Bruce D Serven v. Health Quest Chiropractic Inc

STATE OF MICHIGAN

COURT OF APPEALS

BRUCE D. SERVEN, FOR PUBLICATION

April 6, 2017

Plaintiff-Appellee, 9:00 a.m.

v No. 330983

Genesee Circuit Court

HEALTH QUEST CHIROPRACTIC, INC., LC No. 2014-104032-CK

SILVIO COZZETTO, CHRISTOPHER DEAN,

RANDY WILCOX, MICHIGAN BUREAU OF

HEALTH PROFESSIONS- BOARD OF

CHIROPRACTIC, and QUEST HEALTH

SYSTEMS VI P.L.L.C., d/b/a HEALTH QUEST

OF BURTON,

Defendants,

and

SOLOMON COGAN, THOMAS KLAPP, and

RONALD WILCOX,

Defendants-Appellants.

Before: O’CONNELL, P.J., and GLEICHER and BOONSTRA, JJ.

PER CURIAM.

Bruce Serven is a chiropractor who was disciplined by the Disciplinary Subcommittee of

the Michigan Board of Chiropractic. This Court reversed the subcommittee, holding that its

order lacked legal and factual merit. Serven then filed suit, alleging that the board members

acted with self-interest and improperly penalized him. As to part of Serven’s claims, the circuit

court denied the defendant board members’ motion for summary disposition based on quasi-

judicial immunity and qualified immunity as well as failure to state a claim upon which relief

could be granted. Because the board members were entitled to absolute immunity as quasi-

judicial actors, we reverse and remand for dismissal of Serven’s complaint.

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I. BACKGROUND

This case arises out of State Farm Insurance Company’s retention of Bruce Serven, a

licensed chiropractor, to perform an independent chiropractic examination (ICE) on AE. AE had

been involved in a motor vehicle accident in May 2004, and two years later sought chiropractic

treatment from Health Quest of Burton. Health Quest treated AE approximately three times

weekly. At the time, Health Quest was owned, in part, by Solomon Cogan and Silvio Cozzetto.

Cogan was also the chairman of the Michigan Board of Chiropractic. Defendants Thomas Klapp

and Ronald Wilcox were members of the Michigan Board of Chiropractic Disciplinary

Subcommittee.

Serven conducted a physical examination of AE and elicited his medical history. Serven

concluded that AE was “not currently suffering from any type of musculoskeletal condition of

spinal origin of causal relationship to the [subject] auto accident.” In fact, Serven opined that

AE’s condition was “normal,” negating the need for any further chiropractic services. Serven

further advised State Farm that Health Quest’s services provided to date were not “medically

necessary for the injuries sustained in this accident.” Based in part on this advice, State Farm

denied payment for additional treatment to AE. Health Quest filed suit against State Farm

seeking reimbursement; Serven and Cogan testified against each other during the trial. State

Farm prevailed. Serven alleges that Cogan threatened him, “Obviously I need to see you on a

higher level.”

Shortly thereafter, Cogan’s business partner, Cozzetto, filed a complaint against Serven

with the Michigan Board of Chiropractic. Cozzetto noted that he was sent by his own insurer to

Serven for an ICE following a 2000 car accident. Cozzetto alleged that Serven conducted

chiropractic and orthopedic tests improperly, leading to an inaccurate report and termination of

his insurance benefits. In relation to the current matter, Cozzetto indicated that his associate,

Dennis Borja, had examined and treated AE. Cozzetto accused Serven of improperly rendering

an opinion without reviewing Health Quest’s records and acting outside the scope of his

chiropractic license by considering records from medical care providers. The Attorney General

subsequently filed an administrative complaint against Serven alleging that his behavior

constituted negligence, incompetence, and lack of good moral character under the Public Health

Code. See MCL 333.16221. The lack of good moral character allegation was based on Serven’s

alleged comment during the Board’s investigation that Health Quest “had a track record of

performing unnecessary treatment.” The case was referred to an administrative law judge who

determined that Serven was not negligent, incompetent, or lacking in good moral character and

issued a proposal for a decision to this effect.

The Disciplinary Subcommittee of the Michigan Board of Chiropractic did not adopt the

ALJ’s proposal. At a March 15, 2012 meeting at which Cogan was present, the subcommittee

instead found that Serven was negligent because he had not reviewed Health Quest’s chiropractic

records before issuing his opinion regarding the ICE. In addition, the subcommittee determined

that it was “quite likely” that Serven made the comment that Health Quest “had a track record of

performing unnecessary treatment,” representing a lack of good moral character. The Board

placed Serven on probation for one year. Serven appealed the disciplinary subcommittee’s

decision.

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This Court held that the disciplinary subcommittee erred, reversed the decision, and

remanded with instructions to expunge Serven’s record. Bureau of Health Professions v Serven,

303 Mich App 305; 842 NW2d 561 (2013). We found the Board’s conclusion that Serven was

negligent legally unsound. Specifically, as an independent chiropractic examiner, Serven owed a

duty to State Farm to gather information and provide advice, a duty which Serven fulfilled.

Serven’s only duty to AE was to not cause physical harm, and there was no allegation Serven

had breached that duty. And Serven owed no duty to Health Quest. Id. at 309-310. This Court

also rejected the subcommittee’s conclusion that Serven’s conduct amounted to a lack of good

moral character. Serven’s alleged comment regarding Health Quest during the Board’s

investigation was an “attempt[] to be candid” and was not publicized further than necessary. Id.

at 310-311.

Thereafter, Serven filed this lawsuit against Cogan, Klapp, and Wilcox in their individual

capacities, alleging claims of malicious prosecution, tortious interference with Serven’s

advantageous business relationships, abuse of process, and violations of Serven’s due process

and equal protection rights.1 Defendants moved for summary disposition pursuant to MCR

2.116(C)(6), (C)(7) and (C)(8). The circuit court granted defendants’ motion with regard to the

constitutional and malicious prosecution claims but denied their motion with regard to Serven’s

claims for abuse of process and tortious interference. Defendants appeal, contending that the

circuit court should have dismissed these claims as well.

II. QUASI-JUDICIAL IMMUNITY

Defendants argue that they are entitled to quasi-judicial immunity because they are part

of the Michigan Board of Chiropractic. Summary disposition is appropriate under MCR

2.116(C)(7) where “[e]ntry of judgment, dismissal of the action, or other relief is appropriate

because of . . . immunity granted by law[.]” We review de novo a lower court’s summary

disposition ruling. Maiden v Rozwood, 461 Mich 109, 119; 597 NW2d 817 (1999). “A party

may support a motion under MCR 2.116(C)(7) by affidavits, depositions, admissions, or other

documentary evidence,” which is otherwise admissible. Id. We must review this evidence “in

the light most favorable to the nonmoving party.” Denhof v Challa, 311 Mich App 499, 510;

876 NW2d 266 (2015). “The contents of the complaint are accepted as true unless contradicted

by documentation submitted by the movant.” Maiden, 471 Mich at 119.

We begin our analysis with the doctrinal sire of quasi-judicial immunity—absolute

judicial immunity. “It is well settled that judges are accorded absolute immunity from liability

for acts performed in the exercise of their judicial functions.” Diehl v Danuloff, 242 Mich App

120, 128; 618 NW2d 83 (2000). The purpose of absolute immunity is to “protect[] the finality of

judgments and preserv[e] the judicial independence by ‘insulating judges from vexatious actions

prosecuted by disgruntled litigants.’ ” Id., quoting Forrester v White, 484 US 219, 225; 108 S Ct

538; 98 L Ed 2d 555 (1988). “[T]he broad scope of the immunity . . . is ‘for the benefit of the

public, whose interest it is that the judges should be at liberty to exercise their functions with

1

Serven raised unrelated claims against various other named defendants which are not at issue in

this appeal.

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independence and without fear of consequences.’ ” Id. at 129, quoting Pierson v Ray, 386 US

547, 554; 87 S Ct 1213; 18 L Ed 2d 288 (1967) (citations omitted). Accordingly, judges “are not

liable to civil actions for their judicial acts even when such acts are in excess of their jurisdiction,

and are alleged to have been done maliciously or corruptly.” Bradley v Fisher, 80 US (13 Wall)

335, 351-352; 20 L Ed 646 (1872). Absolute immunity is necessary because “controversies

sufficiently intense to erupt in litigation are not easily capped by a judicial decree” and could

cascade into a never-ending river of actions in other forums. Butz v Economou, 438 US 478,

512; 98 S Ct 2894; 57 L Ed 2d 895 (1978). And “safeguards built into the judicial process tend

to reduce the need for private damages actions as a means of controlling unconstitutional

conduct.” Id. For example:

The insulation of the judge from political influence, the importance of precedent

in resolving controversies, the adversary nature of the process, and the

correctability of error on appeal are just a few of the many checks on malicious

action by judges. Advocates are restrained not only by their professional

obligations, but by the knowledge that their assertions will be contested by their

adversaries in open court. Jurors are carefully screened to remove all possibility

of bias. Witnesses are, of course, subject to the rigors of cross-examination and

the penalty of perjury. Because these features of the judicial process tend to

enhance the reliability of information and the impartiality of the decisionmaking

process, there is a less pressing need for individual suits to correct constitutional

error. [Id.]

Quasi-judicial immunity “is an extension of absolute judicial immunity to non-judicial

officers.” Comment, The Officer Has No Robes: A Formalist Solution for the Expansion of

Quasi-Judicial Immunity, 66 Emory LJ 123, 134 (2016). Quasi-judicial immunity “is available

to those serving in a quasi-judicial adjudicative capacity as well as those persons other than

judges without whom the judicial process could not function.” Maiden, 461 Mich at 134

(quotation marks and citation omitted). In this vein, this Court has noted:

The doctrine of quasi-judicial immunity as developed by the common law has at

least two somewhat distinct branches: one branch focuses on the nature of the job-

related duties, roles, or functions of the person claiming immunity, and one

branch focuses on the fact that the person claiming immunity made statements or

submissions in an underlying judicial proceeding. [Denhof, 311 Mich App at

510.]

In relation to the first branch, a quasi-judicial body subject to quasi-judicial immunity is defined

as a board or commission with statutorily conferred power “to ascertain facts and make orders

founded thereon” and “to exercise discretion of a judicial nature.” Midland Cogeneration

Venture, LP v Nafalty, 489 Mich 83, 91-92; 803 NW2d 674 (2011) (quotation marks and

citations omitted).

In addition to the reasons posited for extending absolute immunity to judicial officers,

quasi-judicial immunity is supported by:

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(1) the need to save judicial time in defending suits; (2) the need for finality in the

resolution of disputes; (3) to prevent deterring competent persons from taking

office; (4) to prevent the threat of lawsuit from discouraging independent action;

and (5) the existence of adequate procedural safeguards such as change of venue

and appellate review. [Diehl, 242 Mich App at 131-132, quoting Duff v Lewis,

114 Nev 564, 569; 958 P2d 82 (1998) (quotation marks and additional citations

omitted).]

Defendants contend that they are entitled to quasi-judicial immunity because in their

Board positions, they acted as quasi-judicial adjudicators. The Board of Chiropractic is

comprised of nine members, five chiropractors and four public members, tasked with

“ascertaining minimal entry level competency of health practitioners and verifying continuing

education during licensure.” In addition, the Board must “take disciplinary action against

licensees who have adversely affected the public’s health, safety, and welfare.” Michigan Board

of Chiropractic, available at <http://www.michigan.gov/snyder/0,4668,7-277-

57738_57679_57726-250191--,00.html> (accessed March 23, 2017).

Once a complaint is filed against a chiropractor, like the complaint filed by Cozzetto

against Serven, the “Complaint Intake Section” of the Board reviews the allegations and

determines if investigation is necessary. If an investigation is deemed necessary, a “trained

investigation staff” member interviews the appropriate witnesses and collects evidence. If the

investigator believes the challenged conduct “was below the minimal standards for the

profession,” the Board submits the matter to “an appropriate expert reviewer.” If the expert

substantiates the staff investigator’s assessment, the Board requests the Attorney General to file a

formal administrative complaint. What Happens After a Complaint is Filed?, available at

<http://www.michigan.gov/lara/0,4601,7-154-72600_73836-365424--,00.html> (accessed March

23, 2017). In this way, the Board acts as police and prosecutor.

Formal administrative complaints are placed before an ALJ for a hearing. Id. Matters

such as this are considered “contested cases.” A contested case is “a proceeding . . . in which a

determination of the legal rights, duties, or privileges of a named party is required by law to be

made by an agency after an opportunity for an evidentiary hearing.” MCL 24.203(3). The

evidentiary hearings in contested cases may be heard by ALJs, as was done in this case. An ALJ

must act “in an impartial manner” and can be disqualified for “personal bias.” MCL 24.279. But

the ALJ is not the final arbiter. At the end of the hearing, the ALJ issues a proposed decision to

which the parties may file exceptions. MCL 24.281(1). The disciplinary subcommittee issues

the final order. It “may adopt, modify, or reject, in whole or in part, the opinion or proposal for

decision of the [ALJ].” Mich Admin Code, R 338.1630(5). This final decision must be made

“within a reasonable time” and must be supported by “competent, material and substantial

evidence.” MCL 24.285. In this regard, the ALJ acts like a magistrate or hearing referee and the

Board’s disciplinary subcommittee as the judge who renders a final decision.

That the disciplinary subcommittee acts as a judge is supported by “the job-related duties,

roles, or functions” of the subcommittee’s members. Denhof, 311 Mich App at 510. The

subcommittee considers the evidence gathered, findings made, and conclusions rendered by an

ALJ and reviews exceptions filed by the parties before rendering a final disciplinary decision.

The system is akin to that in domestic relations matters, in which a Friend of Court referee

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conducts the evidentiary hearing and recommends a resolution which must be considered and

either entered or rejected by a circuit court judge. See MCL 552.507. The subcommittee

“serv[es] in a quasi-judicial adjudicative capacity,” Maiden, 461 Mich at 134, with duties similar

to the circuit court in domestic relations matters.

Moreover, quasi-judicial immunity is frequently extended to a medical licensing board

charged with hearing license suspension and revocation matters. Watts v Burkhardt, 978 F2d

269, 270-271 (CA 6, 1992). See also Buckwalter v Nevada Bd of Medical Examiners, 678 F3d

737 (CA 9, 2012); Ostrzenski v Seigel, 177 F3d 245, 249 (CA 4, 1999) (“Every court of appeals

that has addressed the issue has concluded that members of a state medical disciplinary board are

entitled to absolute quasi-judicial immunity for performing judicial or prosecutorial functions.”).

As a general proposition, the United States Supreme Court has held “that adjudication within a

federal administrative agency shares enough of the characteristics of the judicial process” to

warrant immunity. Butz, 438 US at 512-513.

Cloaking the disciplinary subcommittee with absolute quasi-judicial immunity also

serves public policy. Precluding civil suits against the members saves judicial time in repetitive

appellate-type challenges against disciplinary decisions and enforces finality. Competent

persons need not fear vexatious and harassing litigation arising from their official actions and are

therefore more likely to agree to serve on disciplinary boards. Board members can act

independently and without fear of repercussion for taking disciplinary action against an

individual in the regulated field. See Diehl, 242 Mich App at 131-132. Ultimately, insulating

board members protects the members and the judicial system from private lawsuits by

chiropractors disgruntled by disciplinary action. See Butz, 430 US at 512. See also Watts, 978

F2d aqt 278, quoting Bettencourt v Bd of Registration in Medicine, 904 F2d 772, 783 (CA 1,

1990) (noting that “ ‘the act of revoking a physician’s license . . . is likely to stimulate a litigious

reaction from the disappointed physician, making the need for absolute immunity apparent’ ”);

Vosburg v Dep’t of Social Servs, 884 F2d 133, 137 (CA 4, 1989) (extending quasi-judicial

immunity to social workers who file petitions in child protective cases, in part, because “the

chances are high that suits against social workers would occur with some degree of regularity” as

“[p]arents, resentful of and humiliated by an attempt to usurp their rights, would likely channel

their frustration” at “the State’s advocate”).

The entire process also bears “adequate procedural safeguards” to merit absolute

immunity. Diehl, 242 Mich App at 132. First and foremost, when “all administrative remedies

available within an agency” have been exhausted, the aggrieved party is entitled to direct judicial

review by the courts. MCL 24.301. See also Const 1963, art 6, § 28 (requiring the opportunity

for direct judicial review of administrative officers’ judicial or quasi-judicial final decisions).

Accordingly, the aggrieved party need not file a separate civil action to secure relief. Indeed

Serven was vindicated by judicial review in this case.

Sufficient safeguards ensure that chiropractors against whom a complaint had been filed

would be reviewed by unbiased arbiters. See Butz, 438 US at 512. Mich Admin Code, R

338.1604 has at all relevant times directed, “Any member of . . . a board . . . who takes an active

part in the investigatory or allegation process shall not participate in deciding the contested

case. . . .” Mich Admin Code, R 338.1605(3) grants the Board’s chair, Cogan, power to appoint

a replacement disciplinary subcommittee member if a previously named individual “is unable to

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participate.” This would include replacement of a member removed pursuant to Mich Admin

Code, R 338.1604. Two years after Serven’s disciplinary matter, MCL 333.16216a was enacted

to clarify that anyone with a conflict of interest, such as “a personal or financial interest in the

outcome,” is subject to disclosure requirements. However, active efforts to protect against

conflicts of interest were already in place and were sufficient to protect a respondent’s rights.

Clearly, the safeguards against biased individuals deciding a disciplinary matter did not

work in this case. Cogan was not a member of the disciplinary subcommittee, but he appeared at

the subject meeting and participated in off-the-record discussions. This violated the spirit of

then-MCL 333.16216(1), which provided that “[t]he chair of a board . . . shall not serve as a

member of a disciplinary subcommittee.”2 Cogan was an equity partner in Health Quest and

bore a financial interest in the outcome of Serven’s disciplinary matter, and therefore should

have played absolutely no role in the decision. The failure of the protective measures does not

warrant a private lawsuit against the Board members, however. Absolute immunity does not fall

away even when the judicial or quasi-judicial official acts “maliciously or corruptly.” Bradley,

80 US (13 Wall) at 351-352.

The circuit court erroneously relied on North Carolina State Bd of Dental Examiners v

Fed Trade Comm, ___ US ___; 135 S Ct 1101; 191 L Ed 2d 35 (2015), in denying immunity to

defendants on conflict-of-interest grounds. North Carolina was based on a completely different,

and much more narrowly drawn, immunity principle than that at play here.

In North Carolina, the state’s Board of Dental Examiners investigated several dentist

complaints to determine if nondentists could legally provide teeth whitening services. The

complaints filed by the various dentists challenged the lower prices offered by nondentists for

these services, but did not allege that any recipient of nondentist teeth whitening services had

been harmed. The board was made up of seven dentists, one dental hygienist and one public

member. It determined that teeth whitening fell within the practice of dentistry and therefore

entered cease-and-desist letters against any and all nondentists providing such services or

manufacturing teeth whitening products. Id. at 1108. The FTC filed a complaint against the

state board and conducted an investigation, believing the board’s conduct violated federal

antitrust law by illegally interfering with free enterprise. Id. at 1108-1109.

Specific to antitrust litigation, the United States Supreme Court interpreted federal

legislation “to confer immunity on anticompetitive conduct by States when acting in their

sovereign capacity.” Id. at 1110, citing Parker v Brown, 317 US 341; 63 S Ct 307; 87 L Ed 2d

315 (1943). Parker immunity is most often applied to “[s]tate legislation and decision[s] of a

state supreme court, acting legislatively rather than judicially” as these “are an undoubted

exercise of state sovereign authority.” North Carolina, 135 S Ct at 1110 (quotation marks and

citation omitted). Parker immunity is strictly limited, however, when the state delegates

authority to a board controlled by “active market participants” because those members will

always have a financial interest in anticompetition decisions and actions. Id. at 1111.

2

This provision has since been relocated in MCL 333.16216(4). 2014 PA 413.

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This case does not involve federal antitrust law. Therefore, the limited immunity

conferred by federal antitrust legislation is inapplicable and irrelevant. The Board of

Chiropractic is controlled by chiropractors with a ratio of five licensed chiropractors to four

public members. When the disciplinary subcommittee revokes or suspends one chiropractor’s

license, that chiropractor’s clients will likely move on and find another, competing chiropractor

for services. Even so, the disciplinary action does not violate federal antitrust legislation; it

conforms to state law to protect the public from unscrupulous or incompetent providers.

Moreover, defendants are not completely immune from any admonishment as there are

internal governmental mechanisms for handling their alleged misconduct, adding another

procedural safeguard. If defendants were elected state judges, Serven could have filed a

grievance with the Judicial Tenure Commission, MCR 9.207(A), which may have led to

disciplinary action. Here, Serven could have filed a complaint with the State Board of Ethics.

Defendants are “public officers” as defined in MCL 15.341(c), as they were “appointed by the

governor or another executive department official.” In that role, defendants were required to use

board personnel and resources for legitimate official purposes “and not for personal gain or

benefit.” MCL 15.342(3).3 “Any person or entity . . . may file a complaint charging a public

officer . . . with unethical conduct.” State Board of Ethics Rules of Practice & Procedure, R

15.5(1), available at <http://www.michigan.gov/documents/mdcs/Ethics_Rules-

web_485576_7.pdf> (accessed March 27, 2017). Accordingly, Serven was not without the

means to bring public attention to defendants’ alleged wrongdoing.

Ultimately, as the Board’s disciplinary subcommittee was cloaked with absolute quasi-

judicial immunity, the circuit court should have dismissed Serven’s complaint against these

defendants in its entirety. Given this resolution, we need not consider the remainder of

defendants’ appellate challenges.

We reverse and remand for further proceedings consistent with this opinion. We do not

retain jurisdiction.

/s/ Peter D. O'Connell

/s/ Elizabeth L. Gleicher

/s/ Mark T. Boonstra

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The state ethics act, MCL 15.341 et seq., does permit an aggrieved party to file a civil suit for

damages. The action must be filed within 90 days of the subject occurrence. MCL 15.342c.

Serven waited more than two years to file suit, well beyond the statutory limitation period.

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