JANE MAGNUS-STINSON, District Judge.
Plaintiff Dennis Wesolowski ("
Defendants move to dismiss Mr. Wesolowski's Complaint under Federal Rule of Civil Procedure 12(b)(6) and Federal Rule of Civil Procedure 12(b)(1). Under Rule 12(b)(6), a party may move to dismiss a claim that does not state a right to relief. The Federal Rules of Civil Procedure require that a complaint provide the defendant with "fair notice of what the . . . claim is and the grounds upon which it rests." Erickson v. Pardus, 551 U.S. 89, 93 (2007) (quoting Bell Atlantic v. Twombly, 550 U.S. 544, 555 (2007)). In reviewing the sufficiency of a complaint, the Court must accept all well-pled facts as true and draw all permissible inferences in favor of the plaintiff. See Active Disposal Inc. v. City of Darien, 635 F.3d 883, 886 (7th Cir. 2011). A Rule 12(b)(6) motion to dismiss asks whether the complaint "contain[s] sufficient factual matter, accepted as true, to `state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). The Court will not accept legal conclusions or conclusory allegations as sufficient to state a claim for relief. See McCauley v. City of Chicago, 671 F.3d 611, 617 (7th Cir. 2011). Factual allegations must plausibly state an entitlement to relief "to a degree that rises above the speculative level." Munson v. Gaetz, 673 F.3d 630, 633 (7th Cir. 2012). This plausibility determination is "a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id.
Rule 12(b)(1) "allows a party to move to dismiss a claim for lack of subject matter jurisdiction." Hallinan v. Fraternal Order of Police of Chicago Lodge No. 7, 570 F.3d 811, 820 (7th Cir. 2009). The burden is on the plaintiff to demonstrate that subject matter jurisdiction exists for his or her claims. See Lee v. City of Chicago, 330 F.3d 456, 468 (7th Cir. 2003).
The following facts are drawn from Mr. Wesolowski's Complaint and are accepted as true for the purposes of deciding Defendants' Motions to Dismiss.
On June 20, 2014, Mr. Wesolowski underwent a transurethral resection of the prostate, a procedure performed to treat an enlarged prostate, at the VA Medical Center in Indianapolis, Indiana. [
The VA contracts with IU Health and IUSM to place medical providers at the VA Medical Center. [
Mr. Wesolowski also received treatment from residents placed by IUSM at the VA Medical Center pursuant to a "Medical Education Affiliation Agreement" ("
[
On March 10, 2017, Mr. Wesolowski filed his two-count Complaint in this Court, seeking compensation for the injuries he suffered during his treatment at the VA Medical Center. [
Count II alleges that Mr. Wesolowski was an intended beneficiary of the contracts between IU Health and the VA and between IUSM and the VA. [
Defendants seek dismissal of each Count of Mr. Wesolowski's Complaint on several grounds. First, as to Count I, the VA argues that the Court should either dismiss or stay Mr. Wesolowski's negligence claim for failure to join Dr. Sundaram as a required party under Federal Rules of Civil Procedure 12(b)(7) and 19. [
Count I alleges negligence against only the VA. The VA argues that the Court should stay or dismiss Count I for failure to join Dr. Sundaram, the supervising surgeon of Mr. Wesolowski's operation.
In response, Mr. Wesolowski maintains that Dr. Sundaram is not a required party under Rule 12(b)(7) and Rule 19, but states that he would not object to a stay pending the conclusion of the medical review panel proceedings. [
In reply, the VA reiterates its request for dismissal or a stay, noting that Mr. Wesolowski would not object to a stay of his negligence claim. [
The VA's Motion to Dismiss or Stay is based upon Federal Rule of Civil Procedure 12(b)(7), which provides for dismissal where a party fails to join a required party as defined in Rule 19(a)(1). Under Rule 19(a)(1), a nonparty may be a required party where the court could not "accord complete relief among existing parties" without the joinder of the nonparty or, under certain circumstances, where the nonparty "claims an interest relating to the subject of the action." Fed. R. Civ. P. 19(a)(1). If a nonparty is a required party under Rule 19(a)(1) but cannot be joined, the Court then proceeds to the multi-factor test set out in Rule 19(b) to decide whether dismissal is required or if the case may proceed without the nonparty. "The purpose of Rule 19 is to permit joinder of all materially interested parties to a single lawsuit so as to protect interested parties and avoid waste of judicial resources." Askew v. Sheriff of Cook Cty., Ill., 568 F.3d 632, 634 (7th Cir. 2009) (internal quotation omitted). The defendant bears the burden of demonstrating that the plaintiff has failed to join a required party, see Decatur Ventures, LLC v. Stapleton Ventures, Inc., 2006 WL 3305122, at *5 (S.D. Ind. 2006), and federal courts must carefully scrutinize motions to dismiss under Rule 12(b)(7) because "[d]ismissal . . . is not the preferred outcome under the Rules," Askew, 568 F.3d at 634.
The Court agrees with Mr. Wesolowski that Dr. Sundaram is not a required party under Rule 19. Indiana's comparative fault law permits juries to apportion fault attributable to nonparties, even where the nonparties have not been joined as defendants. E.g., Witte v. Mundy ex rel. Mundy, 820 N.W.2d 128, 133 (Ind. 2005) (citing Ind. Code § 34-6-2-88)); see, e.g., Zigler v. United States, 954 F.2d 430, 433 (7th Cir. 1992) (applying state-law negligence fault scheme to FTCA case). Given that the VA could assert Dr. Sundaram's negligence as an affirmative defense even if he were not joined, the VA has not established how it would be unduly prejudiced by not having Dr. Sundaram joined as a party to this action. The Court therefore declines to dismiss Count I under Rule 12(b)(7).
However, given that Mr. Wesolowski does not object to a stay pending the conclusion of Dr. Sundaram's medical review panel proceedings, the Court concludes that a temporary administrative closure of this matter may serve the interests of judicial efficiency. The medical review panel may provide valuable insight into Mr. Wesolowski's treatment and, after proceedings have ended, Mr. Wesolowski may wish to invoke this Court's supplemental jurisdiction to resolve his claims against Dr. Sundaram and the VA in a single lawsuit. Accordingly, the Court
IU Health and IUSM (collectively, "
In response, Mr. Wesolowski concedes that he did not submit his complaint to the medical review panel prior to filing suit and that he filed his Complaint in this Court outside of the statute of limitations governing Indiana medical malpractice claims. [
In reply, the IU Defendants reiterate their arguments and argue that federal law does not apply to Mr. Wesolowski's breach of contract claim. [
A complaint ordinarily does not need to "anticipate affirmative defenses," such as failure to exhaust administrative remedies and failure to comply with statutes of limitations. United States v. Lewis, 411 F.3d 838, 842 (7th Cir. 2005). However, where, as here, the plaintiff pleads facts demonstrating that the complaint was not filed within the applicable statute of limitations, dismissal under Rule 12(b)(6) may be appropriate. See id. Additionally, the Court may take judicial notice of public records when considering a motion to dismiss, such as Mr. Wesolowski's proposed complaint filed with the Indiana State Department of Insurance for medical panel review. See Geinosky v. City of Chi., 765 F.3d 743, 745 n.1 (7th Cir. 2012) (noting that the court may take judicial notice of public records); [
As Mr. Wesolowski recognizes, whether his Complaint survives the IU Defendants' Motions to Dismiss turns on whether Indiana or federal law applies. If Indiana law applies, the untimeliness of Mr. Wesolowski's Complaint and the failure to present it to a medical review panel require dismissal. On the other hand, the IU Defendants make no argument that dismissal would be required if federal law applies. The ordinary rule is that even where the United States is a party to a contract, state law applies except in instances "where a uniform national rule is necessary to further the interests of the Federal Government." Miree v. DeKalb Cnty., 433 U.S. 25, 29 (1977). Where interpretation of parts of a contract determines the rights of private parties, the Court should apply state law to those provisions and should apply federal law only to "questions directly involving the rights and duties of the Federal Government." Id. at 31.
Here, Mr. Wesolowski makes no argument that the issue of whether Mr. Wesolowski must follow the state medical review process and statute of limitations directly involves the rights and duties of the federal government—and nor could he. Whether state law provides these requirements only impacts whether Mr. Wesolowski can sue the IU Defendants. It has no impact on his claims against the VA. Thus, state law (here, Indiana law, as Mr. Wesolowski does not suggest that any other state's law should apply) governs Mr. Wesolowski's third-party beneficiary claims against the IU Defendants unless Mr. Wesolowski can point to another basis for application of federal law.
The sole argument Mr. Wesolowski makes for application of federal law is that his lawsuit has raised a conflict of laws and that the Affiliation Agreement requires application of federal law where a conflict between state and federal law exists. As set forth above in Part II.B, the Affiliation Agreement provides:
[
Mr. Wesolowski has failed to establish that any conflict exists among the Affiliation Agreement, federal law, and state law.
Mr. Wesolowski's argument also fails on its merits, notwithstanding the issue of waiver. The Court analyzes this issue while being mindful that "[b]efore entangling itself in messy issues of conflict of laws a court ought to satisfy itself that there actually is a difference" between the relevant sources of law. Barron v. Ford Motor Co. of Can. Ltd., 965 F.2d 195, 197 (7th Cir. 1992) (citing Int'l Adm'rs, Inc. v. Life Ins. Co., 753 F.2d 1373, 1376 n.4 (7th Cir. 1985)). In this case, the possible sources of law include the Affiliation Agreement, Indiana law, and federal law.
By its own terms, the Affiliation Agreement only discusses the liability of "properly appointed faculty members," "properly appointed trainees," and the United States. [
The Indiana Medical Malpractice Act ("
Mr. Wesolowski cursorily suggests that these state law provisions may conflict with two federal statutes: the Federal Employees Liability Reform and Tort Compensation Act, 28 U.S.C. § 2679(b)(1), and the Federal Tort Claims Act, id. § 2675. Section 2679(b) "immunizes federal employees acting within the scope of their employment from an action for damages through the device of substituting the United States as the party defendant, so long as the suit is not for a constitutional violation . . . ." Panther Brands, LLC v. Indy Racing League, LLC, 827 F.3d 586, 590-91 (7th Cir. 2016) (citing 28 U.S.C. § 2679(b)(2), (d)). Under the terms of the Affiliation Agreement, the "properly appointed faculty members" and "properly appointed trainees" of IUSM are entitled to the protections of § 2679(b)(1). Rather than sue such persons, a plaintiff must sue the United States because "[a]ny other civil action . . . for money damages . . . against the employee. . . is precluded." 28 U.S.C. § 2679(b)(1). Section 2675 provides that a plaintiff cannot sue the United States without first "present[ing] the claim to the appropriate Federal agency" and receiving a denial of the claim. Id. § 2675(a).
Section 2679(b)(1) explains that a plaintiff cannot sue federal employees in negligence. Section 2675 establishes an administrative exhaustion requirement that must be fulfilled before suing the United States in tort. Neither provision says anything about how or whether Mr. Wesolowski may sue the IU Defendants or any other person aside from the United States and its employees. Thus, they do not conflict with the Malpractice Act. Accordingly, the Affiliation Agreement's conflict of law provision is not implicated, and federal law does not apply. Rather, Indiana law, including the Malpractice Act and its medical panel review requirement and statute of limitations, applies. As Mr. Wesolowski concedes that he failed to comply with the medical review requirement and the statute of limitations, the Court must
One final point warrants additional discussion. If, as the IU Defendants suggest, the medical review requirement were jurisdictional, the Court would be required to address it before the statute of limitations issue and dismiss Mr. Wesolowski's Complaint without prejudice. To support the position that the requirement is jurisdictional, the IU Defendants cite to H.D. v. BHC Meadows Hospital, Inc., an Indiana Court of Appeals decision which observed: "Essentially, the Act grants subject matter jurisdiction over medical malpractice actions first to the medical review panel, and then to the trial court." 884 N.E.2d 849, 853 (Ind. Ct. App. 2008). But more recent Indiana Court of Appeals and Indiana Supreme Court opinions have held to the contrary, concluding that "exhaustion of administrative remedies is not a question of subject matter jurisdiction but one of procedural error." Ellis v. State, 58 N.E.3d 937, 940 (Ind. Ct. App. 2016) (collecting cases); see, e.g., First Am. Title Ins. Co. v. Robertson, 19 N.E.3d 757, 760 (Ind. 2014) ("[E]xhaustion of administrative remedies under [state administrative procedures act] is a procedural error and does not implicate the trial court's subject matter jurisdiction."), amended in part on other grounds, 27 N.E.3d 768 (2015); Walczak v. Labor Works-Ft. Wayne LLC, 983 N.E.2d 1146, 1153 (Ind. 2013) (noting that prior opinion discussing administrative exhaustion in terms of subject matter jurisdiction "was not really about jurisdiction at all, but about exhaustion"); see also Allstate Ins. Co. v. Menard's Inc., 285 F.3d 630, 637 (7th Cir. 2002) (noting that federal courts applying state law should deviate from the opinions of intermediate state courts where there are "persuasive indications that the highest court of the state would decide the case differently from the decision of the intermediate appellate court"). Indiana thus subscribes to the Seventh Circuit's position that "failure to exhaust administrative remedies does not deprive a court of jurisdiction."
The Court therefore clarifies that dismissal of Count II of Mr. Wesolowski's Complaint is required for failure to state a claim and not for lack of subject matter jurisdiction. While dismissal for failure to exhaust administrative remedies must be without prejudice to allow the possibility for future exhaustion, see, e.g., Greene v. Meese, 875 F.2d 639, 643 (7th Cir. 1989), a dismissal for failure to comply with the statute of limitations is a decision on the merits, cf., e.g., Blinn v. Law Firm of Johnson, Beaman, Brach, Beal and White, LLP, 948 N.E.2d 814, 820 (Ind. Ct. App. 2011) (noting that dismissal after statute of limitations has run constitutes "dismissal with prejudice" (internal quotations omitted)). Thus, Count II against the IU Defendants must be dismissed with prejudice.
Finally, the VA seeks dismissal of Mr. Wesolowski's third-party beneficiary claim against it, arguing that the Court of Federal Claims has exclusive jurisdiction over Mr. Wesolowski's suit under the Tucker Act, 28 U.S.C. §§ 1346(a)(2), 1491(a)(1). [
In response, Mr. Wesolowski argues that the Tucker Act does not apply because his thirdparty beneficiary claim sounds in tort instead of contract. [
In reply, the VA reiterates that Count II seeks damages for failure to comply with a contractual obligation and therefore sounds in contract instead of tort. [
A plaintiff is the "absolute master of what [source of] jurisdiction he will appeal to." Healy v. Sea Gull Specialty Co., 237 U.S. 479, 480 (1915). Here, Mr. Wesolowski invokes the Court's jurisdiction pursuant to 28 U.S.C. § 1402, [
Though the Seventh Circuit appears not to have directly addressed the question, courts throughout the country have uniformly held that actions for "an alleged failure to perform contractual obligations undertaking" and for which liability "depends wholly upon the government's alleged promise" fall within the purview of the Tucker Act. Tannenbaum v. Environdyn Eng'rs, Inc., 609 F.Supp. 931, 932 (N.D. Ill. 1985). This is the case regardless of whether the failure to perform contractual obligations has tort underpinnings or whether the action itself would be characterized as a tort under state law. See, e.g., Union Pac. R.R. Co. v. United States ex rel. U.S. Army Corp of Eng'rs, 591 F.3d 1311 (10th Cir. 2010) (explaining that state-law tort of negligent performance of a contract was subject to Tucker Act because claim required analysis of government's performance of contractual duties); Blanchard v. St. Paul Fire & Marine Ins. Co., 341 F.3d 351, 358-59 (5th Cir. 1965) (holding that breach of fiduciary duty claim, despite tort characteristics, fell under Tucker Act because claim alleged that defendant failed to perform "responsibilities with respect to the execution of [a] contract").
In this case, Mr. Wesolowski does not dispute that his lawsuit seeks over $10,000 and that his claim would be subject to the exclusive jurisdiction of the Court of Federal Claims if it is based in contract. Thus, the sole point of contention is whether Mr. Wesolowski's claim is based upon tort or contract. Mr. Wesolowski alleges in his Complaint that "the VA failed to fulfill their duties under the [c]ontracts, including the duties to provide effective and comprehensive treatment by properly trained and certified physicians, as well as failure to provide proper and adequate supervision, or otherwise to ensure appropriate professional surgical coverage." [
For the foregoing reasons, the Court
Mr. Wesolowski's negligence claim against the VA in Count I of his Complaint is the sole remaining claim in this case. The Magistrate Judge is requested to hold a status conference with the remaining parties to discuss the possibility of administratively closing this case pending the conclusion of Dr. Sundaram's medical review panel proceedings and whether partial final judgment against IU Health and IUSM should issue.
