Commonwealth v. Golden Gate Nat'l Senior Care LLC

194 A.3d 1010

COMMONWEALTH of Pennsylvania Acting BY Attorney General, Josh SHAPIRO, Appellant

v.GOLDEN GATE NATIONAL SENIOR CARE LLC; GGNSC Holdings LLC; GGNSC Administrative Services LLC; GGNSC Clinical Services LLC; GGNSC Equity Holdings LLC; GGNSC Harrisburg LP; GGNSC Harrisburg GP, LLC; GGNSC Camp Hill III LP ; GGNSC Camp Hill III GP, LLC; GGNSC Clarion LP ; GGNSC Clarion GP, LLC; GGNSC Gettysburg LP ; GGNSC Gettysburg GP, LLC; GGNSC Altoona Hillview LP ; GGNSC Altoona Hillview GP, LLC; GGNSC Lansdale LP; GGNSC Lansdale GP, LLC; GGNSC Monroeville LP ; GGNSC Monroeville GP, LLC; GGNSC Mt. Lebanon LP ; GGNSC Mt. Lebanon GP, LLC; GGNSC Phoenixville II LP; GGNSC Phoenixville II GP, LLC; GGNSC Philadelphia LP ; GGNSC Philadelphia GP, LLC; GGNSC Wilkes-Barre II LP ; GGNSC Wilkes-Barre II GP, LLC; GGNSC Tunkhannock LP ; GGNSC Tunkhannock GP, LLC; GGNSC Erie Western Reserve LP; GGNSC Erie Western Reserve GP, LLC; GGNSC Pottsville LP ; GGNSC Pottsville GP, LLC, Appellees

No. 16 MAP 2017

Supreme Court of Pennsylvania.

Argued: May 16, 2018

Decided: September 25, 2018

Daniel Berger, Esq., Berger & Montague, P.C., for City of Philadelphia, Amicus Curiae.

Peter Carr, Esq., Philadelphia District Attorney's Office, for Philadelphia District Attorney's Office, Amicus Curiae.

Iris Y. Gonzalez, Esq., for AARP & AARP Foundation, Amicus Curiae.

Kelley Brisbon Hodge, Esq., Philadelphia District Attorney's Office, for Philadelphia District Attorney's Office, Amicus Curiae.

James John Kutz, Esq., Post & Schell, P.C., for American Health Care Association, Amicus Curiae.

Kimber Lynn Latsha, Esq., Latsha Davis & McKenna, P.C., for LeadingAge PA, Amicus Curiae.

Kevin James McKeon, Esq., Hawke McKeon & Sniscak, L.L.P., for Pennsylvania Health Care Association, Amicus Curiae.

Ashley C. Parrish, Esq., for Chamber of Commerce of the United States, Amicus Curiae.

William Alvarado Rivera, Esq., for AARP & AARP Foundation, Amicus Curiae.

Jonathan Sgro, Esq., for Center for Advocacy for the Rights & Interests of the Elderly, Amicus Curiae.

Tyler Ewell Wren, Esq., Berger & Montague, P.C., for City of Philadelphia, Amicus Curiae.

Thomas Devlin, Esq., Pennsylvania Office of Attorney General, for Attorney General, Appellant.

Jonathan Scott Goldman, Esq., for Attorney General, Appellant.

Howard Greeley Hopkirk, Esq., Pennsylvania Office of Attorney General, for Attorney General, Appellant.

Joshua D. Shapiro, Esq., for Attorney General, Appellant.

Thomas A. Clare, Esq., for GGNSC LLP, et al, Appellee.

Thomas H. Lee II, Esq., Dechert LLP, for GGNSC LLP, et al, Appellee.

Elizabeth M. Locke, Esq., for GGNSC LLP, et al, Appellee.

Christopher John Mauro, Esq., Dechert LLP, for GGNSC LLP, et al, Appellee.

Megan L. Meier, Esq., for GGNSC LLP, et al, Appellee.

SAYLOR, C.J., BAER, TODD, DONOHUE, DOUGHERTY, WECHT, MUNDY, JJ.

OPINION

JUSTICE DONOHUE

The Office of the Attorney General ("OAG"), on behalf of the Commonwealth, filed suit against more than two dozen nursing homes and their parent companies (collectively, "Appellees"),¹ alleging violations of the Unfair Trade Practices and Consumer Protection Law, 73 Pa.C.S. §§ 201-1 - 201.9.3 ("UTPCPL"), and unjust enrichment. Upon consideration of Appellees' preliminary objections, the Commonwealth Court dismissed the claims and this appealed followed.² For the reasons discussed herein, we find that the dismissal of the UTPCPL claims was improper, but the dismissal of the unjust enrichment claim was proper because the claim was filed prematurely. Accordingly, we reverse the Commonwealth Court's order and remand for further proceedings.

Appellees are individual nursing homes located throughout Pennsylvania as well as their affiliated companies and parent entities. On July 1, 2015, the OAG filed a complaint and petition for injunctive relief in the Commonwealth Court's original jurisdiction alleging violations of the UTPCPL and unjust enrichment. The complaint named the Parent Companies and fourteen Facilities. Following the filing of preliminary objections, the OAG filed an amended complaint asserting the same claims and naming an additional eleven Facilities as defendants.³

Although raised under four discrete provisions of the UTPCPL, specifically, sections (4)(v), (ix), (x), and (xxi), discussed infra, the essence of the OAG's UTPCPL claims is that through deceptive advertisements and marketing materials, Appellees made materially misleading statements about the nature and quality of the care provided to their nursing home residents. Amended Complaint, 9/8/2015, ¶¶ 6, 11, 77-88. The OAG further alleged that Appellees knowingly failed to provide the level of care they advertised, as they purposefully understaffed the facilities so as to maximize their profits. Id. , ¶¶ 13, 16, 106. The OAG alleged that the actionable conduct occurred in chain-wide and facility-level misrepresentations. Id. , ¶¶ 10-11, 77-107. With regard to the chain-wide misrepresentations, the OAG claimed that through various marketing materials, including brochures, videos, websites, and video advertisements, Appellees misrepresented the level of basic care provided to their residents in their facilities. Id. , ¶ 82. By way of example, the OAG pointed to multiple statements, including the following:

• "Snacks and beverages of various types and consistencies are available at any time from your nurse or nursing assistant."

• "We have licensed nurses and nursing assistants available to provide nursing care and help with activities of daily living .... Whatever your needs are, we have the clinical staff to meet those needs."

• "Clean linens are provided for you on a regular basis, so you do not need to bring your own."

• "A restorative plan of care is developed to reflect the resident's goals and is designed to improve wellness and function. The goal is to maintain optimal physical, mental and psychological functioning."

• "A container of fresh ice water is put right next to your bed every day, and your nursing assistant will be glad to refill or refresh it for you.’ "

• "We work with an interdisciplinary team to assess issues and nursing care that can enhance the resident's psychological adaptation to a decrease of function, increase levels of performance in daily living activities, and prevent complications associated with inactivity."

Id. , ¶¶ 83-84. The OAG averred that based on information it received through former residents and employees of the Facilities, these statements are misleading because they create the impression that the Facilities will provide care that the Facilities do not in fact provide. Id. ¶¶ 85-87. In contrast to the impression that these statements give, the OAG claimed that residents routinely have to wait hours for food, assistance with toileting, changing of soiled bed linens, and other elements of basic care, and sometimes must forgo them entirely. See id.

On the individual facility level, the OAG alleged that the Facilities made misrepresentations not only by providing the marketing materials addressed above, but also in the resident assessment and care plans created for each resident. Id. , ¶¶ 91-92. These care plans, which are created after an evaluation of the resident and updated quarterly, detail the types of assistance that the facility will provide each resident based upon his or her need.⁴ Id. , ¶ 92. The OAG alleged that the services promised in the care plans were not provided because of intentional understaffing. Id. , ¶ 98.

Further, the OAG contended that the Facilities generated billing statements which indicated that certain care was provided when it was not. Id. ¶¶ 99-100. Of importance, for residents who received Medicaid or Medicare, these billing statements were paid by the Pennsylvania Department of Human Services ("DHS") with public funds. Finally, the Commonwealth alleged that the Facilities deceived the Pennsylvania Department of Health ("DOH") as to the levels of care they provided by temporarily increasing the number of staff on hand during DOH inspections and by willfully creating inaccurate and/or falsified resident care records for DOH's review. See id ., ¶¶ 101-104.

For all of these violations, the OAG sought an injunction prohibiting Appellees from engaging in the alleged misconduct, as permitted by section 4 of the UTPCPL, as well as restitution (or "restoration"), as permitted by section 4.1 of the UTPCPL, "including monies paid by consumers and the Commonwealth in the form of per diem payments[.]" Id. , ¶ 272 (citing 73 P.S. §§ 201-4, 201-4.1 ). It also sought civil penalties of $1000 to $3000 for each violation (the amount increasing with the age of the victim), as provided by section 8(b) of the UTPCPL. Id. , ¶ 271 (citing 73 P.S. § 201-8(b) ).

Regarding its unjust enrichment claim, the OAG asserted that Parent Companies directed the Facilities to transfer the amounts received as a result of their deceptive billing practices, including amounts paid by DHS, to them. Id. , ¶¶ 279-280. The Commonwealth asked that Parent Companies be ordered to disgorge all money received through these allegedly unlawful actions. Id. , ¶ 281.

Appellees filed numerous preliminary objections, challenging, inter alia, the OAG's standing to bring these claims, the failure to state claims upon which relief could be granted and insufficient specificity in the amended complaint. Following argument, the Commonwealth Court issued a lengthy opinion in which it overruled a few of Appellees' preliminary objections⁵ but sustained the majority of them, and dismissed the amended complaint.

Commonwealth Court Decision

UTPCPL Claims

The Commonwealth Court first considered Appellees' claim that the OAG failed to establish that the complained-of marketing and advertising materials violated sections 4(v) and (xi) of the UTPCPL because the statements therein were "so vague and indefinite as to categorically qualify as puffery[,]" which is not actionable under the UTPCPL. Preliminary Objections, 10/8/2015, ¶¶ 48-49. The Commonwealth Court agreed, noting that ...