Association of American Physicians & Surgeons, Inc. v. Texas Medical Board

Case: 09-50953 Document: 00511309459 Page: 1 Date Filed: 12/02/2010

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit

FILED
December 2, 2010

No. 09-50953 Lyle W. Cayce
Clerk

ASSOCIATION OF AMERICAN PHYSICIANS & SURGEONS INC,

Plaintiff – Appellant

v.

TEXAS MEDICAL BOARD, (TMB); ROBERTA M. KALAFUT, Individually and
in her Official Capacity; LAWRENCE L. ANDERSON, Individually and in his
Official Capacity; MICHAEL ARAMBULA, Individually and in his Official
Capacity; JULIE K. ATTEBURY, Individually and in her Official Capacity;
JOSE BENAVIDES, Individually and in his Official Capacity; PATRICIA S.
BLACKWELL, Individually and in her Official Capacity; MELINDA S.
FREDRICKS, Individually and in her Official Capacity; MANUAL G.
GUARJARDO, Individually and in his Official Capacity; AMANULLAH KAHN,
Individually and in his Official Capacity; MELINDA MCMICHAEL, Individually
and in her Official Capacity; MARGARET MCNEESE, Individually and in her
Official Capacity; CHARLES E. OSWALT, Individually and in his Official
Capacity; LARRY PRICE, Individually and in his Official Capacity; ANNETTE
P. RAGGETT, Individually and in her Official Capacity; PAULETTE BARKER
SOUTHARD, Individually and in her Official Capacity; TIMOTHY J. TURNER,
Individually and in his Official Capacity; TIMOTHY WEBB, Individually and in
his Official Capacity; IRVIN E. ZEITLER, Individually and in his Official
Capacity; DONALD PATRICK, Individually and in his Official Capacity; JOHN
DOES 1-10, Who are working for the TMB, Individually and in their Official
Capacities,

Defendants – Appellees

Appeal from the United States District Court
for the Western District of Texas
 Case: 09-50953 Document: 00511309459 Page: 2 Date Filed: 12/02/2010

No. 09-50953

Before JONES, Chief Judge, and REAVLEY and HAYNES, Circuit Judges.
EDITH H. JONES, Chief Judge:
The Association of American Physician and Surgeons (“AAPS”) sued the
Texas State Board of Medical Examiners (“the Board”) under 42 U.S.C. § 1983
for declaratory and injunctive relief against alleged constitutional violations
including the Board’s use of anonymous complaints and retaliatory actions
against physicians. The district court dismissed the case based on AAPS’s lack
of standing, noting an absence of “Fifth Circuit authority directly on point for the
types of claims raised in this cause.”
Weighing in on this issue, we conclude that AAPS has standing to bring
this suit on behalf of its members. The judgment is therefore vacated and the
case remanded for further proceedings.
I. BACKGROUND
AAPS is a not-for-profit membership organization incorporated under the
laws of Indiana and headquartered in Tucson, Arizona. Its membership includes
thousands of physicians in nearly every state, including Texas. AAPS asserts
that part of its mission is to protect its members from arbitrary and unlawful
governmental action.
The Board “is an agency of the executive branch of state government with
the power to regulate the practice of medicine.” T EX. O CC. C ODE § 152.001. The
Board consists of nineteen members appointed by the governor – twelve
physicians and seven members of the public. Id. § 152.002. At the time this case
was filed, Dr. Roberta Kalafut was the Board’s president, and Lawrence
Anderson was chair of the Disciplinary Process Review Committee. The other
named and unnamed defendants were Board members and employees. The
Board has statutory authority to discipline physicians for misconduct. See, e.g.,
id. § 164.001.

2
 Case: 09-50953 Document: 00511309459 Page: 3 Date Filed: 12/02/2010

No. 09-50953

AAPS sued the Board on behalf of its members for what it describes as
pervasive and continuing violations of members’ constitutional rights. AAPS
alleged first that the Board manipulated anonymous complaints. Illustratively,
Kalafut targeted physicians using anonymous complaints filed by her husband,
and anonymous complaints allegedly were filed by a New York insurance
company seeking to avoid paying a physician for claims. Second, AAPS alleged
that the Board knew that the former chairman of its Disciplinary Process
Review Committee, Keith Miller, was operating with a significant conflict of
interest, but it took no corrective action and failed to disclose the conflict to the
public or the physicians subject to discipline. Dr. Miller was allegedly an expert
witness for plaintiffs in up to fifty malpractice cases during his tenure as chair
of the committee and generated business for himself as an expert by improperly
disciplining physicians.
Third, AAPS alleged that the Board arbitrarily rejected a decision in favor
of a doctor by an administrative law judge from the State Office of
Administrative Hearings, and then issued a sanction that damaged the
physician’s reputation. Fourth, AAPS asserted that the Board violated AAPS
members’ privacy by releasing unproven facts and records concerning
disciplinary cases. Finally, AAPS alleged that the Board has retaliated against
physicians who have complained about the Board by subjecting them to
disciplinary proceedings and derogatory public comments. AAPS alleged
violations of the confrontation clause and the due process, equal protection, and
free speech provisions of the Constitution, and violation of federal statutory
privacy requirements.1
The Board’s answer included a number of affirmative defenses and sought
dismissal under Fed. Rule Civ. Pro. 12(b)(1), arguing that AAPS lacked standing

1
AAPS’s complaint cites the Health Insurance Portability and Accountability Act
(HIPPA), codified at 29 U.S.C. § 1181 et seq.

3
 Case: 09-50953 Document: 00511309459 Page: 4 Date Filed: 12/02/2010

No. 09-50953

to sue on behalf of its members. In the midst of ongoing discovery disputes, the
district court granted the motion to dismiss. AAPS appeals under 28 U.S.C.
§ 1291.
II. STANDARD OF REVIEW
“We review de novo motions to dismiss and motions for judgment on the
pleadings.” Jebaco, Inc. v. Harrah’s Operating Co., Inc., 587 F.3d 314, 318 (5th
Cir. 2009) (citations omitted). “[W]hen standing is challenged on the basis of the
pleadings,” we must “accept as true all material allegations of the complaint
and . . . construe the complaint in favor of the complaining party.” Pennell v.
City of San Jose, 485 U.S. 1, 7, 108 S. Ct. 849, 855 (1988) (citations and internal
quotation omitted).
III. DISCUSSION
“There is no question that an association may have standing in its own
right to seek judicial relief from injury to itself and to vindicate whatever rights
and immunities the association itself may enjoy”, but “[e]ven in the absence of
injury to itself, an association may have standing solely as the representative of
its members.” Warth v. Seldin, 422 U.S. 490, 511, 95 S. Ct. 2197, 2211 (1975).
AAPS’s standing here depends on its ability to sue for redress of its members’
grievances. Thus,
[A]n association has standing to bring suit on behalf of its members
when: (a) its members would otherwise have standing to sue in their
own right; (b) the interests it seeks to protect are germane to the
organization’s purpose; and (c) neither the claim asserted nor the
relief requested requires the participation of individual members in
the lawsuit.

See Hunt v. Wash. St. Apple Adver. Comm’n, 432 U.S. 333, 343, 97 S. Ct. 2434,
2441 (1977). The first two components of Hunt address constitutional
requirements, while the third prong is solely prudential. See United Food &

4
 Case: 09-50953 Document: 00511309459 Page: 5 Date Filed: 12/02/2010

No. 09-50953

Commercial Workers Union Local 751 v. Brown Grp., Inc., 517 U.S. 544, 555,
116 S. Ct. 1529, 1535 (1996).
Beyond question, AAPS satisfies the first and second Hunt prongs.2 As to
the third prong, the Board argued that because AAPS’s claims require the
participation of individual members, it cannot meet that test. The district court
agreed that AAPS’s allegations about anonymous complaints, conflicts of
interest, arbitrary administrative rulings, breaches of privacy, and retaliation
cannot be sustained without the extensive participation of individual members
and therefore render associational standing improper. We hold otherwise.
Because Hunt’s third prong is prudential, “the general prohibition on a
litigant’s raising another person’s legal rights is a judicially self-imposed limi[t]
on the exercise of federal jurisdiction, not a constitutional mandate.” Brown
Grp., 517 U.S. at 557, 116 S. Ct. at 1536 (citations and quotations omitted). The
third prong focuses importantly on “matters of administrative convenience and
efficiency.” Id. Courts assess this prong by examining both the relief requested
and the claims asserted. Cornerstone Christian Schs. v. Univ. Interscholastic
League, 563 F.3d 127, 134 n.5 (5th Cir. 2009). In general, “an association’s
action for damages running solely to its members would be barred for want of
the association’s standing to sue.” Brown Grp., 517 U.S. at 546, 116 S. Ct. at
1531. But in this case, AAPS seeks declaratory and injunctive relief.

2
The first prong never has been in question, but the second prong was disputed at the
dismissal stage, when the Board argued that the individual interests at issue are not germane
to AAPS’s purpose. The district court did not address that argument because it found the
third Hunt prong dispositive. The Board, however, neither briefed nor argued the
germaneness requirement before this court and therefore abandoned it. Regardless, the
germaneness requirement is “undemanding” and requires “mere pertinence” between the
litigation at issue and the organization’s purpose. See Bldg. & Constr. Trades Council of
Buffalo v. Downtown Dev., Inc., 448 F.3d 138, 148 (2nd Cir. 2006). Through its affidavits and
acts, AAPS has demonstrated its obvious interest in representing its members against alleged
governmental abuse. AAPS easily surpasses the low threshold of Hunt’s germaneness prong.

5
 Case: 09-50953 Document: 00511309459 Page: 6 Date Filed: 12/02/2010

No. 09-50953

As the district court noted, this court has not had occasion to consider
Hunt’s third prong with respect to claims similar to those AAPS alleges.3 Other
circuits have diverged in analogous cases. AAPS relies on precedents from the
Third and Seventh Circuits, which allow standing if an association plaintiff can
prove its case with a sampling of evidence from its members. See Pa. Psychiatric
Soc’y v. Green Spring Health Servs., Inc., 280 F.3d 278 (3d Cir. 2002); Hosp.
Council of W. Pa. v. City of Pittsburgh, 949 F.2d 83 (3d Cir. 1991); Retired Chi.
Police Ass’n v. City of Chi., 7 F.3d 584, 601–02, 608 (7th Cir. 1993). The Board,
in contrast, emphasizes the Tenth Circuit’s rejection of an association’s standing
in Kansas Health Care Association, Inc. v. Kansas Department of Social &
Rehabilitation Services, 958 F.2d 1018 (10th Cir. 1992).
The Third Circuit’s approach is instructive. In Hospital Council, a
constitutional challenge was filed against certain cities’ alleged practice of
coercing tax-exempt hospitals into making payments in order to obtain zoning
approval, protect their tax-exempt status, and secure other governmental
benefits. Id. at 85. Then-Judge Alito explained that although evidence would
be needed from certain individual hospitals and their employees in order to
prove whether the challenged policy had been enforced, the participation of all
of the individual members was unnecessary and thus associational standing
was appropriate. Id. at 89–90; see also Pa. Psychiatric Soc’y, 280 F.3d at 287
(holding that plaintiff could attempt to establish associational standing with
limited individual member participation).

3
We rejected associational standing in Friends for American Free Enterprise
Association v. Wal-Mart Stores, Inc., because the plaintiff’s common law tortious interference
claims at issue were wholly fact-specific as to the individual members. 284 F.3d 575 (5th Cir.
2002). Likewise, in Cornerstone Christian Schools v. University Scholastic League,
associational standing was rejected for plaintiffs asserting a free exercise claim. 563 F.3d 127
(2009) (citing Harris v. McRae, 448 U.S. 297, 100 S. Ct. 2671 (1980)). Neither case is
particularly instructive here.

6
 Case: 09-50953 Document: 00511309459 Page: 7 Date Filed: 12/02/2010

No. 09-50953

The Seventh Circuit expressly adopted the Third Circuit’s reasoning in
Retired Chicago Police Association, a suit seeking to prohibit the city from
changing the terms of annuitant health care costs under the city’s pension plan.
7 F.3d at 590. To prove the case for a contract breach, some retirees would need
to submit evidence, but the active participation of each annuitant would not be
required. Id. at 601–03. The court noted:
We can discern no indication in Warth, Hunt, or Brock that the
Supreme Court intended to limit representational standing to cases
in which it would not be necessary to take any evidence from
individual members of an association. Such a stringent limitation on
representational standing cannot be squared with the Court’s
assessment in Brock of the efficiencies for both the litigant and the
judicial system from the use of representational standing.

Id. at 601-02.
Both of these circuits interpret Hunt to mean, in light of the Court’s
previous decision in Warth, that as long as resolution of the claims benefits the
association’s members and the claims can be proven by evidence from
representative injured members, without a fact-intensive-individual inquiry, the
participation of those individual members will not thwart associational standing.
See also Pa. Psychiatric Soc’y, 280 F.3d at 286.
The Tenth Circuit, however, refused to grant associational standing to a
medical services provider association that sought a preliminary injunction
against Kansas’s planned Medicaid reimbursement rate freeze. See Kansas
Health Care Ass’n, 958 F.2d at 1018. Among other things, the association
argued that the state’s findings as to reimbursement rates did not comply with
federal law. Id. at 1020. The Tenth Circuit held that determining the adequacy
of the rates would “necessarily require individual participation of the
associations’ members.” Id. at 1023. Further, to assess the state’s compliance
with federally prescribed procedures in arriving at its reimbursement rate, the

7
 Case: 09-50953 Document: 00511309459 Page: 8 Date Filed: 12/02/2010

No. 09-50953

district court would be required to make a detailed economic examination of
individual providers. The court acknowledged that “minimal participation” from
individual members might not defeat associational standing, Id. at 1022 (citing
AMISUB (PSL), Inc. v. Colo. Dep’t of Soc. Servs., 879 F.2d 789 (10th Cir.1989)),
but it held that the amount of individual participation necessary to prove the
association’s specific claims foreclosed associational standing.
The differences between these decisions’ approach to associational
standing are more of degree than kind. Hunt’s prudential inquiry concerns both
claims alleged and the relief sought because only a case-specific analysis will
reveal whether an association or its individual members are better positioned to
present a case. See Int’l Union, UAW v. Brock, 477 U.S. 274, 289-90, 106 S. Ct.
2523, 2532-33 (1986) (comparing associational standing with class action
criteria). In Hospital Council and Retired Chicago Police Association, a discrete
pattern of conduct or contract breach was alleged to have applied equally against
a large number of association members. Proving the illegality of the pattern or
breach of contract required some evidence from members, but once proved as to
some, the violations would be proved as to all.
In Kansas Health Care Association, however, the court carefully
distinguished between claims of administrative illegality that would be
apparent with minimal factual development and those that could only be proven
by intensive analysis of individual hospitals. Because of their fact-sensitivity,
the ratemaking inquiries before the court did not lend themselves to proof that
would readily apply to all of the members.
The present case, on balance, more closely resembles Hospital Council
than Kansas Health Care Association. AAPS’s complaint alleged, among other
things, abuses perpetrated on physicians by means of anonymous complaints,
harassment of doctors who complained about the Board, and conflicts of interest
by decision-makers. If practiced systemically, such abuses may have violated or

8
 Case: 09-50953 Document: 00511309459 Page: 9 Date Filed: 12/02/2010

No. 09-50953

chilled AAPS members’ constitutional rights. Proof of these misdeeds could
establish a pattern with evidence from the Board’s witnesses and files and from
a small but significant sample of physicians. Because AAPS also seeks only
equitable relief from these alleged violations, both the claims and relief appear
to support judicially efficient management if associational standing is granted.
In so holding, we “accept as true all material allegations of the complaint
and . . . construe the complaint in favor of the complaining party,” Pennell,
supra, but we express no opinion on whether AAPS will ultimately be able to
prove its rather dramatic claims. Under these circumstances, dismissal under
Rule 12(b)(1) was improper.
III. CONCLUSION
Because AAPS was entitled to claim associational standing on behalf of its
members, we vacate and remand for further proceedings not inconsistent with
this opinion.
VACATED AND REMANDED.

9