Nelson v. State Bd. of Veterinary Medicine, 75 C.D. 2007.

938 A.2d 1163

James W. NELSON, D.V.M., Petitioner v. STATE BOARD OF VETERINARY MEDICINE, Respondent.

No. 75 C.D. 2007.

Commonwealth Court of Pennsylvania.

Argued June 11, 2007.

Decided December 17, 2007.

April L. McClaine, Harrisburg, for petitioner.

Teresa Lazo, Counsel, Harrisburg, for respondent.

BEFORE: LEADBETTER, President Judge, and LEAVITT, Judge, and FLAHERTY, Senior Judge.

OPINION BY Judge LEAVITT.

James W. Nelson, D.V.M., petitions for review of an adjudication of the State Board of Veterinary Medicine (Board) denying his request for reimbursement of costs that he incurred in successfully defending against an enforcement action brought against him by the Bureau of Enforcement and Investigations of the Department of State (Bureau). In this case, we consider what evidence, if any, in addition to sworn testimony must be presented by an individual seeking to prove that his net worth is less than $500,000. This question arises from the statute commonly known as the Costs Act, Act of December 13, 1982, P.L. 1127, as amended, 71 P.S §§ 2031-2035,¹ which entitles an individual to reimbursement, up to a maximum of $10,000, of his costs to defend against an agency's action so long as his net worth does not exceed $500,000.

The facts regarding the Bureaus enforcement action against Nelson are set forth fully in this Courts opinion at Nelson v. State Board of Veterinary Medicine, 863 A.2d 129 (Pa.Cmwlth.2004) (Nelson I). Briefly, the Bureau initiated an investigation after a pet owner complained that Nelson had difficulty euthanizing her dog, which was dying of congestive heart failure. While in Nelsons office to follow up on the complaint, the Bureaus investigator watched Nelson telephone the pet owner and in a loud voice upbraid her for complaining to the Bureau. Nelson used profane language, and the pet owner hung up on him. The Bureau charged Nelson with veterinary malpractice and professional incompetence. After a hearing on the Bureaus charges, the Board concluded that there was no basis to the Bureaus claim of veterinary malpractice. On the other hand, it held that Nelsons angry call to the pet owner constituted professional incompetence. Accordingly, the Board ordered a public reprimand of Nelson. It also ordered Nelson to take a course on effective communication with bereaved pet owners; to take an anger management course; and to send a letter of condolence and apology to the pet owner. Nelson appealed.

This Court reversed the Board. We held that "professional incompetence" refers not to "unprofessional conduct," such as swearing at the owner of a pet entrusted to the care of a licensed veterinarian. Rather, we held that "professional incompetence" describes conduct that has not yet resulted in malpractice but increases the risk for malpractice by, for example, failing to refer an animal to a specialist where appropriate. Our reasons were several.

First, we examined the applicable statute. The focus of the Veterinary Medicine Practice Act² is to ensure the proper diagnosis and treatment of animals. With respect to the relationship between the veterinarian and a pet owner, termed a "client" in the statute, the Act requires only that veterinarians (1) consult with clients and (2) make their records available to clients. Section 3(15) of the Act, 63 P.S. § 485.3(15).³ The Act is otherwise silent.

Next, we looked at the Boards regulations that implement the Act. With respect to the veterinarian-client relationship, the regulation requires the veterinarian to "protect the privacy of clients;" to "readily withdraw from the case" where requested by a client; and to "honor" a request for referral to another veterinarian by taking steps to "facilitate that referral." 49 Pa. Code § 31.21, Principle 7. The regulation does not direct a veterinarian to deal in a "professional" manner with clients.

With respect to "competency," the regulation states that a veterinarian must increase his professional knowledge and seek consultation with other "veterinarians" or other licensed professionals where appropriate. 49 Pa.Code § 31.21, Principle 1. In other words, competency refers exclusively to the medical treatment of an animal and not at all to the veterinarians relationship with the animals owner.

Finally, we looked at precedent that had addressed the question of whether the term "competence" is broad enough to include unseemly behavior by a licensed professional. See Chaby v. State Board of Optometrical Examiners, 35 Pa.Cmwlth. 551, 386 A.2d 1071 (1978) (a licensed optometrist who told a patient to "go to hell found not to be incompetent"); Ciavarelli v. State Board of Funeral Directors, 129 Pa.Cmwlth. 305, 565 A.2d 520 (1989) (licensed funeral directors irate telephone call to a priest for favoring a competitors funeral home found not to be "incompetent" conduct). In both cases, this Court held that reprehensible and impudent behavior did not constitute incompetency in practicing a profession.

Based upon the Act, the regulations and the case law precedent, we held that "professional incompetence" does not equate with "unprofessional conduct," such as swearing at a dog owner. We held that the Board simply lacked the power under the Act to modulate the behavior of veterinarians by directing them to undergo anger management training or to pen notes of condolence. An agency may exercise only those powers expressly conferred upon it by the legislature in "clear and unmistakable language." Aetna Casualty and Surety Company v. Insurance Department, 536 Pa. 105, 118, 638 A.2d 194, 201 (1994) (citation omitted). We reversed the Board. Nelson I, 863 A.2d at 139.

On January 6, 2005, Nelson filed an application with the Board, seeking an award of fees and expenses pursuant to the Costs Act.⁴ In his application, Nelson asserted that the holding in Nelson I demonstrated that the Boards enforcement action against him was not "substantially justified." The application further stated that Nelsons net worth did not exceed $500,000. Attached to his application were the itemized invoices from his attorney showing the amount of legal fees and costs Nelson incurred in defending against the Bureaus action and preparing the costs application. They totaled $16,400 in attorneys fees and $547.35 in costs. Application at ¶ 17. The application was verified by Nelson and by his attorney. The Bureau answered that it lacked sufficient information, knowledge or belief of Nelsons net worth and demanded strict proof thereof. In new matter, the Bureau objected to the payment of attorneys fees in excess of $75 per hour. The Board scheduled a hearing on Nelsons application.

Nelson testified that when the Bureau brought its action in September of 2003, his net worth was $342,315. Nelson prepared an exhibit, which was introduced into evidence, to explain how he arrived at this number. Reproduced Record at 159a-160a (R.R. ____). The exhibit listed his IRA account, valued at $189,780, which was the only asset in his name alone, as well as a series of assets Nelson owned jointly with his wife. The jointly held assets consisted of checking accounts, vehicles, a house, an apartment building, and the veterinary clinic where Nelson conducts his practice. Nelsons 50 percent share of the joint assets amounted to $302,285. The exhibit also listed liabilities, which consisted of outstanding mortgage loans on the apartment building and clinic, as well as one outstanding car loan. The debts totaled $299,500, which, reduced by 50 percent, left Nelson with a total net worth of $342,315. Nelson explained that his valuation of each asset was based on his review of tax records, business records, stock records and appraisals. On cross-examination, Nelson acknowledged that his exhibit did not include every item of personal property, such as used furniture, equipment and clothing that he believed to have only nominal value.⁵ He stated that his jointly owned personalty could be valued, at most, at $30,000, which would add $15,000 to the total of $342,315 or $357,315. This still left a net worth well below the $500,000 maximum allowed under the Costs Act.⁶

Next, Nelson introduced his invoices for legal services. They totaled $16,400 through the filing of the application and $547.35 in costs. Nelson also testified that data from the U.S. Department of Labor shows that since 1983, when the Costs Act was enacted, the cost of living has doubled. This evidence was offered because the Costs Act allows for an increase in the statutory $75 hourly rate for legal services where justified by inflation or by the limited availability of qualified counsel.⁷ James J. Kutz, Esquire, former Chief Counsel for the Bureau of Professional and Occupational Affairs, and presently a partner in the law firm of Post Schell, testified that the $150 hourly fee claimed by Nelson in his application was low for practitioners specializing in administrative practice and procedure.⁸ Hourly rates for this legal specialty range from $200 to $320 per hour. Kutz concluded that "it would be hard to find reasonable access to practitioners billing at $150 per hour...." R.R. 87a; N.T. 51.

The Bureau presented no evidence in opposition to Nelsons case. It subpoenaed no documents from Nelson for production at the hearing. It did nothing except cross-examine Nelson and argue that Nelson should have included furniture, equipment and clothing on his exhibit of assets and liabilities. It did not refute Nelsons evidence offered to show that reimbursement for legal services should be set at an hourly rate of $150.

The Board denied Nelsons application. It concluded that Nelson did not meet his burden of proving that he had a net worth of less than $500,000, the threshold to eligibility for recovery of costs under the Costs Act. The Board also held that, in any case, the Bureaus prosecution of Nelson was substantially justified, also rendering Nelson ineligible.

On appeal,⁹ Dr. Nelson raises two issues....