$19M Settlement Bars Hospital Fraud Claims

A Pennsylvania appellate panel has ruled that a $19 million settlement agreement effectively blocks a pair of fraud lawsuits brought against Jefferson Abington Hospital. The plaintiffs, Amy and Sean West, accused the hospital of concealing a critical internal document during the litigation of their original medical malpractice case, which alleged that improper administration of Pitocin during labor caused their child’s brain injury.

The Wests claimed that the document — a hospital memo outlining protocols for halting Pitocin if contraction frequency became excessive — was deliberately withheld. They argued that knowledge of the memo would have fundamentally altered their legal strategy and potentially increased the settlement amount they accepted midtrial in January 2013.

Their malpractice suit, dubbed West I, resulted in a $19 million settlement. The fraud claims — consolidated under West II and West III — sought to reopen the matter, alleging misrepresentation, fraud, and unjust enrichment stemming from the hospital’s failure to produce the document during discovery.

The Court’s Analysis

In a 2-1 decision, the Pennsylvania Superior Court affirmed the trial court’s dismissal of the fraud suits, holding that the terms of the 2013 settlement agreement were broad enough to preclude any further litigation connected to the underlying malpractice case.

Writing for the majority, Justice Mary Jane Bowes emphasized the sweeping language in the release clause, which barred claims “arising out of” or “in any way connected with” the original lawsuit. According to the court, the Wests’ new allegations were rooted in the same alleged malpractice and were thus barred by the release.

“These suits are not only ‘in any way connected with’ the occurrence underlying the claims the Wests released, they originated from the same source: the alleged malpractice,” Justice Bowes wrote. She added that if the hospital had never provided medical care, the initial lawsuit would not have existed — nor the opportunity for the alleged discovery violation to occur.

The court also found that pursuing the fraud claims would require relitigating the medical malpractice case to establish that the withheld Pitocin document would have increased a jury verdict or affected the original settlement. “[The hospital’s] provision of medical services was thus a but-for cause of the instant controversies,” the panel concluded.

The Parol Evidence Barrier

The majority opinion also rejected the Wests’ argument that they were fraudulently induced into signing the settlement agreement. Citing the parol evidence rule, the court held that the plaintiffs could not introduce external evidence to alter the terms of the written contract. The settlement’s integration clause expressly stated that no additional understandings or agreements existed outside the document itself.

“Based upon Pennsylvania law, the Wests are prohibited from admitting evidence to show that they signed an agreement, which indicated that it did not include any understanding that did not appear within the writing, because they had justifiably relied upon an understanding that was not included in the writing,” the panel wrote.

A Dissenting View

In a sharply worded dissent, Judge Maria McLaughlin challenged the majority’s interpretation of the parol evidence rule, arguing that the rule should not apply because the agreement lacked any express disclaimer of prior representations — particularly regarding discovery obligations or the existence of the August 2006 Pitocin memo.

“In this case, neither the integration clause nor anything else in the release contains a disclaimer of any prior representations, let alone representations about discovery or the August 30, 2006, memo,” McLaughlin wrote. “It only mentions ‘understandings’ and ‘agreements.’ The parol evidence rule is thus no hindrance to this suit.”

Her dissent suggested that the plaintiffs should be allowed to pursue claims based on the alleged withholding of key evidence — a position that may give the Wests grounds for further appellate review.

What’s Next for the West Family?

Following the decision, attorney Chip Becker of Kline & Specter PC expressed the family’s dissatisfaction with the outcome but indicated they are not ready to give up.

“The West family is disappointed by the court's decision but heartened by Judge McLaughlin's vigorous dissent,” Becker said. “They will continue to advocate for their right to pursue fraud and negligence claims against Abington Memorial Hospital based on the hospital’s admitted withholding of key documents in the underlying medical malpractice claim.”

The Law Firms Involved

The West family is represented by Kline & Specter PC, including attorneys Charles “Chip” Becker, Andra Laidacker, and Braden Lepisto.

Jefferson Abington Hospital is represented by Lamb McErlane PC attorney Maureen M. McBride, Potomac Law Group PLLC attorney Susan V. Metcalfe, and Geoffrey Johnson of Law Office of Geoffrey R. Johnson LLC.

Case Information:

Sean West et al. v. Abington Memorial Hospital et al.
Case No. 1723 EDA 2023
Superior Court of Pennsylvania