Petty v. Hospital Service Association of Northeastern Pennsylvania

In Petty v. Hospital Service Association of Northeastern Pennsylvania, 967 A.2d 439, 447-48 (Pa. Cmwlth. 2009) (en banc), appeal granted in part, Pa. 995 A.2d 873 (2010the Court held that policyholders and subscribers lack common law standing to challenge the validity of a nonprofit's corporate action. The Court stated: To adopt Petty's argument on common law standing would mean that every person who contracts with a nonprofit corporation could go beyond the confines of the underlying agreement and challenge the validity of any of that nonprofit's corporate actions. While imaginative, this is nothing more than an attempt to circumvent the Legislature's express limitation in Section 5793(a) of the Nonprofit Law that the only parties who are capable of challenging the validity of nonprofit corporation action are "a member, director, member of an other body, officer or otherwise of a nonprofit corporation." In addition, permitting Petty to establish standing would expose nonprofit corporations to litigation and undermine this Court's decision in Ciamaichelo v. Independence Blue Cross, 928 A.2d 407 (Pa. Cmwlth. 2007) where we went to great lengths to interpret Section 5793(a) of the Nonprofit Law and explain how subscribers, with specific governance powers enumerated in the articles of incorporation and bylaws were the only ones qualified to maintain actions under the term "or otherwise." Petty, 967 A.2d at 448. In Petty, the Court stated that a litigant can establish that he or she has been aggrieved by showing a substantial, direct and immediate interest in the outcome of the litigation. Petty, 967 A.2d at 448. Petty alleged that he had been harmed as a result of the accumulation of excess surplus. Id. The Court concluded: However, Petty fails to plead a direct or immediate interest as to why or how subscribers and policyholders have been harmed by the . . . surplus other than the mere fact that this alleged action is prohibited by the Nonprofit Law. There is no allegation that, for example, health care services are no longer being provided through the health insurance contract or are somehow inefficient, but instead Petty asserts a common interest and demands that the nonprofit obey the laws of the Commonwealth. Because there is no claim that they have not been provided with the coverage for which premiums have been paid, Petty has not been so aggrieved to establish standing . . . .Petty, 967 A.2d at 448.