Anthem Ins. Companies v. Tenet Healthcare Corp.

Decision Date08 June 2000
Docket NumberNo. 10S01-9909-CV-501.,10S01-9909-CV-501.
Citation730 N.E.2d 1227
PartiesANTHEM INSURANCE COMPANIES, INC., f/k/a Associated Insurance Companies, Inc., d/b/a Anthem Blue Cross and Blue Shield, and Anthem Life Insurance Company, Appellants (Plaintiffs Below), v. TENET HEALTHCARE CORPORATION, f/k/a National Medical Enterprises, Inc., f/k/a Psychiatric Institutes of America et al., Appellees (Defendants below).
CourtIndiana Supreme Court

Thomas G. Stayton, Nancy G. Tinsley, Baker & Daniels, Indianapolis, IN, Attorneys for Appellants.

Susan Williams, Brown, Todd and Heyburn, New Albany, IN, Ethan M. Posner, Covington & Burling, Washington, D.C., Attorneys for Appellees.

ON PETITION TO TRANSFER

SULLIVAN, Justice.

An Indiana insurance company sued the parent corporation of a chain of psychiatric hospitals alleging fraud in submitting insurance claims. The Indiana trial court found that the parent corporation did not have sufficient contacts with Indiana to be able to be sued here consistent with due process. Reviewing the question of law presented de novo, we find the requirements for personal jurisdiction over the parent corporation, mandated by both Trial Rule 4.4(A) and the Due Process Clause, satisfied and reverse the judgment of the trial court.

Background

On December 19, 1995, Anthem Insurance Companies, Inc.,1 filed suit against forty-four related entities, including Tenet Healthcare Corporation ("Tenet"),2 three wholly-owned subsidiaries of Tenet, and 40 other entities affiliated with Tenet ("providers")3 alleging fraud in connection with claims submitted for psychiatric services rendered. Anthem contends that these companies engaged in a fraudulent scheme to obtain payments for psychiatric patients who did not need hospitalization or continued treatment. Specifically, Anthem claims that these health care providers obtained insurance payments of over $30 million by misrepresenting patient information to extend hospital stays longer than medically necessary.

On February 16, 1996, 40 of the Defendants moved to dismiss the claims for lack of personal jurisdiction. Included among these Defendants was Tenet (the parent corporation), National Medical Enterprises Hospitals, Inc., and National Medical Enterprises Psychiatric Properties, Inc., which are two wholly-owned subsidiaries of Tenet, and 37 providers. After discovery and a hearing on the motion to dismiss, the trial court granted the motion with respect to Tenet, NME Hospitals, and NME Psychiatric Properties. Anthem appealed the dismissal of Tenet and NME Hospitals.4 The Court of Appeals affirmed the dismissal of Tenet, but reversed the dismissal of NME Hospitals. See Anthem Insurance Cos. v. Tenet Healthcare Corp., 709 N.E.2d 1060, 1069 (Ind.Ct.App.1999). Judge Robb dissented, believing that there were sufficient contacts to establish general personal jurisdiction over Tenet. Id. at 1069-70. This Court granted transfer to clarify the criteria for evaluating personal jurisdiction questions and the standard for reviewing trial court personal jurisdiction decisions.

Discussion
I

Personal Jurisdiction Under Indiana Law. Personal jurisdiction is "a court's power to bring a person into its adjudicative process" and render a valid judgment over a person. Black's Law Dictionary 857 (7th ed.1999); accord Mishler v. County of Elkhart, 544 N.E.2d 149, 151 (Ind. 1989) ("To render a valid judgment, a court must possess two forms of jurisdiction: jurisdiction over the subject matter and jurisdiction over the parties."). Traditionally, courts relied on consent, service of process within a jurisdiction, and domicile as bases for asserting jurisdiction over a person, but the United States Supreme Court, in International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945), formulated a new standard for personal jurisdiction based on the defendant's contacts with a forum state and notions of fairness and reasonableness.

Because Indiana state trial courts are courts of general jurisdiction, jurisdiction is presumed.5 See Mid-States Aircraft Engines, Inc. v. Mize Co., 467 N.E.2d 1242, 1247 (Ind.Ct.App.1984); Weenig v. Wood, 169 Ind.App. 413, 419-20, 349 N.E.2d 235, 240 (1976), transfer denied. Therefore, the plaintiff need not allege jurisdiction in its complaint. Weenig, 169 Ind.App. at 420, 349 N.E.2d at 240. A challenge to personal jurisdiction may be raised either as an affirmative defense in the answer to the complaint or in a motion to dismiss. See Ind. Trial Rules 8(C) & 12(B)(2); see also Lee v. Goshen Rubber Co., 635 N.E.2d 214, 215 (Ind.Ct. App.1994), transfer denied. In either case, once the party contesting jurisdiction, usually the defendant, challenges the lack of personal jurisdiction, the plaintiff must present evidence to show that there is personal jurisdiction over the defendant. See Brokemond v. Marshall Field & Co., 612 N.E.2d 143, 145 (Ind.Ct.App.1993). However, the defendant bears the burden of proving the lack of personal jurisdiction by a preponderance of the evidence, unless the lack of jurisdiction is apparent on the face of the complaint. Suyemasa v. Myers, 420 N.E.2d 1334, 1340 (Ind.Ct.App. 1981).

A

Trial Rule 4.4(A) — Indiana's Long-Arm Statute. Any discussion of personal jurisdiction in Indiana must first start with Trial Rule 4.4(A), Indiana's equivalent of a "long-arm statute."6 This trial rule provides a limit on the exercise of jurisdiction over nonresident defendants. There are two types of long-arm statutes: (1) those which direct the court to exercise jurisdiction to the extent allowed by the United States and state constitutions and (2) "enumerated act" statutes, which direct the court to assert jurisdiction over defendants who commit any act listed in the statute in the state. See 16 James Wm. Moore et al., Moore's Federal Practice § 108.60[1] (3d ed.1999).

Indiana's statute is an "enumerated act" statute. Typically, under such a statute, courts must proceed with a two-step analysis. First, the court must determine if the defendant's contacts with the forum state fall under the long-arm statute.7 Second, if they do, the court must then determine whether the defendant's contacts satisfy federal due process analysis.

The Court of Appeals has frequently recited "`that Indiana Trial Rule 4.4 is intended to extend personal jurisdiction of courts sitting in this state . . . to the limits permitted under the Due Process Clause of the Fourteenth Amendment.'" Griese-Traylor Corp. v. Lemmons, 424 N.E.2d 173, 179 (Ind.Ct.App.1981) (quoting Valdez v. Ford, Bacon & Davis, Texas, Inc., 62 F.R.D. 7, 14 (N.D.Ind.1974)), transfer denied; accord Conseco, Inc. v. Hickerson, 698 N.E.2d 816, 818 (Ind.Ct.App.1998); Yates-Cobb v. Hays, 681 N.E.2d 729, 732 (Ind.Ct.App.1997); North Texas Steel Co. v. R.R. Donnelley & Sons Co., 679 N.E.2d 513, 518 (Ind.Ct.App.1997), transfer denied; Torborg v. Fort Wayne Cardiology, Inc., 671 N.E.2d 947, 949 (Ind.Ct.App. 1996); Rosowsky v. University of Colorado, 653 N.E.2d 146, 148 (Ind.Ct.App.1995), transfer denied; Fidelity Financial Servs., Inc. v. West, 640 N.E.2d 394, 397 (Ind.Ct.App.1994); Brokemond, 612 N.E.2d at 145; Freemond v. Somma, 611 N.E.2d 684, 688 (Ind.Ct.App.1993), transfer denied. The majority of these opinions then proceed directly to a discussion of the limits of federal due process and the accompanying federal and state case law without first determining whether the conduct in question falls under Indiana Trial Rule 4.4(A). See Hickerson, 698 N.E.2d at 818; Yates-Cobb, 681 N.E.2d at 732; North Texas Steel, 679 N.E.2d at 518; Torborg, 671 N.E.2d at 949; Brokemond, 612 N.E.2d at 145; Griese-Traylor, 424 N.E.2d at 180.

Although the result in many of these cases would likely have been the same, this one-step analysis has the effect of ignoring T.R. 4.4(A).8,9 If the Indiana long-arm statute were intended to be coextensive with the limits of personal jurisdiction under the Due Process Clause, it could be written with general language, such as the "any constitutional basis" statutes used in several other states. Most courts with "enumerated act" statutes, and indeed the correct approach under Indiana Trial Rule 4.4(A) is to, engage in a two-step analysis, first determining whether the conduct falls under the long-arm statute and then whether it comports with the Due Process Clause as interpreted by the United States Supreme Court and courts in this state. See Mart v. Hess, 703 N.E.2d 190, 192-93 (Ind.Ct.App.1998); Fidelity Financial, 640 N.E.2d at 396-97; Lee, 635 N.E.2d at 215-16; see also FMC Corp. v. Varonos, 892 F.2d 1308, 1310 (7th Cir.1990); Joseph M. Coleman & Assocs., Ltd. v. Colonial Metals, 887 F.Supp. 116, 118-19 n. 2 (D.Md.1995); Green v. Advance Ross Elecs. Corp., 86 Ill.2d 431, 56 Ill.Dec. 657, 427 N.E.2d 1203, 1206-07 (1981); Lincoln v. Seawright, 104 Wis.2d 4, 310 N.W.2d 596, 599-600 (1981).

Indiana Trial Rule 4.4(A) provides:

Acts Serving as a Basis for Jurisdiction. Any person or organization that is a nonresident of this state, a resident of this state who has left the state, or a person whose residence is unknown, submits to the jurisdiction of the courts of this state as to any action arising from the following acts committed by him or her or his or her agent:
(1) doing any business in this state;
(2) causing personal injury or property damage by an act or omission done within this state;
(3) causing personal injury or property damage in this state by an occurrence, act or omission done outside this state if he regularly does or solicits business or engages in any other persistent course of conduct, or derives substantial revenue or benefit from goods, materials, or services used, consumed, or rendered in this state;
(4) having supplied or contracted to supply services rendered or to be rendered or goods or materials furnished or to be furnished in this state;
(5) owning, using, or possessing any real property or an interest in real property within the state;
(6)
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