Rodriguez Diaz v. Sierra Martinez, Civ. No. 86-1297 (JP).

• Decision Date: 12 July 1989
• Docket Number: Civ. No. 86-1297 (JP).
• Citation: 717 F. Supp. 27
• Parties: Wilfredo RODRIGUEZ DIAZ, Plaintiff, v. Marcelo SIERRA MARTINEZ, et al., Defendants.
• Court: U.S. District Court — District of Puerto Rico

717 F. Supp. 27

Wilfredo RODRIGUEZ DIAZ, Plaintiff, v. Marcelo SIERRA MARTINEZ, et al., Defendants.

Civ. No. 86-1297 (JP).

United States District Court, D. Puerto Rico.

July 12, 1989.

Keith A. Graffam, Charles A. Cordero, Cordero, Miranda & Pinto, Old San Juan, Puerto Rico, for plaintiff.

Engadi Charneco, Rafael Mayoral, Old San Juan, Puerto Rico, for San Juan Mun. Hospital & Hosp. San Carlos.

Robert E. Montalvo, San Juan, Puerto Rico, for Corporación Insular de Seguros.

Elisa A. Fumero López, Garden Hills, Guaynabo, Puerto Rico, for Administración de Servicios Médicos de PR.

José R. García Pérez, San Juan, Puerto Rico, for Secretary of Justice of Puerto Rico.

Jorge J. López López, San Juan, Puerto Rico, for University of Puerto Rico, Dr. Zierenberg.

Dora M. Peñagaricano, Hato Rey, Puerto Rico, for Hosp. General San Carlos.

OPINION AND ORDER

PIERAS, District Judge.

In this diversity action alleging that plaintiff was injured due to a traffic accident and subsequent medical negligence, the court has before it a motion to dismiss filed by most of the defendants citing a myriad of reasons why the claims against them should be dismissed.

I. Eleventh Amendment

Several defendants claim immunity from suit in this Court on the basis of the eleventh amendment to the United States Constitution. That amendment jurisdictionally bars the federal courts from entertaining claims for money damages against the states, including Puerto Rico, Ramirez v. Puerto Rico Fire Serv., 715 F.2d 694, 697 (1st Cir.1983), without their consent. Its application to state agencies and institutions "depends upon whether the entity `is to be treated as an arm or alter ego of the State partaking of the State's Eleventh Amendment immunity, or is instead to be treated as a municipal corporation or other political subdivision to which the Eleventh Amendment does not extend.'" Ainsworth Aristocrat Int'l Pty. Ltd. v. Tourism Co. of Puerto Rico, 818 F.2d 1034, 1036 (1st Cir.1987), quoting Mount Healthy City School Dist. Bd. of Educ. v. Doyle, 429 U.S. 274, 280, 97 S.Ct. 568, 572, 50 L.Ed.2d 471 (1977). Ainsworth held that in making this determination, courts should consider:

local law and decisions defining the status and nature of the agency involved in its relation to the sovereign.... Among the other factors, no one of which is conclusive, perhaps the most important is whether, in the event the plaintiff prevails, the payment of the judgment will have to be made out of the state treasury; significant here also is whether the agency has the funds or the power to satisfy the judgment. Other relevant factors are whether the agency is performing a governmental or proprietary function; whether it has been separately incorporated; the degree of autonomy over its operations; whether it has the power to sue and be sued and to enter into contracts; whether its property is immune from state taxation; and whether the sovereign has immunized itself from responsibility for the agency's operations.

Ainsworth, 818 F.2d at 1037, quoting Blake v. Kline, 612 F.2d 718, 722 (3d Cir. 1979). With this background in mind, we consider each of the defendant entities.

A. The University of Puerto Rico

Plaintiff's claim against the University of Puerto Rico (UPR) need not detain us long. In Pérez v. Rodriguez Bou, 575 F.2d 21 (1st Cir.1978) and Amelunxen v. University of Puerto Rico, 637 F.Supp. 426, 434 (D.P.R.) aff'd mem. 815 F.2d 691 (1st Cir.1986), it was held that suits in federal court against UPR were barred by the eleventh amendment. Plaintiff has not cited any change in the status of the university which would alter the outcome, so for the reasons stated in the aforementioned cases the claim against UPR must be DISMISSED, without prejudice to filing in state court, for lack of jurisdiction.

B. Puerto Rico Medical Services Administration

Defendant Administración de Servicios Médicos de Puerto Rico, the Puerto Rico Medical Services Administration (ASEM or the Administration), was created by the Act of June 22, 1978, No. 66, as amended, 24 L.P.R.A. § 342 et seq. (1979 and Supp.1987). Section 4 of the act, 24 L.P.R.A. § 342b, provides:

The Puerto Rico Medical Services Administration is hereby created as an instrumentality of the Government of the Commonwealth of Puerto Rico, attached to the Commonwealth Department of Health, independent and separate from any other administration or body created or to be created in the future in the Department of Health and which shall be under the direction and supervision of the Secretary of Health. Said Administration shall have a separate juridical personality apart from every official thereof as well as from the Government of the Commonwealth of Puerto Rico and its agencies, instrumentalities, public corporations and political subdivisions. The powers of the Administration shall be vested in and exercised by the Secretary with the advice of the Board of Participating Entities and with its consent on matters specified in section 342d of this title.

The purposes for which the Administration is hereby created are public for the general benefit of the Commonwealth of Puerto Rico; therefore, the properties and activities of the Administration shall be exempt from the payment of any kind of Commonwealth or municipal duties, tariffs or taxes, as well as from assessments.

The Administration shall also be exempted from the payment of fees required for the prosecution of judiciary sic proceedings, the issue of certificates in all offices of the Commonwealth of Puerto Rico and the execution and registration of any public documents in any public registry.

The Administration has the powers "to sue and be sued," 24 L.P.R.A. § 342g(a); "to establish its own administrative, personnel, budgetary, purchasing and accounting structures" in consultation with the Central Personnel Administration Office, the Department of the Treasury, the Bureau of the Budget and the General Services Administration, § 342g(c); to borrow money, with payment guaranteed from revenues generated from its operations, "provided that the Administration's debts and other liabilities shall not constitute debts or liabilities of the Commonwealth of Puerto Rico." § 342g(d); to enter into contracts, § 342g(e); and to issue tax-exempt bonds, § 342h. The Administration's funds are held in designated depositories of Commonwealth funds in separate accounts in the Administration's name, § 342k, but the Administration's budget is "integrated into the total budget of the Department of Health." § 342l. The Administration is funded in large part by Commonwealth budgetary appropriation, and budgetary shortfalls are compensated "through the mechanism of a transfer of funds from the resources of the corresponding government agencies." Id. The majority of the Administration's board is composed of Commonwealth government officials. § 342d.

In Op.Sec.Just. 1982-9 at 54, regarding the Medical Services Administration, the Puerto Rico Secretary of Justice stated:

Due to their being instrumentalities of the Government of the Commonwealth of Puerto Rico, it is indubitable that administrative bodies with corporate personality are integral parts of the Executive Branch of the Commonwealth Government, but that they differ from other bodies in said branch in that the use of the corporate fiction to perform their governmental activities has the goal of freeing them of certain restrictions that are imposed on the traditional departments of the government, gaining them certain flexibility and adaptability characteristic of private commercial enterprises. Court's translation

We now turn to the Blake/Ainsworth factors. The "perhaps ... most important" factor is whether the judgment will have to be paid out of the state treasury. The statute provides (although only in the section governing the Administration's borrowing) that the Administration's debts and liabilities do not constitute liabilities of the Commonwealth, but it also provides that shortfalls in the Administration's budget will be made up out of funds from other agencies—i.e., state funds. A judgment against the Administration may not technically run against the Commonwealth, but the practical effect is that the Commonwealth would have to pay it.

As to the other factors, the Administration does have the funds and power to satisfy the judgment, although, as noted, shortfalls will then be covered by the state. The Administration performs a governmental function, rather than a proprietary one, in administering and operating the Centro Médico complex. See Employees of the Dep't of Public Health & Welfare v. Missouri Dept. of Public Health & Welfare, 411 U.S. 279, 284, 93 S.Ct. 1614, 1617, 36 L.Ed.2d 251 (1973). The Administration is separately "incorporated"—it has a separate juridical personality—but it is an integral part of the Department of Health. It is not autonomous over its operations: the powers of the Administration are "vested in and exercised by" the Secretary of Health, who is an official of the executive branch of the Commonwealth government. It has the power to sue and be sued and to enter into contracts, but its property is exempt from taxation, and, as noted, the sovereign has only partially immunized itself for responsibility for the Administration's operations.

As noted in Ainsworth, "the entity's financial and operational autonomy is often one of the most significant of the factors." 818 F.2d at 1037 n. 4. The Administration is only somewhat financially autonomous, since the effect of a judgment would, as a practical matter, result in the state's paying it, and due to the heavy involvement of the state's financial agencies in the Administration's budgetary and financial affairs. Operationally the Administration is part of the Department of Health and is subject to the control of its Secretary. Given these factors, it cannot be held that the Administration is not an alter ego of the Commonwealth. Therefore,...