Johnson v. Petaluma Health Center, Inc.

Background

These two cases were filed in state court and removed to federal court by Petaluma Health Center, Inc. The provider relied on two federal removal statutes: 42 U.S.C. § 233(l), which concerns federally funded health providers treated as “deemed employees” for certain purposes, and 28 U.S.C. § 1442, which permits removal by parties acting under a federal officer. The opinion identifies the conduct at issue as the storage of patients’ medical information.

The Attorney General appeared in state court within the relevant 15-day period but did not give a definite yes-or-no answer about whether Petaluma Health Center, Inc. was a deemed employee with respect to the acts or omissions involved in the lawsuits. Instead, the Attorney General gave an advisal essentially stating that the answer was not yet known. Petaluma Health Center, Inc. later removed the cases. The Attorney General sought remand, meaning a return of the cases to state court.

Section 233 Removal

The court interpreted the Ninth Circuit’s decision in a prior related proceeding, along with § 233(l), as requiring the Attorney General, when appearing in state court, to advise within 15 days whether the provider was a deemed employee and, if so, whether that status covered the acts or omissions alleged in the lawsuit. The court rejected Petaluma Health Center, Inc.’s argument that the Attorney General only needed to state whether the provider was a deemed employee in the abstract.

The court also rejected the government’s argument that this rule applied only to medical-malpractice cases. In the court’s reading, the same requirement applies to other lawsuits involving the provider’s medical, surgical, dental, or related functions.

The court concluded, however, that the Attorney General’s preexisting “we don’t know yet” advisal should not be treated as a failure to appear. The court viewed it under these circumstances as more like an extension request. Because the Attorney General had appeared, Petaluma Health Center, Inc. did not have a right to remove under § 233(l)(2), which permits a defendant to remove when the Attorney General does not appear within 15 days. The court also rejected the argument that a negative advisal would itself authorize removal, noting that the statute does not say that it would.

Federal-Officer Removal

The court held that removal under 28 U.S.C. § 1442 was also improper. It explained that a provider’s receipt of federal funds to support health-care services does not, by itself, mean the provider was “acting under” a federal officer. The court left open the possibility that a provider might satisfy that standard based on additional activities, such as participation in a specific health-care research project supervised by federal officials. But the opinion found no indication that Petaluma Health Center, Inc. was anything other than a recipient of federal funds for community health-care services, and it held that storing patients’ medical information was not conduct performed while acting under a federal officer.

Disposition

The court granted the motions to remand. It did not immediately direct the clerk to return the cases to Sonoma County Superior Court. Instead, at Petaluma Health Center, Inc.’s oral request, the court stayed the remand while the provider decides whether to appeal. The stay will continue during an appeal if the provider files one. The parties must file a joint status report within 45 days. If Petaluma Health Center, Inc. does not appeal, the court will enter an order remanding the cases.

Judge Chhabria stated that the cases had been improperly removed, while also stating that Petaluma Health Center, Inc. and the Attorney General were not to blame for the circumstances that led to the removal and remand dispute.