HAYNES, Circuit Judge:
In this case, which was removed from state court, Kale Flagg ("Flagg") appeals the dismissal of his complaint against Stryker Corporation ("Stryker") and Memometal Incorporated ("Memometal") (collectively, the "Manufacturing Defendants"), and five fictitious insurance companies.
Although we do not review the merits of the decision below, some background facts are helpful for understanding the jurisdictional determination. Flagg had surgery on his foot, utilizing the services of Dr. Denise Elliot, West Jefferson Medical Center, and the Foot and Ankle Center (collectively, "Medical Defendants") to implant a device manufactured by the Manufacturing Defendants.
Although all of the Medical Defendants and Flagg as plaintiff were citizens of Louisiana, the Manufacturing Defendants removed the case on the basis of diversity jurisdiction. The Manufacturing Defendants alleged that they were citizens of other states and that the Medical Defendants were improperly joined such that their non-diverse citizenship could be discounted.
Flagg appealed, but failed to challenge the district court's jurisdiction. Nonetheless, subject-matter jurisdiction cannot be waived, so we requested supplemental briefing on this issue. We now conclude that the district court should not have discounted the citizenship of the Medical Defendants and that the court lacked diversity jurisdiction.
Under the improper-joinder doctrine, a court should disregard the citizenship of non-diverse defendants where "there is no reasonable basis for predicting that the plaintiff might establish liability... against the in-state defendant[s]." Badon v. R J R Nabisco Inc., 224 F.3d 382, 390 (5th Cir.2000). The Manufacturing Defendants argue that the case against the Medical Defendants is premature in light of the still-pending medical review panel proceeding and, therefore, there is "no reasonable basis" to predict liability against the Medical Defendants. Flagg argues unconvincingly that his case against the Medical Defendants is not a medical malpractice case at all. In the district court, he argued that the case should be stayed until the medical review panel is concluded, at which time it should be remanded.
We begin with an examination of the Louisiana Medical Malpractice Act ("LMMA"). The LMMA governs claims for "any unintentional tort or breach of contract" brought against a qualified "health care provider." LA.REV.STAT. ANN. §§ 40:1299.41, 40:1299.47. The Act requires a plaintiff to submit a claim to a medical review panel before bringing suit. Id. § 40:1299.47(B)(1)(a)(i) ("No action against a health care provider covered by this Part ... may be commenced in any court before the claimant's proposed complaint has been presented to a medical review panel established pursuant to this Section."). The Supreme Court of Louisiana has interpreted this provision to mean that a malpractice complaint against a covered health care provider should be dismissed without prejudice if it is filed "prior to submission of the complaint to a medical review panel and [before] the panel has rendered its expert opinion on the merits of the complaint, unless this requirement is waived by the parties' agreement." Delcambre v. Blood Sys., Inc., 893 So.2d 23, 27 (La.2005); see also Gele v. Binder, 904 So.2d 836, 838 (La.Ct.App.2005); Brister v. Sw. La. Hosp. Ass'n, 624 So.2d 970, 971-72 (La.Ct.App.1993).
Medical review panels "consist of three health care providers who hold unlimited licenses to practice their profession in Louisiana and one attorney." LA.REV.STAT. ANN. § 40:1299.47(C). The attorney serves as an advisory chairperson of the panel and has no voting power. Id. § 40:1299.47(C)(1)(b)(2). The parties submit written evidence to the panel and, with the consent of two members of the panel, may subpoena documentary evidence or deposition testimony for submission. Id. § 40:1299.47(D). The panel may solicit its own evidence, and the parties have the right to convene the panel for questioning at an informal meeting before any report
Id. § 40:1299.47(G).
The LMMA also contains some provisions meant to regulate the timeliness of the process. First, an attorney chairman for the medical review panel is supposed to be appointed within one year from the date on which a request for review is filed. Id. § 40:1299.47(A)(2)(c). If this does not happen within nine months of the initial filing, the board charged with overseeing this process is supposed to "send notice to the parties by certified or registered mail that the claim will be dismissed in ninety days unless an attorney chairman is appointed within one year from the date the request for review of the claim was filed." Id. Following that notice, if an attorney chairperson is not appointed and noticed within that first year, the claim is dismissed and the parties are deemed to have waived the use of the medical review panel. Id. After an attorney chairman is selected, an opinion should be rendered within one year, or else "suit may be instituted"; "[h]owever, either party may petition a court of competent jurisdiction for an order extending the twelve month period... for good cause shown." Id. § 40:1299.47(B)(1)(b). If the parties obtain an extension and no opinion is rendered within that time, "the medical review panel established to review the claimant's complaint shall be dissolved." Id. Finally, "[t]he filing of a request for a medical review panel shall suspend the time within which suit must be filed until ninety days after the claim has been dismissed" or the panel has been dissolved. Id. §§ 40:1299.47(A)(2)(c), (B)(3).
We have not previously addressed the interaction of the LMMA with diversity jurisdiction. In the past, district courts have diverged in their views. Some of those courts have found that the LMMA requires the presentation or exhaustion of administrative remedies before an LMMA claim is ripe to be heard in federal court. These cases dismiss non-diverse defendants as improperly joined and allow plaintiffs' claims against diverse defendants to proceed in federal court. See, e.g., Silvestrini v. Intuitive Surgical, Inc., No. 11-2704, 2012 WL 380283, at *5 (E.D.La. Feb. 6, 2012) (collecting cases for the proposition that federal courts "have denied remand when a plaintiff has failed to present malpractice claims against a non-diverse defendant to a medical review panel because the courts have found that such non-diverse defendants were improperly joined").
After our decisions in Melder v. Allstate Corp., 404 F.3d 328, 331-32 (5th Cir.2005) and Holder v. Abbott Laboratories, Inc., 444 F.3d 383, 387-89 (5th Cir.2006), district courts began to conclude that LMMA defendants should be treated as improperly joined when the review board has not yet issued its opinion. See, e.g., Fontenot v. Johnson & Johnson, No. 10-162, 2010 WL 2541187, at *6-10 (W.D.La. Apr. 30, 2010), report and recommendation adopted, No. 10-162, 2010 WL 2541178 (W.D.La. June 17, 2010). We conclude, however, that these cases do not reach as broadly as the Manufacturing Defendants contend.
In Melder v. Allstate Corp., we found plaintiffs bringing claims related to insurance rate-making could not "seek judicial relief until after they ha[d] exhausted their administrative remedies" with the Louisiana Insurance Rate Commission ("LIRC"). 404 F.3d at 332. The plaintiffs sued LIRC, a non-diverse defendant, but this court affirmed the district court's dismissal of LIRC as improperly joined. Id. at 330, 332. Since plaintiffs had comprehensive administrative remedies to challenge rates before LIRC and LIRC closely controlled and approved all insurance rates, this court enforced Louisiana's requirement that plaintiffs exhaust administrative remedies before bringing suit.
By contrast, the LMMA is not a comprehensive administrative scheme designed to adjudicate a plaintiff's malpractice claims. The net result of the process is an expert opinion admissible in a subsequent lawsuit, but not a decision in and of itself. See LA.REV.STAT. ANN. § 40:1299.47(G), (H) (noting the "report of the expert opinion reached by the medical review panel shall be admissible as evidence" in any subsequent lawsuit, but "shall not be conclusive," and that the panel has the "sole duty to express its expert opinion" as to whether the applicable standards of care were met). Thus, a plaintiff who obtains a positive opinion from the medical review board must still file suit and have the claim adjudicated; it is the same for the defendants who have not received anything akin to a final administrative decision and therefore are not "finished," subject only to appeal, once the review is complete.
Further, the completion of the process is not always a prerequisite to filing suit. The parties can waive the medical review process in several ways. Most simply, "[b]y agreement of all parties, the use of
Far from demonstrating that there is "no reasonable basis" on which the Medical Defendants could be held liable ultimately in this case, the Manufacturing Defendants indirectly pointed the finger at the Medical Defendants in their arguments about res ipsa loquitur. Indeed, based on the Manufacturing Defendants' arguments, the district court rejected Flagg's attempt to invoke "res ipsa loquitur," observing that the doctrine is not applicable "[w]hen reasonable hypotheses as to other causes of the plaintiff's injuries remain." Flagg v. Elliot, No. 2:14-CV-852, 2014 WL 3715127, at *6 (E.D.La. June 16, 2014) (citation omitted).
This situation highlights another problem with concluding the Medical Defendants are improperly joined in this case: it could lead to piecemeal litigation and potentially inconsistent results. The Medical Defendants and the Manufacturing Defendants are clearly properly joined parties in this case under Federal Rule of Civil Procedure 20. All of these defendants are alleged to have combined to cause a single harm to Flagg — pain and further surgeries. The two groups are thus properly tried in the same lawsuit, as Flagg sought to do.
The LMMA scheme is not the kind of comprehensive administrative scheme we have cited in allowing a district court to discount the citizenship of non-diverse parties. We conclude that the fact that the medical review panel apparently still has yet to issue its opinion
W. EUGENE DAVIS, Circuit Judge, dissenting:
The majority holds that this case should be remanded to state court even though the non-diverse party cannot be sued under the state statute creating the cause of action. I disagree and dissent.
As the majority opinion reflects, Mr. Flagg brought suit in state court against both the manufacturer of a toe implant and the medical providers who performed the implant. The manufacturing defendants were diverse, while the medical provider defendants were not diverse. Flagg sued the manufacturers for products liability and the medical provider defendants for malpractice.
Under Louisiana Revised Statute § 40:1299.47 (LMMA), which provides a cause of action against health care providers for malpractice, a patient cannot sue that provider until his case is presented to an administrative panel.
The primary question here is whether a plaintiff's unexhausted claim against a non-diverse defendant should be disregarded as improperly joined for purposes of determining diversity jurisdiction. The majority refused to dismiss this suit against the medical providers and retain the action against the manufacturing defendants.
Smallwood v. Illinois Central Railroad Co. formulated the standard for improper joinder. Improper joinder applies when a plaintiff is unable to maintain a cause of action against the non-diverse party.
In Melder v. Allstate, 404 F.3d 328 (5th Cir.2005), and Holder v. Abbott Labs., 444 F.3d 383 (5th Cir.2006), we held that plaintiffs' unexhausted claims under statutes other than the LMMA had no possibility of recovery, and therefore, they were improperly joined. Furthermore we dismissed the suits against defendants who were the subject of unexhausted claims.
The majority takes the position that these cases are distinguishable because the administrative bodies in Melder and Holder were authorized to resolve the disputes presented by litigants, whereas the LMMA panel hears evidence and arguments and then issues an opinion on whether malpractice occurred. The LMMA opinion, while not binding, is admissible at a later trial as highly probative evidence.
The majority does not explain why this distinction is significant for determining whether a plaintiff can bring suit under the LMMA. We did not condition our holding in Melder and Holder on such a consideration; and, we have never considered such a distinction relevant under Title VII.
Under Title VII, an employee asserting a claim of employment discrimination against an employer must file a charge with the EEOC.
The EEOC has no authority to resolve disputes by rendering a binding decision.
I cannot endorse a rule that enforces the requirement imposed by a federal statute
The majority also distinguishes Melder and Holder arguing that those administrative bodies acted under a much more comprehensive scheme. In my view, this difference is insignificant for our purposes. The sole issue is whether a plaintiff can demonstrate that he has a viable action against a non-diverse defendant at the time the action is removed. We should have a bright line rule: when the statute creating a cause of action requires exhaustion with an administrative agency before suit can be filed, a plaintiff cannot maintain an action in court on the unexhausted claim. Such an action should be dismissed, and the defendants disregarded for diversity jurisdiction purposes.
Under the majority's rule, courts would be required to evaluate the comprehensiveness of the administrative scheme in each new statute along with the adjudicative authority of the administrative body. District courts would be required to determine on which side of the line the administrative scheme falls. This is not a sensible approach. To the contrary, we should respect the judgement of the state on how it chooses to structure its administrative scheme. So long as the state determines that no suit may be filed on a cause of action until exhaustion, we should follow that directive.
Finally, the majority's concern based on judicial efficiency considerations for splitting the products liability and medical malpractice cases is overblown. If the district court in this case dismisses the non-diverse medical provider parties as improperly joined, nothing prevents it from staying the products action pending the medical review panel's opinion. Then, if the plaintiff decides to forgo his malpractice claim, the district court can resolve the products case. However, if the plaintiff joins the malpractice case with the pending products case, then the district court will remand the entire case for a single trial.
For these reasons, I respectfully dissent.