Opinion
Case No. 00-1318-JAR.
March 27, 2002
MEMORANDUM ORDER GRANTING MOTION TO DISMISS UNIVERSITY OF KANSAS SCHOOL OF MEDICINE-WICHITA
Defendant University of Kansas School of Medicine — Wichita ("KU-Wichita") filed a Motion to Dismiss pursuant to Fed.R.Civ.P. 12(b)(1) based on a lack of subject matter jurisdiction. KU-Wichita argues that because it is an arm of the State of Kansas it is entitled to Eleventh Amendment immunity from suit in federal court. For the reasons set forth below, KU-Wichita's motion is granted.
Motion to Dismiss
Motions to dismiss pursuant to Rule 12(b)(1) take two forms: a facial attack on the complaint's allegations as to subject matter jurisdiction which questions the sufficiency of the complaint; and a challenge beyond the allegations in the complaint and to the facts upon which subject matter jurisdiction depends. A district court must accept the allegations in the complaint as true when reviewing a facial attack. However, when reviewing a factual attack, as in the instant case, a district court may not presume the truthfulness of the complaint's factual allegations. The court "has wide discretion to allow affidavits, other documents, and a limited evidentiary hearing to resolve disputed jurisdictional facts under Rule 12(b)(1)." Eleventh Amendment Immunity
Holt v. United States, 46 F.3d 1000, 1002-03 (10th Cir. 1995).
See Teichgraeber v. Memorial Union Corp. of the Emporia State Univ., 946 F. Supp. 900, 902 (D.Kan. 1996); see also Voisin's Oyster House, Inc. v. Guidry, 799 F.2d 183, 188 n. 5 (5th Cir. 1986) (noting that the court may dismiss for lack of subject matter jurisdiction on anyone of three different bases: (1) the complaint alone; (2) the complaint supplemented by undisputed facts in the record; or (3) the complaint supplemented by undisputed facts plus the court's resolution of disputed facts).
Holt, 46 F.3d at 1003.
Id.
"The Eleventh Amendment imposes a constitutional limitation on the jurisdiction of Article III courts." The Eleventh Amendment to the Constitution provides:
Mascheroni v. Board of Regents of Univ. of Cal., 28 F.3d 1554, 1557 (10th Cir. 1994).
The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.
Though often couched in simple terms of sovereign immunity, it is well established that the Eleventh Amendment defines that immunity as a jurisdictional bar. In the absence of consent, the Eleventh Amendment bars suit against a state or an arm or alter ego of the state in federal court. This bar applies to private suits against states and state agencies seeking to impose liability against the state regardless of the nature of the relief sought. The defendant asserting Eleventh Amendment immunity has the burden of proof.
Teichgraeber v. Memorial Union Corp. of Emporia, 946 F. Supp. 900, 903 (D.Kan. 1996).
See, e.g. Klein v. The Univ. of Kansas Medical Center, 975 F. Supp. 1408, 1415 (D.Kan. 1997).
Id. This case is a negligence/malpractice suit. Plaintiffs are seeking compensatory and punitive damages in excess of $75,000.
Teichgraeber, 946 F. Supp. at 903 (agreeing with cases holding that Eleventh Amendment immunity should be treated as an affirmative defense and must be proved by the party that asserts it).
Universities established by the State of Kansas and governed by the Kansas Board of Regents share the State's Eleventh Amendment immunity because the state universities in Kansas function as arms or alter egos of the State of Kansas. The Kansas State Legislature defines the University of Kansas as a "state educational institution," and such educational institutions are separate state agencies and state institutions. At least one judge of this court has concluded that the University of Kansas Medical Center ("Medical Center") functions as an arm or alter ego of the State of Kansas and thus is also entitled to Eleventh Amendment immunity.
See Brennan v. University of Kansas, 451 F.2d 1287, 1290 (10th Cir. 1971).
Id. at 76-712.
Klein v. University of Kansas Med. Ctr., 975 F. Supp. 1408 (D.Kan. 1997); Gray v. University of Kansas Med. Ctr., 715 F. Supp. 1041, 1043 (D. K an. 1989).
But Plaintiffs argue that KU-Wichita is not the Medical Center, and is autonomous from the state. Plaintiffs present testimony that KU-Wichita is a free standing medical school, separate from and not a branch of the Medical Center. The budgets of the Medical Center and KU-Wichita are "managed separately." Plaintiffs further argue that unlike the Medical Center, KU-Wichita does not have its own hospital and uses private hospitals.
But KU-Wichita is not perceived as an entity separate from the Medical Center, by either internal or external constituents. KU-Wichita is called "University of Kansas School of Medicine — Wichita." The Executive Vice Chancellor of the University of Kansas Medical Center states that KU-Wichita is a part of the school of medicine at the Medical Center and is not a separate entity. The external agencies that accredit medical schools and graduate medical education programs (the Liaison Committee on Medical Education and the Liaison Committee on Graduate Medical Education) regard the University's School of Medicine as a single program with two campuses. And, for tax purposes, the University and the Medical Center utilize a common federal tax identification number assigned to the State of Kansas. The University and the Medical Center are exempt from federal income tax pursuant to 26 U.S.C. § 115(1), a provision of the Internal Revenue Code which pertains exclusively to the states and their political subdivisions.
March 7, 2001 Affidavit of Donald F. Hagen, M.D., Executive Vice Chancellor of the University of Kansas Medical Center.
The Tenth Circuit Court of Appeals has directed that in determining whether an agency is an alter ego or instrumentality of the state so as to invoke immunity under the Eleventh Amendment,
[t]he court first examines the degree of autonomy given to the agency as determined by the characterization of the agency by state law and the extent of guidance and control exercised by the state. Second, the court examines the extent of financing the agency receives independent of the state treasury and its ability to provide for its own financing. The governmental entity is immune from suit if the money judgment sought is to be satisfied out of the state treasury.
Klein v. University of Kansas Med. Ctr., 975 F. Supp. 1408, 1415 (D.Kan. 1997) (quoting Watson v. University of Utah Med. Ctr., 75 F.3d 569, 574-75 (10th Cir. 1996) (internal quotations and citations omitted)).
Klein v. University of Kansas Med. Ctr., 975 F. Supp. 1408, 1415 (D.Kan. 1997) (quoting Watson v. University of Utah Med. Ctr., 75 F.3d 569, 574-75 (10th Cir. 1996) (internal quotations and citations omitted)).
Autonomy — Characterization of KU-Wichita by State Law
In the statutes governing the University of Kansas, as well as in statutes governing Wichita State University, KU-Wichita is referred to as the "Wichita branch of the university of Kansas school of medicine." But Plaintiffs, arguing that the two are separate, note that in the statutes governing the University of Kansas Medical Education and Clinical Facilities and Personnel, the "medical center" or "university of Kansas medical center" is defined as "the facility and plant of the University of Kansas located in Kansas City, Kansas," and "other improvements and after-acquired property." And, in the statutes governing the University of Kansas Hospital Authority, the definition of "health sciences schools" is limited to "the schools of medicine, nursing, allied health, pharmacy and any other schools operated by the university of Kansas at the university of Kansas medical center." But Plaintiffs ignore that the University of Kansas Hospital Authority is an independent public authority created to operate the University of Kansas hospital, "for the benefit of the University of Kansas medical center." The hospital and the medical center are separate entities. And, reading the statutes in their entirety, it is evident that the medical center is comprised of the campus in Kansas City, as well as the branch in Wichita.
K.S.A.76-301 et seq.
K.S.A. 76-3a01 et seq.
See K.S.A. 76-378. See also K.S.A. 76-3a17.
K.S.A. 76-801 et seq.
Autonomy — Extent of Guidance and Control Exercised by State over KU-Wichita
KU-Wichita is administered as a branch of the Medical Center. The Dean of the School of Medicine-Wichita reports to the Executive Dean of the School of Medicine at the Medical Center who, in turn, reports to the Executive Vice Chancellor of the University of Kansas Medical Center.
The students at KU-Wichita are students of the Medical Center, who are assigned to the Wichita branch. Students are required to apply for admission through the School of Medicine's offices at the University of Kansas Medical Center. If they matriculate successfully, they are issued a degree from the University of Kansas.
Faculty and staff are also part of the Medical Center. All faculty at KU-Wichita are appointed and re-appointed by the Chancellor of the University, are employees of the state of Kansas, and are paid from the treasury of the state of Kansas. In fact, all staff employees of the University and the Medical Center, including those at KU-Wichita, are employees of the State of Kansas and receive checks issued by the state treasury.
Income and expenses of KU-Wichita are handled centrally. All payroll and operating expenses incurred at KU-Wichita are paid through the central office at the Medical Center. Tuition and fees received from medical students, including those assigned to KU-Wichita, are collected by the Medical Center and ultimately transferred to accounts within the state treasury.
The budget of the Medical Center is a part of the official budget of the state of Kansas. Revenue generated by the Medical Center is wired daily to the state treasury and its expenditures are processed through the state treasury. All internal budgets of the Medical Center are subject to legislative approval and appropriate legislative authority is required before funds can be expended.
KU-Wichita's budget, although managed separately, is authorized by the dean of the School of Medicine in Kansas City, and is included in the Medical Center's budget. KU-Wichita's budget is included in the process requiring legislative approval and appropriation. And, all KU-Wichita funds are maintained by the Medical Center and the state of Kansas.
Extent of financing KU-Wichita Receives Independent of State Treasury
KU-Wichita receives the majority of its financing from non-state sources. Slightly over 50% of KU-Wichita's undergraduate program funds were state appropriated, while 17% of its Graduate Medical Education funds were state appropriated. Thus, 38% of the total budget for KU-Wichita was state appropriated and 62% was non-state appropriated. But this degree of financing does not render KU-Wichita independent of the state treasury. In Watson v. University of Utah Medical Center, the Tenth Circuit Court of Appeals found that the finances of the state university medical center were controlled by the state treasury, despite the medical center receiving less than 5 percent of its funding from state appropriations. The court thus held that the University of Utah Medical Center was entitled to Eleventh Amendment immunity.
75 F.3d 569, 576 (10th Cir. 1996).
Id. at 576-77.
KU-Wichita's Ability to Provide for Its Own Financing
The Legislature allows the state board of regents to "make and execute contracts and other instruments necessary or convenient in the exercise of its powers and functions." To that end, K.S.A. 76-825 provides that:
[t]he university of Kansas medical center may finance or assist in the financing of postgraduate training programs in allopathic medicine and may provide financial assistance to persons engaged in such postgraduate training programs. The university of Kansas medical center may contract with one or more hospitals or one or more medical groups, or both, in Kansas.
But, these contracts are subject to certain parameters and limitations defined by the state. Thus, when KU-Wichita enters into a contract on behalf of the state with local hospitals in order to allow faculty teaching services for the residents at KU-Wichita, a Contractual Provision Attachment is incorporated into the agreement outlining the local hospital's responsibilities to the state.
Plaintiff attaches three contracts to its response to the motion to dismiss. The "Master Agreement" and the "Agreement" dated 9/9/98 both incorporate the Contractual Provisions Attachment.
Satisfaction of Money Judgments against KU-Wichita
The Court must also consider whether a money judgment against KU-Wichita would be satisfied from the state treasury. Although Plaintiffs point out that KU-Wichita turns to the endowment funds when faced with unanticipated, non-budgeted items, endowment funds cannot be used to satisfy the judgment. Any judgment entered against KU-Wichita is subject to the provisions of the Kansas Tort Claims Act, K.S.A. 75-6101, et seq., and is paid with funds from the state treasury.
See Affidavit of Janice M. Arbuckle dated March 12, 2001. Janice M. Arbuckle is the Associate Dean for Administration at KU-Wichita and serves as the Chief Fiscal Officer for KU-Wichita. She is responsible for University funds, budget development and control.
Id.
Plaintiffs further argue that KU-Wichita has a complex institutional arrangement with other entities that clouds the issue of whether it is an arm of the state. Serious factual disputes over Eleventh Amendment immunity occur "only where a relatively complex institutional arrangement makes it unclear whether a given entity ought to be treated as an arm of the state." Plaintiffs argue that KU-Wichita is in a consortium or joint enterprise that has effectively divested or stripped KU-Wichita of any sovereign character and has waived any Eleventh Amendment immunity.
Teichgraeber, 946 F. Supp. at 903 (citations omitted).
Plaintiffs refer to an arrangement in which KU-Wichita is a member of the defendant Wichita Center for Graduate Medical Education ("WCGME"), a not-for-profit corporation, having as additional members the defendant Wesley Medical Center ("Wesley"), Via Christi Regional Medical Center ("Via Christi") and the Department of Veterans Affairs Medical and Regional Office Center ("VA"). Wesley pays KU-Wichita to provide faculty teaching services in obstetrics and gynecology for residents and Wesley provides clinical facilities to KU-Wichita for clinical health training of undergraduate medical students. The member institutions of WCGME provide clinical facilities to KU-Wichita for the graduate medical education of residents and WCGME pays the salaries and fringe benefits to residents.
Apparently the VA withdrew as a member at some point. See Affidavit of Janice M. Arbuckle at p. 54.
Citing Bank of United States v. Planters' Bank of Georgia, Plaintiffs argue that WCGME and Wesley do not rise to a level of an "arm" or "alter ego" of the state, but rather KU-Wichita "descends to a level with those with whom it associates." But the Planters' Bank analysis is not germane because it involved the government becoming a corporator, which "lays down its sovereignty, so far as respects the transactions of the corporation, and exercises no power or privilege which is not derived from the charter." The court noted that a suit against the Planters' Bank of Georgia is no more a suit against the State of Georgia, than against any other individual corporator because any judgment would be satisfied from property of the corporation, not from the state treasury.
Plaintiffs cite S Davis Intern., Inc. v. The Republic of Yemen, 218 F.3d 1292, 1300 (11th Cir. 2000) (citing Bank of United States v. Planters' Bank of Georgia, 22 U.S. 904, 907 (1824)).
Planters' Bank, 22 U.S. at 908.
Id. at 906.
In this case, the judgment would be satisfied from the state treasury, not from any property of a corporation or other entity. The Supreme Court has noted the significance accorded this factor in relation to other Eleventh Amendment considerations. Placing special emphasis on the funding factor is supported by the Eleventh Amendment's central goal: "the prevention of federal court judgments that must be paid out of the State's treasury."
See Hess v. Port Authority Trans-Hudson Corp., 513 U.S. 30, 31 (1994).
Christy v. Pennsylvania Turnpike Comm'n, 54 F.3d 1140, 1145 (3rd Cir. 1995).
Finally, Plaintiffs argue that other circumstances evidence KU-Wichita's autonomy, including that KU-Wichita can sue and be sued in its own name. Although Plaintiffs named "University of Kansas School of Medicine-Wichita" rather than the State of Kansas as a defendant, in their Second Amended Complaint Plaintiffs acknowledge that KU-Wichita "is a branch of the University of Kansas and, therefore, a governmental entity of the State of Kansas . . . Service of process may be made on defendant . . . [KU-Wichita] by serving the Attorney General of the State of Kansas, Carla Stovall. . . ." And, in this case, Scott B. Poor from the State of Kansas Office of the Attorney General entered his appearance to represent KU-Wichita.
K.S.A. 76-713 states that:
. . . Any state educational institution may be sued and may defend any action brought against it. The attorney general, or an attorney designated by the attorney general, shall represent the board of regents and any state educational institution in all litigation, except that litigation arising pursuant to contracts for collection services entered into under K.S.A. 76-745 and amendments thereto shall not be subject to this requirement. . . .
Moreover, even though KU-Wichita has the capacity to sue and be sued, this does not divest it of sovereign character nor waive its sovereign privileges. In its Ellis decision, the Tenth Circuit ruled that although Kansas has generally authorized state court suits against any state educational institution under K.S.A. 76-713, Kansas has not expressly consented to suit in federal court and such waiver cannot be implied into the statute.
Ellis v. Univ. of Kansas Medical Center, 163 F.3d 1186, 1195 (10th Cir. 1998).
There are only two circumstances when a citizen may sue a state and its alter egos in federal court without being barred by the Eleventh Amendment. First, a federal court may hear suits against a state if the state has expressly waived its Eleventh Amendment protection and consented to such suit in the federal courts. Second, a citizen may sue a state in federal court when Congress has abrogated Eleventh Amendment immunity by a valid exercise of Congressional power. Neither circumstance applies in this case.
Id.
IT IS THEREFORE ORDERED BY THE COURT that Defendant University of Kansas School of Medicine — Wichita's Motion to Dismiss pursuant to Fed.R.Civ.P. 12(b)(1) based on a lack of subject matter jurisdiction is GRANTED.
IT IS SO ORDERED.