Wolfington v. Reconstructive Orthopaedic Assocs. II, P.C.

• Decision Date: 29 September 2017
• Docket Number: CIVIL ACTION NO. 16–4935
• Citation: 275 F.Supp.3d 584
• Parties: Andrew WOLFINGTON, individually and on behalf of all others similarly situated v. RECONSTRUCTIVE ORTHOPAEDIC ASSOCIATES II, P.C. a/k/a The Rothman Institute
• Court: U.S. District Court — Eastern District of Pennsylvania

275 F.Supp.3d 584

Andrew WOLFINGTON, individually and on behalf of all others similarly situated

v.RECONSTRUCTIVE ORTHOPAEDIC ASSOCIATES II, P.C. a/k/a The Rothman Institute

CIVIL ACTION NO. 16–4935

United States District Court, E.D. Pennsylvania.

Signed September 29, 2017

Arkady Eric Rayz, Kalikhman & Rayz LLC, Huntingdon Valley, PA, Gerald D. Wells, III, Robert J. Gray, Connolly Wells & Gray, LLP, King of Prussia, PA, Robert J. Levant, Levant Martin Tauber & Levin PC, Philadelphia, PA, for Andrew Wolfington, individually and on behalf of all others similarly situated.

Laura D. Ruccolo, Capehart & Scatchard, P.A., Mount Laurel, NJ, for Reconstructive Orthopaedic Associates II, P.C. a/k/a The Rothman Institute.

MEMORANDUM RE: RULE 11

Baylson, District Judge

I. Introduction

At issue is whether the Court should order Rule 11 sanctions against Plaintiff and/or Plaintiff's counsel. In this case, Plaintiff requested Defendant perform surgery on his knee, but claimed that he could not afford to meet the requirements of Defendant's financial policy, which mandated that customers pay any remaining insurance deductible prior to surgery. At Plaintiff's request, Defendant agreed to perform the operation, with Plaintiff paying a small down payment towards the deductible and agreeing to pay the balance of the deductible after the operation, without interest. Plaintiff never paid any part of the balance due, but instead sued Defendant for failing to provide Plaintiff with information allegedly required under the Truth in Lending Act ("TILA").¹

On December 22, 2016, the Court dismissed the Complaint with prejudice and sua sponte instituted Rule 11 proceedings to determine whether sanctions should be imposed against Plaintiff and/or his counsel because, "Plaintiff's counsel at least, if not Plaintiff himself, had reason to know that this suit was groundless and could be construed as an attempt at extortion to avoid an obligation to pay the deductible." (ECF 22, 268 F.Supp.3d 756, 758–60, 2016 WL 7411527, at 1–2 (E. D. Pa. 2016) ).

II. Relevant Factual² and Procedural History

By way of factual background, Andrew Wolfington ("Plaintiff") alleges that after he suffered anterior cruciate ligament ("ACL") and meniscus tears in his knee

, he sought reconstructive knee surgery at the Rothman Institute ("Defendant"). (ECF 1, "Compl." ¶¶ 15–16). Prior to the surgery, Plaintiff signed a document he received from Defendant entitled "Financial Policy," which stated, in relevant part, that to the extent Plaintiff's insurance had a deductible, Plaintiff "will be required to pay any outstanding deductible prior to [his] procedure." (Id. ¶ 17). After Plaintiff signed the document, but several days prior to the scheduled knee surgery, Defendant contacted Plaintiff to inform him that the surgery could not be completed until Plaintiff paid the insurance deductible, which "exceeded $2,000." (Id. ¶ 18). The first two paragraphs of the Complaint set forth a summary of TILA and EFTA, and the policies they were enacted to further, and then Plaintiff alleges:

4. Despite these plain truths, Defendant (defined herein) extended credit to Plaintiff and obtained Plaintiff's personal banking information so as to execute electronic transfers to repay the loan, yet failed to provide the necessary disclosures and written authorizations in accordance with the TILA, Regulation Z, the EFTA, and Regulation E.

5. Upon information and belief, Defendant used these very same tactics on tens of other consumers who fall within the ambit of the protections of the TILA and the EFTA.

(Id. ¶¶ 4–5).

According to Plaintiff's Complaint, "Defendant agreed to extend credit to Plaintiff to cover the balance owed, which consisted of an initial credit card payment of $200 on January 20, 2016, and subsequent monthly payments of $100, until the balance of the deductible was fully satisfied." (Id. ¶ 20). This alleged financing arrangement was conditioned on Plaintiff "voluntarily agree[ing] to monthly electronic payment deductions from his personal checking account by [Defendant]." (Id. ¶ 21). The Complaint further alleges:

At the time of agreeing to the financing plan, Plaintiff did not receive any written information regarding the financing, nor did he provide written authorization to allow automatic monthly payment deductions from his personal checking account.

(Id. ¶ 22).

Plaintiff's Complaint also alleges that Plaintiff received two "confirmation" emails from Defendant. The first email was dated January 20, 2016, and followed payment of $200 to Defendant via Plaintiff's father's credit card one day prior to the knee surgery. It stated:

Dear Andrew Wolfington,

You recently processed an online bill payment to Rothman Institute through our secure portal. We just want to say "thank you" for your payment; we appreciate your prompt attention.

Here is your payment information:

––––––––––––––––––––––––

Payment To: Rothman InstituteAccount Number: 1353706Account Type: Credit CardAmount: $200.00Credit Card: * * * * * * * * * * * *3065Date Submitted: 01/20/2016 01:32 PMConfirmation #: 820245481086813241

(Id. ¶ 23). The second email was also dated January 20, 2016. It stated:

Dear Andrew Wolfington,

The Rothman Institute has recently scheduled an online bill payment plan for your account balance. We just want to say "thank you" for your payment and appreciate your prompt attention.

Here is your payment information:

––––––––––––––––––––––––

Payment To: Rothman InstitutePatient Account Number: 1353706Paid Via: Credit CardFrequency: Once a monthPayment Amount: $100.00Credit Card: * * * * * * * * * * * *8430Date Submitted Online: 01/20/2016 01:34 PMFirst Scheduled Pay Date: 02/21/2016 12:00 AM

(Id. ¶ 24).

Although the second email confirmation states that the scheduled payment was to be paid via "credit card," Plaintiff alleges that the monthly payments were paid via "electronic transfer from Plaintiff's personal banking account." (Id. ¶ 25).³

The Complaint also alleges: "Plaintiff did not receive any written notification prior to the withdrawal or charge to his account." (Id. ¶ 26). The Complaint does not provide any detailed facts as to how Defendant learned of Plaintiff's credit card, debit card, or bank account number. Presumably, Plaintiff or Plaintiff's father could have provided this information by telephone to Defendant. No party has produced any documentation that Plaintiff (or his father) ever provided any credit card, debit card, or bank account number to Defendant in writing or by email.

Plaintiff alleges in paragraph 38 of the Complaint: "Plaintiff did not receive a copy of a written authorization for the electronic transfers from his personal bank account." Paragraph 43 of the Complaint alleges that, "[a]s noted above, Plaintiff did not receive any advance notice of the electronic transfer from his account. As a result, Plaintiff faced the possibility of having his account overdrawn and incurring fees from his bank."

As discussed in more detail below, Plaintiff's counsel had no grounds to make these allegations, when simple investigation would have revealed that Defendant never received any further payment from Plaintiff because Plaintiff did not have sufficient funds in his bank account. Nonetheless, Plaintiff's counsel brought Plaintiff's claims not only on behalf of Plaintiff, but also alleged that Plaintiff could serve as an adequate representative of "a class of similarly-situated individuals" who suffered supposed injuries because "Defendant used these very same tactics on tens of other consumers...." (Id. ¶¶ 5, 44).

Defendant filed an answer to the Complaint (and counterclaim) on October 12, 2016. Given the initial pleadings, this case raised several issues which the Court felt deserved priority. Defendant contended it was not a "creditor" under TILA, and Plaintiff asserted that there were certain facts as to which he wanted prompt discovery. After an unrecorded Rule 16 telephone conference on October 28, 2016, the Court entered an order, which stated in part as follows:

The Court further orders that each party should make the mandatory disclosures promptly, and shall also exchange documents, particularly pertaining to the Plaintiff's specific medical procedures and financial transactions with the Defendant . Defendant shall also produce information showing the number of creditors it has had for the 18 months prior to the filing of this suit. These documents should be produced within 21 days.

(ECF 9) (emphasis added).

Although the Defendant soon after conceded that it may qualify as a "creditor" under TILA, Plaintiff never produced any documents concerning his "financial transactions with the Defendant" despite this Court's very specific order to do so.⁴

Defendant filed a Rule 12(c) motion for judgment on the pleadings on November 7, 2016 (ECF 10). As detailed in the Court's December 22, 2016 memorandum (ECF 22), Defendant attached an affidavit and exhibits which provided factual information and asserted that no further payments had been made by Plaintiff to Defendant after the $200 down payment prior to the surgery. (ECF 10–4). In his response to the 12(c) motion, filed on November 28, 2016, Plaintiff did not admit or deny this serious assertion of non-payment but simply ignored the issue. (See ECF 16). However, Plaintiff did withdraw his EFTA claim by means of a footnote: "Although Plaintiff believes that his [EFTA] claim would survive Defendant's Rule 12 challenge, Plaintiff hereby voluntarily withdraws that claim so as to allow the parties, and the Court, to focus on Defendant's TILA violations." (Id. at n. 4).

Following additional briefing on that motion, which was considered pursuant to Rule 12(c) because it attached factual materials, the Court held a recorded telephonic conference with counsel. (See ECF 25). During that hearing, held on December 14, 2016, the Court asked counsel questions about "two issues that are important." (Id. at 3). The first question was "whether after this operation the...