The opinion of the court was delivered by: William M. Skretny Chief Judge United States District Court
This case began when Crystal Zanghi and Jose Muniz, Jr., on behalf the estate of their infant son, Jose Muniz III, brought a negligence action in New York state court against several defendants involved in the birth and subsequent care of Muniz III. Thereafter, Defendant Sisters of Charity Hospital of Buffalo, New York, Catholic Health System Inc., d/b/a Sisters of Charity Hospital, as well as Jamie Rehmann, D.O., and Christian Chouchani, D.O., (collectively "Sisters Hospital") answered and, in the process, filed a cross-claim against Defendants Michele H. Frech, D.O. and Northwest Buffalo Community Health Care Center, Inc. ("Northwest").
Unbeknownst to Plaintiffs, however, Dr. Frech and Northwest were "public health service employees" as defined by the Federally Supported Health Centers Assistance Act. 42 U.S.C. § 233(g)-(n). As such, they are deemed federal employees, covered under the Federal Tort Claims Act ("FTCA"), and all claims against them must be brought against the United States. See 28 U.S.C. §§1346(b), 2401(b), 2671--80; Robinson v. Overseas Military Sales Corp., 21 F.3d 502, 510 (2d Cir. 1994) (an action against a federal agency or federal officers in their official capacities is essentially a suit against the United States). Accordingly, the United States removed this action, and has moved, unopposed, to be substituted as the proper party for Dr. Frech and Northwest. (Docket No. 4).
Additionally, the United States moves to dismiss all claims for lack of subject matter jurisdiction -- including Sisters Hospital's cross-claims -- because Plaintiffs failed to file an administrative claim, as required by 42 U.S.C. § 233(a) and 28 U.S.C. § 2675. Once again, Plaintiffs do not oppose this motion, conceding their inability to sustain their claim against the United States without first availing themselves of administrative remedies.
Sisters Hospital, however, opposes the motion to dismiss as it applies to them. They contend that, because the United States is a defendant in their cross-claim, this Court must retain jurisdiction over that claim. To this end, anticipating that the United States will be dismissed as against the original plaintiffs, Sisters Hospital has filed a motion to convert their cross-claim to a third-party claim. (Docket No. 13.) Alternatively, they seek leave to file a third-party claim. (Id.)
The United States opposes this motion, and argues that this Court lacks subject matter jurisdiction over the cross-claim, rendering dismissal mandatory. This Court also requested supplemental briefing on the issue of derivative jurisdiction, and the Government argues that this doctrine also mandates dismissal.
As an initial matter, having met the requirements under 42 U.S.C. § 233, the United States' motion to be substituted for Dr. Frech and Northwest will be granted. Further, there is no dispute that Plaintiffs have not followed the administrative procedures necessary to assert a claim against the United States in federal court. Thus, the United States' motion to dismiss will also be granted as against the original plaintiffs.
But FTCA's administrative exhaustion requirement does not apply to cross-claims. See 28 U.S.C. § 2675(a) ("The provisions of this subsection shall not apply to such claims as may be asserted under the Federal Rules of Civil Procedure by third party complaint, cross-claim, or counterclaim."). Therefore, although the United States will be dismissed as against the original plaintiffs, Sisters Hospitals' cross-claim against the United States cannot be dismissed on the same grounds.
The United States, however, offers three reasons why the claim should nonetheless be dismissed.
First, the United States argues that because it will be dismissed as against the original plaintiffs, it is no longer a party to this case and any cross-claims against it should also be dismissed. But it is well settled that "a cross-claim, once properly made, does not cease to be proper because the defendant to whom it was addressed ceased to be a defendant." Lipford v. N.Y. Life Ins. Co., No. 02 CIV. 0092 (LTSHBP), 2003 WL 21313193, at *4 (S.D.N.Y. June 9, 2003) (quoting Shaps v. D.F.D.S. A/F Copenhagen, No. 83 Civ. 8091(CBM), 1985 WL 269 at *3 (S.D.N.Y. Feb. 13, 1985)). The cross-claim, now better defined as a third-party claim, thus remains viable.*fn1
Second, pointing to the well-pleaded complaint rule, the United States argues that this Court lacks subject matter jurisdiction over Sisters Hospital's claim. The well-pleaded complaint rule provides that for non-diversity cases to be removable, the complaint must establish that the case arises under federal law. Kircher v. Putnam Funds Trust, 547 U.S. 633, 644 n. 12, 126 S. Ct. 2145, 165 L. Ed. 2d 92 (2006). Because this is a state-law, medical malpractice case, the United States contends that this Court lacks subject matter jurisdiction. But if jurisdiction were proper, it would not be because the well-pleaded complaint rule was satisfied. Indeed, provisions of the United States code that confer jurisdiction on federal courts where the United States is a party are "exception[s] to the well-pleaded complaint rule." Id.
The Government relies on Horn v. HT Associates, LLC, where, citing this doctrine, the court dismissed a proposed -- not yet filed -- third-party complaint against the United States. CIV 09-3362 (DRD), 2010 WL 1530624, at *4 (D.N.J. Apr. 15, 2010). But in a footnote, the Horn court recognized a pivotal distinction: "Important for the purposes of the Court's holding is the fact that Plaintiff had not asserted claims against the United States at the time of removal. Had he done so this Court would undisputedly have jurisdiction pursuant to 28 U.S.C. § 1346(a)."*fn2 2010 WL 1530624, at *5 n. 3. Unlike the proposed ...