The opinion
IN THE UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF ARKANSAS
CENTRAL DIVISION
BRIAN WHITLEY, Individually and
on Behalf of All Others Similarly Situated PLAINTIFF
No. 4:16-cv-624-DPM
BAPTIST HEALTH; BAPTIST HEALTH
HOSPITALS; DIAMOND RISK
INSURANCE LLC; ADMIRAL
INSURANCE COMPANY; ADMIRAL
INDEMNITY COMPANY; IRONSHORE
INDEMNITY, INC.; and IRONSHORE
SPECIALTY INSURANCE CO. DEFENDANTS
ORDER
After more than four years of vigorous litigation, the parties agree
that the best way to move this case to some kind of resolution is an
interlocutory appeal. They seek to do so by way of certification
pursuant to either Federal Rule of Civil Procedure 54(b), or 28 U.S.C. §
1292(b), or both. Piecemeal appeals, though, are and should be
disfavored. The question is whether this case qualifies as one of those
rare instances where the many benefits of having one appeal after final
judgment are outweighed by other considerations.
First, it’s useful to trace how we got here. Whitley sued two
Baptist entities and six insurors. He pleaded four claims. The dispute
is about how Baptist collects for services when a third party may be
liable for an insured patient’s injuries—a process that implicates
Baptist’s provider agreements and dealings with patients’ insurors,
involves medical liens and a bill collector (RevClaims), and touches
Baptist’s dealings with its patients. The medical liens complicate
litigation by the patients against the third parties who caused their
injuries. Whitley named Baptist’s insurors pursuant to Arkansas’s
direct action statute, ARK. CODE ANN. § 23-79-210, as a hedge against
Baptist asserting charitable immunity, which the hospital did. There
was an interlocutory appeal on a CAFA issue. After remand, the Court
rejected a standing challenge. The parties did discovery. Thereafter,
Baptist sought summary judgment and Whitley sought class
certification. The Court denied summary judgment to the hospital,
dismissed two of Whitley’s claims without prejudice as duplicative,
and certified the class. The Court of Appeals declined to hear a second
interlocutory appeal under Federal Rule of Civil Procedure 23(f).
After more discovery about class members, and much wrangling
about who was in the class, notice, and the claim form, the Court alerted
the parties that it was considering whether a trial was really needed on
liability for the two remaining claims (violation of Arkansas’s
Deceptive Trade Practices Act and breach of the provider agreements
on a third-party beneficiary theory). After hearing from the parties, the
Court concluded that the class—as substantially narrowed—was
entitled to judgment as a matter of law on liability. Doc. 243.
Unresolved matters include completing a claims process for class
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members damaged by delay from not being able to settle their claims
against tortfeasors because of Baptist’s medical liens, doing some clean-
up discovery, and maybe having a trial on damages for class members
who had to pay money to clear liens.
What about the Whitley class’s direct claim against Baptist’s
insurors? There are unresolved issues there, too. One insurer was
dismissed by stipulation. Doc. 217 & 218. Four others have never
answered or otherwise appeared. The docket contains no record of
service on them. The Court therefore dismisses Admiral Insurance
Company, Admiral Indemnity Company, Ironshore Indemnity, Inc.,
and Ironshore Specialty Insurance Company without prejudice. FED.
R. Civ. P. 4(m).
That leaves one insurer, Diamond Risk Insurance. This company
is represented by the same lawyers who represent the Baptist entities.
And Diamond Risk joins in the request for an interlocutory appeal.
Neither Baptist, Diamond Risk, nor Whitley has ever sought
adjudication, on motion or by trial, of Baptist’s charitable immunity.
Davis Nursing Association v. Neal, 2019 Ark. 91, at *5-8, 570 S.W.3d 457,
460-62; Progressive Eldercare Services-Chicot, Inc. v. Lang, 2020 Ark. App.
186 at **1, 2020 WL 1283446, at *2-3. Whitley’s unresolved claim
against Diamond Risk, and Baptist’s related defense, is a “who pays”
issue. If the hospital enjoys immunity as a charity, Diamond Risk must
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pay to the extent coverage exists. If there’s no immunity, Baptist must
pay. Neal, 2019 Ark. at *5-8; Lang, 2020 Ark. App. 186 at **1.
One other loose end. In its motion for interlocutory appeal,
Baptist mentions its defense that RevClaims (the bill collector involved
in the medical liens) was an independent contractor. The point is that
RevClaims’s status might relieve Baptist from any lien-related liability.
This issue has been dormant. Whitley makes no claim against
RevClaims.
To summarize: the case involved multiple parties; Whitley
pleaded his case as one involving multiple claims; the Court has
resolved some claims (partly or completely) against some parties, albeit
mistakenly from the perspective of both Whitley and Baptist; Whitley’s
direct action against Diamond Risk, which rises or falls depending on
Baptist’s unresolved charitable immunity, has not been decided.
Now to the second issue: does this odd constellation of
circumstances satisfy Rule 54(b)? Dean v. County of Gage, Nebraska, 807
F.3d 931, 937-39 (8th Cir. 2015). The Court has wrestled with this
question, finding it more complicated than it appears. The unserved
insurors don’t matter because they were never actually parties.
Without them, there were still multiple parties — the two Baptist entities
and Diamond Risk. At first blush, there seem to be multiple claims, too.
The parties do not seek certification of the Court’s Order dismissing as
duplicative Whitley’s claims for unjust enrichment or tortious
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interference. His claims for breach of the provider agreements (as a
third party beneficiary) and violation of Arkansas’s Deceptive Trade
Practices Act are pleaded as separate claims, one at common law and
one statutory. They share a factual basis, though that’s not
determinative. The difficulty is that they’re alternative routes to the
same place. Whitley can’t recover on both. Then there is the direct
action against Diamond Risk. It is premised on Baptist’s liability. It has
additional components: coverage, and the existence of charitable
immunity. ARK. CODE ANN. § 23-79-210; Neal, supra. As noted, neither
component has been ventilated. Recovery is mutually exclusive—
either Baptist or Diamond Risk is on the hook, but not both. Whether
multiple claims exist for purposes of Rule 54(b) is a famously vexed
question. 10 CHARLES ALAN WRIGHT, ARTHUR R. MILLER & MARY KAY
KANE, FEDERAL PRACTICE AND PROCEDURE § 2657 (4TH ED. 2014). The
Court need not answer it on this tangled record, however, because even
assuming the presence of multiple claims, there is a deeper problem in
the parties’ request.
There is no final judgment lurking here for the Court to certify.
The Court’s ruling on liability did not resolve whether Baptist or
Diamond Risk had to pay Whitley. This is not the usual case where the
parties want to appeal on a claim or claims that the Court has
completely rejected while other claims pend. E.g., Dean, 807 F.3d at
937-39. It is not a case where the Court has decided for the plaintiff on
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claim for a sum certain, but other claims remain, as well as a counter-
claim that might entitle the defendant to an offset. E.¢., Curtiss-Wright
Corp. v. General Electric Co., 446 U.S. 1, 8-9 (1980). Instead, this Court's
ruling was interlocutory. Charitable immunity, and with it the
question of who bears actual liability, remains to be resolved. Then, of
course, there are the hanging damages issues. The decision that there
is liability does not completely dispose of the ADTPA and breach
claims because the amount of liability is undetermined. Assume away
all the multiplicity issues and consider a one-claim suit by Whitley
solely against Baptist. Would the Court's ruling on liability alone be a
final one that resolved the case? The question answers itself. “The
District Court cannot, in the exercise of its discretion, treat as ‘final’ that
which is not ‘final’ within the meaning of § 1291. But the District Court
may, by the exercise of its discretion in the interest of sound judicial
administration, release for appeal final decisions upon one or more, but
less than all, claims in multiple claims actions.” Sears, Roebuck & Co. v.
Mackey, 351 U.S. 427, 437 (1956) (emphasis original). The Court's ruling
on liability leaves too many issues open to qualify as a final decision
certifiable under Rule 54(b).
Third, notwithstanding the lack of finality, the last question is
whether this is an exceptional case that satisfies § 1292(b)’s strict
criteria. Interlocutory appeals are not favorites of the law. White v. Nix,
43 F.3d 374, 377 (8th Cir. 1994). The finality principle embodied in 28
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U.S.C. § 1921 is bedrock. The Court of Appeals has plenty to do
handling appeals from final judgments and other obligatory matters. I
don’t recall ever certifying an Order for interlocutory appeal. But,
having weighed all the material circumstances, I conclude that these
parties have carried the heavy burden imposed by the statute.
What exactly constitutes acceptance of payment under the
provider agreements, against the backdrop of Arkansas’s recoupment
statute, ARK. CODE ANN. § 23-63-1801, et seq., and its medical lien
statute, ARK. CODE ANN. § 18-46-101, et seq., is the deep legal issue in
this case. In § 1292(b)’s word, it is controlling. The answer determines
whether Whitley and the class have ADTPA and breach claims. The
answer determines class membership. And the answer drives the
recoverable damages. Unlike the discovery issue in White, the parties’
core dispute is not a matter committed to this Court’s discretion. 43
F.3d at 377-78. It is a pure question of law about the interpretation of
texts—the provider agreements and the statutes. The nature of the
issue weighs for certification.
There is a substantial ground for difference of opinion about the
answer. The question is novel. No Arkansas or Eighth Circuit cases are
directly on point. “However, substantial ground for difference of
opinion does not exist merely because there is a dearth of cases.” White,
43 F.3d at 378; see also Union County, Iowa v. Piper Jaffray & Co., Inc., 525
F.3d 643, 647 (8th Cir. 2008) (per curiam). The novelty in the White case
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was more apparent than real because there was a closely analogous
body of settled case law. 43 F.3d at 378. And in the Union County case,
clearly controlling Iowa law existed. 525 F.3d at 646-47. Not so here.
There are, to be sure, some helpful Arkansas cases, but none answer the
acceptance/lien/recoupment question directly. The parties’ vigorous
and long-standing back and forth on the core issue makes the point:
strong arguments exist on each side. This record shows novelty plus.
While this statutory factor does not weigh as heavily for certification as
it would were there some deep split of circuit or Arkansas authority,
the Court concludes that the parties have satisfied it.
Last, the Court is convinced that certification will materially
advance the ultimate termination of this case. White, 43 F.3d at 378. The
parties’ dispute is more than four years old. It is not too strong to say
that the acceptance/lien/recoupment issue is the case. Once it is
decided definitively, the class and damages issues are decided, and the
shape of the rest of the case will be fixed. While there may be another
appeal when all is said and done, for example on the charitable
immunity issue, the core issue will not resurface. In this factor, the
statute’s concern is the endgame — the ultimate termination of the case.
28 U.S.C. § 1292(b). Whether they get there by finishing up the
litigation or by settlement, the parties need a ruling on the
acceptance/lien/recoupment issue. That is why this Court decided it.
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And that is why an early evaluation of that decision betore the class
claims process, and any trial, makes good sense.
Motions, Doc. 263 & 264, partly granted and partly denied. The
Court’s Orders granting judgment as a matter of law on liability in
Whitley’s favor and denying reconsideration, Doc. 243 & 260, are
certified for the Court of Appeals to decide whether to accept a
§ 1292(b) interlocutory appeal.
So Ordered.
arte fp
D.P. Marshaii Jr.
United States District Judge
27 Jonvery Zon)
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