Western Nat'l Mut. Ins. Co. v. Stand Up Mid-am. Mri Inc, A10-566
| Decision Date | 30 November 2010 |
| Docket Number | A10-566 |
| Court | Minnesota Court of Appeals |
| Parties | Western National Mutual Insurance Company, Appellant, v. Stand Up Mid-America MRI, Inc., Respondent. |
This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. §480A.08, subd. 3 (2008).
Affirmed
Hennepin County District Court
Richard S. Stempel, John C. Syverson, Stempel & Doty PLC, Hopkins, Minnesota; and Michael W. Lowden, Lowden Law Firm, Minnetonka, Minnesota (for appellant)
Randall D.B. Tigue, Randall Tigue Law Office P.A., Golden Valley, Minnesota (for respondent)
Considered and decided by Schellhas, Presiding Judge; Shumaker, Judge; and Collins, Judge.*
UNPUBLISHED OPINION
Appellant challenges the district court's decision on summary judgment that, because respondent's violation of the corporate-practice-of-medicine doctrine was not knowing and voluntary, appellant is obligated to pay claims submitted by respondent. We affirm.
Respondent Stand Up Mid-America MRI Inc., n/k/a Stand Up Mid-America MRI P.A., is in the business of performing MRI scans on doctor-referred patients and providing the doctors with a report of findings from the scans. Respondent was incorporated in November 2003 under the Minnesota Business Corporation Act, Minn. Stat. §§ 302A.001-.917 (2002 & Supp. 2003). Respondent's sole shareholder has always been Wayne Dahl, D.C., a licensed chiropractor.
Respondent's service consists of both technical and professional components. First, a technologist performs an MRI scan on the referred individual. Although the State of Minnesota does not require that such technologists be licensed in any health-care profession, respondent employs certified radiologic technologists. Respondent then sends the images from the MRI scan to an independent chiropractor or radiologist for a "professional radiologic interpretation" and findings. Respondent includes the findings of the chiropractor or radiologist in a report that it prepares for the referring doctor. The referring doctor uses the report to aid in the diagnosis and treatment of the individual.
According to Dr. Dahl, the chiropractors or radiologists do not analyze what they find and do not offer any diagnoses. Dr. Dahl explained, Dr. Dahl testified that "[y]ou cannot diagnose someone you've never seen," and that there is no doctor-patient relationship between the chiropractor or radiologist and the referred individual.
Prior to incorporating in 2003, Dr. Dahl consulted an attorney for advice on the appropriate corporate structure for respondent and checked the Minnesota Secretary of State's website to determine what corporate form his competitors were using. He found that all were general business corporations, including some that were publicly traded. Both professionals and non-professionals owned the businesses. Nobody advised Dr. Dahl that his ownership or incorporation of respondent could constitute a violation of the corporate-practice-of-medicine doctrine (CPMD).
In September 2005, the supreme court released Isles Wellness, Inc. v. Progressive N. Ins. Co., in which it held that the CPMD exists in Minnesota, "that the corporate employment of chiropractors is prohibited except as expressly permitted by statute," and that a particular chiropractic clinic, which was organized as a general business corporation and owned by a layperson, was in violation of the doctrine. 703 N.W.2d 513, 515, 524 (Minn. 2005) (Isles Wellness I). The court also held that a massage-therapy clinic and a physical-therapy clinic owned by the same layperson were not in violation. Id.
Dr. Dahl was aware of Isles Wellness I but was not "learned... as to the implications." Following the decision, he sought further legal advice as to whether respondent, which was owned by a licensed chiropractor, had no chiropractor employees, and did not directly diagnose or treat patients, was affected. An attorney advised Dr. Dahl that because of the distinctions between respondent and the business involved in Isles Wellness I, respondent was not subject to the CPMD. Dr. Dahl stated in a sworn affidavit that he has never knowingly operated respondent in violation of the CPMD.
Between July 15, 2005, and May 7, 2008, respondent performed services for 14 doctor-referred individuals whose claims were submitted to their insurer, appellant Western National Mutual Insurance Co., a workers'-compensation and no-fault auto insurance carrier. On February 22, 2006, appellant sent respondent a letter with respect to one of its insured's claims, stating that its investigation indicated that respondent was "in violation of the MN Corporate Practices of Medicine Act" and that respondent's billing statement as to this claim was therefore void as a matter of public policy. Appellant sent respondent similar letters with respect to many of the other claims by these 14 insureds. Appellant paid the bills for three of its insureds in the amount of $13,425.96, but has not paid the bills of the remaining 11 insureds, leaving $31,310.30 outstanding.
Meanwhile respondent was involved in a similar dispute with Allstate Insurance Co. related to services provided to one of its insureds in August 2005. Respondent sued Allstate to collect payment for its services, and Allstate asserted the CPMD as a defense.
The district court denied respondent's motion for summary judgment on May 22, 2008, ruling that the CPMD applied to respondent. Dr. Dahl immediately reincorporated respondent under the Minnesota Professional Firms Act, Minn. Stat. §§ 319B.01-.12 (2006 & Supp. 2007).
After a trial, the district court determined that although respondent had violated the CPMD when it provided its services to Allstate's insured, its bill for services was not void because respondent had not knowingly and intentionally operated in violation of the CPMD under Isles Wellness, Inc. v. Progressive N. Ins. Co., 725 N.W.2d 90, 95 (Minn. 2006) (Isles Wellness II). Allstate appealed, and this court affirmed. Stand Up Mid Am. MRI, Inc. v. Allstate Ins. Co., No. A09-1108, 2010 WL 1440199 (Minn. App. Apr. 13, 2010). In that appeal, respondent did not challenge the district court's determination that it was subject to and had violated the CPMD.
Appellant commenced this action on January 27, 2009, alleging that respondent violated the CPMD when it provided services to appellant's 14 insureds, seeking a declaration that the bills for services were void, and seeking to recoup the $13,425.96 it had already paid on its insureds' claims. Respondent counterclaimed to collect on the unpaid bills. The district court denied appellant's motion for summary judgment and granted respondent's motion, concluding that even though respondent had operated in violation of the CPMD, based on the undisputed facts, respondent had not knowingly and intentionally done so, and its bills were therefore not void. The court ordered judgment in favor of respondent in the amount of $31,310.30. This appeal follows.
Summary judgment is granted when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that either party is entitled to a judgment as a matter of law." Minn. R. Civ. P. 56.03. On review, this court "determine[s] whether there are any genuine issues of material fact and whether the district court erred in its application of the law." Isles Wellness I, 703 N.W.2d at 516. The court must "view the evidence in the light most favorable to the party against whom summary judgment was granted." Id.
The CPMD is a common-law prohibition against corporations engaging in healthcare practice "through the employment of licensed professionals except pursuant to specific statutory or regulatory exceptions." Id. at 516-17. Policy reasons underlying the CPMD include the "corporation's inability to satisfy the training and licensure requirements" of health-care practice, along with "concerns raised by the specter of lay control over professional judgment, commercial exploitation of health care practice, and the possibility that a health care practitioner's loyalty to a patient and an employer will be in conflict." Id. at 517.
Proficiency in [health-care] occupations requires long years of special study and of special research and training and of learning in the broad field of general education. Without such preparation proficiency in these professions is impossible. The law recognizes them as a part of the public weal and protects them against debasement and encourages the maintenance therein of high standards of education, of ethics and of ideals. It is for this purpose that rigid examinations are required and conducted as preliminary to the granting of alicense. The statutes could be completely avoided and rendered nugatory, if one or more persons, who failed to have the requisite learning to pass the examination, might nevertheless incorporate themselves formally into a corporation in whose name they could practice lawfully the profession which was forbidden to them as individuals. A corporation, as such, has neither education, nor skill, nor ethics. These are sine qua non to a learned profession.
Id. at 517-18 (quoting State v. Bailey Dental Co., 234 N.W. 260, 262-63 (Iowa 1931)). In deciding whether a particular business is subject to the CPMD, the court considers (1) whether the practitioners are engaged in "healing," (2) whether a license is required by law, (3) whether the profession requires "significant training and education," and (4) whether practitioners "enjoy independent professional...
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