Price v. United States Of America

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF OHIO

EASTERN DIVISION

Raymond Price,

Plaintiff, Case No. 2:18-cv-949

v. Judge Sarah D. Morrison

Magistrate Judge Chelsey M. Vascura

United States of America, et al.,

Defendants.

OPINION AND ORDER

This matter is before the Court on the United States of America’s Motion to Dismiss

Plaintiff’s Amended Complaint for Lack of Subject Matter Jurisdiction. (ECF No. 27.) Plaintiff

filed a Memorandum in Opposition to the Motion (ECF No. 28), and Defendant filed a Reply

(ECF No. 29). The matter is now ripe for decision.

I. BACKGROUND

The United States has filed a motion to dismiss for lack of subject matter jurisdiction,

mounting both a facial attack and a factual attack. (U.S. Mot. Dismiss, ECF No. 27, at 3–4.) As a

result, all facts alleged in the Amended Complaint are assumed to be true, unless proven

otherwise by the evidence that the United States has proffered. See United States v. Ritchie, 15

F.3d 592, 598 (6th Cir. 1994).

Plaintiff Raymond Price, a veteran, is a patient of the Department of Veterans Affairs

Medical Center in Belmont County, Ohio (“VA-Belmont”). (Amended Compl., ECF No. 25 ¶

35.) The VA-Belmont is a part of the VA-Pittsburgh Health System (“VAPHS”), a health care

system within the VA. (Id. ¶¶ 2–3.) On March 29, 2015, the VA entered into a contract with

Ambulatory Care Solutions, LLC (“ACS”), to provide primary care services at the VA-Belmont

(the “Contract”). (U.S. Mot. Dismiss Ex. A, ECF No. 27-1, at 1, 9–10.) ACS was the service

provider at the VA-Belmont during the relevant time period.1 (U.S. Mot. Dismiss Ex. B, ECF

No. 27-2, at 1.)

Pursuant to the Contract, ACS was responsible for “comply[ing] with all relevant VA

policies and procedures, including those related to quality, patient safety and performance . . . .”

(ECF No. 27-1, at 7.) These policies and procedures included VHA Directive 2009-019 and

VHA Directive 1088 (collectively, the “Directives”), which govern the transmission of results

for diagnostic tests at VA clinics. (Amended Compl. Exs. 2, 4, ECF Nos. 25-2, 25-4).

On October 2, 2015, Mr. Price had a blood test at the VA-Belmont. (ECF No. 25, ¶¶ 37,

40, 43.) Among the laboratory tests run on Mr. Price’s blood was a test to check his Prostate-

Specific Antigen (“PSA”) levels. (Id. ¶¶ 37, 44.) PSA is a protein produced by the prostate, and

elevated levels of PSA (above four ng/ml) indicate a risk of prostate cancer. (Id. ¶ 37.) Mr. Price

left the VA-Belmont without receiving the results of his PSA test. (Id. ¶ 42.)

After his blood draw at the VA-Belmont, Mr. Price’s blood was sent to the laboratory at

VAPHS for testing. (Id. ¶ 43.) The employees at the VAPHS laboratory are federal employees.

(Id. ¶ 97; U.S. Reply to Mot. Dismiss, ECF No. 29, at 6.) VAPHS completed the PSA test later

that same day and, at some point, notated in Mr. Price’s medical record that he had an elevated

PSA level of 61.98 ng/ml. (ECF No. 25, ¶¶ 42, 44.)

On October 9, 2015, VAPHS sent Mr. Price’s October 2, 2015, blood test results to Dr.

Daniel Jones, Mr. Price’s regular primary care provider, who works outside of the VA system.

1 Defendant ACS insists that Ambulatory Care Solutions of Ohio, LLC, was actually the service provider at

VA-Belmont. (Def. Ambulatory Care Solutions Mot. Summ. J., ECF No. 31, at 2.) The Court need not wade into

this dispute at this time but assumes that ACS, as the party to the Contract, was indeed the service provider.

(Id. ¶ 48; Amended Compl. Ex. 5, ECF No. 25-5.) This transmission did not include the results

of the PSA test. (ECF No. 25 ¶ 49.)

Over one year later, on October 28, 2016, Mr. Price had another PSA test. (Id. ¶ 54.) This

test showed that Mr. Price’s PSA level had further increased to 145.36. (Id.) On November 16,

2016, Mr. Price visited the VA-Belmont where he learned for the first time that his PSA levels

were elevated. (Id. ¶¶ 55, 58.)

Shortly after Mr. Price learned this information, he sought treatment from an oncologist,

Dr. Gregory Merrick. (Id. ¶ 60.) Dr. Merrick diagnosed Mr. Price with advanced prostate cancer.

(Id.) According to Dr. Russell Pachynski, another oncologist, Mr. Price’s prostate cancer

“progress[ed] and spread to a substantial and significant degree” between the time of the October

2, 2015, PSA test and the October 28, 2016, test. (Amended Compl. Ex. 7, ECF No. 25-7 ¶ 6.)

On November 15, 2017, Mr. Price submitted an administrative claim of medical

malpractice to the VA. (ECF No. 27, ¶ 66.) On June 13, 2018, the VA denied Mr. Price’s claim

on the grounds that the relevant VA-Belmont employees were contract employees, precluding

liability for the United States. (ECF No. 27-2.) On August 23, 2018, Mr. Price filed a Complaint

against the United States and against ACS. (Compl., ECF No. 1.) On March 7, 2019, Mr. Price

filed an Amended Complaint. (ECF No. 25.) All three Counts of the Amended Complaint plead

allegations of negligence, against ACS in Count One and against the United States, on behalf of

the VA-Belmont, in Count Two and, on behalf of VAPHS, in Count Three. (Id. at 21–28.) The

United States has not filed an Answer and has instead moved to dismiss Counts Two and Three

for lack of subject matter jurisdiction on the grounds of sovereign immunity. (ECF No. 27.)

II. STANDARD OF REVIEW

Federal Rule of Civil Procedure 12(b)(1) provides for dismissal when the court lacks

subject matter jurisdiction. Without subject matter jurisdiction, a federal court lacks authority to

hear a case. Thornton v. Sw. Detroit Hosp., 895 F.2d 1131, 1133 (6th Cir. 1990). Motions to

dismiss for lack of subject matter jurisdiction fall into two general categories: facial attacks and

factual attacks. Ritchie, 15 F.3d at 598. A facial attack under Rule 12(b)(1) “questions merely the

sufficiency of the pleading[,]” and the trial court therefore takes the allegations of the complaint

as true. Wayside Church v. Van Buren Cty., 847 F.3d 812, 816 (6th Cir. 2017) (internal quotation

marks omitted). To survive a facial attack, the complaint must contain a short and plain

statement of the grounds for jurisdiction. Rote v. Zel Custom Mfg. LLC, 816 F.3d 383, 387 (6th

Cir. 2016). A factual attack is a challenge to the factual existence of subject matter jurisdiction,

in which case no presumptive truthfulness applies to the factual allegations. Ritchie, 15 F.3d at

598. In the context of a factual attack, a reviewing court may weigh the evidence in order to

satisfy itself as to the existence of its power to hear the case. Id.

When subject matter jurisdiction is challenged, “the plaintiff has the burden of proving

jurisdiction in order to survive the motion.” Moir v. Greater Cleveland Reg’l Transit Auth., 895

F.2d 266, 269 (6th Cir. 1990).

III. ANALYSIS

The United States has filed a Motion to Dismiss the Amended Complaint for Lack of

Subject Matter Jurisdiction on the grounds of sovereign immunity. In support of this argument,

the United States has mounted both a facial and factual attack.

A. Count Two

The United States, as sovereign, is by default immune from suit. United States v.

Mitchell, 445 U.S. 535, 538 (1980). In some circumstances, it has waived its immunity and has

consented to be sued. But statutory waivers must be “unequivocally expressed” and must clearly

demonstrate congressional intent to waive sovereign immunity. Id. (internal quotation marks

omitted).

The United States has waived its sovereign immunity to tort suits via the Federal Tort

Claims Act (“FTCA”), although this waiver is subject to various exceptions. Adkisson v. Jacobs

Eng’g Grp., 790 F.3d 641, 645 (6th Cir. 2015). One such exception is for contractors. The FTCA

only allows for liability for torts caused by “[e]mployee[s] of the Government,” who are defined,

as relevant here, as working for a “federal agency.” Logue v. United States, 412 U.S. 521, 525–

26 (1973); accord 28 U.S.C. § 2671. The definition specifically excludes contract employees.

Logue, 412 U.S. at 526; accord 28 U.S.C. § 2671. In essence, the FTCA adopted the vicarious

liability rules of the common law, that an employer is liable for the negligent acts of its

employees but not those of its contractors. Logue, 412 U.S. at 526–27. As with all waivers of

sovereign immunity, this exception must be given “due regard.” United States v. Orleans, 425

U.S. 807, 814 (1976).

The United States’ argument that the FTCA does not establish a cause of action for the

negligence claim in Count Two is as follows: The employees at the VA-Belmont were contract

employees and not “[e]mployee[s] of the Government.” (ECF No. 27, at 5.) Because they are not

“[e]mployee[s] of the Government,” there is no waiver of sovereign immunity under the FTCA.

Mr. Price argues in response that the VA (a “federal agency”) exercised such substantial

control over the VA-Belmont that the employees at the VA-Belmont were, for all intents and

purposes, federal employees. (Resp. to Mot. Dismiss ECF No. 28, at 20.) This argument is not

persuasive.

The Contract outlines each party’s responsibilities. Notably, the Contract specifies that

while “[t]he Government may evaluate the quality of professional and administrative services

provided,” it “retains no control over the medical, professional aspects of services rendered (e.g.,

professional judgments, diagnosis for specific medical treatment).” (ECF No. 27-1 ¶ B.2.45.)

The Contract further states that “[c]ontractor employees are not covered by the Federal Tort

Claims Act[,]” id. ¶ B.2.45.7, language that would be complete surplusage if the Contract were

not designed to set up a contractor/contract employee relationship.

Mr. Price tries to avoid the language of the contract by arguing that these “two

paragraphs should [not] eviscerate the balance of the undisputed evidence of the United States’

control over” ACS. (ECF No. 28, at 20.) However, contracts are governed by their language.

Dottore v. Huntington Nat’l Bank, 480 F. App’x 351, 352 (6th Cir. 2012) (“[T]he intent of the

parties to a contract is presumed to reside in the language they chose to employ in the

agreement.” (quoting Kelly v. Med. Life Ins. Co., 509 N.E.2d 411, 413 (Ohio 1987))); Moser v.

United States, No. 1:02-CV-302, 2006 WL 1476202, at *7 (S.D. Ohio May 25, 2006) (finding

that VA contract expressly intended to create an independent contractor relationship). The

Contract is clear that the United States and ACS established a contractor/contract employee

relationship.

The Government argues that this is the end of the inquiry. Mr. Price, however, argues that

the contractual language is inconsistent regarding the amount of control that the United States

can exert over ACS. (ECF No. 28, at 21–24.) In making this argument, Mr. Price highlights all of

the obligations that the VA requires of ACS in the Contract. (Id. at 11-12.) He also points out

that the VA has the right to audit—and has in fact audited—the VA-Belmont. (Id. at 13-14.) Mr.

Price then uses these contractual provisions to argue that the Government exercised such

pervasive control over ACS that ACS employees should be considered to be “[e]mployee[s] of

the Government” for purposes of the FTCA.

It is not surprising that the Government wishes to hold its contractors on a tight leash, and

it is permitted to do so. The Government has a right to hold its contractors to exacting standards

and to ensure the quality of those with which it does business. Orleans, 425 U.S. at 816.

However, such standards do not alter the character of the business relationship. Id.

The requirements here are analogous to those in Logue, where the Government mandated

standards of treatment for federal prisoners in the county jail with which it contracted, “including

methods of discipline, rules for communicating with attorneys, visitation privileges, mail,

medical services, and employment.” 412 U.S. at 529–30. The Government also had the right to

enter the jail to inspect its conditions and to monitor contract compliance. Id. at 530. What the

Logue Court found most important, however, was that the Government had “no authority to

physically supervise the conduct of the jail’s employees[.]” Id. That is the key. “[E]mployees of

a contract with the Government[] whose physical performance is not subject to governmental

supervision” are not considered to be “acting on behalf” of a federal agency and are not

encompassed by the FTCA. Id. at 531. As a result, the contract workers at the VA-Belmont can

only be considered to be “[e]mployee[s] of the Government” under the FTCA if their “physical

performance” was “subject to governmental supervision.” It was not. That is exactly what

Paragraph B.2.45 says: “The Government . . . retains no control over the medical, professional

aspects of services rendered . . . .”

Mr. Price argues that the conduct at issue here is not governed by Paragraph B.2.45. He

argues that notification of the PSA test results is so ministerial, particularly given the confines of

the Directives, that it involves no discretion or professional judgment. That parses the language

in Paragraph B.2.45 far too finely. It defies logic to say that reporting blood test results is not

part of the “medical, professional aspects of services rendered.” The Directives govern many of

the aspects of reporting test results, but the requirement that the VA-Belmont employees comply

with the Directives is merely a contractual restriction rather than an example of the Government

monitoring the VA-Belmont employees’ physical performance. A violation of these Directives

may be a breach of the Contract, but it does not change the nature of the relationship between the

Government and ACS.

Finally, Mr. Price cites four cases to support the argument that contractors can sometimes

be “[e]mployee[s] of the Government” under the FTCA. (ECF No. 28, at 22–23.) Two of these

cases are out-of-circuit cases from long before the Supreme Court interpreted the FTCA’s

contractor exception in Logue and Orleans, so they are entitled to no weight. See generally Witt

v. United States, 462 F.2d 1261 (2d Cir. 1972); State of Md., for Use of Pumphrey v. Manor Real

Estate & Tr. Co., 176 F.2d 414 (4th Cir. 1949). The remaining two are district court opinions

involving significantly more governmental intervention than is the case here; in particular, the

Government in those cases had the ability to manage individual doctors’ schedules and

assignments. See Williams v. United States, No. 03 Civ. 9909 (GEL), 2007 WL 951382, at *11–

*12 (S.D.N.Y. Mar. 22, 2007) (noting that Government approved personnel assignments and

controlled doctor’s work hours, vacation time, and daily schedule); Tivoli v. United States, No.

93-CIV-5817-CLB-MDF, 1996 WL 1056005, at *4–*5 (S.D.N.Y. Sept. 27, 1996), aff'd, 164

F.3d 619 (2d Cir. 1998) (finding that Government designated the specific treating physicians

under the contract and controlled their work hours and assignments). There is no evidence that

the Government had the ability to do so here, nor has Mr. Price alleged that it did.

While precedent that closely mirrors these facts is thin, the weight of the precedent that

does exist is heavily on the Government’s side of the argument. See, e.g., Linkous v. United

States, 142 F.3d 271, 276 (5th Cir. 1998) (finding that factors in Restatement (Second) of

Agency tipped in favor of independent contractor status for VA doctor); Carrillo v. United

States, 5 F.3d 1302, 1304 (9th Cir. 1993) (“The circuits are unanimous in holding that a contract

physician is not an employee of the government under the FTCA.” (collecting cases)); Durbin v.

United States, No. 92-6658, 1993 WL 219868, at *1 (6th Cir. June 21, 1993) (per curiam)

(affirming district court’s dismissal of negligence action brought against VA independent

contractor); Moser, 2006 WL 1476202, at *7 (finding that VA contract expressly intended to

create an independent contractor relationship).

Mr. Price has not met his burden to prove that the Court has subject matter jurisdiction

over Count Two. Count Two is, accordingly, dismissed.

B. Count Three

The Amended Complaint makes a series of allegations against VAPHS, an undisputed

“federal agency,” based on its role in the alleged failure to transmit the PSA test results. (ECF

No. 25, at 26–28.) The Government entirely ignores this claim in its Motion to Dismiss but

addresses it in its Reply wherein it argues that VAPHS is not liable for any negligent acts of ACS

and that VAPHS had no duty to communicate test results to Mr. Price. (ECF No. 29, at 6–7.)

Mr. Price alleges in Count Three, at least in part, that VAPHS was negligent with regard

to its own responsibilities based on its role in the PSA testing and based on its supervisory

responsibilities over the VA-Belmont and ACS. (See, e.g., ECF No. 25 ¶ 99.) The Court holds

that, for the same reasons outlined above, it has no subject matter jurisdiction over any claims of

vicarious liability asserted against VAPHS for any negligence by ACS. To the extent that Count

Three alleges such vicarious liability, these aspects of the claim are dismissed for lack of subject

matter jurisdiction. However, based on the waiver of sovereign immunity in the FTCA, because

VAPHS is a “Federal agency” and its employees are “[e]mployee[s] of the Government,” the

Court does have subject matter jurisdiction over any negligence committed by these individuals.

See 28 U.S.C. §§ 2671, 2674–75.

As a result, Mr. Price may pursue his claims under Count Three alleging that VAPHS

was itself negligent either through actions of VAPHS employees surrounding the PSA testing

(and the transmission of the test results) or through VAPHS’s supervision of the employees at

the VA-Belmont, to the extent that it had a responsibility to do so. See, e.g., Brown v. United

States, 486 F.2d 284, 288–89 (8th Cir. 1983) (finding evidence of federal government’s

negligence based on its knowledge of inadequate conditions in county jail housing federal

inmates); Rodriguez v. United States, No. 1:13-CV-01559, 2015 WL 3645716, at *8–11 (N.D.

Ohio June 10, 2015) (denying motion to dismiss where there was evidence that federal

employees failed to take reasonable measures to address known negligence by a contractor).

IV. CONCLUSION

For the reasons set forth above, Defendant’s Motion to Dismiss is GRANTED as to

Count Two and GRANTED IN PART and DENIED IN PART as to Count Three. Count Two

is DISMISSED without prejudice for lack of jurisdiction.

IT IS SO ORDERED.

/s/ Sarah D. Morrison

SARAH D. MORRISON

UNITED STATES DISTRICT JUDGE