Stand Up Mid America MRI, Inc. v. Allstate Insurance Company, No. A09-1108 (Minn. App. 4/13/2010)
| Decision Date | 13 April 2010 |
| Docket Number | No. A09-1108.,A09-1108. |
| Parties | Stand Up Mid America MRI, Inc., Respondent, v. Allstate Insurance Company, Appellant. |
| Court | Minnesota Court of Appeals |
Appeal from the District Court, Hennepin County, File No. 27CV084290.
Mark A. Karney, Minneapolis, Minnesota, for respondent.
Richard S. Stempel, Christopher M. Drake, Stempel & Doty, PLC, Hopkins, Minnesota, for appellant.
Considered and decided by Stoneburner, Presiding Judge; Hudson, Judge; and Stauber, Judge.
UNPUBLISHED OPINION
Appellant insurer appeals from the district court's decision that, because respondent did not knowingly or intentionally violate the corporate-practice-of-medicine doctrine, appellant is liable for payment for magnetic-resonance-imaging services that respondent provided to appellant's insured. We affirm.
Respondent Stand Up Mid America MRI, Inc. (SUMA) owns a magnetic-resonance-imaging (MRI) machine. Chiropractors refer patients to SUMA to get MRI scans. After SUMA performs an MRI scan, SUMA sends the MRI images to a radiologist, Terry Yochum, Doctor of Chiropractic (D.C.). Dr. Yochum reads the MRI images and creates a report that includes "findings" interpreting the images. SUMA sends Dr. Yochum's report to the referring chiropractor. SUMA is owned and operated by Wayne E. Dahl, D.C., who has been a licensed chiropractor in Minnesota since 1977. SUMA was, at times relevant to this lawsuit, organized under Minn. Stat. § 302A (2004), the Minnesota Business Corporation Act, rather than Minn. Stat. § 319B.01 (2004), the Minnesota Professional Firms Act.
Appellant Allstate Insurance Company insures Sarah Coe. Coe's treating chiropractor referred Coe to SUMA in August 2005 for a spinal/cervical MRI for use in chiropractic treatment. Coe assigned her insurance benefits under the Allstate policy to SUMA.
SUMA performed an MRI on Coe's cervical spine, and Dr. Yochum prepared a report including his findings based on the images. The report was sent to Coe's treating chiropractor. SUMA billed Allstate $1,600 for Coe's MRI and $400 for Dr. Yochum's reading and report. The total bill, including tax, came to $2,040.
Allstate and Coe executed a Hold Harmless and Indemnity Agreement, in which Allstate agreed to hold Coe harmless for any of the charges allegedly incurred and due to SUMA but reserved its rights and defenses against SUMA. Allstate declined to pay SUMA's bill, and SUMA sued Allstate for the outstanding balance of the bill, plus interest. Allstate denied liability on the grounds that SUMA's bill was void because SUMA was knowingly and/or intentionally owned and operated in violation of the corporate-practice-of-medicine doctrine (CPMD).
After a bench trial, the district court concluded that SUMA's taking of the MRI images did not violate the CPMD, but the interpretation and analysis of the MRI images by SUMA did violate the CPMD under a September 2005 supreme court decision that first applied the CPMD to the practice of chiropractic. Because the case applying the CPMD to chiropractic was issued after SUMA provided services to Coe, the district court held that SUMA's violation could not have been knowing or intentional, and its bill was valid. The district court entered judgment for SUMA. This appeal follows.
In an appeal from a bench trial, the district court's factual determinations are entitled to deference and will not be set aside unless clearly erroneous. Porch v. Gen Motors Acceptance Corp., 642 N.W.2d 473, 477 (Minn. App. 2002), review denied (Minn. June 26, 2002). But we are not bound by and need not give deference to the district court's decision on a purely legal issue. Id. "When reviewing mixed questions of law and fact, we correct erroneous applications of law, but accord the [district] court discretion in its ultimate conclusions and review such conclusions under an abuse of discretion standard." Id. (quotation omitted).
The CPMD is the application of a historical prohibition on corporations engaging in "learned professions," including the medical profession, through the employment of licensed professionals, except under specific statutory or regulatory exceptions. Isles Wellness, Inc. v. Progressive N. Ins. Co., 703 N.W.2d 513, 516 (Minn. 2005) (Isles Wellness I) (). In Minnesota, the CPMD was first recognized in Granger v. Adson, 190 Minn. 23, 26-27, 250 N.W. 722, 723 (1933). Granger, a layperson, sued to enforce a contract with a licensed pathologist to analyze urine samples taken as part of "health audits" Granger offered to his subscribers. Granger, 190 Minn. at 24, 250 N.W. at 722-23. "Granger then presented the results obtained from the pathologist to the subscriber and, depending on the results, either advised the subscriber to consult a doctor or offered the subscriber advice about diet, habits and exercise." Isles Wellness I, 703 N.W.2d at 518-19 (citing Granger, 190 Minn. at 24, 250 N.W. at 722).
The supreme court held that Granger was practicing medicine in violation of a statute that prohibited the practice of medicine without a license and was engaged in the practice of healing,1 voided his contract with the pathologist, and stated that "it is 2017improper and contrary to statute and public policy for a corporation or layman to practice medicine' indirectly by hiring a licensed doctor to practice medicine for the benefit or profit of the hire." Id. at 519 ().2
In Isles Wellness, Inc. v. Progressive N. Ins. Co., 725 N.W.2d 90 (Minn. 2006) (Isles Wellness II), the supreme court held that operating a chiropractic clinic in violation of the corporate-practice-of-medicine doctrine does not, as a matter of public policy, void all contracts between the clinic and its patients' insurers. Id. at 95. The supreme court stated:
[W]e conclude that categorically voiding the contracts would not serve the public policy reasons underlying the corporate practice of medicine doctrine. Permitting insurance companies to avoid liability under their insurance contracts does little to protect patients from the specter of lay control over professional judgment. . . . We will not void a contract unless it is established that the corporation's actions show a knowing and intentional failure to abide by state and local law.
Id. (quotation and citation omitted).
In this case, the district court held that SUMA's imaging with its MRI machine did not violate the CPMD, but paying a licensed chiropractor to make findings based on the images did violate the CPMD. Nonetheless, the district court concluded that because the supreme court did not apply the CPMD to the practice of chiropractic until September 2005, SUMA's violation of the CPMD in this case could not have been knowing or intentional in August 2005 when it provided services to Coe. Therefore, the district court concluded that Allstate could not avoid paying for the services by claiming a violation of the CPMD.
Allstate first urges this court to hold that the district court erred by stating that the imaging alone did not violate the CPMD. SUMA agrees with Allstate and urges this court to hold that the CPMD applies to imaging as well as analysis of images. But whether or not imaging alone implicates the CPMD is not critical to the outcome of this case; we therefore conclude that this is not the appropriate case in which to reach that issue. The critical issue in this case is whether SUMA knowingly and intentionally violated the CPMD. There is no dispute that Coe's scan and Dr. Yochum's interpretation of Coe's scan both occurred before Isles Wellness I was issued. Because we conclude that the district court correctly held that SUMA could not have knowingly and intentionally violated the CPMD prior to the issuance of the opinion in Isles Wellness I, Allstate is not entitled to relief even if the district court erred in holding that taking the scan alone did not violate the CPMD.
Isles Wellness II requires an examination of the circumstances surrounding the contract to determine whether the violation was knowing and intentional. 725 N.W.2d at 93. In this case, SUMA employed a chiropractor who, as the district court found, provided services to Coe's treating chiropractor that fall squarely within the definition of the practice of chiropractic. The record does not support Allstate's assertion that the services provided by SUMA did not constitute "chiropractic" as considered in Isles Wellness I. Dr. Yochum is a doctor of chiropractic. Dr. Dahl, SUMA's sole shareholder, described Dr. Yochum—one of the preeminent authorities on scanning within the chiropractic community, having written textbooks on the subject—as an expert in chiropractic radiology. SUMA includes Dr. Yochum's name, followed by his chiropractic degree, D.C., on its letterhead. Coe's treating chiropractor was aware of Dr. Yochum's credentials and relied on his interpretation of Coe's MRI scan.
The district court found that Dr. Yochum's analysis of Coe's images is exactly the type of analysis that chiropractors and radiologists do. Minn. Stat. § 148.01, subd. 3 (2008) specifically defines "chiropractic" to include
analytical x-ray of the bones of the skeleton which are necessary to make a determination of the presence or absence of a chiropractic condition. The practice of chiropractic may include procedures which are used to prepare the patient for chiropractic adjustment or to complement the chiropractic...
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