Harry F. Stoner, and Bonnie E. Stoner, His Wife v. Presbyterian University Hospital, 609 F.2d 109, 3rd Cir. (1979)

609 F.
2d 109
Harry F. STONER, and Bonnie E. Stoner, his wife, Appellants,

v.
PRESBYTERIAN UNIVERSITY HOSPITAL, Appellee.
No. 79-1319.
United States Court of Appeals,

Third Circuit.
Submitted Under Third Circuit Rule 12(6) Oct. 18, 1979.
Decided Nov. 5, 1979.
As Amended Nov. 19, 1979.
Mark B. Aronson, Behrend & Aronson, Pittsburgh, Pa., for appellants.

John W. Jordan, IV, Thomson, Rhodes & Grigsby, Pittsburgh, Pa., for
appellee.
Before SEITZ, Chief Judge, and GARTH and SLOVITER, Circuit
Judges.
OPINION OF THE COURT
PER CURIAM.
Appellants, Harry F. Stoner and his wife Bonnie E. Stoner, filed this suit to
recover losses sustained as a result of the failure of the appellee, Presbyterian
University Hospital, to provide proper health care to Mr. Stoner. Jurisdiction
was based on diversity of citizenship. 28 U.S.C. 1332 (1976). The district
court dismissed their complaint without prejudice, holding that Pennsylvania
law requires that they first submit their claim to a state administered arbitration
process. Appellants assert that the district court erred in applying this rule of
Pennsylvania law to a diversity action filed in federal district court.
The Pennsylvania legislature provided for arbitration of medical malpractice

claims in the Health Care Services Malpractice Act, Pa.Stat.Ann. tit. 40,
1301.101-.1006 (Purdon Supp.1979). Arbitration panels appointed under the
Act
3
have
original exclusive jurisdiction to hear and decide any claim brought by a
patient or his representative for loss or damages resulting from the furnishing of
medical services which were or which should have been provided.
4
Id. 1301.309. Judicial review of a decision of an arbitration panel is available

in the form of a trial de novo. Id. 1301.509. The Pennsylvania Supreme Court
has made clear that submission of claims to arbitration is a prerequisite to filing
malpractice suits in court. Parker v. Children's Hospital of Philadelphia, 483 Pa.
106, 394 A.2d 932 (1978).
The district court determined that Pennsylvania's arbitration requirement was a

matter of substantive law and therefore binding upon a federal court sitting in
diversity. See Erie R.R. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188
(1938). Another district court has previously reached the same conclusion.
Marquez v. Hahnemann Medical College and Hospital of Philadelphia, 435
F.Supp. 972 (E.D.Pa.1976).
The characterization of the arbitration requirement as substantive rather than

procedural is far from persuasive on its face. Because any party to an arbitration
who is dissatisfied with the panel's decision can obtain de novo review, the
arbitration process should not affect the ultimate outcome of the litigation. See
Guaranty Trust Co. of New York v. York, 326 U.S. 99, 65 S.Ct. 1464, 89 L.Ed.
2079 (1945). The requirement is surely more procedural than substantive in the
sense that its immediate impact is on the course of proceedings before a court
rather than on conduct outside of a court. See Hanna v. Plumer, 380 U.S. 460,
475, 85 S.Ct. 1136, 14 L.Ed.2d 8 (1965) (Harlan, J., concurring). However, we
do not find these considerations determinative. As this court has noted before,
the applicability of state law to diversity suits should ultimately depend not on
the distinction between substance and procedure but on the policies underlying
the Erie doctrine. Edelson v. Soricelli, 610 F.2d 131, (3d Cir. 1979); Witherow
v. Firestone Tire & Rubber Co., 530 F.2d 160, 163-66 (3d Cir. 1976).
We note that no federal statute or court rule even arguably directs the federal
court to disregard Pennsylvania's rule of mandatory arbitration. In this situation,
a federal court exercising its diversity jurisdiction has very limited authority to
apply rules of law, whether substantive or procedural in character, that differ
from rules that a court of the forum state would apply in the same matter. The
Supreme Court stated the governing rule in Erie : "Except in matters governed
by the Federal Constitution or by Acts of Congress, the law to be applied in any
case is the law of the State." 304 U.S. at 78, 58 S.Ct. at 822. This part of the
Erie opinion essentially restates the Rules of Decision Act, 28 U.S.C. 1652
(1976), and reflects the concept that the diversity jurisdiction exists only to
provide non-residents with a forum free of local biases. The fortuity of diverse
citizenship should not subject a litigant to legal burdens different from those
that a state court would impose. Guaranty Trust Co. of New York v. York, 326
U.S. 99, 108-09, 65 S.Ct. 1464, 89 L.Ed. 2079 (1945). The Supreme Court
explained in Hanna v. Plumer, 380 U.S. 460, 466-69, 85 S.Ct. 1136, 14 L.Ed.2d
8 (1965), that the intention behind the Erie doctrine and the Rules of Decision
Act is to prevent this inequitable administration of laws and the related problem
of forum shopping. Chief Justice Warren's discussion makes clear that state law
will apply to suits in diversity whenever these concerns are implicated and the
Constitution, an act of Congress, or a rule promulgated under the Rules
Enabling Act, 28 U.S.C. 2072 (1976), does not provide otherwise.
8
These policy concerns are substantially implicated in the present case. The
Pennsylvania legislature's goals in requiring preliminary arbitration are to
reduce the number of trials on frivolous malpractice claims and to make
possible a more efficient means of disposing of meritorious claims. See Parker
v. Children's Hospital of Philadelphia, 483 Pa. 106, 394 A.2d 932, 936 (1978).
To deny the benefits of this procedure to a Pennsylvania defendant who
happens to have been sued by a non-resident is the very sort of inequity that the
Erie doctrine seeks to prevent. Moreover, to allow non-resident plaintiffs to
avoid this prerequisite to suit by suing in federal court would serve no purpose
but to frustrate the legislature's legitimate goals. We hold that the district court
properly applied Pennsylvania's arbitration requirement to this case.1
Appellants argue that the Pennsylvania statute unconstitutionally encroaches

upon the diversity jurisdiction by restricting appeals to state courts.2 They aim
their challenge at 509 of the Act:
10
Appeals
from determinations made by the arbitration panel shall be a trial de novo in
the court of common pleas in accordance with the rules regarding appeals in
compulsory civil arbitration and the Pennsylvania Rules of Civil Procedure.
11
40 Pa.Stat.Ann. 1301.509 (Purdon Supp.1979). The district court ruled that

the appellants' constitutional challenge was premature.
12
A basic principle of judicial review holds that a court will not "anticipate a
question of constitutional law in advance of the necessity of deciding it."
Ashwander v. TVA, 297 U.S. 288, 346-47, 56 S.Ct. 466, 483, 80 L.Ed. 688
(1936) (Brandeis, J., concurring), Quoting Liverpool, N. Y. & P. S. S. Co. v.
Commissioners of Emigration, 113 U.S. 33, 39, 5 S.Ct. 352, 28 L.Ed. 899
(1885). Since appellants had not yet brought their claim before an arbitration
panel, the district court did not face a direct application of 509. The court only
had to hear a constitutional challenge to this section if the validity of the

arbitration requirement, the only section of the Act it was asked to apply,
depended upon the validity of 509. Under Pennsylvania law, separate
provisions of a statute are presumed severable, and any particular one will
survive a decision voiding another unless it is so interrelated with the void
provision or incomplete without it that the legislature could not have intended it
to stand alone. 1 Pa.Cons.Stat.Ann. 1925 (Purdon Supp.1979). The arbitration
requirement could operate and serve adequately the goals of fewer trials on
frivolous claims and more efficient disposition of meritorious claims without
any restriction of appeals to state courts. Therefore, we find that the provisions
are severable and that the district court properly found the constitutional
challenge to 509 premature.
13
Appellants argue that the consequence of waiting until after arbitration to bring
their constitutional challenge may be a complete loss of access to the district
court. The only provision for judicial review in the Pennsylvania Act is 509.
They reason that if the district court eventually finds that this provision does
attempt to limit review to state courts and hence is unconstitutional, the court
would lack any basis of jurisdiction to review the merits of the arbitration
panel's decision. They would be left with an unreviewable panel decision. This
reasoning is incorrect. A trial in federal court following an administrative
proceeding that is subject to de novo review is not an appellate proceeding; it is
an exercise of the court's original jurisdiction. Horton v. Liberty Mutual
Insurance Co., 367 U.S. 348, 355, 81 S.Ct. 1570, 6 L.Ed.2d 890 (1961). Hence,
the district court would not require any special grant of jurisdiction to hear the
case, and the constitutional challenge, following the arbitration process.
14
The judgment of the district court will be affirmed.
Appellants' counsel should take notice of the applicable statute of limitations
Appellants' argument before the district court and their briefs on this appeal
limit the scope of their challenge to the effect of 509. They do not argue that
the arbitration requirement as administered violates either the federal or the
Pennsylvania Constitution. See Edelson v. Soricelli, 610 F.2d 131, (3d Cir.
1979)

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609 F.

Harry F. STONER, and Bonnie E. Stoner, his wife, Appellants,

United States Court of Appeals,

Mark B. Aronson, Behrend & Aronson, Pittsburgh, Pa., for appellants.

The Pennsylvania legislature provided for arbitration of medical malpractice

Id. 1301.309. Judicial review of a decision of an arbitration panel is available

The district court determined that Pennsylvania's arbitration requirement was a

The characterization of the arbitration requirement as substantive rather than

Appellants argue that the Pennsylvania statute unconstitutionally encroaches

40 Pa.Stat.Ann. 1301.509 (Purdon Supp.1979). The district court ruled that

had to hear a constitutional challenge to this section if the validity of the

The judgment of the district court will be affirmed.

Appellants' counsel should take notice of the applicable statute of limitations

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