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Wilson v. Altman

United States District Court, E.D. Pennsylvania

August 7, 2019

RHONDA HILL WILSON, et al., Plaintiffs,
v.
JESSICA K. ALTMAN, et al., Defendants.

         TABLE OF CONTENTS

         I. INTRODUCTION ..................................................................................................................... 3

         II. BACKGROUND ....................................................................................................................... 6

         A. The Purpose of the Mcare Act ............................................................................................ 6

         B. Factual History of the Present Case .................................................................................... 7

         III. STANDARD OF REVIEW .................................................................................................... 10

         IV. ANALYSIS ............................................................................................................................. 12

         A. Plaintiffs' Federal Claims in Counts I to IV and the Rooker-Feldman Doctrine .............. 13

         1. Plaintiffs' Claims in Counts I, II, and III are Barred by Rooker-Feldman ................... 16

         a. Plaintiffs Lost in State Court ................................................................................... 17

         b. Plaintiffs Were Injured by the Set off Order ........................................................... 18

         c. Plaintiffs Are Asking the Court to Review and Overturn the Set off Order ........... 19

         2. Count IV Is Not Barred By The Rooker-Feldman Doctrine ......................................... 20

         B. Plaintiffs' Claims Against Defendants in Their Official Capacities are Barred by Eleventh Amendment Immunity .................................................................................................. 22

         C. Plaintiffs' Claims Against Defendants in Their Individual Capacities in Count IV will be Dismissed .......................................................................................................... 24

         D. Plaintiffs' Claim in Count IV for a Violation of Their Right to Equal Protection will be Dismissed for Failure to State a Claim ............................................................. 25

         E. Defendants Are Entitled to Qualified Immunity in This Case .......................................... 26

         F . Plaintiffs' State Law Claims Will Be Dismissed Pursuant to 28 U.S.C. § 1367 ............... 27

         G. Plaintiffs' Request for Punitive Damages Will Be Dismissed .......................................... 28

         H. Leave to Amend the Complaint Will Be Denied in This Case .......................................... 28

         V. CONCLUSION ........................................................................................................................ 29

          OPINION

          Slomsky, J.

         I. INTRODUCTION

         Rhonda Hill Wilson, Esquire, and The Law Office of Rhonda Hill Wilson, P.C., (“Plaintiffs”) bring the present suit pursuant to 42 U.S.C. § 1983, [1] alleging constitutional violations against them committed by employees of the Commonwealth of Pennsylvania. The action arises from a dispute over attorney's fees. Plaintiffs represented individuals in a medical malpractice case in Pennsylvania state court. In that case, a jury awarded Plaintiffs' clients over $2.5 million in damages, including punitive damages of $875, 000. (Doc. No. 4-3 at 3.) According to a Pennsylvania statute, 25% of punitive damages awarded in all medical professional liability cases must be allocated to a state fund. 40 Pa.C.S.A. § 1303.505. This fund is known as the Medical Care Availability and Reduction of Error Fund (“the Fund”).

         In this case, following the jury verdict in the malpractice action, a state court judge ordered that Plaintiffs distribute the awarded damages. Under the Order, Plaintiffs were responsible for sending the appropriate amount to their clients in the underlying case. On May 24, 2018, Plaintiffs sent the funds to their clients, which included the punitive damages awarded, but neglected to subtract from the punitive damages the 25% for the Fund. (Doc. No. 1 ¶ 32.)

         As a result, on August 22, 2018, the Fund filed a motion in state court seeking to withhold the money owed to it from the attorney's fees it was scheduled to pay to Plaintiffs in the underlying medical malpractice case. (Id. ¶ 41.) On December 13, 2018, the state court judge granted the Fund's motion and the money in question was withheld from the attorney's fees that the Fund sent to Plaintiffs. (Id. ¶¶ 50, 51.) Plaintiffs appealed this decision to the Pennsylvania Superior Court. (Id. ¶ 50.) The appeal is still pending. (Doc. No. 4 at 3.)

         Because Plaintiffs felt that it was entirely improper for counsel responsible for representing the Fund or its Executive Director or the Commonwealth Insurance Commissioner to have sought the offset, Plaintiffs brought the instant suit in federal court on April 11, 2019 naming as Defendants the following:

• Jessica K. Altman, Commissioner of the Commonwealth of Pennsylvania Department of Insurance.
• Ted Otto, Executive Director of the Fund.
• Kathryn McDermott Speakes, Esquire, Senior Litigation Counsel of the Pennsylvania Insurance Department.
• Amy G. Daubert, Esquire, Chief Counsel of the Pennsylvania Insurance Department.
• John J. Lacek, Esquire, Counsel with the Pennsylvania Insurance Department.[2]

(Doc. No. 1 ¶¶ 3-7.)

         The Complaint contains six Counts. In Counts I to I V, Plaintiffs allege civil rights violations against Defendants pursuant to 42 U.S.C. § 1983 (“Section 1983”). In Count I, Plaintiffs claim that Defendants violated their substantive due process rights under the Fourth and Fourteenth Amendments by unreasonably seizing attorney's fees from them. (Doc. No. 1 ¶¶ 54, 61.) In Count II, Plaintiffs claim that withholding the money in question amounted to an unconstitutional taking in violation of their rights under the Fifth Amendment. (Id. ¶ 65.) In Count III, Plaintiffs contend that the withholding of the attorney's fees constitutes an excessive fine in violation of the Eighth Amendment. (Id. ¶ 85.) In Count IV, Plaintiffs assert that Defendants made disparaging remarks about them and ignored information provided by them for no other reason than race in violation of their right to equal protection under the Fourteenth Amendment.[3] (Id. ¶ 93.) In Count V, Plaintiffs allege a state law abuse of process claim against Defendants, claiming that they abused the set off process in order to illegally take money from them. (Id. ¶ 103.) Finally, in Count VI, Plaintiffs request punitive damages for Defendants' alleged “reckless and outrageous” conduct in securing the set off Order. (Id. ¶ 108.)

         On May 15, 2019, Defendants filed a Motion to Dismiss the Complaint for Failure to State a Claim or for Lack of Subject Matter Jurisdiction. (Doc. No. 4.) On May 29, 2019, a Response to the Motion was filed (Doc. No. 7), and on June 4, 2019, Defendants filed a Reply. (Doc. No. 9.) The Court held a hearing on the Motion to Dismiss on June 18, 2019. On June 26, 2019, the Court entered an Order requesting that the parties submit supplemental memoranda on the applicability of the doctrine of qualified immunity to this case, if any. (Doc. No. 13.) Accordingly, the parties submitted their supplements on July 12, 2019.

         For the reasons noted below, the Court will grant Defendants' Motion to Dismiss the Complaint.

         II. BACKGROUND

         As noted above, this case implicates the Medical Care Availability and Reduction of Error Act (“Mcare Act”). The Court will review the pertinent sections of the Mcare Act and then discuss the factual history of this case.

         A. The Purpose of the Mcare Act

         The Mcare Act was passed by the Pennsylvania General Assembly in 2002 to ensure that medical care is available in the Commonwealth “through a comprehensive and high-quality health care system.” 40 Pa.C.S.A. § 1303.101(a). The Mcare Act requires all health care providers to purchase medical professional liability insurance in the minimum amount of $500, 000 per occurrence or claim to guarantee that people injured due to medical negligence receive reasonable compensation. § 1303.711(d).

         The Act also created the Mcare Fund (“the Fund”) to “pay claims against participating health care providers for losses or damages awarded in medical professional liability actions against them in excess of the basic insurance coverage required by section 711(d).” § 1303.712(a). The Fund exists within the State Treasury and is operated by employees of the Commonwealth. It ensures adequate compensation to victims by paying damages in excess of the basic coverage amount, up to $500, 000 per occurrence. § 1303.712(c)(2)(i). If the Fund is required to pay a claim, it has until “December 31 following the August 31 on which [the claim] became final.” § 1303.712(j).

         Relevant here, the Mcare Act also provides that if punitive damages are awarded against a health care provider in a medical professional liability case, the prevailing party is entitled to 75% of the punitive damages award and the Fund is entitled to 25% of the punitive damages award. § 1303.505(e).

         B. Factual History of the Present Case

         In December 2008, Plaintiffs were retained as counsel to represent Robert Dubose, suing in his own right and as the Administrator of the Estate of Elise Dubose (“the Estate”), in a medical malpractice action against Willowcrest Nursing Home and Albert Einstein Health Care Network. (Doc. No. 1 ¶ 21.) Plaintiffs filed Mr. Dubose's lawsuit in the Court of Common Pleas of Philadelphia County in 2009. (Id. ¶ 22.) Four years later, on March 21, 2013, a jury returned a verdict for Mr. Dubose and the Estate, which included an award of punitive damages. (Id. ¶ 23.) The verdict and jury award were affirmed by the Pennsylvania Supreme Court on November 22, 2017. (Id. ¶ 26.)

         On December 13, 2017, Plaintiffs filed a Petition to Distribute Proceeds from the medical malpractice lawsuit. (Id. ¶ 29.) On April 27, 2018, this petition, which included a stipulation regarding Plaintiffs' 40% fee and litigation costs, was granted by Court Order. (Id. ¶¶ 29-31.) The Order set forth how the damages were to be distributed. Regarding punitive damages, the Order provided that they were to be paid as follows:

         5. The Punitive Damages jury award of $614, 367.96 (after subtraction of attorney fees at 40% and one-fourth (1/4th) of the costs)[4] shall be paid as follows:

a. $460, 775.97 to The Estate of Elise Dubose, Deceased, Robert Dubose, Administrator; provided, however, that counsel shall not distribute any funds to the said Administrator until the additional security as may be required by the Register of Wills of Philadelphia County pursuant to 20 Pa.C.S.A. § 3323(b)(3) is posted, as per the Survival Claim.
b. $153, 591.99 to the Pennsylvania MCare Fund as per statutory requirement . . . .

(Doc. No. 12-1 at 2-3.) Pursuant to this Order, a check for $1, 695, 051.55[5] was sent to Rhonda Hill Wilson, Esquire and her office (“Plaintiffs”), who were responsible for sending the Estate its share. (Doc. No. 4-3 at 4.) On May 24, 2018, Plaintiffs sent to the Estate its portion of the award, minus attorney's fees and costs, which amounted to $1, 207, 443.47.[6] (Doc. No. 1 ¶ 32.) Notably, Plaintiffs did not set aside the amount of punitive damages owed to the Fund. (Id.) Again, this amounted to $153, 591.99. (Doc. No. 4-3 at 3.)

         On June 6, 2018, Defendants informed Plaintiffs that the Fund had not been paid its portion of the punitive damages. (Id. ¶ 34.) Plaintiffs then contacted Mr. Dubose and advised him that he was required to pay to the Fund $153, 591.99 from the award the Estate had received. (Id. ¶ 35.) Shortly thereafter, on June 11, 2018, Plaintiffs filed a Notice of Claim to the Estate on behalf of Defendants for the outstanding funds owed to the Fund. (Id. ¶ 40.) On August, 22, 2018, the Fund filed a Motion to Approve [an] Equitable Set off in the Philadelphia Court of Common Pleas, Orphan's Court Division. (Id. ¶ 41.) Defendants sought to withhold $153, 591.99, which was the 25% of the punitive damages it was entitled to receive, from fees and costs that the Fund was required to pay to Plaintiffs on December 31, 2018.[7] (Id.) Plaintiffs filed an Answer to the Motion on August 27, 2018. (Id. ¶ 42.)

         In connection with the underlying state court case, oral argument on the Motion to Approve the Equitable Set off was held in state court on October 30, 2018. The Fund's counsel then filed a Reply Brief on November 19, 2018, in which Plaintiffs alleged they were accused of being disingenuous. (Id. ¶¶ 43, 46.) The next day, Plaintiffs filed a Motion to Dismiss Mcare's Motion for Set off. (Id. ¶ 47.) Seven days later, on November 27, 2018, Plaintiffs filed a Surreply to the Mcare Fund's Reply Brief, in which they “decried the defaming, derogatory and malicious characterizations made against Plaintiffs.”[8] (Id. ¶ 48.) Defendants replied to Plaintiffs' Motion to Dismiss the Set off Motion on December 10, 2018. (Id. ¶ 49.)

         On December 13, 2018, Judge Matthew D. Carrafiello of the Philadelphia Court of Common Pleas entered an Order granting the Mcare Fund's Motion to Approve Equitable Set off (“Set off ...


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