Krandle v. Refuah Health Center, Inc.

Background

Rebecca Krandle, Dawn Esposito, and Paola Cortazar brought two proposed class actions against Refuah Health Center, Inc. (“RHC”), alleging tort and other claims arising from a data breach of RHC’s computer systems. The complaints alleged that hackers accessed files containing personally identifying and personal health information. Krandle alleged that she was a former RHC employee and patient and received notice that her information was exposed. Esposito and Cortazar received notices that their information may have been compromised; Esposito alleged increased spam and phishing attempts, and Cortazar alleged suspicious credit-card charges.

The plaintiffs originally filed the actions in New York state court. RHC removed both cases to federal court under 42 U.S.C. § 233(l)(2), a provision concerning federally supported health centers, and alternatively under 28 U.S.C. § 1442(a)(1), which permits removal of certain cases brought against federal officers or persons acting under federal authority. The plaintiffs moved to remand, meaning they asked the federal court to return the cases to state court. The court considered the two motions together because the cases presented similar jurisdictional questions.

Removal under 42 U.S.C. § 233

Section 233(l) allows a federally supported health center to remove a state-court action after the Attorney General has been notified and has failed to appear within the statutory 15-day period. The court held that RHC removed both actions prematurely.

For the Krandle action, RHC gave the Department of Health and Human Services’ Office of General Counsel the summons and complaint on May 26, 2022, and separately sent them to the U.S. Attorney’s Office on June 3, 2022. RHC removed the case on June 14, 2022. The court concluded that notice to the Attorney General could not simply be attributed from notice to another federal agency. Assuming that the June 3 notice was sufficient, RHC still removed the case four days before the statutory period ended.

For the Esposito action, RHC gave notice to both the Office of General Counsel and the U.S. Attorney’s Office on June 15, 2022, and removed the case the next day. The court held that this plainly did not satisfy the 15-day waiting period. The court also rejected RHC’s argument that the related Krandle action justified the early removal. Because removal was improper under § 233 in both actions, the court did not decide the plaintiffs’ remaining arguments about whether § 233 otherwise applied to their claims.

Removal under 28 U.S.C. § 1442

The court separately considered RHC’s alternative reliance on § 1442(a)(1). That statute permits a defendant to remove a state-court case involving acts taken under color of federal office. A non-federal-officer defendant must show that it is a “person” under the statute, acted under federal authority, and has a colorable federal defense—a plausible federal defense sufficient to allow the federal court to hear the case without deciding in advance that the defense will succeed.

The court concluded that RHC satisfied the relevant requirements. The parties did not dispute that RHC timely followed the § 1442 removal procedure, qualified as a “person,” or asserted a colorable federal defense. The main issue was whether RHC was “acting under” federal authority.

Following controlling Second Circuit precedent, the court held that RHC was acting under federal authority because it operated as a federally supported health center and performed services that, without the federal program, the federal government would have to perform itself. The court also relied on federal requirements that health centers maintain the confidentiality of patient records as a condition of receiving grant funds and maintaining coverage as a deemed Public Health Service employee. It concluded that protecting patient information was a medical or related function for purposes of the federal health-center framework, even though the alleged failure to protect the information did not occur during the actual delivery of medical treatment.

The court therefore concluded that RHC properly removed both actions under § 1442. Because that conclusion resolved the jurisdictional issue, the court did not decide whether RHC itself was a federal officer.

Disposition

Judge Kenneth M. Karas ordered that Krandle’s motion to remand was granted in part and denied in part, and Esposito’s motion to remand was granted in part and denied in part. The court found the removals improper under § 233 but proper under § 1442, so both cases remained in federal court. The opinion did not decide whether the plaintiffs’ data-breach claims were legally valid.