Pacific Radiation Oncology v. the Queen's Medical Center ( 2015 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
PACIFIC RADIATION ONCOLOGY, No. 14-17050
LLC, a Hawai’i limited liability
corporation; PRO ASSOCIATES, LLC, D.C. No.
a Hawai’i limited liability company; 1:12-cv-00064-
JOHN LEDERER, M.D., individually LEK-KSC
and as manager of the LLC’s
appearing for the Pacific Radiation
Oncology Physicians; LAETON OPINION
PANG, M.D.; EVA BIENIEK, M.D.;
VINCENT BROWN, M.D.; PAUL
DEMARE, M.D.; THANH HUYNH,
M.D.,
Plaintiffs-Appellants,
JOHN AND MARY DOE, 1 through 17,
Appellant-Intervenor,
v.
THE QUEEN’S MEDICAL CENTER, a
Hawai’i non-profit corporation;
QUEEN’S DEVELOPMENT CORP., a
Hawai’i for profit corporation;
NOREEN D.S.W. MOKUAU; WILLIAM
G. OBANA, M.D.; ARTHUR A.
USHIJIMA; MARK H. YAMAKAWA;
PAULA YOSHIOKA; SHARLENE K.
TSUDA; RICHARD C. KEENE;
CLINTON YEE; NALEEN M.
2 PAC. RADIATION ONCOLOGY V. QUEEN’S MED. CTR.
ANDRADE, M.D.; ERNEST H.
FUKEDA, JR.; ROBB OHTANI, M.D.;
NEIL J. HANNAHS; CHRISTINE M.
GAYAGAS; PETER K. HANASHIRO;
ROBERT K. NOBRIGA; ERIC K.
YEAMAN; JULIA C. WO; CAROLINE
WARD ODA; PETER HALFORD, M.D.;
BARRY WEINMAN, individually and
in their capacities as Officers and
Trustees of Queen’s Medical Center,
Defendants-Appellees.
Appeal from the United States District Court
for the District of Hawaii
Leslie E. Kobayashi, District Judge, Presiding
Argued and Submitted
October 15, 2015—Honolulu, Hawaii
Filed December 22, 2015
Before: Diarmuid F. O’Scannlain, Richard C. Tallman,
and Milan D. Smith, Jr., Circuit Judges.
Opinion by Judge Tallman
PAC. RADIATION ONCOLOGY V. QUEEN’S MED. CTR. 3
SUMMARY*
Civil Procedure
The panel affirmed the district court’s denial of injunctive
relief sought by Pacific Radiation Oncology, LLC against
The Queen’s Medical Center.
Pacific Radiation Oncology, consisting of a group of
physicians specializing in radiation oncology, sued the
Queen’s Medical Center alleging unfair trade practices.
During discovery, Pacific Radiation Oncology sought
injunctive relief against the Queen’s Medical Center alleging
that the Center’s review and use of patient records during
litigation violated the Health Insurance Portability and
Accountability Act of 1996, 42 U.S.C. § 1320d, and the
Hawaii Constitution art. 1, § 6.
The panel held that the district court did not abuse its
discretion in denying Pacific Radiation Oncology’s motion
for a temporary restraining order or in the alternative for a
preliminary injunction. The panel followed the Eighth
Circuit and adopted the rule of Devose v. Herrington, 42 F.3d
470, 471 (8th Cir. 1994), which established that there must
exist a relationship between the injury claimed in a motion
for injunctive relief and the conduct alleged in the underlying
complaint. The panel held that in this case there was not a
sufficient nexus between Pacific Radiation Oncology’s claim
of injury to patients’ privacy in its motion for injunctive relief
*
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
4 PAC. RADIATION ONCOLOGY V. QUEEN’S MED. CTR.
and the unfair trade practice claims in its underlying
complaint.
COUNSEL
Clare E. Connors (argued), Mark S. Davis, and Michael K.
Livingston, Davis Levin Livingston, Honolulu, Hawaii, for
Plaintiffs-Appellants.
Jerry M. Hiatt (argued), and Mahilani E.K. Hiatt, Hiatt &
Hiatt, Honoka’a, Hawaii, for Appellant-Intervenor.
Paul Alston (argued), William S. Hunt, Clyde J. Wadsworth,
and Claire Wong Black, Alston Hunt Floyd & Ing, Honolulu,
Hawaii; Daniel M. Mulholland III, Horty, Springer &
Mattern, P.C., Pittsburgh, Pennsylvania, for Defendants-
Appellees.
OPINION
TALLMAN, Circuit Judge:
A court’s equitable power lies only over the merits of the
case or controversy before it. When a plaintiff seeks
injunctive relief based on claims not pled in the complaint,
the court does not have the authority to issue an injunction.
During discovery of its unfair trade practices case, Appellant
Pacific Radiation Oncology, LLC (PRO) sought injunctive
relief against Appellee The Queen’s Medical Center (QMC)
arguing that QMC’s review and use of patient records
violated the Health Insurance Portability and Accountability
Act of 1996 (HIPAA), 42 U.S.C. § 1320d, and the Hawaii
PAC. RADIATION ONCOLOGY V. QUEEN’S MED. CTR. 5
Constitution art. 1, § 6. The district court denied the
injunction because PRO’s complaint did not contain a claim
alleging improper review and use of confidential patient
information in violation of HIPAA and the Hawaii
Constitution. We affirm.
I
To understand the motion that is the subject of this
appeal, it is necessary to describe the deterioration of a nearly
forty-year professional relationship between PRO and QMC
and the extended litigation that occurred as a result.
A
PRO consists of a group of physicians specializing in
radiation oncology. PRO provided service to its patients at
QMC, and at one of QMC’s competitors, The Cancer Center
of Hawaii (TCCH), in which some PRO members held a
financial interest. But QMC is the only facility on Oahu with
an operating room licensed by the Nuclear Regulatory
Commission (NRC) for specialized radiation services to treat
cancer. During the course of their nearly forty-year
relationship, PRO physicians were allowed to meet with and
treat their patients at QMC in order to accommodate patient
preferences in choosing the location of treatment. However,
this relationship ended in 2011 when QMC decided to
transition to a closed-facility model. As a result, PRO
physicians could not practice at QMC at all unless they
accepted exclusive employment with QMC and divested any
interest they held in TCCH. PRO physicians, therefore,
would no longer retain hospital privileges that allowed access
to the NRC-licensed operating room which they used to treat
certain patients.
6 PAC. RADIATION ONCOLOGY V. QUEEN’S MED. CTR.
In January of 2012 PRO brought suit against QMC
alleging that adopting the closed-facility model was merely
a pretext to prevent PRO physicians from competing with
QMC. The complaint filed against QMC alleged ten claims
for relief: (1) denial of procedural and substantive due
process; (2) violation of QMC bylaws and governing
regulations; (3) intentional tortious interference with
plaintiffs’ contractual obligations with competing facilities;
(4) intentional and tortious interference with prospective
business advantage; (5) intentional and tortious interference
with the professional and contractual relationship with
plaintiffs’ patients; (6) unfair, deceptive, anti-competitive,
and illegal trade practices in violation of Hawaii Revised
Statutes Chapter 480 arising out of QMC’s termination of
privileges; (7) unfair, deceptive, anti-competitive, and illegal
trade practices in violation of Chapter 480 arising out of
QMC’s violation of the anti-kickback statute; (8) unfair,
deceptive, anti-competitive, and illegal trade practices in
violation of Chapter 480 arising out of QMC’s attempt at
economic credentialing; (9) unfair, deceptive, anti-
competitive, and illegal trade practices in violation of Chapter
480 arising out of QMC’s breach of its obligations under its
corporate integrity agreement between the Office of the
Inspector General of the U.S. Department of Health and
Human Services; and (10) breach of fiduciary duty and bad
faith owed to a partner. PRO initially requested injunctive
relief and damages related only to the termination of hospital
privileges.
In March 2012 the district court granted a preliminary
injunction to allow PRO physicians to continue treating
patients who needed access to the NRC-licensed operating
room at QMC. Pac. Radiation Oncology, LLC v. Queen’s
Med. Ctr., 861 F. Supp. 2d 1170 (D. Haw. 2012). In
PAC. RADIATION ONCOLOGY V. QUEEN’S MED. CTR. 7
February 2014 we affirmed that preliminary injunction. Pac.
Radiation Oncology, LLC v. Queen’s Med. Ctr., 555 F. App’x
730 (9th Cir. 2014). Thereafter, QMC brought a
counterclaim against PRO alleging that PRO physicians were
unlawfully transferring patients from QMC to TCCH by
encouraging them to seek treatment there. Additionally,
QMC alleged that PRO physicians failed to inform patients
of their financial interests in TCCH when making these
referrals. Thus, QMC argues that it had a legitimate business
interest to move to a closed-facility model.
Prior to the commencement of litigation in 2012, QMC
administrators identified 133 relevant patients from the
hospital’s own electronic record-keeping system who had an
initial consultation with a PRO physician at QMC but did not
return to QMC for radiation therapy. After bringing its
counterclaim, QMC served a subpoena on TCCH seeking
documents and information regarding those patients.
Included in this subpoena was a list of 132 of the 133
identified patients’ names, patient numbers, and treating
physicians. However, when QMC filed the return of service
with the district court clerk on Thursday, July 10, 2014, it
filed the subpoena on the public docket with the complete
unredacted list of patient names, numbers, and treating
physicians. Upon realizing its error, QMC counsel
immediately notified the magistrate judge overseeing
discovery, the clerk restricted access to the document the next
business day, Monday, July 14, 2014, and the court granted
QMC’s ex parte motion to seal the document. So far as can
be determined, only QMC’s attorneys accessed the document
through PACER while it was publicly available.
PRO then filed a motion for a temporary restraining order,
or alternatively a preliminary injunction. PRO challenged not
8 PAC. RADIATION ONCOLOGY V. QUEEN’S MED. CTR.
only the public filing of the patient list, but also QMC’s right
to review its own medical records that were the basis of the
list, and PRO sought to preclude QMC’s review of the
records sought from TCCH in the subpoena. PRO alleges
that QMC’s conduct violates HIPAA and the Hawaii
Constitution.
B
The district court denied PRO’s motion for injunctive
relief. It concluded that PRO’s complaint “does not contain
a claim alleging improper review and use of confidential
patient information in violation of HIPAA and the Hawaii
Constitution.” Pac. Radiation Oncology, LLC v. Queen’s
Med. Ctr., 47 F. Supp. 3d 1069, 1076 (D. Haw. 2014). The
court rejected PRO’s arguments that the claims for violation
of patient privacy are part of its Hawaii Revised Statutes
Chapter 480 claims because the allegations in those claims
did not refer to improper review and use of patient
information. Id. Acknowledging the seriousness of the
public disclosure, the court nonetheless held that the motion
“simply does not fit within the TRO [temporary restraining
order] analysis.” Id.The district court then construed the motion as ultimately
presenting a discovery issue. Id. Specifically, the court
found that QMC had violated the terms of a previously
entered protective order when it publicly disclosed
identifiable patient information. Id. at 1078. For that
violation, the district court sanctioned QMC with PRO’s
reasonable attorneys’ fees and costs incurred in responding to
PAC. RADIATION ONCOLOGY V. QUEEN’S MED. CTR. 9
the public filing.1 Id. at 1080. To the extent that QMC
argued that its use of patient information was relevant to its
defenses and counterclaims against PRO, the district court
instructed the parties to confer on how to access this
information in compliance with the protective order, HIPAA,
and the Hawaii Constitution through the normal discovery
process overseen by the magistrate judge. Id. at 1081.2
PRO appealed the district court’s denial of injunctive
relief. We have jurisdiction under 28 U.S.C. § 1292(a)(1) to
review PRO’s appeal of that order.
1
The court reserved calculating the final amount to be awarded pending
the outcome of this appeal.
2
The magistrate judge found the information relevant to QMC’s claims
and defenses and held that if the patient information was deidentified it
would comply with HIPAA and the Hawaii Constitution. HIPAA clearly
allows for deidentification but it is unclear whether deidentification is
sufficient to comply with the more stringent privacy requirements
mandated by the Hawaii Constitution. When PRO appealed the magistrate
judge’s order, the district court reserved ruling on the issue and certified
questions to the Hawaii Supreme Court to resolve the state law legal
issues. Pac. Radiation Oncology, LLC v. Queen’s Med. Ctr., No. 12-
00064-LEK-KSC, 2015 WL 419654, at *11 (D. Haw. Jan. 30, 2015). The
first certified question is of particular relevance to this appeal, asking:
“[m]ay a third party who is in lawful possession of a patient’s confidential
medical records use, or be compelled to produce, these records in
litigation where the patient is not a party?” Certified Questions to the
Hawaii Supreme Court From the United States District Court for the
District of Hawaii at 8, Pac. Radiation Oncology, LLC v. Queen’s Med.
Ctr., No. 12-00064-LEK-KSC (2015), ECF No. 541. This question
addresses both QMC’s use of its own patient records and whether QMC
can request relevant patient records from TCCH. Resolution of that
discovery issue does not affect the merits of the ruling denying injunctive
relief.
10 PAC. RADIATION ONCOLOGY V. QUEEN’S MED. CTR.
II
We review a district court’s grant or denial of a
preliminary injunction for an abuse of discretion. Pimentel v.
Dreyfus, 670 F.3d 1096, 1105 (9th Cir. 2012). We employ a
two part test: first, determining whether the trial court
identified the correct legal rule to apply to the requested relief
and second, determining whether the court’s application of
that rule was illogical, implausible, or without support from
inferences that may be drawn from facts in the record. Id.“A decision based on an erroneous legal standard or a clearly
erroneous finding of fact amounts to an abuse of discretion.”
Id.III
A
The district court’s denial of PRO’s motion was not an
abuse of discretion because the motion for relief was
unrelated to the underlying complaint. A preliminary
injunction is appropriate when it grants relief of the same
nature as that to be finally granted. De Beers Consol. Mines
v. United States, 325 U.S. 212, 220 (1945). We have yet to
adopt a formal test for comparing the relief sought in a
preliminary injunction with the final relief sought in the
original complaint. Other circuits, however, have enunciated
a rule requiring a plaintiff to “establish a relationship between
the injury claimed in the party’s motion and the conduct
asserted in the complaint.” Devose v. Herrington, 42 F.3d
470, 471 (8th Cir. 1994).
Devose is illustrative of the exactitude by which courts
evaluate whether a motion for injunctive relief is related to
PAC. RADIATION ONCOLOGY V. QUEEN’S MED. CTR. 11
the underlying claim. Though new assertions of misconduct
might support additional claims against a defendant, they do
not support preliminary injunctions entirely unrelated to the
conduct asserted in the underlying complaint. See id. In
Devose, a prisoner brought a 42 U.S.C. § 1983 action against
prison officials for violating his Eighth Amendment rights.
Id. The prisoner then sought injunctive relief claiming prison
officials retaliated against him for bringing his lawsuit. Id.The court held that the prisoner’s motion for injunctive relief
based on retaliation by prison officials was entirely different
and separate from the underlying conduct challenged in the
§ 1983 action. Id. The Eighth Circuit therefore affirmed the
district court’s denial of injunctive relief. Id.
The rule of Devose is already being applied by the lower
courts of our circuit. See, e.g., Mitchell v. Haviland, No.
2:09-cv-3012 JAM KJN P, 2014 WL 458218 at *2 (E.D. Cal.
Feb. 4, 2014) (denying a motion for injunctive relief alleging
retaliation against a prisoner for filing a § 1983 action under
Devose because it claimed new assertions of misconduct in a
different prison by different prison employees); Padilla v.
Nevada, No. 3:08-cv-410-LRH(RAM), 2011 WL 2746653 at
*8 (D. Nev. June 3, 2011) (noting that the Ninth Circuit has
not directly addressed this issue and applying Devose in
denying injunctive relief based on violations of plaintiff’s
First Amendment rights when the underlying complaint
alleged Eighth Amendment violations).
Furthermore, many of our sister circuits have either
adopted Devose explicitly or independently formulated an
identical rule. See Colvin v. Caruso, 605 F.3d 282, 299–300
(6th Cir. 2010); Little v. Jones, 607 F.3d 1245, 1251 (10th
Cir. 2010); Omega World Travel, Inc. v. Trans World
Airlines, 111 F.3d 14, 16 (4th Cir. 1997); accord Kaimowitz
12 PAC. RADIATION ONCOLOGY V. QUEEN’S MED. CTR.
v. Orlando, 122 F.3d 41, 43 (11th Cir. 1997); Stewart v. U.S.
I.N.S., 762 F.2d 193, 198–99 (2nd Cir. 1985).
Persuaded by the logic behind Devose’s rule and the
pervasive application of the rule both within the district
courts of our circuit and our sister circuits, we now formally
adopt the rule of Devose. We hold that there must be a
relationship between the injury claimed in the motion for
injunctive relief and the conduct asserted in the underlying
complaint. This requires a sufficient nexus between the
claims raised in a motion for injunctive relief and the claims
set forth in the underlying complaint itself. The relationship
between the preliminary injunction and the underlying
complaint is sufficiently strong where the preliminary
injunction would grant “relief of the same character as that
which may be granted finally.” De Beers Consol. Mines,
325 U.S. at 220. Absent that relationship or nexus, the
district court lacks authority to grant the relief requested.
B
Applying this rule here, PRO’s motion for injunctive
relief does not have a relationship or nexus to the underlying
complaint. Therefore the district court properly refused to
grant the relief requested. PRO’s motion for injunctive relief
is based on potential misconduct entirely unrelated to its
unfair trade practices claims. PRO’s complaint alleges
multiple claims against QMC for violations of due process,
unfair and illegal trade practices, and other state law claims.
The complaint does not contain a claim for improper review
and use of confidential patient information in violation of
HIPAA and the Hawaii Constitution. PRO’s complaint
relates only to the retention of hospital privileges and
PAC. RADIATION ONCOLOGY V. QUEEN’S MED. CTR. 13
collection of damages from unfair competition and related
theories.
Besides merely asserting that the claims are related or
incorporated into its complaint, PRO fails to explain how the
privacy claims underlying the motion for injunctive relief
relate to the unfair trade practices claims in its complaint.
See Devose, 42 F.3d at 471. Instead, PRO relies on
generalized notice pleading requirements in an attempt to
justify how evidence of QMC’s privacy violations is relevant
to claims of unfair trade practices. We are not persuaded.
QMC’s particular use of private patient medical information
may have some relevance to those claims. That use may have
contemporaneously violated HIPAA and the Hawaii
Constitution and might arguably support a new claim against
QMC by PRO or the patients whose privacy may have been
compromised.3 See id. However, that does not turn PRO’s
claims of unfair trade practices into separate and distinct
claims that QMC violated HIPAA and the Hawaii
Constitution.4 Despite PRO’s arguments to the contrary,
PRO cannot point to any violation of privacy claims or any
conduct implicating a violation of patient privacy in its
complaint because there are none.
Finally, PRO itself admitted in the district court that its
motion for injunctive relief has nothing to do with the
3
We assume, but do not decide, that PRO has standing to assert the
privacy rights of its patients. Nor do we address whether HIPAA contains
a private right of action.
4
We are equally unpersuaded by PRO’s attempts at oral argument to
link by incorporation the claims of violation of patient privacy with their
claims of violation of QMC’s bylaws.
14 PAC. RADIATION ONCOLOGY V. QUEEN’S MED. CTR.
underlying claim. Reply Mem. in Supp. of Pls.’ Mot. for
TRO or in the Alternative for Prelim. Inj. at 1, Pac. Radiation
Oncology, LLC v. Queen’s Med. Ctr., 47 F. Supp. 3d 1069(2014) (No. 12-00064), ECF No. 260 (“The merit or lack of
merit of the claims and defenses of either party is not before
the Court.”). PRO is not asking for relief of the same nature
it may ultimately be granted in its lawsuit against QMC. See
De Beers Consol. Mines, 325 U.S. at 220. Instead, PRO is
seeking to enjoin QMC’s use of private patient information
— a remedy that will not be provided if PRO succeeds in its
underlying unfair trade practices suit.
Though the district court did not explicitly consider
Devose in denying PRO’s motion for injunctive relief, the
court properly denied the motion because it was unrelated to
the underlying complaint. The district court stated that PRO
could not prove the likelihood of success requirement of the
preliminary injunction analysis because the privacy violations
alleged in the motion were not contained within the actual
complaint. Additionally, the district court correctly noted
that the issue presented in the motion “does not fit within the
TRO analysis” and properly denied injunctive relief. Though
the district court did not refer to Devose explicitly, it applied
the same analysis and came to the same legal conclusion.
There was no abuse of discretion in denying PRO’s motion.
PRO might have sought leave to amend its complaint to
include a claim of violation of its patients’ privacy rights
under HIPAA and the Hawaii Constitution. Or PRO and its
patients might have brought a separate suit against QMC.
PRO did neither. What we have before us is merely a
PAC. RADIATION ONCOLOGY V. QUEEN’S MED. CTR. 15
discovery dispute in disguise as an interlocutory appeal.5
PRO cannot respond to QMC’s discovery request by seeking
injunctive relief unrelated to the claims set forth in the
underlying suit.
IV
We hold the district court did not abuse its discretion in
denying PRO’s motion for a temporary restraining order or in
the alternative for a preliminary injunction. We follow the
Eighth Circuit and adopt the rule of Devose — there must
exist a relationship between the injury claimed in a motion
for injunctive relief and the conduct alleged in the underlying
complaint. There was not a sufficient nexus between PRO’s
claim of injury to patients’ privacy in violation of HIPAA and
the Hawaii Constitution in its motion for injunctive relief and
the unfair trade practice claims in its underlying complaint.
The district court properly ruled that PRO’s motion for
injunctive relief was unrelated to its underlying complaint.
PRO cannot seek interim equitable relief of a nature it is not
seeking in the final adjudication of its lawsuit.
AFFIRMED.
5
A discovery dispute that will be resolved by the district court once it
receives guidance from the Hawaii Supreme Court.