Appalachian Regional Healthcare, Inc. v. U.S. Nursing Corporation

Filing 30

MEMORANDUM OPINION AND ORDER: (1) Dft's motion to dismiss, R. 16 , is GRANTED. (2) Pla's motions for reconsideration, R. 23 , a hearing, R. 26 , and leave to file a sur-reply, R. 26 , are DENIED AS MOOT. (3) This matter is STRICKEN from Court's active docket. Signed by Judge Amul R. Thapar on 11/18/2014. (RCB)cc: COR

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
SOUTHERN DIVISION
PIKEVILLE
APPALACHIAN REGIONAL
HEALTHCARE, INC.,
Plaintiff,
v.
U.S. NURSING CORPORATION,
Defendant.

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Civil No. 14-122-ART

MEMORANDUM OPINION
AND ORDER

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One might be forgiven for wondering what Appalachian Regional Healthcare
(“ARH”) and U.S. Nursing Corporation (“USN”) are fighting about, or whether federal
court is the correct field of battle. Article III of the Constitution, which limits the
jurisdiction of federal courts to cases or controversies, requires federal courts to ask these
questions. Occasionally, doing so reveals that the parties are fighting about nothing at
all—or at least nothing that a federal court may resolve. This is one such occasion.
Because there is no live case or controversy that this Court may resolve, the Court lacks
subject-matter jurisdiction.
BACKGROUND
This conflict did not begin in federal court (nor will it end here). It began with a
sawmill. When Ralph Edward Proffitt was injured in a sawmill accident, he did the
obvious thing: He sought medical treatment. R. 1 at ¶ 6. According to Proffitt, the
treatment he received from one of the attending nurses, Constance Foote, made his
injuries worse, not better.

Proffitt then sued the sawmill, Nurse Foote, and the

corporations responsible for Nurse Foote in Letcher County Circuit Court. Ralph Proffitt
v. Corly Mfg. Co., Civil Action No. 08-CI-360; see also R. 1 at ¶¶ 5–6, 17–19.
At the time of Proffitt’s treatment, ARH’s regular nurses were on strike. R. 1 at
¶ 7.

To fill the gap, ARH and USN had entered into a Staffing Agreement (“the

Agreement”). Under the Agreement, USN would provide the nurses, and ARH would
exercise “complete supervision over the[ir] job performance.” Id. at ¶ 13. All the nurses
USN provided, however, would remain employees of USN—not of ARH. Id. If a nurse
caused any liability, USN agreed to “indemnify, defend, save, and hold harmless” ARH.
Id. at ¶ 16.
On September 11, 2012, USN moved for summary judgment in Proffitt, arguing
that Kentucky’s borrowed-servant doctrine absolved USN of liability. See R. 1 at ¶ 17.
The borrowed-servant doctrine applies when an employer loans his employee to a thirdparty and that third-party directs the employee’s work: the borrowed-servant doctrine
shifts the usual employer liabilities to the third-party. See Carnes v. Dep’t of Econ. Sec.,
435 S.W.2d 758, 761–62 (Ky. 1968). So, because USN “lent” Nurse Foote to ARH,
under the borrowed-servant doctrine, ARH—not USN—would be responsible for Nurse
Foote’s alleged torts.
ARH filed this action for breach of contract and an injunction in an attempt to
curtail the arguments that USN can raise in state court. ARH argues that USN’s reliance
on the borrowed-servant doctrine in the state-court litigation constitutes an “ongoing
breach” of the Agreement. R. 1 at ¶ 20. USN refused to withdraw the defense and
reserved the right to assert the defense at trial. R. 1-4 at 1–3. USN did agree, however,
that it would honor the indemnification clause no matter how the borrowed-servant
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motion came out. Id. at 3.
ARH asks the Court for three things: (1) a declaration that asserting the borrowedservant doctrine is a breach of the Agreement, (2) a list of USN’s duties under the
indemnification clause of the Agreement, (3) and a finding of whether USN’s insurance
policy meets the insurance requirements under the Agreement. ARH also seeks to enjoin
USN from asserting the borrowed-servant defense in the Proffitt litigation. Id. USN
moved to dismiss this action for lack of subject-matter jurisdiction and for failure to state
a claim for relief. R. 16. In the interim, the Proffitt court denied USN’s motion for
summary judgment.

Accordingly, this Court denied as moot ARH’s motion for a

preliminary injunction. R. 22. ARH moved the Court to reconsider its denial of the
preliminary injunction motion, R. 23, and moved for a hearing, R. 26. Because the Court
will grant USN’s motion to dismiss, it will deny as moot ARH’s motions to reconsider
and for a hearing.
DISCUSSION
Article III of the Constitution limits federal court jurisdiction to cases or
controversies. See Fed. R. Civ. P. 12(b)(1); Michigan v. Meese, 853 F.2d 395, 397 (6th
Cir. 1988). To satisfy the case-or-controversy requirement, ARH must show that (1) it
faces an actual or threatened concrete injury, (2) its harm is fairly-traceable to the
defendant’s conduct, and (3) this Court can likely redress its injury. Meese, 853 F.2d at
398; Courtney v. Smith, 297 F.3d 455, 460 (6th Cir. 2002). Because ARH fails to state a
case or controversy, the Court will grant USN’s motion to dismiss.
ARH claims that it will imminently suffer a qualifying injury. It is a “virtual
certainty,” ARH argues, that an adverse verdict in Proffitt would lead to an investigation
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by the Joint Commission on the Accreditation of Hospital Organizations “and perhaps
other regulatory bodies.” R. 24 at 8. ARH also claims that, because it is self-insured, an
adverse verdict “could potentially affect” its ability to respond to other claims and
maintain its insurability. Id. at 9.
But ARH’s unsubstantiated allegations are not sufficient to plead an injury and so
fail to create a case or controversy.

ARH states, without support, that regulatory

investigation is “virtual[ly] certain[ ]” to follow an adverse verdict—a verdict that has not
been rendered, in a case that has not been set for trial. R. 28 at 1–2. Put another way,
ARH will be injured if the jury in Proffitt renders a verdict adverse to ARH, and if a
regulatory agency decides to investigate as a result, and if that investigation then gets
around to finally causing ARH some actual injury. Such a speculative complaint is
precisely the sort that this Court cannot remedy. See N. Am. Natural Res., Inc. v. Strand,
252 F.3d 808, 812–13 (6th Cir. 2001). The Strand court was highly skeptical of an injury
framed in the subjunctive. Id. This skepticism is all the more justified when it relies on
the independent, intervening decisions of multiple third parties.

ARH may have a

concrete injury should the case go to trial, the jury render an adverse verdict, and an
agency launch an investigation of ARH. But none of the links in this speculative chain
has been forged. As a result, ARH has not alleged a concrete, rather than hypothetical,
injury.
ARH’s second alleged injury is even less substantial. According to ARH, because
it is self-insured, an adverse verdict “could potentially affect” its ability to respond to
other claims and maintain insurability. “Could potentially” is classically speculative
language. And again, this alleged injury assumes an adverse outcome in state court.
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Absent actual or imminent harm, ARH has not presented a live case or controversy.
Consequently, the case must be dismissed.
CONCLUSION
Courts exist to hear and resolve cases and controversies. Cases and controversies
require an actual or imminent injury. Mere arguments are not enough. In an argument
without injury, like the dispute between ARH and USN, the Court may not intervene.
Accordingly, it is ORDERED that:
(1)

Defendant’s motion to dismiss, R. 16, is GRANTED.

(2)

Plaintiff’s motions for reconsideration, R. 23, a hearing, R. 26, and leave to
file a sur-reply, R. 26, are DENIED AS MOOT.

(3)

This matter is STRICKEN from the Court’s active docket.

This the 18th day of November, 2014.

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