NEEDREPLACE

• Decision Date: 25 March 2014
• Docket Number: Civil No. 12–1056(DSD/JJG).
• Citation: 7 F.Supp.3d 934
• Parties: STATE 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.
• Court: New York District Court

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,

v.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. 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.

ORDER

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.

DISCUSSION

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.

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, 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].”).

Moreover, Minnesota law contemplates lay ownership of diagnostic-imaging facilities. See Minn.Stat. § 144.565, subdiv. 1(2) (requiring diagnostic-imaging facilities to provide the health commissioner with “the names of all physicians with any financial or economic interest ... and all other individuals with a ten percent or greater financial or economic interest in the facility” (emphasis added)). Such a provision indicates that “the Minnesota legislature did not intend to prohibit lay people from owning MRI facilities, potentially including those who employ or independently contract with licensed medical professionals.” Spine Imaging MRI, 2011 WL 379100, at *8 n. 3 (citation omitted). Thus, Minnesota law—in notable contrast to the laws of states that expressly proscribe lay ownership of diagnostic-imaging facilities—suggests that some aspects of MRI services need not be directly controlled by a licensed physician. See, e.g., N.J. Admin. Code § 13:35–2.6 (“Any diagnostic or screening office offering diagnostic or screening tests for a fee shall ... [b]e solely owned and under the responsibility of one or more physicians....”). Moreover, contrary to State Farm's argument, the practice of global billing does not demonstrate the inseparability of the technical and professional components, as global billing is regularly used in the industry. See Schultz Aff. Ex. B, at 2; Appleman Aff. ¶ 10, ECF No. 51. As a result, the court concludes that the technical and professional components of MRI scans are separable.

State Farm next argues that, even if the components of MRI scans are separable, MDI violates the CPMD by performing the technical component of MRI scans. In general,

[a] prohibition on the corporate practice of health care arises not simply because particular health care practitioners are engaged in “healing,” but also because the individual practitioners are members of a state licensed profession, must undergo significant training and education, and enjoy independent professional judgment.

Isles Wellness, 703 N.W.2d at 522. Here, MDI technologists are not members of a “state licensed profession.” Although MDI technologists register with the American Registry of Radiologic Technologists, such registration is not equivalent to state licensure. See Ball Dep. 7:1–3; see also Isles Wellness, 703 N.W.2d at 522 (“[N]o training or licensure is required by state statute. Thus, much of the underlying rationale of the prohibition on corporate practice is inapplicable.”). Second, though MDI technologists are subject to certain educational requirements, the obligations are less substantial than those pertaining to professions subject to the CPMD, such as dentistry and chiropractic care. See Ball Dep. 6:22–7:10; see also, e.g., State v. Bailey Dental Co., 211 Iowa 781, 234 N.W. 260, 262 (1931); Isles Wellness, 703 N.W.2d at 523–24. Indeed, MDI technologists' academic and training backgrounds, accreditation status and continuing education obligations are materially similar to those of physical therapists, whom Minnesota courts have specifically excluded from...