GEORGE v. HOSPITAL UNIVERSITARIO DE ADULTOS

Full title: LIONEL GEORGE et al., Plaintiffs v. HOSPITAL UNIVERSITARIO DE ADULTOS…

Court: United States District Court, D. Puerto Rico

Date published: Sep 17, 2004

CIVIL 03-2291 (HL) (D.P.R. Sep. 17, 2004)

Opinion

CIVIL 03-2291 (HL).

September 17, 2004

REPORT AND RECOMMENDATION

CAMILLE L. VELEZ-RIVE, Magistrate Judge

INTRODUCTION

On December 2, 2003, plaintiffs, Lionel George and Agnes George, on their own and on behalf of the estate of their son Leonel George (hereinafter "plaintiffs"), brought a medical malpractice action against the defendant, the Hospital Universitario de Adultos (hereinafter "University Hospital"). (Docket No. 1).

On April 15, 2004, the University Hospital filed a 12(b)(1) motion to dismiss the claims for lack of subject matter jurisdiction for absence of diversity citizenship and for the lawsuit being barred by the Eleventh Amendment to the Constitution. (Docket No. 4). Defendant asserts that the University Hospital is not a citizen of the Commonwealth of Puerto Rico ("Commonwealth") for purposes of establishing diversity of citizenship because the hospital is an arm or alter ego of the Commonwealth. In addition, defendant argues that the University Hospital cannot be sued because it is part of the Department of Health which is an arm of the Commonwealth. According to defendant, it is immune from suit in federal court due to the Eleventh Amendment's bar of all suits brought in federal court against a state by citizens from another state. (Docket No. 4).

The Motion to Dismiss was referred to this Magistrate Judge for an evidentiary hearing and report and recommendation. (Docket No. 11). In its referral, the Court noted the following: "[t]his Court notes that this determination requires a factual analysis into the actual structure of the hospital and the vulnerability of the state's purse. Fresenius Medical Care Cardiovascular Resources, Inc. v. Puerto Rico and the Caribbean Cardiovascular Center Corp., 322 F.3d 56 (1^st Cir. 2003)."

On September 1, 2004, an evidentiary hearing was held. Defendant presented the following three (3) documents: regulation for the administration of the University Hospital of Puerto Rico, revised on December 2001; organizational chart of the umbrella Department of Health; and certification of José Martínez González, Director of the Office of Primary and Hospital Services of the Department of Health dated May 14, 2003.¹ Plaintiffs' counsel was provided with copies of these documents in open court and he had no objections that these be introduced into evidence. Janette Baez-Rivera, Finance Director of the University Hospital, was available in court on behalf of defendant to answer any questions related to the structure of the University Hospital. Baez-Rivera was not called as a witness but plaintiffs' counsel expressed his desire to cross-examine her. The Court suggested to plaintiff's counsel to interview Baez-Rivera off the record instead because she did not speak English and the arrangements for an official court interpreter had not been made. After plaintiff's counsel interviewed Baez-Rivera, he informed the Court that there was no need for him to cross-examine her.²

1 This certification was submitted to the Court in Civil Case No. 02-2485 (JAG-JA). Therefore, defendant was granted five (5) days to submit a similar certification addressing the points at issue in this case. On September 13, 2004, defendant filed the certification of Dra. Aidaález de Gregory, in her official capacity as Subsecretary of the Commonwealth of Puerto Rico Department of Health, related to the issues in this case. (Docket No. 16). On the same day, plaintiffs filed a notice of no opposition to said certification. (Docket No. 18). Accordingly, the certification of Dr. González de Gregory will be considered by the undersigned in rendering this Report and Recommendation.

2 The fact that plaintiff's counsel had an opportunity to review the evidence submitted by the defendant, to interview Baez-Rivera and to verbally oppose the Motion to Dismiss renders Docket entries No. 7 and 8 moot.

Taking into account the arguments and the evidence presented by the parties during the evidentiary hearing and the written pleadings, the Motion to Dismiss is deemed submitted and ready for disposition by the Court.

RULE 12(B)(1) MOTION STANDARD

Under Rule 12(b)(1), defendants may move to dismiss an action against them based on lack of federal subject matter jurisdiction. See Fed.R.Civ.P. 12(b)(1). Since federal courts have limited jurisdiction, the party asserting jurisdiction has the burden of demonstrating the existence of federal jurisdiction. Sabroso Publishing, Inc. v. Caiman Records Am., Inc., 141 F. Supp.2d 224, 226 (D.P.R. 2001). In assessing a motion to dismiss for lack of subject-matter jurisdiction, a district court "must construe the complaint liberally, treating all well-pleaded facts as true and drawing all reasonable inferences in favor of the plaintiffs." Viqueira v. First Bank, 140 F.3d 12 (1st Cir. 1998) (citing Royal v. Leading Edge Prods., Inc., 833 F.2d 1 (1st Cir. 1987)); Great River Indus., Inc. v. Pub. Serv. Comm'n of P.R., 131 F. Supp. 2d 265, 268 (D.P.R. 2001). Additionally, during such process, a court may review any evidence, including submitted affidavits and depositions, to resolve factual disputes bearing upon the existence of jurisdiction. Sabroso, 141 F.Supp.2d at 226 (citing Land v. Dollar, 330 U.S. 731, 734-35, 67 S.Ct. 1009 (1947); Aversa v. United States, 99 F.3d 1200, 1210 (1st Cir. 1996).

FACTUAL BACKGROUND

The facts in this case show that on November 25, 2002, Leonel George of 30 years of age was admitted at the University Hospital for a surgical intervention with a comminuted intra-articular fracture on his right leg suffered on November 16, 2002. (Docket No. 1, ¶ 4 and ¶ 9). On December 4, 2002, George was taken to the operating room at the University Hospital to undergo a scheduled procedure on his fracture and he was given spinal anesthesia around 5:00 PM. (Docket No. 1, ¶¶ 5 and 6). After being injected with the spinal anesthesia, George began having respiratory difficulties and the anesthesiologist was called to the Operating Room. (Docket No. 1, ¶ 7). George never improved and he was pronounced dead at 7:00 PM on December 4, 2002 due to complications following the administration of the spinal anesthesia. (Docket No. 1, ¶ 8).

ANALYSIS

The Eleventh Amendment proscribes that "[t]he 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." 1 U.S.C. Const. Amend. XI.

The Eleventh Amendment bars suits from being brought in federal courts for monetary damages against states, unless the state being sued waives its immunity or consents to being sued. The Eleventh Amendment has also been interpreted to bar suits for monetary relief against the agencies or instrumentalities of a state and against its officers in their official capacities. Kentucky v. Graham, 473 U.S. 159, 169, 105 S.Ct. 3099 (1985); Culebras Enterprises Corp. v. Rivera Ríos, 813 F. 2d 506, 516 (1^st Cir. 1987).

It has already been determined that the Commonwealth of Puerto Rico is considered a state for purposes of the Eleventh Amendment. Metcalf Eddy, Inc. v. Puerto Rico Aqueduct Sewer Authority, 991 F. 2d 935, 939 n. 3 (1^st Cir. 1993); De León López v. Corporación Insular de Seguros, 931 F. 2d 116, 121 (1^st Cir. 1991); Puerto Rico Ports Auth. v. M/V Manhattan Prince, 897 F.2d 1, 9 (1^st Cir. 1990).³

3 Over the last two decades, the First Circuit consistently has held that Puerto Rico is considered a "State" for Eleventh Amendment purposes, and therefore Eleventh Amendment applies with full force to the Commonwealth of Puerto Rico. See, e.g., Negrón Gaztambide v. Hernández Torres, 145 F.3d 410 (1^st Cir. 1998); Metcalf, 991 F.2d 935, 939 n. 3 (1^st Cir. 1993); Aviles-Martínez v. Monroig, 963 F.2d 2, 8 (1^st Cir. 1992); De León López, 931 F.2d 116, 121 (1^st Cir. 1991);Culebras, 813 F.2d at 516; Ainsworth Aristocrat Int'l Pty., Ltd. v. Tourism Co. of P.R., 818 F.2d 1034 (1^st Cir. 1987);Fernández v. Chardón, 681 F.2d 42, 59 n. 13 (1^st Cir. 1982) (Puerto Rico enjoys the full benefits of the Eleventh Amendment); Ezratty v. Com. of Puerto Rico, 648 F.2d 770, 776 n. 7 (1^st Cir. 1981) ("The principles of the Eleventh Amendment, which protect a state from suit without its consent, are fully applicable to the Commonwealth of Puerto Rico.");Litton Indus., Inc. v. Colón, 587 F.2d 70 (1^st Cir. 1978) (action against Puerto Rico barred by Eleventh Amendment, unless immunity is expressly abrogated by Congress acting under the Fourteenth Amendment).

Eleventh Amendment immunity does not solely protect the State. Rather, since a State only exists through its instrumentalities, Eleventh Amendment immunity also extends to arms or "alter egos" of the State. Ainsworth Aristocrat Int'l Pty. Ltd. v. Tourism Co. of Puerto Rico, 818 F.2d 1034, 1036 (1^st Cir. 1987); see Mount Healthy City School Dist. Bd. of Educ. v. Doyle, 429 U.S. 274, 280, 97 S.Ct. 568 (1977); Sánchez-López v. Fuentes Pujols, 247 F. Supp. 2d 37 (D. Puerto Rico 2002).

"The [Supreme] Court has held that, absent waiver by the State or valid congressional override, the Eleventh Amendment bars a damages action against a State in federal court." Kentucky, 473 U.S. at 169. The test for finding that a state has waived its Eleventh Amendment immunity is a stringent one. Acevedo López v. Police Dept. of Com. of Puerto Rico, 247 F.3d 26, 28 (1^st Cir. 2001); see Atascadero State Hosp. v. Scanlon, 473 U.S. 234, 241, 105 S.Ct. 3142 (1985). A state's consent to suit in the federal courts must be "unequivocally expressed." Pennhurst State Sch. Hosp. v. Halderman, 465 U.S. 89, 99, 104 S.Ct. 900 (1984). It must be "stated by the most express language or by such overwhelming implications from the text as [will] leave no room for any other reasonable construction." Edelman v. Jordan, 415 U.S. 651, 673, 94 S.Ct. 1347 (1974). Furthermore, "in order for a state statute or constitutional provision to constitute a waiver of Eleventh Amendment immunity, it must specify the state's intention to subject itself to suit in federal court."Atascadero, 473 U.S. at 241; Acevedo López, 247 F.2d at 28.

Whether a local entity, or public official, "`is to be treated as an arm of the state partaking of the State Eleventh Amendment Immunity, or is instead to be treated as a municipal corporation or other political subdivision to which the Eleventh Amendment does not extend . . . depends, at least in part, upon the nature of the entity created by state law.'" Culebras, 813 F.2d at 516-17. It has been held that the factors to consider are: (1) whether it performs a governmental function, (2) to what extent it is financed independently of the state treasury, (3) whether it functions with substantial autonomy, (4) and if a judgment sought to be entered against the agency will be satisfied out of the state treasury. See Id at 517; Buck v. Puerto Rico Symphony Orchestra Corp., 849 F.Supp. 141, 144 (D. Puerto Rico 1994); Suárez Cestero v. Pagán Rosa, 996 F.Supp. 133, 142 (D. Puerto Rico 1998).

These cases were decided before Fresenius Med. Care Cardiovascular Res., Inc. v. P.R. the Caribbean Cardiovascular Ctr. Corp., 322 F.3d 56, 65 (1^st Cir.), cert. denied, 124 S. Ct. 296 (2003), which set out a two-pronged test for deciding whether entities are an arm of the state. The first prong is centered around evaluating whether the state has clearly structured the entity to share its sovereignty. In this case, whether the Commonwealth has structured the University Hospital to be an arm of the Commonwealth. Id. If it is unclear whether the entity is structured to be an arm of the Commonwealth, then the Court must enter into the second prong and ask whether the Commonwealth's treasury is threatened by the lawsuit. Id. at 66. If either of these questions are answered in the affirmative then the entity, in this case the University Hospital, is considered an arm of the Commonwealth.

Defendant argues that the case should be dismissed for lack of subject matter jurisdiction because the University Hospital is entitled to Eleventh Amendment immunity. Defendant points that the University Hospital is owned and administered by the Department of Health of the Commonwealth. Defendant submits the Department of Health is the agency of the executive branch of the Commonwealth responsible for establishing, providing, administering and insuring all of the health services in Puerto Rico. Defendant contends that the enabling statute shows that the Department of Health has a tight relationship with the Commonwealth. 3 P.R. Laws Ann. § 171 et seq. Defendant also argues that this relationship is also shown by the regulation of December 2001. Defendant avers that the Department of Health lacks financial autonomy and operates under state funds. In turn, defendant submits that the University Hospital operates from funds of the Department of Health. As to this matter, defendant submits in the sworn statement of Dr. González de Gregory that the budget allocations received by the University Hospital are assigned annually from the Department of Health's Budget Office. In turn, the funds generated by the University Hospital from medical plans billing, parking, the Health Reform Program and others are returned to the Treasury Department of the Commonwealth of Puerto Rico. Therefore, defendant argues that both the Department of Health and the University Hospital are arms or alter egos of the Commonwealth and thus, protected by Eleventh Amendment immunity.

In support of this contention, defendant makes reference toArecibo Community Health Care, Inc. v. Commonwealth, 270 F.3d 17 (1^st Cir. 2001) where the First Circuit ruled that the Department of Health is an instrumentality of the Commonwealth and claims against it are barred by Eleventh Amendment immunity. In addition, defendant refers to Rodríguez-Díaz v. Sierra Martínez, 717 F. Supp. 27 (D.P.R. 1989) in which this Court ruled that the Department of Health is an arm of the state.

Furthermore, defendant supports its arguments on the recent decision of this District of Antonio Casiano Escobar v. University Hospital et al, Civil No. 02-2485 (JAG-JA) (Opinion and Order of June 30, 2004) in which this Court ruled that the University Hospital is entitled to Eleventh Amendment immunity under the first prong of Fresenius because it is structured to be an arm of the Commonwealth of Puerto Rico.

As to the relationship of the University Hospital with the University of Puerto Rico (UPR), defendant submits in the sworn statement of Dr. González de Gregory that the Department of Health has entered in a services contract with the University of Puerto Rico's School of Medical Sciences to provide professional services by the faculty and students to the University Hospital as part of its duty to provide quality medical services to those seeking public health care services in Puerto Rico. The University of Puerto Rico's School of Medical Sciences provides to the University Hospital among others, anesthesia, neurosurgery, orthopedic and pathology services as a result of this contract services.

We note that it is generally considered that "the UPR is an arm of the state and is therefore entitled to Eleventh Amendment immunity in federal courts." Panzardi-Santiago v. U.P.R., 200 F. Supp. 2d 1, 8 (D.P.R. 2002); see Nieves v. U.P.R., 7 F.3d 270, 272 (1^st Cir. 1993); Pinto v. U.P.R., 895 F.2d 18 (1^st Cir. 1990); Pérez v. Rodríguez Bou, 575 F.2d 21, 25 (1^st Cir. 1978) (dictum); Amelunxen v. U.P.R., 637 F. Supp. 426, 434 (D.P.R. 1986); Llewellyn-Waters v. U.P.R., 56 F. Supp. 2d 159, 161-62 (D.P.R. 1999); Dogson v. U.P.R., 26 F. Supp.2d 341, 343 (D.P.R. 1998); Silva v. U.P.R., 834 F. Supp. 553, 556 (D.P.R. 1993); Silva v. U.P.R., 817 F. Supp. 1000, 1004-05 (D.P.R. 1993).

Additionally, defendant avers that it passes the two pronged test for Eleventh Amendment immunity outlined in Fresenius. Under the circumstances above mentioned, defendant contends that it meets the first prong of theFresenius case inasmuch the state has clearly structured the University Hospital to share its sovereignty. In addition, defendant alleges it is entitled to Eleventh Amendment immunity under the second prong of the Fresenius test. Defendant argues immunity is appropriate because it is the Commonwealth's treasury which is responsible for paying damages because the University Hospital is owned and administered by the Department of Health which is an arm of the government. To prove this point the University Hospital states that it relies heavily on Commonwealth funding for its operation because the budget allocations received by the University Hospital are assigned annually from the Department of Health's Budget Office and the funds generated at the University Hospital are returned to the Treasury Department of the Commonwealth of Puerto Rico. Accordingly, defendant concludes that under the second prong of Fresenius, the University Hospital is immune from suit because the Commonwealth treasury is financially affected by this lawsuit.

Plaintiffs respond to these arguments by stating that the University Hospital's structure does not indicate that it is an arm of the Commonwealth. Plaintiffs argue the University of Puerto Rico is a public corporation and, as such, it is not an arm of the Commonwealth, and is therefore not entitled to Eleventh Amendment immunity.

Additionally, plaintiffs assert that the Commonwealth would not be responsible for paying damages resulting from this suit. According to 18 P.R. Laws Ann. § 612(f), "[t]he debts or obligations of the University [are not] debts or obligations of the Commonwealth of Puerto Rico. . . ." For these reasons plaintiffs maintain that the Commonwealth is not responsible for any judgment against the defendants. Therefore, in plaintiff's opinion, under the second prong of Fresenius, the University Hospital is not entitled to Eleventh Amendment immunity.

We note that this District has previously ruled that the University Hospital, as part of the University of Puerto Rico, is an arm if the Commonwealth of Puerto Rico. Rivera v. Hospital Universitario, 762 F.Supp. 15, 16 (D.P.R. 1991). More importantly, and as pointed out by defendant, this District recently ruled that the University Hospital is entitled to Eleventh Amendment immunity under the first prong of Fresenius because it is structured to be an arm of the Commonwealth of Puerto Rico. Antonio Casiano Escobar v. University Hospital et al, Civil No. 02-2485 (JAG-JA) (Opinion and Order of June 30, 2004).

Plaintiffs have provided no grounds for us to deviate from the rulings of both the First Circuit Court of Appeals and this District that the Department of Health is an instrumentality of the Commonwealth and claims against it are barred by Eleventh Amendment immunity. Arecibo Community Health Care, 270 F.3d at 17; Rodríguez-Díaz, 717 F. Supp. at 27. More importantly, no evidence has been presented in this case by plaintiffs to put us in a position to deviate from the precedents in Rivera, 762 F.Supp. at 16 and Casiano Escobar (Opinion and Order of June 30, 2004) ruling the University Hospital is an arm of the Commonwealth entitled to Eleventh Amendment Immunity.

More over, plaintiffs in this case have not argued that the University Hospital is separate from the Department of Health or the University of Puerto Rico.⁴ In addition, plaintiffs have failed to rebut the evidence presented by defendant that the University Hospital is structured as an arm of the Commonwealth. Therefore, it is clear that the first prong of the Fresenius is met.

4 As a matter of fact, plaintiffs have filed filed a Motion to Amend/Correct the Complaint to include the University of Puerto Rico claiming it is an indispensable party in this claim. (Docket No. 15).

Nonetheless, plaintiffs invite us to consider the second prong of the Fresenius test arguing that, even though the first prong might be met, the second prong is not met in this case because the University of Puerto Rico is a public corporation and its debts are not those of the Commonwealth. Plaintiffs contend that since the second prong is not met, then the University Hospital is not entitled to Eleventh Amendment Immunity under theFresenius test. We need not consider the second prong ofFresenius in the case.

The test in Fresenius is clear. The first prong is centered around evaluating whether "the [Commonwealth has] structured an agency to be an arm of the [Commonwealth]." Fresenius, 322 F.3d at 65. If it is unclear whether the University Hospital is structured to be an arm of the Commonwealth, then the court must ask whether the Commonwealth's treasury is threatened by the lawsuit. Id. at 66. Therefore, if the first prong is clearly met there is no need to enter into the second prong. Id. Based on the evidence presented on the record and prior precedents, it is clear that the University Hospital is structured to be an arm of the Commonwealth of Puerto Rico and, as such, entitled to Eleventh Amendment immunity. Thus, we need not consider the second prong of the Fresenius test.

Accordingly, the University Hospital is entitled to immunity under the first prong of Fresenius because it is structured to be an arm of the Commonwealth of Puerto Rico. The Commonwealth has not waived its sovereign immunity in relation to the defendant, and since it is an arm of the state, the court lacks subject matter jurisdiction under 28 U.S.C. § 1332.

CONCLUSION

In view of the above, it is recommended that defendant's Motion to Dismiss be GRANTED in its entirety.

The parties have ten (10) days to file any objections to this report and recommendation. Failure to file same within the specified time waives the right to appeal this order. Henley Drilling Co. v. McGee, 36 F.3d 143, 150-151 (1st Cir. 1994);United States v. Valencia, 792 F.2d 4 (1st Cir. 1986). See Paterson-Leitch Co. v. Mass. Mun. Wholesale Elec. Co., 840 F.2d 985, 991 (1^st Cir. 1988) ("Systemic efficiencies would be frustrated and the magistrate's role reduced to that a mere dress rehearser if a party were allowed to feint and weave at the initial hearing, and save its knockout punch for the second round").