Opinion
IP 01-1341-C-T/L
January 29, 2003.
AMENDED ENTRY ON THE MAGISTRATE JUDGE'S REPORT AND RECOMMENDATION
This Entry is a matter of public record and is being made available to the public on the court's web site, but it is not intended for commercial publication either electronically or in paper form. Although the ruling or rulings in this Entry will govern the case presently before this court, this court does not consider the discussion in this Entry to be sufficiently novel or instructive to justify commercial publication or the subsequent citation of it in other proceedings.
On November 25, 2002, Magistrate Judge William T. Lawrence entered a Report and Recommendation on Defendant's Motion for Leave to Amend Answer ("Report and Recommendation") in which he recommended that the Defendant's Motion for Leave to Amend Answer be granted. This case comes before the court on the Plaintiff's Objection to Magistrate Judge's Report and Recommendation's [sic] Pursuant to 28 U.S.C. § 636(b)(1)(c). This entry presumes a familiarity with the Report and Recommendation.
Having conducted a de novo review of the record and for the following reasons, the undersigned will overrule the Plaintiff's objection to the eleventh defense (setoff), deny the motion for leave to amend the Answer, and grant leave to add the twelfth defense of sovereign immunity.
I. Background
On September 12, 2002, the Plaintiff Ted M. Sulkoff, commenced this action by filing his Complaint and Demand for Jury Trial against the Defendant the United States of America (the "United States"). He brought his claim under the Federal Tort Claims Act (the "FTCA"), 28 U.S.C. § 2671-2680, alleging that he suffered an injury because of the negligent treatment provided him at the Richard L. Roudebush VA Medical Center (the "VA Medical Center" or "Center"), a health care facility operated by the Defendant in Indianapolis, Indiana. In particular, Mr. Sulkoff has alleged that: Richard Jackson, M.D., was an officer and employee of the VA Medical Center and was responsible for managing the medical staff of the Center (Compl. ¶ 8); Dr. Jackson "was acting under the color of his office and within the scope of his employment for the Department of Veterans Affairs" and "was acting as an employee of the Center" at all times relevant (id. ¶¶ 9, 10); he had a physician-patient relationship with the Plaintiff at all relevant times (id. ¶ 11); the negligence, carelessness and medical malpractice of Dr. Jackson and other employees of the United States in treating the Plaintiff caused the Plaintiff permanent injury, (id. ¶¶ 13, 15, 16-18.)
On December 7, 2001, the United States filed its Answer to Complaint and Demand for Jury Trial and Affirmative Defenses. In response to paragraphs 8, 9 and 10 of the Complaint, the Defendant admitted "that Dr. Jackson was an employee at the time certain treatment was provided to plaintiff." (Answer ¶¶ 6, 7.) The United States asserted as its fifth affirmative defense that, inter alia, "no acts or omissions by the United States proximately caused or contributed to any injury or damage to plaintiff." (Id. at 3, Affirmative Defenses ¶ 5.)
Pursuant to the parties' Case Management Plan ("CMP"), filed January 16, 2002, as approved on January 23, 2002, by the court's Entry Approving Case Management Plan And Setting Final Pretrial Conference, the deadline for motions to amend the pleadings was March 12, 2002. (CMP ¶ III.D; Entry Approving CMP at 1.)
The parties subsequently moved for an extension of the "Anchor Date" under their CMP, the date on which the case was filed or removed, which extension was granted. This was done after the expiration of the deadline for amendments to the pleadings and did not affect that deadline.
On October 4, 2002, the United States filed its Motion for Leave to Amend Answer, seeking to amend its answer to assert that Dr. Jackson was not an employee of the United States and assert an additional affirmative defense that the "injuries and damages alleged in the [C]omplaint were not caused by a negligent or wrongful act or omission of any employee of the United States while acting within the scope of his or her office or employment." (Mot. Leave Am. Answer ¶ 9.)
The court granted the motion for leave by Order dated October 7, 2002. However, because the motion was granted before the Plaintiff had a sufficient time as provided under the court's Local Rules to respond, and the Plaintiff promptly filed a motion for reconsideration and objection to the motion, the court subsequently vacated its order and set the motion for hearing and argument.
Hearing and argument on the motion was held on November 21, 2002, before Magistrate Judge William T. Lawrence. Later that same day, the Plaintiff filed his Supplement to Plaintiff's Objection to United States of America's Motion for Leave to Amend Answer ("Supplement"). In the Supplement the Plaintiff states that he does not object to the motion to the extent it seeks to add sovereign immunity as an affirmative defense as he concedes that this defense is jurisdictional and can be raised at any time. He reiterates, however, that he objects to any amendment in paragraphs 6 and 7 of the Answer regarding Dr. Jackson's employment status. The Plaintiff also states that he objects to the proposed eleventh defense of setoff because no explanation was offered as to why this defense was not raised originally.
The hearing was originally scheduled before the undersigned but a trial in the Terre Haute division of the court required that the hearing be switched to Magistrate Judge Lawrence at the last minute. It was kind of Judge Lawrence to conduct the hearing without advance notice and to narrow the issues through his helpful report and recommendation.
Upon considering the Plaintiff's objection to the Report and Recommendation, the undersigned realized that it had not entered an order pursuant to 28 U.S.C. § 636(b) referring the matter of the Defendant's motion for leave to amend to Magistrate Judge Lawrence for hearing and a report and recommendation for the disposition of the motion. Neither party has objected to the referral or hearing before the Magistrate Judge, so the undersigned will make an order of referral nunc pro tunc.
By virtue of Local Rule 72.1(c), a formal referral to the Magistrate Judge may not have been required, but out of an abundance of caution, this nunc pro tunc referral is made to effectuate the undersigned's intent in requesting Magistrate Judge Lawrence to preside at the hearing. Regardless, neither party disputes that the matter before the court addressed in this entry is here on objections raised to the Magistrate Judge's report and recommendation, pursuant to 28 U.S.C. § 636(b)(1)(c). Given that the Magistrate Judge did not make a specific ruling on the motion for leave to amend, this court has given the matters to which objections are made a de novo review.
II. Standard of Review
The Government's motion for leave to amend has been referred to the Magistrate Judge pursuant to Rule 72(b) of the Federal Rules of Civil Procedure. Under that rule, "[i]f a party objects to a magistrate judge's recommended disposition, the district judge `shall make a de novo determination upon the record . . . of any portion of the magistrate judge's disposition to which specific written objection has been made. . . ." Willis v. Caterpillar Inc., 199 F.3d 902, 904 (7th Cir. 1999) (quoting Fed.R.Civ.P. 72(b)). The district judge "may accept, reject, or modify the recommended decision. . . ." Id.III. Discussion
The Plaintiff objects to the Defendant's motion for leave to amend on several grounds. First, he argues that the motion is untimely since it was filed after the deadline for amendments to the pleadings, and the United States did not move for an enlargement of that deadline before seeking leave to amend. The Plaintiff also maintains that the United States has not made any of the showings required by Rules 15 and 16 of the Federal Rules of Civil Procedure and Local Rule 16.1, namely good cause, lack of prejudice to the opposing party, and absence of bad faith. He claims that the United States fraudulently induced him to dismiss his complaint against Dr. Jackson which he had made before the Indiana Department of Insurance.
The Defendant responds that the motion for leave to amend cannot be untimely. It argues that if Dr. Jackson was not an employee, then the United States has not waived the defense of sovereign immunity, which deprives this court of subject matter jurisdiction; and matters addressing a court's lack of subject matter jurisdiction can be raised at any time. According to the Defendant, the motion was timely because it was promptly made after the error in the representation of Dr. Jackson's employee status was discovered.
It seems that the motion for leave to amend was filed shortly after defense counsel discovered the uncertainty as to whether Dr. Jackson was an employee of the Defendant — counsel represents that the uncertainty arose during the preparation of responses to the Plaintiff's discovery served on or about August 20, 2002, and the motion was filed on October 4, 2002. But the question of the Defendant's promptness in moving to amend is only one small aspect of the court's consideration in deciding whether leave to amend should be granted in this case.
Rule 16(b) provides in pertinent part that: "A schedule shall not be modified except upon a showing of good cause and by leave of the district judge[.]" Fed.R.Civ.P. 16(b); United States v. 1948 S. Martin Luther King Dr., 270 F.3d 1102, 1110 (7th Cir. 2001). In this context, "good cause" means that the deadline could not be met despite the party's diligence. See SW Enterp., L.L.C. v. SouthTrust Bank of Ala., N.A., No. 02-10090, 2003 WL 16122, at *2 (5th Cir. Jan. 6, 2003); Tschantz v. McCann, 160 F.R.D. 568, 571 (N.D.Ind. 1995); 6A Charles Alan Wright, et al., Federal Practice and Procedure § 1522.1 at 231 (2nd ed. 1990). "Carelessness is not compatible with a finding of diligence[.]" Pumpco, Inc. v. Schenker Int'l, Inc., 204 F.R.D. 667, 668 (D.Colo. 2001) (quotation omitted).
A scheduling order had been entered in this case, and pursuant to that order, the deadline for filing motions for leave to amend the pleadings was March 12, 2002. The United States' motion came well after the expiration of that deadline. Therefore, Rule 16(b) requires that the Defendant show good cause before a belated amendment will be allowed.
The United States does not really try to show good cause for its untimely motion. Instead, it's position seems to be that good cause is established just because it seeks to add the defense of sovereign immunity, which addresses the court's subject matter jurisdiction. See, e.g., F.D.I.C. v. Meyer, 510 U.S. 471, 475 (1994) ("Sovereign immunity is jurisdictional in nature."); Edwards v. United States Dep't of Justice, 43 F.3d 312, 317 (7th Cir. 1994) ("Waiver of sovereign immunity is a jurisdictional prerequisite in the nature of . . . subject matter jurisdiction, in that unless sovereign immunity be waived, there may be no consideration of the subject matter.") (quotation omitted). The Defendant is correct: The court's subject matter jurisdiction can be raised at any time. Fed.R.Civ.P. 12(h)(3); Rosenfeld v. United States, 859 F.2d 717, 723 (9th Cir. 1988) (stating that the court had to consider the sovereign immunity defense though not raised until appeal because the defense implicates the court's subject matter jurisdiction which can be raised at any time); Leonhard v. United States, 633 F.2d 599, 618 n. 27 (2nd Cir. 1980) (stating that "[i]t is immaterial that the defense of sovereign immunity was not expressly raised by the agencies below nor pressed by them on this appeal); see also Macklin v. United States, 300 F.3d 814, 819 n. 5 (7th Cir. 2002) ("Federal courts `have an obligation — regardless of the arguments advanced to them by the parties — to assure themselves of their own jurisdiction.'") (quotation omitted).
Nonetheless, that does not eliminate the requirement that good cause be shown for purposes of Rule 16. The Defendant makes no effort to explain why it could not, despite its diligence, have moved to amend its answer before the expiration of the deadline for amendments. Rather, it appears that the Defendant was anything but diligent in discovering the bases for the amendment it seeks.
The Magistrate Judge did not expressly address whether the Defendant made the good causing showing. The undersigned infers from the Report and Recommendation that he found good cause in the jurisdictional nature of the proposed amendment. Though subject matter jurisdiction can be raised at any time, in the undersigned's opinion, something more is needed to satisfy Rule 16(b)'s good cause requirement.
The United States has no one to blame but itself for its error about Dr. Jackson's employment status. As represented in the Defendant's reply brief, the Regional Counsel for the Department of Veterans Affairs contacted the wrong employee at the VA Medical Center about the doctor's employment status. The information about Dr. Jackson's employment was not obtained from discovery, but was available at all times to the Defendant had it only inquired of the appropriate person at the Center. At best, the United States' actions in ascertaining Dr. Jackson's employment status could be described as careless, which does not constitute good cause. At worst, the actions taken by and on behalf of Department of Veteran Affairs may give rise to questions about whether the conduct was done in good faith. The Plaintiff states that in reliance on the United States' admission in its Answer that Dr. Jackson was an employee, he dismissed his proceeding against Dr. Jackson before the Indiana Department of Insurance. But there is more. Even before the filing of the Answer in this case, on June 18, 2001, the Department of Veterans Affairs provided an affidavit to the attorney representing Dr. Jackson in the Indiana medical malpractice proceeding. That affidavit was from Dr. Kenneth Klotz, the Chief of Staff at the Richard l. Roudebush VA Medical Center, and in it, Dr. Klotz swore that in his official capacity, he is responsible for the management of the medical staff of that facility, and that Dr. Jackson was acting as an employee of the Department of Veterans Affairs and was acting under the color of his office and within the scope of that employment when he provided the complained of medical treatment to Mr. Sulkoff. That affidavit was an unequivocal statement by a person who should know the employment status of his professional staff. The affidavit was used repeatedly by Dr. Jackson's private counsel in attempts to persuade counsel for Mr. Sulkoff to dismiss the Indiana proceeding against Dr. Jackson. It can easily be inferred that the Department of Veterans Affairs (and its Regional Counsel and its counsel in this case) clearly understood that the purpose of the affidavit was to do that very thing. The court is unaware of any legal requirement that such an affidavit be provided to Dr. Jackson's attorney. It appears to have been a voluntary and gratuitous act. The response of Mr. Sulkoff's counsel to the affidavit made it clear that he was going to wait until the United States took a formal position in this case with respect to Dr. Jackson's employment status before he accepted Dr. Klotz's assertions. Ultimately, after the Government's Answer in this case was filed, Mr. Sulkoff's counsel apparently felt that he had plenty to rely on to agree to dismiss the Indiana Department of Insurance proceeding. At that point, it must have appeared futile for Mr. Sulkoff to proceed in the state law malpractice action, in the face of an affidavit of the VA Chief of Staff and a concession in the Answer in this case from the attorney for the United States. Thus, the Defendant's error may have grave ramifications for the Plaintiff as it appears the applicable statute of limitations on a medical malpractice claim against Dr. Jackson would be likely to have expired by now.
If it is determined in this case that Dr. Jackson was not an employee of the VA at the times in question, the Plaintiff's only potential means of recovery may be to attempt to resurrect his state law medical malpractice action against Dr. Jackson. One wonders whether equity would preclude the assertion of a statute of limitations defense in such a proceeding. This court has not researched the question and does not intend to issue a binding opinion on the matter. Instead, it makes two observations. First, Mr. Sulkoff did not withdraw his original state law malpractice claim until he had been provided bad information by the VA Medical Center Chief of Staff, the attorney for the United States and the attorney for Mr. Jackson. Second, if reliance on the sworn word of Dr. Klotz and the pleading of the attorney for the Government leave Mr. Sulkoff in a "Catch 22" where he has no forum in which to litigate his claims, the unfairness of such a situation would be apparent. The court hopes that Dr. Jackson would not be so impudent as to even bring such a question to issue.
The United States believes that the motion for leave cannot be barred as untimely or for lack of good cause just because it wishes to assert sovereign immunity as an affirmative defense. This view is misguided. No authority is offered to support this belief. Because the Defendant has not shown good cause as required by Rule 16(b) for modifying the deadline for motions for amendments to the pleadings, the court finds that its motion for leave to amend its answer must be denied.
But that may be little consolation to Mr. Sulfolk because, as stated, matters concerning the court's subject matter jurisdiction can be raised at any time. Thus, the United States does not need an amendment in order to assert sovereign immunity in this case. See 5A Charles Alan Wright and Arthur R. Miller, Federal Practice and Procedure § 1361 at 446-47 (2nd ed. 1990). The court will, however, allow the amendment of the affirmative defenses to add the twelfth affirmative defense that the injuries and damages of the Plaintiff were not caused by an act of any employee of the United States acting within the scope of his or her office or employment.
The Plaintiff apparently concedes that the Government can always contest the court's subject matter jurisdiction by not objecting to the Government's effort to amend the affirmative defenses portion of its Answer by adding the defense of sovereign immunity.
The court is aware that Mr. Sulfolk wishes to rely on the Government's "judicial admission" in its Answer that Dr. Jackson was an employee. A "judicial admission" is binding on the party that makes it, see, e.g., Help At Home Inc. v. Med. Capital, L.L.C., 260 F.3d 748, 753 (7th Cir. 2001), and "may not be controverted," Keller v. United States, 58 F.3d 1194, 1199 n. 8 (7th Cir. 1995). It appears, however, that the United States' admission that Dr. Jackson was an employee is not a "judicial admission."
Factual admissions can be binding as judicial admissions; admissions of legal conclusions cannot. See, e.g., McCaskill v. SCI Mgmt. Corp., 298 F.3d 677, 681-82 (7th Cir. 2002) (Rovner, J., concurring); Conseco Group Risk Mgmt. Co. v. Ahrens Fin. Sys., Inc., No. 00 C 5467, 2001 WL 219627, at *8 (N.D.Ill. Mar. 6, 2001); Dabertin v. HCR Manor Care, Inc., 68 F. Supp.2d 998, 10000 (N.D.Ill. 1999). Whether Dr. Jackson was a federal employee under the FTCA appears to be a question of law. See Ezekiel v. Michel, 66 F.3d 894, 899 (7th Cir. 1995); Sullivan v. United States, 21 F.3d 198, 201 (7th Cir. 1994). Thus, the Defendant's admission that he was an employee appears to be an admission of a legal conclusion and is not likely to constitute a binding judicial admission.
Determination of the effect, if any, of the unamended answer on the court's subject matter jurisdiction and the question of whether the United States should be estopped from asserting that Dr. Jackson was not an employee are matters for another day. It is noted that Mr. Sulkoff has a very high hurdle to clear in order to show that estoppel should apply against the United States. See, e.g., LaBonte v. United States, 233 F.3d 1049, 1053 (7th Cir. 2000) (requiring a showing of affirmative misconduct).
Lastly, as for the Plaintiff's objection to the eleventh defense of setoff, the court finds that this objection should be OVERRULED. This is because the defense was pled in the original Answer filed on December 7, 2001. Counsel for the Plaintiff must have overlooked it as it is contained at the top of page 5 of the Answer. (See Answer to Compl. and Demand for Jury Trial and Affirmative Defenses at 5.)
IV. Conclusion
Pursuant to 28 U.S.C. § 636(b) and Rule 72(b), the Defendant's Motion for Leave to Amend Answer is referred to United States Magistrate Judge William T. Lawrence for hearing and report and recommendation for disposition of the motion nunc pro tunc.
Because the United States has failed to show good cause for the belated amendment to its Answer, the Defendant's Motion for Leave to Amend Answer is DENIED in respect to the proposed amendments to the Answer, but GRANTED in respect to the proposed twelfth defense. The Plaintiff's objection to the eleventh defense of setoff is OVERRULED as this defense was pled in the original Answer.
Of course, despite the denial of leave for the amendment of the Answer, the question of this court's lack of jurisdiction has already been suggested by the parties' filings discussed in this entry, so a discussion about how this question can best be addressed will take place at the upcoming pretrial conference.
ALL OF WHICH IS ORDERED this 29th day of January 2003.