Opinion
Civ. No. 02-2281 (WGB).
December 17, 2003
Karla Donovan, Esq., BUCKLEY THEROUX, LLC, A Limited Liability Company, Princeton, NJ, Attorney for Defendant Guy Murphy, M.D.
Pamela R. Perron, AUSA, U.S. Attorney's Office, Newark, NJ, Attorney for Defendant United States of America.
OPINION
Defendant Guy Murphy, M.D. ("Dr. Murphy") seeks to have this Court certify that at the time of Plaintiff Shadiquah Lacey's ("Lacey") labor and delivery, he was acting within the scope of his employment pursuant to 28 U.S.C. § 2679(d)(3).
The Court has jurisdiction pursuant to 28 U.S.C. §§ 1346(b) and 28 U.S.C. § 2679.
Defendant United States of America ("the Government") contends that Dr. Murphy was acting outside the scope of his employment, and therefore, his actions are not covered by the Federal Tort Claims Act ("FTCA"). Additionally, the Government claims that Plaintiffs Mykal Lacey-Echols ("Mykal") and his guardian ad litem, Shadiquah Lacey, and Shadiquah Lacey and Tyrone Echols Jr., individually (collectively "Plaintiffs") have advised that they will withdraw their claims against Defendant Newark Community Health Centers, Inc. ("NCHC") in the event that Dr. Murphy was not acting within the scope of his employment; thus, the Government, seeks dismissal of all claims against it pursuant to Fed.R.Civ.P. 12(b)(1) for lack of subject matter jurisdiction and remand of the remainder of the case.
Murphy's petition is denied. Because Dr. Murphy acted outside the scope of his employment and his actions are therefore not covered by the FTCA, the Government is not the proper party to be charged as a substitute defendant for Dr. Murphy's alleged medical malpractice. Accordingly, those claims against the Government must be dismissed. However, to the extent that the Government's motion to dismiss and for remand is contingent on Plaintiffs' withdrawal of certain of their claims, which is an event that has yet to occur, the Government's motion is dismissed without prejudice. I. BACKGROUND
A. Procedural History
Plaintiff Lacey saw Dr. Guy Murphy, an obstetrician, for prenatal care at NCHC. On March 21, 2000, Lacey gave birth to an infant, Mykal, at University Hospital, Newark, New Jersey, which is part of the University of Medicine and Dentistry of New Jersey ("UMDNJ").
On March 6, 2001, Plaintiffs filed suit in the Superior Court of New Jersey alleging medical malpractice arising out of the March 20 and 21, 2000 labor and delivery of Mykal. Plaintiffs allege that Dr. Murphy was negligent with regard to the prenatal care of Lacey, as well as the labor and delivery of Mykal. The suit was filed against Dr. Murphy, NCHC, and UMDNJ.
On September 7, 2001, Plaintiffs filed an administrative tort claim with the Department of Health and Human Services ("HHS"). By letter dated November 15, 2002, HHS denied FTCA coverage for Mykal.
On May 10, 2002, the Government filed a Notice of Removal to remove this case to this Court pursuant to 28 U.S.C. § 2679(d)(2), which allows for the removal and substitution of the United States as party defendant once the Attorney General or his designee, certifies that a federal employee who is sued in state court for a wrongful or negligent act was committed while the employee "was acting within the scope of his office or employment." The Notice of Removal states that NCHC was deemed a federal entity. (See Notice of Removal, at ¶¶ 4-5). It also provides that at certain relevant times prior to March 20, 2000, and specifically excluding conduct on or after March 20, 2000, Dr. Murphy has been deemed to be a federal employee acting within the scope of employment. (See id.) Therefore, this action was to be deemed to be against the United States, and the United States was to be substituted in place of NCHC and Dr. Murphy for conduct occurring prior to March 20, 2000. (Id.)
Appended to the Notice of Removal is a declaration from the Secretary of HHS ("Secretary") stating that "Dr. Murphy has been deemed an employee of the Public Health Service for all actions alleged in this matter except for the delivery of Mykal Lacey-Echols on March 21, 2000." (Declaration of Richard G. Bergeron ("Bergeron Decl."), at ¶ 3, attached to Notice of Removal).
On May 16, 2002, Plaintiffs filed a Notice of Intent to Submit a Motion for Remand to the Superior Court of New Jersey, on the grounds that Dr. Murphy was not covered by the FTCA for his actions during the delivery of Mykal. On that basis, Plaintiffs indicated they would voluntarily dismiss their claims as to NCHC and have the case remanded. In response, Dr. Murphy and the Government both proposed a short discovery period limited to the issue of whether Dr. Murphy was acting within the scope of his employment during the labor and delivery of Mykal.
During a July 25, 2002 scheduling conference, Magistrate Judge Madeline C. Arleo permitted the parties a 90 day discovery period limited solely to the issue of whether Dr. Murphy was acting within the scope of his employment with NCHC at the time of the labor and delivery of Mykal at UMDNJ on March 20 and 21, 2000. Thereafter, the Government orally declined to certify that Dr. Murphy was acting within the scope of his employment when he treated Lacey as an inpatient at UMDNJ on March 20-21, 2000 because Dr. Murphy accepted direct payment for the delivery rather than billing through his employer, NCHC.
Dr. Murphy now moves to have this Court certify that he was in fact acting within the scope of his employment pursuant to 28 U.S.C. § 2679(d) (3). The Government opposes Dr. Murphy's motion and also moves for dismissal pursuant to Fed.R.Civ.P. 12(b) (1) and remand to the state court under 28 U.S.C. § 1447, contending that because Dr. Murphy accepted direct payment for the labor and delivery, he was moonlighting and therefore, outside the scope of any federal employment. Because Plaintiffs have advised that they will accept remand to state court and withdraw the claims against NCHC in the event Dr. Murphy was not acting within the scope of his employment during delivery at UMDNJ, the Government argues that it is not a proper party to this suit and that therefore, this Court lacks subject matter jurisdiction.
B. Facts
1. Dr. Murphy's Employment With NCHC
Dr. Murphy maintains a private practice, but he has also been employed by the NCHC since 1993. He is the only obstetrician on NCHC's staff with privileges at UMDNJ. In 2000, his employment with NCHC was part-time, three days per week as a gynecologist/obstetrician. His only employment contract with NCHC expired by its terms in 1994; there was no written employment contract in March 2000. Dr. Murphy states that after the expiration of his written contract, all terms and conditions of his employment were discussed and orally agreed to between Dr. Murphy and Russell, then President and CEO of NCHC. None of these oral agreements were reduced to writing.
Generally, the employment terms of physicians employed by Section 330 grantees were arranged between the grantee and the physician. (Bree Tr., at 27:23-28:2).
Dr. Murphy testified that NCHC initially provided him with medical malpractice insurance coverage that covered his NCHC patients as well as his private practice patients. However, sometime after June 1996, Russell advised Dr. Murphy that because of financial difficulties, NCHC would no longer be providing medical malpractice coverage for him for his private practice patients, but that he would be covered by the FTCA for services he rendered to NCHC patients. (Guy Murphy, M.D. Dep. Tr. ("Murphy Tr."), attached as Ex. L to Donovan Cert., at 41:13-19; 47:16-48:10; 55:20-56:10). Russell also purportedly told Dr. Murphy that he could continue to bill NCHC patients privately for inpatient services. (Id. at 37:10-16.) Prior to 1996, Dr. Murphy had billed patients directly for inpatient services. (Id. at 37:21-23.) According to Dr. Murphy's testimony, Russell never linked in conversation, either expressly or by implication, the way in which the patients were billed for inpatient services with the availability of malpractice coverage through NCHC under the FTCA. (Id. at 13:14-24; 17:17-19; 41:13-20.) Nonetheless, Dr. Murphy's assumption or understanding after June 1996 was that his inpatient services for NCHC patients would be covered by the FTCA, even if he directly billed and accepted fees from those patients. (Id. at 13:2-20).
Dr. Murphy stated that he never wrote a memo or letter to NCHC to confirm his understanding that FTCA coverage would be available for his inpatient activities for which he directly billed and accepted fees. (Id. at 30:10-15). He further testified that he never received any communications from any federal agency officially condoning his acceptance of fees directly for inpatient services and guaranteeing federal agency malpractice coverage for such services. (Id. at 30:4-9). Dr. Murphy did not try to confirm whether his understanding of FTCA coverage was correct by contacting a lawyer. (Id. at 15:20-16:1). Additionally, Dr. Murphy did not attend any physicians' staff meetings where payment for inpatient services was discussed. (Id. at 16:8-11).
Upon learning of the state court malpractice litigation, Dr. Murphy spoke to Mr. Russell who then drafted a letter dated March 1, 2001 addressed "To Whom It May Concern," advising that Dr. Murphy, as an employee of NCHC, was covered under the FTCA.
Peter Tah, M.D. ("Dr. Tah"), another board-certified obstetrician/gynecologist associated with NCHC, has privileges at Wayne and Columbus Hospitals. Dr. Tah testified that since 1997, he has billed privately for services that he rendered to NCHC patients at Columbus Hospital. He does not remit to NCHC any of the fees he collects with respect to his inpatient care. Dr. Tah had the same understanding as Dr. Murphy regarding the existence of malpractice coverage under the FTCA for deliveries performed on NCHC patients regardless of whether he directly billed those patients.
2. Dr. Murphy's Billing for Lacey's Pre-Natal Care, Labor and Delivery
Lacey went to NCHC in 1999 for pre-natal care. NCHC billed Medicaid for all of Lacey's pre-natal and post-natal visits with Dr. Murphy on NCHC premises. Aside from the delivery, Dr. Murphy saw Lacey only at the NCHC facility.
The NCHC has several outpatient facilities, but for inpatient services such as baby deliveries, NCHC patients must go to a hospital. Thus, Lacey was admitted to UMDNJ on March 20, 2000, and on March 21, 2000, Mykal was born. Dr. Murphy placed a notice of the delivery in Lacey's medical chart, but he did not advise NCHC's financial department that he had delivered Mykal. He did not bill through NCHC for his services to Plaintiffs at UMDNJ. Instead, Dr. Murphy submitted a claim to New Jersey Medicaid for $3,500 for the delivery. Medicaid paid Dr. Murphy $595.00, none of which Dr. Murphy remitted to NCHC. NCHC was unaware of, and had no control over the rates that Dr. Murphy charged for deliveries. There is no dispute that Dr. Murphy directly billed for the delivery of Mykal performed at UMDNJ.
C. Statutory Framework
1. Federal Tort Claims Act
Under the FTCA, 28 U.S.C. §§ 1346(b), 2671-80, which is a limited waiver of sovereign immunity, the sole remedy for tortious or negligent conduct by federal employees acting within the scope of their employment is against the United States. Thus, when a federal employee is sued, once the Attorney General of the United States certifies that the employee was acting within the scope of his or her employment, the action against the federal employee is deemed to be against the United States, and the United States must be substituted for the employee as the party defendant. 28 U.S.C. § 2679(d) (1). The Attorney General's certification conclusively establishes scope of office or employment for removal purposes. 28 U.S.C. § 2679(d)(2). However, if the Attorney General refuses "to certify scope of office or employment . . ., the employee may at any time before trial petition the court to find and certify that the employee was acting within the scope of his office or employment." 28 U.S.C. § 2679 (d) (3).
The Attorney General has delegated his authority to issue § 2679(d) certifications to the United States Attorneys. 28 C.F.R. § 15.3; see Wilson v. Jones, 902 F. Supp. 673, 677 n. 1 (E.D. Va. 1995).
Passed as an amendment to the FTCA, the Federal Employees Liability and Reform Tort Compensation Act of 1988, 28 U.S.C. § 2679, is also known as the Westfall Act.
2. Federally Supported Health Centers Assistance Act
The Federally Supported Health Centers Assistance Act ("FSHCAA"), 42 U.S.C. §§ 233, et seq., extends FTCA coverage to employees of the Public Health Service. Section 233(a) of the FSHCAA provides:
The remedy against the United States provided by [the Federal Tort Claims Act] . . . for damage for personal injury, including death, resulting from the performance of medical, surgical, dental, or related functions . . . by any commissioned officer or employee of the Public Health Service while acting within the scope of his office or employment, shall be exclusive of any other civil action or proceeding by reason of the same subject-matter against the officer or employee . . . whose act or omission gave rise to the claim.42 U.S.C. § 233(a).
Pursuant to the FSHCAA, certain private "health centers" that serve underserved populations and that request and receive federal grant money pursuant to Section 330 of the Public Health Act, 42 U.S.C. § 254b, may apply to HHS to be "deemed" an employee of the Public Health Service by the Secretary of HHS. 42 U.S.C. § 233(g) (1) (D). Once a health center is deemed to be a federal employee, "the health center need not purchase and maintain malpractice insurance for itself or its physicians" because in effect, the United States through the FTCA, "exposes itself to lawsuits, in place of a health center." Miller v. Toatley, M.D., 137 F. Supp.2d 724, 725 (W.D. La. 2000). The purpose of this is to allow deemed health centers to reduce their costs so that more funds are available for direct service to underserved populations.
The Secretary's determination that an entity or employee of an entity is deemed to be an employee of the Public Health Service is final and binding upon the Secretary, the Attorney General, and "other parties to any civil action or proceeding." 42 U.S.C. § 233 (g) (1) (F).
The exclusive remedy for personal injuries caused by a deemed community health center or its employees acting within the course and scope of employment is an action against the United States under the FTCA. 42 U.S.C. § 233(g); see Miller, 137 F. Supp.2d at 725.
Here, it is undisputed that Defendant NCHC applied for, and was deemed on April 15, 1996 to be a "federal employee" eligible for coverage under the FTCA. The deeming letter states, "Please note that the applicability of the Act [FTCA] to a particular claim or case will depend upon the determination or certification, as appropriate, by the Attorney General that the individual or grantee is covered by the Act and was acting within the scope of employment."
The Bureau of Primary Health Care ("BPHC") transmits its policy through Policy Information Notices ("PINs) and provides a more detailed explanation of the policies instituted through Policy Advisory Letters ("PALs"). From 1995 through 1999, HHS sent three PINs and a PAL to all deemed health center administrators advising that, if physicians directly billed and received funds for inpatient hospital care of a health center patient, those services would be considered to be outside the scope of the funded project of the health center, and there would be no protection under the FTCA. BPHC also made all PINs and PALs available on the Internet as of 1994.
BPHC is a bureau under the Health Resources and Services Administration, an operating division of HHS.
PIN 95-29, dated September 1995, stated that in the event a medical malpractice suit is filed against the health center or its staff, the deemed center must "verify that the defendant was not billing privately for the services or was not being paid or compensated above his or her employment/contract wages for services." (Declaration of Pamela R. Perron ("Perron Decl."), Ex. E at ¶ VIII(5)).
In April 1996, PIN 96-07 instructed health centers to clearly define in a written job description what is expected of the employee. "Although it is not necessary to be overly specific, [the employment agreement or contract for services] would be sufficient to determine whether the individual was acting within the scope of his/her employment (or contract) with the health center, as opposed to moonlghting." (Id. at ¶ IV(B)). PIN 96-07 further instructed senior management of the health centers to submit verification that "the named individual(s) was not billing privately or being paid or compensated above the amount stated in their employment agreement or contract with the health center." (Id. at ¶ XI(C)).
In April 1999, PIN 99-08 superceded earlier notices with the requirement that once a malpractice action is commenced, health centers must provide a sworn "declaration signed by the practitioner that the practitioner is licensed to practice medicine and that the practitioner was not billing privately." (Id. at ¶ XIX(B) (3)).
PIN 99-08 is available on the internet at ftp://ftp.hrsa.gov/bphc/docs/1999PINS/PIN99-08.PDF.
Finally, in PAL 99-15, the BPHC expressly stated that "if a provider bills for services and receives payment from the patient or third party payer [sic] then the activity giving rise to the payment would not be covered under FTCA." (Id., Ex. F at Answer #4).
PAL 99-15 is available on the internet at ftp://ftp.hrsa.gov/bphc/docs/1999PALS/PAL99-15.PDF.
While the Government does not have proof of mailing of the three PINs to NCHC, the Government has produced evidence to show that at least PAL 99-15 was mailed on or about May 3, 1999 to Robert Russell ("Russell"), who was President and CEO of NCHC for approximately 15 years, from 1986 through his death in September of 2001. (See Perron Decl., Ex. L). Moreover, Dr. Murphy does not dispute that NCHC received PINs and PALs at its corporate office, and that Robert Russell distributed them to the Medical Director and others as he saw fit. PALs and PINs were not distributed directly to staff physicians. (Martin Bree Dep. Tr. ("Bree Tr."), attached as Ex. I to Certification of Karla M. Donovan in Support of Petition ("Donovan Cert."), at 24:23-25:14). II. DISCUSSION
A. Whether Dr. Murphy Was Acting Within The Scope Of His Employment
Because the Attorney General has refused to certify that Dr. Murphy was acting within the scope of his employment, Dr. Murphy seeks, pursuant to 28 U.S.C. § 2679(d)(3), to have this Court find and certify that he was acting within the scope of his federal employment during the relevant times on March 20-21, 2000. In contrast, the Government moves for dismissal and remand, arguing that it is not a proper party to this suit and that this Court lacks subject matter because Dr. Murphy was not acting within the scope of his employment during delivery at UMDNJ.
1. Standard of Review
A review of the scope certification decision by the Attorney General, or the United States Attorney as his designee, is subject to de novo review by a district court. See Schrob v. Catterson, 967 F.2d 929, 936 n. 13 (3d Cir. 1992); Melo v. Hafer, 912 F.2d 628, 641-42 (3d Cir. 1990), aff'd, 112 S. Ct. 358 (1991). Although the scope certification is not conclusive, it serves as prima facie evidence regarding the employee's challenged conduct. Id. at 936; see also Gutierrez de Martinez v. Drug Enforcement Admin., 111 F.3d 1148, 1153 (4th Cir. 1997). The party seeking review bears the burden of rebutting or disproving, by a preponderance of the evidence, the Attorney General's decision to grant or deny the scope of employment certification. Schrob, 967 F.2d at 936; see also Gutierrez de Martinez, 111 F.3d at 1153; Green v. Hall, 8 F.3d 695, 698 (9th Cir. 1993). If the party challenging the scope certification comes
forward with competent evidence that would permit a conclusion contrary to that found in the certification, the defendant and the government, after discovery if desired, are entitled to an evidentiary hearing at which both sides will tender their evidence on all disputes material to the scope of employment issue. Thereafter, the district court will resolve all issues of fact or law relevant to that issue and will find that the defendant did or did not act within the scope of his or her employment.Melo v. Hafer, 13 F.3d 736, 747 (3d Cir. 1994). "If the facts can be determined without an evidentiary hearing, the court can rule on a pretrial motion to substitute [the United States as the party defendant] or to set aside the substitution based on the certification, pleadings, documentary evidence, and affidavits."Schrob, 967 F.2d at 936.
Here, there are no disputed factual issues that must be resolved in order for the Court to rule on the pending motions.
In arguing that Dr. Murphy was acting outside the scope of his employment, the Government erroneously relies on the control test. See Gov't Opp'n, at 14-17. Although the determination of whether a person is a federal employee is a matter of federal, rather than state, law, the question of whether a defendant employee's conduct was within the scope of his employment under the Westfall Act for the purposes of FTCA coverage is governed by the law of the state where the conduct occurred. See Woods v. McGuire, 954 F.2d 388, 390 (6th Cir. 1992); Nadler v. Mann, 951 F.2d 301, 305 (11th Cir. 1992); Webb v. United States, 24 F. Supp.2d 608, 613 (W.D. Va. 1998); Wilson v. Jones, 902 F. Supp. 673, 679 (E.D. Va. 1995) (citing Williams v. United States, 350 U.S. 857 (1955) (per curiam)); Biase v. Kaplan, 852 F. Supp. 268, 292 (D.N.J. 1994). Specifically, the state law of respondeat superior applies to the scope of employment issue. See Webb, 24 F. Supp.2d at 613; Wilson, 902 F. Supp. at 679; 35A Am. Jur.2d Federal Tort Claims Act § 101.
See Ezekiel v. Michel, 66 F.3d 894, 899 (7th Cir. 1995) (citing inter alia United States v. Orleans, 425 U.S. 807, 814 (1976)); see also Alexander v. Mount Sinai Hospital Medical Center of Chicago, 165 F. Supp. 2d 768, 772 (N.D. Ill. 2001); Delvalle v. Sanchez, 170 F. Supp.2d 1254, 1265 n. 14 (S.D. Fla. 2001).
Under federal law, whether a party is an employee of the federal government or an independent contractor turns on the determination of whether the federal government has control over the performance of the contractor or whether his "day-to-day operations are supervised by the Federal Government." United States v. Orleans, 425 U.S. 807, 814 (1976); see also Duplan v. Harper, 188 F.3d 1195, 1200 (10th Cir. 1999); Tisdale v. United States, 62 F.3d 1367, 1371 (11th Cir. 1995).
2. Respondeat Superior
Under the New Jersey law of respondeat superior, the "scope of employment" refers "to those acts which are so closely connected with what the servant is employed to do, and so fairly and reasonably incidental to it, that they may be regarded as methods, even though quite improper ones, of carrying out the objectives of the employment." Carter v. Reynolds, 175 N.J. 402, 411 (2003). In assessing the scope of employment, factors that courts have considered include: "the nature of the employment, the duties of the employee, whether the accident occurred in the course of fulfilling some job-related function, or whether it occurred during a trip personal to the employee."Id. (citations omitted).
Under the respondeat superior doctrine, "an employer can be found liable for the negligence of an employee causing injuries to third parties, if, at the time of the occurrence, the employee was acting within the scope of his or her employment."Carter v. Reynolds, 175 N.J. 402, 408-09 (2003) (citingLehmann v. Toys `R' Us, Inc., 132 N.J. 587, 619 (1993) (quoting Restatement (Second) of Agency § 219 (1958))).
An employee is acting within the scope of [his or her] employment if the action is "of the kind that [the employee] is employed to perform; it occurs substantially within the authorized time and space limits; and it is actuated, at least in part, by a purpose to serve the master." Biase v. Kaplan, 852 F. Supp. 268, 292 (D.N.J. 1994) (citing Printing Mart-Morristown v. Sharp Electronics Corp., 116 N.J. 739, 771 (1989) (quoting Restatement (Second) of Agency § 228 (1958))); Carter, 175 N.J. at 411-412.
In this case, there can be no dispute that performing a delivery is of the kind of work that Dr. Murphy was employed by NCHC to perform, or that it occurred substantially within the authorized time and space limits.
There is, however, a question as to whether Dr. Murphy's delivery of Mykal without remitting any of the fees to NCHC was actuated, even in part, by a purpose to serve the employer, NCHC. As the Government points out, because Dr. Murphy billed Medicaid directly for the delivery of Mykal, without ever remitting the fee to NCHC, there was personal benefit to Dr. Murphy, but no benefit to NCHC.
Dr. Murphy does not dispute that he billed directly for Mykal's delivery. Instead, Dr. Murphy maintains that NCHC did benefit when he performed inpatient the labor and delivery of an NCHC patient because it furthered NCHC's mission to provide "quality health to the medically underserved" and helped realize other goals listed in its § 330 grant applications. Additionally, Dr. Murphy contends that by providing inpatient care for NCHC patients, it enabled NCHC in effect, to provide full service maternity care. However, these statements presuppose the very argument that Dr. Murphy is trying to establish — that he was acting in the scope of his employment at NCHC, and therefore, it was NCHC, rather than a physician in private practice that, by performing the labor and delivery, provided the "quality health to the medically underserved", as well as the full service maternity care.
Dr. Murphy also suggests that as a result of his inpatient delivery services, patients are "more likely" to return to NCHC for post natal care, thus resulting in more revenue for NCHC. This, however, is unsubstantiated speculation.
Moreover, Dr. Murphy claims that by providing inpatient delivery services to NCHC patients, NCHC benefits because he is the only physician at NCHC with privileges at UMDNJ, thus in the grant applications requesting federal funding pursuant to § 330 of the Public Health Act, NCHC can claim that it has linkage to an additional hospital. However, Dr. Murphy has not presented any evidence that NCHC's receipt of § 330 funding depended on the number of hospital linkages it listed. Thus, while the linkage to another hospital is clearly a benefit to patients, Dr. Murphy has not adequately explained how it is a benefit to NCHC, particularly when NCHC sees no portion of the fees generated by the inpatient services.
Accordingly, the Court finds that Dr. Murphy's directly billed inpatient delivery of Mykal was not actuated, even in part, by a purpose to serve NCHC. See Miller v. Toatley, 137 F. Supp.2d 724 (W.D. La. 2000) (noting that once physician, who was employed by a deemed health center, directly billed patient for the delivery of her baby, health center was not benefitting),aff'd, 251 F.3d 157 (5th Cir. 2001).
In Miller, the court held that a physician was not acting within the scope of his employment when he directly billed a patient for the delivery of her baby, regardless of whether he believed he was authorized to do so. Id. at 728-29. There, as in this case, the Government contended that because the physician, Dr. Toatley, directly billed for the delivery of the plaintiff patient's baby and for other work he performed, he was not acting within the course and scope of his employment with Bayou, a deemed health center.
In its analysis, the court recognized two possibilities: (1) Dr. Toatley directly billed to try to "pocket" the portion of the income which contractually belonged to Bayou; or (2) the doctor "honestly felt that he was authorized to directly bill without going through Bayou." Id. at 728. If Dr. Toatley acted deliberately out of greed, which the court recognized would have been easy to do since the work was done outside of the clinic, the court noted it would not "reward" such conduct; opening the coffers of the United States would "punish John and Jane Public for greed of a member of society who failed to follow the rules."Id. at 728. Alternatively, even if Dr. Toatley acted believing he was permitted to directly bill (even though he admitted he never received written permission to take the actions he did,see id. at 729 n. 4), his employment contract with Bayou clearly provided that all billing and money should be funneled through Bayou. Id. at 728.
Dr. Murphy maintains that Miller is distinguishable because here, there was no employment contract that specifically prohibited him from direct billing, and because he claims to have been advised by Russell that he could bill directly for inpatient services of NCHC patients and that such actions would be covered by the FTCA. Although it is undisputed that there was no written employment contract between NCHC and Dr. Murphy, and notwithstanding what Dr. Murphy may have been orally told or sincerely believed was permissible, the rationale behind theMiller decision is still instructive. Indeed, the Miller court observed that even without resort to the contract, plain "[c]ommon sense dictate[d] that if Bayou is not getting the benefit of billing for Dr. Toatley's efforts in delivering the [plaintiff's] baby, Dr. Toatley is not covered by Bayou." Id. at 729.
The court further commented:
The United States provides coverage to Bayou. Bayou in turn hires doctors to provide medical services for which Bayou then bills. The doctors and Bayou have a symbiotic relationship. Dr. Toatley gets a medical office, billing provided, and a large paycheck with incentives. Bayou gets to bill for his inpatient and outpatient services. Any reasonable person, especially a doctor, would understand this relationship. Once Bayou is denied the right to bill for the doctor's work with or without express written permission, Bayou is not benefitting. . . .
(emphasis added). Moreover, the Louisiana court found that Dr. Toatley "should have known that his actions would not be covered by Bayou's coverage through the United States" and that therefore, Dr. Toatley "knew that his actions were not in the scope of his employment with Bayou." Id. at 729. In reaching that conclusion, the court relied on the fact that Dr. Toatley "knew that Bayou was denied the opportunity to bill"; it notably did not attribute Dr. Toatley's constructive knowledge to the employment contract. Id.
Additionally, fairness considerations having nothing to do with Dr. Toatley's employment contract evidently factored into the court's decision that Dr. Toatley was not acting within the scope of his employment when he billed the clinic's patient directly.
To hold otherwise would expose the United States to liability for claims which it never intended to provide coverage. The United States clearly intended to provide coverage for those providers actively engaged in the scope of working for a public health facility. The United States in no way intended to impose liability on itself for private doctors providing private services for which they directly bill.
. . .
[A]lthough denial of coverage by the United States may serve to limit the [plaintiff's] recovery, the alleged unfairness to one family is minuscule in comparison with the great injustice which would be inflicted on the American people.Id. at 729-30.
Lastly, for whatever reason, the Miller court did not conduct the "scope of employment" analysis under Louisiana state law. Dr. Murphy suggests that the court did not do so because Dr. Toatley had a written agreement forbidding direct billing. There is, however, no mention in the Miller opinion of state law or why the court did not apply it. In any event, Miller is instructive in that a pertinent factor in that analysis was the issue of benefit to the employer, which under New Jersey law, is to be considered when determining whether conduct occurred within the scope of employment.
In sum, the Court finds that because Dr. Murphy directly billed for the inpatient services provided to Plaintiffs on March 20-21, 2000, and remitted no portion of that payment to NCHC, Dr. Murphy's conduct was not actuated, even in part, by a purpose to serve the master. Accordingly, Dr. Murphy acted outside the scope of his employment, and therefore, Dr. Murphy's actions are not covered by the FTCA. Because the Government is not the proper party to be charged with Dr. Murphy's alleged medical malpractice, those claims against the Government must be dismissed.
3. Implied Authority To Bind the Government
To recover for breach of an express or implied-in-fact contract with the United States, the party seeking to enforce the contract must show "that the officer whose conduct is relied upon had actual authority to bind the government in contract." H. Landau Co. v. United States, 886 F.2d 322, 324 (Fed. Cir. 1989); see also Gardiner v. Virgin Islands Water Power Authority, 145 F.3d 635, 644 (1998). Even those agents with specific authority can only bind the government to the extent that their authority permits. Gardiner, 145 F.3d at 644."An officer of the United States who does not possess express contracting authority may nevertheless bind the United States, but only if he has implied actual authority." Salles v. United States, 156 F.3d 1383, 1384 (Fed. Cir. 1998) (internal quotation marks and cite omitted). Implied actual authority to bind the government arises when "such authority is considered to be an integral part of the duties assigned to a government employee."H. Landau Co., 886 F.2d at 324; see, e.g., Thomas v. INS, 35 F.3d 1332, 1338-40 (9th Cir. 1994) (holding that from express statutory grant of authority to U.S. Attorney to "prosecute for all offenses against the United States", U.S. Attorney had "implied authority" to enter plea agreements and bind government as a whole).
Here, Dr. Murphy claims that Russell, President and CEO of NCHC, authorized him to bill privately for inpatient services at UMDNJ, and that Russell was a deemed federal employee with actual implied authority to bind the Government to his decision. According to Dr. Murphy, Russell had implied actual authority to bind the Government because the Government entrusted the administrators of the health centers with the dissemination of FTCA coverage literature as well as arranging the employment terms of physicians employed by the § 330 grantees.
In response, the Government points out that not only did Russell never tell Dr. Murphy that he would have FTCA coverage even if he directly billed for inpatient services, but that in any case, Russell was not a federal employee and had no authority to bind the United States or extend sovereign immunity. The Government also adds that Dr. Murphy is precluded by Rule 801(c), Fed.R.Evid., from relying on hearsay by an unavailable declarant, the late Russell, to prove the existence of an alleged employment agreement.
As an initial matter, the Government is correct that according to Dr. Murphy's unequivocal testimony, Dr. Murphy was never advised by Russell that even if he billed directly for inpatient services, he would be covered by the FTCA. See Murphy Tr., at 13:20-24; 17:17-19; 41:13-20. Nevertheless, Dr. Murphy claims that the Government "mischaracterizes" his testimony regarding his conversations with Russell because it does not account for the fact that in the past, he "always" billed privately for inpatient services to NCHC patients and was still provided insurance coverage.
However, by Dr. Murphy's own testimony, there was never an affirmative representation made by Russell that even if he billed NCHC patients directly for inpatient services, he would still receive FTCA coverage. To the extent that Dr. Murphy relies on Russell's March 21, 2001 letter, which contains a general statement that Dr. Murphy was employed by NCHC and covered by the FTCA, the Court notes that that letter fails to specify what billing practice Dr. Murphy used or in what particular conduct Dr. Murphy was engaged.
The Government is also correct that Russell was not a federal employee when he allegedly entered into a verbal agreement with Dr. Murphy regarding FTCA coverage. The FSHCAA provides that the FTCA is the exclusive remedy against a deemed entity and its employees for the purpose of medical malpractice claims. See 42 U.S.C. § 233(a). Here, there is no allegation that Russell's act or omission resulted in personal injury; therefore, federal employee status under the FSHCAA is not triggered. Indeed, nothing in the FSHCAA gives Russell blanket federal employee status for all purposes, rather than for just tort liability.
Moreover, being charged with distributing informational materials regarding FTCA coverage to the physicians and determining the employment terms of physicians employed by NCHC does not necessarily make Russell a federal employee; rather, those were presumably his duties as a result of his role as CEO and President of NCHC.
Nonetheless, even assuming as true, for the purpose of this motion, all of Dr. Murphy's premises, most of which the Government disputes — that Russell did represent to Dr. Murphy that he could bill directly and still receive FTCA coverage; that Russell was a deemed federal employee pursuant to the FSHCAA; that one of Russell's "assigned duties" was to distribute informational materials regarding FTCA coverage to the physicians; that he determined the employment terms of physicians employed by NCHC — Russell had neither the express nor the implied actual authority to bind the Government. The Court rejects Dr. Murphy's contention that "an integral part" of Russell's alleged assigned duties (of distributing FTCA literature and negotiating employment terms) was the implied authority to essentially override the policies set by BPHC, and further, to extend the waiver of sovereign immunity.
Dr. Murphy does not argue that Russell had any express authority to bind the Government.
In light of the Court's decision that Russell did not have any authority to bind the Government, the Court need not address whether Russell's alleged out of court statements are admissible under Rule 801(c) to show the existence of an enforceable agreement.
4. Equitable Estoppel
Dr. Murphy further contends that his reliance on Russell's representations was not unreasonable because: (1) he had no reason to believe that direct billing would eliminate FTCA coverage; (2) he had no way of knowing whether Russell was authorized to permit private billing and FTCA coverage in view of his past oral contracts with Russell; and (3) prior to 1996, he had directly billed for inpatient services. To further bolster his position, Dr. Murphy emphasizes that Dr. Tah also operated under the same understanding regarding FTCA coverage. Therefore, Dr. Murphy concludes that it would be inequitable for this Court to find that he was not acting within the scope of his employment.
The Government argues that while Dr. Tah may have suffered from the same misconception as Dr. Murphy, it does not prove the existence of an enforceable agreement. The Court agrees with the Government.
Furthermore, to the extent that Dr. Murphy is suggesting that the Government be equitably estopped from arguing that his understanding of FTCA coverage is unenforceable, the Court notes that "equitable estoppel is rarely valid against the government. [citation omitted]. In order to establish estoppel against the Government, a party must prove affirmative misconduct by the government in addition to the four traditional elements of the doctrine." Devalle v. Sanchez, 170 F. Supp.2d 1254, 1272 (S.D. Fla. 2001). The traditional elements of equitable estoppel require that there be reasonable reliance on a material misrepresentation that results in damages. See Heckler v. Community Health Services, Inc., 467 U.S. 51, 59 (1984).
Here, assuming arguendo, that Dr. Murphy could establish that the traditional elements of estoppel are satisfied, there is still no evidence of affirmative misconduct by the Government.
Finally, as unfair as Dr. Murphy claims the denial of FTCA coverage would be to him, it would be more unjust to enforce an oral agreement that no one but Dr. Murphy can testify to, and that requires the unanticipated use of public money and an extension of the limited waiver of sovereign immunity, notwithstanding that the public, by way of the deemed health center, gained no benefit. See Miller, 137 F. Supp.2d 724, discussed supra.
Even if Dr. Murphy is denied FTCA coverage, he has private malpractice insurance to cover Plaintiffs' injuries. See Insurance Documents attached as Ex. I to Perron Decl.
Therefore, Dr. Murphy has failed to establish equitable estoppel against the Government.
B. Whether Dr. Murphy Was A Federal Employee During The Labor And Delivery For Purposes of FTCA Coverage
The Government argues that the Court need not reach the issue of whether Dr. Murphy was acting within the scope of his employment because Dr. Murphy was not even a federal employee during the labor and delivery of Mykal on March 20-21, 2000.
In response, Dr. Murphy insists that this Court should not consider this argument by the Government because the dispute has continually been with respect to the scope of his employment, not whether he was an employee at all. Moreover, Dr. Murphy claims that he was in fact a federal employee.
In view of this Court's finding that Dr. Murphy was not acting within the scope of his employment when he directly billed for inpatient services provided to Plaintiffs on March 20-21, 2000, the Court need decide whether Dr. Murphy was a federal employee at the relevant times.
III. CONCLUSION
For the foregoing reasons, Dr. Murphy's petition to certify his conduct as within the scope of federal employment is denied. Those claims against the Government as substitute defendant for Dr. Murphy must be dismissed because Dr. Murphy acted outside the scope of his employment and his actions are therefore not covered by the FTCA. However, to the extent that the Government's motion to dismiss and for remand is contingent on Plaintiffs' withdrawal of certain of their claims, which is an event that has yet to occur, the Government's motion is dismissed without prejudice. Once Plaintiffs withdraw their claims against NCHC, the Government may renew its motion to dismiss and for remand.
An appropriate Order follows.