Midtown Medical Group, Inc. v. State Farm Mutual Automobile Insurance

206 P.3d 790, 220 Ariz. 341, 2008 Ariz. App. LEXIS 208
CourtCourt of Appeals of Arizona
DecidedDecember 23, 2008
Docket1 CA-CV 07-0501
StatusPublished
Cited by7 cases

This text of 206 P.3d 790 (Midtown Medical Group, Inc. v. State Farm Mutual Automobile Insurance) is published on Counsel Stack Legal Research, covering Court of Appeals of Arizona primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Midtown Medical Group, Inc. v. State Farm Mutual Automobile Insurance, 206 P.3d 790, 220 Ariz. 341, 2008 Ariz. App. LEXIS 208 (Ark. Ct. App. 2008).

Opinion

OPINION

BARKER, Judge.

¶ 1 The primary question in this matter is whether an “outpatient treatment center” as described in Arizona Revised Statutes (“A.R.S.”) section 36-405(B)(l) and Arizona Administrative Code (“A.A.C.”) R9-10101(39), which employs physicians and chiro-praetors, may be owned by persons who are not licensed physicians or chiropractors. For the following reasons, we affirm the trial court’s decision that the ownership structure of such an entity is statutorily permitted.

I.

¶ 2 Midtown Medical Group, Inc., doing business as Priority Medical Center, Inc. (“the Center”), is incorporated as a general corporation in Arizona and is owned solely by Jacob Kost, who is an engineer and is not licensed to practice medicine or chiropractic. 1 Kost is responsible for most of the day-today administrative activities at the Center. The Center employs on a part-time basis doctors and chiropractors who have no ownership interest in the clinic. The doctors do not have any duties or responsibilities involving billing or regarding the price charged for services. It is undisputed, however, that all medical and chiropractic services are provided by individuals who are licensed in their particular field.

¶ 3 A number of insurance companies refused to reimburse injured persons treated by the Center. The insurance companies claimed that the Center was not legally licensed under Arizona law. As a result, the Center sent a number of letters to the insurance companies and their lawyers, including one to Steven D. Smith, who was counsel for State Farm Mutual Automobile Insurance Company (“State Farm”). The letters attached a copy of the license that had been issued to the Center by the A'izona Department of Health Services and requested that the insurance companies and their lawyers cease and desist from disseminating information that the Center was unlicensed or conducting business illegally. The Center also attempted unsuccessfully to intervene in a number of lawsuits between the insurers and the injured persons. Finally, the Center filed a declaratory action, seeking an order that the Center “is a duly licensed ‘outpatient treatment center’ pursuant to A’izona law ... and, as such, is not conducting its business ‘illegally’ in the State of Aizona.”

*343 ¶ 4 After a prior appeal in which this controversy was determined to be justiciable, Midtown Med. Group, Inc. v. Liberty Assurance Co. of Boston, 1 CA-CV 05-0045 (Ariz.App. Jan. 19, 2006) (mem.decision), the parties filed cross-motions for summary judgment regarding whether the Center was authorized to provide medical and chiropractic services in Arizona and permitted to recover fees for those services. The trial court found that “plaintiffs licensed health care institution is lawfully organized pursuant to the laws of Arizona” and granted summary judgment for the Center. In doing so, the trial court determined that the “corporate practice doctrine” announced by the Arizona Supreme Court in Funk Jewelry Co. v. State ex rel. La Prade, 46 Ariz. 348, 50 P.2d 945 (1935), and State ex rel. Board of Optometry v. Sears, Roebuck & Co., 102 Ariz. 175, 427 P.2d 126 (1967), had been modified by subsequent legislative pronouncements. However, the trial court denied the Center’s request to enjoin State Farm from alleging in any judicial proceeding that the Center is not lawfully licensed. The trial court also denied the Center’s request for attorneys’ fees.

¶ 5 State Farm and Smith timely appeal. The Center timely cross-appeals. We have jurisdiction pursuant to A.R.S. § 12-2101(B) (2003).

II.

¶ 6 On appeal, State Farm and Smith jointly argue that the statutory licensing scheme for physicians and chiropractors prohibits lay persons from owning an “outpatient treatment center.” They also contend that the Center is practicing medicine in violation of the corporate practice of medicine doctrine set forth in the Funk Jewelry and Sears cases. Accordingly, they argue the Director of the Department of Health Services (“Director”) erred in awarding the Center a license to operate. We disagree with both arguments.

¶ 7 We turn first to the language of the statutes under which the Center was licensed, as they are the most reliable indicator of the legislature’s intent. Obregon v. Indus. Comm’n, 217 Ariz. 612, 614, ¶ 11, 177 P.3d 873, 875 (App.2008) (“We look first to the language of the statute as the most reliable indicator of its meaning.”). We then address related statutory provisions and the corporate practice of medicine doctrine. As the questions presented are ones of law, we review them de novo. Saenz v. State Fund Workers’ Comp. Ins., 189 Ariz. 471, 473, 943 P.2d 831, 833 (App.1997) (explaining that de novo review is applied when reviewing questions of law decided by the trial court in a summary judgment action).

III.

¶ 8 The legislature has delegated the licensing of health care institution 2 to the Director under A.R.S. § 36-405 (Supp.2007). 3 As part of that delegation of authority, the legislature provided as follows:

The director may, by rule:
1. Classify and subclassify health care institutions .... Classes of health care institutions may include hospitals, infirmaries, outpatient treatment centers, health screening services centers and residential care facilities.

Id. (B)(1) (emphasis added). Thus, in accordance with this rule-making authority, the Director has specified that an “[ojutpatient treatment center” is a class of a “health care *344 institution,” A.A.C. R9-10-101(39), and that a “person” may apply for such a license, A.AC. R9-10-102(A)(16). “Person,” as used in this rule, is defined by A.A.C. R9-10-101(43) to have “the same meaning as in A.R.S. § 1-215.” That definition “includes a corporation, company, partnership, firm, association or society, as well as a natural person.” A.R.S. § 1-215(29) (Supp.2008) (emphasis added). Thus, the plain language of the rule clearly authorizes a corporation to be licensed as an “outpatient treatment center.” Neither does it require that a “natural person” hold a professional license to obtain a license for such an entity.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

State of Arizona v. Hon. James Marner; Hanees Mohamed Haniffa
560 P.3d 338 (Court of Appeals of Arizona, 2024)
Bates v. Bates
Court of Appeals of Arizona, 2021
Marsh v. Mayer
Court of Appeals of Arizona, 2015
Marsh v. Coles
361 P.3d 383 (Court of Appeals of Arizona, 2015)
Sorrell v. Gaarde-Morton
357 P.3d 828 (Court of Appeals of Arizona, 2015)
Winckler v. Bnsf
Court of Appeals of Arizona, 2015
Awsienko v. Cohen
257 P.3d 175 (Court of Appeals of Arizona, 2011)

Cite This Page — Counsel Stack

Bluebook (online)
206 P.3d 790, 220 Ariz. 341, 2008 Ariz. App. LEXIS 208, Counsel Stack Legal Research, https://law.counselstack.com/opinion/midtown-medical-group-inc-v-state-farm-mutual-automobile-insurance-arizctapp-2008.