NEEDREPLACE, Civil No. 12–1056(DSD/JJG).

CourtNew York District Court
Writing for the CourtDAVID S. DOTY
Citation7 F.Supp.3d 934
PartiesSTATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, an Illinois corporation, and State Farm Fire and Casualty Company, an Illinois corporation, Plaintiffs, v. MOBILE DIAGNOSTIC IMAGINE, INC., a Minnesota limited liability company and Michael Appleman, individually, Defendants.
Docket NumberCivil No. 12–1056(DSD/JJG).
Decision Date25 March 2014

7 F.Supp.3d 934

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, an Illinois corporation, and State Farm Fire and Casualty Company, an Illinois corporation, Plaintiffs,
MOBILE DIAGNOSTIC IMAGINE, INC., a Minnesota limited liability company and Michael Appleman, individually, Defendants.

Civil No. 12–1056(DSD/JJG).

United States District Court, D. Minnesota.

Signed March 25, 2014

Defendant's motion granted.

[7 F.Supp.3d 936]

William L. Moran, Esq. and Murnane Brandt, PA, St. Paul, MN, for plaintiffs.

Eric C. Tostrud, Esq. and Lockridge, Grindal & Nauen, PLLP, Minneapolis, MN, for defendants.


DAVID S. DOTY, District Judge.

This matter is before the court upon the motions for declaratory judgment and partial summary judgment by plaintiffs State Farm Mutual Automobile Insurance Company and State Farm Fire and Casualty Company (collectively, State Farm) and the motion for summary judgment by defendants Mobile Diagnostic Imaging, Inc. (MDI) and Michael Appleman (collectively, defendants). Based on a review of the file, record and proceedings herein, and for the following reasons, the court grants the motion by defendants.

I. Standard of Review

The Declaratory Judgment Act, 28 U.S.C. § 2201, grants courts discretion to declare rights. Twin City Fed. Sav. & Loan Ass'n v. Gelhar, 525 F.Supp. 802, 804 (D.Minn.1981). “An action for declaratory relief properly should be entertained where a judgment will serve a useful purpose in clarifying and settling legal relations, and where it will terminate the proceedings and afford relief from uncertainty, insecurity and controversy.” Id. (citation omitted). “Summary judgment is suitable in declaratory judgment actions.” Iams Co. v. Falduti, 974 F.Supp. 1263, 1269 (E.D.Mo.1997) (citations omitted).

“The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); see Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A fact is material only when its resolution affects the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A dispute is genuine if the evidence is such that it could cause a reasonable jury to return a verdict for either party. See id. at 252, 106 S.Ct. 2505.

On a motion for summary judgment, the court views all evidence and inferences in a light most favorable to the nonmoving party. See id. at 255, 106 S.Ct. 2505. The nonmoving party, however, may not rest upon mere denials or allegations in the pleadings but must set forth specific facts sufficient to raise a genuine issue for trial. See Celotex, 477 U.S. at 324, 106 S.Ct. 2548. A party asserting that a genuine dispute exists—or cannot exist—about a material fact must cite “particular parts of materials in the record.” Fed.R.Civ.P. 56(c)(1)(A). If a plaintiff cannot support each essential element of a claim, the court must grant summary judgment because a complete failure of proof regarding an essential element necessarily renders all other facts immaterial. Celotex, 477 U.S. at 322–23, 106 S.Ct. 2548.

II. Corporate Practice of Medicine Doctrine

State Farm seeks a declaratory judgment that MDI violates the CPMD by (1) performing MRI scans and (2) maintaining relationships with independent contractors who interpret the scans. Further, State Farm seeks a declaratory judgment that MDI's violations are knowing and intentional, excusing State Farm from payment of any outstanding bills for services rendered.

[7 F.Supp.3d 938]

Under Minnesota law,2 the CPMD prohibits the “corporate practice of health care professions.” Isles Wellness, Inc. v. Progressive N. Ins. Co., 703 N.W.2d 513, 518 (Minn.2005) (citation omitted); see also Minn.Stat. § 147.081 (codifying the unlawful practice of medicine). “When adopted by state courts, the general prohibition on corporate employment of licensed health care professionals has been based on a corporation's inability to satisfy the training and licensure requirements set out in state statutes and related public policy considerations.” Isles Wellness, 703 N.W.2d at 517 (citations omitted). The CPMD “is [not] limited to medicine and ... appl[ies] to other branches of the healing arts.” Spine Imaging MRI, L.L.C. v. Liberty Mut. Ins. Co., 818 F.Supp.2d 1133, 1140 (D.Minn.2011) (alterations in original) (citation and internal quotation marks omitted). The CPMD, however, “does not automatically embrace every form of health care or therapy.” Isles Wellness, 703 N.W.2d at 522.

A. Performing MRI Scans

State Farm first argues that MDI violates the CPMD by performing MRI scans. Specifically, State Farm argues that the provision of MRI services is an indivisible process requiring the involvement of a licensed medical provider at all stages. MDI responds that MRI services involve two distinct steps. Specifically, MDI argues that physically recording an MRI scan is a mechanical activity requiring limited training. MDI argues that the interpretation of MRI scans, by contrast, requires the involvement of licensed physicians or radiologists to interpret the scans and formulate reports of their findings. MDI argues that it may perform the technical component and contract with ProScan to execute the professional component without violating the CPMD.

Minnesota courts have addressed the application of the CPMD to MRI services in several unpublished opinions. See, e.g., W. Nat'l Mut. Ins. Co. v. Stand Up Mid–Am. MRI, Inc., No. A10–566, 2010 WL 4825320 (Minn.Ct.App. Nov. 30, 2010); Stand Up Mid Am. MRI, Inc. v. Allstate Ins. Co., No. A09–1108, 2010 WL 1440199 (Minn.Ct.App. Apr. 13, 2010). The Minnesota Supreme Court, however, has not squarely addressed whether MRI services are divisible or indivisible. Thus, the court “must predict how [the Minnesota Supreme] Court would decide this unresolved issue of state law.” Midwest Oilseeds, Inc. v. Limagrain Genetics Corp., 387 F.3d 705, 715 (8th Cir.2004) (citation omitted).

The parties agree that if the technical and professional components are inseparable, MDI would be in violation of the CPMD because it is well-established that laypersons are not permitted to interpret MRI scans. See Allstate, 2010 WL 1440199, at *1. State Farm, however, points to no precedent suggesting that MRI services are inseparable.3 In fact,

[7 F.Supp.3d 939]

the reasoning of other courts considering similar facts suggests otherwise. See id. at *2 (noting that the trial court found that the “taking of the MRI images [by an MRI service] did not violate the CPMD,” but affirming on different grounds); see also Spine Imaging MRI, L.L.C. v. Country Cas. Ins. Co., No. 10–480, 2011 WL 379100, at *7 (D.Minn. Feb. 1, 2011) (“[T]he [c]ourt cannot conclude as a matter of law that ... [the] taking of MRI scans itself violates the [CPMD].”).


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