Larsen v. Chinwuba

• Decision Date: 10 September 2003
• Docket Number: No. 25,25
• Citation: 377 Md. 92,832 A.2d 193
• Parties: Steven B. LARSEN, Maryland Insurance Commissioner v. Christian E. CHINWUBA.
• Court: Maryland Court of Appeals

832 A.2d 193

377 Md. 92

Steven B. LARSEN, MarylandInsurance Commissioner v.Christian E. CHINWUBA.

No. 25, Sept. Term, 2002.

Court of Appeals of Maryland.

September 10, 2003.

Carmen M. Shepard, Deputy Atty. Gen. (J. Joseph Curran, Jr., Atty. Gen., Andrew H. Baida, Solicitor Gen., Randolph S. Sergent, Asst. Atty. Gen., on brief), Baltimore, for petitioner.

Sunanda K. Holmers, Chevy Chase, for respondent.Argued before BELL, C.J. ELDRIDGE, RAKER, WILNER, CATHELL, HARRELL and BATTAGLIA, JJ.

ELDRIDGE, J.

The Maryland Insurance Commissioner in the course of a statutorily authorized investigation into the financial affairs and solvency of a Maryland health maintenance organization ("HMO"), and shortly before instituting receivership proceedings against the HMO, sent letters to the HMO requesting information.The Commissioner allegedly disclosed the contents of these letters to the press, along with making statements to the press about the investigation.The single dispositive issue in this defamation and invasion of privacy action against the Commissioner, by the principal official associated with the HMO, is whether the Commissioner's actions were within the scope of his public duties.If they were, the Commissioner was entitled to immunity under the Maryland Tort Claims Act.¹We shall hold that the Commissioner's actions, forming the basis for this tort suit, were within the scope of his public duties.Accordingly, the Commissioner was entitled to immunity.

I.

The relevant facts of this case were set forth in the reported opinion of the Court of Special Appeals as follows (Chinwuba v. Larsen,142 Md.App. 327, 339-345, 790 A.2d 83, 89-93(2002)(footnotes omitted)):

"This is another appellate chapter arising from the misfortunes of PrimeHealth Corporation(`PrimeHealth'), a defunct Maryland health maintenance organization (`HMO').Christian Chinwuba, M.D., appellant, was the primary owner of PrimeHealth, until the State placed the insolvent HMO into receivership.In this case, Chinwuba complains about certain statements and actions of the Maryland Insurance Administration (the `MIA') and its Commissioner, Steven B. Larsen(the `Commissioner'), appellees, during the investigation leading up to that receivership.

"In the Circuit Court for Prince George's County, Chinwuba filed a four count complaint against the MIA and Larsen, alleging defamation, false light invasion of privacy (`false light'), abuse of process, and violation of due process under Articles 24 and 26 of the Maryland Declaration of Rights.The MIA and Larsen successfully moved to transfer the case to the Circuit Court for Baltimore City, and then moved to dismiss the complaint, or, in the alternative, for summary judgment.

* * *

"In reviewing the dismissal of a complaint, we credit the allegations of the complaint, and draw all reasonable inferences in favor of the plaintiff.* * * Consequently, this opinion features Chinwuba's version of events....

* * *

"Dr. Chinwuba, a radiologist, had an ownership share in PrimeHealth, through ownership of PrimeHealth's sole shareholder, and was the sole owner of Diagnostic Health Imaging Systems, Inc.(`DHIS').In November 1995, PrimeHealth applied to the MIA for a certificate of authority to operate as an HMO in Maryland.In support of the application, Chinwuba submitted an affidavit describing a transfer of certain medical equipment by DHIS to PrimeHealth.The purpose of the transfer was to ensure that PrimeHealth had a minimum surplus of $1.5 million in assets, as required by the MIA's solvency standards for health maintenance organizations.In its initial audit, the MIA raised concerns that PrimeHealth did not meet this requirement.With the `acquisition' of the medical equipment from DHIS, PrimeHealth had sufficient assets to satisfy the standard.In December 1996, however, `DHIS became totally operationally defunct.'

"Based on the effect of this transfer on DHIS, the MIA became concerned that DHIS creditors might be able to challenge it as a fraudulent conveyance.On August 28, 1996, the MIA asked Chinwuba to provide a notarized statement disclosing `[a]ny and all liabilities or debts of DHIS, and any and all liens or encumbrances on the assets of DHIS immediately preceding the gift of assets to PrimeHealth.'Chinwuba was asked to attest that neither he nor DHIS was aware of any creditors `that could have the gift of DHIS' accounts receivable and equipment set aside or annulled to satisfy their claim or levy' or `that would force DHIS to file for bankruptcy in the foreseeable future.'

"Chinwuba responded to the MIA's request [by three separate certifications in September 1996, the first two of which were notarized].

* * *

"The third certification ... [stated] that `DHIS does not have any other liabilities or debts or any liens or encumbrances on the "contributed" assets of DHIS[.]'In November 1996, relying on Chinwuba's statements in all three certifications, the MIA granted PrimeHealth a certificate of authority to operate as an HMO.

* * *

"By early 1998, the MIA claimed that it had discovered millions of dollars in judgments against DHIS, that these judgments had been in existence when DHIS transferred the medical equipment to PrimeHealth, and that none of these judgments had been disclosed in any of Chinwuba's certifications.In a March 11, 1998 letter, Commissioner Larsen informed PrimeHealth that the MIA had `grave concerns covering a number of critical areas relating to PrimeHealth's ongoing ability to maintain licensure,' and outlined those concerns.The opening paragraph of the letter acknowledged that the MIA already had begun a `review' of the gift of medical equipment that Chinwuba certified had been made by DHIS to PrimeHealth.

* * *

"With respect to the DHIS liabilities, Larsen wrote that `[r]ecently, during the course of our investigation, the [MIA] has uncovered a substantial number of judgments against DHIS which existed at the time of the conveyance of the equipment to PrimeHealth and which have not been extinguished in the court records of Prince George's County.'Larsen specifically stated that `[t]he veracity of [Chinwuba's] critical notarized statement [regarding the existence of creditors that could challenge the DHIS transfer of the medical equipment to PrimeHealth] is ... in doubt.'Asserting that he`intend[ed] to continue [his] inquiry into this matter,' Larsen demanded `a full explanation as to why Dr. Chinwuba certified that no additional judgments existed when the court records clearly indicate otherwise; ... and why the [MIA] should not have concerns relating to the management based on the criteria listed above.'

"PrimeHealth responded through its attorneys, by letter dated March 27, 1998.The letter was accompanied by affidavits and attachments that purported to address `the three areas of concern, ownership/control, the transfer of assets to PrimeHealth, and the fitness of management, which were raised in [Larsen's] letter of March 11.'PrimeHealth interpreted the MIA's concerns regarding its management team as related to `your interpretation of Dr. Chinwuba's notarized statement of September 6, 1996.'In the letter and a supporting affidavit, PrimeHealth took the position that `Dr. Chinwuba was correct in his assertion that the subject equipment was unencumbered at the time it was transferred to PrimeHealth, except as otherwise disclosed to the [MIA].'

"Larsen replied to PrimeHealth's explanation letter, by letter dated March 31, 1998, which set forth `new and continued concerns.'The MIA issued a draft `Limited Scope Examination Report'(the `proposed report'), detailing various deficiencies in PrimeHealth's operations.Among the matters addressed in the proposed report were Chinwuba's certifications regarding the transfer of medical equipment.The proposed report stated that those certifications were false and misleading, in that they failed to disclose the DHIS liabilities."

In his Circuit Court complaint, Dr. Chinwuba alleged that Insurance Commissioner Larsen "violated the Maryland Insurance Code" by releasing to the press the March 11th letter, PrimeHealth's March 27th letter, and the March 31st letter, and that the statements in the March 11th and 31st letters were false, malicious, and defamatory.The complaint also alleged that, when he released to the press the March 11th and March 31st letters, the Insurance Commissioner verbally made false, malicious, and defamatory statements about Dr. Chinwuba to the press.In addition, the complaint alleged that the draft "Report" dated March 31, 1998, and submitted to PrimeHealth on or about August 7, 1998, "classified Chinwuba as untrustworthy, unfit and unreliable to own any interest in an HMO in the State of Maryland," and "was false, misleading and was intentionally designed to place Chinwuba in false light in the media, public and in the business community both within and without the State of Maryland."Finally, the complaint recited that, on August 23, 1998, the Maryland Insurance Administration and Commissioner Larsen instituted receivership proceedings against PrimeHealth in the Circuit Court for Baltimore City, and that the pleadings in the receivership proceedings alleged "various wrongdoing and fraudulent acts on the part of Chinwuba."

As earlier mentioned, the Maryland Insurance Administration and Insurance Commissioner Larsen filed a motion to dismiss or, in the alternative, for summary judgment.With regard to the action against the Insurance Administration, the motion asserted that the plaintiff had failed to comply with the procedural requirements of the Maryland Tort Claims Act.The motion further alleged that Insurance Commissioner Larsen was acting within the scope of his public duties and, therefore, was entitled to both common law public official immunity and statutory immunity under the Maryland Tort Claims Act.Alternatively, the defendants contended that the Insurance Commissioner's...