source: Caselaw Access Project

author: McEWEN, Judge:

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text:
    604 A.2d 1053
    Ronald M. McCLELLAN and Harold Shotel, Co-Executors of the Estate of Marilyn M. McClellan, Deceased, Appellants, v. HEALTH MAINTENANCE ORGANIZATION OF PENNSYLVANIA a/k/a HMO PA Foundation and United States Healthcare of Pennsylvania, Inc. d/b/a HMO Pennsylvania, Appellees. Ronald M. McCLELLAN and Harold Shotel, Co-Executors of the Estate of Marilyn M. McClellan, Deceased, Appellants, v. Joseph A. HEMPSEY, D.O.
    Superior Court of Pennsylvania.
    Argued September 26, 1991.
    Filed March 10, 1992.

      Brian D. Rosenthal, Philadelphia, for appellants.
    David F. Simon, Blue Bell, for Health Maintenance & U.S. Healthcare, appellees.
    Before ROWLEY, President Judge, and McEWEN and TAMILIA, JJ.
   McEWEN, Judge:

This appeal has been taken from an order which sustained the preliminary objections in the nature of a demurrer filed by Health Maintenance Organization of Pennsylvania and United States Healthcare of Pennsylvania (hereinafter appellees) and dismissed the complaint against appellees with prejudice.

Marilyn McClellan, appellants’ decedent, a 39-year-old teacher employed by the School District of Philadelphia, was the wife of appellant Ronald M. McClellan and the mother of three young children. Sometime prior to June of 1985 Marilyn McClellan contracted, through her employer, the School District of Philadelphia, with Health Maintenance Organization of Pennsylvania, an HMO operated by appellees, for health care coverage for herself and her family.

HMOs, authorized by the Health Maintenance Organization Act, Act of December 29,1972, P.L. 1701, No. 864, § 1, as amended, 40 P.S. §§ 1551 et seq., are defined as “an organized system which combines the delivery and financing of health care and which provides basic health services to voluntarily enrolled subscribers for a fixed prepaid fee.” 40 P.S. § 1553. Appellees allege in their brief that HMO PA is a modified IPA model HMO “in which the HMO contracts with the independent, private physicians as independent contractors.” A primary care physician is assigned to each subscriber and is the “physician who supervises, coordinates, and provides initial and basic care to members; initiates their referral for specialist care; and maintains continuity of patient care.” 28 Pa.Code § 9.2.

Marilyn McClellan selected Joseph A. Hempsey, D.O., as her family’s primary care physician from the list of participating physicians provided by HMO of Pennsylvania. Appellants allege that Dr. Hempsey removed a mole from Mrs. McClellan’s back on October 28, 1985, and, even though Mrs. McClellan had related to Dr. Hempsey that the mole had recently undergone a marked change in size and color, Dr. Hempsey discarded the mole without obtaining a biopsy or other histological exam. Appellants claim that as a result of Dr. Hempsey’s failure to submit the tissue sample for testing, Mrs. McClellan’s malignant melanoma was not timely diagnosed or treated, and Mrs. McClellan died on January 1, 1988.

Appellants commenced a medical malpractice action against Dr. Hempsey, and later instituted suit against appellees, alleging that the negligence of appellees in selecting and retaining Dr. Hempsey as a primary care physician contributed to the condition which caused the death of Mrs. McClellan. Appellants also sought to hold appellees liable for breach of contract and misrepresentation based upon the express representations made by appellees concerning the competency of their primary care physicians and the availability to subscribers of consultation and treatment by medical specialists whenever warranted through primary care physician referrals. The two actions were consolidated and appellees filed preliminary objections in the nature of a demurrer to the complaint. The trial court sustained the demurrer and this appeal timely followed.

Appellants contend that the order must be reversed and the complaint reinstated since the amended complaint, contrary to the conclusion of the trial court, sets forth valid causes of action in assumpsit and trespass based upon:

1) ostensible agency;
2) corporate negligence;
3) breach of contract/breach of warranty; and
4) intentional misrepresentation or fraud.

Appellants also argue that the complaint properly includes a claim for punitive damages and that none of the claims set forth in the amended complaint are preempted by ERISA. After a careful review of the record, we find that the procedural posture of this case compels reversal of the trial court order and reinstatement of the complaint.

A trial court, in ruling upon preliminary objections in the nature of a demurrer, employs the same standard applied by this Court:

A demurrer can only be sustained where the complaint is clearly insufficient to establish the pleader’s right to relief. Firing v. Kephart, 466 Pa. 560, 353 A.2d 833 (1976). For the purpose of testing the legal sufficiency of the challenged pleading a preliminary objection in the nature of a demurrer admits as true all well-pleaded material, relevant facts, Savitz v. Weinstein, 395 Pa. 173, 149 A.2d 110 (1959), and every inference fairly deducible from those facts, Hoffman v. Misericordia Hospital of Philadelphia, 439 Pa. 501, 267 A.2d 867 (1970); Troop v. Franklin Savings & Trust, 291 Pa. 18, 139 A. 492 (1927). The pleader’s conclusions or averments of law are not considered to be admitted as true by a demurrer. Savitz v. Weinstein, supra.
Since the sustaining of a demurrer results in a denial of the pleader’s claim or a dismissal of his suit, a preliminary objection in the nature of a demurrer should be sustained only in cases that clearly and without doubt fail to state a claim for which relief may be granted. Schott v. Westinghouse Electric Corp., 436 Pa. 279, 259 A.2d 448 (1969); Botwinick v. Credit Exchange, Inc., 419 Pa. 65, 213 A.2d 349 (1965); Savitz v. Weinstein, supra; London v. Kingsley, 368 Pa. 109, 81 A.2d 870 (1951); Waldman v. Shoemaker, 367 Pa. 587, 80 A.2d 776 (1951). If the facts as pleaded state a claim for which relief may be granted under any theory of law then there is sufficient doubt to require the preliminary objection in the nature of a demurrer to be rejected. Packler v. State Employment Retirement Board, 470 Pa. 368, 371, 368 A.2d 673, 675 (1977); see also Schott v. Westinghouse Electric Corp., supra [436 Pa.] at 291, 259 A.2d at 449.

MacGregor v. Mediq, Inc., 395 Pa.Super. 221, 225-26, 576 A.2d 1123, 1125 (1990), quoting County of Allegheny v. Commonwealth, 507 Pa. 360, 372, 490 A.2d 402, 408 (1985) (emphasis supplied). Accord: Kyle v. McNamara & Criste, 506 Pa. 631, 634, 487 A.2d 814, 816 (1985); Mudd v. Hoffman Homes for Youth, Inc., 374 Pa.Super. 522, 524-525, 543 A.2d 1092, 1093-1094 (1988). Thus, even though less than a model pleading, the complaint in the instant case may not be dismissed unless this Court is convinced that, as a matter of law, no recovery is possible under the facts as pled.

I. CLAIMS BASED UPON NEGLIGENCE.

Appellants sought, in their complaint, to state a cause of action in negligence utilizing theories of ostensible agency and corporate negligence.

(a) Ostensible Agency.

As to the theory of ostensible agency, resolution of the question of whether the defendant, Joseph Hempsey, D.O., could properly be found by a jury to be the ostensible agent of the appellees is controlled by the holding of this Court in Boyd v. Albert Einstein Medical Center, 377 Pa.Super. 609, 547 A.2d 1229 (1988). This Court there concluded that the trial court had erred in entering summary judgment in favor of the defendant HMO where there “existed a question of material fact as to whether participating physicians are the ostensible agents of HMO.” Id., 377 Pa.Superior Ct. at 610-11, 547 A.2d at 1229. We agree with appellants that the factual allegations of their complaint are sufficient to withstand a demurrer since the defendant Dr. Hempsey could properly be found by a jury, depending upon the evidence produced at trial, to be the ostensible agent of appellees.

The theory of ostensible agency, first applied by this Court in Capan v. Divine Providence Hospital, 287 Pa.Super. 364, 430 A.2d 647 (1980), as noted by our Supreme Court in Thompson v. Nason Hospital, 527 Pa. 330, 338, 591 A.2d 703, 707 (1991), has been defined as follows:

Pennsylvania courts have determined that the two factors relevant to a finding of ostensible agency are: (1) whether the patient looks to the institution, rather than the individual physician for care and (2) whether the HMO ‘holds out’ the physician as its employee. Also instructive is the definition of apparent or ostensible agency in the Restatement (Second) of Agency, Section 267, which provides:
One who represents that another is his servant or other agent and thereby causes a third person justifiably to rely upon the care or skill of such apparent agent is subject to liability to the third person for harm caused by the lack of care or skill of the one appearing to be a servant or other agent as if he were such.

Boyd v. Albert Einstein Medical Center, supra, 377 Pa.Super. at 619-20, 547 A.2d at 1234.

The amended complaint filed by appellants provided, in relevant part:

a) that at all relevant times, the appellees were acting by and through their agents, servants, employees and/or ostensible agents who, in turn were acting within the course and scope of their employment. [Paragraph 5]
b) that the appellees assigned and/or referred each individual subscriber to the care of a “primary care physician”. [Paragraph 6]
c) that appellants’ decedent was provided with a directory of primary care physicians from which she was required to choose a “primary care physician”. [Paragraph 43]
d) that appellants’ decedent was assigned and/or referred to Dr. Joseph Hempsey as her “primary care physician”. [Paragraph 14]
e) that no member of the HMO operated by appellees could consult with or come under the care of a specialist who participated in the HMO unless the “primary care physician” referred the individual subscriber to the participating specialist. [Paragraph 9]
f) that the appellees represented that “each and every primary care physician provided by [appellees] satisfied criteria for participation as a qualified physician after passing vigorous screening criteria ...” and that “their primary care physicians had to undergo vigorous screening and meet certain criteria to be qualified as a primary care physician for [appellees and] that ... [Dr.] Hempsey, D.O. did undergo their screening, met their criteria____” [Paragraphs 34 and 41];
g) that the appellees had a duty to exercise reasonable care in providing “primary care physicians” who were qualified to provide competent care to subscribers [Paragraph 20]; and
h) that as a result of the justifiable reliance of appellants’ decedent on the expertise of the appellees to evaluate, screen, and select their primary care physicians, appellants’ decedent selected Dr. Hempsey who was not qualified to render medical care and who should not have been assigned to appellants’ decedent as a primary care physician.

Appellees argue that, even in light of the decision of this Court in Boyd, the complaint was properly dismissed since appellants failed to “allege any holding out by appellees or any reliance by Marilyn McClellan on representations made by appellees. Most importantly, the amended complaint does not allege any causal link between the ‘holding out’ and Marilyn McClellan’s injuries.” [Brief at 4-5]. We find that a fair reading of the allegations contained in the amended complaint, and consideration of “every inference fairly deducible from those facts ... ”, MacGregor v. Mediq, Inc., supra, 395 Pa.Super. at 225-26, 576 A.2d at 1125, reveals that there are sufficient averments of fact to withstand a demurrer.

Moreover, as conceded by appellees:

An averment of agency is a fact that is admitted for purposes of a demurrer rather than a conclusion of law.

DeGenova v. Ansel, 382 Pa.Super. 213, 218, 555 A.2d 147, 150 (1988) quoting Line Lexington Lumber and Mill Work Co., Inc. v. Pennsylvania Publishing Co., 451 Pa. 154, 162, 301 A.2d 684, 689 (1973). Accord: Department of Transportation v. Bethlehem Steel Corp., 28 Pa.Cmwlth. 214, 218, 368 A.2d 888, 892 (1977). See also: Frazier v. Ruskin, 203 Pa.Super. 525, 533, 199 A.2d 513, 518 (1964).

The allegations of the complaint — when all reasonable inferences therefrom are taken as true as they must when we consider the propriety of the demurrer — are sufficient to state a cause of action for negligence based upon the theory of ostensible agency. Appellants have alleged that Dr. Hempsey was held out as the agent of the appellees, and that appellees represented that their primary care physicians were carefully screened and fully qualified physicians who would render competent medical care to HMO members and who would obtain timely consultation and/or treatment for HMO members with medical specialists whenever such treatment was warranted. The complaint further alleges that Dr. Hempsey was not properly screened or evaluated and was not qualified to act as a primary care physician and, as a result of that incompetency, Dr. Hempsey failed to perform certain tests and failed to timely refer the appellants’ decedent to a specialist, as a direct result of which she died. Thus we are compelled to conclude that the grant of a demurrer was, under these circumstances, error.

(b) Corporate Negligence.

Appellants’ argument that their complaint also sets forth sufficient facts to state a valid cause of action In negligence based upon a theory of corporate negligence, as defined by our Supreme Court in Thompson v. Nason Hospital, supra, is not as easily resolved. The Court there reasoned:

the corporate hospital of today has assumed the role of a comprehensive health center, with responsibility for arranging and coordinating the total health care of its patients---- Courts have recognized several bases on which hospitals may be subject to liability including respondeat superior, ostensible agency and corporate negligence____
Corporate negligence is a doctrine under which the hospital is liable if it fails to uphold the proper standard of care owed the patient, which is to ensure the patient’s safety and well-being while at the hospital. This theory of liability creates a nondelegable duty which the hospital owes directly to a patient____
The hospital’s duties have been classified into four general areas: (1) a duty to use reasonable care in the maintenance of safe and adequate facilities and equipment; (2) a duty to select and retain only competent physicians; (8) a duty to oversee all persons who practice medicine within its walls as to patient care; and (4) a duty to formulate, adopt and enforce adequate rules and policies to ensure quality care for the patients.

Thompson, supra, 527 Pa. at 888-40, 591 A.2d at 708-707 (citations omitted).

While HMO PA could be viewed as having “assumed the role of a comprehensive health center’’, only two of the four duties defined by the Court in Thompson could be imposed upon a modified IPA model HMO since such an HMO ha® no facilities or equipment and thus cannot “oversee____ patient care [within its walls].” It is reasonable, however, to require that an IPA model HMO “select and retain only competent physicians” and “formulate, adopt and enforce adequate rules and policies to ensure quality care for [its subscribers].” Id., 527 Pa. at 339-40, 591 A.2d at 707.

It would appear unnecessary, however,-to extend the theory of corporate negligence to IPA model HMOs in order to find that such HMOs have a non-delegable duty to select and retain only competent primary care physicians. “[T]his court has adopted the view of [Section 323 of] the Restatement (Second) of Torts for purposes of liability regarding services rendered.” Mohler v. Jeke, 407 Pa.Super. 478, 486-87, 595 A.2d 1247, 1251 (1991), citing Cantwell v. Allegheny County, 319 Pa.Super. 255, 466 A.2d 145 (1983). See also: Patentas v. United States, 687 F.2d 707, 714-715 (3rd Cir.1982). Section 323 of the Restatement (Second) of Torts provides:

One who undertakes, gratuitously or for consideration, to render services to another which he should recognize as necessary for the protection of the other’s person or things, is subject to liability to the other for physical harm resulting from his failure to exercise reasonable care to perform his undertaking, if
(a) his failure to exercise such care increased the risk of harm, or
(b) the harm is suffered because of the other’s reliance upon the undertaking.

It thus follows that a complaint, if it is to state a cause of action under Section 323 against an IPA model HMO, must contain factual allegations sufficient to establish the legal requirement that the HMO has undertaken

(1) To render services to the plaintiff subscriber,
(2) which the HMO should recognize as necessary for the protection of its subscriber,
(3) that the HMO failed to exercise reasonable care in selecting, retaining, and/or evaluating the plaintiffs primary care physician, and
(4) that as a result of the HMO’s failure to use such reasonable care, the risk of harm to the subscriber was increased.

Appellants’ complaint, when read in light of the appropriate standard, alleged that appellees had a duty to use reasonable care in selecting and retaining primary care physicians, that appellees breached that duty of care, and that, as a result of that breach, appellants’ decedent was not timely diagnosed or treated, resulting in her death. The required allegations in a negligence action are “that a given standard of care was called for and that such standard was breached or that defendant acted less reasonably than a reasonable person would act. The complaint must also allege that such negligence resulted in an injury.” Doe v. Dyer-Goode, 389 Pa.Super. 151, 158, 566 A.2d 889, 892 (1989). We find that the allegations of the complaint are sufficient to state a cause of action for negligence in the selection, retention, and/or evaluation of the primary care physician. Since Section 323 of the Restatement (Second) of Torts has long been part of the law of this Commonwealth, we need not now consider or decide whether the theory of corporate negligence is applicable to IPA model HMOs.

Under the Rules of Civil Procedure, a plaintiff is not obligated to state the legal theory or theories underlying his complaint. Pa.R.C.P. 1019(a) requires only allegations of the “material facts on which a cause of action ... is based.” Assertions of legal rights and obligations in a complaint may be construed as conclusions of law, which have no place in a pleading and need not be denied in preliminary objections. Goodrich-Amram 2d, Standard Pennsylvania Practice § 1019(a): 12 (collecting cases). This system of fact pleading may sometimes cause both the court and the defendant uncertainty as to the legal grounds of the complaint. Here, for example, the trial court discerned only one possible cause of action, that of fraud and deceit. The complaint, however, stated at least one other cause of action. The obligation to discover the cause or causes of actions is on the court: the plaintiff need not identify them. See Schreiber v. Republic Intermodal Corp., 473 Pa. 614, 375 A.2d 1285 (1977). Therefore, appellant has preserved his claim that the complaint states a cause of action other than fraud and deceit, even though he did not identify any such cause in his complaint.

DelConte v. Stefonick, 268 Pa.Super. 572, 577-78, 408 A.2d 1151, 1153 (1979) (footnote omitted).

II. MISREPRESENTATION.

Nor can we perceive any basis upon which to sustain the demurrer to appellants’ claims for misrepresentation and punitive damages.

Appellees, in their preliminary objections, contended that the amended complaint failed to state a cause of action for intentional misrepresentation or tortious fraud in that appellants did not allege:

(1) a misrepresentation of past or existing facts;
(2) utterances that were fraudulent;
(3) an intent to induce detrimental reliance; or
(4) damages proximately caused by the fraudulent conduct.

The elements of a cause of action for fraud or misrepresentation are:

(1) a misrepresentation; (2) a fraudulent utterance thereof; (3) an intention by the maker that the recipient will act; (4) justifiable reliance by the recipient upon the misrepresentation; and (5) damages to the recipient as the proximate result. Neuman v. Corn Exchange National Bank & Trust, 356 Pa. 442, 51 A.2d 759 (1947). The deliberate nondisclosure of a material fact is the same as culpable misrepresentation. Id. Even innocent misrepresentations are actionable if they relate to matters material to the transaction involved; while, if the misrepresentation is made knowingly or involves non-privileged failure to disclose, materiality is not a requisite to the action, DeJoseph v. Zambelli, 392 Pa. 24, 139 A.2d 644 (1958), aff'g on the opinion of the trial court, 11 [Pa] D. & C.2d 447 (1957). A misrepresentation is material when it is of such a character that if it had not been made, the [agreement] would not have been entered into. Greenwood v. Kadoich, 239 Pa.Super. 372, 357 A.2d 604 (1976).

Catagnus v. Montgomery County, 113 Pa.Cmwlth. 129, 135, 536 A.2d 505, 508 (1988). Accord: New York State Electric and Gas Corp. v. Westinghouse Electric Corp., 387 Pa.Super. 537, 552-53, 564 A.2d 919, 927 (1989).

While the requirements of Pennsylvania Rule of Civil Procedure 1019(b) are satisfied if “plaintiff pleads facts sufficient to permit defendant to prepare his defense^] plaintiff must set forth the exact statements or actions plaintiff alleges constitute the fraudulent misrepresentations.” McGinn v. Valloti, 363 Pa.Super. 88, 91, 525 A.2d 732, 734 (1987). Appellants in the instant case alleged that appellees intentionally misrepresented that

each and every primary care physician provided by defendants HMO satisfied criteria for participation as a qualified physician after passing vigorous screening criteria established by Defendants HMO [and] that the primary care physicians with whom they enrolled under the terms of the contract with Defendants HMO would promptly and properly refer patients to appropriate specialists as required for necessary medical treatment;

and that appellants’ decedent, as a result of her reliance on these statements which are alleged to be intentionally false and misleading, sustained the injuries previously described. Thus, the allegations of the complaint, while inartful at best, are sufficient to withstand a demurrer.

III. PUNITIVE DAMAGES.

As for the claim for punitive damages:

A request for punitive damages does not constitute a cause of action in and of itself. Rather, a request for punitive damages is merely incidental to a cause of action.

Nix v. Temple University, 408 Pa.Super. 369, 380, 596 A.2d 1132, 1138 (1991). And, of course, a cause of action for misrepresentation can support a claim for punitive damages:

Punitive damages are defined by Section 908(1) [of the Restatement (Second) of Torts] as damages other than compensatory or nominal, “awarded against a person to punish him for outrageous conduct.” Thus, exemplary damages are proper when the act which creates actual damages also imports insult or outrage, and is committed with a view to oppress or is done in contempt of plaintiffs’ rights. Golomb v. Korus, 261 Pa.Super. 344, 396 A.2d 430 (1977); See U.S. ex rel. Motley v. Rundle, 340 F.Supp. 807 (E.D.Pa.1977). Punitive damages may be given when the act is done with reckless indifference, as well as, bad motive. Bacica v. Board of Ed. of Sch. Dist. of Erie, 451 F.Supp. 882 (W.D.Pa.1978). Thus, a court may not award punitive damages merely because a tort has been committed. Additional evidence must demonstrate willful, malicious, wanton, reckless or oppressive conduct. Pittsburgh Outdoor Adv. Co. v. Virginia Manor Apts., Inc., 436 Pa. 350, 353, 260 A.2d 801, 803 (1970); Hughes [v. Babcock], 349 Pa. [475] 480, 37 A.2d [551] 554 [1944]; See also: Franklin Music Co. v. American Broadcasting Co., Inc., 616 F.2d 528, 542 (3rd Cir.1979). Though this rule seems to require the plaintiff to meet an additional burden, it is difficult to picture a fact pattern which would support a finding of intentional fraud without providing proof of “outrageous conduct” to support an award of punitive damages.

Delahanty v. First Pennsylvania Bank, N.A., 318 Pa.Super. 90, 129-30, 464 A.2d 1243, 1263 (1983).

“Outrageous conduct” has been defined as:

an “act done with a bad motive or with a reckless indifference to the interests of others.” Focht v. Rabada, 217 Pa.Super. 35, 38, 268 A.2d 157 (1970) citing comment (b) to section 908 of the Restatement of Torts.
“Reckless indifference to the interests of others”, or as it is sometimes referred to, “wanton misconduct”, means that “the actor has intentionally done an act of an unreasonable character, in disregard to a risk known to him or so obvious that he must be taken to have been aware of it, and so great as to make it highly probable that harm would follow.” Evans v. Philadelphia Transportation Company, 418 Pa. 567, 574, 212 A.2d 440, 443 (1965).

Smith v. Brown, 283 Pa.Super. 116, 120, 423 A.2d 743, 745 (1980).

Appellees will, of course, be afforded ample opportunity to ascertain, prior to trial, whether the evidence which appellants believe establishes “reckless indifference” is sufficient to submit the claim for punitive damages to the jury. See Moran v. G. & W. J. Corson, Inc., 402 Pa.Super. 101, 111-20, 586 A.2d 416, 422-425 (1991). It is premature, however, based upon the allegations contained in the complaint, to dismiss the claim for punitive damages.

IV. CONTRACT CLAIMS.

Similarly, the averments of fact contained in the complaint are sufficient to withstand a demurrer as to the cause of action sounding in contract. Cf. Cassell v. Shellenberger, 356 Pa.Super. 101, 103-05, 514 A.2d 163, 165 (1986). Appellants specifically asserted in the complaint that based upon appellees’ representations, made to appellants’ decedent

through contracts and other documentation presently within their possession, that the primary care physicians had to undergo vigorous screening and meet certain criteria to be qualified as a primary care physician for defendant; that defendant, Joseph A. Hempsey, D.O. did undergo their screening, met their criteria and was qualified as a primary care physician; and that patients would be referred by their primary care physician to appropriate specialists as required for necessary medical treatment, plaintiff enrolled herself and her family with Defendants HMO for all the family medical care and executed a contract with Defendants HMO for them to provide said medical care.

Appellants also alleged that appellees had breached the provisions of the contract which required them to provide the decedent with a qualified primary care physician who would provide reasonably competent medical care, including appropriate referrals, and that as a result of the appellees’ breach, appellants’ decedent suffered the injuries described. These allegations are sufficient to state a claim for breach of contract sufficient to withstand a demurrer.

V. PREEMPTION BY ERISA.

Appellees further demurred to the complaint on the grounds that the appellants’ claims were preempted by ERISA, 29 U.S.C. §§ 1001-1461. Resolution of this issue, insofar as concerns the negligence claims, is controlled by our opinion in DeGenova v. Ansel, 382 Pa.Super. 213, 555 A.2d 147 (1988), wherein we rejected an identical preemption claim:

Section 514(a) of ERISA provides:

The provisions of this title and Title IY shall supersede any and all state laws insofar as they may now or hereafter relate to any employee benefit plan____ 29 U.S.C. § 1144(1) (emphasis supplied).

The preemptive provision of ERISA was meant to establish pension plan legislation as an exclusively federal concern, reserving for the federal government the sole power to regulate the field of employee benefit plans. McMahon v. McDowell, 794 F.2d 100, 106 (3rd Cir.1986). While the statutory scheme provides the government with broad powers to regulate employee pension plans, “ERISA is not all encompassing.” Lane v. Goren 743 F.2d 1337, 1339 (9th Cir.1984). The test to determine if a cause of action is preempted by ERISA remains whether or not the action “relates to” ERISA, and is not merely remotely related to the act. Shaw v. Delta Air Lines Inc., 463 U.S. 85, 103 S.Ct. 2890, 77 L.Ed.2d 490 (1983). In the present case, we find that the appellants' state law claims do not “relate to” ERISA and, therefore, are not preempted by the statute. Initially we observe that appellants are not seeking ERISA benefits or claiming improper distribution or administration of potential ERISA benefits. In addition, appellant, if these claims were found to be preempted by ERISA, would not be able to bring a similar civil action under ERISA, see 29 U.S.C. § 1132(a), and would have no remedy whatsoever against ALICO.

DeGenova v. Ansel, supra, 382 Pa.Superior Ct. at 219, 555 A.2d at 150. It merits mention that this court finds reassuring support for the DeGenova decision in the recent opinion of the distinguished Judge Herbert J. Hutton of the U.S. District Court for the Eastern District of Pennsylvania in Kohn v. Delaware Valley HMO, Inc., 1991 WL 275609 (Civil Action No. 91-2745; filed December 20, 1991), as well as the opinion of the esteemed Judge Franklin S. Van Antwerpen in Independence HMO, Inc. v. Smith, 733 F.Supp. 983 (E.D.Pa.1990).

The issue of preemption of the contract claims, however, is an issue which cannot be resolved on the very limited record presently before this Court. If HMO PA is a valid ERISA employee benefit plan, it would appear that the contract claims are preempted. However,

“[t]he existence of an ERISA plan is a question of fact, to be answered in light of all the surrounding circumstances from the point of view of a reasonable person.” Donovan v. Dillingham, 688 F.2d 1367 (11th Cir.1982). Five elements comprise an ERISA welfare plan:
(1) A “plan, fund or program” (2) established or maintained (3) by an employer or by an employee organization, or by both, (4) for the purpose of providing medical, surgical, hospital care, sickness, accident, disability, death, unemployment or vacation benefits, apprenticeship or other training programs, day care centers, scholarship funds, prepaid legal services or severance benefits (5) to the participants or their beneficiaries.

Kanne v. Connecticut General Life Ins. Co., 867 F.2d 489, 492 (9th Cir.1988) (quoting Donovan v. Dillingham, 688 F.2d 1367, 1371 (11th Cir.1982) (en banc)).

The MDP Plan, established by MDP Associates, Inc., is not fully insured and is controlled by three individuals who also control MDPhysicians of Amarillo, Inc., an independent practice association consisting of over 130 physicians in the Amarillo area. Stipulation at 1-2. Participants in the MDP Plan have a choice of seeking treatment from a network medical service provider, where the Plan pays 90% of the medical expenses incurred, or from a non-network medical service provider, where the Plan pays 80% of the expenses. Stipulation at 3. Participants in the MDP Plan are not limited to employees of the physicians who established the MDP Plan. ******

Likewise MDPhysicians Associates, Inc., does not act directly as an employer or indirectly in the interest of any employer. 29 U.S.C. § 1002(5). Courts construing the language of ERISA have concluded that a person or corporation cannot possibly act in the interest of employers when such employers have no voice in the management or operation of the plan because no basis for an agency relationship exists. See Bell v. Employee Security Benefit Ass’n, 437 F.Supp. 382, 393 (D.Kan.1977); Hamberlin v. VIP Insurance Trust, 434 F.Supp. 1196, 1198 (D.Ariz.1977); Matthew 25 Ministries, Inc. v. Corcoran, 771 F.2d 21, 22 (2d Cir.1985).

Plaintiff is not an “employer” as defined by case law. The participating employers do not participate in the day-to-day operation or administration of the plan contrary to Fifth Circuit precedent. Taggart Corp. v. Life and Health Benefits Administration, Inc., 617 F.2d 1208, 1210 (5th Cir.1980). The MDP Plan in fact is controlled by the same three individuals that control MDP Physicians of Amarillo, Inc. The Fifth Circuit has held, under similar circumstances, that a plan established and “maintained by entrepreneurs for the purpose of marketing products or services to others” would not be acceptable as an ERISA plan because the Act did not intend to cover mere purchases of insurance. Id. at 1210-11. The fact that the subscribing employers, as in the case at hand, are unrelated is further support for the proposition that the plan is marketing insurance coverage to the employers. Matthew 25 Ministries, Inc. v. Corcoran, 771 F.2d 21, 22 (2nd Cir.1985); Taggart, 617 F.2d at 1210.

MDPhysicians and Assoc., Inc. v. Wrotenbery, 762 F.Supp. 695, 697-698 (N.D. Texas 1991) (footnote omitted).

Since the record is wholly inadequate to resolve this issue, as well as others relevant to resolution of the preemption issue, see, e.g.: Metropolitan Life Insurance Co. v. Massachusetts, 471 U.S. 724, 105 S.Ct. 2380, 85 L.Ed.2d 728 (1985); Insurance Board Under the Social Insurance Plan of Bethlehem Steel Corporation v. Muir, 819 F.2d 408 (3rd Cir.1987), the preliminary objection based upon preemption must be rejected without prejudice to the right of appellees to raise the issue upon remand.

Order reversed. Complaint reinstated. Case remanded. Jurisdiction relinquished.

      . The order did not affect the action against the remaining defendant, Joseph A. Hempsey, D.O.

      . An individual practice association (IPA) HMO is defined as "an HMO that contracts for delivery of services with a partnership, corporation, or association whose major objective is to enter into contractual arrangements with health professionals for the delivery of such health services.” 28 Pa.Code § 9.2.

      . We are without the benefit of an opinion by the learned trial court judge as a result of his sudden and prolonged illness.

      . The issues raised on appeal, as set forth in appellants’ brief, are:
      a) whether plaintiffs stated a cause of action for negligence against the HMO Defendants when they have specifically alleged all of the elements necessary to support an action for corporate negligence liability and, also, for respondeat superior liability under a theory of ostensible agency.
      b) whether plaintiffs stated a cause of action against the HMO Defendants where they have alleged all of the elements necessary to support an action for breach of contract/breach of warranty, where the HMO Defendants breached the terms of their various contractual agreements____
      c) whether plaintiffs stated a cause of action against the HMO Defendants, for intentional misrepresentation and/or fraud, where it is specifically pled that they solicited members and disseminated advertising and other information to the public containing misrepresentations about the quality of care provided, the screening and review processes for member physicians and the freedom of access to specialist care, when the HMO Defendants knew this information was misleading and untrue, and when they further knew the public, and plaintiffs’ decedent in particular, would rely upon this information to their detriment.
      d) whether plaintiffs stated a cause of action against the HMO Defendants for punitive damages____

      . Employee Retirement Income Security Act, 29 U.S.C. § 1001 et seq.

      . Appellants include in their complaint an allegation that the agreements between appellees and their “primary care physicians” are themselves tortious since it is “against the 'primary care physician’s’ personal or pecuniary interest to give proper medical advice and make appropriate referral.” This allegation suggests as issues whether the essential elements of the HMO system violate public policy, and whether the HMO system itself contributed to the asserted malpractice in this case. It is settled beyond peradventure, however, that the judicial branch is precluded by constitutional mandate from addressing the ethical, moral, or social implications of a health care program which indirectly provides a diminished compensation for a provider who deems further medical attention necessary or desirable. The fundamental prerogative and duty of considering and establishing social policy, including, of course, the regulation of health care providers, is vested solely in the legislature.

      . The HMO defendant in Boyd was Health Maintenance Organization of Pennsylvania, one of the appellees in the instant case.

      . Appellants alleged in their complaint that the decedent subscribed to HMO PA’s health plan in reliance on the "material misrepresentation ... that each and every primary care physician provided by defendants HMO satisfied criteria for participation as a qualified physician after passing vigorous screening criteria established by Defendants HMO” and relied on "misrepresentations ... that the primary care physicians with whom they enrolled under the terms of the contract with Defendants HMO would promptly and properly refer patients to appropriate specialists as required for necessary medical treatment.”

      . See Thompson v. Nason Hospital, supra, 527 Pa. at 340, 591 A.2d at 708; Mitzelfelt v. Kamrin, 526 Pa. 54, 584 A.2d 888 (1990).

      . The preliminary objection based upon the failure to attach a copy of the contract is meritless since appellants alleged that the contract and other documents were in the possession of appellees and set forth the substance of those documents. See Pa.RX.P. 1019(h).


author: MONTEMURO, Judge:

text:
    604 A.2d 1064
    Alan KLEIN, a/k/a Alan H. Klein, Appellant, v. Robert J. WALTON, III, and Hilda Walton and Joseph F. Boyle, Jr. Alan KLEIN, a/k/a Alan H. Klein v. Robert J. WALTON, III and Hilda Walton and Joseph F. Boyle, Jr. Appeal of Joseph F. BOYLE, Jr. Appeal of Robert J. WALTON, III, and Hilda Walton.
    Superior Court of Pennsylvania.
    Argued Jan. 15, 1992.
    Filed March 12, 1992.

      David J. Moloznik and Joseph S. Moloznik, Philadelphia, for Klein, appellant (at 1200) and for appellee (at 1340,1341 & 1967).
    Leonard J. Bucki, Philadelphia, for Walton et al., appellants (at 1967) and for appellees (at 1200, 1340 & 1341).

      Linda Richenderfer, Philadelphia, for Boyle, appellant (at 1340 & 1341) and for appellee (at 1200 & 1967).
    Before ROWLEY, President Judge, and OLSZEWSKI and MONTEMURO, JJ.
   MONTEMURO, Judge:

This is a consolidated appeal from both an April 11,1986 order enforcing a settlement agreement and dismissing all claims of Joseph Boyle, and a March, 15 1991 order dismissing any remaining claims by Alan Klein. A review of the procedural and factual context of this case is necessary before addressing the issues presented by this appeal.

The origins of this dispute began in December of 1976 when an agreement of sale was entered into between Alan Klein (“Klein”) and Robert and Hilda Walton (“Waltons”) for Klein to purchase seven parcels of land (“the properties”) for $215,000.00. (“Klein Agreement”). The Waltons, after alleging that Klein did not timely receive a mortgage commitment, considered the Klein Agreement null and void. In April of 1977, Joseph Boyle (“Boyle”) and the Waltons entered into an Agreement whereby Boyle would pay $205,-000 for the properties, with Boyle being responsible for paying the $10,000 brokers’ commission. (“Boyle Agreement”). Prior to settlement of the Boyle transfer, Klein brought suit against Walton in state court pursuant to his agreement and forced the title of the properties to be indexed lis pendens. (“First Klein suit”). This suit was removed to federal court based on diversity jurisdiction. Prior to trial, the parties indicated to Judge Hannum that the parties had settled the case. Judge Hannum confirmed with both parties that the case was settled, and without placing the terms of settlement on the record, dismissed the case with prejudice.

In accordance with the agreement, settlement was to occur on or before December 11, 1978. If settlement did not occur by the specified date, then Boyle, as per his agreement, would have a right to purchase the properties until December 31, 1978. The Waltons disputed the terms of the settlement agreement, and did not attend the December 11,1978 closing. Klein brought suit in the Philadelphia Court of Common Pleas, again indexed lis pendens, to enforce the settlement agreement. (“Second Klein Suit”). Meanwhile, Boyle asserted his right to purchase the properties; however, he did not schedule a closing by December 31, 1978. Boyle intervened in the Second Klein Suit to assert his rights to specific performance of the properties, and to have the lis pendens struck from the title of the property. In 1980, Klein and Boyle entered into an agreement, whereby they would agree to share the properties and any yet to be determined damage award. (“Sharing Agreement”).

On October 29, 1985, the trial court dismissed the Second Klein suit on the basis that jurisdiction was only proper in the federal forum where the First Klein suit was dismissed. The trial court also dismissed all of Boyle’s claims as having lapsed by the terms of the Boyle Agreement. On April 11, 1986, after Klein and Walton filed post-trial motions, the trial court reversed its earlier jurisdictional ruling, and decided the merits of the Second Klein suit.

The trial court found that the settlement agreement did in fact exist and ordered that: (1) the Waltons convey the properties to Klein; (2) Klein pay the Waltons the sum of $215,000.00, representing the purchase price, and the sum of $12,500.00, with the Waltons paying any brokers’ commissions; (3) Klein pay Boyle the sum of $25,000.00; and (4) with the exception of Alan Klein’s claim against the Waltons for claimed loss of returns, all other claims of the parties to this action are dismissed with prejudice.

Thus, all that remained to be litigated was Klein’s claim for lost rents. Unfortunately, this task proved to be anything but expedient. In 1986, Waltons made a request for production of documents, which went unanswered by Klein. Over the next four years the parties exchanged correspondence with various settlement proposals; However, Klein pursued no formal discovery during this period. The Waltons, based on this inactivity, moved to dismiss the claim of lost rents. On October 18, 1990, Judge D’Alessandro denied this motion. The Waltons then renewed their 1986 request for production of documents, which again went unanswered by Klein. On March 15, 1991, Judge D’Alessandro dismissed Klein’s claim for damages after the Waltons renewed their motion to dismiss.

The issues raised on appeal arising from the April 11, 1986 order are as follows: (1) whether the trial court erred in reversing itself and finding that it did have jurisdiction to enforce the settlement agreement; (2) whether the trial court erred in enforcing the settlement agreement; and (3) whether the trial court erred dismissing all claims by Boyle.

The sole issue raised on appeal with respect to the March 15,1991 order is whether the trial court erred in dismissing Klein’s damages claims for failure to prosecute his case, and respond to discovery requests.

The first issue arising from the April 11, 1986 order is whether the trial court had jurisdiction to enforce the settlement agreement. In Schultzendorf v. Pittsburgh Lake Erie R.R. Co., 340 Pa.Super. 230, 489 A.2d 927 (1985), this ourt held that a party to a settlement in federal court, cannot attack its validity in state court. The Schultzendorf Court reasoned that since the operation and practical effect of a settlement is “the denouement of litigation,” attacking the validity of the settlement is equivalent to attacking the validity of a federal court judgment. Id., 340 Pa.Superior Ct. at 232, 489 A.2d at 928.

The Waltons contend that Klein was not attempting to enforce the settlement, but rather was attempting to challenge the federal court’s dismissal contrary to Schultzendorf. For support for this conclusion, the Waltons assert that because the trial court could not have reinstated Klein’s cause of action if it found that the settlement did not exist, it could not have jurisdiction to determine the existence of the settlement. However, applying the Waltons’ logic would convert every attempt to enforce a settlememt into a challenge of the previous court’s dismissal. Since we find that Klein was merely attempting to enforce the agreement, the state court was an appropriate forum for adjudicating his claim.

The Waltons’ second issue raised on appeal from the April 11, 1986 order is whether, assuming the court did have jurisdiction to hear Klein’s claim, the trial court erred in failing to find that Klein was estopped from asserting his claim since he failed to cooperate in reaching an agreement on the terms of the settlement. This claim for relief, which the Waltons do not support with any case law, ignores the trial court’s finding that all of the essential terms of the settlement agreement existed. Since the terms were already reached, Klein did not owe the Waltons any additional duty to cooperate, and the trial court did not err in failing to address this meritless claim.

The third issue raised on appeal is whether the trial court erred in dismissing Boyle’s claims that sought to deny Klein’s right to the properties, strike Klein’s lis pendens, and to force the conveyance of the properties to Boyle. The trial court found that Boyle signed an agreement that provided that he would accept the properties from Walton by December 81, 1978. Since Boyle did not schedule any closing by that date, his rights to the properties lapsed by the terms of his own agreement. Thus, the April 11, 1986 order provided, “With the exception of Alan Klein’s claim against Robert J. Walton, III and Hilda Walton for claimed loss of returns, all other claims of the parties to this action are dismissed, with prejudice.” (T.C.O. 12).

This order put Boyle out of court, and therefore was a final order. Sweener v. First Baptist Church of Emporium, 516 Pa. 584, 538 A.2d 998 (1987); Motheral v. Burkhart, 400 Pa.Super. 408, 583 A.2d 1180 (1990). There is no evidence of record that this dismissal was appealed by Boyle, and as such, Boyle can not now complain of any alleged errors committed by the April 11, 1986 dismissal of his claim. Id. (appeals not taken within 30 days are waived); Pa.R.A.P 903(a). Therefore, although we agree with the trial court that Boyle’s claim is without merit, we are without jurisdiction to decide the issue on appeal. Furthermore, the existence of the Sharing Agreement between Klein and Boyle does not give Boyle standing in this litigation after his dismissal and failure to appeal. Therefore, we quash Boyle’s appeal, and affirm all other aspects of the April 11, 1986 order.

The sole issue raised with respect to the March 15, 1991 order is whether the trial court erred in determining that Klein’s right to pursue any damage claim is barred by laches.

Initially, we note that an award of damages, incident to a decree of specific performance, is not the same as legal damages. Easton Theatres v. Wells Fargo, 265 Pa.Super. 334, 401 A.2d. 1333 (1979). “Rather, a court in equity is involved in an accounting by which it fairly apportions between the parties the costs caused by the delay in the performance in the contract.” Id., 265 Pa.Superior Ct. at 352, 401 A.2d at 1343. The equitable doctrine of laches will apply to one who is guilty of lack of due diligence in failing to institute or prosecute his proceedings. Freeman v. Lawton, 353 Pa. 613, 46 A.2d 205 (1946).

Our standard in reviewing a determination by the chancellor in equity is not to substitute our own judgment for that of the chancellor, “our task is rather to determine whether a judicial mind, on due consideration of all of the evidence, as a whole, could have reasonably have reached the conclusion of the chancellor.” Aiken Industries v. Estate of Wilson, 477 Pa. 34, 383 A.2d 808, 810 (1978).

In the present case the chancellor found that the failure of Klein to take any action in four years coupled with his failure to respond to Waltons’ discovery requests was sufficient to bar his claim for damages incident to specific performance. Klein counters that he did make repeated efforts to prosecute his claim.

Our review of the record indicates that Klein made no formal discovery requests for four years. Curiously, Boyle, who was dismissed from the action, did attempt to list the case for trial and did respond to the Waltons’ discovery request. The peripheral attempts by Boyle to prosecute the damages claim, however, are not imputed as actions of Klein. Klein’s activity from 1986 to 1990 includes various settlement proposals, and letters requesting lost rent figures, and demands for lost rents exceeding $1,000,000. Klein, however, took no action to compel the Waltons to act, or to otherwise properly pursue his claim. Furthermore, the failure of Klein to prosecute his claim has resulted in the Waltons having to manage the properties on Klein’s account.

As our Supreme Court noted:

If the plaintiff said to the defendant every day from the time when his first claim arose, T am going to sue you very soon,’ so that no reliance on misleading conduct could be urged, delay might none the less be fatal if a court of equity thought the plaintiff had remained inactive so long that it would be an injustice to allow recovery.

Freeman, supra 353 Pa. at 617, 46 A.2d at 207. We cannot say that under these circumstances, that the chancellor abused his discretion in finding that Klein remained inactive for so long that it would be an injustice to allow recovery. Accordingly, we affirm.

Orders affirmed in part, quashed in part.

      . Since we hold that state court was an appropriate forum, we will not address whether Klein could have alternatively pursued his claim in federal court.

      . Walton appealed the jurisdictional holding of the April 11, 1986 order, but this court properly quashed this appeal as interlocutory.

      . Klein also argues that the dismissal was an improper discovery sanction, and that laches does not apply since this was an action for damages at law. First, the dismissal was based on laches not as a discovery sanction. Second, as discussed in Easton Theatres, supra, the laches defense is applicable. Thus, both these assertions are without merit.

      . We do note that even though the Waltons have been prejudiced by the delay, a showing of prejudice is no longer a requirement for dismissing a case on the basis of failure to prosecute. Penn Piping, Inc. v. Insurance Co. of North America, 529 Pa. 350, 603 A.2d 1006 (Pa.1992).


author: MONTEMURO, Judge: OLSZEWSKI, Judge,

text:
    604 A.2d 1068
    Judith HERSHEY, Appellant, v. NINETY-FIVE ASSOCIATES and Blair Mahoney, Appellees.
    Superior Court of Pennsylvania.
    Argued Jan. 14, 1992.
    Filed March 16, 1992.

      Eugene H. Miller, Chester, for appellant.
    Harold L. Frank, Wayne, Lawrence L. Robinson, Philadelphia, for appellees.
    Before ROWLEY, President Judge, and OLSZEWSKI and MONTEMURO, JJ.
   MONTEMURO, Judge:

This is an appeal from an order granting appellees’ motion for summary judgment. The only issue on appeal is whether the trial court erred in finding that appellant’s exclusive remedy is workman’s compensation and, therefore, erred in granting the motion for summary judgment. For the reasons set forth below, we affirm.

On April 9, 1987, appellant was working her regular shift as night auditor at the Howard Johnson Hotel. At approximately 6:40 a.m. appellant was counting the money in the cash drawer when an unidentified male jumped over the counter. The man grabbed appellant by the hair, put a razor to her throat, and dragged her into the back offices. Thereafter, appellant was struck repeatedly as the assailant attempted to remove her clothing. Fortunately, appellant was then able to escape the assailant. Apparently, however, before leaving the hotel, the assailant took some money from the cash drawer. It is undisputed that appellant had no prior relationship with the assailant, and that she had never seen him before.

Appellant filed a suit against appellees for personal injury allegedly caused by the appellees’ negligence which resulted in her assailant’s opportunity to attack. Thereafter, appellees filed a motion for summary judgment asserting that appellant’s common law action against appellees was barred under the Pennsylvania Workmen’s Compensation Act. The motion for summary judgment was granted, and appellant filed this appeal.

The only issue before us on appeal is whether appellant’s common law action against her employer for personal injuries sustained when she was sexually assaulted by an unknown assailant while in the course of her employment on her employer’s premises is barred under the provisions of the Pennsylvania Workmen’s Compensation Act.

As a general rule, the Pennsylvania Workmen’s Compensation Act provides the exclusive remedy for employees who seek recovery for injuries sustained in the course of their employment. Wagner v. Natural Indemnity Co., 492 Pa. 154, 422 A.2d 1061 (1980). The Act provides a specific exception, however, in cases wherein the injury is caused intentionally by third parties. Section 301(c) of the Act provides in pertinent part that

The term “injury arising in the course of his employment”, as used in this article, shall not include an injury caused by an act of a third person intended to injure the employee because of reasons personal to him, and not directed against him as an employee or because of his employment ...

In such cases, the employee can pursue her common law remedies against her employer, and attempt to prove that the employer was negligent in failing to take precautions necessary to prevent a foreseeable attack by the third party. This provision of the Act, however, has been narrowly construed by our courts to allow recovery only in cases where the third party’s actions were motivated by a history of personal animosity toward that particular employee. Mike v. Borough of Aliquippa, 279 Pa.Super. 382, 421 A.2d 251 (1980).

In Brooks v. Marriott Corp., 361 Pa.Super. 350, 522 A.2d 618 (1987), we discussed the exception for injuries inflicted by third parties as provided for in Section 411:

This exception to the coverage of the Act applies to situations in which the third-party’s acts were motivated by a feeling of animus against the particular person injured. If the third-party would have attacked a different person in the same position as the injured employee, that attack falls outside the exception and is covered exclusively by the Act.

In the Brooks case, the employee was stabbed and beaten to death by an unknown person while working at his employer’s restaurant following the robbery of the restaurant. The employee’s personal representative sued the employer, and alleged that the employee was attacked for reasons which were personal to the attacker, and not because of her status as an employee of the restaurant. The Brooks court reversed the grant of preliminary objections against the estate, but stated that to prevail at trial appellant would have to prove that the deceased was killed after the accomplishment of the robbery for reasons not connected with her status as an employee, and that the attacker had personal animus toward the victim which was the motivation for the stabbing.

In a case which was very similar to the instant case, the Commonwealth Court affirmed the trial court’s grant of summary judgment on the basis that the employee’s remedy was limited to the Workmen’s Compensation Act. In Holland v. Norristown State Hospital, 136 Pa.Cmwlth. 655, 584 A.2d 1056 (1990), a state hospital security employee was assaulted and raped by a committed psychopath during the course of her employment. The victim contended that the rape was directed at her as a woman, and not as an employee, and therefore her recovery was not limited to the Workmen’s Compensation Act. The Commonwealth Court disagreed, and held that

In the present case, there is no allegation of a preexisting personal animosity between the patient and Holland. Although Holland was most likely attacked because she was a woman, the patient would have attacked any woman in that situation. She was attacked not because the patient’s animosity was personal to her but because of her position as an employee of Norristown, and as such, her remedy is limited to compensation under the Act.

Id., 136 Pa.Cmwlth. at 664, 584 A.2d at 1060.

In the instant case, appellant argues that the fact that her assailant attempted to rape her established that the attack upon her was motivated by a feeling of animus or personal animosity. Appellant argues that because of the nature of sexual assaults, proof of past personal animus is not required. She contends that she should be given a chance to prove at trial that rape is generally directed at the victim with personal enmity, and that therefore, the Workmen’s Compensation Act is not her exclusive remedy. We disagree and find that appellant cannot rely upon the sexual nature of her attack to establish that the attack occurred for reasons personal to her assailant. Appellant admits that she did not know her attacker, and that she had no prior contact with him. As such, appellant is not in a position to prove that the attack was a result of a preexisting animosity between appellant and her assailant. Any evidence, whether it be by expert testimony at trial or by the testimony of the victim herself, regarding the “personal” nature of sexual assaults would not satisfy appellant’s burden of proving that her attack was a result of the assailant’s personal animus against the victim. Appellant is unable to prove that the assailant would not have attacked any woman who had been standing behind the desk when he entered appellee’s hotel on April 9, 1987. Accordingly, the trial court correctly granted the motion for summary judgment and found that appellant’s exclusive remedy was the Workmen’s Compensation Act.

Order affirmed.

OLSZEWSKI, J., dissents.

OLSZEWSKI, Judge,

dissenting.

The instant case is Judith Hersbey’s appeal from the order, entered April 16, 1991, granting Ninety-Five Associates’ motion for summary judgment. This action stems from a sexual assault perpetrated by an unknown assailant on appellant while she was employed by appellees’ hotel. Ninety-Five Associates’ first summary judgment motion, claiming that appellant’s common law action against them was barred by the Workmen’s Compensation statute, was denied by Judge Anthony Semeraro on June 20, 1990. Thereafter, the case was transferred to Judge J.K. Barclay Surrick, who upon motion of Ninety-Five Associates, reconsidered and granted the motion for summary judgment on April 16, 1991. Finding that the grant of summary judgment was improper in this case, I dissent from the majority’s disposition.

This action developed from the following factual scenario. On April 9, 1987, at approximately 6:40 a.m., Ms. Hershey was working as a night auditor at a Howard Johnson Hotel owned and operated by appellees. Her responsibilities included adding up daily receipts and counting money. As she was standing behind the desk counting money from the cash drawer, the assailant leaped over the counter, grabbed Ms. Hershey by her hair, placed a razor at her throat, and dragged her into a back office. The assailant struck appellant repeatedly and attempted to remove her clothing. Ms. Hershey was ultimately able to escape the assailant. However, before fleeing the scene the assailant removed money from the cash register. Appellant neither knew nor had ever before seen her assailant at the time of the attack.

Appellant argues that the attack was motivated by personal animus toward her, which removes this incident from the scope of the Pennsylvania Workmen’s Compensation Act, 77 P.S. § 1 et seq., and entitles her to a private cause of action against appellees. Appellant’s argument for a private cause of action is also based on her allegation of appellees’ negligence, which resulted in her assailant’s opportunity for attack. On the other hand, appellees argue that the attack was prompted by the assailant’s intention to rob the hotel, that it occurred in the course of Ms. Hershey’s employment, and therefore worker’s compensation is the exclusive remedy.

The benchmark for review of summary judgment actions is that summary judgment is properly granted only where the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Pa.R.C.P. 1035(b), 42 Pa.C.S.A.; Marks v. Tasman, 527 Pa. 132, 136-138, 589 A.2d 205, 207 (1991). The record is viewed in the light most favorable to the non-moving party, and all doubts concerning the existence of a genuine issue of material fact must be resolved against the non-mover. Id. In the case at bar, I find that there is a genuine issue of material fact relating to the attacker’s motivation; I cannot conclude from the pleadings herein that Ms. Hershey’s cause of action is barred by the Workmen’s Compensation Act.

Appellant’s amended complaint states that:

5. On or about April 9,1987, Plaintiff, Judith Hershey, was working as a clerk for Defendant at the Howard Johnson executive hotel. At approximately 6:45 a.m. on April 9, 1987, an unidentified male jumped over the counter in the hotel section of the Howard Johnson executive Hotel and he then proceeded to strike Plaintiff and force her into a back office where he attempted to rape and/or otherwise sexually assault Plaintiff.
6. The injury to Judith Hershey resulted from the acts of an unidentified male which was personal to her and, a result of the personal animosity of her assailant and, said actions did not result from the relationship of her employment.
7. At the time of the aforesaid attack, Plaintiff, Judith Hershey was alone on the first floor of the aforesaid building and the doors to said area were unlocked and open to the public at the instructions of defendant, Blair Mahoney, individually and on behalf of Ninety-Five Associates.
******
9. Defendants knew or should have known that a prior attack occurred at the Hotel on or about February 12, 1987 and that other crimes had taken place on the premises in the period leading up to April 9, 1987.

(Emphasis added.)

In addition, it is not disputed that appellant was employed by appellees on the date the attack occurred. Both parties’ versions of the facts as set forth in their respective briefs are substantially alike; thus, there appears to be no dispute concerning the events of that day. The contention between the parties centers around the interpretation of the statutory provisions regarding injuries caused by a third party in the workplace. Initially, we note that the Workmen’s Compensation Act is ordinarily the exclusive means of compensation for injuries sustained in the workplace. Based on a “trade-off” theory, the Act provides certain compensation in return for the employer’s immunity from suit by employees. 77 P.S. §§ 481(a), 1403; Brooks v. Marriott Corp., 361 Pa.Super. 350, 353, 522 A.2d 618, 619-620 (1987). However, this blanket immunity is subject to exceptions mandated by the Pennsylvania legislature, one of which is the genesis of the instant controversy.

Specifically, 77 P.S. § 411, defines “Injury,” “personal injury,” and “injury arising in the course of employment:”

(1) ... [T]he term ‘injury arising in the course of his employment’ as used in this article shall not include an injury caused by an act of a third person intended to injure the employe because of reasons personal to him, and not directed against him as an employe or because of his employment; but shall include all other injuries sustained while the employe is actually engaged in the furtherance of the business or affairs of the employer.

(Emphasis added.)

Accordingly, we have held that

[a]n employee is permitted to maintain a common law cause of action against his employer whenever his or her injury is the result of an attack or assault by a third person or fellow employee for reasons that are personal to the attacker and not connected with the victim’s employment. To fit within this exception, the third party’s or fellow employee’s act must have been motivated by his animosity against the injured employee. If the third party would have attacked a different person in the same position as the injured employee, the attack falls outside the “third party attack” exception.

Vosburg v. Connolly, 405 Pa.Super. 121, 126-127, 591 A.2d 1128, 1131 (1991), citing Brooks v. Marriott Corp., 361 Pa.Super. 350, 355-356, 522 A.2d 618, 621 (1987). See also Dolan v. Linton’s Lunch, 397 Pa. 114, 152 A.2d 887 (1959).

Pursuant to our case and statutory law on third-party injuries, I find that there exists a genuine issue of fact concerning the applicability of the Workmen’s Compensation Act to this case. Clearly, robbery is related to a business entity’s business purpose, and would bar a private cause of action by an employee. Such a simple analysis, however, is inappropriate under the circumstances of this case.

There was evidence on the record which supports appellant’s allegation that the attack was unrelated to appellant’s employee status or the hotel’s business purpose. Appellant testified at her deposition that when the assailant leaped over the counter, the cash drawer containing two to three hundred dollars was open and in plain view. (Deposition Transcript at 26.) Rather than robbing the hotel of the money clearly available to him at that moment, the assailant grabbed appellant by her hair and put a razor to her throat. He proceeded then to drag her, away from the desk and the money, to back offices, where he punched appellant’s face and threw her against office furniture. The assailant continued beating appellant while he was removing her clothing. Eventually, the assailant was distracted by a noise and pulled appellant back toward the front desk. Once there, he knocked appellant to the floor and kicked her face. When appellant finally had an opportunity to escape, the assailant followed her, grabbing a handful of her hair. (D.T. at 29-31.) While in her presence, the assailant never took money from the open cash drawer. Only after the assault was over did appellant have any notice of a robbery. (D.T. at 31.)

I find that appellant’s allegations and the inferences which may be drawn from them fairly set forth a cause of action under the third-party exception of 77 Pa.C.S. § 411(1). I would reverse the grant of summary judgment entered by the lower court.

      . It is interesting to note that in appellant’s original complaint there was no allegation that the attack was the result of personal animosity. Only after appellee filed preliminary objections challenging the sufficiency of the complaint, did appellant amend the complaint to include an allegation that the attack was a result of the personal animosity of the assailant, and not from the relationship of her employment.

      . Though on this appeal appellant is identified as Judith Hershey, appellant’s name due to her marriage is now Judith lanna.


author: JOHNSON, Judge.

text:
    604 A.2d 1072
    Thomas G. REESE, Appellant v. TOM HESSER CHEVROLET-BMW.
    Superior Court of Pennsylvania.
    Argued Dec. 5, 1991.
    Filed March 16, 1992.

      Richard S. Campagna, Scranton, for appellant.
    John R. O’Brien, Scranton, for appellee.
    Before ROWLEY, President Judge, and WIEAND and JOHNSON, JJ.
   JOHNSON, Judge.

Thomas G. Reese appeals from an order granting Tom Hesser Chevrolet-BMW’s Motion for Summary Judgment. We are asked to determine whether the public policy of this Commonwealth is offended where an employer demands that employees, on pain of dismissal, contribute pro-rata to cover the employer’s loss on used vehicle sales, where the loss results from incorrect information provided by the employees to the lending bank in the regular course of business. We find no public policy violation. We affirm.

Thomas G. Reese was employed by Tom Hesser Chevrolet-BMW (hereinafter “Hesser Chevrolet”) as a used car salesman from March 1985 until July 1987. Reese had been working for Hesser Chevrolet for approximately four months when he arranged to sell a used truck to a customer named Morgan. When a vehicle was sold, Hesser Chevrolet would arrange financing with a local bank by telephone. Information necessary to establish the loan value of a vehicle would be given by the salesman to Hesser Chevrolet’s finance manager who, in turn, communicated it to the bank.

Two years after the sale, the financing bank claimed it had been given false information by Hesser Chevrolet concerning the mileage on the Morgan truck and the presence of a cruise control. As a result, the bank had released funds to Hesser Chevrolet in excess of the truck’s real loan value. When the truck loan was not repaid, the bank charged Hesser Chevrolet’s account $1200 for the loss that resulted from this, and one other similar, transaction.

In response to the bank’s action, Hesser Chevrolet assessed $300.00 each against its sales manager, its finance manager, Reese and the salesperson involved in the other sale. The other three employees paid the assessment. Reese was told that his refusal to pay the $300 assessed against him would result in his dismissal. He refused to pay and was dismissed in July 1987.

Reese filed a Complaint against Hesser Chevrolet alleging that he had been unlawfully discharged. At the close of pleadings, Hesser Chevrolet moved for summary judgment. In its supporting brief, Hesser Chevrolet averred that Reese had produced no facts of record upon which to base any allegation of wrongful discharge. Subsequently, Reese filed an answer to the motion, supporting his answer by deposition excerpts.

In his answer, Reese admitted that he was an at-will employee of Hesser Chevrolet. He also admitted that he was dismissed for his failure to pay the $300 fine to Hesser Chevrolet. On April 3, 1991, the court granted Hesser Chevrolet’s Motion for Summary Judgment. Reese asserts the following issue on appeal:

Where an employee is discharged for refusing to become the victim of a crime does his discharge violate the public policy of the Commonwealth of Pennsylvania?

In determining whether the trial court erred in granting a motion for summary judgment, this court must determine whether the “pleadings, depositions, answers to interrogatories, admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Pa.R.C.P. 1035(b); An entry of summary judgment may be granted only in cases where the right is clear and free from doubt. Marks v. Tasman, 527 Pa. 132, 134, 589 A.2d 205, 206 (1991). Okkerse v. Howe, 405 Pa.Super. 608, 610, 593 A.2d 431, 432 (1991). The moving party has the burden of showing that there is no genuine issue of material fact and that he is entitled to judgment as a matter of law. Id.

Absent statutory, contractual or public policy exceptions to the contrary, employment is terminable at-will by either party. Geary v. United States Steel, Corp., 456 Pa. 171, 175, 319 A.2d 174, 176 (1974). One limited exception to this doctrine has emerged in this state allowing redress if the discharge of an employee-at-will violates a clearly defined mandate of public policy. Field v. Philadelphia Elec. Co., 388 Pa.Super. 400, 418, 565 A.2d 1170, 1179 (1989).

This public policy exception has been very narrowly drawn and has been applied in only rare instances where important issues of public policy are raised. See e.g., Reuther v. Fowler & Williams, Inc., 255 Pa.Super. 28, 386 A.2d 119 (1978) (termination for serving on a jury); Perks v. Firestone Tire & Rubber Co., 611 F.2d 1363 (3rd Cir.1978) (termination for refusal to take polygraph when state statute forbids); Novosel v. Nationwide Ins. Co., 721 F.2d 894 (3rd Cir.1983) (termination for refusal to participate in employer’s lobbying effort); Shaw v. Russel Trucking Lines, Inc., 542 F.Supp. 776 (W.D.Pa.1982) (termination for refusal to violate antitrust law).

Here, Reese argues that Hesser Chevrolet’s action of imposing the $300 fine violated public policy. He contends that since his commission on the sale of the truck in 1985 was approximately $167, he was being asked to contribute almost twice his commission, thus being asked to pay for his employer’s lost profit which had been confiscated by the bank. Reese argues that this was all without any showing that he, Reese, bore any fault in the matter. Reese argues that this constituted “the threat of extortion under 18 Pa.C.S.A. 3923(a)(7).” Appellant’s Brief at 16. Reese concludes, therefore, that he was discharged for refusing to become a victim of a crime, which would offend public policy. This argument fails.

The section of the Crimes Code upon which Reese relies to claim he would be a victim of a crime provides:

§ 3923. Theft by extortion
(a) Offense Defined. — A person is guilty of theft if he intentionally obtains or withholds property of another by threatening to:
(7) inflict any other harm which would not benefit the actor.

18 Pa.C.S. § 3923(a)(7). This case does not involve a threat by Hesser Chevrolet to inflict harm on Reese; rather, it involves the imposition of an assessment by an employer against an employee whose actions may have contributed to a $1200 loss. Reese does not attempt to fit Hesser Chevrolet’s actions into any of the activities set forth in the first six subsections of Section 3923. We decline to determine that the threat of discharging an at-will employee for failure to join in the restitution surrounding several bad auto loans constitutes the infliction of “any other harm which would not benefit the actor [Hesser Chevrolet].” Reese does not argue that the dismissal of employees thought by their employer to have been responsible for losses is not intended to benefit the employer. We are unable to conclude that the fine imposed upon Reese and the other employees, on pain of discharge, amounted to extortion.

It may well be that the action of the employer was unfair to Reese; however, it still does not rise to the level of a public policy violation. See Darlington v. General Electric, 350 Pa.Super. 183, 210, 504 A.2d 306, 320 (1986) (no public policy violation where employee was discharged without opportunity to defend himself against allegations of phone account irregularities).

Reese does not contend that there is any genuine issue for trial. The facts are not in dispute. The only question before us is whether, on the facts presented, Hesser Chevrolet is entitled to judgment as a matter of law. We are unable to find any offense to the public policy of this Commonwealth. Consequently, we find that the trial court did not err in granting Hesser Chevrolet’s Motion for Summary Judgment. Accordingly, the order of April 3,1991, is AFFIRMED.

Order AFFIRMED.