Hinds v. Community Medical Centers, Inc. ( 2022 )

nee nnn meen ee OIE IO IE IE SE eee 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 DANIEL HINDS, on behalf No. 2:22-cv-01207-JAM-AC of themselves and others 12 similarly situated, 13 Plaintiff, AMENDED ORDER DENYING MOTION FOR SUBSITUTION AND GRANTING 14 Vv. MOTION FOR REMAND 15 COMMUNITY MEDICAL CENTERS, INC., 16 Defendant. 17 18 On November 11, 2021, Daniel Hinds (“Plaintiff” or 19 “Mr. Hinds”) filed suit against Community Medical Centers, Inc. 20 (“CMC”) in San Joaquin Superior Court based on various state laws 21 alleging CMC failed to protect his Protected Health Information 22 (“PHI”) and Personally Identifiable Information (“PII”). 23 Thereafter four more cases alleging the same violations were 24 filed against CMC and the San Joaquin Superior Court consolidated 25 them into this class action. CMC then removed and filed its 26 motion to substitute the United States as this suit’s defendant. 27 See Notice of Removal (“NOR”); ECF No. 1; see also Mot. to 28 1 Substitute (“Mot.”), ECF No. 9. The United States and Plaintiff 2 filed their respective oppositions and CMC replied. See US 3 Opp’n, ECF No. 3; Pl.’s Opp’n, ECF No. 29; Reply to US Opp’n, ECF 4 No. 35, Reply to Pl.’s Opp’n, ECF No. 34. In addition, the 5 United States and Plaintiff filed motions to remand. See US Mot. 6 to Remand (“US MTR”), ECF No. 27; Pl.’s Mot. to Remand (“Pl.’s 7 MTR”), ECF No. 24. CMC filed oppositions to both, and the United 8 States and Plaintiff filed replies. See Def.’s Opp’n to US MTR, 9 ECF No. 32; Def’s Opp’n to Pl.’s MTR, ECF No. 33; US Reply to 10 Def’s Opp’n to US MTR, ECF No. 36; Pl.’s Reply to Def’s Opp’n to 11 Pl.’s MTR, ECF No. 37.1 12 I. BACKGROUND 13 A. Statutory Framework 14 CMC is a healthcare provider that operates over 25 15 facilities in California. Mot. at 2. To offset its operation 16 costs associated with malpractice liability, CMC applied for and 17 received federal grant funding pursuant to the to The Federally 18 Supported Health Centers Assistance Act of 1992 (“FSHCAA”), See 19 Pub. L. No. 104-73, 109 Stat. 777 (1995) in 2021 and 2022; see 20 also Mot. at 2. As a recipient of this funding, the Secretary of 21 Health and Human Services (HHS) deemed CMC an employee of the 22 United States Public Health Service (“PHS”) “for the purposes of” 23 42 U.S.C. § 233. See § 233(g)(1)(A); see also Mot. at 1, 4. 24 Under 42 U.S.C. § 233, the Federal Tort Claims Act (“FTCA”) is 25 the only remedy for certain medical-malpractice suits against PHS 26 27 1 This motion was determined to be suitable for decision without oral argument. E.D. Cal. L.R. 230(g). The hearing was 28 scheduled for September 27, 2022. 1 employees. § 233(a). However, the FTCA’s applicability is not 2 automatic. Instead, the United States Attorneys—in accordance 3 with Attorney General’s delegation of such duties—evaluate when a 4 lawsuit’s alleged actions or omission triggers the FTCA’s 5 coverage. § 233(b)-(l). If a healthcare provider—like CMC—is 6 sued in state court, FSHCAA provides two avenues for the case’s 7 removal to federal court: (1) the Attorney General can remove the 8 case after certifying the defendant is a deemed PHS employee 9 whose actions or omissions fall within the FTCA’s purview; or 10 (2) the healthcare provider can remove the case on its own if the 11 Attorney General fails to appear within fifteen days of receiving 12 notice of the case. See §§ 233(c), (l)(1)-(2). 13 B. CMC’s Data Breach and Subsequent Class Action 14 After CMC applied and received FSHCAA funding in 2021 and 15 2022, CMC learned of an “external system breach” compromising its 16 patients PHI and PII in October 2021. See Consolidated Class 17 Action Compl. (“CCAC”) ¶¶ 6 at 16, Exh. B to NOR, ECF No. 1-2.2 18 After CMC notified its patients of the breach, Daniel Hinds filed 19 suit against CMC in San Joaquin Superior Court based on various 20 state laws. Id. ¶ 11; See State Ct. Docket (“Docket”) at 2, Exh. 21 B to NOR, ECF No. 1-2. Thereafter four more cases were filed— 22 Beck, Donaire, Palermo, and Miranda—due to the same breach. See 23 Mot. at 3. CMC forwarded each complaint to HHS, seeking its 24 representation in all instances. See NOR ¶ 6. In January 2022, 25 HHS’s counsel denied CMC’s request because CMC and its staff are 26 27 2 Exhibit B to the NOR is the state court docket and is 417 pages. As a result, citation to this exhibit use the CM/ECF page 28 numbers. 1 “deemed to be employees of the [PHS] solely in medical 2 malpractice cases” and the complaints’ allegations do “not fall 3 under the auspice of the FSCHAA and FTCA.” See Letters from 4 Dep’t of Health & Hum. Serv., Exh. C to NOR, ECF No. 1-3. 5 Later that month, the state court consolidated the 6 abovementioned cases into the Hinds case, and the parties entered 7 a stipulated case management order requiring Plaintiffs to file 8 and serve a consolidated complaint by June 8, 2022. See 9 Stipulation Case Mgmt. Order No. 1 at 328, Exh. B to NOR, ECF 10 No. 1-2. Plaintiff filed and served Defendant the Consolidated 11 Class Action Complaint (“CCAC”) on June 9, 2022. See Docket at 12 4. On June 13, 2022, CMS sent HHS and the United States Attorney 13 for the Eastern District of California (“United States Attorney”) 14 the CCAC and letter seeking “removal of the consolidated class 15 action to federal district court and substitution of the United 16 States as the proper defendant in the places of CMC.” See CMC 17 Letter to HSS and US Attorney, Exh. 1 to US Opp’n, ECF No. 27-3. 18 In accordance with § 233(l)(1), the United States Attorney 19 appeared in court on June 22, 2022 and explained he was 20 determining whether § 233’s protection shielded CMC from 21 Plaintiff’s allegations. See Mot. at 4; see also US Opp’n at 4. 22 On July 7, 2022, CMC asked the United States Attorney if he 23 would consent to CMC removing the case to federal court and 24 substitution of the United States in CMC’s place. See Decl. of 25 Joseph Frueh ¶ 3, ECF No. 27-2. The United States Attorney 26 advised he was still evaluating the matter and “would oppose any 27 unilateral removal or attempt to compel the United States to 28 substitute as the defendant in lieu of CMC.” Id. One day later, 1 CMC removed the action to federal court. See NOR; see also Mot. 2 at 4, US Opp’n at 4. On August 5, 2022, the United States 3 Attorney sent CMC a letter denying its request because the 4 “available information” indicated the claims against CMC were not 5 “for damage for personal injury, including death, resulting from 6 the performance of medical, surgical, dental or related 7 functions.” See US Attorney Letter to CMC, Exh 2. to US Opp’n, 8 ECF No. 27-4. 9 II. OPINION 10 A. Analysis 11 1. CMC’s Motion for Substitution 12 The parties dispute whether § 233 entitles CMC to absolute 13 immunity and the United States’ substitution in this suit. CMC 14 argues these safeguards are applicable because: (1) § 233 15 immunizes PHS employees from claims stemming from “the 16 performance of medical or related functions within the scope of 17 their employment,” see Mot. at 6 (citation omitted); (2) CMC was 18 deemed a PHS employee during the data breach’s occurrence; and 19 (3) the management of PHI and PII is a related function that 20 falls “within the scope of its . . . deemed status.” Id. CMC 21 contends these facts taken together demonstrate “CMC is immune 22 from this action under § 233(a) and substitution of the United 23 States is proper because Plaintiff’s exclusive remedy is a claim 24 against the United States under the [FTAC].” Id. at 6-7. 25 The United States argues CMC’s motion fails because CMC 26 fails to identify a statute allowing this Court to mandate the 27 Government’s substitution under these circumstances. See US 28 Opp’n at 4. Specifically, although it concedes § 233(a) 1 provides a mechanism by which deemed PHS employees can assert an 2 immunity-defense that requires plaintiffs to pursue their claims 3 against the United States pursuant to the FTCA, the Government 4 asserts “nothing in the text of § 233(a) authorizes a federal 5 court to force the United States to substitute in place of a 6 defendant in an existing lawsuit.” US Opp’n at 5. The Government 7 argues the same is true of §§ 233(c) and (l)(2). Id. at 7 8 a. Section 233(a) 9 Section 233(a)’s statutory history evidences its inability 10 to serve as the basis for CMC’s request. Enacted in 1970, § 233 11 was cast in the likeness of the Federal Drivers Act of 1961 that 12 “made an action against the United States under the FTCA the 13 ‘exclusive’ remedy for ‘personal injury’ . . . resulting from the 14 operation by any employee of the Government of any motor vehicle 15 while acting with the scope of his office or employment.” Levin 16 v. United States, 568, U.S. 503, 508 n.2 (2013). If the Attorney 17 General declined to represent a federal employee who thought a 18 claim against him fell under the Federal Drivers Act’s purview, 19 he could either: (1) independently pursue a defense under the 20 statute; or (2) file suit under the Administrative Procedure Act 21 (“APA”) challenging the Attorney General’s refusal to defend him. 22 See Sangemino v. Zuckerberg, 454 F. Supp. 206, 208-09 (E.D.N.Y. 23 1978) (stating that “the failure (or even refusal) of the 24 Attorney General to supply an appropriate certification will not 25 preclude a defendant driver from invoking the personal immunity 26 of the Federal Drivers Act in defense of such an action.”); see 27 also Proietti v. Levi 530 F.2d 836 (9th Cir. 1976) (finding that 28 “[t]he district court correctly asserted review jurisdiction 1 under the [APA]” regarding a federal employee’s challenge to the 2 Attorney General denial of his request under the Federal Drivers 3 Act.) 4 Congress then replaced the Federal Drivers Act with the 5 Westfall Act of 1988. The Westfall Act extends its 6 predecessor’s coverage to all federal employees and allows them 7 to petition a court “to find and certify that the employee was 8 acting within the scope of his office or employment” when the 9 Attorney General determines otherwise. Pub. L. No. 100-694, 10 § 6, 102 Stat. 4563, 4564-65 (1988), codified at 28 U.S.C. 11 § 2679(d)(3). If the court agrees with the petitioner, it 12 substitutes the United States as the suit’s defendant. Id. 13 Notably, Congress did not modify § 233 or the FSHCAA with 14 similar language. This Court “presume[s] that such drafting 15 decisions are deliberate,” United States v. Alexander, 175 F.3d 16 1117, 1121 (9th Cir. 2013), and accordingly finds Congress did 17 not intend for the Government’s forceful substitution under 18 § 233(a). Moreover, the Court’s conclusion is supported by the 19 fact the Westfall Act requires the United States to be served 20 according to Rule 4 of the Federal Rules of Civil Procedure 21 before its substitution occurs. See § 2679(d)(3). Section 233, 22 in comparison, does not. Thus, if the court allowed CMC’s § 233 23 interpretation to prevail, courts could force the United States’ 24 participation in lawsuits where jurisdiction over the Government 25 is not established—an outcome that flies in the face of due 26 process and will not be condoned by this Court 27 b. Sections 233(c) and (l)(2) 28 CMC also relies on §§ 233(c) and (l)(2) to support its 1 contention that this Court should force the United States’ 2 substitution. See Mot. at 1-2. As discussed above, the former 3 allows the Attorney General to remove a matter after he certifies 4 the defendant is a deemed PHS employee whose actions or omissions 5 fall within the FTCA’s purview. See § 233(c). The latter, in 6 comparison, allows a healthcare provider to unilaterally remove a 7 case if the Attorney General fails to appear within fifteen days 8 of receiving notice of the case. See § 233(l)(1)-(2). Here, 9 neither scenario is applicable because the Attorney General: 10 (1) did not issue such a certification; and (2) timely appeared 11 in court. As a result, neither provision aids CMC’s argument that 12 § 233 allows this Court to force the United States’ substitution 13 in this suit. 14 Given district courts “are creatures of statute, and they 15 have only so much of the judicial power of the United States as 16 the acts of Congress have conferred upon them,” Bath County v. 17 Amy, 80 U.S. 244, 247-48 (1871), the Court agrees with the 18 Government and finds it lacks the statutory authority to grant 19 CMC’s request. CMC’s motion for substitution is accordingly 20 denied. Furthermore, given the Court reached it decision because 21 of the Government’s opposition, it finds Plaintiff’s filings 22 regarding this matter moot and need not address them. 23 2. Plaintiff’s Motion for Remand 24 Plaintiff urges this Court to remand this case because CMC 25 removed this action on July 8, 2022—over seven months after 26 Mr. Hinds filed his suit on November 11, 2021. See Pl.’s MTR at 27 8. As a result, Plaintiff contends CMC failed to comport with 28 28 U.S.C. § 1446(b), which provides: 1 [t]he notice of removal of a civil action or proceeding 2 shall be filed within 30 days after the receipt by the defendant, through service or otherwise, of a copy of 3 the initial pleading setting forth the claim for relief 4 upon which such action or proceeding is based, or within 30 days after the service of summons upon the 5 defendant if such initial pleading has then been filed in court and is not required to be served on the 6 defendant, whichever period is shorter. 7 Because CMC removed this action thirty days after receiving 8 Mr. Hinds’ initial pleading, Plaintiff argues CMC’s removal 9 is untimely and requires this action’s remand to state court. 10 Id. CMC, in response, contends its removal was timely 11 because: (1) it removed the action within thirty days of its 12 receipt of the CCAC; and (2) two decisions in the District of 13 South Carolina provided CMC with a new basis to remove this 14 action. See Def’s Opp’n to Pl.’s MTR at 2-3. 15 The Court agrees with Plaintiff and finds CMC’s removal 16 untimely. The Court reaches this conclusion because of: 17 (1) § 1446(b)’s plain language identifying the initial 18 pleading as the filing initiating the thirty-day window by 19 which an action can be removed; and (2) case law finding “the 20 plain language of the statute requires a paper that shows a 21 ground for removal that was previously unknowable or 22 unavailable.” Chan Healthcare Grp., PS v. Liberty Mut. Fire 23 Ins. Co., 844 F.3d 1133, 1142 (9th Cir. 2017). Here, because 24 CMC fails to cite to any allegation in the CCAC that was 25 unavailable in Mr. Hinds’ initial pleading as the basis for 26 removal, grounds for removal were knowable or available to 27 CMC on November 11, 2021. As a result, its opportunity to 28 1 remove this cause of action expired on December 11, 2021. 2 Furthermore, even if the Court found CMC’s argument that the 3 District of South Carolina’s decisions provided a novel 4 removal basis, its removal would still be untimely. Those 5 orders were published on June 2, 2022, and CMC’s removal was 6 filed July 8, 2022—thirty-six days later. 7 Thus, for the reasons set forth above, the Court grants 8 Plaintiff’s motion for remand. Moreover, because Plaintiff’s 9 motion is granted, the Court finds the United States’ motion 10 regarding this matter moot and does not need to directly 11 address its arguments. 12 B. Sanctions 13 This Court issued its Order re Filing Requirements (“Filing 14 Order”) on July 11, 2022. ECF No. 5-2. The Filing Order limits 15 reply memoranda to five pages. Filing Order at 1. The Filing 16 Order also states that an attorney who exceeds the page limit 17 must pay monetary sanctions of $50 per page. Id. CMC exceeded 18 the Court’s five-page limit when it replied to the Plaintiff’s 19 Opposition to CMC’s motion for substitution by four pages and 20 the United States’ Opposition to CMC’s motion for substitution 21 by six pages. See Reply to US Opp’n; Reply to Pl.’s Opp’n. The 22 Court therefore ORDERS CMC’s counsel to pay $500.00 to the Clerk 23 for the Eastern District of California no later than seven days 24 from the date of this Order. 25 /// 26 /// 27 /// 28 /// nee nee OI IERIE RII EE IIE III IRE OSI EE IES eee 1 TII. ORDER 2 For the reasons set forth above, the Court DENIES CMC’s 3 | motion for substitution and GRANTS Plaintiff’s motion for remand. 4 IT IS SO ORDERED. 5 Dated: December 8, 2022 6 JOHN A. MENDEZ 8 SENIOR UNITED*STATES DISTRICT JUDGE 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 11