IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
November 25, 2008
No. 08-30075
Summary Calendar Charles R. Fulbruge III
Clerk
LIBERTY MUTUAL INSURANCE COMPANY
Plaintiff-Appellee
v.
DR. CLARK GUNDERSON AND
LAKE CHARLES MEMORIAL HOSPITAL
Defendants-Appellants
Appeal from the United States District Court
for the Western District of Louisiana
USDC No. 2:04-CV-2405
Before STEWART, OWEN, and SOUTHWICK, Circuit Judges.
PER CURIAM:*
Defendants-Appellants Dr. Clark Gunderson and Lake Charles Memorial
Hospital (jointly “Gunderson”) appeal the district court’s grant of First Health
Group Corporation’s (“First Health”) motion for a permanent injunction and stay
of proceedings. Appellee First Health requests that this Court dismiss the
instant appeal for lack of jurisdiction. We DENY First Health’s motion to
dismiss, and AFFIRM the district court’s grant of the permanent injunction.
*
Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion
should not be published and is not precedent except under the limited
circumstances set forth in 5TH CIR. R. 47.5.4.
No. 08-30075
I. FACTUAL AND PROCEDURAL BACKGROUND
The parties in this case have a long and complicated history of litigation.
The factual and procedural background relevant to the instant appeal is
provided below.
Liberty Mutual entered into an agreement (“PPO Contract”)
with [First Health] whereby First Health agreed to make available
to Liberty Mutual various hospitals and medical providers.
Defendants, Dr. Clark Gunderson (“Gunderson”) and Lake Charles
Memorial Hospital (“LCMH”) entered into “Provider Agreements”
with First Health for the delivery of medical services at discounted
rates to “Payors,” namely in this suit, Liberty Mutual. . . .
Gunderson and LCMH asserted in [a prior] suit that the payment
provision of their Provider Agreements is null and void under the
disclosure rules of Louisiana’s Any Willing Provider Act, Louisiana
Revised Statute 40:2203.1, because [Liberty Mutual] (the preferred
provider organizations and third party administrators) failed to
comply with the statute’s notice provisions. Thus, Gunderson and
LCMH, assert that they are entitled to additional monies [from
Liberty Mutual] for medical services performed, in addition to
statutory penalties and attorneys’ fees.
Liberty Mutual filed this suit requesting that the Court enter
a judgment declaring that (1) the Provider Agreements are valid
and enforceable, (2) Liberty Mutual is obligated to pay Gunderson
and LCMH only the negotiated rates for medical services performed,
(3) Gunderson and LCMH are not entitled to be paid amounts in
excess of the negotiated rates, (3) [sic] Gunderson and LCMH have
no cause of action under any law, statute, or regulation against
Liberty Mutual, and (5) Gunderson and LCMH’s efforts to receive
additional monies violate their contracts which constitutes a breach
of those contracts, entitling Liberty Mutual to damages and
indemnity, including, but not limited to attorneys [sic] fees.
In its Second Amended Complaint, Liberty Mutual added as
a defendant, [sic] First Health. . . . Liberty Mutual maintains that
pursuant to the PPO Contract, First Health agreed to “fully
indemnify and hold harmless [Liberty Mutual] . . . from and against
any and all claims . . . .
First Health filed a motion for summary judgment
maintaining that because the Provider Agreements are valid and
enforceable, First Health is not obligated to indemnify Liberty
Mutual. . . . Liberty Mutual filed a motion for partial summary
judgment seeking a declaration against Gunderson and LCMH that
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No. 08-30075
the Provider Agreements with First Health are valid and
enforceable.
Liberty Mutual Ins. Co. v. Gunderson, No. 04-cv-2405 (W.D. La Feb. 15, 2006)
(Mem. Ruling). On February 15, 2006, the district court made the following
rulings at the summary judgment stage:
(1) the discount provisions in the Provider Agreements between
First Health and Gunderson and LCMH are valid and enforceable
because there are no prohibitions in the Louisiana Workers’
Compensation law that prevent a provider from agreeing to charge
and received discounted rates for the services they provide to
occupationally ill or injured workers, and (2) the payment provisions
of the provider Agreement between Liberty Mutual and Gunderson
and LCMH are not null and void because Louisiana Revised Statue
§ 40.2203.1 expressly states that the notice requirement provisions
shall not apply to group purchasers (First Health) or to agreements
of a group purchaser (payors such as Liberty Mutual who have an
agreement with First Health).
Liberty Mutual Ins. Co., No. 04-cv-2405, slip op. at 2 (W.D. La. Nov. 30, 2007)
(Memorandum Ruling).
On October 30, 2006, the district court issued a temporary restraining
order and preliminary injunction against Gunderson preventing him from
pursuing any claim before any court arising under Louisiana’s Any Willing
Provider Act against First Health or any payor as set forth in the provider
agreements between First Health and Gunderson. Gunderson did not file an
appeal to the district court’s order granting the preliminary injunction.
On August 24, 2007, Liberty Mutual filed a motion for civil contempt and
sanctions, for a permanent injunction, and for stay of proceedings pursuant to
the All Writs Act, 28 U.S.C. § 1651(a).1 Liberty Mutual alleged that Gunderson
1
District courts have the power to issue a narrowly tailored injunction
under the All Writs Act to enjoin “repeatedly vexatious litigants from filing
future state court actions.” Newby v. Enron Corp., 542 F.3d 463, 2008 U.S. App.
LEXIS 19167, *5 (5th Cir. 2008).
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No. 08-30075
continued to file and prosecute claims in violation of the October 2006
preliminary injunction.
On September 27, 2007, First Health requested an order holding
Gunderson in civil contempt for violating the October 2006 preliminary
injunction. First Health also requested that the district court permanently
enjoin Gunderson from relitigating in the Louisiana state workers’ compensation
system factual and legal issues actually decided by the district court’s February
2006 memorandum ruling and April 2006 amended judgment.2
On November 30, 2007, the district court granted First Health’s motion for
a permanent injunction and stay of proceedings. The district court agreed that
Gunderson violated the district court’s October 2006 preliminary injunction
when it continued to file and prosecute claims against First Health’s payors in
the Louisiana Office of Workers’ Compensation (“OWC”). On January 2008, the
district court granted a motion to amend the November 2007 judgment, to
correct the time period regarding Gunderson’s contract with First Health.
On January 10, 2008, Gunderson filed a notice of appeal from the
November 2007 judgment, permanent injunction, and stay order, as well as the
January 2008 amended judgment, permanent injunction, and stay order. On
appeal, Gunderson argues that the district court erred when it applied the
relitigation exception to the Anti-Injunction Act, 28 U.S.C. § 2283, to this case.
2
The Anti-Injunction Act, 28 U.S.C. § 2283, generally prohibits federal
courts from interfering with state court proceedings. Under the statute, a
United States court may not grant an injunction to stay proceedings in a state
court unless it is (1) expressly authorized by Congress; (2) where necessary in
aid of its jurisdiction; or (3) to protect or effectuate its judgments. The later of
these three exceptions is commonly referred to as the “relitigation exception” to
the Anti-Injunction Act. See Duffy & McGovern Accommodation Servs. v. QCI
Marine Offshore, Inc., 448 F.3d 825, 828 (5th Cir. 2006) (stating that “a federal
court can enjoin state proceedings threatening to ignore an earlier, preclusive
federal court order”).
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No. 08-30075
On May 16, 2008, First Health filed a motion to dismiss the appeal for lack
of jurisdiction.
II. APPELLATE JURISDICTION
First Health contends that Gunderson claims to appeal from the district
court’s November 2007 and January 2008 judgments granting the permanent
injunction, but in actuality Gunderson is impermissibly attempting to appeal for
the first time the October 2006 and April 2006 judgments granting the
preliminary injunction. First Health refers to the preliminary injunction as the
“original injunction.” First Health claims the permanent injunction served
merely to clarify the preliminary injunction and is not independently appealable;
therefore, this Court has no jurisdiction to hear the appeal because Gunderson
failed to appeal from the preliminary injunction.
First Health acknowledges that 28 U.S.C. § 1292(a)(1) grants this Court
jurisdiction to entertain appeals from “[i]interlocutory orders of the district
courts . . . granting, continuing, modifying, refusing or dissolving injunctions, or
refusing to dissolve or modify injunctions.”3 But First Health argues that the
permanent injunction served merely to clarify the scope of the earlier
preliminary injunction, and “interlocutory appeals are not allowed when a court
merely enforces or interprets a previous injunction.” Ingram Towing Co. v.
Adnac Inc., 59 F.3d 513, 516 (5th Cir. 1995). Gunderson argues that it is well
settled that once an order of permanent injunction is granted, the order of
preliminary injunction is merged with it and an appeal is proper only from the
order granting the permanent injunction. Louisiana World Exposition, Inc. v.
3
Gunderson notes that before the deadline to appeal the November 2007
injunction passed, First Health timely filed an unopposed motion to amend the
injunction to correct an inaccurate date. The district court then issued the
January 2008 amended judgment, and in accordance to Federal Rule of
Appellate Procedure 4(a)(1), Gunderson and LCMH timely filed a notice of
appeal of that order.
5
No. 08-30075
Logue, 746 F.2d 1033, 1038 (5th Cir. 1984); SEC v. First Fin. Group, 645 F.2d
429, 433 (5th Cir. 1981) (internal citations omitted).
The district court did not merely enforce or interpret the preliminary
injunction. Instead, the district court broadened the scope of the injunction and
converted the preliminary injunction into a permanent injunction. In this
situation, under First Financial Group and Louisiana World Exposition, Inc., an
appeal is proper only from the order granting the permanent injunction. First
Health’s argument that Gunderson waived the opportunity to appeal the validity
of issues related to the original preliminary injunction fails, because the
permanent injunction merged the two injunctions into one.
The motion to dismiss for lack of jurisdiction is, therefore, DENIED. We
now turn to Gunderson’s appeal from the district court order.
III. ANALYSIS
A. Standard of Review
The district court’s decision to issue a permanent injunction is reviewed
for abuse of discretion. Regions Bank v. Rivet, 224 F.3d 483, 488 (5th Cir. 2000)
(citation omitted). “The application of the relitigation exception is an issue of
law, and therefore this [C]ourt reviews de novo the lower court’s determination
that an injunction may be issued under that exception.” Id.
B. Discussion
The issue on appeal is the permanent injunction issued by the district
court on January 2008. Gunderson appeals the portion of the injunction which
enjoins claims against First Health and/or its “unidentified payors.” Gunderson
does not appeal the permanent injunction applicable to claims against Liberty
Mutual.
Gunderson makes four basic arguments to support the conclusion that the
district court erred in granting a permanent injunction in favor of First Health
and its payors: (1) that the district court improperly applied the All Writs Act
and the relitigation exception of the Anti-Injunction Act; (2) that the district
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No. 08-30075
court lacked subject matter jurisdiction; (3) that the absence of a judgment
between Gunderson and First Health precludes the relief granted by the district
court; and (4) that including First Health’s “payors” within the scope of the
injunction rendered the injunction too general to pass muster under Federal
Rule of Civil Procedure (“Rule”) 65.
7
No. 08-30075
1. All Writs Act and the Relitigation Exception
Gunderson contends that it was improper for the district court to rely upon
the All Writs Act and the relitigation exception to the Anti-Injunction Act to
enjoin Gunderson from pursuing claims pending in both Louisiana state court
and in the OWC. As explained in Regions Bank v. Rivet, this Court utilizes a
four-part test to determine whether the relitigation exception to the Anti-
Injunction Act applies to preclude litigation of a claim in state court. 224 F.3d
at 488. Specifically,
(1) “the parties in a later action must be identical to (or at least in
privity with) the parties in a prior action”; (2) “the judgment in the
prior action must have been rendered by a court of competent
jurisdiction”; (3) “the prior action must have concluded with a final
judgment on the merits”; and (4) “the same claim or cause of action
must be involved in both suits.”
Id. (5th Cir. 2000) (citations omitted). Gunderson argues that these
requirements are not met in this case. We disagree. This section will address
Regions Bank factors one, three, and four. Factor two is discussed below as it is
related to a separate claim made by Gunderson.
A. Factor One
To the extent that Gunderson attempts to bring any claims, whether in
federal court, state court, or the OWC, against Liberty Mutual involving the
district court’s ruling at the summary judgment stage, the parties in the future
actions would be identical, and res judicata applies. Vines v. Univ. of La., 398
F.3d 700, 709 (5th Cir. 2000). Gunderson does not dispute that he is precluded
from bringing any claims of this nature against Liberty Mutual.
Further, this Court finds that First Health and its “payors” are in privity
with Liberty Mutual. “Privity is a ‘legal conclusion that the relationship between
the one who is a party on the record and the non-party is sufficiently close to
afford application of the principle of preclusion.’” Id. at 706. As this Court
explained in Howell Hydrocarbons, Inc. v. Adams, a party is in privity with a
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No. 08-30075
party for res judicata purposes “if the party adequately represented his interest
in the prior proceeding.” 897 F.2d 183, 188 (5th Cir. 1990). Liberty Mutual and
other “payors” entered into Provider Agreement contracts with First Health.
Liberty Mutual and First Health actively disputed Gunderson’s claims that (1)
the discount provisions contained in the Provider Agreements are unenforceable,
and (2) that the payment provisions contained in the Provider Agreements do
not apply to group purchasers or to agreements of group purchasers. The
contractual relationship between First Health and its payors, as well as the
identical litigation position against Gunderson in suits over these contractual
provisions, evidence to this Court that First Health and its “payors” are in
privity with Liberty Mutual. Factor One is satisfied.
B. Factor Three
Factor Three requires that the prior action conclude with a final judgment
on the merits. The district court’s use of the relitigation exception and decision
to issue a permanent injunction were based on its summary judgment ruling in
favor of Liberty Mutual. Gunderson abandoned any ability to appeal the district
court’s summary judgment ruling.4 Factor Three is satisfied.
C. Factor Four
Factor Four requires that both disputes involve the same claim or cause
of action. The claims at issue in the instant case, and the claims filed by
Gunderson in the OWC, all involve discount and payment provisions in Provider
4
On May 9, 2006, Gunderson appealed the district court’s grant of
summary judgment. This Court dismissed the appeal for lack of jurisdiction in
a per curiam opinion without explanation. Based on the briefs filed, this Court
finds that the appeal was dismissed for lack of jurisdiction because Gunderson
improperly attempted to appeal the district court's denial of a 12(b)(6) motion to
dismiss. See Appellee's Mot. to Dismiss the Appeal for Lack of Juris. in Liberty
Mutual Insurance Co. v. Gunderson, No. 06-30545, (5th Cir. 2006) (unpublished
decision). Gunderson failed to brief the only appealable issue, the district court's
grant of summary judgment in favor of Liberty Mutual, and therefore abandoned
that issue on appeal.
9
No. 08-30075
Agreements between First Health and Gunderson. First Health’s payors
provided payments to Gunderson under the provisions found in these Provider
Agreements between First Health and Gunderson. Gunderson repeatedly
attempted to make claims against First Health’s payors, arguing that the payors
improperly discounted rates for their services under these Agreements, despite
the district court’s rejection of that very argument in its ruling that the Provider
Agreements are valid and enforceable.
In addition, collateral estoppel precludes Gunderson from pursuing any
future claims that would involve relitigating the issues decided by the district
court when it granted summary judgment against Gunderson. Vines, 398 F.3d
at 709 (explaining that collateral estoppel requires the same issue, fact, or law
be actually litigated and determined in a prior judgment). Gunderson is barred
from attempting to bring a claim in federal court, state court, or the OWC that
would involve deciding the validity of the discount or payment provisions
contained in Provider Agreements between First Health and its payors. The
district court decided these issues on summary judgment, and Gunderson
abandoned its appeal of the rulings contained in the district court’s grant of
summary judgment. Factor Four is satisfied.
2. Subject Matter Jurisdiction (Regions Bank Factor Two)
Gunderson alleges that the district court did not have subject matter
jurisdiction to decide the instant case. To demonstrate the district court’s lack
of subject matter jurisdiction, Gunderson points to similar lawsuits where the
same district court found that it lacked jurisdiction. See Sentry v. Lake Charles
Mem’l, 2:06-cv-00570 (W.D. La. June 4, 2008); AIG v. Gunderson, 2:05-cv-247
(W.D. La. May 11, 2005); Gunderson v. F.A. Richard & Assocs., 2:04-cv-1242
(W.D. La. Mar. 23, 2005).5 Gunderson, however, in making this argument
5
The findings in the other cases are irrelevant; however, this Court notes
that the district court distinguished the instant case from each one of the
decisions cited by Gunderson to argue that the district court lacked subject
10
No. 08-30075
ignores that the district court had proper diversity jurisdiction over this case.
The Supreme Court explained in Horton v. Liberty Mutual Insurance Co. that
state workers’ compensation claims may be removed to federal district courts if
diversity jurisdiction exists. 367 U.S. 348, 352 (1961). Regions Bank Factor Two
requires the court have “competent” jurisdiction, but does not specifically require
that the court using the relitigation exception to the Anti-Injunction Act have
subject matter jurisdiction over the case. Regions Bank, 224 F.3d at 488
(citation omitted). The district court properly found that it maintained diversity
jurisdiction over this case.
3. Final Judgment on the Merits Between Gunderson and First Health
Gunderson next argues that the district court erred in issuing the
injunction, because “Plaintiffs in both suits must have asserted the same claim
or cause of action, the federal court’s underlying judgment must be ‘final’, [sic]
and the federal and state proceedings must involve identical parties.” Gunderson
then provides a citation to Regions Bank. Gunderson misunderstands what is
required by the relitigation exception. The four factor test outlined in Regions
Bank does not require a final judgment on the merits between Gunderson and
First Health. Regions Bank, 224 F.3d at 488 (citation omitted). The test does,
however, require a final judgment on the merits. As discussed above, the district
court issued a final judgment when it granted summary judgment in favor of
Liberty Mutual. While this Court acknowledges that the grant of summary
judgment was limited to a finding in favor of Liberty Mutual, we also find that
First Health and its payors are in privity with Liberty Mutual for purposes of
the relitigation exception. The district court specifically ruled on the validity of
Provider Agreements entered into between Gunderson and First Health in its
summary judgment ruling.
matter jurisdiction. On de novo review, this Court must make an independent
determination regarding subject matter jurisdiction.
11
No. 08-30075
4. Federal Rule of Civil Procedure 65
Gunderson argues that enjoining actions against parties who are not
identified (or identifiable without initiating litigation), violates the rule of
specificity for injunctions. Gunderson asserts that the permanent injunction is
impermissibly vague, overbroad and hard to ascertain in that it fails to name or
otherwise identify the ‘payors’ of First Health. Rule 65(d) requires specificity;
“[a]n injunction must simply be framed so that those enjoined will know what
conduct the court has prohibited.” Meyer v. Brown & Root Constr. Co., 661 F.2d
369, 373 (5th Cir. 1981). The district court correctly noted that the Provider
Agreements between First Health and Gunderson required First Health to
provide a payor listing to Gunderson. Liberty Mutual, No. 04-cv-2405, slip op.
5-6 (Mem. Ruling). First Health complied with these requirements, and
provided Gunderson with payor listings. Therefore, this Court holds that the
permanent injunction is framed in a manner that enables Gunderson to know
what conduct the district court prohibited.
IV. CONCLUSION
For the foregoing reasons, First Health’s motion to dismiss for lack of
jurisdiction is DENIED. The district court’s grant of a permanent injunction
against Gunderson is AFFIRMED.
12