Carter v. Pikeville Medical Center, Inc., Civil Action No. 10-105-ART (E.D. Ky. Nov 01, 2010).

District Judge for the Eastern District of Kentucky, Amul R. Thapar, handed down an opinion in true CAFA Law Blog writing style, and for that Judge Thapar, we here at the CAFA Law Blog salute you!

 The Eastern District Court in Kentucky remanded a CAFA case holding that it cannot excuse a removing party from carrying its burden of establishing the amount in controversy by a preponderance of the evidence just because doing so is difficult or burdensome.

The plaintiffs, lawyer and law firm, filed a state court class action asserting that Pikeville Medical Center and HealthPort Technologies violated KY. REV. STAT. § 422.317(1) by charging the plaintiffs for copies of their medical records that should have been provided for free.

The plaintiff’s proposed class consisted of all attorneys who were unlawfully billed by the defendants for free medical record copies. The plaintiff also sought to certify a class of all similarly situated defendants, Kentucky hospitals, physicians and clinics who had contracted with HealthPort and for whom HealthPort had attempted unlawful billing. 

HealthPort removed the action to the District Court under CAFA, 28 U.S.C. §1332(d)(2), and the plaintiffs moved to remand. 

The District Court remanded the action.

At the outset, Judge Thapar explained, “Ali Baba may have gained access to the forty thieves’ secret cave simply by saying, ‘Open, Sesame!’ But the door to the federal courthouse does not open quite so easily. Federal courts are courts of limited jurisdiction. To bring a case in federal court, or to remove a case to federal court, the party invoking federal jurisdiction has the burden of establishing by a preponderance of the evidence that the court has jurisdiction.”

First, HealthPort contended that the compensatory damages for all class members who were unlawfully charged for medical records over a five-year period would total roughly $2 million. HealthPort stated that it arrived at $2 million figure because it copied nearly $2 million pages of medical records and charged $1.00 per page for patients in Kentucky for the five years that the class action covered. HealthPort also argued that damages for unlawful collection practices, possible punitive damages, attorney’s fees, and the costs of complying with the plaintiff’s requested injunction exceeded $5 million. 

The Court remarked that HealthPort built its jurisdictional argument on a foundation of quicksand. The Court stated that $2 million represented HealthPort’s estimated revenue it received from all medical records requests for Kentucky patients over five years. But the plaintiff class did not seek damages for all medical records requests. They sought damages for a much smaller subset-those medical records (a) that were requested by members of the putative class which consisted of attorneys and legal representatives seeking their patients’ medical records; (b) that should have been provided for free under § 422.317(1), i.e., requests for the first copy of the patients’ medical records; and (c) for which HealthPort unlawfully charged a fee. Thus, estimation of $2 million in compensatory damages bore no relation to the amount that the class actually sought.

HealthPort, however, protested that it would be too time-consuming and expensive for it to determine which medical records requests fell within the scope of the class action and which fell outside the scope. 

The Court remarked that HealthPort chose to remove the action to federal court. Thus, having elected to shoulder the burden of establishing the amount in controversy by a preponderance of the evidence, it could not now claim that it was too heavy or burdensome. 

The Court stated that courts do not generally excuse parties from carrying their burdens just because doing so is difficult. The Court stated, “imagine if a court excused the government from having to prove a criminal defendant guilty beyond a reasonable doubt because evidence of guilt was hard to find HealthPort’s failure to carry its burden rendered the Court’s effort to determine the amount of compensatory damages “a matter of judicial star-gazing.” The Court said, it would “not use its telescope to search for jurisdiction where the removing party has not demonstrated that it exists.”       

Second, for the same reason, the Court found that HealthPort also failed to carry its burden in establishing the amount of compensatory damages that the plaintiff class sought for wrongful collection efforts, including referral to credit reporting and collection entities, and for costs of complying with the plaintiff’s requested injunction.

Third, the Court observed that even if the jury was to award punitive damages at the upper limit of what was constitutionally permissible–perhaps nine times the compensatory damages, that figure was still a null set because HealthPort had not established any compensatory damages by a preponderance of the evidence. The Court remarked, “Nine times zero is still zero.”

Finally, because HealthPort failed to identify any statute that permitted the plaintiff class to recover attorney’s fees, the Court stated that the attorney’s fees could not be included in the amount in controversy.

Accordingly, the Court concluded that HealthPort failed to carry its burden of demonstrating by a preponderance of the evidence that the amount in controversy requirements had been met and the plaintiffs’ motion to remand was granted.