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Kindred Hospitals East, L.L.C. v. Buffalo Board of Education

United States District Court, M.D. Florida, Tampa Division

August 23, 2017

KINDRED HOSPITALS EAST, L.L.C. d/b/a KINDRED HOSPITAL - BAY AREA - ST. PETERSBURG Plaintiff,
v.
BUFFALO BOARD OF EDUCATION; BUFFALO BOARD OF EDUCATION EMPLOYEE BENEFIT PLAN; and HEALTHNOW NEW YORK, INC. d/b/a BLUECROSS BLUESHIELD OF WESTERN NEW YORK, Defendants.

          ORDER

          SUSAN C. BUCKLEW UNITED STATES DISTRICT JUDGE.

         This cause comes before the Court on Defendants' motion to dismiss Plaintiff's complaint or, in the alternative, motion to transfer venue (the “Motion”) (Doc. 6), Plaintiff's response in opposition to the Motion (Doc. 21), and Defendants' reply to Plaintiff's response (Doc. 32). For the following reasons, this case will be TRANSFERRED to the United States District Court for the Western District of New York, Buffalo Division.[1]

         I. Background

         Plaintiff Kindred Hospitals East, L.L.C. d/b/a Kindred Hospital - Bay Area - St. Petersburg (“Kindred”) filed its complaint in this action in state court seeking payment from Defendants the Buffalo Board of Education (the “Board”), the Buffalo Board of Education Employee Benefit Plan (the “Plan”) (together, the “Plan Defendants”), and HealthNow New York, Inc. d/b/a BlueCross BlueShield of Western New York (“HealthNow”) for the care and treatment provided to a patient (the “Insured”), who was a member of the Plan. (Doc. 2). Kindred's complaint contains the following pertinent allegations: Kindred is a limited liability company that owns and operates a hospital located in St. Petersburg, Florida. (Doc. 2, ¶¶ 2, 21- 24). The Plan is an employee welfare benefit plan, qualifying as a governmental plan within the meaning of 29 U.S.C. § 1002(32), with its principal place of business in Buffalo, New York. (Doc. 2, ¶ 3). The Board, a municipal entity organized under the laws of the State of New York with its principal place of business in Buffalo, New York, is the administrator and sponsor of the plan. (Doc. 2, ¶ 4). HealthNow, the claim processor of the Plan, is a New York corporation with its principal place of business in Buffalo, New York. (Doc. 2, ¶ 5).

         Kindred provided care and treatment to the Insured, a former school teacher who had coverage under the Plan. (Doc. 2, ¶ 11). As part of the admission process, the Insured's daughter assigned to Kindred the Insured's rights to benefits under the Plan. (Doc. 2, ¶ 19). Further, on September 14, 2015, Kindred contacted HealthNow to verify coverage and terms of payment under the Plan. ((Doc. 2, ¶ 12). During this phone conversation, HealthNow misrepresented that Kindred would receive payment under the Plan at Kindred's local BlueCross contract rate for providing services to the Insured. ((Doc. 2, ¶ 41). HealthNow subsequently denied Kindred's claim for benefits under the Plan. (Doc. 2, ¶ 16).

         Based on these facts, the complaint contains counts for breach of written contract against the Plan Defendants (Count I), breach of oral contract (Count II), breach of implied-in-fact contract (Count III), negligent misrepresentation (Count IV), false information negligently supplied for the guidance of others (Count V), and promissory estoppel (Count VI) against all Defendants, and declaratory relief (Count VII) against the Plan Defendants. Defendants now move to dismiss the complaint for 1) lack of personal jurisdiction, 2) lack of standing, 3) failure to state a claim upon which relief can be granted, and 4) failure to join necessary and indispensable parties.[2] (Doc. 6). In the alternative, Defendants argue that this action should be transferred to the United States District Court for the Western District of New York, Buffalo Division (the “WDNY”). (Doc. 6). Kindred opposes the motion to dismiss but states that if the Court finds that personal jurisdiction is lacking as to one or more Defendants, it agrees that transfer to the WDNY is appropriate. (Doc. 21).

         In support of the Motion, Defendants filed the affidavit of Geoffrey Pritchard, the CFO of the Board, who affirms that the Board and the Plan have never done business in Florida, have never held any certificates of licenses in Florida, have never maintained any offices or places of business in Florida, have never maintained a registered agent in Florida, have never conducted any advertising in Florida, have never solicited any business in Florida, have no bank accounts or property holdings in Florida, have never targeted Florida residents in regards to inclusion in the Plan, and all decisions vis-à-vis benefits payable under the plan are made in New York. (Doc. 6-2). Pritchard further states that the Insured was eligible to participate in the Plan by virtue of the Insured's employment with the Buffalo Board of Education and, at the time the Insured became eligible to participate in the Plan, the Insured was domiciled in New York. (Doc. 6-2, ¶ 21).

         In addition, Defendants filed the affidavit of Paul Valley, a senior director of HealthNow, who affirms that HealthNow, as a third party administrator for the Plan, does not target Florida residents in regard to administrative services for the Plan, that the Plan was administered and all decisions regarding the Plan were made in New York, and that HealthNow has never been domiciled in Florida, has never held any certifications or licenses in Florida, has never maintained any place of business or office in Florida, does not maintain a registered agent in Florida, does not conduct any advertising in Florida, does not maintain any bank accounts in Florida and does not have any property holdings in Florida. (Doc. 6-3). Moreover, Valley states that 96% of the members of the Plan are located in New York while only 1.5% (approximately 297 members) are located in Florida. (Doc. 6-3, ¶ 28).

         II. Discussion

         Courts typically address personal jurisdiction issues before subject matter jurisdiction, failure to state a claim, and venue because a “court without personal jurisdiction is powerless to take further action.” Posner v. Essex Ins. Co., Ltd., 178 F.3d 1209, 1214 n.6 (11th Cir. 1999); see also Read v. Ulmer, 308 F.2d 915, 917 (5th Cir. 1962)[3] (“It would seem elementary that if the court has no jurisdiction over a defendant, the defendant has an unqualified right to have an order entered granting its motion to dismiss.”). In order to survive a motion to dismiss, a plaintiff must allege “sufficient facts to support a reasonable inference that the defendant can be subjected to the jurisdiction of the court.” Jackam v. Hosp. Corp. of Am. Mideast, Ltd., 800 F.2d 1577, 1579 (11th Cir. 1986) (citation omitted).

         The Court applies a two-part test in determining whether the exercise of personal jurisdiction over a non-resident defendant is proper. Horizon Aggressive Growth, L.P. v. Rothstein-Kass, P.A., 421 F.3d 1162, 1166 (11th Cir. 2005). The Court must first determine whether the Florida long-arm statute provides a basis for personal jurisdiction, Sculptchair, Inc. v. Century Arts, Ltd., 94 F.3d 623, 626 (11th Cir. 1996), and then it must inquire if such exercise of jurisdiction comports with the constitutional principles of due process, Sun Bank, N.A. v. E.F. Hutton & Co., Inc., 926 F.2d 1030, 1033 (11th Cir. 1991) (citations omitted).

         A. Florida's Long-Arm Statute

         “The reach of Florida's long-arm statute ‘is a question of Florida law, '” and this Court “is required to apply the statute ‘as would the Florida Supreme Court.'” Louis Vuitton Malletier, S.A. v. Mosseri, 736 F.3d 1339, 1352 (11th Cir. 2013) (quoting United Techs. Corps. v. Mazer, 556 F.3d 1260, 1274 (11th Cir. 2009)). The long-arm statute permits jurisdiction over an out-of-state defendant when the defendant engages in “substantial and not isolated activity within this state, ” see § 48.193(2), Fla. Stat. (general jurisdiction), or when the defendant engages in certain acts which are targeted at Florida and relate to the plaintiff's cause of action, see § 48.193(1), Fla. Stat. (specific jurisdiction). Here, Kindred seeks the exercise of specific jurisdiction because it asserts that its claims arise from Defendants' activities directed at Florida regarding the Insured. Florida's long-arm statute provides in relevant part:

(1)(a) A person, whether or not a citizen or resident of this state, who personally or through an agent does any of the acts enumerated in this subsection thereby submits himself or herself . . . to the jurisdiction of the courts of this state for ...

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