Com. of PA Acting by AG Kathleen Kane v. Golden Gate National Senior Care LLC
2017 Pa. Commw. LEXIS 84
| Pa. Commw. Ct. | 2017Background
- Commonwealth (OAG) sued Golden Gate National Senior Care and affiliated entities alleging UTPCPL violations, breach of contract, and unjust enrichment based on marketing statements, resident care plans/assessments (MDS), billing practices, and alleged understaffing at multiple Pennsylvania skilled nursing facilities.
- Golden Gate filed twelve preliminary objections to the Commonwealth’s Amended Complaint; the Court’s review was limited to the pleadings.
- The Commonwealth alleged chain‑wide and facility‑level misrepresentations (marketing brochures, websites, videos, statements to hospitals, resident care plans/MDS, and billing) and sought injunctive relief, restoration/disgorgement, civil penalties, and damages.
- The Court treated advertising claims under UTPCPL Sections 2(4)(v), (ix), and (x) as false‑advertising issues and evaluated whether statements constituted actionable factual representations or nonactionable puffery.
- The Court also addressed whether the Commonwealth may recover restoration under UTPCPL §4.1 (i.e., whether the Commonwealth is a “person in interest”), whether unjust enrichment claims are preempted by statutory/regulatory MA remedies, pleading particularity for fraud/UTPCPL catch‑all §2(4)(xxi), and veil‑piercing/vicarious liability for parent entities.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether chain‑wide marketing statements support UTPCPL claims (Sections 2(4)(v),(ix),(x)) | Marketing materials promised levels of care and availability and thus were deceptive when understaffing prevented performance. | Statements are broad, vague, opinion/promises (puffery) or non‑specific advertising not actionable. | Court: Marketing statements are puffery; not actionable — dismissed. |
| Whether facility‑level care plans, MDS, assessments, and bills constitute "advertising" under UTPCPL false‑advertising provisions | These documents and billing representations misled residents/insurers about services provided. | Such documents are individualized, post‑admission statements by staff (isolated, not widely disseminated advertising) and thus not false advertising. | Court: Resident care plans, assessments, and billing statements are not advertising for Sections 2(4)(v),(ix),(x); those claims dismissed. |
| Sufficiency / particularity of UTPCPL §2(4)(xxi) (catch‑all deceptive conduct) pleadings | Commonwealth alleges pervasive, systemic deceptive conduct via confidential witnesses and many examples of care deviations; proceeding under the deceptive (not fraud) prong. | Complaint lacks attachment of writings (Rule 1019(i)) and specific document/resident identification; insufficient specificity. | Court: Claim under §2(4)(xxi) must meet Rule 1019(i) pleading standards; Commonwealth failed to attach or describe writings and plead specifics — claim dismissed for lack of specificity; but the Court overruled objection that §2(4)(xxi) required common‑law fraud particularity. |
| Whether Commonwealth may recover restoration / restitution under UTPCPL §4.1 (is Commonwealth a “person in interest”) | Commonwealth seeks restoration for monies paid to providers; argues restoration available to it as enforcement actor. | UTPCPL’s definition of “person” does not include political subdivisions or the Commonwealth (Meyer); restoration limited to private persons. | Court (adopting persuasive federal decision): Commonwealth is not a “person in interest” entitled to restoration under §4.1; restoration claim dismissed. |
| Whether unjust enrichment claim is preempted by statutory/regulatory MA remedies | Commonwealth seeks restitution from parent entities for MA overpayments. | DHS/MA statutory/regulatory scheme (Code and MA Manual) provides specific remedies (investigation, restitution, civil/enforcement penalties); statutory remedies must be strictly pursued — common‑law quasi‑contract preempted. | Court: Unjust enrichment dismissed as displaced by statutory/regulatory MA enforcement and restitution procedures. |
| Whether allegations suffice to pierce corporate veil or impose parent vicarious liability | Commonwealth alleges pervasive parent control and siphoning; parents should be liable. | Complaint lacks allegations that corporate form was used to perpetrate fraud or that entities are sham; veil piercing under Delaware law requires showing alter‑ego used to perpetrate injustice. | Court: Complaint fails to plead facts showing parents used corporate form to perpetrate fraud/sham; veil‑piercing/vicarious liability dismissed. |
Key Cases Cited
- GGNSC Clarion LP v. Kane, 131 A.3d 1062 (Pa. Cmwlth. 2016) (addressed agency authority and related staffing regulation issues)
- Meyer v. Community College of Beaver County, 93 A.3d 806 (Pa. 2014) (UTPCPL definition of “person” excludes political subdivision agencies)
- Castrol, Inc. v. Pennzoil Co., 987 F.2d 939 (3d Cir. 1993) (distincts puffery from actionable false representations)
- EP Medsystems, Inc. v. EchoCath, Inc., 235 F.3d 865 (3d Cir. 2000) (puffery vs. material representations analysis)
- Seldon v. Home Loan Servs., Inc., 647 F.Supp.2d 451 (E.D. Pa. 2009) (individualized statements not "advertising" under UTPCPL false‑advertising provisions)
- Commonwealth v. Glen Alden Corp., 210 A.2d 256 (Pa. 1965) (equity cannot supplant a statutory remedy where legislature provided a procedure)