The opinion of the court was delivered by: ELLEN S. HUVELLE, District Judge
Plaintiffs seek review under the Administrative Procedure Act ("APA"),
5 U.S.C. § 701, et seq., of a Department of Health and Human Services
("HHS") determination that they are ineligible for medical malpractice
liability coverage from the federal government under the Federally
Supported Health Centers Assistant Act ("FSHCAA" or "the Act"),
42 U.S.C. § 233(g). For the reasons set forth below, plaintiffs'
motion for summary judgment will be granted, and defendants' cross-motion
will be denied.
Plaintiffs are physicians who provide obstetric and gynecological
services in Arizona for patients of El Rio Santa Cruz Neighborhood Health
Center, Inc. ("El Rio") through contracts established between El Rio and
each physician's individually-owned, eponymous corporation. As a
non-profit clinic that receives federal funds for the provision of
medical care to low-income patients, El Rio receives professional
liability coverage from the federal government pursuant to
the FSHCAA. This Act makes federally-funded community health centers and
their employees, officers, and individual contractors eligible for
medical malpractice coverage under the Federal Tort Claims Act ("FTCA"),
28 U.S.C. § 1346, 2671, to the same extent as federal employees of
the Public Health Service.
In July 2002 the family of an El Rio patient sued plaintiffs, among
others, in a survival action in Arizona state court for medical
malpractice allegedly committed in July 2000. See Puig v. Rios, No.
2002-3441 (Ariz. Sup. Ct). Shortly thereafter, El Rio notified HHS of the
suit and submitted information to the agency for a determination of the
physicians' FTCA coverage, which, if granted, would prompt the
substitution of the United States as defendant for the individual
physicians in the malpractice suit. See 42 U.S.C. § 233(g)(1)(A).
HHS, however, denied the physicians FTCA coverage by letter dated January
23, 2003, to El Rio from Elizabeth Jordan Gianturco, the Chief of the
Claims and Employment Law Branch of HHS's General Counsel's Office ("the
Gianturco letter"). The letter stated that plaintiffs
cannot be deemed employees of the Public Health
Service because their contracts were between the
health center and a professional corporation. See BPHC
Policy Information Notice 99-08, Section IV. Based
upon the above, this agency has determined that this
matter does not meet the criteria under the FSHCAA for
coverage under the Federal Tort Claims Act (FTCA) and
for representation by the United States government.
Although HHS had made its determination, the physicians removed the
malpractice action from state to federal court in Arizona in March
See Puig v. Rios, Civ. No. 03-161 (D. Ariz.). El
Rio sought intervenor status for the sole purpose of adjudicating the FTCA
coverage issue, and before that motion was decided, the physicians and El
Rio filed a joint petition for a determination of the physicians'
coverage and a third-party complaint for declaratory and injunctive
relief against HHS and Tommy Thompson as "necessary parties" to the
coverage decision. Meanwhile, the malpractice plaintiff had moved to
remand the case to state court. On June 5, 2003, the court granted the
remand because it found that the notice of removal had not been timely
filed as required by 42 U.S.C. § 233(1)(2) and 28 U.S.C. § 1446(b),
and therefore, the remaining matters were moot. El Rio subsequently
withdrew its motion to intervene, and the third-party complaint was also
Thus, the malpractice claim is currently
pending in Arizona state court.
The physicians and El Rio filed the instant complaint against HHS and
its Secretary in this Court on August 18, 2003, requesting that the Court
invalidate HHS's refusal to grant FTCA coverage to the physicians and
direct HHS to take appropriate action to notify the Department of Justice
that plaintiffs are entitled to FTCA coverage. Their summary judgment
motion and the government's cross-motion are now before the Court.
The issues raised by the parties present narrow questions of law
appropriate for summary judgment. As a threshold matter, the government
challenges the Court's jurisdiction over plaintiffs' claim. It contends
that it is "well-settled that the APA is not an implied grant of subject
matter jurisdiction permitting review of agency action," and thus,
plaintiffs must establish an independent source of federal question
jurisdiction. (Cross-mot, at 10 (citing Califano v. Sanders, 430 U.S. 99
(1977)).) The government argues that no independent
jurisdiction exists, because "HHS's negative `deeming' determination
[does] not create federal question jurisdiction." (Id. at 11 (citing
Allen v. Christenberry, 327 F.3d 1290 (11th Cir. 2003)).)
Addressing the merits of plaintiffs' claim that they should receive
FTCA coverage under the Act, the government asks the Court to construe
the relevant portions of the FSHCAA narrowly, limiting FTCA coverage only
to individuals who contract directly with health clinics. It contends
that HHS's denial of coverage to the physicians, who have contracted with
El Rio "not in their individual capacities, but through a separate and
distinct corporate entity," was not arbitrary and capricious, and should
be upheld. (Id. at 14, 17.)
The government's challenges to the Court's jurisdiction are misguided.
There is a presumption in favor of reviewability under the APA, see,
e.g., Abbott Labs. v. Gardner, 387 U.S. 136, 141 (1967), and thus,
"[e]ven though the APA itself technically grants no jurisdiction, power
to review any agency action exists under 28 U.S.C. § 1331." Robbins
v. Reagan, 780 F.2d 37, 42-43 (D.C. Cir. 1985) (quoting Megapulse, Inc.
v. Lewis, 672 F.2d 959, 966 n.30 (D.C. Cir. 1982)).
This Circuit has discussed how the holding in Sanders, upon which
defendants rely, "does not inexorably lead to the conclusion" that the
Court has no basis for jurisdiction over APA claims, but instead has been
limited to its facts. Robbins, 780 F.2d at 42. It is now well-established
that Sanders bars a district court's jurisdiction over an APA challenge
to federal agency action only when a federal statute specifically
precludes review. Id. See also Ass'n of Nat'l Advertisers v. FTC,
617 F.2d 611, 619 (D.C. Cir. 1979) ("[g]eneral federal question
jurisdiction . . . gives the district courts the power to review agency
action absent a preclusion of review statute"). No statutory provision
precludes APA review of the HHS determination at
issue here. See Fox Television Stations, Inc. v. F.C.C., 280 F.3d 1027,
1038 (D.C. Cir. 2002) (citing Abbott Labs., 387 U.S. at 141 ("clear and
convincing evidence" of congressional intent is required to foreclose
judicial review)). Thus, the Court has jurisdiction over plaintiffs' APA
Second, the government's reliance on the Alien case is inapposite. In
Allen, the Eleventh Circuit concluded that HHS's determination that a
physician was not covered under the FTCA did not create federal question
jurisdiction over the underlying malpractice claim between the injured
plaintiff and the physician defendant. 327 F.3d at 1295-96. There, because
HHS had determined, prior to removal, that the doctors were not covered,
the doctors had no basis to remove the case to federal court.*fn3 Id.
Therefore, Alien's procedural posture rendered the HHS determination a
"tangential federal issue" that could not transform the action "into a
federal case where the rights involved [were] rooted in state law."
Robbins, 780 ...