Lyons v. Lutheran Hosp. of Ind.

IP 04-0728-C H/S Lyons v Lutheran Hospital
Judge David F. Hamilton

Signed on 9/15/04

NOT INTENDED FOR PUBLICATION IN PRINT

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION

EDWARD LYONS, )
)
Plaintiff, )
vs. ) NO. 1:04-cv-00728-DFH-VSS
)
LUTHERAN HOSPITAL OF INDIANA, )
MEDTRONIC, INC., )
)
Defendants. )

Stephen B. Caplin
CAPLIN PARK TOUSLEY & MCCOY
sbcpc@yahoo.com

Jeremy A. Klotz
ICE MILLER
jeremy.klotz@icemiller.com

Kevin R. Knight
ICE MILLER
kevin.knight@icemiller.com

Charles W. McNagny
cwm1@glmlaw.net

Julie A. Robinson
CAPLIN PARK TOUSLEY & MCCOY
julieahudson@hotmail.com

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION

EDWARD LYONS,

Plaintiff,

v.

LUTHERAN HOSPITAL OF INDIANA and
MEDTRONIC, INC.,

Defendants.

)
)
)
)
) CASE NO. 1:04-cv-0728-DFH-VSS
)
)
)
)
)

ENTRY ON MOTION TO REMAND

Plaintiff Edward Lyons sued defendants Medtronic , Inc. and Lutheran

Hospital of Indiana, Inc. in an Indiana state court for wrongs that he says injured

his late wife Sandra Lyons and ultim ately caused her death. Defendant

Medtronic removed this action from state court arguing that defendant Lutheran

Hospital, whose presence would defeat complete diversity of citizenship, was

fraudulently joined as a defendant. Plaintiff has moved to remand the action.

The first issue is whether plaintiff fraudulently joined Lutheran Hospital

of Indiana as a defendant, in which case diversity is complete and the court has

jurisdiction, or whether the hospital is a proper defendant in this case. In

opposing remand, Medtronic has raised a second issue. I t a rgu e s tha t if the

court finds that the claim against Lutheran Hospital must be remanded, then the

court should sever the claims against the two defendants and retain jurisdiction

over the claims against Medtronic. For the reasons explained below, the court

finds that plaintiff did not fraudulently join the hospital and that severance is not

appropriate. Accordingly, the court grants the motion to remand the entire

action and awards plaintiff his attorney fees incurred as a result of the removal.

See 28 U.S.C. § 1447(c).

I.

Plaintiff’s Allegations

Sandra Lyons suffered from serious back pain. She had surgery to implant

a Neurostimulator System manufactured by defendant Medtronic. On March 19,

2002, Mrs. Lyons had another operation to replace the lead wire on the

Neurostimulator System. The surgery was performed at Lutheran Hospital of

Indiana in Fort Wayne, Indiana. For present purposes, the court must accept as

true plaintiff’s allegations that the lead wire used in the March 19th surgery was

defective.

After the March 19th surgery, Mrs. Lyons suffered continuing severe pain.

She returned to Lutheran Hospital a few days later to deal with complications

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resulting from the alleged defect in the Medtronic device. Plaintiff alleges that

while at the hospital on March 26th, Mrs. Lyons slipped, fell, and hit her head,

resulting in her death.

As the surviving spouse and as personal representative of Mrs. Lyons’

estate, plaintiff Edward Lyons asserts three distinct sets of claims. First, he

alleges that Medtronic manufactured and sold a medical device that was defective

within the meaning of Indiana product liability law. The complaint alleges

expressly that Sandra Lyons’ death was a proximate result of the defective

product. Second, plaintiff alleges a claim for premises liability against Lutheran

Hospital based on the fatal slip and fall. The third claim is a medical malpractice

claim against Lutheran Hospital and some of its doctors, but plaintiff has not ye t

actually asserted that claim in this case. Under Indiana law, a plaintiff may not

file most medical malpractice claims in court without first submitting the claim

for evaluation by a medical review panel acting under the supervision of the

Indiana Department of Insurance. Ind. Code § 34-18-8-4. Plaintiff has advised

the court that he has initiated such a claim alleging that Lutheran Hospital and

several doctors provided substandard care that injured Mrs. Lyons and caused

her death. See Pl. Br. at 2 n.1. If the panel review process does not resolve the

case, plaintiff would then have the ability to assert such a claim in court.

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II.

Fraudulent Joinder

Medtronic argues that plaintiff’s claims against Lutheran Hospital are

necessarily claims for medical malpractice, so that they could not be asserted in

any court at the time of removal because plaintiff had not completed the panel

review process. Because these claims should be dismissed immediately without

prejudice, Medtronic argues, the joinder of Lutheran Hospital as a defendant is

so flawed that the court should deem Lutheran Hospital to have been

fraudulently joined.1

Diversity cannot be destroyed by joinder of non-diverse parties if that

joinder is fraudulent. Hoosier Energy Rural Elec. Co-op, Inc. v. Amoco Tax

Leasing IV Corp., 34 F.3d 1310, 1315 (7th Cir. 1994). “Fraudulent” joinder is an

unfortunate legal term of art. Despite its connotations, it is not necessarily

intended to cast aspersions on the character of plaintiffs or their counsel.

“Fraudulent” joinder occurs “either when there is no possibility that a plaintiff

can state a cause of action against nondiverse defendants in state court, or where

1In cases where the Indiana Medical Malpractice Act applies, “the Indiana
Courts have no jurisdiction until the review panel issues its opinion, and the
federal district court is bound by this decision in a diversity suit.” Johnson v.
Methodist Hosp. of Gary , 547 F. Supp. 780, 782 (N.D. Ind. 1982); see also
Castelli v. Steele, 700 F. Supp. 449, 455 (S.D. Ind. 1988) (“It is well settled under
this provision that any medical malpractice action filed in an Indiana court must
be dismissed without prejudice for want of jurisdiction if an opinion has not first
been obtained by a medical review panel.”).

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there has been outright fraud in plaintiff’s pleading of jurisdictional facts.” Id.,

quoting Gottlieb v. Westin Hotel Co., 990 F.2d 323, 327 (7th Cir. 1993). The latter

form of fraudulent joinder is rare and is not alleged to have occurred here.

Where the defense argues that the plaintiff cannot possibly state a viable

claim against the non-diverse defendant, the defense bears a “heavy burden” to

establish fraudulent joinder. Poulos v. N a a s Foods, Inc., 959 F.2d 69, 73 (7th Cir.

1992). “The defendant must show that, after resolving all issues of fact a nd law

in favor of the plaintiff, the plaintiff cannot establish a cause of action against the

in-state defendant.” Id. (emphasis in original). In making that evaluation, the

court must give plaintiff the benefit of the doubt on all fairly disputable issues of

both fact and law. Id.; Hoosier Energy, 34 F.3d at 1315; Gottlieb, 990 F.2d at 327.

Joinder is not fraudulent if a plaintiff’s claims depend on fairly debatable issues

of state law that require substantial analysis. “A claim which can be dismissed

only after an intricate analysis of state law is not so wholly insubstantial and

frivolous that it may be disregarded for purposes of diversity jurisdic t i on . ”

Batoff v. State Farm Ins. Co., 977 F.2d 848, 853 (3d Cir. 1992).

To apply that general standard here, the court must consider whether

there is any reasonable possibility that a state court might find that plaintiff has

a claim against Lutheran Hospital that falls outside the scope of the Medical

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Malpractice Act, so that the claim is now ripe for litigation. Giving the plaintiff

the benefit of disputes as to both facts and law, the answer is yes. The court

cannot find fraudulent joinder here.

The special procedures under the supervision of the Indiana Department

of Insurance apply to claims for “malpractice.” See Ind. Code §§ 34-18-8-1 & -4.

The Medical Malpractice Act defines “malpractice” as “a tort or breach of contract

based on health care or professional services that were provided, or that should

have been provided, by a health care provider, to a patient.” Ind. Code § 34-18-2-

18. The Act defines a tort as a “a legal wrong, breach of duty, or negligent or

unlawful act or omission proximately causing injury or damage to another.” Ind.

Code § 34-18-2-28.

Indiana courts have repeatedly explained that the Act does not apply to

every negligent act or omission by a health care provider. E.g., Winona Memor ia l

Foundation v. Lomax, 465 N.E.2d 731, 742 (Ind. App. 1984) (holding that hospital

patient’s “premises liability” claim for injuries resulting from fall caused by

negligent maintenance of hospital floor was not a malpractice claim within the

scope of the Act). In general, “the Act applies to conduct, curative or salutary in

nature, by a health care provider acting in his or her professional capacity, and

is designed to exclude only conduct which is unrelated to the promo t ion o f a

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patient’s health or the provider’s exercise of professional expertise, skill, or

judgment.” Winona Memor ia l Hosp., Ltd. P’ship v. Kuester, 737 N.E.2d 824, 828

(Ind. App. 2000), citing Methodist Hospital of Indiana, Inc. v. Ray, 551 N.E.2d 463,

466 (Ind. App. 1990), adopted on transfer, 558 N.E.2d 829 (Ind. 1990). The Act

requires malpractice claims to be evaluated by an expert medical panel before

they can be pursued in court. The scope of the panel’s expertise can be useful

in considering whether a claim qualifies as “malpractice” under the Act, and is

thus required to be submitted to a panel, or whether a claim is one for ordinary

negligence and not subject to the Act. “Such matters as the maintenance of

reasonably safe premises are within the common knowledge and experience of

the average person. Health care providers, who must make up the medical review

panel . . . are no more qualified as experts on such matters than the average

juror.” Winona Mem’l Found. v. Lomax, 465 N.E.2d at 740.

Indiana case law draws some fine distinctions along the boundaries

between malpractice claims and other negligence claims. For example, in Putnam

County Hospital v. Sells, 619 N.E.2d 968 (Ind. App. 1993), the injured person was

a child who had just had surgery. She was in the recovery room, under the

influence of anesthesia. The rails on her hospital bed had not been raised, and

the patient fell out of bed and injured her face. The Indiana Court of Appeals

held that the claim was a claim for malpractice rather than ordinary negligence.

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The complaint alleged that the hospital had been negligent in failing to train and

supervise its staff in monitoring patients recovering from surgery, and that

hospital staff were negligent in failing to monitor and observe the patient, and in

failing to ensure that railings were in place while the patient was under the

influence of anesthes ia . Id. at 971. Because the complaint attacked the

hospital’s care of a patient under anesthesia, the appellate court found that the

claim was not for premises liability but for medical malpractice. Id.

Putnam County Hospital carefully distinguished the case of Harts v. Caylor-

Nickel Hospital, Inc., 553 N.E.2d 874 (Ind. App. 1990), which held that a claim for

injury resulting from a fall from a hospital bed was a claim for premises liability

and not for medical malpractice. In Harts, the bedrail gave way when the patient

tried to use it to turn over in bed. As the Putnam County Hospital court explained

the distinction: “The bedrailing was in place but did not work properly. Thus,

Harts’ claim involved negligent maintenance of the hospital’s premises or

equipment.” 619 N.E.2d at 971.

How should claims arising from Mrs. Lyons’ fall be characterized? As

Putn am County Hospital and Harts demonstrate, the details matter. Yet the

complaint here does not provide any detail about the circumstances of Mrs.

Lyons’ fall. It says in relevant part: “While at Hospital, Sandra slipped, fell, and

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struck her head as a result of the negligence of the Hospital.” Cplt. ¶ 9. Plaintiff

was not required to provide more detail, of course, and plaintiff may not even be

in a position to provide more detail at this point. Without more factual detail, and

keeping in mind the court’s obligation to give plaintiff the benefit of all fairly

arguable issues of both fact and law, the court cannot say that the claim in this

case is so obviously a claim for malpractice that plaintiff’s joinder of Lutheran

Hospital as a defendant was fraudulent.

Medtronic contends that plaintiff’s claim against Lutheran Hospital “is

either a medical malpractice case or it’s not; Plaintiff cannot have it both ways.”

Def. Br. at 9 n.4. The assertion has appealing simplicity, but it is not accurate.

For example, plaintiff could argue that the doctors named in the ma lp rac t ice

complaint performed the March 19th surgery negligently or that they cared for

Mrs. Lyons negligently after she returned to the hospital on March 22nd. At the

same time, plaintiff could argue that Mrs. Lyons’ fall on March 26th was also the

result of either negligent maintenance of the premises (not malpractice) or

negligent supervision of a medicated patient by nursing staff (malpractice), or

perhaps both. Plaintiff has suggested in his reply brief that Mrs. Lyons fell while

she was still at the hospital but after a doctor had ordered her discharge,

indicating that the fall might not have been caused by any negligence on the part

of medical staff. Pl. Reply Br. at 9. If true, those details would tend to indicate

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that the claim is not for medical malpractice. In any event, the details of the

accident cannot be resolved at this point and may require trial to be resolved. At

this point, the court certainly cannot say that the joinder was fraudulent.2

Medtronic has also tried to turn the burden of persuasion here upside

down: “At the time of removal in this case, Plaintiff’s Complaint was insufficient

to support a determination that Plaintiff’s allegations against Lutheran [Hospital]

did not fall within the Act.” Def. Br. at 9. Plaintiff has no burden here, and was

not required to plead facts sufficient to negate the defense based on the Medical

Malpractice Act. Medtronic is the party who must carry the heavy burden on the

issue of fraudulent joinder. It cannot do so by merely showing that plaintiff’s

claim might fall within the Act; it must show that plaintiff’s claim could not

possibly fall outside the Act. Medtronic has failed to make such a showing.

2In fact, one of the challenges for plaintiff and his counsel in this dispute
is to avoid being prematurely trapped into arguing that wrongdoing by the
hospital was either definitely medical malpractice or definitely not medical
malpractice. Whether any alleged negligent acts or omissions by the hospital
were one or the other or both may have to await trial (and possibly also an
opinion from the medical review panel). A plaintiff who fears being trapped
prematurely may need to file both a medical malpractice complaint with t h e
Department of Insurance and a non-malpractice complaint in court, as plaintiff
has done here , and then wait for the review panel to complete its work befor e
both theories can be presented to one jury in one trial. Then, after a verdict, the
legal consequences of the particular findings (such as damages caps that apply
only to medical malpractice claims) could be sorted out.

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III.

Severance of Claims

As an alternative to its fraudulent joinder argument based on the Medical

Malpractice Act, Medtronic argues that the court should sever plaintiff’s claims

against it from his claims against Lutheran Hospital. Medtronic argues that the

claims are so different and arise from such different circumstances or

occurrences that they should be severed. Under this approach, the claims

against the hospital would be remanded to state court and the product liability

claims against Medtronic would stay in this court. This argument is a version of

what has been called “fraudulent misjoinder,” under which potentially viable but

unrelated claims against resident and non-resident defendants would be joined

in one action to destroy diversity and thereby prevent removal by the non-

resident defendants. See Conk v. Richards & O’Neil, LLP , 77 F. Supp. 2d 956,

970-71 (S.D. Ind. 1999) (rejecting claim of fraudulent misjoinder and remanding

to state court after finding that claims against Indiana defendants and non-

Indiana defendants were sufficiently related so that state court could allow their

joinder in one action); see also Tapscott v. MS Dealer Serv. Corp ., 77 F.3d 1353,

1360 (11th Cir. 1996) (finding fraudulent misjoinder of unrelated cla ims fo r

purpose of preventing removal by non-resident defendant), abrogated on other

grounds by Office Depot v. Cohen, 204 F.3d 1069, 1077-78 (11th Cir. 2000).

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Whether the claims against the two defendants were misjoined should be

evaluated under state procedural law rather than fede ral law. See

Bridgestone/Firestone, Inc. v. Ford Motor Co., 260 F. Supp. 2d 722, 728 (S.D. Ind.

2003); Conk, 77 F. Supp. 2d at 970-71; accord, Sweeney v. Sherwin Williams Co.,

304 F. Supp. 2d 868, 873 (S.D. Miss. 2004); Jamison v. Purdue Pharma Co.,

251 F. Supp. 2d 1315, 1321 & n.6 (S.D. Miss. 2003) (explaining that federal rules

cannot be used to expand jurisdiction of federal courts).

Indiana Trial Rule 20(A)(2) addresses joinder of defendants:

All persons may be joined in one action as defendants if there is
asserted against them jointly, severally, or in the alternative, any
right to relief in respect of, or arising out of, the same transaction,
occurrence, or series of transactions or occurrences and if any
question of law or fact common to all defendants will arise in the
action.

Rule 20(a) of the Federal Rules of Civil Procedure contains virtually identical

language. The parties have not identified any significant difference between

federal courts’ and Indiana courts’ applications of these provisions. The choice

between the two may have no practical effect here, as it did not in Conk.

Plaintiff’s claims against Medtronic and Lutheran Hospital satisfy the

standards of both the state and federal rules. Plaintiff seeks to hold both

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defendants severally liable for Mrs. Lyons’ death. Those claims arise from the

same series of occurrences that allegedly culminated in her death. According to

plaintiff, Medtronic’s defective product caused Mrs. Lyons to return to the

hospital a few days after the surgery in which the defective product was

implanted. At the hospital, she encountered the negligence that most

immediately caused her death. Plaintiff’s theory of the case will raise some

challenging issues of foreseeability and intervening causation. S e e g en e r a l l y

Holden v. Ba lko , 949 F. Supp. 704 (S.D. Ind. 1996) (holding that alleged original

tortfeasor could not, to reduce his own liability, assert comparative fault of doctor

who treated the injury). Nevertheless, plaintiff seeks one trial about one series

of occurrences ending in death, with all potentially responsible parties as

defendants. That approach will usually be both more just and more economical

than a series of trials against different defendants. In a series of separate trials,

each defendant could try to defend itself by blaming the absent parties. Further,

combining all claims and defendants in one case wou ld present common

questions of fact regarding the cause of Mrs. Lyons’ death and the resulting

damages that might be awarded if liability is found, as well as common questions

of law relating to damages.3

3Medtronic magnanimously suggests that severance would be in plaintiff’s
interest because it would give him two opportunities to win. Medtronic proposes
a federal trial on the product liability claim and a state trial on all claims against
the hospital (and perhaps the doctors). Def. Br. at 21-22. Plaintiff is skeptical,
(continued…)

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Medtronic argues that the alleged wrongs – distributing a defective product

and the negligence claim against the hospital – occurred at different times and

are subject to substantially different legal standards. That’s true as far as it goes.

But Medtronic’s arguments in favor of severance are based on a mistaken

assertion: “There is no mention in the Complaint, or in Plaintiff’s Memo,

suggesting that the alleged [product] defect led to Decedent’s slip and fall.” Def.

Br. at 21. On the contrary, plaintiff alleges explicitly in Count III, Paragraph 18

of the complaint against Medtronic that “as a result of the defective condition of

the Stimulator, Sandra died, and the Estate has suffered damages.” The same

allegation is incorporated into Count IV against Medtronic. In evaluating

misjoinder and severance, the critical fact here is that plaintiff is alleging that

Mrs. Lyons’ death was caused by both Medtronic and the hospital. If plaintiff

were required to pursue two separate cases, the defendant in each case could

name the other as a responsible non-party, thus bringing the cases back

together.

Medtronic also argues that the court should exercise its discretion under

Rule 21 of the Federal Rules of Civil Procedure to sever these claims, citing

3(…continued)
as is the court, about this apparent generosity. In the court’s experience, the
greater risk is to plaintiff from allowing each defendant in separate trials to
defend itself by putting a proverbial “empty chair” on trial, thus p o s i n g a
significant risk of inconsistent verdicts that would all go against plaintiff.

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Rice v. Sunrise Express, Inc., 209 F.3d 1008, 1016 (7th Cir. 1999 ) ( f ind ing

severance proper, though severance did not affect subject matter jurisdiction

because case arose under federal law). The use of Rule 21 to expand a federal

court’s jurisdiction, however, does not appear to be an option. “These rules shall

not be construed to extend or limit the jurisdiction of the United States district

courts or the venue of actions therein.” Fed. R. Civ. P. 82. Even if severance were

available as a matter of discretion, though, the court would not sever because of

the potential for multiple trials with inconsistent results.4

4Another factor weighs against the proposed severance, even if the court
were permitted to carry it out so as to expand its jurisdiction. As noted, plaintiff
is also pursuing malpractice claims against the hospital and several doctors
under the Medical Malpractice Act. Unless those claims are resolved by the
medical review panel process, plaintiff can reasonably be expected to add those
defendants in the future to any lawsuit based on Mrs. Lyons’ death and/or the
allegedly defective product and resulting injuries, which could include injuries
from further medical treatment. Thus, even if the court severed now and retained
jurisdiction over the product liability claim, there is a substantial prospect that
fairness could require the court to allow later addition of the hospital and/or
doctors as defendants in the future. That step would destroy diversity of
citizenship and require remand then.

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IV.

Attorney Fees Under 28 U.S.C. § 1447(c)

Plaintiff has asked the court to award his attorney fees incurred as a result

of the remand. Under 28 U.S.C. § 1447(c), a plaintiff who secures a remand is

presumed to be entitled to a fee award. Garbie v. DaimlerChrysler, 211 F.3d 407,

411 (7th Cir. 2000); Wisconsin v. Hotline Indus., Inc., 36 F.3d 363, 367-68 (7th

Cir. 2000). The plaintiff is not required to show that the removal was done in bad

faith or was unreasonable. Garbie, 211 F.3d at 410; Tenner v. Zurek, 168 F.3d

328, 329-30 (7th Cir. 1999).

As Judge Tinder has explained, an issue of fraudulent joinder can be “so

close that costs should not be gran t ed . ” Valentine v. Ford Motor Co., 2003 WL

23220758, *6 (S.D. Ind. 2003) (awarding fees for remand where issue was not so

close as to warrant denial of fees). However, the issue of fraudulent joinder in

this case is not close. Medtronic has attempted to defend its removal by

essentially trying to shift the burden to plaintiff to prove that his claims against

the hospital do no t fall within the Medical Malpractice Act. That is not the

applicable standard. The applicable standard requires Medtronic to show that

plaintiff has no viable claim against the hospital even if all debatable questions

of fact and law are resolved in plaintiff’s favor. Med tron ic canno t mee t th is

standard. Accordingly, the general presumption in favor of a fee award applies.

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See id. The case will be remanded effective immediately. Plaintiff may submit

a fee petition no later than September 30, 2004, and Medtronic may file any

opposition 14 days after the petition is filed. If either side requests a hearing, the

court will hold one, but in the absence of a request the court will decide the

amount of a reasonable fee based on the written submissions.

DAVID F. HAMILTON, JUDGE
United States District Court
Southern District of Indiana

So ordered.

Date: September 15, 2004

Copies to:

Stephen B. Caplin
CAPLIN PARK TOUSLEY & MCCOY
sbcpc@yahoo.com

Jeremy A. Klotz
ICE MILLER
jeremy.klotz@icemiller.com

Kevin R. Knight
ICE MILLER
kevin.knight@icemiller.com

Charles W. McNagny
cwm1@glmlaw.net

Julie A. Robinson
CAPLIN PARK TOUSLEY & MCCOY
julieahudson@hotmail.com

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