by Mark Bauman | Mar 21, 2023 | Legal News, Other News
In a memorandum opinion, the District Court for the Eastern District of Pennsylvania held that the PA Department of Public Welfare (“DPW”) was not entitled to the full amount of its lien against the settlement between a plaintiff and the Philadelphia Housing Authority.
The case involved a minor plaintiff who suffered injuries as the result of the presence of mold in a subsidized home, which triggered an asthma attack resulting in permanent brain damage. The case settled for $11,913,000.00 prior to trial. DPW paid $1,265,896.00 for plaintiff’s medical treatment as a result of the injuries sustained. Plaintiff’s counsel reached out to DPW a number of times in an effort to negotiate the lien to no avail. The Court approved the settlement on June 15, 2010 and the parties placed $1,267,611.41 in escrow, which represented more than the total DPW lien. DPW filed a motion to vacate the settlement or in the alternative to intervene and attempted to assert a lien for the full amount. The Court denied the motion to vacate, however, it granted the motion to intervene and a hearing to determine the amount DPW may collect was held on August 5, 2010.
Plaintiff argued that DPW could only collect a limited amount of its lien based on its “ratio theory.” The true value of plaintiff’s claim was over $45 million and the $11.9 million settlement represented less than a third of that value. Thus, the amount DPW would be entitled to receive would be one third of the settlement minus costs and fees, which in this case was approximately $200,000.00.
DPW admits that its recovery for reimbursement is limited in that it cannot exceed one half of the beneficiary’s recovery after deducting fees and costs (and any medical expenses paid by the beneficiary). DPW argued that Pennsylvania law establishes a presumption that half of a plaintiff’s settlement is properly attributed to compensation for medical expenses and therefore, DPW can lawfully collect its full lien because that amount does not exceed half the total settlement.
The Court disagreed with both arguments. Plaintiff’s “ratio theory” would require the Court to hold mini-trials to determine the true value of a claim and would seriously undermine the economy of settlement. In addition, the Court noted that DPW’s argument ignores the compromise that is involved with a settlement. “When parties settle, everyone sacrifices. DPW’s suggestion that it does not need to sacrifice (unless its lien is for more than half of a plaintiff’s total recovery) ignores this reality.”
Instead, the Court determined that the proper approach was for the trial judge to assess the factors that would have influenced the parties’ settlement positions and to make an ultimate determination of what portion of the settlement represented compensation for past medical expenses. In the case at hand, the Court considered each side’s potential arguments at trial and determined that the plaintiff settled for two-thirds the value of the claim, and therefore, DPW was entitled to two-thirds of its $1,265,896.00 lien (minus fees and costs) which amounted to $537,448.43.
by Mark Bauman | Mar 20, 2023 | Commercial Litigation & Corporate Law, Legal News
In Zimmerman v. Harrisburg Fudd I, L.P., 2009 Pa.Super. 202 (2009), the Pennsylvania Superior Court, in interpreting the Contractor and Subcontractor Payment Act (CASPA), permitted plaintiff (contractor) to recover post-judgment interest, penalties, attorney’s fees and expenses from collecting the money plaintiff was owed from defendant (owner).
Plaintiff and defendant entered into an agreement requiring plaintiff to install improvements to the wall and floor of a new restaurant being built by defendant. After not being paid for four months after submitting an invoice, plaintiff brought a breach of contract action against defendant. At arbitration, the parties stipulated to an award in favor of plaintiff and against defendant for the amount of the contract claim, plus statutory interest, penalty, and attorney fees as provided for by CASPA. Plaintiff subsequently entered the arbitration award and executed on the judgment. Defendant filed a claim for exemption from the execution which was denied by the trial court. An emergency motion to stay the execution was subsequently filed by defendant and was denied by the trial court. The denial of the emergency motion to stay the execution was denied and appealed to the Superior Court. While on appeal, plaintiff was paid by a garnishee of defendant.
The Superior Court affirmed the trial court’s denial of defendant’s motion for an emergency stay of execution and plaintiff subsequently filed a motion to recover statutory interest from the date of the arbitration award to the date they were paid by garnishee, the statutory penalty under CASPA, attorney fees and expenses incurred in the post-award proceedings. The trial court denied this motion and plaintiff appealed to the Superior Court.
The Superior Court held that the trial court abused its discretion because Section 505 of CASPA mandates that payment of statutory interest be paid and a penalty of 1% per month must be paid if payment is made after twenty days of delivery of the invoice. Additionally, CASPA provides for attorney fees to be paid to the prevailing party in any proceeding to recover any payment under CASPA. The Superior Court held that plaintiff was the prevailing party because the arbitrators awarded plaintiff the entire amount of their claim.
The Superior Court held that plaintiff is entitled to attorney fees and expenses for those attorney fees and expenses incurred during the post-award period during which plaintiff incurred expenses to defend against, inter alia, defendant’s claim for exemption, defendant’s motion for an emergency stay and related appeal, and the instant appeal. It remanded the case to the trial court with instructions to conduct a hearing to determine a reasonable amount of attorney fees and expenses incurred by plaintiff.
by Mark Bauman | Mar 20, 2023 | Legal News, Other News
In a per curiam opinion, the Superior Court of New Jersey, Appellate Division, affirmed the Law Division decision refusing to allocate proceeds following a settlement after a decision from a non-binding arbitration award which specifically allocated funds for medical expenses paid by Medicare.
In Ilse Theresa Jackson v. Hudson Court, LLC, et al., 2010 WL 2090036 (NJ Super. 2010), plaintiff sued several defendants as a result of a trip and fall. In her Complaint, she sought damages for permanent bodily injury and disability, pain and suffering, emotional distress and economic losses, including medical expenses paid by Medicare. The case was referred to nonbinding arbitration wherein the arbitrator awarded plaintiff $85,000. Of that award, the arbitrator specifically earmarked $30,000 as funds in satisfaction of the Medicare lien. Thereafter, the case settled for $85,000; however, plaintiff sought a court ordered allocation of the settlement proceeds and specifically requested that no portion of her personal injury settlement be attributable to her medical expenses. The Law Division denied plaintiff’s request and plaintiff appealed.
In her appeal, plaintiff argued that the collateral source rule (N.J.S.A. 2A:15-97) bars recovery by Medicare beneficiaries of medical expenses. She interpreted the statute to prohibit recovery of any benefits paid by a “source other than a joint tortfeasor.” Thus, she argued that “no plaintiff should be obligated to reimburse Medicare-covered expenses from money recovered as a result of a personal injury claim because otherwise Medicare beneficiaries would have to satisfy Medicare liens using funds awarded for pain and suffering, or for lost wages.” The Appellate Division disagreed with plaintiff holding that the collateral source rule does not apply to reimbursable benefits paid by Medicaid, nor Medicare. Citing to, Lusby ex rel. Nichols v. Hitchner, 273 N.J. Super. 578, 590 (App.Div. 1994). The Appellate Division further pointed out that plaintiff’s settlement, as allocated by the arbitrator, included a specific amount attributable for medical expenses, and thus, the lien would not unjustly be satisfied from her non-economic award.
by Mark Bauman | Mar 19, 2023 | Commercial Litigation & Corporate Law, Legal News
In The Herrick Group & Associates, LLC v. K.J.T., L.P., Civil Action No. 07-CV-00628, U.S. Magistrate Judge Timothy R. Rice held that defendant (seller) did not prove the existence of an oral agreement to modify a written agreement of sale with plaintiff (purchaser).
In this action, during a four-day trial, evidence was presented regarding which party was responsible for a failed real estate transaction involving the sale of Washington Towers, a $6.5 million dollar commercial property in the business district of Reading, Pennsylvania.
Plaintiff alleged that defendant attempted to conceal the loss of the building’s commercial tenants and also failed to secure plaintiff’s oral agreement to address the loss of rental income plaintiff planned to receive as part of its purchase. Defendant countered that there was an oral modification to the agreement of sale which guaranteed lease payments from two commercial tenants who had prematurely terminated their leasehold prior to closing. Defendant sought the forfeit of plaintiff’s $325,000 deposit and liquidated damages.
In entering judgment for plaintiff, the Court set forth the law requiring that an oral contract modifying a prior written contract prohibiting non-written modifications must be proved by clear, precise, and convincing evidence. Brinich v. Jencka, 757 A.2d 388, 399 (Pa.Super. 2000). The Court reasoned that defendant failed to meet this burden and noted that all prior modifications to the agreement of sale were in writing, and it also indicated that correspondence between the parties revealed that the guaranteed lease payments were one of several options which were the subject of negotiations for which the parties never came to a final agreement. Thus plaintiff was entitled to a return of their $325,000 deposit.
by Mark Bauman | Mar 19, 2023 | Legal News, Other News
On July 22, 2008, U.S. District Judge James M. Munley of the Middle District of Pennsylvania issued an opinion in Grosek v. Pather Transportation, Inc. requiring the Defendant to produce documents related to punitive damages in the discovery phase of litigation before a determination was made that punitive damages are warranted.
In Grosek, The Defendants sought a Protective Order pursuant to Federal Rule of Civil Procedure 26(c) which would have prevented Plaintiff from conducting any discovery on the Plaintiffs’ financial condition until a jury concluded that punitive damages are warranted in the case. Defendants also argued that their financial condition cannot be relevant until a determination has been made that punitive damages are appropriate.
In declining to issue the Protective Order, the Court reasoned that “Defendants have demonstrated no prejudice which would occur from allowing discovery” and also noted that “the weight of authority requires a Defendant to disclose his financial condition in pretrial discovery when punitive damages are required.” The Court distinguished those cases cited by Defendants on the basis that they stand for the proposition that discovery is not permitted in determining whether a defendant has the means to satisfy a judgment. The Court also directed the parties to enter into a confidentiality agreement which would protect the disclosure of the financial condition of Defendants.
