Spine Imaging Mri, L.L.C. v. Country Cas. Ins. Co.

• Decision Date: 01 February 2011
• Docket Number: Civil No. 10-480 (JRT/ALB)
• Parties: SPINE IMAGING MRI, L.L.C., a Minnesota limited liability company, Plaintiff, v. COUNTRY CASUALTY INSURANCE COMPANY, an Illinois corporation, COUNTRY MUTUAL INSURANCE COMPANY, an Illinois corporation, and COUNTRY PREFERRED INSURANCE COMPANY, a Missouri corporation, Defendants.
• Court: U.S. District Court — District of Minnesota

SPINE IMAGING MRI, L.L.C., a Minnesota limited liability company, Plaintiff, v. COUNTRY CASUALTY INSURANCE COMPANY, an Illinois corporation,

COUNTRY MUTUAL INSURANCE COMPANY, an Illinois corporation,

and COUNTRY PREFERRED INSURANCE COMPANY, a Missouri corporation, Defendants.

Civil No. 10-480 (JRT/ALB)

UNITED STATES DISTRICT COURT DISTRICT OF MINNESOTA

February 1, 2011

MEMORANDUM OPINION AND ORDER DENYING DEFENDANTS' MOTION TO DISMISS

Eric C. Tostrud and Matthew R. Salzwedel, LOCKRIDGE GRINDAL NAUEN PLLP, 100 Washington Avenue South, Suite 2200, Minneapolis, MN 55401, for plaintiff.

Richard S. Stempel and Robert J. Anthonsen, STEMPEL & DOTY PLC, 41 12^th Avenue North, Hopkins, MN 55343, for defendants.

Plaintiff Spine Imaging MRI, L.L.C. ("Spine Imaging") provides magnetic resonance imaging ("MRI") services which assist in identifying and analyzing neck and spine injuries. At issue before the Court is whether Spine Imaging violates Minnesota's prohibition on the corporate practice of medicine by taking MRI images and maintaining independent contractor relationships with licensed medical professionals who analyze the images for clients. This issue is also central to another lawsuit before the Court. See Spine Imaging MRI, L.L.C. v. Liberty Mutual Insurance Co., et al., No. 09-1963, 2010 WL 3893678 (D. Minn. Sept. 30, 2010).

Spine Imaging brought this action for a declaratory judgment against defendants Country Casualty Insurance Company, Country Mutual Insurance Company, and Country Preferred Insurance Company (collectively, "defendants"), which insure some of Spine Imaging's clients. Defendants have moved to dismiss for lack of subject matter jurisdiction and failure to state a claim upon which relief can be granted. They also urge the Court to dismiss the action on the ground of abstention. For the reasons stated below, the Court denies defendants' motion.

BACKGROUND

Spine Imaging is a Minnesota business specializing in the provision of MRI services to assist physicians and chiropractors with the diagnosis and treatment of various medical conditions, often related to the neck and spine. (Compl. ¶ 21, Docket No. 1.) Spine Imaging alleges that although it is owned and operated by an individual who is not a licensed physician or chiropractor, it does not employ any licensed physicians or chiropractors as part of its medical imaging practice. (Id. ¶¶ 22-23.)

Spine Imaging alleges that the provision of MRI services is comprised of two distinct steps: a technical component and a professional component. (Id. ¶ 27.) The technical component involves physically taking the MRI scan, while the professional component involves interpreting and analyzing the image that results from the scan. (Id. ¶¶ 28-29.) Spine Imaging asserts that it only performs the technical component of MRI services through the MRI technicians it employs, and that it "maintain[s] independent-contractor relationships with board certified radiologists, neuroradiologists, and skeletal radiologists, who provide patients with interpretational MRI services and preparesummary reports." (Id. ¶ 31.) Physicians and chiropractors often refer patients to Spine Imaging. (Id. ¶ 42.) Spine Imaging argues that its structure and practice do not violate Minnesota's corporate practice of medicine doctrine.

Defendants provide no-fault automobile insurance in Minnesota. (Id. ¶ 46.) Treatment for many injuries sustained by insured individuals who suffer car accidents relies upon accurate MRI services. (Id. ¶ 45.) Spine Imaging derives a significant amount of revenue from claim reimbursements from insurers, including defendants. (Id.)

On February 15, 2010, defendants sent Spine Imaging a letter stating that, based on facts made clear in Spine Imaging and another state court case, "it appears that Spine Imagine MRI is in violation of the Corporate Practice of Medicine Doctrine." (Id., Ex. A.) Because of its belief that Spine Imaging "knowingly and intentionally violated the Corporate Practice of Medicine Doctrine," defendants requested reimbursement for $99,848.00, the total amount they had paid Spine Imaging. (Id.)

Spine Imaging filed suit under the federal Declaratory Judgment Act, 28 U.S.C. § 2201, and Minnesota's Uniform Declaratory Judgments Act, Minn. Stat. § 555.01. Spine Imaging sought a declaration that (a) the physical taking of MRIs 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; (c) Spine Imaging did not knowingly or intentionally violate the corporate practice of medicine doctrine; and (d) Spine Imaging isnot knowingly or intentionally violating the corporate practice of medicine doctrine.¹ (Id. ¶ 73.)

Defendants have moved to dismiss the action on several grounds. First, they argue that the Court lacks subject matter jurisdiction because the amount in controversy requirement for a diversity case has not been established and there is no controversy ripe for adjudication. Defendants also argue that Spine Imaging is not entitled to the declaratory relief it seeks because it is and has been violating the corporate practice of medicine doctrine. Finally, defendants urge the Court to refrain from deciding this case out of deference to parallel proceedings in state court.

ANALYSIS

I. MOTION TO DISMISS UNDER RULE 12(B)(1)

A. Standard of Review

A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(1) challenges the Court's subject matter jurisdiction. Uland v. City of Winsted, 570 F. Supp. 2d 1114, 1117 (D. Minn. 2008). Spine Imaging must prove the existence of jurisdiction by a preponderance of the evidence. Rasmussen v. State Farm Mut. Auto. Ins. Co., 410 F.3d 1029, 1031 (8^th Cir. 2005). In considering such a motion, the Court construes the factual allegations in the pleadings as true and views them in the light most favorable to the non-moving party. Hastings v. Wilson, 516 F.3d 1055, 1058 (8^th Cir. 2008). The Court may also consider matters outside the pleadings without converting the12(b)(1) motion into one for summary judgment. Harris v. P.A.M. Transport, Inc., 339 F.3d 635, 638 n.4 (8^th Cir. 2003).

B. Spine Imaging Has Met the Amount in Controversy Requirement

28 U.S.C. § 1332(a) provides for federal subject matter jurisdiction over civil actions between completely diverse parties "where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs . . . ." "[T]he amount in controversy [for purposes of diversity jurisdiction] should be determined at the time of filing." White v. FCI USA, Inc., 319 F.3d 672, 674 (5^th Cir. 2003). It "is measured by the value of the object of the litigation." Hunt v. Washington State Apple Adver. Comm'n, 432 U.S. 333, 347 (1977). Defendants claim that Spine Imaging has not met the amount in controversy requirement because it attempts to use an amount, $99,848.00, already paid to Spine Imaging by defendants instead of an outstanding amount due for services performed.

In their February 15, 2010 letter to Spine Imaging, defendants clearly (a) expressed their belief that Spine Imaging "knowingly and intentionally violated the Corporate Practice of Medicine Doctrine," and (b) requested reimbursement for the total amount they had paid Spine Imaging, $99,848.00. (Compl., Ex. A, Docket No. 1.) Defendants' reimbursement demand is sufficient in and of itself to satisfy the amount in controversy requirement. Defendants have asserted their legal entitlement to a sum larger than the jurisdictional threshold amount; Spine Imaging contests their right to that sum. "The purpose of declaratory judgment is to afford an added remedy to one who is uncertain of his rights and who desires an early adjudication thereof without having towait until his adversary should decide to bring suit, and to act at his peril in the interim." Riley v. Dozier Internet Law, PC, 371 Fed. Appx. 399, 409 (4^th Cir. 2010) (quotations omitted). The Court is not deprived of jurisdiction because defendants have not formally declined to reimburse Spine Imaging for any pending charges at the time the complaint was filed, and have not (yet) filed suit or brought a counterclaim.

Moreover, contrary to defendants' assertions, the February 15, 2010 letter evinces defendants' intent to cease reimbursing Spine Imaging for future MRI scans performed on its policyholders. While defendants did not explicitly refuse to continue reimbursing Spine Imaging, their position that Spine Imaging was not entitled to reimbursement, coupled with their demand for reimbursement of all prior payments, is sufficient to place future reimbursements in dispute. Spine Imaging has submitted an affidavit stating that since January 1, 2005, it has generated gross revenue of over $8 million dollars, most of which is derived from reimbursements from no-fault insurers such as defendants. (Aff. of Jennifer Hentges ¶ 3, June 14, 2010, Docket No. 19.) The Court concludes that Spine Imaging's allegations and this additional evidence regarding the likelihood of future losses also satisfies the amount in controversy requirement. See Spine Imaging, 2010 WL 3893678, at *7 ("A reasonable fact finder could conclude that defendants' continued refusal to pay for its insureds' claims will cause Spine Imaging damage in excess of $75,000.").

For the first time in their reply brief, defendants assert that Spine Imaging failed to establish the requisite amount in controversy with respect to each individual defendant. While plaintiffs generally cannot aggregate separate and independent claims againstmultiple defendants to achieve the amount in controversy for diversity jurisdiction, "where two defendants are jointly liable, the same damages can satisfy the amount-in-controversy requirement as to both defendants." Martinez v. Martinez, No. CIV 09-0281, 2010 WL 1608884, at *18 (D.N.M. March 30, 2010); see also ...