Barnes v. Lehman, 88-1288

• Decision Date: 28 December 1988
• Docket Number: No. 88-1288,88-1288
• Citation: 861 F.2d 1383
• Parties: Jeffrey D. BARNES, Plaintiff-Appellant, v. Sam R. LEHMAN, M.D., United States Fire Insurance Company and Crum and Forster Insurance Companies, Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1383

861 F.2d 1383

Jeffrey D. BARNES, Plaintiff-Appellant, v. Sam R. LEHMAN, M.D., United States Fire Insurance Company and Crum and Forster Insurance Companies,

Defendants-Appellees.

No. 88-1288.

United States Court of Appeals, Fifth Circuit.

Dec. 28, 1988.

Gerald K. Fugit, Eva-Marie E. Leahey, Odessa, Tex., for plaintiff-appellant.

Jack O. Tidwell, McMahon, Cox & Tidwell, Odessa, Tex., for Lehman, M.D.

Timothy D. Yeats, Ivan R. Williams, Jr., Big Spring, Tex., for U.S. Fire Ins. Co., et al.

Appeal from the United States District Court for the Western District of Texas.

Before REAVLEY, HIGGINBOTHAM and SMITH, Circuit Judges.

REAVLEY, Circuit Judge:

Jeffrey Barnes brought an action under 42 U.S.C. Sec. 1983 against his doctor and his insurer under the Texas Workers' Compensation Law. The district court dismissed the cause for failure to state a claim. We affirm.

BACKGROUND

In January of 1987, Barnes injured his back while engaged in his job on an oilfield drilling rig. Barnes filed a claim for temporary disability benefits and, pursuant to Workers' Compensation Law, Tex.Civ.Stat.Ann. art. 8306-8309 (Workers' Comp. Law), he received weekly benefits from January 21, 1987 to October 20, 1987. In October of 1987, Barnes was seen by his doctor, defendant Sam Lehman, M.D., who released him to return to work. Complying with termination provisions of the Workers' Comp. Law, art. 8306 Sec. 18a(b) and art. 8307 Sec. 11, the defendant insurance company ¹ ceased payment of weekly benefits based on Lehman's medical opinion. Barnes obtained an examination and opinion from another doctor who found Barnes to be suffering from a back injury and in need of further convalescence. The insurance company refused to reinstate benefits despite Barnes's protestations that Lehman had rendered an uninformed diagnosis.

Pursuing his remedies under the Workers' Comp. Law, Barnes requested a prehearing conference. Art. 8306 Sec. 18a(b). The conference officer, a representative of the Texas Industrial Accident Board, recommended that benefits be reinstated. The insurance company was not bound to follow the recommendation and the benefits were not resumed. Barnes filed suit in state court contesting the termination of The complaint filed in federal court alleges that the insurance company and Dr. Lehman deprived Barnes of a vested property right without due process of the law in violation of the United States Constitution. Barnes claims that the disability benefits were seized in violation of the Fourth Amendment and that the lack of an adequate remedy violates his right to due process of law under the Fourteenth Amendment. The defendants, Barnes claims, were "acting under color of statute, ordinance, regulation, custom, or usage of a state; specifically ... the Texas Worker's Compensation Act."

                benefits.  He also filed this suit in federal district court alleging claims under 42 U.S.C. Secs. 1983, 1985(3) and state law. 2   The district court dismissed the federal claims;  Barnes appeals the dismissal of his Sec. 1983 claim
                

In dismissing the Sec. 1983 complaint, the district court held that Barnes failed to state a claim under Rule 12(b)(6) of the Federal Rules of Civil Procedure. The court concentrated on the issue of whether a nexus existed between the state and the challenged action sufficient to find the necessary element of "state action." Taking Lehman's allegedly uninformed medical opinion and the termination of benefits based on that opinion as the challenged actions, the district court found that the insurance company's reliance on a medical opinion is not a matter within the supervision of the state; the court found no state encouragement of, coercion of, approval of, or responsibility for the challenged action. The sole issue raised on appeal is whether a sufficient nexus exists between the State of Texas and the challenged actions of a doctor and an insurance company to state a cause of action for money damages under Sec. 1983.

DISCUSSION

A viable cause of action under Sec. 1983 alleges the violation of a federally protected right at the hand of one acting under color of state law. ³ The defendants to this action are private persons or private entities. Barnes has failed to show that any deprivation he may have suffered occurred under color of state law or through state action; we need not, therefore, determine whether the defendants violated a federally protected right by depriving Barnes of a vested property interest. The analysis of state action under the Fourteenth Amendment and the analysis of action under color of state law may coincide for purposes of Sec. 1983. Lugar v. Edmondson Oil Co., Inc., 457 U.S. 922, 935, 102 S.Ct. 2744, 2752, 73 L.Ed.2d 482 (1982). The terms often are used interchangeably in the case law; we do the same here.

Whether the conduct of private parties is state action depends on the specific facts and circumstances surrounding the challenged action. See Burton v. Wilmington Parking Authority, 365 U.S. 715, 722, 81 S.Ct. 856, 860, 6 L.Ed.2d 45 (1961); Roberts v. Louisiana Downs, Inc., 742 F.2d 221, 224 (5th Cir.1984). The imposition of state regulation does not necessarily turn the actions of a private entity into those of the state. A sufficiently close nexus must be shown to exist between the state and the challenged action. Jackson v. Metropolitan Edison Co., 419 U.S. 345, 351, 95 S.Ct. 449, 453, 42 L.Ed.2d 477 (1974). That nexus may arise from the exercise, by a private entity, of powers traditionally within the exclusive prerogative of the state. Id. at 352-53, 95 S.Ct. at 454-55. A private decision may constitute state action when the state has exercised coercive power or provided significant overt or covert encouragement. Mere acquiescence or approval, however, is insufficient for such a finding. See Blum v. Yaretsky, 457 U.S. 991, 1004, 102 S.Ct. 2777, 2786, 73 L.Ed.2d 534 (1982); Flagg Bros., Inc. v. Brooks, 436 U.S. 149, 166, 98 S.Ct. 1729, 1737-38, 56 L.Ed.2d 185 (1978).

Whether the various approaches to detecting state action are different in operation or just different in characterization, the challenged conduct in a Sec. 1983 action must be fairly attributable to the state. The United States Supreme Court issued a trilogy of state action cases applying the existing incantations to varying facts. See Blum v. Yaretsky, 457 U.S. 991, 102 S.Ct. 2777, 73 L.Ed.2d 534 (1982); Lugar v. Edmondson Oil Co., 457 U.S. 922, 102 S.Ct. 2744, 73 L.Ed.2d 482 (1982); Rendell-Baker v. Kohn, 457 U.S. 830, 102 S.Ct. 2764, 73 L.Ed.2d 418 (1982). In Lugar, the opinion most instructive to the analysis of this case, the Court relied upon the joint participation of private and state actors to find the challenged conduct of the private actor to be fairly attributable to the state.

Lugar presents a condensed two-prong test for determining whether conduct may be considered state action for purposes of Sec. 1983:

First, the deprivation must be caused by the exercise of some right or privilege created by the State or by a rule of conduct imposed by the State or by a person for whom the State is responsible.... Second, the party charged with the deprivation must be a person who may fairly be said to be a state actor.

457 U.S. at 937, 102 S.Ct. at 2753. In Lugar, a Virginia statute authorized state employees to issue and execute a writ of attachment based on the ex parte allegations of a corporate creditor. The Court held that joint participation of the state and a private party, sufficient to turn the latter into a state actor, occurs "when the State has created a system whereby state officials will attach property on the ex parte application of one party to a private dispute." Id., 457 U.S. at 942, 102 S.Ct. at 2756.

Barnes urges us to follow the opinion of Baksalary v. Smith which held that a sufficient nexus between the state and private conduct was created in the context of Pennsylvania's Workmen's Compensation Act. 579 F.Supp. 218 (E.D.Pa.1984) (opinion by Louis H. Pollak, District Judge). A three-judge panel of a federal district court applied the Lugar analysis and holding to find joint participation of the state and a private actor constituted state action. We decline to adopt the broad interpretation given in Baksalary to the narrow holding of Lugar.

In Baksalary the Pennsylvania Workmen's Compensation Act contained an automatic supersedeas provision which terminated benefits upon the insurer's petition that the worker had returned to work at comparable wages or that a doctor's affidavit affirmed the worker's recovery. The panel found the plaintiffs, a class of workers who lost their benefits without notice or hearing, to have been deprived of a constitutionally protected property interest in the continued receipt of their benefits. Id. at 224-25 (citing Mathews v. Eldridge, 424 U.S. 319, 332, 96 S.Ct. 893, 901, 47 L.Ed.2d 18 (1976)).

To determine whether deprivation of the protected interest was accomplished by state action, the Baksalary opinion employed the two-prong Lugar analysis. First, the court found that the insurer exercises a state created right or privilege when it terminates or suspends benefits without notice. Specifically the insurer must continue payments unless it qualifies for a supersedeas; in order to qualify for the supersedeas, the insurer must file a petition which is reviewed by the state for technical compliance; the insurer can be fined if it discontinues benefits without qualifying; thus, "[t]ermination through invocation of the automatic supersedeas provision ... constitutes 'the exercise of some right or privilege created by the state.' " Baksalary, 579 F.Supp. at 227-28 (quoting Lugar, 457 U.S. at 937, 102 S.Ct. at 2753).

In satisfaction of the second prong of the Lugar analysis, the Baksalary court found the filing and review process required by the automatic supersedeas provision was sufficient to constitute "joint participation" and transform...