The opinion
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
Dr. Jeffrey Carey, et al.,
Plaintiffs, Case No. 2:23-cv-3774
Vv. Judge Michael H. Watson
Whitehall Surgery Center, Ltd. Magistrate Judge Deavers
d/b/a Pickerington Surgery Center,
et al.,
Defendants.
OPINION AND ORDER
On review of the parties’ filings and the relevant caselaw, the Court has
discovered that it lacks subject-matter jurisdiction over this case. Accordingly, for
the reasons explained more fully below, the case is REMANDED to the Fairfield
County Court of Common Pleas.
I. FACTS'
Dr. Jeffrey Carey, Dr. William Gianakopoulos, and Dr. Rashmi Patel
(collectively, “Plaintiffs”) are licensed physicians and owners of “Physician
Member Units” of Whitehall Surgery Center, Ltd. (the “Center”). Compl. J] 1-3,
ECF No. 7. The Center is an ambulatory surgery center in Pickerington, Ohio.
ld. 44. Dr. Steven P. Balaloski, Dr. David Kim, Dr. Rodney Comisar, Dr. Michael
Ezzie, Dr. Joel Shaw, Todd Dougherty, and OhioHealth Corporation (collectively
' Because the case is at the pleadings stage, the Court accepts Plaintiff's factual
allegations as true.
with the Center, “Defendants”) also own membership units in the Center or are
on the Center's Board of Managers (the “Board”). /d. [ff] 5-12.
In November 2023, the Center told its members, including Plaintiffs, that
the Board recommended removing the Urology and Podiatry practices and asked
the members to vote in approval of that change (the “Vote”). /d. ] 39. Plaintiffs
believe that removing those Practices would force Plaintiffs to violate the federal
Anti-Kickback Statute (the “Statute”). /d. J] 29, 34.
Based on these facts, Plaintiffs asserted three claims in the Fairfield
County Court of Common Pleas: (1) “declaratory judgment and injunctive relief’;
(2) breach of fiduciary duty; (3) “members’ right to business records.”2 /d.
11 44-66. Based on their Complaint, the state court issued a temporary
restraining order (“TRO”) against Defendants which, among other things, paused
the Vote. ECF No. 1-10.
Defendants promptly removed to this Court and moved to vacate the TRO.
ECF Nos. 1 & 3. Defendants removed this case on the basis of federal question
jurisdiction and referenced the “substantial federal question” standard outlined by
Grable & Sons Metal Prod., Inc. v. Darue Eng’g & Mfg., 545 U.S. 308 (2005) and
subsequent cases. See Notice of Removal J 3, ECF No. 3.
2 The Court is skeptical that all of these “claims” are properly considered separate
causes of action, rather than remedies.
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Il. STANDARD OF REVIEW
It is axiomatic that “[f]lederal courts are courts of limited jurisdiction.”
Freeland v. Liberty Mut. Fire Ins. Co., 632 F.3d 250, 255 (6th Cir. 2011) (internal
quotation marks and citation omitted). “[F]ederal courts have a duty to consider
their subject matter jurisdiction in regard to every case and may raise the issue
sua sponte.” Answers in Genesis of Ky., Inc. v. Creation Ministries Int’l, Ltd., 556
F.3d 459, 465 (6th Cir. 2009) (citing cases). Because this case is at the
pleadings stage, the Court examines its subject-matter jurisdiction through the
lens of Rule 12(b)(1).
Federal Rule of Civil Procedure 12(b)(1) provides for dismissal when the
Court lacks subject matter jurisdiction. “Motions to dismiss for lack of subject
matter jurisdiction fall into two general categories: facial attacks and factual
attacks.” United States v. Ritchie, 15 F.3d 592, 598 (6th Cir. 1994). A facial
attack under Rule 12(b)(1) “is a challenge to the sufficiency of the pleading itself,”
and the trial court therefore takes the allegations of the complaint as true. /d. To
survive a facial attack, the complaint must contain a “short and plain statement of
the grounds” for jurisdiction. Rote v. Ze! Custom Mfg. LLC, 816 F.3d 383, 387
(6th Cir. 2016) (quoting Fed. R. Civ. P. 8(a)). A factual attack is a “challenge to
the factual existence of subject matter jurisdiction.” Ritchie, 15 F.3d at 598. No
“presumptive truthfulness applies to the factual allegations.” /d. When
examining a factual attack under Rule 12(b)(1), “the court can actually weigh
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evidence to confirm the existence of the factual predicates for subject-matter
jurisdiction.” Glob. Tech., Inc. v. Yubei (XinXiang) Power Steering Sys. Co., 807
F.3d 806, 810 (6th Cir. 2015) (internal quotation marks and citation omitted).
lll. ANALYSIS
Traditionally, there are two bases for a federal court’s jurisdiction: federal-
question jurisdiction and diversity-of-citizenship. A Court has federal-question
jurisdiction under 28 U.S.C. § 1331 for cases “arising under the Constitution,
laws, or treaties of the United States.” 28 U.S.C. § 1331. Diversity-of-citizenship
jurisdiction requires that no plaintiff and no defendant be citizens of the same
state, and the amount in controversy must be $75,000 or greater. 28 U.S.C.
§ 1332.
Working backwards, there is no diversity-of-citizenship jurisdiction here
because at least one Plaintiff and at least one Defendant are citizens of Ohio.
See 28 U.S.C. § 1332; see generally, Compl., ECF No. 7.
Thus, the Court considers whether there is federal-question jurisdiction.
Only Plaintiffs’ “claim” for declaratory judgment and injunctive relief could
possibly implicate federal law and, therefore, the Court focuses its federal-
question analysis on that claim.
For purposes of federal-question jurisdiction, a claim “arises under federal
law” if the cause of action is (1) “created by a federal statute”; or (2) “presents a
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substantial question of federal law.” Miller v. Bruenger, 949 F.3d 986, 991 (6th
Cir. 2020). The Court addresses each of these bases, in turn.
A. Was the Cause of Action Created by a Federal Statute?
Generally, to decide whether “a plaintiff's case arises under federal law,
federal courts look at the face of the plaintiff's ‘well-pleaded complaint.”
Massamore v. RBRC, Inc., No. 22-5381, 2023 WL 4505074, at *1 (6th Cir. July 6,
2023) (citation omitted). For declaratory judgment actions, like this case,
however, some “fine-tuning of the well-pleaded complaint rule is necessary[.]’
Miller, 949 F.3d at 990 (6th Cir. 2020). In such cases, courts “ask whether,
absent the availability of declaratory relief, the case could have been brought in
federal court.” /d. (cleaned up). To do so, courts “look to the anticipated claim
underlying the request for declaratory relief’ and “determine if the face of that
claim could arise under federal law.” /d. at 991 (citation omitted).
Here, it is not entirely clear what cause of action underlies Plaintiff's
declaratory judgment claim. Distilled, Plaintiffs ask the Court to enjoin the Vote
because, in Plaintiffs’ view, the Vote (and/or its outcome) would violate the Anti-
Kickback Statute. However, Plaintiffs have insisted they are not bringing an Anti-
Kickback Claim.
Indeed, the Statute itself “does not provide for a private right of action.”
Concord EMS v. Oakwood Healthcare, Inc., No. 14-CV-13012, 2015 WL
13036949, at *3 (E.D. Mich. Mar. 25, 2015) (citing cases). Plaintiffs argue that
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the Statute and the False Claims Act work together to create a private right of
action in the form of a qui tam action. Mot. 9-14, ECF No. 10 (citing cases).
Although, at first glance, this argument may seem persuasive, the facts of this
case undercut Plaintiffs’ position. Plaintiffs are clearly not bringing a qui tam
action. Nor could they: much of Plaintiffs’ argument is that they fear a third party
will bring a qui tam action against them. The person who allegedly violates a
statute cannot bring a qui tam action against himself. It cannot be that simply
because someone e/se might, hypothetically, bring a qui tam action against
Plaintiffs, Plaintiffs’ cause of action is created by that same qui tam action. In
sum, Plaintiffs’ claim is not created by a federal statute.
On the whole, Plaintiffs’ underlying claim is a breach-of-contract claim. In
essence, Plaintiffs’ claim is that, through the operating agreement, they have a
contract with Defendants, and Defendants plan to breach the contract by forcing
Plaintiffs out through an illegal vote (or at least, a vote to do something illegal).
Thus, Plaintiffs’ underlying claim is a breach-of-contract claim, which is not
created by a federal statute.
B. Does the Cause of Action Present a Substantial Question of Federal
Law?
State-law claims that “implicate a ‘substantial question of federal law’ also
open the door into federal court.” Est. of Cornell, 908 F.3d at 1014 (citation
omitted). In determining whether there is a “substantial question of federal law,”
courts consider whether the underlying cause of action:
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(1) ‘necessarily raise[s] a stated federal issue’ that is (2) “disputed and
substantial” and (3) hearable by the federal courts without disturbing
the established federal-state court balance.
Miller, 949 F.3d at 992 (quoting Est. of Cornell, 908 F.3d at 1014). These
considerations are sometimes called the “Grable prongs.” E.g., Est. of Cornell,
908 F.3d at 1014-16.
Applying this test, there is no federal-question jurisdiction here. True, the
first Grable prong favors federal jurisdiction because the Complaint references
the Statute and at least “nominally raise a federal issue.” Est. of Cornell, 908
F.3d at 1015. The other Gable prongs, however, weigh strongly against federal
jurisdiction.
Consider the second Grable prong. To satisfy that prong, “the federal
issue must not only be contested but also substantial.” Miller, 949 F.3d at 993.
To determine “substantiality,” courts consider the following factors:
(1) whether the case includes a federal agency, and particularly,
whether the agency’s compliance with the federal statute is in dispute;
(2) whether the federal question is important (i.e. not trivial);
(3 whether a decision on the federal question will resolve the case (i.e.
the federal question is not merely incidental to the outcome); and
(4) whether a decision on the federal question will control many other
cases (i.e. the issue is not anomalous or isolated).
Est. of Cornell, 908 F.3d at 1015 (cleaned up).
All of these factors weigh against substantiality. First, no federal agency is
part of this action. Second, although the United States certainly has an interest
in enforcing the Statute generally, this particular question (whether a physician-
owned medical practice can make decisions that favor more profitable divisions
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of the practice) is not the sort of important federal interest that warrants federal
jurisdiction. See Grable, 545 U.S. at 315 (2005) (concluding there was a
“substantial question of federal law” in part because the government has a
“strong interest” in the “prompt and certain collection of delinquent taxes”
(quotation marks and citation omitted)). As to the third factor, a decision on
whether the Vote would violate the Statute would not dispose of the case
because Plaintiffs bring other claims unrelated to the Statute. See generally,
Compl., ECF No. 7. Finally, to the extent the case raises a federal issue on the
interpretation of the Statute, it “does not do so for a broad range of parties;
rather, the inquiry would be fact-bound and situation-specific.” Miller, 949 F.3d at
993 (quotation marks and citations omitted). In sum, the federal question
intertwined with Plaintiffs’ claim is not substantial.
Lastly, the third Grable prong (whether the case is hearable by the federal
courts without disturbing the established federal-state court balance) weighs
against federal jurisdiction. First, the Statute contains no private right of action.
See Mikulski v. Centerior Energy Corp., 501 F.3d 555, 573 (6th Cir. 2007) (en
banc) (explaining that although “the absence of a cause-of-action provision is not
determinative, this certainly provides a starting point for this part of the analysis”
(citing cases)). Second, Plaintiffs’ claim is a contract claim, which is traditionally
a state-law claim. See Harris v. Ambrozic, No. 5:05CV1681, 2005 WL 1593921,
at *1 (N.D. Ohio July 6, 2005) (observing that “breach of contract. . . [is a] state
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law claim[]”). “[G]ranting federal jurisdiction here would risk swinging open the
federal courtroom doors to any [contractual] dispute” that simply raises the
buzzwords “federal law.” Miller, 949 F.3d at 994.
At bottom, the Grable prongs weigh against federal jurisdiction.
IV. CONCLUSION
For these reasons, the Court lacks jurisdiction over the case. Accordingly,
the case is remanded to the Fairfield County Court of Common pleas.
The Clerk shall terminate all pending motions and close the case.
IT IS SO ORDERED. , □
MICHAEL H. WATSON, JUDGE
UNITED STATES DISTRICT COURT
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