A. Karim Katrib, M.D. v. Herbert J. Thomas Memorial Hospital Association and Thomas Health System, Inc.

IN THE SUPREME COURT OF APPEALS OF WEST VIRGINIA
January 2023 Term FILED
March 27, 2023
released at 3:00 p.m.
EDYTHE NASH GAISER, CLERK
No. 21-0843 SUPREME COURT OF APPEALS
OF WEST VIRGINIA
A. KARIM KATRIB, M.D.,
Petitioner,
v.
HERBERT J. THOMAS MEMORIAL HOSPITAL ASSOCIATION
and THOMAS HEALTH SYSTEM, INC.,
Respondents.
Appeal from the Circuit Court of Kanawha County
The Honorable Joanna I. Tabit, Judge
Case No. 21-C-409
AFFIRMED
Submitted: January 10, 2023
Filed: March 27, 2023
John J. Polak, Esq. Thomas J. Hurney, Jr., Esq.
Mark A. Atkinson, Esq. Mark H. Dellinger, Esq.
ATKINSON & POLAK, PLLC Laura A. Hoffman, Esq.
Charleston, West Virginia Jackson Kelly PLLC
Counsel for Petitioner Charleston, West Virginia
Counsel for Respondents
CHIEF JUSTICE WALKER delivered the Opinion of the Court.
JUSTICE ARMSTEAD deemed himself disqualified and did not participate in the
decision.
JUDGE SHAWN DAVID NINES sitting by temporary assignment.
JUSTICE WOOTON dissents and may write separately.
SYLLABUS BY THE COURT
1. “‘Appellate review of a circuit court’s order granting a motion to
dismiss a complaint is de novo.’ Syl. Pt. 2, State ex. rel McGraw v. Scott Runyan Pontiac-
Buick, Inc., 194 W.Va. 770, 461 S.E.2d 516 (1995).” Syllabus Point 2, Vanderpool v.
Hunt, 241 W. Va. 254, 823 S.E.2d 526 (2019).
2. “‘“The trial court, in appraising the sufficiency of a complaint on a
Rule 12(b)(6) motion, should not dismiss the complaint unless it appears beyond doubt that
the plaintiff can prove no set of facts in support of his claim which would entitle him to
relief.” Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957).’ Syllabus
Point 3, Chapman v. Kane Transfer Co., Inc., 160 W. Va. 530, 236 S.E.2d 207 (1977).”
Syllabus Point 2, Boone v. Activate Healthcare, LLC, 245 W. Va. 476, 859 S.E.2d 419,
420 (2021).
3. “‘Whenever it is determined that a court has no jurisdiction to
entertain the subject matter of a civil action, the forum court must take no further action in
the case other than to dismiss it from the docket.’ Syllabus Point 1, Hinkle v. Bauer Lumber
& Home Bldg. Ctr., Inc., 158 W.Va. 492, 211 S.E.2d 705 (1975).” Syllabus Point 1,
Hanson v. Bd. of Educ. of the Cnty. of Min., 198 W. Va. 6, 479 S.E.2d 305 (1996).
i
WALKER, Chief Justice:
In May 2021, Petitioner A. Karim Katrib, M.D., sued Herbert J. Thomas
Memorial Hospital Association and Thomas Health System, Inc. 1 Because Dr. Katrib’s
claims related to the 2019 suspension of his hospital clinical privileges and medical staff
membership, which occurred before Thomas Hospital’s Chapter 11 bankruptcy
confirmation order and reorganization plan, 2 the circuit court dismissed the complaint
under Rules 12(b)(1) and 12(b)(6) of the West Virginia Rules of Civil Procedure. The
circuit court held that it lacked jurisdiction because the claims were discharged in
bankruptcy and so the complaint failed to state a claim upon which relief can be granted.
We agree and affirm the order.
I. FACTUAL AND PROCEDURAL BACKGROUND
Dr. A. Karim Katrib is a self-employed physician who practices in South
Charleston, West Virginia. He held clinical privileges and medical staff membership with
Thomas Hospital for approximately 34 years until they were suspended in 2019. In 2021,
he filed this action raising claims related to the 2019 suspension. The question presented
1
Herbert J. Thomas Memorial Hospital Association is a subsidiary of Thomas
Health Systems, Inc. For the sake of brevity, we refer to these Respondents collectively as
“Thomas Hospital.”
See In re Thomas Health System, Inc., et al., Case No. 20-20007 (Bankr. S.D. W.
2
Va. Aug. 19, 2020).
1
here is whether those claims were discharged in Thomas Hospital’s 2020 bankruptcy
proceeding, so we begin there.
On January 10, 2020, Thomas Hospital and its subsidiaries filed voluntary
petitions for relief under Chapter 11 of the Bankruptcy Code. 3 Thomas Hospital did not
list Dr. Katrib as a creditor in its petition, so it did not provide him with actual notice of
the filing and claims bar date. But Thomas Hospital publicized notice of the bankruptcy
proceedings in The Wall Street Journal, and local newspapers including The Register-
Herald, The Charleston Gazette-Mail, and The Herald-Dispatch on July 14, 2020. There
is no indication in the record that Dr. Katrib submitted proof of his claims to the bankruptcy
court.
The bankruptcy proceedings ultimately led to a Chapter 11 reorganization
plan that was approved and confirmed by the United States Bankruptcy Court for the
Southern District of West Virginia on August 19, 2020, with an effective date of September
30, 2020. Through this plan, the bankruptcy court allocated Thomas Hospital’s debts
among its creditors and discharged and released it from liabilities occurring prior to the
petition date, January 10, 2020. 4 This discharge constituted a permanent statutory
3
11 United States Code §§ 101-1532.
4
Article VIII of the plan provides that it
(continued . . .)
2
injunction prohibiting the commencement and continuation of released and discharged
claims against Thomas Hospital. 5
Under federal law, any actions taken in violation of the bankruptcy discharge
injunction, and judgments entered or enforced against Thomas Hospital after the entry of
the injunction are void and without effect. 6 Even so, Dr. Katrib filed this action in the
Circuit Court of Kanawha County against Thomas Hospital on May 14, 2021. In his
shall be in complete satisfaction, discharge, and release,
effective as of the Effective Date, of Claims . . . and Causes of
Action of any nature whatsoever . . . including demands,
liabilities, and Causes of Action that arose before the Effective
Date . . . and all debts . . . whether or not: (1) a Proof of Claim
based upon such debt or right is filed or deemed filed . . . or (3)
the Holder of such a Claim has accepted the Plan or voted to
reject the Plan. The Confirmation Order shall be a judicial
determination of the discharge of all Claims subject to the
occurrence of the Effective Date, except as otherwise
specifically provided in the Plan.
5
The plan describes the injunctive effect of the order:
From and after the Effective Date . . . all persons and entities
that have, hold, or may hold claims that have been released,
discharged, or are subject to the exculpation restrictions below
are permanently enjoined, from and after the Effective Date,
from . . . commencing . . . any cause of action released or to be
released pursuant to the Plan or the Confirmation Order.
6
11 U.S.C. § 524(a).
3
complaint, Dr. Katrib alleged facts summarized below and accepted as true for purposes of
this appeal. 7
In December 2018, Thomas Hospital informed Dr. Katrib that its Peer
Review Committee had concerns about a standard-of-care issue arising from his treatment
of a patient in September 2018. The committee asked Dr. Katrib to address his treatment
of the patient in writing, and he did so in January 2019.
By letter May 16, 2019, Thomas Hospital informed Dr. Katrib of the
immediate precautionary suspension of all his clinical privileges. It stated that the medical
staff peer review investigation process would be completed within thirty days, as required
under the hospital’s medical staff bylaws. Dr. Katrib claimed that he did not receive a
response within that time.
On August 14, 2019, Dr. Katrib’s counsel provided Thomas Hospital with
the opinion of Dr. Jeremy Tiu regarding Dr. Katrib’s treatment of the patient in question.
According to Dr. Tiu, the patient received excellent care. Counsel also stated that Dr.
7
See John W. Lodge Distrib. Co. v. Texaco, Inc., 161 W. Va. 603, 605, 245 S.E.2d
157, 158 (1978) (“For purposes of the motion to dismiss, the complaint is construed in the
light most favorable to plaintiff, and its allegations are to be taken as true.”).
4
Katrib was willing to meet with those reviewing the suspension to discuss the treatment of
the patient.
On September 19, 2019, Thomas Hospital advised Dr. Katrib that his clinical
privileges and medical staff membership were suspended with a recommendation that they
be revoked. Under the hospital’s bylaws, Dr. Katrib had thirty days to request a hearing to
protest this decision, which he did on October 2, 2019. But there had not been a hearing
scheduled when Dr. Katrib filed his complaint in circuit court in 2021.
Dr. Katrib asserted five causes of action against Thomas Hospital related to
the suspension of his privileges: Count I, violation of medical staff bylaws; 8 Count II,
retaliation in violation of the West Virginia Patient Safety Act or a substantial public policy
of West Virginia; 9 Count III, discrimination based on age, national origin, and religion in
violation of the West Virginia Human Rights Act or a substantial public policy of West
8
This type of action is commonly referred to as a Mahmoodian claim. See Syl. Pt.
1, Mahmoodian v. United Hosp. Center, Inc., 185 W. Va. 59, 404 S.E.2d 750 (1991) (“The
decision of a private hospital to revoke, suspend, restrict or to refuse to renew the staff
appointment or clinical privileges of a medical staff member is subject to limited judicial
review to ensure that there was substantial compliance with the hospital’s medical staff
bylaws governing such a decision, as well as to ensure that the medical staff bylaws afford
basic notice and fair hearing procedures, including an impartial tribunal.”).
9
Dr. Katrib asserted that Thomas Hospital’s suspension of his medical staff
membership and clinical privileges was in retaliation for him voicing patient safety
concerns at various times prior to 2018.
5
Virginia; Count IV, tortious interference; and Count V, intentional infliction of emotional
distress.
In June 2021, Thomas Hospital filed a “Notice of Bankruptcy and Discharge
of Proceedings,” asserting that Dr. Katrib’s claims had been discharged in bankruptcy and
that the claims were permanently enjoined based on the discharge injunction. It also filed
a motion to dismiss the complaint under Rules 12(b)(1) and 12(b)(6) of the West Virginia
Rules of Civil Procedure. The circuit court conducted a hearing on the motion on
September 13, 2021.
On September 24, 2021, the circuit court granted Thomas Hospital’s motion
to dismiss, finding that sufficient facts were present in the complaint to resolve the
bankruptcy discharge affirmative defense. The circuit court found that the claims were
discharged and permanently enjoined because Thomas Hospital’s alleged conduct at issue
occurred in 2018 and 2019, prior to the filing of the bankruptcy petition. It determined that
the bankruptcy plan had res judicata effect over the claims brought by Dr. Katrib, so any
judgment would be void. The circuit court also found that it lacked subject matter
jurisdiction because these claims were discharged in bankruptcy, so it concluded that the
complaint failed to state a claim upon which relief could be granted under Rules 12(b)(1)
and 12(b)(6) of the West Virginia Rules of Civil Procedure. And it found that the dispute
over clinical privileges and medical staff membership did not make Dr. Katrib a known
6
creditor of Thomas Hospital, so constructive notice of the bankruptcy was sufficient to
bind Dr. Katrib to the discharge injunction, barring his claims.
II. STANDARD OF REVIEW
Dr. Katrib appeals the circuit court’s order dismissing his claims under Rules
12(b)(1) and 12(b)(6) of the West Virginia Rules of Civil Procedure. Both subsections of
Rule 12 are applicable here because a circuit court lacks subject matter jurisdiction over
claims discharged by a bankruptcy court, and any judgment rendered in violation of the
bankruptcy court’s discharge and injunction would be void. 10 This Court has held that
“[a]ppellate review of a circuit court’s order granting a motion to dismiss a complaint is de
novo.” 11 We have also held that “‘[t]he trial court, in appraising the sufficiency of a
complaint on a Rule 12(b)(6) motion, should not dismiss the complaint unless it appears
beyond doubt that the plaintiff can prove no set of facts in support of his claim which would
10
See note 17, below; see also Teresa M. Schreffler & The Honorable Janice Miller
Karlin, Walking the Balance Beam of the Bankruptcy Code’s Discharge Injunction, 87 J.
Kan. B. Ass’n. 38, 40 (May 2018) (“A bankruptcy discharge voids any judgment at any
time obtained, to the extent that such judgment is a determination of the personal liability
of the debtor with respect to any debt discharged under the applicable chapter. The
discharge injunction also operates as an injunction against the commencement or
continuation of an action, the employment of process, or an act, to collect, recover or offset
any such debt as a personal liability of the debtor, whether or not discharge of such debt is
waived.”) (citing 11 U.S.C. §§ 524(a)(1) and (a)(2)) (quotation marks and footnotes
omitted).
11
Syl. Pt. 2, Vanderpool v. Hunt, 241 W. Va. 254, 823 S.E.2d 526 (2019) (first
quoting Conley v. Gibson, 355 U.S. 41, 45-46 (1957); then quoting Syl. Pt. 2, State ex. rel
McGraw v. Scott Runyan Pontiac-Buick, Inc., 194 W. Va. 770, 461 S.E.2d 516 (1995)).
7
entitle him to relief.’” 12 At the same time, a motion to dismiss “enables a circuit court to
weed out unfounded suits.” 13
III. ANALYSIS
We begin our analysis and application of federal law with two fundamental
concepts. First, “a principal purpose of the Bankruptcy Code is to provide debtors and
creditors with ‘the prompt and effectual administration and settlement of the [debtor’s]
estate.’” 14 Along with that comes the similar purpose “to centralize disputes over the
debtor’s assets and obligations in one forum, thus protecting both debtors and creditors
from piecemeal litigation and conflicting judgments.” 15 These background rules provide
context for why Thomas Hospital’s reorganization plan set strict cut-off dates for potential
creditors like Dr. Katrib. Without the finality of those deadlines, the bankruptcy process
is robbed of the certainty federal law affords a debtor to restructure and pull itself back to
12
Syl. Pt. 2, Boone v. Activate Healthcare, LLC, 245 W. Va. 476, 859 S.E.2d 419,
420 (2021) (quoting Syl. Pt. 3, Chapman v. Kane Transfer Co., Inc., 160 W. Va. 530, 236
S.E.2d 207 (1977)).
13
McGraw, 194 W. Va. at 776, 461 S.E.2d at 522.
Moses v. CashCall, Inc., 781 F.3d 63, 72 (4th Cir. 2015) (quoting Katchen v.
14
Landy, 382 U.S. 323, 328 (1966)).
Moses, 781 F.3d at 72 (citing Phillips v. Congelton, L.L.C. (In re White Mountain
15
Mining Co.), 403 F.3d 164, 169-70 (4th Cir. 2005)).
8
solvency. The clear purpose of a bankruptcy discharge and the concomitant injunction
provision is to give the debtor a financial “‘fresh start.’” 16
While discharge in bankruptcy is an affirmative defense under Rule 8(c) of
the West Virginia Rules of Civil Procedure, this defense strikes at the heart of a circuit
court’s subject matter jurisdiction. When Thomas Hospital filed for bankruptcy, the United
States District Court for the Southern District of West Virginia had exclusive jurisdiction
over prepetition claims against it. 17 “The authorities seem to be uniform to the effect that
where a discharge in bankruptcy is pleaded as a defense . . . the burden is upon the
defendant to prove his discharge,” and this “may be done by putting in evidence a certified
copy of the order granting the discharge.” 18 And it is “clearly proper” in deciding a motion
In re Jet Florida Systems, Inc., 883 F.2d 970, 972 (11th Cir. 1989) (quoting
16
Thomas H. Jackson, The Fresh-Start Policy in Bankruptcy Law, 98 Harv. L. Rev. 1393,
1396-97 (May 1985)).
17
This case raises issues of federal preemption because Congress has given the
United States District Courts original and exclusive jurisdiction over prepetition claims in
bankruptcy matters. The Bankruptcy Code provides that “[t]he district court in which a
case under title 11 is commenced or is pending shall have exclusive jurisdiction of all the
property, wherever located, of the debtor as of the commencement of such case, and of
property of the estate.” 28 U.S.C. § 1334(e)(1). The bankruptcy court that confirms a
reorganization plan enters an injunctive order—the confirmation order, see 11 U.S.C. §§
524, 1141—the violation of which it can sanction. See Cox v. Zale Delaware, Inc., 239
F.3d 910, 915 (7th Cir. 2001) (“the creditor who attempts to collect a discharged debt is
violating not only a statute but also an injunction and is therefore in contempt of the
bankruptcy court that issued the order of discharge.”) (citing Pertuso v. Ford Motor Credit
Co., 233 F.3d 417, 421 (6th Cir. 2000)).
18
2 A.L.R. 1672.
9
to dismiss under Rules 12(b)(1) and (6) “to take judicial notice of matters of public
record.” 19
In this appeal, we are asked to determine whether the circuit court erred by
concluding that Dr. Katrib’s claims were subject to the discharge, release, and injunction
provisions of Thomas Hospital’s Chapter 11 bankruptcy confirmation order and
reorganization plan. In most cases, confirmation of the plan results in discharge of all
prepetition claims against the debtor. 20 Even so, a bankruptcy discharge may be challenged
on due process grounds and “[a]ny claimant who makes such a challenge bears the burden
of proof.” 21
Dr. Katrib relies on this important but “seldom-occurring” 22 exception in
bankruptcy law: a party who fails to receive adequate notice of a bankruptcy filing is not
Norris v. Hearst Trust, 500 F.3d 454, 461 n.9 (5th Cir. 2007) (citing Cinel v.
19
Connick, 15 F.3d 1338, 1343 n.6 (5th Cir. 1994)); see also Syl. Pt. 1, Forshey v. Jackson,
222 W. Va. 743, 671 S.E.2d 748 (2008) (“A circuit court ruling on a motion to dismiss
under Rule 12(b)(6) of the West Virginia Rules of Civil Procedure may properly consider
exhibits attached to the complaint without converting the motion to a Rule 56 motion for
summary judgment.”).
20
11 U.S.C. §§ 1141(c), (d)(1)(A).
In re Tronox Inc., 626 B.R. 688, 718 (Bankr. S.D.N.Y. 2021) (citing Waterman
21
S.S. Corp., 200 B.R. 770, 744-75 (Bankr. S.D.N.Y. 1996)).
22
In re Newstar Energy of Texas, LLC, 280 B.R. 623, 626 (Bankr. W.D. Mich.
2002).
10
bound by the terms of its confirmation order. He claims that he was a known creditor of
Thomas Hospital who was entitled to actual written notice of the bankruptcy filing and that
summary dismissal of his claims resulted in a denial of due process. Dr. Katrib contends
that whether he was an unknown creditor—and so not entitled to actual notice—was an
issue of fact that Thomas Hospital had the burden of proving and that he was entitled to
discovery to explore. He also argues that because the complaint sufficiently challenges
Thomas Hospital’s continued failure to provide him with a hearing in compliance with
hospital bylaws, this claim was not discharged in bankruptcy.
Thomas Hospital responds that because all of Dr. Katrib’s claims arise from
conduct that occurred in 2018 and 2019, these prepetition claims were discharged in the
2020 bankruptcy. It argues that dismissal was proper here because the facts of the
bankruptcy discharge were not disputed and its application to Dr. Katrib’s claims was
apparent from the face of the complaint. 23 And as in any other matter where jurisdiction
is challenged, Thomas Hospital states that Dr. Katrib had the opportunity to submit
additional evidence to refute the arguments that he was an unknown creditor, but he did
23
Thomas Hospital notes that Dr. Katrib had ample opportunity to file a proof of
claim with the Bankruptcy Court, request a modification of the plan to exclude his claims
from the discharge injunction, or object to the confirmation of the plan.
11
not come forward with any evidence to suggest that the bankruptcy discharge did not apply
to his claims. 24 We take up these two issues in turn.
A. Adequate Notice of Bankruptcy Filing
Dr. Katrib’s main contention is that he was a known creditor who was entitled
to actual written notice of Thomas Hospital’s bankruptcy filing. And Dr. Katrib argues
that without adequate notice, the circuit court’s dismissal of his claims resulted in a denial
of due process in violation of the Fifth Amendment to the United States Constitution and
Article III, section 10 of the West Virginia Constitution. Thomas Hospital responds that
because Dr. Katrib was an unknown creditor, publication notice of the bankruptcy was
sufficient to satisfy due process requirements. 25
Procedural due process is a fundamental component of Chapter 11
bankruptcy because of the broad relief that may be granted to those that seek its protection.
The “reorganization process is dependent on the proper notification to creditors and other
interested parties of all important steps in the proceeding so that they may take such steps
as necessary to safeguard their interests.” 26
Due process requires notice that is
24
See Elmore v. Triad Hosps., Inc., 220 W. Va. 154, 158 n.7, 640 S.E.2d 217, 221
n.7 (2006) (recognizing that matters outside the pleadings can be considered in deciding a
motion to dismiss for lack of jurisdiction under Rule 12(b)(1)).
25
Because these issues are intertwined, we address them jointly.
26
In re Harbor Tank Storage Co., 385 F.2d 111, 115 (3d. Cir. 1967).
12
“ʽreasonably calculated to reach all interested parties, reasonably conveys all required
information, and permits a reasonable time for a response.’” 27 As a result, “[i]nadequate
notice is a defect which precludes discharge of a claim in bankruptcy.” 28
Whether notice satisfies these requirements under federal law depends on
whether the creditor is known or unknown. 29 A debtor must provide a known creditor with
actual written notice of the bar date. 30 A known creditor is “one whose identity is either
known or ‘reasonably ascertainable by the debtor.’” 31
A creditor’s identity is “reasonably ascertainable” if that
creditor can be identified through reasonably diligent efforts. .
. . Reasonable diligence does not require impracticable and
extended searches . . . in the name of due process. . . . A debtor
does not have a duty to search out each conceivable or possible
creditor and urge that person or entity to make a claim against
it. . . . The requisite search instead focuses on the debtor’s own
27
Chemetron Corp. v. Jones, 72 F.3d 341, 346 (3d Cir. 1995) (quoting Greyhound
Lines, Inc. v. Rogers (In re Eagle Bus Mfg., Inc.), 62 F.3d 730, 735 (5th Cir. 1995)).
28
Chemetron, 72 F.3d at 346.
29
Id.30
In re Energy Future Holdings Corp., 522 Bank. 520, 529 (Bankr. D. Del. 2015).
31
In re Nortel Networks, Inc., 531 B.R. 53, 63 (Bankr. D. Del. 2015) (quoting
Chemetron, 72 F.3d at 346); see In re J.A. Jones, Inc., 492 F.3d 242, 251 (4th Cir. 2007)
(affirming bankruptcy court and district court’s determination that a woman’s estate—
following a fatal car crash—was a known creditor based on “[a] plethora of facts and
circumstances” that indicated the accident was reported to the contractor’s insurer as “an
occurrence or offense” which may result in a claim for damages) (internal quotation marks
omitted).
13
book and records. Efforts beyond a careful examination of
these documents are generally not required[.] 32
An unknown creditor, on the other hand, is “one whose ‘interests are either
conjectural or future or, although they could be discovered upon investigation, do not in
due course of business come to [the debtor’s] knowledge.’” 33 And “it is not the debtor’s
duty to search out each conceivable or possible creditor and urge that person or entity to
make a claim against it.” 34 In other words, “[d]ebtors cannot be required to provide actual
notice to anyone who potentially could have been affected by their actions [because] such
a requirement would completely vitiate the important goal of prompt and effectual
administration and settlement of debtors’ estates.” 35 For unknown creditors, “constructive
notice of the claims bar date by publication satisfies the requirements of due process.” 36
32
Nortel Networks, 531 B.R. at 63 (quoting Chemetron, 72 F.3d at 346-47 (internal
quotation marks and citations omitted)).
33
Chemetron, 72 F.3d at 346 (quoting Mullane v. Central Hanover Bank & Trust
Co., 339 U.S. 306, 317 (1950) (footnote omitted)).
34
In re Brooks Fashion Stores, Inc., 124 B.R. 436, 445 (Bankr. S.D.N.Y. 1991)
(internal quotation marks and citations omitted).
In re U.S.H. Corp. of New York, 223 B.R. 654, 659 (Bankr. S.D.N.Y. 1998) (citing
35
Chemetron, 72 F.3d at 348).
36
Chemetron, 72 F.3d at 348 (citing City of New York v. New York, N.H. & H.R.
Co., 344 U.S. 293, 296 (1953)).
14
In this case, the parties agree that there was a dispute over the 2019
suspension of Dr. Katrib’s hospital privileges resulting from a standard-of-care issue with
a patient he treated. Dr. Katrib retained an expert to render an opinion on the matter and
asked for a hearing to challenge the suspension, but one was not scheduled. So this appeal
turns on whether Thomas Hospital’s knowledge of this dispute makes Dr. Katrib’s
violation-of-medical-staff-bylaws claim “reasonably ascertainable” from a search of its
records. 37 Dr. Katrib argues that because he suffered an actual, recognized, property injury
when his privileges were suspended that Thomas Hospital had “‘some specific information
that reasonably suggest[ed]’” this claim. 38 But he is conflating the issue of when this claim
arose—a broad inquiry discussed below—with the inquiry of whether Thomas Hospital
could reasonably ascertain him as a potential creditor.
Under the facts alleged here and applying federal law, Dr. Katrib’s claim for
violation of hospital bylaws would not be reasonably ascertainable by a review of Thomas
Hospital’s books and records. Other than requesting a hearing in October 2019, there is
nothing to suggest that Dr. Katrib claimed damages from Thomas Hospital relating to the
suspension of his privileges before the bankruptcy petition was filed or that he indicated
that he would seek civil damages if Thomas Hospital did not provide him with a hearing.
37
See Chemetron, 72 F.3d at 347 (applying “reasonably ascertainable” standard, not
a “reasonably foreseeable” standard).
38
In re Arch Wireless, Inc., 534 F.3d 76, 81 (1st Cir. 2008) (quoting In re Crystal
Oil Co., 158 F.3d 291, 297 (5th Cir. 1998)).
15
Even though Dr. Katrib’s protest to Thomas Hospital’s alleged violation of its bylaws could
arguably be discovered upon investigation, there is nothing to indicate that a search of
Thomas Hospital’s books and records would show that this protest would evolve into a
claim for damages. 39 And knowledge of this dispute concerning clinical privileges cannot
equate to knowledge that Dr. Katrib would bring various claims against Thomas Hospital
for torts and statutory violations; these claims were entirely speculative and would not be
identified through reasonably diligent efforts. For these reasons, the circuit court did not
err in concluding that Dr. Katrib was an unknown creditor. So, notice by publication was
constitutionally sufficient. 40
39
Dr. Katrib argues that this case is analogous to In re Talon Auto Group, Inc., 284
B.R. 622 (Bankr. E.D. Mich. 2002), but Talon is distinguishable. In Talon, Ms. Vargo
filed a grievance with her union steward after she was suspended pending discharge in
November 2000 following an altercation with another employee. Id. at 623. A meeting
was held between Ms. Vargo and representatives of Talon in December 2000 where it was
agreed that she could return to work in a different capacity, pending the outcome of her
grievance. Id. at 624. Talon later filed for Chapter 11 relief but did not list Ms. Vargo as
a creditor nor provide her actual notice of the bankruptcy filing. Id. The bankruptcy court
concluded that Talon was a known creditor because her grievance was still pending when
Talon filed its bankruptcy petition. Id. at 626. It held that because Ms. Vargo did not
receive proper notice of the bankruptcy, she was not bound by the confirmed Chapter 11
plan. Id. Talon is materially different than the facts alleged here because a pending
grievance seeking reinstatement and backpay damages would be reasonably ascertainable
by a search of the company’s records. In this case, Dr. Katrib did not file a grievance or
give any notice that he was seeking damages from Thomas Hospital related to his
suspension.
40
We are not persuaded by Dr. Katrib’s argument that the issue of whether he
qualified as an unknown creditor was an issue of fact upon which he was entitled to
discovery. In his response to Thomas Hospital’s motion to dismiss, Dr. Katrib did not
come forward with any evidence, like an affidavit, to refute Thomas Hospital’s evidence
(continued . . .)
16
B. All Claims Were Discharged in Bankruptcy
Dr. Katrib also argues that the circuit court erred in finding that his complaint
did not seek relief for actionable nondischargeable conduct that Thomas Hospital
committed or continued after the bankruptcy discharge. Specifically, he claims that the
complaint challenges Thomas Hospital’s continued failure to comply with the bylaws even
after the effective date of the discharge order. Reasoning that the suspension of his clinical
privileges and medical staff membership had been continuous from May 2019, Dr. Katrib
maintains that the denial of due process alleged was also continuous. Thomas Hospital
responds that Dr. Katrib should have brought his claims in the bankruptcy proceeding
because they all stem from conduct that occurred in 2018 and 2019. It notes that courts
have cautioned that “[c]laimants should not have an incentive to delay asserting their
claims until after the debtor is reorganized, in the hopes of obtaining a complete recovery
rather than the partial recovery they would likely get as part of the reorganization plan.” 41
of the bankruptcy discharge and its application to his claims. Likewise, in his alternative
request for discovery, Dr. Katrib did not identify what kind of evidence would be helpful
in resolving the issue. And while discovery is available to ascertain jurisdictional facts
relative to a motion to dismiss, it was within the circuit court’s sound discretion to deny
his request for discovery. Bowers v. Wurzburg, 202 W. Va. 43, 48, 501 S.E.2d 479, 484
(1998).
DPWN Holdings (USA), Inc. v. United Air Lines, Inc., 871 F.Supp.2d 143, 157
41
(E.D.N.Y. 2012).
17
Federal law is clear that when a bankruptcy plan is confirmed, all prior claims
against the reorganized company are discharged. 42 This is true regardless of whether a
claim was listed on the company’s schedules or a proof of claim was filed. 43 As the
Bankruptcy Code provides, “the confirmation of a plan . . . discharges the debtor from any
debt that arose before the date of such confirmation” and that “after confirmation of a plan,
the property dealt with by the plan is free and clear of all claims and interests of
creditors.” 44 When determining when a claim arises for bankruptcy purposes, “reference
is to be made to federal bankruptcy law rather than to state law.” 45 And in this context,
federal courts have recognized the broad definition given to the word “claim” in
bankruptcy: “Congress intended that the definition of claim . . . be as broad as possible,
noting that ‘the bill contemplates that all legal obligations of the debtor, no matter how
remote or contingent, will be able to be dealt with in the bankruptcy[,]’” and this “permits
the broadest possible relief in the bankruptcy court.” 46
42
11 U.S.C. §§ 1141(c), (d)(1)(A).
43
Although a failure to file a timely claim with the bankruptcy court may be excused
where a plaintiff establishes “excusable neglect,” Dr. Katrib has not made any allegations
in that regard. See Fed. R. Bankr. P. § 9006(b)(1).
44
11 U.S.C. §§ 1141(c), (d)(1)(A) (emphasis added).
45
Butler v. NationsBank, N.A., 58 F.3d 1022, 1029 (4th Cir. 1995).
46
Grady v. A.H. Robins Co., 839 F.2d 198, 200 (4th Cir. 1988) (quoting H.R. Rep.
No. 95-595, at 309 (1977) as reprinted in 1978 U.S.C.C.A.N. 5963, 6266; S. Rep. No. 95-
989, at 22 (1978) as reprinted in 1978 U.S.C.C.A.N. 5787, 5808).
18
In its motion to dismiss, Thomas Hospital attached a copy of the bankruptcy
order, and the circuit court was tasked with determining whether Thomas Hospital met its
burden of showing that Dr. Katrib’s complaint contained prepetition claims that fell within
the discharge. As the Kentucky Supreme Court has observed and we concur, “[w]hile it is
true that state courts lack jurisdiction to modify or to grant relief from a bankruptcy court’s
discharge injunction, they retain, . . . concurrent jurisdiction under 28 U.S.C. § 1334(b) ‘to
construe the discharge and determine whether a particular debt is or is not within the
discharge.’” 47 Accepting the allegations in the complaint as true, the circuit court
concluded that Dr. Katrib’s claims arose prior to the confirmation date and were discharged
by the bankruptcy court. We agree.
As explained above, Dr. Katrib’s claims arise from his suspension of hospital
privileges that occurred in 2019. In his reply brief, Dr. Katrib recognizes that the violation-
of-bylaws claim “already existed” when Thomas Hospital filed for bankruptcy protection
because he “suffered an actual injury in 2019 when his privileges were suspended.” So,
when the bankruptcy court discharged the claim under 11 U.S.C. § 1141(d) by confirmation
47
Sunbeam Corp. v. Dortch, 313 S.W.3d 114, 115-16 (Ky. 2010) (quoting In re
Pavelich, 229 B.R. 777, 783 (Bankr. App. 9th Cir. 1999)); see also, In re Stabler, 418 B.R.
764, 770 (Bankr. App. 8th Cir. 2009) (with a few exceptions, “state courts have concurrent
jurisdiction to determine the dischargeability of a debt,” as well as “whether [certain debts]
constituted post-petition debts outside the penumbra of the discharge and discharge
injunction.”); In re Hamilton, 540 F.3d 367, 373 (6th Cir. 2008) (“State courts have
unbridled authority to determine the dischargeability of debts” but an incorrect
interpretation that effectively modifies the discharge order is ineffective.).
19
of the plan, 11 U.S.C. § 524(a)(2) automatically provided that the discharge operated as an
injunction which barred the commencement of a state court action to collect the discharged
claim. 48 Contrary to his assertion, Dr. Katrib does not allege any post-confirmation acts
by Thomas Hospital that give rise to his claim for violation of hospital bylaws, separate
and distinct from its failure to hold a hearing in 2019. 49
This Court has held that “[w]henever it is determined that a court has no
jurisdiction to entertain the subject matter of a civil action, the forum court must take no
further action in the case other than to dismiss it from the docket.” 50 For this reason, the
circuit court properly dismissed the complaint.
IV. CONCLUSION
For the reasons set out above, we affirm the September 24, 2021, order of the
Circuit Court of Kanawha County.
Affirmed.
48
Roy v. Garden Ridge, L.P., 640 S.E.2d 665, 666 (Ga. App. 2006) (quoting 4-524
Collier on Bankruptcy § 524.01 (15th ed. 2006)).
49
At oral argument in this matter, Dr. Katrib’s counsel conceded that his request for
hearing is moot at this point.
50
Syl. Pt. 1, Hanson v. Bd. of Educ. of the Cnty. of Min., 198 W. Va. 6, 479 S.E.2d
305 (1996) (quoting Syl. Pt. 1, Hinkle v. Bauer Lumber & Home Bldg. Ctr., Inc., 158 W.
Va. 492, 211 S.E.2d 705 (1975)).
20