IRS PTIN Registration System is "Down"

The Internal Revenue Service's Tax Professionals system presently is "down" due to litigation.  [Note:  See "Update" at end of posting, below (02/06/13)]

According to the IRS Statement on Court Ruling Related to Return Preparers, updated as of January 25, 2013, a litigation stay is the reason:

As of Friday, Jan. 18, 2013, the United States District Court for the District of Columbia has enjoined the Internal Revenue Service from enforcing the regulatory requirements for registered tax return preparers. In accordance with this order, tax return preparers covered by this program are not currently required to register with the IRS, to complete competency testing or secure continuing education. The ruling does not affect the regulatory practice requirements for CPAs, attorneys, enrolled agents, enrolled retirement plan agents or enrolled actuaries.

The Internal Revenue Service, working with the Department of Justice, continues to have confidence in the scope of its authority to administer this program. On Wednesday, Jan. 23, the IRS and Justice Department asked for the injunction to be lifted. Regardless of the outcome of that request, an appeal is planned within the next 30 days.

The IRS is continuing to evaluate the scope of the court's order in determining consistent next steps. Please continue to check this site as additional information becomes available.

The federal litigation, which was filed by individual plaintiffs in 2012, regarding required payment to the IRS of annual fees charged to professional tax preparers, was referenced in a mid-summer posting by Michael Kohn on Accounting Today, entitled Appeals Court Upholds PTIN Fee (06/13/12). The Federal Appeals Court upheld such fees:

A federal appeals court has upheld a lower court ruling dismissing the complaint of a tax preparer who argued that the Treasury Department and the Internal Revenue Service did not have the right to charge an annual fee for a Preparer Tax Identification Number.

The case involved Jesse Brannen III, a tax attorney and CPA in White, Ga. Brannen sued the Treasury Department, claiming that it exceeded its statutory authority when it began charging a $64.25 fees for issuing a PTIN and an annual renewal fee of $63. * * *  

Earlier this year, an advocacy group called the Institute for Justice filed suit against the IRS on behalf of three other tax preparers challenging the IRS’s licensing requirements (see Tax Preparers Sue IRS over New Requirements). * * *

The stay dated January 18, 2013, was issued by the trial court in the same case, Loving v. Internal Revenue Service, Civil Action No. 12-385 (See also: Memorandum Opinion, both unofficial links), filed in the U.S. District Court for the District of Columbia.  That litigation had also questioned the IRS' authority to compel annual continuing education and testing of certain federal income preparers.

But the issue of PTIN fees may be revisited in another federal jurisdiction, according to a press release issued today, entitled Atlanta Attorney/CPA Files Lawsuit Challenging PTIN User Fees (01/28/13).

On January 25, 2013, Allen Buckley, an Atlanta attorney/CPA filed suit in the U.S. District Court for the Eastern District of Tennessee, challenging charging of user fees by the U.S. Treasury Department to issue and annually renew Preparer Tax Identification Numbers ("PTINs").

Beginning in 2010, after the IRS recommended the tax return preparation industry be regulated in a new manner not approved by Congress, regulations were issued to implement IRS's recommendations. One of the regulations included the requirement that a PTIN be obtained, and that fees be charged for issuance and annual renewal of the PTIN. The IRS's recommendation called for renewal every three years, but the regulations provided for annual renewal. The initial fee is $64.25 and the annual renewal fee is $63.

The suit seeks a declaratory judgment that charging of fees for initial issuance of a PTIN and annual renewal thereof is unlawful, and also asks for a permanent injunction, preventing the Treasury Department from charging issuance and renewal fees.

Allen Buckley said: "The user fee statute is the basis for charging of fees. Numerous requirements exist for the user fee statute to be used to charge fees, including requirements that the fees are paid voluntarily and a special benefit is received by the payer. Neither of these requirements has been met in this case." * * *

With the IRS PTIN system "down", if a professional tax preparer is not currently registered or renewed, can one register anew or re-register with the IRS willingly for the year 2013?  How?

Recently, federal estate tax forms and federal transfer tax laws have been in flux.  Now federal tax professional preparer requirements for 2013 are too. 

Update: 02/06/13:

The IRS Preparer Tax Identification Number (PTIN) system was restored online effective February 2, 2013. It had been "down" after January 18, 2013, due to litigation in federal court. For an update, see: PA EE&F Law Blog posting IRS PTIN System Online Again (02/06/13).

Appeal Procedures from PA Orphans' Court Rewritten

Appeals from orders issued by the various Orphans' Court Divisions, of the Courts of Common Pleas in Pennsylvania, are governed, effective February 12, 2012, by revised procedural rules, which were further amended by the Pennsylvania Supreme Court by order dated July 16, 2012.

A completely rewritten Rule 342 ("Appealable Orphans' Court Orders"), of the Pennsylvania Rules of Appellate Procedure (Pa. R.A.P.), was adopted December 29, 2011, in conjunction with an amended PA R.A.P. Rule 311 ("Interlocatory Appeals as of Right") , by the Pennsylvania Supreme Court, applicable to all Orphans’ Court orders entered forty-five days after that adoption.  See:  42 Pa. Bulletin 374 (01/12/12, PDF). 

On July 27, 2012, the Pennsylvania Supreme Court order, dated July 16, 2012, amending both Pa.R.A.P. 311 and 342 and providing for further, minor changes, effective immediately, was submitted for publication to the Pennsylvania Bulletin. See: 42 Pa. Bulletin 4693 (07/28/12, PDF).

The collective revisions contemplate disputed matters in an "estate", "trust", or "guardianship" -- terms defined terms under subsection (b) of Rule 342 -- that have been resolved by a trial court order, from which appeal is sought by a party to Pennsylvania's appellate courts -- first, to the Pennsylvania Superior Court, or, if granted further, to the Pennsylvania Supreme Court.

These rule revisions address trial court-ordered dispositions that are appealable "as of right" from the Orphans' Court Division, as set forth in the revised Pa. R.A.P. 342:

General rule. An appeal may be taken as of right from the following orders of the Orphans’ Court Division:

(1) An order confirming an account, or authorizing or directing a distribution from an estate or trust;

(2) An order determining the validity of a will or trust;

(3) An order interpreting a will or a document that forms the basis of a claim against an estate or trust;

(4) An order interpreting, modifying, reforming or terminating a trust;

(5) An order determining the status of fiduciaries, beneficiaries, or creditors in an estate, trust, or guardianship;

(6) An order determining an interest in real or personal property;

(7) An order issued after an inheritance tax appeal has been taken to the Orphans’ Court pursuant to either 72 Pa.C.S. § 9186(a)(3) or 72 Pa.C.S. § 9188, or after the Orphans’ Court has made a determination of the issue protested after the record has been removed from the Department of Revenue pursuant to 72 Pa.C.S. § 9188(a); or

(8) An order otherwise appealable as provided by Chapter 3 of these rules. [Link added.]

The revised Official Note to Pa. R.A.P. 342 recounts the history since 1992 regarding orders appealable and the failed past efforts towards clarification, and then explains the situations sought to be remedied by the recent sweeping changes:

In 1992, the Supreme Court amended Rule 341 to make clear that, as a general rule, a final order is an order that ends a case as to all claims and all parties. Because of this amendment, many Orphans' Court orders that may have been considered constructive final orders prior to 1992 became unappealable interlocutory orders. Although some Orphans' Court orders were construed by case law to be appealable as collateral orders, see Estate of Petro, 694 A.2d 627 (Pa. Super. 1997), the collateral order doctrine was neither consistently applied nor was it applicable to other Orphans' Court orders that previously had been considered final under the ''final aspect'' doctrine. See, e.g. Estate of Habazin, 679 A.2d 1293 (Pa. Super. 1996).

In response, the Supreme Court revised Rule 342 that initially permitted appeals from Orphans' Court orders concerning distribution even if the order was not considered final under the definition of Rule 341(b). In 2001, Rule 342 was amended to also allow appeals from orders determining an interest in realty or personalty or the status of individuals or entities, in additional to orders of distribution, if the Orphans' Court judge made a determination that the particular order should be treated as final. In 2005, the Supreme Court amended Rule 342 again, adding subdivision (2) to clarify that Rule 342 was not the exclusive method of appealing Orphans' Court orders.

Also, in 2005, the Supreme Court amended Rule 311 to provide for an interlocutory appeal as of right from an order determining the validity of a will or trust. See former Rule 311(a)(8). Such an order needed to be immediately appealable and given finality so that the orderly administration of the estate or trust could proceed appropriately.

Since 2005, it has become apparent that other adversarial disputes arise during the administration of an estate, trust or guardianship, and that orders adjudicating these disputes also must be resolved with finality so that the ordinary and routine administration of the estate, trust or guardianship can continue. See Estate of Stricker, 602 Pa. 54, 63-64, 977 A.2d 1115, 1120 (2009) (Saylor, J., concurring). Experience has proven that the determination of finality procedure in subdivision (1) of Rule 342 is not workable and has been applied inconsistently around the Commonwealth. See id. (citing Commonwealth v. Castillo, 585 Pa. 395, 401, 888 A.2d 775, 779 (2005) (rejecting the exercise of discretion in permitting appeals to proceed)).

Experience has also proven that it is difficult to analogize civil litigation to litigation arising in estate, trust and guardianship administration. The civil proceeding defines the scope of the dispute, but the administration of a trust or estate does not define the scope of the litigation in Orphans' Court. Administration of a trust or an estate continues over a period of time. Litigation in Orphans' Court may arise at some point during the administration, and when it does arise, the dispute needs to be determined promptly and with finality so that the guardianship or the estate or trust administration can then continue properly and orderly. Thus, the traditional notions of finality that are applicable in the context of ongoing civil adversarial proceedings do not correspond to litigation in Orphans' Court.

In order to facilitate orderly administration of estates, trusts and guardianships, the 2011 amendments list certain orders that will be immediately appealable without any requirement that the Orphans' Court make a determination of finality. Orders falling within subdivisions (a)(1)—(7) no longer require the lower court to make a determination of finality. * * *

  The revised Official Note then explains in detail the substantive changes contained in revised PA. R.A.P. 342.  I cannot improve upon this concise and reliable explanation -- other than breaking up the text into shorter paragraphs and emphasizing the subdivision explanations; and so I quote, with highlighting and re-paragraphing applied:

Subdivisions (a)(1)—(7) list orders that are unique to Orphans' Court practice, but closely resemble final orders as defined in Rule 341(b). 

Subdivision (a)(1) provides that the adjudication of any account, even an interim or partial account, is appealable. Previously, only the adjudication of the final account would have been appealable as a final order under Rule 341. The prior limitation has proven unworkable for estate administration taking years and trusts established for generations during which interim and partial accounts may be adjudicated and confirmed. The remainder of subdivision (a)(1) permits appeals from orders of distribution as Rule 342 always has permitted since its initial adoption.

Subdivision (a)(2) is a new placement for orders determining the validity of a will or trust that previously were appealable as interlocutory appeals as of right following the 2005 amendment to Rule 311. See prior Rule 311(a)(8).

Subdivision (a)(3) is a new provision that allows an immediate appeal from an order interpreting a will or other relevant document that forms the basis of a claim asserted against an estate or trust. Such orders can include, among other things, an order determining that a particular individual is or is not a beneficiary or determining if an underlying agreement executed by the decedent during life creates rights against the estate.

Subdivision (a)(4) addresses trusts and is similar to subdivision (a)(3), but also permits immediate appeals from orders modifying, reforming or terminating a trust since such judicial actions are now permitted under 20 Pa.C.S. § 7740 et seq.

Subdivision (a)(5) is intended to clarify prior Rule 342 in several respects: First, an appealable Orphans' Court order concerning the status of individuals or entities means an order determining if an individual or entity is a fiduciary, beneficiary or creditor, such as an order determining if the alleged creditor has a valid claim against the estate. Second, such orders include orders pertaining to trusts and guardianships as well as estates. Finally, this subdivision resolves a conflict in prior appellate court decisions by stating definitively that an order removing or refusing to remove a fiduciary is an immediately appealable order.

Subdivision (a)(6) retains the same language from prior Rule 342.

Subdivision (a)(7) permits appeals of an Orphans' Court order concerning an inheritance tax appraisement, assessment, allowance or disallowance when such order is issued separately and not in conjunction with the adjudication of an account. Sections 9186 and 9188 of Chapter 72 provide three procedures, outside the context of an accounting, whereby either the personal representative or the Department of Revenue may bring before the Orphans' Court a dispute over inheritance taxes imposed. See also Estate of Gail B. Jones, 796 A.2d 1003 (Pa. Super. 2002) (analogizing a petition regarding the apportionment of inheritance taxes to a declaratory judgment petition given that an estate account had not yet been filed). A decision concerning inheritance taxes issued in conjunction with the adjudication of an account would be appealable under subdivision (a)(1). 

In keeping with the 2005 amendment that added subdivision (2) to prior Rule 342, subdivision (a)(8) tracks subdivision (2) of former Rule 342. Subdivision (2) was adopted in response to Estate of Sorber, 2002 Pa. Super. 226, 803 A.2d 767 (2002), a panel decision holding that Rule 342 precluded immediate appeals from orders that would have otherwise been appealable as collateral orders under Rule 313 unless the Orphans' Court judge made a determination of finality under Rule 342.

Subdivision (a)(8) makes clear that Rule 342, as amended, is still not the sole method of appealing an Orphans' Court order and an order not otherwise immediately appealable under Rule 342 may still be immediately appealable if it meets the criteria under another rule in Chapter 3 of these rules. Examples would include injunctions appealable under Rule 311(a)(4), Interlocutory Orders Appealable by Permission under Rules 312 and 1311, Collateral Orders appealable under Rule 313, and an order approving a final accounting which is a true final order under Rule 341. Whether or not such orders require certification or a further determination of finality by the trial court depends on the applicable rule in Chapter 3. Compare Rules 311(a)(4), 313 and 341(c) with Rules 312 and 1311.

The revised Official Note concludes with a stern warning about a failure, under Subsection (c) to appeal, which constitutes a "waiver of all objections" to an order:

Failure to appeal an order that is immediately appealable under subdivisions (a)(1)—(7) of this rule shall constitute a waiver of all objections to such order and may not be raised in any subsequent appeal. See Subdivision (c) of this Rule. The consequences of failing to appeal an Orphans' Court order under (a)(8) will depend on whether such order falls within Rules 311, 312, 313, 1311 or 341.

The revision amended Pa. R.A.P. Rule 311(g) under this concept, to provide as follows:

 (g) Waiver of objections.

       (1) Where an interlocutory order is immediately appealable under this rule, failure to appeal:

             (i) Under Subdivisions (a), (b)(2) or (f) of this rule shall not constitute a waiver of the objection to the order and the objection may be raised on any subsequent appeal in the matter from a determination on the merits.

            (ii) Under Subdivisions (b)(1) or (c) of this rule shall constitute a waiver of all objections to jurisdiction over the person or over the property involved or to venue, etc. and the question of jurisdiction or venue shall not be considered on any subsequent appellate review of the matter.

           (iii) Under Subdivision (e) of this rule shall constitute a waiver of all objections to such orders and any objection may not be raised on any subsequent appeal in the matter from a determination on the merits.

Don't forget another process perhaps necessary post-trial to protect appeal rights from an orphans' court's order -- "Exceptions" -- that may be applicable under local rules.  See:  Pa. Orphans' Court Rule 7.1.

Filial Support of Indigent Parents in PA

On Tuesday, June 12, 2012, WITF-FM's Radio Smart Talk will host a discussion about the legal concept of "filial support" and its possible consequences for Pennsylvania's sons and daughters with aged parents who require care, but who can't pay.

"Filial" is defined by the Merriam-Webster dictionary as 1: of, relating to, or befitting a son or daughter, or 2: having or assuming the relation of a child or offspring.  

However, the concept of "benefit" to a son or daughter becomes reversed, if you add a duty of "support" under a state statute.  The result?  Adult children (if not abandoned in their youth) owe an ongoing duty of support to parents who have become indigent; and they must defend against claims by their parent's care-giving creditors in court.

On May 7, 2012, a three-Judge Pennsylvania Superior Court panel issued an opinion and order in Healthcare Retirement Corporation of America v. Pittas (PDF, 10 pages).  The ruling upheld a judgment rendered by a Lehigh County, PA trial court, against a son for his mother's unpaid debt of $92,943.41, owed to a institution for her medical and residential care.

The charges resulted from treatment needed after the mother was injured in a car accident.  The care extended six months before she withdrew from the facility, and then left the country.  The case at trial was decided while an application for Medicaid coverage was pending.

The Court's opinion noted the essential facts:

On or about September 24, 2007, after completing rehabilitation for injuries sustained in a car accident, Appellant’s mother was transferred to an HCR facility for skilled nursing care and treatment.  Appellant’s mother resided in the facility and was treated by HCR until March of 2008.  In March of 2008 Appellant’s mother withdrew from the HCR facility and relocated to Greece.

A large portion of the bills incurred by Appellant’s mother due and owing to HCR went unpaid.  As a result, on or about May 12, 2008, HCR instituted a filial support action against Appellant.  Pursuant to 23 Pa.C.S.A. § 4603, entitled “Relatives’ liability,” HCR sought to hold Appellant liable for the outstanding debt incurred as a result of his mother’s treatment and care.

The parties submitted the case to arbitration, whereupon a three member arbitration panel found in favor of Appellant.  HCR appealed the arbitration award to the trial court.  The trial court held a three-day non-jury trial, after which it entered a verdict in favor of HCR in the amount of $92,943.41. * * *

The Court referenced portions of the applicable statute, 23 Pa.C.S.A. § 4603 (unofficial version posted online by OneCLE), which provides:

(a) Liability. --
    (1) Except as set forth in paragraph (2), all of the following individuals have the responsibility to care for and maintain or financially assist an indigent person, regardless of whether the indigent person is a public charge:   

        (i) The spouse of the indigent person.
        (ii) A child of the indigent person.
        (iii) A parent of the indigent person.

    (2) Paragraph (1) does not apply in any of the following cases:
        (i) If an individual does not have sufficient financial ability to support the indigent person.
        (ii) A child shall not be liable for the support of a parent who abandoned the child and persisted in the abandonment for a period of ten years during the child's minority. * * *

When is a person "indigent"?  The Court noted:

What it means to be “indigent” is not defined within the applicable statute. Therefore, in  applying Section 4603, our Courts have applied the common-law definition of indigence.    In  so  doing,  we  have  held that:     

the indigent person need not be helpless and in extreme want, so completely destitute of property, as to require assistance from the public.  Indigent persons are those who do not have sufficient means to pay for their own care and maintenance.  “Indigent” includes, but is not limited to, those who are completely destitute and helpless.  It also encompasses those persons who have some limited means, but whose means are not sufficient to adequately provide for their maintenance and support. 

 Savoy v. Savoy, 641 A.2d 596, 599-600 (Pa. Super. 1994), quoting Verna v. Verna, 432 A.2d 630, 633 (Pa. Super. 1981). [Unofficial case links added.]

Any adult child whose parent is now, or might become "indigent", might be just an accident or medical emergency away from becoming liable for that parent's care under the cited statute and its application by the Pennsylvania courts in a debt collection lawsuit commenced by a creditor.

Concerns about the ruling were reported in an article entitled Pennsylvania Man Appeals to Court to Avoid Paying Mom's $93,000 Nursing Home Bill, by Susanna Kim, posted May 23, 2012, by ABC News.  Many readers' comments to the article reflect deep personal concerns and even anger.  See also: PA EE&F Law Blog posts "Filial Support" in PA? Really?!? (07/28/08); and PA's "Filial Responsibility" Law in the News (07/16/09).

On May 25, 2012, The Dickinson School of Law of Penn State University highlighted on its home page a link to a four-minute video presentation posted on YouTube, entitled Elder law expert Katherine Pearson explains new family support decision in PA and its policy issues.

A dramatic holding in a nursing home debt collection case by the Pennsylvania Superior Court "breaks new ground," explains elder law expert and Penn State Law professor Katherine Pearson.

In Health Care & Retirement Corporation of America v. Pittas, the nursing home obtained a judgment against an adult son for the cost of his mother's care with neither a contractual obligation nor "fault" on the son's part.

Professor Katherine C. Pearson briefly and conversationally addresses these questions in the video:

• What is the history of the filial support statute in Pennsylvania?
• What is so dramatic about the Superior Court's application of this law in the Pittas case?
• What are the consequences of this decision?
• What's wrong with requiring adults to support their parents?
• What other issues do you see?
• What policy questions does this case raise?

Katherine is an expert on "filial support" in Pennsylvania. She wrote a chapter on the topic, entitled Filial Support Obligations in Pennsylvania: Adult Children, Parents and Spouses, in the book, Elder Law in Pennsylvania (Jeffrey Marshall, ed., 3d ed. 2011), published by the Pennsylvania Bar Institute.

Just last Friday, June 8, 2012, she posted a more sweeping analysis of "filial support" laws online, including a comparison of each state's current laws.  Her article, which was accepted for publication by the University of Illinois School of Law's Elder Law Journal for its Fall, 2012 issue, is entitled Filial Support Laws in the Modern Era: Domestic and International Comparison of Enforcement Practices for Laws Requiring Adult Children to Support Indigent Parents.  That academic paper (Abstract No. 2079753) can be downloaded from the Social Science Research Network (SSRN) free (32 pages, PDF).

In early April, before the Pittas decision was issued, Katherine gave an extended interview about "filial support", which was broadcast on the Australian radio show Encounter.

During the program “Dutiful Sons and Daughters” Professor Katherine Pearson discusses filial support laws trends in the U.S. during a panel dialog. * * * A recording of “Dutiful Sons and Daughters” is available on Radio National, the largest single network in the country. A recording of an extended interview with Pearson can be downloaded from Radio National’s website. * * *

Tomorrow's Radio Smart Talk presentation, during a fifty-minute discussion, likely will consider these questions and more.  I hope that Katherine will be a guest.  The program will be broadcast at 9:00 AM and again at 7:00 PM.  I will update this posting afterwards to include both a web link and a podcast link for the recorded presentation.

Update: 06/12/2012 @ 11:30 AM:

I guessed correctly:  Professor Katherine Pearson was one of the panelists.  The other panelist was a local professional colleague and friend, Attorney Jan L. Brown, of Harrisburg, PA.  The program, entitled Who is responsible to pay for long-term care?, broadcast from 9 to 10 AM.  It will be rebroadcast at 7 PM this evening.

A recording of the program is available now.  The discussion among host Scott LaMar, Katherine, and Jan can be heard online by downloading an MP3 file (20.8 MB) posted at this link: http://witf.vo.llnwd.net/o35/smarttalk/radiosmarttalk/RST_June122012.mp3. 

Katherine and Jan concisely explained the legal principles operating in the Pittas case (now the subject of an en banc reconsideration petition filed with the PA Superior Court).  They also placed it into the context of Pennsylvania domestic relations law.  Only Pennsylvania and South Dakota statutes and case decisions will sanction such third-party collection actions against an adult child for long-term care obligations incurred by an indigent parent, without considering situational "equities".

They addressed consequences and planning considerations for families of indigent long-term care residents.  The callers' comments ventured further, however, questioning fairness of responsibility for an estranged parent's medical care, oppressive debt collection efforts of institutions, and selective application by institutions.  Katherine also mentioned the cost of litigation in defending such claims, which alone can be staggering.

The discussion then focused on long-term care insurance.  Both federal and state governments have promoted LTC coverage for the past few years as a viable individual hedge against future inability to support long-term care.  

However, LTC coverage has become prohibitively expensive for the middle class.  Two major issuers -- John Hancock and Met Life -- discontinued their LTC offerings.

Even after an individual's purchase and ongoing premium payments, LTC insurance coverage might be revealed, when claim would be made, as unreliable or inapplicable.  LTC coverage, as a future source of support, may be a "bet" more than a "hedge", due to contract limitations, changes in medical services and billings, or illiquidity of an insurer.

Katherine and Jan considered many questions and offered some tips.  However, given flux in applicable law, distinctive facts in individual situations, processing complexities, and reduced government funding, there can be no definitive general answers regarding long-term care provisions, much less specific predictions as to personal financial liability.

I heartily recommend this program for listening by lawyers and laypersons alike.

PA Courts' 2012 Calendars & Holidays

On December 27, 2011, the Unified Judicial System of Pennsylvania posted its chart of County Holidays for 2012 (PDF, 2 pages), which summarizes legal and operating holidays designated by counties for the various courthouses in the Commonwealth.  This is a most useful, even essential, chart.  It completes the posting of all Pennsylvania court calendars for 2012.

The chart appeared on the website for Pennsylvania courts, operated by the Administrative Office of Pennsylvania Courts (AOPC), which increasingly offers online resources essential to interaction with the Commonwealth's legal system, as summarized in its Web Portal webpage:

The AOPC’s Unified Judicial System web portal site has recently been redesigned to provide more useful information in an easier-to-navigate format. All aspects of the site, including the look and feel and the technology upon which the site is based, were reprogrammed.

Both public and secure information is available on this site. Secure information is available through specialized e-services for users with a secure login. Approval for these services must be granted by a county clerk of court or district court administrator.

Listed below are some of the e-services available to users:

• Web Docket Sheets provide access to search, view and print the docket sheets for Pennsylvania’s Appellate Courts, Criminal Courts of Common Pleas, Magisterial District Courts and the Philadelphia Municipal Court
• Statewide Warrants provides access to view warrants generated from the Common Pleas Criminal Court Case Management System (CPCMS) and the Magisterial District Judge Management System (MDJS)
• The Calendar Schedule [Criminal Courts of Common Pleas and Magisterial District Courts] provides access to search, view and print case events scheduled in the Common Pleas Criminal Court Case Management System (CPCMS)
• The DA Link application is a secure web service which provides Pennsylvania's district attorneys the ability to construct criminal Informations online and submit them electronically to the Courts of Common Pleas
• The County Court Calendar provides access to view calendars prepared and submitted by participating counties
• Local Rules provides access to search, view and print active Local Rules of Court. The site is currently limited to the local rules mandated by Rules of Civil Procedure 239.1 et seq. [Links, italics, & paragraphing added]

Some of these links are secured to specific groups of users in the court system or law enforcement, while other resources are made available publicly, such as the Public Calendar Schedule, explained on the website.

The AOPC website also lists or links calendars for Pennsylvania appellate courts and their support offices in 2012, as follows:

Supreme Court of Pennsylvania:

• 2012 Sessions Calendar
• 2012 Duty Assignment Schedule for Emergecny Petitions
• 2012 Holiday Calendar

Superior Court of Pennsylvania:

• 2012 Argument Panel Sessions
• 2012 Holiday Calendar

Commonwealth Court of Pennsylvania:

• 2012 Sessions Calendar

One more tip:  Attorneys licensed in Pennsylvania should create a personal account on the AOPC website to interact on law license matters.

Personalized AOPC accounts are also available to the pubic for informational purposes.

PA DPW Reclaims Medicaid from Charles II

On March 23, 2010, a Memorandum Opinion was issued (but not reported for publication) by a three-Judge panel of the Commonwealth Court, per President Judge Leadbetter in the case Malloy v. Department of Public Welfare (No. 1575 C.D. 2009), reported unofficially online by Leagle.

The holding of this case was that the Pennsylvania Department of Public Welfare could assess a recovery of overpaid Medicaid benefits personally against a guardian of assets who had had failed to inform DPW as to the disqualification of the principal's status as an entitled beneficiary, who had not informed the Orphans' Court about the matter during its consideration of sales of a Medicaid-exempt asset, and who did not spend funds on the principal's maintenance.

Here are the facts, according to the Opinion:

In June 2005, Charles M. was admitted to a nursing home. The next month, Charles II applied to the Department, on his father's behalf, for Medicaid/Long Term Care benefits, to cover nursing home expenses.

The application form, signed by Charles II, included, in a list of Charles M.'s assets, a house on Cortez Drive in Washington, Pennsylvania, which Charles M. owned free and clear. Previously, Charles M. had lived in the house with Charles II, but after Charles M. moved to the nursing home, Charles II lived in the house alone.

The application included language obliging the recipient of benefits to notify the Department of any change in financial circumstances within seven days, and also stated that "any person enriched as a result of a transfer of assets or income, which would have affected [the recipient's] eligibility, will be liable for repayment of those benefits issued incorrectly."

The application was approved, and the Department began paying a substantial portion of Charles M.'s nursing home expenses.

In November 2005, Charles II was appointed Charles M.'s legal guardian by the Washington County Orphans Court, with full authority to administer his assets.

In March of 2006, he received permission from the court to transfer one-half of the Cortez Drive property to himself and to encumber the property with a $70,000 mortgage, which represented about half the assessed value of the property. The court ordered that $20,000 of the proceeds from the mortgage be used to cover Charles M.'s existing debts, and that the remaining $50,000 be used for his future expenses.

After settling the debts, however, Charles II used the remaining money for purposes other than Charles M's needs. None of these transactions were reported to the Department.

After the money from the first mortgage was exhausted, Charles II returned to the Orphans Court and received permission to take out another mortgage on the Cortez Drive property, this time for $127,000. No careful accounting was made of these funds, but the ALJ found that, after the balance of the first mortgage was paid off, the bulk of the remainder was used for purposes other than the needs of Charles M. Again, this transaction was not reported to the Department.

In March 2008, Charles II completed, on Charles M.'s behalf, a Department form reviewing Charles M's benefits. On this form, Charles M. did not report the transfer of half of the Cortez Drive property to himself, the two mortgages on the property, or any of the money received from them. Eventually, however, the Department discovered records of the property transfer, and concluded that the transaction had made Charles M. ineligible to receive benefits, and that as a consequence, the Department had overpaid him $35,459.63.

While the Department was preparing its claim, Charles M. passed away, and the Department sought restitution from Charles II.

Both sides acknowledge that the transactions surrounding the Cortez Drive property made Charles M. ineligible to receive Department benefits, leading to the overpayment. * * * [Reparagraphing applied; citation omitted.]

The sole question before the Commonwealth Court -- brought to it not from the Orphans' Court Division, but as an appeal from the administrative finding within DPW's hearing process -- was: "[W]hether the Department may seek repayment directly from Charles II, rather than from Charles M.'s estate."

The ruling by the Commonwealth Court supported the collection rights and process of DPW against Charles II, personally, pursuant to the following reasoning:

The statute governing this situation provides that when undisclosed property makes a recipient ineligible for benefits, leading to overpayment, "[r]epayment of the overpayment shall be sought from the recipient, the person receiving or holding such property, the recipient's estate and/or survivors benefiting from receiving such property." Section 1408(c)(6)(i) of the Public Welfare Code, 62 P.S. § 1408(c)(6)(i).

The ALJ found that the undisclosed transfer of the interest in the Cortez Drive property was for inadequate consideration, and that this transfer made Charles M. ineligible for benefits in the amount of the transferred interest. These findings, especially the former, are not challenged on appeal.

As the person to whom the interest in the Cortez Drive property was transferred, Charles II certainly qualifies as one from whom repayment may be sought, because he is a "person receiving or holding [the undisclosed] property" that rendered Charles M. ineligible for benefits.

Charles II's sole argument before this court, essentially, is that it would be unfair to collect repayment from him rather than from Charles M.'s estate.

There appears to be no case law examining the process by which the Department chooses from whom to collect repayments. However, there is nothing in the plain language of the statute to suggest that the Department is in any way obligated to consider the equities when making that choice.

The statute's clear purpose is to provide a mechanism for the Department to make the Commonwealth whole after it has overpaid a recipient. To accomplish this aim, the statute lists a number of potential parties from whom repayment can be collected, connected with "and/or." The use of this term implies that the legislature intended to give the Department wide latitude or broad discretion to choose which party, or group of parties from whom it would collect repayment.

Of course, there is nothing in the statute to prevent the Department from considering fairness, but it would also be consistent with the statute's purpose for it to consider a party's solvency, location, willingness to pay, or any of a number of other factors in making its decision. When, as here, a statute gives an agency discretionary powers, judicial review is limited to a determination of whether there has been a manifest or flagrant abuse of discretion, or a purely arbitrary execution of the agency's duties or functions. City of Scranton v. Bureau of Workers' Comp., 787 A.2d 1094 (Pa. Cmwlth. 2001).

There is nothing about the Department's decision to collect repayment from Charles II that approaches abuse of discretion or arbitrariness. Not only is the collection of repayment from Charles II expressly authorized, but it seems entirely appropriate, given that it was his actions that led to the overpayment.

It was Charles II, in his role as guardian, who executed the transaction that made Charles M. ineligible for benefits; it was Charles II who failed to report that transaction to the Department, leading to the overpayment; and it was Charles II who failed to spend the proceeds of that transaction on the needs of Charles M., as he was required to do.

Charles II argues that many of these actions were made under court supervision. However, there is no indication in the record that the Orphans Court was aware that Charles M. had recently applied for and been granted benefits or the way Charles II was spending the mortgage proceeds.

Regardless, it is clear that holding Charles II accountable for the benefit overpayment is in no way arbitrary or an abuse of discretion. * * * [Reparagraphing applied; footnotes omitted.]

Thus, the Court held: "For all the foregoing reasons, we affirm."

Okay.

That's it?!?!

No further commentary about Medicaid fraud, or incomplete testimony and failure to account before the Orphans' Court Division, or misapplication of funds by a guardian?

Just . . . now, return the money?

At least, this decision stands for the expanded reach of DPW as it seeks recovery of Medicaid funds wrongfully paid.

Graphics Credit:
Pennsylvania Capitol Preservation Committee/Photo by Hunt Commercial Photography --
This mural by Violet Oakley depicts King Charles II signing the Charter of Pennsylvania in 1681.
It now resides in the Governor's Reception Room of the Pennsylvania State Capitol building.

Autopsies' Open Records Inspections Delayed

The Associated Press reported, on December 29, 2009, in a brief article entitled Pa. judge: Coroner can delay filing autopsy report that "[a] county judge in south-central Pennsylvania says a coroner doesn't have to release the means of death of a 21-year-old man until the end of January."

Cumberland County Coroner Michael Norris refused to release the means of death for Shippensburg University football player Thomas Rainey, a Landisville man who died in an accident in April. Authorities have said the death wasn't suspicious.

WGAL-TV asked President Judge Edgar Bayley to order the coroner to release the information.

Bayley says the Right-to-Know Law that took effect this year doesn't supersede the state Coroner's Act. That law requires the autopsy report to be filed within 30 days of the end of the calendar year in which the deaths occurred.

I have not read the county court's opinion disposing of the issue, because I did not see it posted online yet among available Cumberland County, PA Judicial Opinions.

However, one can read the entire record of the underlying administrative proceedings and the final determination opinion & order that was appealed to the Cumberland County Court, by way of the Pennsylvania Office of Open Records, under its Docket No. AP 2009-0337, which includes that Office's Final Determination Opinion, dated July 24, 2009 (PDF, 10 pages).

That Final Determination recited the arguments of the parties, and noted the conflict in the new, sweeping Right-to-Know Law effective January 1, 2009, versus Pennsylvania Coroner's Laws, including the “Coroner’s Act,” 16 P.S. §§ 1214 and 1231-1260, as contained in the County Code, Act of August 9, 1955, P.L. 323, as amended.

The Pennsylvania Supreme Court's January 22, 2009 opinion in Penn Jersey Advance, Inc., d/b/a Easton Publishing Company v. Grim, 599 Pa. 534 (2009) had made it clear that autopsy reports are official records, and thus are open to the public. But, in a footnote, the effect of the new Right-to-Know Law was left uncertain:

We note that section 708(b)(20) of the recently-effective Act 3 of 2008, the “Right-to-Know Law,” provides an exception from public access for certain records relating to autopsies. See 65 P.S. § 67.708(b)(20).

The Right-to-Know Law further provides that “[i]f the provisions of this act regarding access to records conflict with any other Federal or State law, the provisions of this act shall not apply.” See 65 P.S. § 67.3101.1.

The Right-to-Know Law became effective on January 1, 2009, see 65 P.S. § 67.3104(3), and thus has no application to the events underlying this case..

Accordingly, we express no opinion at this time on the relationship between the Coroner’s Act and the Right-to-Know Law. [Paragraphing applied.]

The question then became, when does an autopsy report become such a public record available for inspection under the new open records law?

This one trial court now says: within 30 days of the end of the calendar year in which the death occurred, pursuant to the Coroner's laws, which prevail over the Right-to-Know law.

That can be a long time for news organizations wanting to report a story. So, stay tuned to see if that decision is appealed further or if legislative change is advocated.

Bowmaster Decides Difficult Medicaid Lien Issues

On December 29, 2009, the Pennsylvania Supreme Court issued an opinion in E.D.B., v. Gerald Clair and Centre Community Hospital, No. 78 MAP 2008, that resolved a conflict in decisions issued by the Superior Court and the Commonwealth Court as to the extent of the statutory lien provided to the Pennsylvania Department of Public Welfare upon private litigation proceeds, for reimbursement to DPW of its expenses advanced to a Medicaid beneficiary.

The Court's ruling vacated the Superior Court’s prior holding in the case, and reinstated the Order of the Court of Common Pleas of Centre County, dated November 6, 2006.

The Supreme Court’s E.D.B. opinion settles the “incompatible--indeed opposite—holdings” reached by the two Pennsylvania lower appellate courts -- the Superior Court in Bowmaster v. Gerald Clair and Centre Community Hospital, 933 A.2d 86 (Pa.Super. 2007) [PDF, 11 pages], and the Commonwealth Court in Shaffer-Doan v. Department of Public Welfare, 960 A.2d 500 (Pa.Cmwlth. 2008) [PDF, 9 pages]. See also: Jordan v. Western Pennsylvania Hospital, ___ A.2d ___, No. 346 C.D. 2008, 2008 WL 4831303 (Pa. Cmwlth. Nov. 10, 2008) [PDF, 12 pages], and Galindo v. Crozier-Keystone Health System, No. 1136 C.D. 2008 (Pa.Cmwlth., January. 8, 2009) [PDF, 9 pages].

The Supreme Court majority sided with the Commonwealth Court's analysis by holding that a minor Medical Assistance (Medicaid) recipient has a cause of action against a third-party tortfeasor to recover, but then reimburse the Department of Public Welfare, for Medical Assistance benefits received during minority.

Specifically, the Court majority interpreted subsection 1409(b) of the Pennsylvania Fraud Abuse and Control Act to supersede, according to the dissent, “centuries’ worth of Pennsylvania jurisprudence which places the responsibility to raise a child upon her parents”. The Court majority favored the public interest of protecting taxpayers and the public treasury in the provision of Medical Assistance benefits, which historically were not considered in common law parental support principles.

Notably, the Supreme Court recognized that the General Assembly had enacted subsection 1409(b), conferring upon the Department of Public Welfare a statutory right to reimbursement from the “entire amount of any settlement” “notwithstanding any other provision of law”, prior to the United States Supreme Court’s monumental decision in Arkansas Department of Health & Human Services v. Ahlborn, 547 U.S. 268, 126 S.Ct. 1752 (2006).

Because the operative facts of E.D.B.’s case arose pre-Ahlborn, the Court leaves the door open for post-Ahlborn challenges to claims for reimbursement by the Department when a beneficiary’s complaint unequivocally fails to assert damages for medical expenses incurred during minority.

Notably, the Department of Public Welfare appears to be proactively preempting the opportunity for any such argument by actively intervening in minors’ actions that do not seek recovery for medical expenses during minority, as contemplated in 62 P.S. 1409(b).

For the Department's general Statement of Policy in this regard see: Implementation of Third-Party Liability Provisions of Act 2008-44, published Saturday, November 1, 2008, 38 Pa.B. 5970, which states "how the Department will interpret and apply sections 1409 and 1409.1 of the Public Welfare Code (code) (62 P. S. §§ 1409 and 1409.1) to tort claims involving MA recipients."

Note: Thanks to Nora E. Gieg, Esq., of Tucker Arensberg, P.C., for contributing to this article, edited and expanded by Neil E. Hendershot, Esq. for this Blog.

New Cause of Action under FINRA Found

A decision issued on June 30, 2009, by a three-judge panel of the U.S. Third Circuit Court of Appeals, in Sarah Grammer v. John J. Kane Regional Centers-Glen Hazel (PDF, 23 pages), likely will impact nursing home and rehabilitation facilities that provide care subject to the Federal Nursing Home Reform Amendments (FNHRA).

The decision reversed a ruling by the United States District Court for the Western District of Pennsylvania, and, by its fresh interpretation of FNHRA, recognized new causes of action under those amendments to federal law.

The decision was noted by Professor Katherine C. Pearson, who is the Director of the Elder and Consumer Protection Clinic, of Penn State - Dickinson School of Law, and who now is Chair of the Elder Law Section of the Pennsylvania Bar Association. She sent me an email message with a link to her web article about the decision, and granted me permission to repost it. I do so now (reparagraphing & links applied), with thanks to her.

Should Federal Standards for Care by Nursing Homes be Enforceable
by Private Suits for Damages under Federal Civil Rights Laws?
The Third Circuit Says Yes.

by Katherine C. Pearson

Advocates for elders and disabled persons in nursing homes have long been frustrated by the absence of an express cause of action in federally imposed “Nursing Home Residents Rights,” a key feature of the Nursing Home Reform Act (NHRA) at 42 U.S.C. § 1396r.

On June 30, 2009, however, the Third Circuit Court of Appeals ruled in the case of Sarah Grammer v. John J. Kane Regional Centers-Glen Hazel that a private cause of action does exist under federal civil rights laws, at 42 U.S.C. § 1983, for violation of the resident’s rights under the NHRA. State action, necessary for a civil rights suit, existed because the defendant facility was a county-operated home.

In 1987, Congress enacted key nursing home reform laws in an effort to respond to widespread complaints about quality of care in facilities that were accepting Medicare and Medicaid dollars. Until that legislation, it was not uncommon to hear complaints about aged residents routinely being restrained in beds or chairs to prevent wandering, or being heavily medicated solely to make the residents easier to “manage.”

The Nursing Home Reform Act for the first time mandated that with the exception of emergencies, a doctor’s detailed, written order would be required before physical or chemical restraints could be imposed, and then only when necessary for the physical safety of the residents. The federal law mandated that facilities must care for residents “in such a manner and in such an environment as will promote maintenance or enhancement of [their] quality of life. . . .”

The legislation was widely hailed as ushering in a new era of accountability for institutional caretakers. But individual residents and their families have frequently questioned whether administrative sanctions for violations of the law, such as civil fines or threats of defunding, are sufficient to protect residents.

In the Grammer case, the complaint alleged breach of the duty to ensure quality care under NHRA standards, citing the death of Melviteen Daniels from poor care that resulted in malnourishment, decubitus ulcers and sepsis, and alleging the cause of action under 42 U.S.C. § 1983.

The District Court in the Western District of Pennsylvania dismissed the complaint for damages, finding no cause of action existed at law.

The Third Circuit reversed in a 2 to 1 ruling. In the majority opinion, Circuit Judge Nygard gives a detailed explanation of how the NHRA should be recognized as unambiguously conferring federal, substantive rights on residents to quality care, rights that are enforceable under federal civil rights statutes.

The dissent notes that the NHRA was enacted as part of an Omnibus Budget bill, pointing to Supreme Court decisions that have rejected attempts to infer substantive rights from “Spending Clause” cases.

The Third Circuit's decision in Grammer opens new doors for recovery on behalf of older adults and disabled persons in public facilities, including the potential for attorneys' fees for successful civil rights claimants.

The outcome also suggests a new question, whether privately-owned nursing homes are also subject to a civil rights suit for violations of NHRA-mandated standards of care. Are private owners operating under color of state law when they are certified as Medicare and Medicaid qualified facilities and accept public dollars for their services? At a minimum, does the existence of a federal cause of action against public facilities strengthen the argument by resident-advocates that violation of federal standards constitutes "negligence per se" for common law tort claims?

Another open question is whether mandatory arbitration provisions in nursing home admission agreements will be treated as limiting or barring courtroom litigation of federal civil rights claims.

Real Estate Tax: Reassessments Needed More Often

On April 29, 2009, the Pennsylvania Supreme Court unanimously held, in a Majority Opinion written by Chief Justice Castille in Clifton, et al. v. Allegheny County, Nos. 20 & 21 WAP 2007 (PDF, 53 pages), that "the base year method of property valuation, as applied in Allegheny County [PA], violates the Uniformity Clause. We therefore agree that a countywide reassessment is required."

A Concurring Opinion was filed by Justice Baer.

The Majority Opinion framed the issue on its first page:

The present appeals call for us to consider the constitutionality of Pennsylvania’s property assessment laws.1

Presently, the assessment laws of the Commonwealth neither require nor do they prohibit periodic property reassessments, and thus they permit real estate taxes to be levied on property values that are based upon a stagnant “base year market value” for an indefinite period of time. Allegheny County has adopted such a base year system.

In a thorough opinion and order, the Court of Common Pleas of Allegheny County, per the Honorable R. Stanton Wettick, Jr., found that, because a base year assessment method that does not require periodic reassessments inherently causes significant disparities in the ratio of assessed value to fair market value, the Commonwealth’s property assessment laws were facially unconstitutional as they violate the Uniformity Clause of the Pennsylvania Constitution, A.CONST. art. VIII, § 1, which requires equality of taxation. * * *

[Footnote 1: When referring generally to “assessment laws,” we are referring to the General County Assessment Law, 72 P.S. §§ 5020-1 to -602, the First Class County Assessment Law, 72 P.S. §§ 5341.1-5341.21, the Second Class County Assessment Law, 72 P.S. §§ 5452.1-5452.20, the Second Class A and Third Class County Assessment Law, 72 P.S. §§ 5342-5350k, and the Fourth to Eighth Class County Assessment Law, 72 P.S. §§ 5453.101-5453.107]

The Pennsylvania Supreme Court agreed with the trial court as to the unconstitutionality of an indefinitely-applied base year concept as proven in Allegheny County, but did not require, as did the trial judge, annual market reassessments of real estate for taxation purposes, instead leaving the crafting of a constitutionally-acceptable, countywide real estate tax assessment mechanism to the legislature.

[T]he Allegheny County scheme, which permits a single base-year assessment to be used indefinitely, has resulted in significant disparities in the ratio of assessed value to current actual value in Allegheny County.

The disparity is most often to the disadvantage of owners of properties in lower-value neighborhoods where property values often appreciate at a lower rate than in higher-value neighborhoods, if they appreciate at all. * * *

In beginning its examination of Pennsylvania's real estate tax assessment system, the Court reached all the way back to "ancient Egypt, Babylon, and Persia", through medieval England, and up to colonial America.

The Court examined the post-1982 real estate assessment system in Pennsylvania, when "the assessment laws governing the different counties were amended so as to allow counties to utilize either a current market value method or to adopt a base year market value method in arriving at the assessed value of each property in the county."

The ruling was reported on April 30, 2009, in an article entitled "Court orders county reassessment -- Justices say taxation system is 'broken'" by Karamagi Rujumba, published by the Pittsburgh Post-Gazette.

The court cited examples of what has happened to property taxes in the Woodland Hills School District since the county implemented its base-year system. Between 2002 and 2005, for example, the court showed that property values in Braddock declined by 16 percent while they went up by 35 percent in Edgewood.

Justice Max Bear wrote a concurring opinion as the court returned the case back to Common Pleas Court where it asked "the trial court to determine Allegheny County's progress in executing a county wide reassessment and to set a realistic time frame for its completion."

As a result, the justices wrote, "Allegheny County is currently left with a broken system of property taxation." * * *

"We find no ineluctable constitutional deficiency with the use of a base year system: it is only through the passage of time that a base year assessment will become stale, and thus unconstitutional," said the court.

The article noted that, "[s]o far, this ruling has no effect on any other county that has a base-year assessment system.

The Supreme Court nudged the Commonwealth's General Assembly for real estate tax reassessment reform:

It is not our charge to determine what may be the best system of assessment. Nor is this Court capable of fixing a point in time at which a base year automatically becomes unconstitutionally non-uniform.

As the trial court noted, the General Assembly is the appropriate place in the first instance to fashion a more comprehensive and soundly constitutional scheme. To that end, the trial court has provided a useful survey of the property assessment methods of our sister states, which shows that twenty-two of our sister states require annual reassessments, while twenty-six permit reassessments to be conducted at intervals over one year, though they still require periodic reassessment.

Pennsylvania is the only state where legislation allows the use of a base year indefinitely. * * *

The Court then issued its ruling:

Ultimately, our task is decisional, and Allegheny County is currently left with a broken system of property taxation.

In its effort to fashion a remedy, the trial court directed the Chief Assessment Officer of Allegheny County to conduct a reassessment no later than March 31, 2009, for use in the 2010 tax year, even if this Court had not yet issued a final order.

We agree that reassessment is required. However, recognizing that the passage of time may require adjustment by the trial court, we will remand this matter to the trial court to determine Allegheny County’s progress in executing a countywide reassessment and to set a realistic timeframe for its completion.

This case should nudge the Legislature to amend the assessment laws for reasonable, periodic countywide reassessments of property values used for real estate taxation.

"Free Ride" Over for PA DPW in Personal Injury Recoveries?

On March 25, 2009, a U.S. District Court in Pennsylvania issued a Memorandum Opinion in Tristani v. Richman, 2009 WL 799747 (W.D.Pa. Mar. 25, 2009; No. 06-694).

The decision held that that Pennsylvania's Medicaid recoupment, anti-lien, and anti-recovery statutory provisions create enforceable rights under Section 1983; and that such provisions bar recovery by the Commonwealth directly from a Medicaid beneficiary of all personal injury settlement proceeds received in privately-conducted litigation, including that portion attributable to medical care already paid by Medicaid.

The court ruled that if a state wishes to recoup such funds, then it must join the litigation against third-party tortfeasors, along with the other plaintiffs.

Nora E. Gieg, Esq., of Tucker Arensberg, P.C. in Pittsburgh, PA, wrote a brief analysis of this important holding and considered its longer-term effects. I am pleased to post it, with gratitude for her contribution.

Tristani’s Blow
to State Medicaid Agency’s
Third Party Liability Collection Practices

by Nora E. Gieg, Esq.
Tucker Arensberg, P.C.

In a potentially striking blow to the Pennsylvania Medicaid (medical assistance) third-party liability (“TPL”) collection practices, the Honorable Joy Flowers Conti, Judge for the United States District Court for the Western District of Pennsylvania, issued a Memorandum Opinion dated March 25, 2009 in Tristani v. Richman et al. (PAWD Civil Action No. 06-694), a pending class action lawsuit against the Pennsylvania Department of Public Welfare.

The Tristani ruling fills a gap left by the United States Supreme Court’s decision in Ark. Dep’t of Health and Hum. Servs. v. Ahlborn, 547 U.S. 268 (2006) regarding a presumed “exception” in federal law permitting state medicaid agencies to effectuate mandatory TPL recovery through the imposition of liens on Medicaid recipients’ personal injury proceeds.

The United States Supreme Court’s Ahlborn ruling "assumed" that Federal Law created an exception to the Anti-Lien and Anti-Recovery provisions because the parties therein had stipulated as much. Now, the Tristani opinion squarely addresses validity of such an assumed exception, which the United State Supreme Court was forced to “leave for another day”. 547 U.S. 268, 284 n. 13 (2006).

In an opinion as dense as any law school hypothetical wrought with interpretations on due process, civil procedure, qualified immunity, takings, and interpretations of Congressional intent, in her Tristani opinion, Judge Conti reasons that the Federal Anti-Lien and Anti-Recovery provisions, 42 U.S.C. §§1396p(a)(1) and 1396p(b)(1), preempt Pennsylvania state law at 62 Pa. C.S. §§ 1409, et seq. under the Supremacy Clause of the United States Constitution, inasmuch as Pennsylvania’s TPL statute permits liens on the personal injury actions/proceeds of Medicaid recipients.

Finding the Federal Anti-Lien and Anti-Recovery provisions to be unambiguous, the District Court gave no deference to the interpretations of the U.S. Department of Health and Human Services on which the the State Medicaid Agency and Pennsylvania General Assembly ostensibly relied in passing the Pennsylvania TPL statute.

Instead, the District Court found that federal law requires State Medicaid Agencies, like Pennsylvania's Department of Public Welfare, to commence direct actions against liable third parties for the cost of Medicaid to recipients, stating in no uncertain terms that the DPW’s “free ride” was over.

The District Court noted, however, that federal law did not leave State Medicaid Agencies without recourse. The Court reasoned that the Pennsylvania TPL statutory scheme permits DPW to assert its own interests in personal injury actions against third party tortfeasors without violating the Federal Anti-lien and Anti-Recovery Provisions

The Court found that DPW's intervention in -- rather than “liening” of -- settlement actions, was the proper method of recovery. It also held that Pennsylvania’s statutory default calculation of 50% for “unallocated” settlements was a valid amount of recovery.

Plaintiffs in the Tristani action had also asked the District Court to determine whether Pa. C.S. § 1409(b)(7)(iii) contravenes Section 1396k(b). Finding neither named plaintiff able to establish a cause of action in this regard, the Court left open for another day the efficacy of Pennsylvania’s statutory authorization for the collection of managed care organization expenditures, as opposed to capitation payments.

The Tristani ruling, if not altered on appeal, would shake to its core the traditional method of TPL recovery in Pennsylvania. This ruling likely would create long-reaching effects for TPL recovery nationwide, too.

However, review of the docket reveals that steps are already in place to appeal the trial court's ruling. Thus, some uncertainly exists as to the current force of the Opinion, inasmuch as it lacks the force of an "order".

Pending further appellate review of the Tristani opinion, both State Medicaid Agencies (seeking recoupment of funds expended for the fiscally-strained Medicaid programs) and Plaintiffs’ counsel (seeking maintenance funds for their injured clients), may find themselves in a precarious position with unpredictable options in situations which demand action.