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Med Flight Air Ambulance, Inc. v. MGM Resorts International

United States District Court, D. New Mexico

November 22, 2017

MED FLIGHT AIR AMBULANCE, INC., Plaintiff,
v.
MGM RESORTS INTERNATIONAL, SIERRA HEALTH-CARE OPTIONS, UMR, INC., and BEATRIZ HERNANDEZ, SPECIAL ADMINISTRATOR OF THE ESTATE OF ADRIAN HERNANDEZ, DECEASED, Defendants.

          MEMORANDUM OPINION AND ORDER GRANTING DEFENDANT MGM'S MOTION TO DISMISS BASED ON LACK OF PERSONAL JURISDICTION AND DENYING DEFENDANT'S REQUEST FOR ATTORNEY'S FEES AND COSTS

         THIS MATTER comes before the Court upon the Renewed Motion to Dismiss First Amended ERISA Complaint for Lack of Personal Jurisdiction (Doc. 21) filed by Defendant MGM Resorts International (hereinafter “Defendant” or “MGM”). Having reviewed the parties' pleadings and the applicable law, the Court finds that Defendant's motion regarding lack of personal jurisdiction is well-taken and therefore granted, but that the request for attorney's fees is denied.

         BACKGROUND

         This case arises from a denial of insurance benefits for Mr. Hernandez in connection with a medical helicopter ride from a hospital in El Paso, Texas to Las Vegas, Nevada.[1] Plaintiff Med Flight Air Ambulance, Inc. (“Med Flight”) is a New Mexico corporation with its principal business location located in Albuquerque, New Mexico.

         MGM is a Delaware corporation with its principal business location in Las Vegas, Nevada. MGM employed Adrian Hernandez and provides a self-insured health insurance plan to its employees, entitled the “MGM Resorts Health and Welfare Benefit Plan” (“MGM Plan”). MGM is the Plan Administrator of the MGM Plan, and Mr. Hernandez was a participant and beneficiary of the MGM Plan. Defendant UMR, Inc. (“UMR”) is a Delaware corporation that is registered and licensed to do business in the state of New Mexico. UMR is a Claims Administrator, along with MGM, of the MGM Plan.

         On January 12, 2017, Med Flight filed a complaint in the Second Judicial District Court, County of Bernalillo, asserting breach of contract and unfair trade practices. Defendants removed the case to federal court on February 17, 2017 based on federal question jurisdiction under the federal ERISA statute (29 U.S.C. §1132(a)(1)(B) and §1132(g)(1), and based on diversity jurisdiction. According to the complaint, in December 2014, Mr. Hernandez was admitted to Del Sol Medical Center in El Paso, Texas as the result of a medical condition that required emergency medical services. When it was determined that there was no doctor available in El Paso who could treat Mr. Hernandez, he and his medical providers contacted Plaintiff Med Flight and requested air ambulance transport to a medical facility in Las Vegas, Nevada where the necessary medical services were available and where Mr. Hernandez would have family support. Mr. Hernandez signed various documents with Med Flight including an assignment of insurance benefits and agreement to pay any balances for services provided (hereinafter, “air transport” contract” or “air transport agreement”). Med Flight accepted Mr. Hernandez' agreements in Albuquerque, New Mexico on December 10, 2014 and then transported Mr. Hernandez from Del Sol Medical Center in El Paso, Texas to Valley Hospital and Medical Center in Las Vegas, Nevada. The case caption references the Estate of Mr. Hernandez and while the pleadings do not contain much further discussion on Mr. Hernandez, the Court assumes that he passed away subsequent to his being transported from El Paso to Las Vegas.

         In this lawsuit, Plaintiff Med Flight claims that Defendants (including MGM) owed Mr. Hernandez as Plan participant-and therefore Plaintiff via assignment-purported benefits in the form of payment of the usual and customary charges for the emergency air transport of Mr. Hernandez. The Amended Complaint has three counts asserted under ERISA. Count I alleges a breach of agreement between Defendants and Med Flight under 29 U.S.C. §1132(a)(1)(B); Count II asserts requested relief in the form of attorney fees and costs under §1132(g)(1); and Count III seeks relief under §1132(c) which provides for other civil enforcement penalties for violation of the statute.[2]

         MGM claims that Plaintiff is under the erroneous impression that MGM owes Mr. Hernandez (the Plan participant) -and therefore Plaintiff through assignment, benefits in connection with medical air transport from a hospital in El Paso, Texas to Las Vegas, Nevada. In this motion, Defendant contends that it should be dismissed from this lawsuit on the basis of lack of personal jurisdiction under Fed.R.Civ.P. 12(b)(2) and in addition, seeks reasonable attorneys' fees and costs pursuant to §1132(g)(1).

         I. Legal Standard

         At the pleading stage, plaintiffs need only make a prima facie showing of personal jurisdiction. Dudnikov v. Chalk & Vermilion Fine Arts, Inc., 514 F.3d 1063, 1070 (10th Cir. 2008). However, cases involving personal jurisdictional questions under ERISA are treated somewhat differently. Before a federal court can assert personal jurisdiction over a defendant in a federal question case, the court must determine (1) “whether the applicable statute potentially confers jurisdiction” by authorizing service of process on the defendant and (2) “whether the exercise of jurisdiction comports with due process.” Peay v. BellSouth Med. Assistance Plan, 205 F.3d 1206, 1209 (10th Cir. 2000) (citing Omni Capital Int'l v. Rudolf Wolff & Co., 484 U.S. 97, 104 (1987) (finding in a federal question case that, before a federal court may exercise personal jurisdiction over a defendant, there must be “a basis for the defendant's amenability to service of summons”).

         The MGM Plan at issue in this case is subject to ERISA. The last clause of 29 U.S.C. § 1132(e)(2) authorizes nationwide service of process. See Peay, 205 F.3d at 1210 (“When a federal statute provides for nationwide service of process, it becomes the statutory basis for personal jurisdiction.”). Thus, provided that due process is satisfied, §1132(e)(2) confers jurisdiction over Defendants by authorizing service of process on them. Id. at 1210; Cory v. Aztec Steel Bldg., Inc., 468 F.3d 1226, 1232-1233 (10th Cir. 2006) (“Without federal statutory authorization for nationwide service, we need not proceed to the Fifth Amendment inquiry”).

         In federal question cases, such as this one, personal jurisdiction flows from the Due Process Clause of the Fifth Amendment, rather than the Fourteenth Amendment. See Republic of Panama v. BCCI Holdings et al., 119 F.3d 935 (11th Cir. 1997) (“It is well established that when . . . a federal statute provides the basis for jurisdiction, the constitutional limits of due process derive from the Fifth, rather than the Fourteenth, Amendment.”). Due process under the Fourteenth Amendment requires that “maintenance of [a] suit . . . not offend traditional notions of fair play and substantial justice.” International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (internal quotation marks and citation omitted). These limits on a court's ability to exercise jurisdiction are designed to protect defendants by “providing them with fair notice that their activities will render them liable to suit in a particular forum.” Peay, 205 F.3d at 1211 (citing Republic of Panama, 119 F.3d at 945 and Burger King Corp. v. Rudzewicz, 471 U.S. 462, 470-77 (1985)). In Peay, the Tenth Circuit noted that although the United States Supreme Court has not yet defined Fifth Amendment due process limits on personal jurisdiction, the due process clauses of the Fourteenth and Fifth Amendments “are virtually identical” and were both “designed to protect individual liberties from the same types of government infringement.” 205 F.3d at 1212 (citing Republic of Panama, 119 F.3d at 945). Based on this reasoning, the Tenth Circuit held that:

in a federal question case where jurisdiction is invoked based on nationwide service of process, the Fifth Amendment requires the plaintiff's choice of forum to be fair and reasonable to the defendant. In other words, the Fifth Amendment “protects individual litigants against the burdens of litigation in an unduly inconvenient forum.”

205 F.3d at 1212 (emphasis added). To establish that jurisdiction does not comport with Fifth Amendment due process principles, the burden is on defendant to first demonstrate “that his liberty interests actually have been infringed.” Id. In meeting this burden of showing “constitutionally significant inconvenience, ” Peay set forth the following five factors:

(1) the extent of the defendant's contacts with the place where the action was filed;
(2) the inconvenience to the defendant of having to defend in a jurisdiction other than that of his residence or place of business, including (a) the nature and extent and interstate character of the defendant's business, (b) the defendant's access to counsel, and (c) the distance from the defendant to the place where the action was brought;
(3) judicial economy;
(4) the probable situs of the discovery proceedings and the extent to which the discovery proceedings will take place outside the state of the defendant's residence or place of business; and
(5) the nature of the regulated activity in question and the extent of impact that the defendant's activities have beyond the borders of his state of residence or business.

205 F.3d at 1212.[3] If a defendant successfully demonstrates that litigation in the plaintiff's chosen forum is unduly inconvenient, then “jurisdiction will comport with due process only if the federal interest in litigating the dispute in the chosen forum outweighs the burden imposed on the defendant.” Republic of Panama, 119 F.3d at 948. To determine whether infringement on the defendant's liberty is justified sufficiently by government interests, courts conduct a kind of balancing inquiry by examining: (a) the federal policies advanced by the statute, (b) the relationship between nationwide service of process and the advancement of these policies, (c) the connection between the exercise of jurisdiction in the chosen forum and the plaintiff's vindication of his federal right, and (d) concerns of judicial efficiency and economy.

         II. Facts Relating to Jurisdiction

         The jurisdictional facts are generally undisputed. The exhibits supporting these facts are contained in the briefs and are not restated here. Defendant has also submitted two affidavits of Nathan Lloyd, Senior Vice President and Legal Counsel for MGM, who is located in Las Vegas, Nevada, to support their statement of facts. See Docs. 21-1 and 61-1. Plaintiff Med Flight claims to dispute a few of Defendant's facts, but its responses fail to offer actual evidence supporting the existence of a dispute. For most of the facts on which Plaintiff claims there exists a dispute, Plaintiff contends that additional discovery will uncover the evidence necessary to create the dispute. See Pltff's Resp. to Defts' Facts 12, 13, 14 & 18. However, the time for jurisdictional discovery has come and gone. The Court suspended ruling on MGM's previous motion to dismiss (Doc. 24) so that Plaintiff could engage in limited discovery to address the jurisdictional issue raised in that motion. See Doc. 33 (denying as moot MGM's first motion to dismiss in light of the Court's allowance of jurisdictional discovery requested by Med Flight). This should have provided Plaintiff with the information necessary to be able to respond to MGM's renewed motion to dismiss which is now before the Court. Plaintiff offers no evidence to rebut Defendant's Facts 12, 13, 14 and 18. Hoping to uncover some in general discovery later on in time does not suffice to create an issue of fact, and the Court deems those facts as admitted. Plaintiff also claims that Facts 7, 22, 23 and 26 are disputed, and the Court takes up these “disputes” in the following factual presentation.

         Adrian Hernandez, the deceased Plan participant and employee of MGM, was a resident of Las Vegas, Nevada, not a resident of New Mexico. MGM believes Mr. Hernandez' relatives, to the extent necessary for testimony, are located in Nevada, or at least not located in New Mexico. There is no allegation that Mr. Hernandez' employment with MGM was ever at a location outside of Nevada.

         None of the Defendants (including MGM) are citizens of New Mexico. MGM's headquarters is located in Las Vegas, Nevada. None of the hospital facilities in question is located in New Mexico. The initial hospital, Del Sol Medical Center, is located in El Paso Texas, and the destination hospital, Valley Hospital and Medical Center, is located in Las Vegas, Nevada.

         MGM provides a self-insured health insurance plan to its employees. As mentioned previously, the MGM Plan is a self-funded employee group health plan subject to ERISA; MGM is the Plan administrator and Defendant UMR is the claims administrator. The MGM Plan is administered in Nevada, and there is a “governing law” provision in the Plan states that: “The Plan shall be construed in accordance with the laws of the State of Nevada, to the extent not preempted by federal law.” MGM has never administered, nor does it currently administer, the Plan in New Mexico.

         MGM is not qualified, licensed, authorized, or registered to transact business in New Mexico, and has no business locations in the state. It does not own or operate any business of any kind, including any hotels, in New Mexico. However, Plaintiff disputes this fact (Fact 7), claiming that while MGM does not keep an office in New Mexico, it does conduct “an extensive amount of advertising and soliciting in New Mexico, ” based on the fact that the hotels in Las Vegas specifically target University of New Mexico Lobo fans because the NCAA Division I basketball tournament for the Mountain West Conference is held annually in Las Vegas. As support for this claim, Plaintiff offers as an exhibit a copy of an article contained in the Albuquerque Journal from March 2016 titled “Albuquerque makes its mark on Vegas” in which MGM Resort's vice president in charge of sports booking operations stated that the Mirage “is the official hotel of the New Mexico Lobos and of San Jose State.” Pltff's Ex. 2, Doc. 55-2. The article also states that one of the college basketball tournaments would be played at the MGM Grand Garden Arena.

         The Court deems Fact 7 as admitted, notwithstanding the submission of the Albuquerque Journal article, for several reasons. First, the Court agrees with Defendant in that the article is inadmissible hearsay. Club Car Inc. v. Club Car (Quebec) Import, Inc., 362 F.3d 775 (10th Cir. 2004) (inadmissible hearsay cannot be considered on a motion for summary judgment); see also Miles v. Ramsey, 31 F.Supp.2d 869, 876 (D. Colo. 1998) (noting that courts have uniformly found that newspaper articles are inadmissible hearsay when the article was not written or acknowledged by the defendant, yet is produced as proof of facts stated in that article). Second, ...


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