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ALLEN J. KLINE v. BLUE SHIELD PENNSYLVANIA (04/04/89)

filed: April 4, 1989.

ALLEN J. KLINE, D.O., RICHARD GLICK, D.O. AND GEORGE B. DAINOFF, D.O., INDIVIDUALLY AND TRADING AS K.G.D. OB-GYN ASSOCIATES, P.C., C/O DUBYN & SMITH, P.C., APPELLANTS,
v.
BLUE SHIELD OF PENNSYLVANIA, APPELLEE



Appeal from the Order of the Court of Common Pleas of Philadelphia County, Civil Division at No. 2089 July Term 1987.

COUNSEL

Jay R. Levenberg, Philadelphia, for appellants.

Thomas E. Wood, Philadelphia, for appellee.

Cavanaugh, McEwen and Popovich, JJ.

Author: Popovich

[ 383 Pa. Super. Page 348]

This is an appeal from the order of the Court of Common Pleas of Philadelphia County which granted the appellee's motion for judgment on the pleadings and dismissed the appellants' complaint. We affirm the judgment on the pleadings in favor of the appellee.

The facts of this case are virtually undisputed. In 1981, a dispute arose between the appellants, several obstetricians and their professional corporation (hereafter, referred to as "KGD"), and the appellee, Blue Shield of Pennsylvania (hereafter, referred to as "PBS"), regarding services performed by the participating doctors pursuant to their contract with PBS. PBS claimed that, from May of 1977 through 1981, KGD charged Blue Shield subscribers more than uninsured patients for identical procedures. PBS requested a refund for the overcharges. However, KGD claimed the charges were appropriate based on the participation contract with PBS and PBS's By-Laws. This matter was then resolved in favor of PBS by the Medical

[ 383 Pa. Super. Page 349]

Review Committee, an independent tribunal established pursuant to PBS's By-Laws and 40 Pa.C.S.A. ยง 6324(c). Following a hearing, the Review Committee, in September of 1981, determined that KGD had overcharged PBS and directed KGD to refund the sum of $59,947.00. KGD refused, and, thereafter, from January 4, 1982 through October 16, 1982, PBS withheld fees due the appellants in order to reclaim the previous overcharges.

In March of 1982, KGD filed a complaint with the Pennsylvania Department of Health alleging that recovery of the claimed overcharges by withholding fees was unlawful. Finally, in February of 1984, the Department of Health held that PBS acted improperly and must refund fees totaling $59,947.00.*fn1 See Pa. Blue Shield v. Commonwealth Dept. of Health, 93 Pa. Commw.Ct. 1, 500 A.2d 1244, 1246 n. 1 (1985), allocatur denied 514 Pa. 632, 522 A.2d 560 (1987). PBS appealed the Department of Health's decision to the Commonwealth Court, and, on November 13, 1985, our sister court expressly reversed, on the merits, "the department's decision that Blue Shield improperly withheld $59,947." Blue Shield, 500 A.2d at 1248-1249.

On December 16, 1987, KGD filed a complaint in the Philadelphia County Court of Common Pleas alleging that PBS had unlawfully withheld payments due KGD for services rendered to PBS subscribers from January of 1982 through October of 1982, totaling $59,947.00. PBS admitted that it had withheld payments but denied any obligation to remit said funds. In its answer and new matter, PBS claimed this action was barred by collateral estoppel and/or res judicata based on the Commonwealth Court's holding in Blue Shield, supra, 500 A.2d 1244. PBS also asserted the appellant's claim was barred by the doctrine of arbitration and award and raised the defense of common law recoupment.

[ 383 Pa. Super. Page 350]

Following PBS's motion for judgment on the pleadings, the lower court entered judgment in favor of PBS, ruling that the issues raised herein had already been decided in PBS's favor ...


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