Liberty Mutual Insurance v. Gunderson ( 2008 )


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  •           IN THE UNITED STATES COURT OF APPEALS
    FOR THE FIFTH CIRCUIT  United States Court of Appeals
    Fifth Circuit
    FILED
    November 25, 2008
    No. 08-30075
    Summary Calendar               Charles R. Fulbruge III
    Clerk
    LIBERTY MUTUAL INSURANCE COMPANY
    Plaintiff-Appellee
    v.
    DR. CLARK GUNDERSON AND
    LAKE CHARLES MEMORIAL HOSPITAL
    Defendants-Appellants
    Appeal from the United States District Court
    for the Western District of Louisiana
    USDC No. 2:04-CV-2405
    Before STEWART, OWEN, and SOUTHWICK, Circuit Judges.
    PER CURIAM:*
    Defendants-Appellants Dr. Clark Gunderson and Lake Charles Memorial
    Hospital (jointly “Gunderson”) appeal the district court’s grant of First Health
    Group Corporation’s (“First Health”) motion for a permanent injunction and stay
    of proceedings. Appellee First Health requests that this Court dismiss the
    instant appeal for lack of jurisdiction. We DENY First Health’s motion to
    dismiss, and AFFIRM the district court’s grant of the permanent injunction.
    *
    Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion
    should not be published and is not precedent except under the limited
    circumstances set forth in 5TH CIR. R. 47.5.4.
    No. 08-30075
    I. FACTUAL AND PROCEDURAL BACKGROUND
    The parties in this case have a long and complicated history of litigation.
    The factual and procedural background relevant to the instant appeal is
    provided below.
    Liberty Mutual entered into an agreement (“PPO Contract”)
    with [First Health] whereby First Health agreed to make available
    to Liberty Mutual various hospitals and medical providers.
    Defendants, Dr. Clark Gunderson (“Gunderson”) and Lake Charles
    Memorial Hospital (“LCMH”) entered into “Provider Agreements”
    with First Health for the delivery of medical services at discounted
    rates to “Payors,” namely in this suit, Liberty Mutual. . . .
    Gunderson and LCMH asserted in [a prior] suit that the payment
    provision of their Provider Agreements is null and void under the
    disclosure rules of Louisiana’s Any Willing Provider Act, Louisiana
    Revised Statute 40:2203.1, because [Liberty Mutual] (the preferred
    provider organizations and third party administrators) failed to
    comply with the statute’s notice provisions. Thus, Gunderson and
    LCMH, assert that they are entitled to additional monies [from
    Liberty Mutual] for medical services performed, in addition to
    statutory penalties and attorneys’ fees.
    Liberty Mutual filed this suit requesting that the Court enter
    a judgment declaring that (1) the Provider Agreements are valid
    and enforceable, (2) Liberty Mutual is obligated to pay Gunderson
    and LCMH only the negotiated rates for medical services performed,
    (3) Gunderson and LCMH are not entitled to be paid amounts in
    excess of the negotiated rates, (3) [sic] Gunderson and LCMH have
    no cause of action under any law, statute, or regulation against
    Liberty Mutual, and (5) Gunderson and LCMH’s efforts to receive
    additional monies violate their contracts which constitutes a breach
    of those contracts, entitling Liberty Mutual to damages and
    indemnity, including, but not limited to attorneys [sic] fees.
    In its Second Amended Complaint, Liberty Mutual added as
    a defendant, [sic] First Health. . . . Liberty Mutual maintains that
    pursuant to the PPO Contract, First Health agreed to “fully
    indemnify and hold harmless [Liberty Mutual] . . . from and against
    any and all claims . . . .
    First Health filed a motion for summary judgment
    maintaining that because the Provider Agreements are valid and
    enforceable, First Health is not obligated to indemnify Liberty
    Mutual. . . . Liberty Mutual filed a motion for partial summary
    judgment seeking a declaration against Gunderson and LCMH that
    2
    No. 08-30075
    the Provider Agreements with First Health are valid and
    enforceable.
    Liberty Mutual Ins. Co. v. Gunderson, No. 04-cv-2405 (W.D. La Feb. 15, 2006)
    (Mem. Ruling). On February 15, 2006, the district court made the following
    rulings at the summary judgment stage:
    (1) the discount provisions in the Provider Agreements between
    First Health and Gunderson and LCMH are valid and enforceable
    because there are no prohibitions in the Louisiana Workers’
    Compensation law that prevent a provider from agreeing to charge
    and received discounted rates for the services they provide to
    occupationally ill or injured workers, and (2) the payment provisions
    of the provider Agreement between Liberty Mutual and Gunderson
    and LCMH are not null and void because Louisiana Revised Statue
    § 40.2203.1 expressly states that the notice requirement provisions
    shall not apply to group purchasers (First Health) or to agreements
    of a group purchaser (payors such as Liberty Mutual who have an
    agreement with First Health).
    Liberty Mutual Ins. Co., No. 04-cv-2405, slip op. at 2 (W.D. La. Nov. 30, 2007)
    (Memorandum Ruling).
    On October 30, 2006, the district court issued a temporary restraining
    order and preliminary injunction against Gunderson preventing him from
    pursuing any claim before any court arising under Louisiana’s Any Willing
    Provider Act against First Health or any payor as set forth in the provider
    agreements between First Health and Gunderson. Gunderson did not file an
    appeal to the district court’s order granting the preliminary injunction.
    On August 24, 2007, Liberty Mutual filed a motion for civil contempt and
    sanctions, for a permanent injunction, and for stay of proceedings pursuant to
    the All Writs Act, 28 U.S.C. § 1651(a).1 Liberty Mutual alleged that Gunderson
    1
    District courts have the power to issue a narrowly tailored injunction
    under the All Writs Act to enjoin “repeatedly vexatious litigants from filing
    future state court actions.” Newby v. Enron Corp., 
    542 F.3d 463
    , 2008 U.S. App.
    LEXIS 19167, *5 (5th Cir. 2008).
    3
    No. 08-30075
    continued to file and prosecute claims in violation of the October 2006
    preliminary injunction.
    On September 27, 2007, First Health requested an order holding
    Gunderson in civil contempt for violating the October 2006 preliminary
    injunction. First Health also requested that the district court permanently
    enjoin Gunderson from relitigating in the Louisiana state workers’ compensation
    system factual and legal issues actually decided by the district court’s February
    2006 memorandum ruling and April 2006 amended judgment.2
    On November 30, 2007, the district court granted First Health’s motion for
    a permanent injunction and stay of proceedings. The district court agreed that
    Gunderson violated the district court’s October 2006 preliminary injunction
    when it continued to file and prosecute claims against First Health’s payors in
    the Louisiana Office of Workers’ Compensation (“OWC”). On January 2008, the
    district court granted a motion to amend the November 2007 judgment, to
    correct the time period regarding Gunderson’s contract with First Health.
    On January 10, 2008, Gunderson filed a notice of appeal from the
    November 2007 judgment, permanent injunction, and stay order, as well as the
    January 2008 amended judgment, permanent injunction, and stay order. On
    appeal, Gunderson argues that the district court erred when it applied the
    relitigation exception to the Anti-Injunction Act, 28 U.S.C. § 2283, to this case.
    2
    The Anti-Injunction Act, 28 U.S.C. § 2283, generally prohibits federal
    courts from interfering with state court proceedings. Under the statute, a
    United States court may not grant an injunction to stay proceedings in a state
    court unless it is (1) expressly authorized by Congress; (2) where necessary in
    aid of its jurisdiction; or (3) to protect or effectuate its judgments. The later of
    these three exceptions is commonly referred to as the “relitigation exception” to
    the Anti-Injunction Act. See Duffy & McGovern Accommodation Servs. v. QCI
    Marine Offshore, Inc., 
    448 F.3d 825
    , 828 (5th Cir. 2006) (stating that “a federal
    court can enjoin state proceedings threatening to ignore an earlier, preclusive
    federal court order”).
    4
    No. 08-30075
    On May 16, 2008, First Health filed a motion to dismiss the appeal for lack
    of jurisdiction.
    II. APPELLATE JURISDICTION
    First Health contends that Gunderson claims to appeal from the district
    court’s November 2007 and January 2008 judgments granting the permanent
    injunction, but in actuality Gunderson is impermissibly attempting to appeal for
    the first time the October 2006 and April 2006 judgments granting the
    preliminary injunction. First Health refers to the preliminary injunction as the
    “original injunction.” First Health claims the permanent injunction served
    merely to clarify the preliminary injunction and is not independently appealable;
    therefore, this Court has no jurisdiction to hear the appeal because Gunderson
    failed to appeal from the preliminary injunction.
    First Health acknowledges that 28 U.S.C. § 1292(a)(1) grants this Court
    jurisdiction to entertain appeals from “[i]interlocutory orders of the district
    courts . . . granting, continuing, modifying, refusing or dissolving injunctions, or
    refusing to dissolve or modify injunctions.”3 But First Health argues that the
    permanent injunction served merely to clarify the scope of the earlier
    preliminary injunction, and “interlocutory appeals are not allowed when a court
    merely enforces or interprets a previous injunction.” Ingram Towing Co. v.
    Adnac Inc., 
    59 F.3d 513
    , 516 (5th Cir. 1995). Gunderson argues that it is well
    settled that once an order of permanent injunction is granted, the order of
    preliminary injunction is merged with it and an appeal is proper only from the
    order granting the permanent injunction. Louisiana World Exposition, Inc. v.
    3
    Gunderson notes that before the deadline to appeal the November 2007
    injunction passed, First Health timely filed an unopposed motion to amend the
    injunction to correct an inaccurate date. The district court then issued the
    January 2008 amended judgment, and in accordance to Federal Rule of
    Appellate Procedure 4(a)(1), Gunderson and LCMH timely filed a notice of
    appeal of that order.
    5
    No. 08-30075
    Logue, 
    746 F.2d 1033
    , 1038 (5th Cir. 1984); SEC v. First Fin. Group, 
    645 F.2d 429
    , 433 (5th Cir. 1981) (internal citations omitted).
    The district court did not merely enforce or interpret the preliminary
    injunction. Instead, the district court broadened the scope of the injunction and
    converted the preliminary injunction into a permanent injunction. In this
    situation, under First Financial Group and Louisiana World Exposition, Inc., an
    appeal is proper only from the order granting the permanent injunction. First
    Health’s argument that Gunderson waived the opportunity to appeal the validity
    of issues related to the original preliminary injunction fails, because the
    permanent injunction merged the two injunctions into one.
    The motion to dismiss for lack of jurisdiction is, therefore, DENIED. We
    now turn to Gunderson’s appeal from the district court order.
    III. ANALYSIS
    A. Standard of Review
    The district court’s decision to issue a permanent injunction is reviewed
    for abuse of discretion. Regions Bank v. Rivet, 
    224 F.3d 483
    , 488 (5th Cir. 2000)
    (citation omitted). “The application of the relitigation exception is an issue of
    law, and therefore this [C]ourt reviews de novo the lower court’s determination
    that an injunction may be issued under that exception.” 
    Id. B. Discussion
          The issue on appeal is the permanent injunction issued by the district
    court on January 2008. Gunderson appeals the portion of the injunction which
    enjoins claims against First Health and/or its “unidentified payors.” Gunderson
    does not appeal the permanent injunction applicable to claims against Liberty
    Mutual.
    Gunderson makes four basic arguments to support the conclusion that the
    district court erred in granting a permanent injunction in favor of First Health
    and its payors: (1) that the district court improperly applied the All Writs Act
    and the relitigation exception of the Anti-Injunction Act; (2) that the district
    6
    No. 08-30075
    court lacked subject matter jurisdiction; (3) that the absence of a judgment
    between Gunderson and First Health precludes the relief granted by the district
    court; and (4) that including First Health’s “payors” within the scope of the
    injunction rendered the injunction too general to pass muster under Federal
    Rule of Civil Procedure (“Rule”) 65.
    7
    No. 08-30075
    1. All Writs Act and the Relitigation Exception
    Gunderson contends that it was improper for the district court to rely upon
    the All Writs Act and the relitigation exception to the Anti-Injunction Act to
    enjoin Gunderson from pursuing claims pending in both Louisiana state court
    and in the OWC. As explained in Regions Bank v. Rivet, this Court utilizes a
    four-part test to determine whether the relitigation exception to the Anti-
    Injunction Act applies to preclude litigation of a claim in state 
    court. 224 F.3d at 488
    . Specifically,
    (1) “the parties in a later action must be identical to (or at least in
    privity with) the parties in a prior action”; (2) “the judgment in the
    prior action must have been rendered by a court of competent
    jurisdiction”; (3) “the prior action must have concluded with a final
    judgment on the merits”; and (4) “the same claim or cause of action
    must be involved in both suits.”
    
    Id. (5th Cir.
    2000) (citations omitted).       Gunderson argues that these
    requirements are not met in this case. We disagree. This section will address
    Regions Bank factors one, three, and four. Factor two is discussed below as it is
    related to a separate claim made by Gunderson.
    A. Factor One
    To the extent that Gunderson attempts to bring any claims, whether in
    federal court, state court, or the OWC, against Liberty Mutual involving the
    district court’s ruling at the summary judgment stage, the parties in the future
    actions would be identical, and res judicata applies. Vines v. Univ. of La., 
    398 F.3d 700
    , 709 (5th Cir. 2000). Gunderson does not dispute that he is precluded
    from bringing any claims of this nature against Liberty Mutual.
    Further, this Court finds that First Health and its “payors” are in privity
    with Liberty Mutual. “Privity is a ‘legal conclusion that the relationship between
    the one who is a party on the record and the non-party is sufficiently close to
    afford application of the principle of preclusion.’” 
    Id. at 706.
    As this Court
    explained in Howell Hydrocarbons, Inc. v. Adams, a party is in privity with a
    8
    No. 08-30075
    party for res judicata purposes “if the party adequately represented his interest
    in the prior proceeding.” 
    897 F.2d 183
    , 188 (5th Cir. 1990). Liberty Mutual and
    other “payors” entered into Provider Agreement contracts with First Health.
    Liberty Mutual and First Health actively disputed Gunderson’s claims that (1)
    the discount provisions contained in the Provider Agreements are unenforceable,
    and (2) that the payment provisions contained in the Provider Agreements do
    not apply to group purchasers or to agreements of group purchasers. The
    contractual relationship between First Health and its payors, as well as the
    identical litigation position against Gunderson in suits over these contractual
    provisions, evidence to this Court that First Health and its “payors” are in
    privity with Liberty Mutual. Factor One is satisfied.
    B. Factor Three
    Factor Three requires that the prior action conclude with a final judgment
    on the merits. The district court’s use of the relitigation exception and decision
    to issue a permanent injunction were based on its summary judgment ruling in
    favor of Liberty Mutual. Gunderson abandoned any ability to appeal the district
    court’s summary judgment ruling.4 Factor Three is satisfied.
    C. Factor Four
    Factor Four requires that both disputes involve the same claim or cause
    of action. The claims at issue in the instant case, and the claims filed by
    Gunderson in the OWC, all involve discount and payment provisions in Provider
    4
    On May 9, 2006, Gunderson appealed the district court’s grant of
    summary judgment. This Court dismissed the appeal for lack of jurisdiction in
    a per curiam opinion without explanation. Based on the briefs filed, this Court
    finds that the appeal was dismissed for lack of jurisdiction because Gunderson
    improperly attempted to appeal the district court's denial of a 12(b)(6) motion to
    dismiss. See Appellee's Mot. to Dismiss the Appeal for Lack of Juris. in Liberty
    Mutual Insurance Co. v. Gunderson, No. 06-30545, (5th Cir. 2006) (unpublished
    decision). Gunderson failed to brief the only appealable issue, the district court's
    grant of summary judgment in favor of Liberty Mutual, and therefore abandoned
    that issue on appeal.
    9
    No. 08-30075
    Agreements between First Health and Gunderson.             First Health’s payors
    provided payments to Gunderson under the provisions found in these Provider
    Agreements between First Health and Gunderson.             Gunderson repeatedly
    attempted to make claims against First Health’s payors, arguing that the payors
    improperly discounted rates for their services under these Agreements, despite
    the district court’s rejection of that very argument in its ruling that the Provider
    Agreements are valid and enforceable.
    In addition, collateral estoppel precludes Gunderson from pursuing any
    future claims that would involve relitigating the issues decided by the district
    court when it granted summary judgment against Gunderson. 
    Vines, 398 F.3d at 709
    (explaining that collateral estoppel requires the same issue, fact, or law
    be actually litigated and determined in a prior judgment). Gunderson is barred
    from attempting to bring a claim in federal court, state court, or the OWC that
    would involve deciding the validity of the discount or payment provisions
    contained in Provider Agreements between First Health and its payors. The
    district court decided these issues on summary judgment, and Gunderson
    abandoned its appeal of the rulings contained in the district court’s grant of
    summary judgment. Factor Four is satisfied.
    2. Subject Matter Jurisdiction (Regions Bank Factor Two)
    Gunderson alleges that the district court did not have subject matter
    jurisdiction to decide the instant case. To demonstrate the district court’s lack
    of subject matter jurisdiction, Gunderson points to similar lawsuits where the
    same district court found that it lacked jurisdiction. See Sentry v. Lake Charles
    Mem’l, 2:06-cv-00570 (W.D. La. June 4, 2008); AIG v. Gunderson, 2:05-cv-247
    (W.D. La. May 11, 2005); Gunderson v. F.A. Richard & Assocs., 2:04-cv-1242
    (W.D. La. Mar. 23, 2005).5 Gunderson, however, in making this argument
    5
    The findings in the other cases are irrelevant; however, this Court notes
    that the district court distinguished the instant case from each one of the
    decisions cited by Gunderson to argue that the district court lacked subject
    10
    No. 08-30075
    ignores that the district court had proper diversity jurisdiction over this case.
    The Supreme Court explained in Horton v. Liberty Mutual Insurance Co. that
    state workers’ compensation claims may be removed to federal district courts if
    diversity jurisdiction exists. 
    367 U.S. 348
    , 352 (1961). Regions Bank Factor Two
    requires the court have “competent” jurisdiction, but does not specifically require
    that the court using the relitigation exception to the Anti-Injunction Act have
    subject matter jurisdiction over the case. Regions 
    Bank, 224 F.3d at 488
    (citation omitted). The district court properly found that it maintained diversity
    jurisdiction over this case.
    3. Final Judgment on the Merits Between Gunderson and First Health
    Gunderson next argues that the district court erred in issuing the
    injunction, because “Plaintiffs in both suits must have asserted the same claim
    or cause of action, the federal court’s underlying judgment must be ‘final’, [sic]
    and the federal and state proceedings must involve identical parties.” Gunderson
    then provides a citation to Regions Bank. Gunderson misunderstands what is
    required by the relitigation exception. The four factor test outlined in Regions
    Bank does not require a final judgment on the merits between Gunderson and
    First Health. Regions 
    Bank, 224 F.3d at 488
    (citation omitted). The test does,
    however, require a final judgment on the merits. As discussed above, the district
    court issued a final judgment when it granted summary judgment in favor of
    Liberty Mutual. While this Court acknowledges that the grant of summary
    judgment was limited to a finding in favor of Liberty Mutual, we also find that
    First Health and its payors are in privity with Liberty Mutual for purposes of
    the relitigation exception. The district court specifically ruled on the validity of
    Provider Agreements entered into between Gunderson and First Health in its
    summary judgment ruling.
    matter jurisdiction. On de novo review, this Court must make an independent
    determination regarding subject matter jurisdiction.
    11
    No. 08-30075
    4. Federal Rule of Civil Procedure 65
    Gunderson argues that enjoining actions against parties who are not
    identified (or identifiable without initiating litigation), violates the rule of
    specificity for injunctions. Gunderson asserts that the permanent injunction is
    impermissibly vague, overbroad and hard to ascertain in that it fails to name or
    otherwise identify the ‘payors’ of First Health. Rule 65(d) requires specificity;
    “[a]n injunction must simply be framed so that those enjoined will know what
    conduct the court has prohibited.” Meyer v. Brown & Root Constr. Co., 
    661 F.2d 369
    , 373 (5th Cir. 1981). The district court correctly noted that the Provider
    Agreements between First Health and Gunderson required First Health to
    provide a payor listing to Gunderson. Liberty Mutual, No. 04-cv-2405, slip op.
    5-6 (Mem. Ruling).     First Health complied with these requirements, and
    provided Gunderson with payor listings. Therefore, this Court holds that the
    permanent injunction is framed in a manner that enables Gunderson to know
    what conduct the district court prohibited.
    IV. CONCLUSION
    For the foregoing reasons, First Health’s motion to dismiss for lack of
    jurisdiction is DENIED. The district court’s grant of a permanent injunction
    against Gunderson is AFFIRMED.
    12