R. Parungao v. Community Health Systems, Inc., et al

Filing

Filed opinion of the court PER CURIAM. AFFIRMED. Diane P. Wood, Chief Judge; Kenneth F. Ripple, Circuit Judge and Diane S. Sykes, Circuit Judge. [6843236-1] [6843236] [16-3021]

Case: 16-3021

Document: 73

Filed: 05/24/2017

Pages: 13

In the

United States Court of Appeals
For the Seventh Circuit
____________________
No. 16-3021
R. SHERWIN PARUNGAO,
Plaintiff-Appellant,
v.
COMMUNITY HEALTH SYSTEMS, INC., et al.,
Defendants-Appellees.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 1:15-cv-04453 — Robert W. Gettleman, Judge.

____________________
ARGUED APRIL 26, 2017 — DECIDED MAY 24, 2017
____________________
Before WOOD, Chief Judge, and RIPPLE and SYKES, Circuit
Judges.
PER CURIAM. This is the fourth lawsuit that Dr. R. Sherwin
Parungao, a surgeon, has brought against affiliates of Galesburg Cottage Hospital. The district court ruled that Dr. Parungao’s complaint was barred by res judicata and Illinois’s
closely related single-refiling rule. Because we agree that this

Case: 16-3021

Document: 73

Filed: 05/24/2017

2

Pages: 13

No. 16-3021

suit violates the doctrine of res judicata, we affirm the district
court’s judgment. 1
I
BACKGROUND
Dr. Parungao began practicing surgery at Galesburg Cottage Hospital in 2006. He first worked as a private practitioner, but later accepted employment with Knox Clinic,
which supplies doctors for the hospital. Knox Clinic told
Dr. Parungao in May 2013 that it was discharging him without cause, as allowed under his employment agreement.
Dr. Parungao believes that the hospital orchestrated this discharge to harm his career. He asserts that before Knox Clinic
fired him, the hospital’s medical executive committee manipulated the peer-review process to insinuate that he had performance problems and make it difficult for him to secure future employment. Dr. Parungao later resigned from Galesburg and sought other employment, but alleges that he was
thwarted in those efforts by the hospital and its doctors.
This is not the first time Dr. Parungao has attempted to recover based on these, or similar, allegations. His first suit
against Galesburg Cottage Hospital and its corporate affiliates was voluntarily dismissed. See Doe v. Cmty. Health Sys.
Prof’l Servs. Corp., Galesburg Hosp. Corp., & Knox Clinic Corp.,
No. 2013-CH-73 (Knox Cty., Ill. Cir. Ct., filed July 15, 2013).
The day after he voluntarily dismissed that action, Dr. Parungao filed another petition in the same court, requesting to
1

The district court had jurisdiction over this case under 28 U.S.C. § 1332.
Our jurisdiction is premised on 28 U.S.C. § 1291.

Case: 16-3021

Document: 73

Filed: 05/24/2017

No. 16-3021

Pages: 13

3

refile the case under seal and under a fictitious name. That
petition was denied, so no complaint or suit was filed. Dr. Parungao then brought another suit in state court against the
chief of the medical staff at Galesburg, Dr. Daniel K. Piper. See
Parungao v. Piper, No. 2013-L-40 (Knox Cty., Ill. Cir. Ct., filed
Oct. 21, 2013). Because this appeal and the defense of res judicata rest on the relationship between the Piper litigation and
Dr. Parungao’s current federal lawsuit, we briefly compare the
allegations set forth in the two relevant complaints.
In October 2013, Dr. Parungao sued Dr. Piper for defamation in circuit court in Knox County, Illinois. That lawsuit focused on the time during which Dr. Parungao sought employment at other hospitals after he resigned from Galesburg. He
alleged that Dr. Piper had made false and harmful representations to hospital entities with which he sought employment.
These representations, made in letters bearing Galesburg Cottage Hospital letterhead, suggested to those entities that
Dr. Parungao had been the subject of some type of nondisciplinary action related to his professional conduct. The relevant allegations from the Piper complaint are set forth below:
7.
Although Dr. Parungao’s privileges to
practice at GCH [Galesburg Cottage Hospital]
remained intact, Dr. Parungao ceased performing surgeries at GCH on or about May 15, 2013,
and he thereafter sought employment elsewhere.
8.
On or about May 28, 2013, Dr. Piper represented to Gaye Shaw, Director of Medical Staff
Affairs at St. Mary’s Hospital in Centralia, Illinois (collectively “St. Mary’s”) that he was authorized to respond to a request by St. Mary’s

Case: 16-3021

Document: 73

4

Filed: 05/24/2017

Pages: 13

No. 16-3021
for verification of Dr. Parungao’s staff privileges
and credentials at GCH.
9.
On or about May 28, 2013, Dr. Piper represented to Natalie Brown, Medical Staff Coordinator at Weatherby Locums in Fort Lauderdale, Florida (collectively “Weatherby”) that he
was authorized to respond to a request by
Weatherby for verification of Dr. Parungao’s
staff privileges and credentials at GCH.
10.
Dr. Piper informed St. Mary’s and
Weatherby that Dr. Parungao was not the subject of any disciplinary action as a member of
the Medical Staff, he was the subject of “other
action” as a result of an ongoing review related
to his participation in an impaired practitioner
program.
11.
Dr. Piper defined “other action” as follows:
Other Actions:
This category includes any resignation
while under investigation, termination of
the physician’s relationship with the
Hospital via contract for reasons related
to competence or professional conduct,
active participation in an impaired practitioner program due to a directive of the
MEC [Medical Executive Committee],
peer review committee or impaired practitioner committee (where disclosure is

Case: 16-3021

Document: 73

Filed: 05/24/2017

No. 16-3021

Pages: 13

5
permitted by law), and formal reprimands.

…
16.
The information Dr. Piper conveyed to
St. Mary’s and Weatherby regarding the existence of “other action” against Dr. Parungao was
false.[ 2]
The Illinois circuit court granted Dr. Piper’s motion to dismiss for failure to state a claim of defamation, and the Appellate Court of Illinois affirmed the dismissal. Parungao v. Piper,
No. 3-14-0197, 2014 WL 7251127, at *4–8 (Ill. App. Ct. Dec. 18,
2014), reh’g denied and amended (Ill. App. Ct. Jan. 28, 2015).
Dr. Parungao then filed the present lawsuit in federal court
in the Northern District of Illinois. 3 While the earlier Piper suit
focused on the letters Dr. Piper had sent that kept Dr. Parungao from obtaining employment with Weatherby and St.
Mary’s (and named only Dr. Piper as a defendant), the present
suit focuses on the events leading up to those same letters
(and excludes Dr. Piper as a defendant). Dr. Parungao alleges
that Galesburg’s medical staff president, Dr. Mark E. Davis,
initiated a sham peer-review process against him for personal
reasons. He refused to participate and later received confirmation that “no adverse action was ever taken or recommended against him.” 4 Dr. Parungao alleges that the process
2

R.91-7 at 3–4.

3

Parungao v. Cmty. Health Sys., Inc., Cmty. Health Sys. Prof’l Servs. Corp.,
Galesburg Hosp. Corp., Knox Clinic Corp., & Davis, No. 1:15-cv-04453, (N.D.
Ill. filed May 20, 2015).
4

R.65 at 7.

Case: 16-3021

6

Document: 73

Filed: 05/24/2017

Pages: 13

No. 16-3021

undertaken by the hospital constituted a breach of contract,
tortious interference with contractual relations, intentional infliction of emotional distress, and civil conspiracy.
As in the Piper complaint, Dr. Parungao also alleges that,
after this process was initiated, he “sought employment with
other healthcare entities,” which “submitted requests for verification that [he] was in good standing on GCH’s medical
staff.” 5 And, also just as in the Piper complaint, he alleged that
he had trouble obtaining further employment with those
healthcare entities because of the responses of the hospital defendants. But rather than attribute his troubles specifically to
Dr. Piper’s letters to Weatherby and St. Mary’s, he broadened
his allegation as follows:
44.
Despite the fact that plaintiff was at all
times in good standing and not subject to any
disciplinary proceedings or adverse actions,
GCH refused to provide these healthcare entities with verification of the same, thereby hindering plaintiff’s ability to obtain privileges
with the medical staffs of other healthcare entities.[ 6]
Nonetheless, this timeline of events, including Galesburg’s
“refusal to verify” Dr. Parungao’s good standing, is consistent
with the timeline in Piper, which alleged that Dr. Piper’s responses to Weatherby and St. Mary’s contained false and
harmful information about his standing on the medical staff.

5

Id.

6

Id.

Case: 16-3021

No. 16-3021

Document: 73

Filed: 05/24/2017

Pages: 13

7

Dr. Parungao moved in the district court for a protective
order and supervision of discovery, and in his attached memorandum of law he confirmed this overlap between the allegations in his two suits. His motion referred to and attached
Dr. Piper’s letters to Weatherby and St. Mary’s and used language similar to that used in his Piper complaint to describe
the content of those letters as false. The motion attributed the
letters to the defendants in this case and characterized them
as evidence of a conspiracy among the hospital defendants to
ruin his professional standing. The motion sought a protective order to allow Dr. Parungao to obtain potentially privileged information from the hospital defendants about the
“other actions” described in Dr. Piper’s letters as well as any
other supposed peer-review processes that had occurred. The
district court denied Dr. Parungao’s motion.
All but one of the defendants moved to dismiss for failure
to state a claim under Federal Rule of Civil Procedure 12(b)(6).
(Community Health Systems, Inc., moved to dismiss for lack
of personal jurisdiction.) They argued that Dr. Parungao’s
complaint was barred by res judicata and Illinois’s related single-refiling rule, see 735 ILCS § 5/13-217, which provides that
a suit, once voluntarily dismissed, can be refiled only one
time. Several of the defendants referred to Dr. Parungao’s motion for a protective order in their motions to dismiss, asserting that Dr. Parungao’s motion in effect acknowledged that
his federal suit was based on the same facts as alleged in the
Piper suit. Dr. Parungao, however, responded that there was
no privity between Dr. Piper and the medical defendants, so
that neither res judicata nor the single-refiling rule could support dismissal.

Case: 16-3021

Document: 73

Filed: 05/24/2017

8

Pages: 13

No. 16-3021

The district court dismissed Dr. Parungao’s complaint. It
ruled that Dr. Parungao was impermissibly attempting to relitigate the Piper complaint, which had been fully and fairly
litigated in the Illinois courts. The district court decided that
both the current suit and the Piper suit were “refilings” of
Dr. Parungao’s first, voluntarily dismissed, complaint in state
court. Accordingly, the court concluded that both res judicata
and the single-refiling rule supported dismissal. Dr. Parungao
timely appeals.
II
DISCUSSION
Dr. Parungao contends that neither res judicata nor the Illinois single-refiling rule supported dismissing his complaint.
He argues that the question whether the hospital defendants
in this case are in “privity” with Dr. Piper, as required for preclusion rules to apply, cannot be decided now. We conclude
that the district court correctly ruled that res judicata barred
the complaint, and therefore do not reach the applicability of
Illinois’s single-refiling rule.
The principles governing our review are clearly established. In reviewing a dismissal under Federal Rule of Civil
Procedure 12(b)(6), we accept as true all factual allegations in
the complaint and draw all reasonable inferences in favor of
the plaintiff. Anicich v. Home Depot U.S.A., Inc., 852 F.3d 643,
648 (7th Cir. 2017). In this procedural posture, district courts

Case: 16-3021

No. 16-3021

Document: 73

Filed: 05/24/2017

Pages: 13

9

ordinarily should not dismiss a complaint based on an affirmative defense such as res judicata. 7 But when it is “clear from
the face of the complaint, and matters of which the court may
take judicial notice, that the plaintiff’s claims are barred as a
matter of law,” dismissal is appropriate. Conopco, Inc. v. Roll
Int’l, 231 F.3d 82, 86 (2d Cir. 2000); see Watkins v. United States,
___ F.3d ___, No. 16-2109, 2017 WL 1505314, at *2–3 (7th Cir.
Apr. 27, 2017) (ruling that court could take judicial notice of
earlier state-court complaint and thereby dismiss based on an
affirmative defense). Courts may take judicial notice of court
filings and other matters of public record when the accuracy
of those documents reasonably cannot be questioned. See Adkins v. VIM Recycling, Inc., 644 F.3d 483, 492–93 (7th Cir. 2011);
Gen. Elec. Capital Corp. v. Lease Resolution Corp., 128 F.3d 1074,
1080–81 (7th Cir. 1997).
We apply Illinois’s law of res judicata to this diversity action. See Harmon v. Gordon, 712 F.3d 1044, 1054 (7th Cir. 2013)
(applying Illinois law). The doctrine of res judicata, also
known as claim preclusion, applies if there is “(1) a final judgment on the merits rendered by a court of competent jurisdiction; (2) an identity of the causes of action; and (3) an identity
of the parties or their privies.” Rose v. Bd. of Election Comm’rs
for the City of Chi., 815 F.3d 372, 374 (7th Cir. 2016) (applying
Illinois law). If the doctrine applies, the plaintiff is barred
from raising “not only every matter that was actually determined in the first suit, but also every matter that might have
been raised and determined in that suit.” Chicago Title Land
Trust Co. v. Potash Corp. of Saskatchewan Sales Ltd., 664 F.3d

7

See Carr v. Tillery, 591 F.3d 909, 913 (7th Cir. 2010); Muhammad v. Oliver,
547 F.3d 874, 878 (7th Cir. 2008).

Case: 16-3021

10

Document: 73

Filed: 05/24/2017

Pages: 13

No. 16-3021

1075, 1079 (7th Cir. 2011) (quoting Hudson v. City of Chicago,
889 N.E.2d 210, 217 (Ill. 2008)) (applying Illinois law).
Illinois employs a “transactional test” to decide whether
complaints allege the same cause of action. Id. at 1079–80. Under this test, “separate claims will be considered the same
cause of action for purposes of res judicata if they arise from
a single group of operative facts, regardless of whether they
assert different theories of relief.” Id. (quoting River Park, Inc.
v. City of Highland Park, 703 N.E.2d 883, 893 (Ill. 1998)). There
need not be a “substantial overlap of evidence,” so long as the
complaints arise from the same transaction or “series of connected transactions.” Id. at 1080. As for privity, Illinois courts
conclude that it exists “between parties who adequately represent the same legal interests.” Id. (quoting People ex rel. Burris v. Progressive Land Developers, Inc., 602 N.E.2d 820, 825 (Ill.
1992)).
We agree with the district court that all of these elements
are present in this case. First, the parties do not dispute that
there was a final judgment in Dr. Parungao’s suit against
Dr. Piper. That action, the Piper suit, ended in a dismissal with
prejudice for failure to state a claim. See Rose, 815 F.3d at 374
(noting that involuntary dismissal is “unquestionably” final
judgment on the merits under Illinois law). The district court
thus correctly concluded that this first element of res judicata
was present.
With respect to the second element, identity of the causes
of action between the Piper litigation and the current suit, we
look to the filings in the earlier case. In doing so we are persuaded, as was the district court, that Dr. Piper’s letters on
Galesburg letterhead to the other hospital entities were “just
one act in the series of events that led to plaintiff’s problems

Case: 16-3021

No. 16-3021

Document: 73

Filed: 05/24/2017

Pages: 13

11

with and ultimate resignation from GCH,” the basis of the
present suit. 8 Our earlier decision, Chicago Title Land Trust Co.,
664 F.3d 1075, provides ample authority. In that case, the
plaintiffs had sued two defendants for fraud based on certain
representations that those defendants had made. They then
brought another suit alleging fraud and contract claims
against different defendants, but citing the same representations. Id. at 1079–80. We found that the two cases involved the
same series of events. Id.; see also Huon v. Johnson & Bell, Ltd.,
757 F.3d 556, 558–59 (7th Cir. 2014) (holding that employment
discrimination lawsuit against former employer and several
of its employees was precluded under Illinois law by earlier
defamation case against supervisor and coworker when the
two actions were based on the same series of connected transactions).
In this case, the same pattern is repeated: In Piper, Dr. Parungao alleged defamation based on Dr. Piper’s representations to Weatherby and St. Mary’s about his performance. In
the present case, Dr. Parungao challenges the peer-review
process that led to those same representations that impaired
his job prospects. While his theory of recovery is different
here than in Piper, both suits arise out of statements made
around the time he resigned that made it difficult for him to
get another job. Under a “pragmatic” view, see Huon, 757 F.3d
at 558 (applying Illinois law), Dr. Parungao’s federal complaint arises out of the same series of connected events alleged
in Piper.
We now turn to the matter of privity. In ruling that
Dr. Piper (in Piper) and the hospital defendants (in this case)
8

R.143 at 10.

Case: 16-3021

12

Document: 73

Filed: 05/24/2017

Pages: 13

No. 16-3021

are in privity, the district court observed that Dr. Piper had
maintained in the earlier suit that his legal interests were
aligned with those of the hospital defendants. The court concluded that both Dr. Piper and the hospital defendants “were
each defending the integrity of the peer review process at the
hospital and that the employment information was disseminated in a proper manner.” 9
Although Dr. Parungao was careful not to mention
Dr. Piper in his federal complaint, his own motion for a protective order before the district court reveals the basis for privity because the motion treats the hospital defendants as responsible for the letters that Dr. Piper composed on hospital
letterhead. First, the motion acknowledges that Dr. Parungao
bases his theory of liability in this case partly on those letters.
In addition, the motion explains that the federal case alleges a
conspiracy among the hospital defendants to harm Dr. Parungao’s reputation with other healthcare entities by sending
letters with false information. These are the letters sent by
Dr. Piper. Finally, Dr. Parungao even attached Dr. Piper’s letters to his motion, to emphasize that he sought to hold the
hospital defendants vicariously liable for those letters. Dr. Parungao therefore has characterized the legal interests of the
hospital defendants and Dr. Piper as aligned. See United States
v. Egan Marine Corp., 843 F.3d 674, 678–79 (7th Cir. 2016) (explaining relationship between vicarious liability and privity
for preclusion purposes). He has pleaded himself out of court
on the issue of privity.
Dr. Parungao responds on appeal that the allegation in the
federal complaint that the hospital “refused” to verify his
9

Id. at 11–12.

Case: 16-3021

Document: 73

Filed: 05/24/2017

No. 16-3021

Pages: 13

13

good standing to other entities does not refer to Dr. Piper’s letters, but to some other, unexplained event. He also contends
that it is possible that Dr. Piper’s letters to Weatherby and St.
Mary’s were sent without authority from the hospital, and
that the hospital defendants in this case might disclaim responsibility for Dr. Piper’s actions. Thus, he argues, the hospital defendants’ legal interests in this case are not necessarily
aligned with those of Dr. Piper in his defamation suit. Dr. Parungao’s theory might have been plausible had he not, in his
motion for a protective order, taken a position that contradicts
the one he now advances for the first time on appeal. Because
his theory is implausible in light of his own characterization
of his case in his motion for a protective order, we may rely
on that characterization to affirm the district court’s dismissal.
See Watkins, 2017 WL 1505314, at *2–3 (declining to ignore
plaintiff’s previous filing establishing statute-of-limitations
bar “[a]bsent a claim that there is a plausible, good-faith basis
to challenge” its legitimacy).
Conclusion
The district court correctly found that Dr. Parungao’s complaint was barred by the doctrine of res judicata. We therefore
affirm the judgment of the district court.
AFFIRMED