Willingway Hosp. v. Blue Cross & Blue Shield

• Decision Date: 28 November 1994
• Docket Number: Civ. A. No. CV 693-075.
• Citation: 870 F. Supp. 1102
• Parties: WILLINGWAY HOSPITAL, INC., Plaintiff, v. BLUE CROSS & BLUE SHIELD OF OHIO, Defendant.
• Court: U.S. District Court — Southern District of Georgia

870 F. Supp. 1102

WILLINGWAY HOSPITAL, INC., Plaintiff, v. BLUE CROSS & BLUE SHIELD OF OHIO, Defendant.

Civ. A. No. CV 693-075.

United States District Court, S.D. Georgia, Statesboro Division.

October 31, 1994.

As Amended November 28, 1994.

Harry L. Trauffer, Smyrna, GA, for plaintiff.

Paul Wain Painter, Jr., Painter, Ratterree, Connolly & Bart, Savannah, GA, George F. Karch, Jr., Michael E. Smith, Thompson, Hine and Flory, Cleveland, OH, for defendant.

ORDER

EDENFIELD, Chief Judge.

Before the Court is the Defendant's motion to dismiss for want of personal jurisdiction. The Court GRANTS the Defendant's motion, finding that the Defendant lacks sufficient contacts with this jurisdiction to satisfy due process requirements.

I. Background

This case springs from a dispute between a Georgia Hospital and an Ohio medical insurance company. On May 24, 1993, the Plaintiff, Willingway Hospital (hereinafter "Willingway"), filed suit in the Superior Court of Bulloch County, Georgia, to collect a $45,658.79 health insurance claim, which the Defendant, Blue Cross & Blue Shield of Ohio (hereinafter "BCBS") refused to pay. Willingway's claim stems from its treatment of James Rudolph, a member of a group health insurance policy issued by BCBS. As Rudolph's assignee, Willingway contends that it has the right to recover the unpaid insurance proceeds.

BCBS removed this action from the Superior Court of Bulloch County, Georgia, to this Court on July 16, 1993, asserting federal question jurisdiction under 28 U.S.C. § 1331. See Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 67, 107 S.Ct. 1542, 1548, 95 L.Ed.2d 55 (1987). Willingway's claims are governed by the Employee Retirement Income Security Act of 1974, as amended (hereinafter "ERISA"), 29 U.S.C. §§ 1001-1461.

Willingway provided medical services to James Rudolph during two periods: from January 28, 1991 to March 11, 1991 and from August 31, 1992 to October 12, 1992. (Complaint at 1 and 2). Rudolph's insurance policy required that beneficiaries obtain pre-certification for treatment. While Willingway alleges in its complaint that it obtained pre-certification authorizing five days of treatment (Complaint at 2), BCBS has supplied an affidavit stating that it did not provide any pretreatment authorization. (Waldron Aff. at 3).

Despite an anti-assignment clause in Rudolph's BCBS policy (Def. Mot. Sum. Jdgt., Ex. 2, at 29), Rudolph executed an assignment of benefits to Willingway to collect the $49,415.95 due for the treatment. (Complaint at 1-2). To date, BCBS has only paid $3,757.16, claiming that the remaining treatment, totalling $45,658.79, was not medically necessary. (Ans. at 2).

II. Personal Jurisdiction

A. Burden of Proof

Because this Court has chosen not to conduct a discretionary evidentiary hearing on the defendant's motion to dismiss for lack of personal jurisdiction, Willingway has the burden of establishing a prima facie case of personal jurisdiction over BCBS. Madara v. Hall, 916 F.2d 1510, 1514 (11th Cir.1990); Morris v. SSE, Inc., 843 F.2d 489, 492 (11th Cir.1988), appeal after remand, 912 F.2d 1392 (11th Cir.1990); DeLong Equip. Co. v. Washington Mills Abrasive Co., 840 F.2d 843, 845 (11th Cir.1988). To do so Willingway must present enough evidence to withstand a motion for directed verdict. Madara, 916 F.2d at 1514. The Court must accept as true all facts alleged in the complaint that are uncontroverted by the defendant's affidavits. E.g., Madara, 916 F.2d at 1514; Cable/Home Communication Corp. v. Network Prod., Inc., 902 F.2d 829, 855 (11th Cir.1990). Where, however, the defendant's affidavits and the plaintiff's assertions conflict, the Court must construe all reasonable inferences in favor of the plaintiff. E.g., Madara, 916 F.2d at 1514; Cable/Home Communication, 902 F.2d at 855.

B. Personal Jurisdiction vs. Service of Process

In determining whether to exercise personal jurisdiction, courts generally should first establish whether a defendant can properly be served with process under the applicable statutory authority, and then inquire if that service comports with the constitutional principles of due process. Sun Bank, N.A. v. E.F. Hutton & Co., 926 F.2d 1030, 1033 (11th Cir.1991) (diversity case); Go-Video, Inc. v. Akai Elec. Co., 885 F.2d 1406, 1413 (9th Cir.1989) (federal question case).

In federal question cases it is imperative that these two inquiries remain separate, see Charles Wright and Arthur Miller, 4 Federal Practice and Procedure § 1063 (1987), because federal statutes that provide nationwide service of process do not necessarily provide nationwide personal jurisdiction. Service of process and personal jurisdiction are linked only in so far as they both must be satisfied before a case can go forward. Id.

The U.S. Supreme Court has only spoken on how personal jurisdiction relates to nationwide service of process once. In Omni Capital Int'l v. Rudolf Wolff & Co., 484 U.S. 97, 104, 108 S.Ct. 404, 409, 98 L.Ed.2d 415 (1987), the Court commented on the distinction between the two concepts when it provided:

Before a court may exercise personal jurisdiction over a defendant, there must be more than notice to the defendant and a constitutionally sufficient relationship between the defendant and the forum. There also must be a basis for the defendant's amenability to service of summons. Absent consent, this means there must be authorization for service of summons on the defendant.

Id.

In Omni the Court was confronted with a federal question case where the controlling federal statute was silent as to service of process. The Court looked to Rule 4(e) of the Federal Rules of Civil Procedure, which provides that when determining jurisdiction, a federal court looks to either a federal statute or to the long-arm statute of the state in which the court sits. Id. at 105, 108 S.Ct. at 410. Since the statute in Omni did not provide for service of process, the Court concluded that the Louisiana Long-Arm Statute must be applied. Id. at 111, 108 S.Ct. at 413.

In so holding Omni does not reach the precise issue in this case, namely how is personal jurisdiction determined when a federal statute does provide for national service of process. The lower courts have generally gravitated towards applying a "national contacts" test. Wright and Miller, § 1067.1; see e.g., Texas Trading & Milling Corp. v. Federal Republic of Nigeria, 647 F.2d 300 (2nd Cir.1981), cert. denied 454 U.S. 1148, 102 S.Ct. 1012, 71 L.Ed.2d 301; Horne v. Adolph Coors Co., 684 F.2d 255 (3rd Cir.1982); and FTC v. Jim Walter Corp., 651 F.2d 251 (5th Cir.1981). In Jim Walter a case filed under the Federal Trade Commission Act which provides for nationwide service, 15 U.S.C. § 49, the Fifth Circuit explained one rationale for a national contacts test:

Because the district court's jurisdiction is always potentially, and, in this case, actually co-extensive with the boundaries of the United States, due process requires only that a defendant in a federal suit have minimum contacts with the United States, "the sovereign that created the court."

Id. 651 F.2d at 256 (quoting Stafford v. Briggs, 444 U.S. 527, 554, 100 S.Ct. 774, 789, 63 L.Ed.2d 1 (1980) (Stewart, J., dissenting)).¹ The Eleventh Circuit has only addressed the national contacts issue once, stating in Delong, 840 F.2d at 847, that "if a federal statute containing a service of process provision is applicable to the case, service on an out-of-state defendant is made according to its terms." Id. at 847. Unfortunately, the Jim Walter and Delong decisions have done little to clarify the Eleventh Circuit's position on the national contacts test. Based on the Supreme Court's decision in Insurance Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 102 S.Ct. 2099, 72 L.Ed.2d 492 (1982), the Jim Walter decision became questionable precedent only a year after it was rendered. In Jim Walter the Fifth Circuit had based its personal jurisdiction inquiries on sovereignty instead of due process. Id. 651 F.2d at 256. The Supreme Court found this general approach to be misguided when it stated in Ireland that, unlike the requirement of subject matter jurisdiction:

The requirement that a court have personal jurisdiction flows not from Art. III, but from the Due Process Clause.... It represents a restriction on judicial power not as a matter of sovereignty, but as a matter of individual liberty.

Omni, 484 U.S. at 104, 108 S.Ct. at 409 (quoting Ireland, 456 U.S. at 702, 102 S.Ct. at 2104). In light of Ireland, this Court does not feel constrained by the holding in Jim Walter.

Likewise, the Delong decision does not offer much in the way of substantive guidance. It simply provides that if a controlling federal statute contains a nationwide service of process provision, then the provision should be followed for the purposes of serving process. Delong, 840 F.2d at 847. The decision does not speak to how personal jurisdiction is established in the nationwide service of process context. Consequently, this Court has relative freedom to explore this area.

C. The Duckworth Test

This Court is not new to this issue; in Duckworth v. Medical Electro-Therapeutics, Inc., 768 F.Supp. 822 (S.D.Ga.1991), this Court tentatively embraced the national contacts test and then fashioned a two prong test to ensure that due process was being served in making such personal jurisdiction inquiries. Id. at 830. This test was based primarily on one developed by the U.S. District Court for the Eastern District of Pennsylvania in Oxford First Corp. v. PNC Liquidating Corp., 372 F.Supp. 191, 203-204 (E.D.Pa.1974). While Duckworth has not been followed, other jurisdictions have adopted an Oxford type analysis. See U.S. Telecom, Inc. v. Hubert, 678 F.Supp. 1500, 1508 (D.Kan.1987).

To survive the first prong of the Duckworth test, the plaintiff only needs to demonstrate that the defendant has sufficient contacts with the United States to ensure proper...