summary judgment on the basis of qualified immunity, our standard of review over this legal question is plenary. Hynson, 827 F.2d at 934. We hold that the investigators, as a matter of law, are entitled to qualified immunity from liability stemming from this incident. We will therefore vacate the district court's order denying King and Mihalich's motion for summary judgment. In so ruling, we apply the usual Fed.R.Civ.P. 56(c) standard of absence of any genuine issue of material fact necessary to the determination of qualified immunity under the law relating to that subject.

I

Appellee William Lee was the owner of the Denver Nursing Home. In December of 1979, Leonard Mihalich, an investigator for the Commonwealth's Medicaid Fraud Control Unit, was assigned to investigate Lee and his nursing home. The home was a participant in Pennsylvania's Medicaid Assistance Program and received federal reimbursements for certain allowable expenses. After receiving documents from the Pennsylvania Department of Public Welfare which indicated an accounting analysis might lead to the discovery of improprieties in claims for reimbursements, the Fraud Unit determined that further investigation into the home's operation was necessary. Bradford King, also an investigator for the Fraud Unit, joined the investigation in June, 1980. Neither Mihalich nor King is an attorney.

The investigation focused on a series of cost reports filed for the fiscal years ending September 30, 1977, 1978 and 1979. Apparently, the last report was filed on January 11, 1980.*fn2 A search warrant, executed in July of 1981, turned up additional evidence purportedly demonstrating fraudulent procurement of Medicaid reimbursements. Following this investigation, on January 12, 1982, King and Mihalich caused two sixty-four count informations alleging Medicaid fraud to be filed against Lee and the Denver Nursing Home. Lancaster County Common Pleas held a two year statute of limitations applied. Because the prosecution was not begun within two years of the last criminal act, it dismissed the actions.

Common Pleas applied Section 5552(a) of Title 42 of the Pennsylvania Consolidated Statutes, 42 Pa.Cons.Stat.Ann. § 5552(a) (Purdon Supp. 1987). It requires that criminal prosecutions generally must be brought within two years after the offense is committed. Here, assuming, as did Common Pleas, that the last criminal act occurred on January 11, 1980, the informations filed on January 12, 1982 were untimely if § 5552(a) applies. The investigators had sought to invoke an exception to § 5552(a) set forth at 42 Pa.Cons.Stat.Ann. § 5552(c)(1) (Purdon 1981). It allows a criminal action to be brought within one year of the "discovery" of the offense where fraud is a material element of that offense.*fn3 The Commonwealth had argued before Common Pleas that the fraud was not discovered until execution of the search warrant in July, 1981. If so, the January 12, 1982 informations would be timely under the one year extension of § 5552(c)(1).

Common Pleas rejected the argument and held that the two year statute of limitations barred the criminal action. The court assumed that if the investigators had enough evidence to support the issuance of criminal complaints they had it "by early November of 1980." Common Pleas considered the evidence secured in July of 1981 by execution of the search warrant only cumulative to the earlier evidence the investigators had uncovered. Accordingly, Common Pleas dismissed the criminal charges against Lee and the nursing home.

After dismissal of the criminal actions, Lee and the Denver Nursing Home brought the instant suit in the district court. Their complaint sought damages and attorney's fees under 42 U.S.C.A. § 1983 and 42 U.S. CIA. § 1988 (West 1981) for malicious prosecution and abuse of process.*fn4 They contend that the prosecution was malicious because the investigators disregarded a clear statute of limitations ban.

II

Generally, government officials performing discretionary functions enjoy qualified immunity from civil damages for liability when their conduct "does not violate clearly established statutory or constitutional rights of which a reasonable person would have known." Harlow v. Fitzgerald, 457 U.S. 800, 818, 73 L. Ed. 2d 396, 102 S. Ct. 2727 (1982).*fn5 Qualified immunity serves to protect government officials from the personal costs of litigation and the attendant inhibiting effect of potential litigation upon the proper discharge of their official responsibilities. Anderson v. Creighton, 483 U.S. 635, 107 S. Ct. 3034, 3038, 97 L. Ed. 2d 523 (1987). In furtherance of these policies, the discriminant for qualified immunity focuses on the objective legal reasonableness of an official's acts under law which has been clearly established at the time he acts. Harlow, 457 U.S. at 818-19. In Anderson, the Supreme Court further defined the objective state of mind an official must show in order to establish qualified immunity. It said: "The contours of the right must be sufficiently clear that a reasonable official would understand that what he is doing violates that right. . . . In the light of preexisting law the unlawfulness must be apparent." 107 S. Ct. at 3039. Accordingly, we must determine whether investigators King and Mihalich could have reasonably believed that the criminal prosecution was lawful under the law in the light of the information they possessed when they acted. Anderson, 107 S. Ct. at 3040. Their subjective beliefs are not relevant to our inquiry. Id. Because this matter is before us on appeal from a denial of a motion for summary judgment on the ground of qualified immunity, we must reject King and Mihalich's appeal from its denial if we conclude a reasonable jury could find that the unlawfulness of their actions was so "apparent" that no reasonable investigator could have believed his actions were lawful. Martin v. Malhoyt, 265 U.S. App. D.C. 89, 830 F.2d 237, 253-54 (D.C. Cir. 1987) (citing Anderson, 107 S. Ct. at ...


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