Mri v. Liberty Mut. Ins. Co., Civil No. 09–1963 (JRT/AJB).

• Decision Date: 30 September 2010
• Docket Number: Civil No. 09–1963 (JRT/AJB).
• Citation: 743 F.Supp.2d 1034
• Parties: SPINE IMAGING MRI, L.L.C., a Minnesota limited liability company, Plaintiff,v.LIBERTY MUTUAL INSURANCE COMPANY, Allstate Insurance Company, and American Family Mutual Insurance Company, Defendants.Liberty Mutual Insurance Company, Counterclaim Plaintiff,v.Spine Imaging MRI, L.L.C., Counterclaim Defendant.
• Court: U.S. District Court — District of Minnesota

743 F.Supp.2d 1034

SPINE IMAGING MRI, L.L.C., a Minnesota limited liability company, Plaintiff,

v.LIBERTY MUTUAL INSURANCE COMPANY, Allstate Insurance Company, and American Family Mutual Insurance Company, Defendants.Liberty Mutual Insurance Company, Counterclaim Plaintiff,

v.Spine Imaging MRI, L.L.C., Counterclaim Defendant.

Civil No. 09–1963 (JRT/AJB).

United States District Court, D. Minnesota.

Sept. 30, 2010.

Eric C. Tostrud and Matthew R. Salzwedel, Lockridge Grindal Nauen PLLP, Minneapolis, MN, for plaintiff/counterclaim defendant.Sharie L. Lowden, Law Offices of Stilp & Grove, Golden Valley, MN; and Michael W. Lowden, Lowden Law Firm, Minnetonka, MN, for defendant/counterclaim plaintiff Liberty Mutual Insurance Company.John C. Syverson and Richard S. Stempel, Stempel & Doty P.L.C., Hopkins, MN, for defendant Allstate Insurance Company.Mark A. Solheim, Hilary J. Loynes, and Paula Duggan Vraa, Larson King, LLP, St. Paul, MN, for defendant American Family Mutual Insurance Company.

MEMORANDUM OPINION AND ORDER

JOHN R. TUNHEIM, District Judge.

Plaintiff Spine Imaging MRI, L.L.C. (“Spine Imaging”) provides medical imaging services to individuals with neck and spine injuries. Spine Imaging brought this action against defendant-insurers Liberty Mutual Fire Insurance Co. (“Liberty”), Wilson Mutual Insurance Company (“Wilson”), Allstate Insurance Company (“Allstate”) and American Family Mutual Insurance Company (“American Family”) (collectively, “defendants”), alleging claims for breach of contract, declaratory judgment, and unjust enrichment arising out of defendants' refusal to pay for medical imaging services provided by Spine Imaging to defendants' policyholders. Liberty filed counterclaims asking for a declaration that Spine Imaging is knowingly operating in violation of the corporate practice of medicine doctrine and seeking recovery of benefits paid to Spine Imaging. The case is before the Court on Allstate and American Family's motions to dismiss for lack of subject matter jurisdiction and for failure to state a claim; and on Spine Imaging's motion to dismiss counterclaims filed by Liberty.

BACKGROUND

Spine Imaging specializes in providing magnetic-resonance imaging (“MRI”) to assist physicians and chiropractors with the diagnosis and treatment of various medical conditions, with a specific focus on the neck and spine. (Am. Compl. ¶ 18, Docket No. 45.) MRI technology provides images of the human body that can be used to assist in diagnosing various medical conditions and assess the most effective course of treatment. ( Id. ¶ 21.)

Spine Imaging alleges that there are two steps to providing medical imaging services. The first step, the “technical component,” “involves physically taking the MRI scan itself. This is a mechanical process that can be performed by trained MRI technicians.” ( Id. ¶ 25.) Spine Imaging employs such MRI technicians. ( Id. ¶ 25.) The second step, the “professional component,” “involves interpreting the image that results from the MRI scan. This interpretation must be performed by a licensed physician or chiropractor.” ( Id. ¶ 26.) Spine Imaging claims it only provides the technical component of the MRI services, but maintains “independent-contractor relationships with board certified radiologists, neuroradiologists, and skeletal radiologists, who provide patients with interpretational MRI services and prepare summary reports.” ( Id. ¶ 28.) Spine Imaging concedes that it is not owned or operated by a licensed physician or chiropractor, but also avers that it does not employ licensed physicians or chiropractors as part of its medical imaging services. ( Id. ¶¶ 19–20.) Spine Imaging actively markets its services to the chiropractic community to provide services to individuals who have suffered neck and spine injuries in automobile accidents. ( Id. ¶ 31.) Spine Imaging has experienced substantial success and its services have been in demand. ( Id. ¶¶ 32–41.)

In Minnesota, “no-fault” automobile insurance covers the cost of treatment for most car accident victims. ( Id. ¶ 42.) Defendants all provide “no-fault” automobile insurance in Minnesota, and some of Spine Imaging's clients have insurance policies with defendants. ( Id. ¶ 43.) Spine Imaging alleges that defendants regularly reimbursed Spine Imaging for the MRI services provided to defendants' policyholders. ( Id.)

In spring 2009, defendants ceased reimbursing Spine Imaging for medical imaging services provided to defendants' policyholders. ( Id. ¶ 49.) Defendants aver that they ceased paying those claims because Spine Imaging's corporate structure and business operations violated the Minnesota common law corporate practice of medicine doctrine, which prohibits a corporation from engaging in or providing professional medical services. ( Id. ¶ 50.) Spine Imaging claims that the corporate practice of medicine doctrine does not apply to it because it only provides the technical component of the medical imaging services, and those services do not constitute the “practice of medicine.” ( Id. ¶ 57.) Further, Spine Imaging asserts that it does not exert control over the independent contractors with whom it contracts to interpret the MRI images as part of the professional component of the medical imaging services. ( Id. ¶ 58.) Spine Imaging emphasizes that the licensed physicians/independent contractors are not Spine Imaging employees. ( Id.) Spine Imaging alleges that even if its business violated the corporate practice of medicine, defendants are not excused from paying Spine Imaging for MRIs provided to defendants' policyholders because “[t]here is absolutely no evidence that Spine Imaging was or is knowingly and intentionally violating” the doctrine. ( Id. ¶ 59.)

In response to defendants' refusal to pay for medical imaging services performed, Spine Imaging brought this action in federal court based on diversity of citizenship jurisdiction. ( Id. ¶ 16.) In its Amended Complaint, Spine Imaging alleges claims for breach of contract, declaratory judgment, and unjust enrichment. In its breach of contract claim, Spine Imaging alleges that “Defendants' refusal to pay Spine Imaging for its imaging services already provided by Spine Imaging to defendants' policyholders constitutes a breach of contract .... [and] Spine Imaging has suffered substantial damages as a result of defendants' breach of contract.” ( Id. ¶¶ 62–63.) In its claim for declaratory judgment, Spine Imaging asks the Court to enter judgment declaring that “(a) the physical taking of MRI scans does not constitute the practice of medicine; (b) Spine Imaging's practice of engaging independent contractors to provide the professional component of MRI services does not violate the corporate practice of medicine doctrine; [and] (c) Spine Imaging did not knowingly or intentionally violat[e] the corporate practice of medicine doctrine.” ( Id. ¶ 73.) In its claim for unjust enrichment, Spine Imaging alleges that “[d]espite that defendants' policyholders have received valuable and medically necessary services, defendants have refused to pay for those services, and it would be inequitable and unjust for defendants to receive the benefits of these services without paying for their reasonable value.” ( Id. ¶ 78.)

Allstate and American Family filed motions to dismiss, arguing that the Court does not have subject matter jurisdiction over the case and that the Amended Complaint fails to state a claim on which relief may be granted. ( See Docket Nos. 34, 40.) Spine Imaging brought a motion to dismiss Liberty's counterclaims, which seek a declaration from the Court that Spine Imaging's business violates the Minnesota corporate practice of medicine doctrine and seek recovery of benefits previously paid to Spine Imaging for medical imaging services. (Docket No. 67.) The Court first addresses Allstate and American Family's motions to dismiss, and then turns to Spine Imaging's motion to dismiss Liberty's counterclaims.

I. ALLSTATE AND AMERICAN FAMILY'S MOTIONS TO DISMISSA. Standard of Review for 12(b)(1) and 12(b)(6) Motions to Dismiss

1. Motion to Dismiss for Lack of Subject Matter Jurisdiction

A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(1) challenges the Court's subject matter jurisdiction and requires the Court to examine whether it has authority to decide the claims. Uland v. City of Winsted, 570 F.Supp.2d 1114, 1117 (D.Minn.2008). A party invoking federal subject matter jurisdiction has the burden of proving by a preponderance of the evidence that jurisdiction exists. V S Ltd. P'ship v. Dep't of Housing and Urban Development, 235 F.3d 1109, 1112 (8th Cir.2000). In resolving a motion to dismiss under Rule 12(b)(1), the Court is not limited to a consideration of the face of the complaint, but may also consider evidence submitted by the parties. Gilmore v. Nw. Airlines, Inc., 504 F.Supp.2d 649, 653 (D.Minn.2007).

2. Motion to Dismiss for Failure to State a Claim

In reviewing a complaint under a Rule 12(b)(6) motion to dismiss, the Court considers all facts alleged in the complaint as true, and construes the pleadings in a light most favorable to the non-moving party. See, e.g., Bhd. of Maint. of Way Employees v. Burlington N. Santa Fe R.R., 270 F.3d 637, 638 (8th Cir.2001). To survive a motion to dismiss, however, a complaint must provide more than “ ‘labels and conclusions' or ‘a formulaic recitation of the elements of a cause of action.’ ” Ashcroft v. Iqbal, ––– U.S. ––––, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). That is, to avoid dismissal, a complaint must include “sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Id. (internal quotation marks omitted). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the...