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Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 

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Notice: This opinion is subject to formal revision before publication

in the Federal Reporter or U.S.App.D.C. Reports. Users are requested

to notify the Clerk of any formal errors in order that corrections may be

made before the bound volumes go to press.

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 5, 2004 Decided February 8, 2005

No. 04-5089

EL RIO SANTA CRUZ NEIGHBORHOOD

HEALTH CENTER, INC., ET AL.,

APPELLEES

V.

U. S. DEPARTMENT OF HEALTH AND HUMAN SERVICES

AND

TOMMY G. THOMPSON, SECRETARY, DEPARTMENT OF

HEALTH AND HUMAN SERVICES,

APPELLANTS

Appeal from the United States District Court

for the District of Columbia

(No. 03cv01753)

Howard S. Scher, Attorney, U.S. Department of

Justice, argued the cause for appellants. With him on the

briefs were Peter D. Keisler, Assistant Attorney General,

Kenneth L. Wainstein, U.S. Attorney, Jeffrey S. Bucholtz,

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Deputy Assistant Attorney General, and Robert S.

Greenspan, Attorney.

James L. Feldesman argued the cause for appellees.

With him on the brief were Khatereh S. Ghiladi and Robert

A. Graham.

Before: HENDERSON and ROGERS, Circuit Judges, and

WILLIAMS, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge ROGERS.

Concurring opinion filed by Circuit Judge

HENDERSON.

 

ROGERS, Circuit Judge: The Federally Supported

Health Centers Assistance Act of 1995 (“FSHCAA”), Pub.

L. No. 104-73, 109 Stat. 777 (codified as amended at 42

U.S.C. § 233), makes federally-funded community health

centers and their employees, officers, and individual

contractors eligible for medical malpractice coverage

under the Federal Tort Claims Act (“FTCA”), 28 U.S.C. §

1346 (2000), to the same extent as federal employees of

the United States Public Health Service. See 42 U.S.C. §

233(g). The El Rio Santa Cruz Neighborhood Health

Center, Inc. (“the Center”) in Arizona and physicians

before the court provide obstetric and gynecological

services for patients of the Center. As a non-profit clinic

that receives federal funds, the Center receives

professional liability coverage from the federal

government pursuant to the FSHCAA. See id. When the

physicians were sued in the Arizona State court for

malpractice, the Center notified the United States

Department of Health and Human Services (“HHS”) of the

suit and submitted information for a determination of the

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physicians’ coverage under the FTCA. HHS denied the

physicians coverage because they had contracted with the

Center through their professional corporations. Joined by

the Center, the physicians filed a separate lawsuit

challenging the denial of coverage under the

Administrative Procedure Act (“APA”), 5 U.S.C. §§ 701-

706, and the district court ruled in their favor.

HHS appeals the grant of summary judgment to the

Center and the physicians, challenging both the district

court’s jurisdiction under the APA and its findings that

HHS failed to examine relevant evidence, namely the

physicians’ separate guarantees to the Center of their

personal performance, and to treat similar cases similarly.

Upon de novo review, we hold that the district court had

jurisdiction of the APA claim because the removal remedy

under the FSHCAA was not an adequate remedy that

precluded APA review, and that HHS was arbitrary and

capricious in failing to address evidence before it in

concluding that the physicians were ineligible for medical

malpractice coverage pursuant to the FSHCAA.

Accordingly, we affirm the grant of summary judgment

remanding the matter to HHS.

 I. 

A.

Under the FTCA, 28 U.S.C. §§ 1346(b), 2672-80, and

Public Health Service Act (“PHSA”), 42 U.S.C. § 233

(2000), Congress protected officers and employees of the

Public Health Service from personal liability for the

negligent or wrongful act or omission while acting within

the scope of their employment by providing that the United

States may assume any such liability. 28 U.S.C. § 2672.

In enacting the FSHCAA, 42 U.S.C. § 233(g), Congress

extended FTCA coverage for Public Health Service

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employees to public or non-profit private entities receiving

federal funds under the PHSA, 42 U.S.C. § 254b, and to

their officers, board members, employees, and contractors

who are physicians or other licensed or certified health

care practitioners, and meet certain criteria. Id. §

233(g)(1)(A); see id. § 233(e), (h), (i). Upon approval by

the HHS Secretary of an application, such individual is

“deemed to be an employee of the Public Health Service.”

Id. § 233(g)(1)(F). The Attorney General, upon notice

from a deemed defendant, shall defend against, or

compromise, civil actions or proceedings for such damage

or injury. Id. § 233(b), (d). The remedy against the United

States, as relevant here, for “damages for personal injury,

including death, resulting from the performance of

medical, surgical, dental, or related functions . . . by any

commissioned officers or employee of the Public Health

Service” is “exclusive.” Id. § 233(g)(1)(A). Congress

enacted the FSHCAA to relieve publicly funded health

centers of the burden of rising malpractice insurance costs.

H.R. Rep. No. 104-398, at 5-6 (1995), reprinted in 1995

U.S.C.C.A.N. 767, 769; H.R. Rep. No. 102-823(II), at 5-6

(1992). 

In order to be considered for FTCA coverage, a health

center must submit an application to the HHS Secretary

verifying that the health center, and the appropriate

officer, board member, employee, or contractor of the

health center, meet FSHCAA requirements. 42 U.S.C. §

233(g)(1)(D); see id. § 233(g)(1)(B)-(C), (h). The

Secretary is required to determine within 30 days of

receipt of the application whether the applicant is to be

deemed covered by the FTCA. Id. § 233(g)(1)(E). Once

the Secretary has determined that an applicant is covered,

this determination is final and binding upon the Secretary,

Attorney General, and other parties to a civil action or

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proceeding. Id. § 233(g)(1)(F). However, the Attorney

General, in consultation with the Secretary, and after

notice and opportunity for a hearing, may determine, based

on five criteria, that covering an individual health care

professional “would expose the Government to an

unreasonably high degree of risk of loss,” and that the

individual “shall not be deemed to be an employee of the

Public Health Service” for FSHCAA purposes. Id. §

233(i). 

Once a civil action or proceeding is filed in state or

local court against a public health or non profit entity or its

officers or employees or contractors, the statute provides

for two circumstances in which the case can be removed to

the federal district court. First, if the Attorney General

appears in state or local court within 15 days after being

notified of the filing of the case and advises that the

Secretary has deemed the defendant to be a Public Health

Service employee, the case shall be removed to the federal

district court. Id. § 233(l)(1); see id. § 233(c). Second, if

the Attorney General fails timely to appear, the case shall

be removed to federal district court upon petition by a

defendant. Id. § 233(l)(2). The case then shall be stayed

until the district court conducts a hearing and determines

the appropriate forum or procedure for the assertion of the

claim. Id.

B.

The undisputed facts are that in January 2002, the

physicians were sued for medical malpractice by Sergio

Puig and others (“plaintiffs”) in State court in Arizona.

The complaint and summonses were served on the

physicians on July 17, 2002. By letter of January 23, 2003

(“Gianturco letter”), Elizabeth Jordan Gianturco, Chief of

the Claims and Employment Branch, denied El Rio’s

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request for representation pursuant to the FSHCAA

“because [the individual physicians] cannot be deemed

employees of the Public Health Service because their

contracts were between the health center and a professional

corporation,” and therefore did “not meet the criteria under

the FSHCAA for coverage under the [] FTCA.” 

On March 21, 2003, the physicians removed the

malpractice action to the federal district court in Arizona

pursuant to 28 U.S.C. § 1441 and 42 U.S.C. § 233. They

filed two pleadings on May 14, 2003 in the Arizona district

court. The first was a complaint for declaratory and

injunctive relief that they were covered by the FTCA. The

second was a petition pursuant to 42 U.S.C. § 233(l)(2) for

determination of their FTCA coverage. On June 5, 2003,

the Arizona federal district court ruled that the physicians’

notice of removal was untimely and remanded the case to

the State court; the court also ruled that the remand

rendered the complaint for declaratory and injunctive relief

moot.

On August 18, 2003, the physicians and the Center

(hereinafter “the physicians”) filed a complaint for

declaratory and injunctive relief against HHS and its

Secretary under 28 U.S.C. §§ 1331, 1346(a), 1361, and the

APA, 5 U.S.C. §§ 701-06 in the district court in the

District of Columbia. Ten days later they filed in the

Arizona State court a motion to dismiss the malpractice

lawsuit for lack of subject matter jurisdiction on the

ground that the plaintiffs had admitted the physicians’

status as federal employees. The Arizona State court, on

October 7, 2003, denied the physicians’ motion to dismiss,

and, according to the parties’ briefs, stayed the malpractice

action pending resolution of their APA claim in federal

court in the District of Columbia.

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1

 D.C. Court of Appeals v. Feldman, 460 U.S. 462 (1983); Rooker

v. Fidelity Trust Co., 263 U.S. 413 (1923); Gray v. Poole, 275 F.3d

1113, 1119 (D.C. Cir. 2002).

On January 15, 2004, the district court in the District

of Columbia ruled that it had federal question jurisdiction

under 28 U.S.C. § 1331 to entertain the physicians’

challenge to HHS’s coverage determination, and that no

statute barred its review under the APA of the negative

coverage decision. On the merits, the district court granted

the physicians’ motion for summary judgment and

remanded for want of reasoned decisionmaking. The court

reversed HHS’s refusal to deem the physicians as Public

Health Service employees, which contradicted HHS’s

position in a similar case, because HHS had ignored each

physician’s contractual liability as guarantors. 

On appeal, HHS challenges the grant of summary

judgment to the physicians on three principal grounds,

each of which the physicians dispute. Our review is de

novo. See DBI Architects v. Am. Express Travel-Related

Servs. Co., 388 F.3d 886 (D.C. Cir. 2004). We first

address HHS’s contention that the district court lacked

jurisdiction under the APA because the removal remedy

under the FSHCAA § 233(l)(2) is adequate. We then

address HHS’s contention that the APA action was barred

under the Rooker-Feldman1 doctrine. Finally, because we

conclude that HHS’s first two contentions are

unpersuasive, we address the merits of HHS’s denial under

the FSHCAA of FTCA coverage for the physicians and

affirm the grant of summary judgment remanding the

matter to HHS.

II.

Section 704 of the APA provides that “[a]gency action

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made reviewable by statute and final agency action for

which there is no other adequate remedy in a court are

subject to judicial review.” 5 U.S.C. § 704. HHS contends

that the district court lacked jurisdiction of the physicians’

APA claim because the FSHCAA provides removal as the

means of obtaining access to a federal forum to determine

the federal status of federally supported health centers and

their employees or contractors, and removal is an adequate

remedy precluding APA review. HHS maintains that the

physicians waived their opportunity to challenge HHS’s

negative coverage determination because their petition for

removal was, in HHS’s view, untimely. Against the

background of Supreme Court and our caselaw defining the

nature of an adequate remedy, we hold that any remedy

afforded by the FSHCAA is too doubtful to constitute an

adequate remedy precluding APA review.

The Supreme Court has long instructed that the

“generous review provisions” of the APA must be given “a

hospitable interpretation” such that “only upon a showing

of ‘clear and convincing evidence’ of a contrary legislative

intent should the courts restrict access to judicial review.”

Abbott Labs. v. Gardner, 387 U.S. 136, 141 (1967)

(quoting Shaughnessy v. Pedreiro, 349 U.S. 48, 51 (1955);

Rusk v. Cort, 369 U.S. 367, 379-380 (1962)). In Abbott

Laboratories, the Court allowed pre-enforcement review

of agency regulations under the APA, rejecting the

argument that statutory provision for review of some

matters necessarily implied that Congress intended to deny

judicial review of other matters. Id. The Court pointed

out that its inquiry turned on “whether in the context of the

entire legislative scheme the existence of that

circumscribed remedy evinces a congressional purpose to

bar agency action not within its purview from judicial

review.” Id. Observing that the legislative history evinced

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no such intent, id. at 142, and that the statute itself

provided its remedies were not in lieu of others, id. at 144,

the Court adopted a literal reading of the statutory

language. It rejected an interpretation that the savings

clause was limited to review of regulations enumerated in

the statute as “requir[ing] a considerable straining both of

language and of common understanding.” Id. at 145.

 In Bowen v. Massachusetts, 487 U.S. 879, 901 (1988),

the Supreme Court addressed the meaning of “adequate

remedy” under § 704 of the APA. While observing that §

704 was not intended to provide additional judicial

remedies “where the Congress has provided special and

adequate review procedures,” the Court explained that

“[t]he exception that was intended to avoid such

duplication should not be construed to defeat the central

purpose of providing a broad spectrum of judicial review

of agency action.” Id. at 903-04. In that case, the Court

concluded that relief in the Claims Court “is plainly not

the kind of ‘special and adequate review procedure’ that

will oust a district court of its normal jurisdiction under

the APA.” Id. at 904. Not only was reviewability of a

disallowance decision by the Claims Court “doubtful,” the

Claims Court lacked equitable jurisdiction to grant

prospective relief, which the Court considered appropriate

in light of the interaction between the states’

administration of an approved Medicaid plan and the HHS

Secretary’s regulatory interpretation. Id. at 905. The

Court was unwilling to assume a money judgment “will

always be an adequate substitute for prospective relief . .

. .” Id. 

This court, in turn, in determining whether an adequate

remedy exists, has focused on whether a statute provides

an independent cause of action or an alternative review

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procedure. See, e.g., Envtl. Def. Fund v. Reilly (“EDF”),

909 F.2d 1497, 1501 (D.C. Cir. 1990); Nat’l Wrestling

Coaches Ass’n v. Dep’t of Educ., 366 F.3d 930, 945 (D.C.

Cir. 2004); Council of & for the Blind v. Regan

(“Council”), 709 F.2d 1521, 1527, 1531-32 & n.75 (D.C.

Cir. 1983) (en banc). Succinctly put, where a statute

affords an opportunity for de novo district-court review,

the court has held that APA review was precluded because

“Congress did not intend to permit a litigant challenging

an administrative denial . . . to utilize simultaneously both

[the review provision] and the APA.” EDF, 909 F.2d at

1501; see Wright v. Dominguez, 2004 WL 1636961 (D.C.

Cir. 2004) (per curiam). In a distinct line of cases, the

court also has held APA review is unavailable where there

is a private cause of action against a third party otherwise

subject to agency regulation. See Nat’l Wrestling Coaches

Ass’n, 366 F.3d at 945; Godwin v. Sec’y of Hous. & Urban

Dev., 356 F.3d 310, 312 (D.C. Cir. 2004); Wash. Legal

Found. v. Alexander, 984 F.2d 483, 485 (D.C. Cir. 1993);

Women’s Equity Action League v. Cavazos (“WEAL”), 906

F.2d 742, 751 (D.C. Cir. 1990); Coker v. Sullivan, 902

F.2d 84, 89-90 (D.C. Cir. 1990); Council, 709 F.2d at

1531. While originally deferring to congressional intent to

provide a remedy for an acknowledged problem, Council,

709 F.2d at 1532 n.75, this court later embraced the

doctrinal view disfavoring suits directly against federal

enforcement authorities administering anti-discrimination

laws, holding that remedies against the discriminating

entity were of “the same genre” as that which the court in

Council had held were adequate so as to preclude APA

review, WEAL, 906 F.3d at 751 (citing Council, 709 F.2d

at 1531-33). 

A review of the removal remedy under the FSHCAA

indicates Congress almost certainly did not intend for the

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FSHCAA removal provisions of § 233(l)(2) to provide a

review procedure for a negative deeming determination by

the Secretary. The plain text of the FSHCAA speaks only

to the final and binding nature of the Secretary’s

affirmative coverage determinations, and not to negative

coverage determinations. 42 U.S.C. § 233(g)(1)(F). The

removal of a state or local court action to the federal

district court is mentioned in connection with the Attorney

General’s appearance to certify that the defendant was

acting in the scope of his employment and assumes the

Secretary already has made a positive determination as to

his status as a Public Health Service employee. Id. §

233(c). The statute later provides for the removal of a

state or local court action when either the Attorney General

timely appears and advises that the Secretary has deemed

the defendant to be a Public Health Service employee with

respect to the particular action or omission at issue, or the

Attorney General does not timely appear and the defendant

petitions for removal, and a hearing is held in the federal

district court to determine the appropriate forum or

procedure for the damages claim. Id. § 233(l)(1), (2).

When the Attorney General does not timely appear, the

legislative history indicates that Congress intended the

removal section of the FSHCAA to apply only where the

Secretary already has determined that a defendant is

covered by the FTCA. The House Report states that the

1995 amendment to the FSHCAA:

includes a provision requiring that, if a civil

action or proceeding is filed in a [s]tate or local

court against any covered health center or its

covered personnel, the Attorney General, within

15 days after being notified of such filing, shall

make an appearance in such case and advise such

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court as to whether the defendant . . . is covered

under the FTCA . . . . [I]f the Attorney General

fails to appear [timely], upon petition of the

covered health center or its covered personnel, the

civil action proceeding shall be removed to the

appropriate United States district court, and the

civil action or proceeding shall not be acted on

until a hearing is conducted . . . .

H.R. Rep. No. 104-398, at 12 (emphasis added).

Consistent with Congress’s concern with the length of time

being taken to process malpractice claims, id. at 7, the

House Report also noted that under then current law, there

was a void such that if the Attorney General’s response

was not timely, a default judgment could be filed against

the covered Center or covered individual. See id. at 11-12.

Thus, the FSHCAA text and legislative history show

that the removal remedy under § 233(l)(2) was not

designed to afford independent district court review of the

Secretary’s negative coverage determinations. The

FSHCAA is silent regarding negative coverage

determinations. The removal section neither authorizes the

federal district court to make the deeming determination

itself de novo, or to overturn a negative coverage

determination. Although the text of § 233(l)(2), when the

Attorney General does not timely appear, references a

post-removal hearing by the district court to determine the

proper forum or procedure for the assertion of the claim,

the legislative history indicates this was intended to

protect a covered defendant against a default judgment due

to the Attorney General’s untimeliness, rather than a

negative coverage determination. 

Congress’s silence on the question of review of a

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negative coverage determination is understandable upon

review of the statutory scheme. As the 1995 amendment

makes clear, Congress envisioned eliminating front-end

delays in malpractice litigation by enacting provisions

requiring the Secretary to act promptly on a defendant’s

application for FTCA coverage, 42 U.S.C. § 233(g)(1)(E),

requiring the Attorney General to appear promptly in state

or local court, id. § 233(l)(1), and by affording a covered

defendant protection against a default judgment when the

Attorney General failed timely to appear, id. § 233(l)(2).

Where the Secretary makes a prompt negative coverage

determination in accordance with § 233(g)(1)(E) prior to

the filing of a malpractice action in state court, but see

infra p. 15, the defendant could challenge the denial of

coverage as final agency action in a separate action under

the APA, 5 U.S.C. § 704. See Bennett v. Spear, 520 U.S.

152, 177-78 (1997). Under the scenario that Congress

evidently envisioned, a defendant physician in a state court

malpractice action would have no occasion to invoke §

233(l)(2) when the Attorney General failed to appear,

unless the Secretary had deemed the physician covered by

the FTCA. The hearing in federal district court following

§ 233(l)(2) removal was designed simply to assure that the

United States was substituted as the defendant in place of

the Center and/or its personnel and that the case proceeded

as a tort action, unless “such a remedy is precluded”

because compensation or other benefits were available

against the United States under other laws, in which event

the case would be dismissed. 42 U.S.C. § 233(c).

In other words, there was no need for Congress to

address review of negative coverage decisions. By

requiring the Secretary to act within 30 days of receiving

an application for coverage, Congress could reasonably

contemplate that physicians seeking to associate with

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public health care centers would have an incentive to apply

promptly to the Secretary and to know, prior to being sued

for malpractice, whether or not they were covered by the

FTCA. If HHS rendered a negative coverage

determination, they could challenge the decision directly

under the APA, or purchase private medical malpractice

insurance.

The question remains whether the relief potentially

available for uncovered defendants under the removal

section, § 233(l)(2), is of “the same genre,” WEAL, 906

F.2d at 751, as that available under the APA or other

remedies held sufficient to preclude APA review. Id. For

reasons similar to those stated in WEAL, the fact that

Congress may not have intended § 233(l)(2) to be a remedy

for reviewing negative coverage decisions is not

dispositive. See id. However, Congress’s lack of intent to

provide a remedy, coupled with the uncertainty of the

availability of a remedy in the statute, leads us to conclude

that APA review is not precluded.

There is facial attractiveness to treating § 233(l)(2) as

an adequate remedy for an uncovered FSHCAA defendant.

Doing so would mean that all coverage issues under the

FSHCAA would be addressed in the same removal

procedure, and all questions relating to the proper

procedure would be before a single federal judge. The

legislative history of the FSHCAA indicates that when

Congress added the removal section it was “concerned

about the length of time it takes for medical malpractice

actions to be processed.” H.R. Rep. No. 104-398, at 7.

While the focus of that concern was on executive agency

processing, see id., and the possibility that default

judgments could be rendered against covered health

centers and/or their covered personnel, id. at 12, requiring

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a malpractice defendant to use the removal procedure

under § 233(l)(2) to seek judicial review of a negative

coverage decision would not be inconsistent with reducing

delays. Were the district court to make a de novo

determination of whether the defendant should be deemed

a Public Health Service employee, as the Arizona federal

district court suggested it would have done, then the

physicians would have a federal forum to obtain the relief

that they seek in their APA action. Cf. Wright, 2004 WL

1636961. It also is conceivable that the district court

might stay the malpractice action until the Secretary has

made a determination if one had not been made, although

this would tend further to delay resolution of the

malpractice action. Or the district court might review the

negative coverage determination under a standard

comparable to the deferential standard of the APA, and

then there would be no difference between the removal

remedy and the APA remedy.

Nevertheless, there are fundamental problems with this

approach. The first relates to the manner in which HHS

has implemented the Secretary’s deeming responsibilities

under § 233(g)(1)(E). Although the statute provides that

the Secretary “shall” make a determination of whether an

applicant is deemed a member of the Public Health Service

covered by the FTCA “within 30 days after the receipt of

an application,” 42 U.S.C. § 233(g)(1)(E), the Bureau of

Primary Health Care (“BPHC”) has issued a Policy

Information Notice (“PIN”) stating that it does not

maintain any database of individual providers covered by

the FTCA. See BPHC PIN 99-08 (April 12, 1999), at §§

XII & XIX. Rather, as the physicians allege in their

complaint, and HHS admits in its answer to the complaint,

“coverage determinations for individuals are not made in

advance but, instead, only after a lawsuit is filed against

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such individuals and is reported to HHS.” The effect of

postponing the coverage decision is that an individual

physician providing services to a publicly funded health

center cannot be certain of protection from medical

malpractice liability - subject to possible review by the

Attorney General, 42 U.S.C. § 233(i) - until after being

sued. At least where a physician has not insisted on being

hired as an employee of a center, the physician must either

risk exposure to personal liability, incur or require the

health center to incur potentially redundant medical

malpractice insurance costs, contrary to the purpose of the

FSHCAA, or forego providing services to the health center

altogether. If not for HHS’s manner of implementing the

application provision, it is unlikely that § 233(l)(2) would

have been available as an option for review of HHS’s

negative coverage determination because such decisions

likely would have been challenged before § 233(l)(2) could

be invoked. 

Second, the removal section is silent on the time frame

within which a defendant must petition for removal.

Several approaches are possible. HHS’s approach would

import the 30-day limit of the general removal statute, 28

U.S.C. § 1446(b), triggered after the expiration of the

Attorney General’s 15-day period to appear. The Arizona

federal district court, ruling that until the date of the

Gianturco letter, there was no diversity and no federal

question and hence no basis for removal, applied the 30-

day limit of the general removal statute from the date of

the letter. The doctrine of laches, barring removal for

unreasonable delay, also might be an appropriate vehicle.

Cf. Nat’l Ass’n for the Advancement of Colored People v.

NAACP Legal Def. & Educ. Fund, Inc., 753 F.2d 131, 136-

39 (D.C. Cir. 1985). Whichever analysis is correct, the

point is that the absence of a time limit in § 233(l)(2)

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underscores the uncertainty of the availability of the

removal remedy. The risk is that, as here, the physicians

unknowingly may lose any opportunity to challenge a

negative coverage determination. 

 

Under HHS’s implementation of the application

process under § 233(g)(1)(E), therefore, the text and

legislative history of the FSHCAA left the uncovered

physicians, upon being sued for malpractice, with a void.

As such, § 233(l)(2) as a remedy for review of a negative

deeming decision is fraught with uncertainty. The

FSHCAA does not authorize the district court upon

removal to overturn a negative deeming determination or

set a deadline for petitioning for removal. HHS itself is

unclear on appeal whether the district court is to make a de

novo coverage determination after a § 233(l)(2) removal,

arguably contrary to Congress’s decision to place that

responsibility in the Secretary, or to apply a deferential

standard, in which event there would be little reason to bar

an APA action seeking the same relief. Therefore, to

afford the physicians a remedy for negative deeming

determinations in § 233(l)(2), HHS’s approach would

require some recrafting of the removal section. By

contrast, by its silence on judicial review, there is no

reason to conclude that in enacting the FSHCAA Congress

intended to bar APA review of a negative coverage

determination. 

HHS’s reliance on the dictum in Allen v.

Christenberry, 327 F.3d 1290, 1295-96 (11th Cir. 2003),

regarding the limited circumstances for removal under §

233(l)(2), is misplaced. In a subsequent decision,

Christenberry v. Thompson (“Christenberry II”), No. 03-

14703, at 6 (11th Cir. July 30, 2004) (unpublished), the

Eleventh Circuit acknowledged that physicians whom the

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18

Secretary had determined were not Public Health Service

employees could challenge the Secretary’s negative

determination in an APA action, but held that the suit was

barred under the Rooker-Feldman doctrine in light of the

State court’s “express finding that the FTCA was not

applicable.” Id. at 9. To the extent HHS relies on our

decisions in National Wrestling Coaches, 366 F.3d at 930,

and Godwin, 356 F.3d at 310, standing for the principle

that a distinct right of action against the regulated third

party may be an adequate remedy precluding an APA claim

against the regulating agency for the same concern, HHS

makes no attempt to show that the supposed remedy under

§ 233(l)(2) is adequate under the APA or the standards of

adequacy implied by those cases.

For these reasons, we conclude that any remedy

afforded by § 233(l)(2) is too “doubtful,” Bowen, 487 U.S.

at 901, to constitute an adequate remedy sufficient to

preclude the physicians’ APA action challenging the

Secretary’s negative coverage determination. As the

physicians maintain, § 233(l)(2) “do[es] not and w[as]

never intended to apply to an individual’s action to compel

HHS to accept his/her coverage application.” Appellees’

Br. at 17. Moreover, APA jurisdiction would not

“duplicate” § 233(l)(2), because the APA action is for the

purpose of reviewing a negative coverage determination,

while § 233(l)(2) is to protect a covered defendant against

a default judgment when the Attorney General fails timely

to appear. See H.R. Rep. No. 104-398, at 9. Given that §

233 does not provide for judicial review, the reason

articulated by the Supreme Court for the adequate remedy

doctrine - to avoid duplication of “special statutory

procedures for review of agency actions,” Darby v.

Cisneros, 509 U.S. 137, 146 (1993); see Bowen, 487 U.S.

at 903 - does not arise here. Nor do other reasons that this

USCA Case #04-5089 Document #876169 Filed: 02/08/2005 Page 18 of 27
19

2

 See supra n.1.

court has relied upon to find an adequate remedy apply

here, as district court proceedings pursuant to § 233(l)(2)’s

removal option are not “of the same genre” as a “special

statutory procedure for review of agency action” or a

private right of action, see WEAL, 906 F.2d at 751, and the

APA action does not put the court in the inappropriate

position of overseeing federal agency enforcement, cf.

Coker, 902 F.2d at 89, but presents a question of statutory

interpretation. Much as the Supreme Court concluded in

Abbott Laboratories, a statute that provides a specific

review procedure under certain conditions, namely, when

the Attorney General does not appear and the Secretary has

deemed the defendant to be covered by the FTCA, but not

where the Secretary has made a negative coverage

determination, does not offer the requisite “clear and

convincing evidence” from which to conclude that

Congress intended to bar APA review. 387 U.S. at 141.

Where such uncertainty exists regarding the availability

and nature of review upon removal on petition by a

defendant, APA review is not precluded by § 704. See id.

at 140-41; Bowen, 487 U.S. at 901. To so hold would deny

the physicians an APA remedy because the Secretary’s

negative coverage determination was made other than at

the time contemplated by the FSHCAA. 

III.

Under the Rooker-Feldman doctrine,2a federal district

court is precluded from exercising jurisdiction in an APA

action where the action “amount[s] to the functional

equivalent of an appeal from a state court.” Gray v. Poole,

275 F.3d 1113, 1119 (D.C. Cir. 2002). HHS contends that

the physicians’ APA lawsuit is barred because it is the

functional equivalent of an appeal from the Arizona State

USCA Case #04-5089 Document #876169 Filed: 02/08/2005 Page 19 of 27
20

court, for that court denied the physicians’ motion to

dismiss for lack of subject matter jurisdiction and directed

the physicians to answer the complaint. The premise of

HHS’s contention is flawed. 

The record demonstrates that the Arizona State court

did not rule on the specific issue presented by the APA

complaint. While the physicians’ motion to dismiss the

malpractice lawsuit raised the question whether they were

covered by the FTCA, the physicians properly characterize

their motion to dismiss, and the State court’s denial, as

relating solely to the question of whether the malpractice

plaintiffs’ filing of an FTCA claim amounted to an

acknowledgment that their lawsuit was more properly

against the United States. The court minutes indicate that

the State court responded only to the question of whether

the plaintiffs had admitted defendants’ federal status. The

minutes state: 

[The physicians] . . . moved in this Court to

dismiss the instant case, claiming [the

malpractice] Plaintiffs should be bound by their

“admission” in the protective notice of federal

claim that [the physicians] are employees of the

federal government and the [FTCA] applies . . . .

[Plaintiffs’] alleged “admission” is not binding on

them. Therefore, the Defendant’s motion to

dismiss is denied.

Appellant’s Br. Addendum B, 2-4. 

In sum, the State court did not address whether HHS

erred in refusing to afford the physicians FTCA coverage.

The APA and State malpractice proceedings are properly

USCA Case #04-5089 Document #876169 Filed: 02/08/2005 Page 20 of 27
21

viewed as two parallel proceedings. This conclusion is

consistent with the Eleventh Circuit’s decision in

Christenberry II, in which the court held that the RookerFeldman doctrine barred APA review, because the State

court had expressly found that the FTCA was inapplicable,

Christenberry II, at 8-9, and a determination by the district

court that the physicians were covered by the FTCA would

necessarily reverse the State court’s denial of the motion

to dismiss. Id. at 9. Here, because the Arizona State court

did not rule on the question whether the physicians are

covered by the FTCA, we hold that the Rooker-Feldman

doctrine does not bar review of the physicians’ APA claim

to FTCA coverage, and we turn to the merits of HHS’s

challenge to the district court’s conclusion that it acted

arbitrarily and capriciously in denying the physicians

FTCA coverage.

IV.

HHS contends that it properly denied FTCA coverage

to the physicians. Its argument is that the physicians’

contracts with the Center were not as employees but

through corporate entities, and whatever effect their

personal guarantees had under state law was irrelevant

because FTCA coverage is a federal question and

administrative convenience outweighed any reason to

inquire into the laws of the several states in applying the

FSHCAA coverage provision. The physicians respond that

“[t]he Gianturco letter rests completely on the assumption

that [the] physician[s’] ‘contracts were between the health

center and a professional corporation,’” ignoring that

“there is a separate set of contracts (the Guarantees) for

[the] physician[s’] services . . . [and thus] the requirement

for a direct contract between health center and individual

. . . is fully satisfied.” Appellees’ Br. at 40.

USCA Case #04-5089 Document #876169 Filed: 02/08/2005 Page 21 of 27
22

In order for the court to uphold an agency’s action or

conclusion as not “arbitrary, capricious, an abuse of

discretion, or otherwise not in accordance with law,” 5

U.S.C. § 706(2)(A), the court must be able to conclude that

the agency “examine[d] the relevant data and articulate[d]

a satisfactory explanation for its action including a

‘rational connection between the facts found and the

choice made.’” Motor Vehicle Mfrs. Ass’n v. State Farm

Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983) (quoting

Burlington Truck Lines, Inc. v. United States, 371 U.S.

156, 168 (1962)); see Lozowski v. Mineta, 292 F.3d 840,

845 (D.C. Cir. 2002). Appellate counsel's post hoc

rationalizations are not a substitute, for “an agency's

discretionary order [will] be upheld, if at all, on the same

basis articulated in the order by the agency itself.”

Burlington Truck Lines, 371 U.S. at 168-69.

The FSHCAA defines an employee of a public or

non-profit entity receiving federal funds under 42 U.S.C.

§ 254b, as “any officer, governing board member, or

employee of such an entity, and any contractor of such an

entity who is a physician or other licensed or certified

health care practitioner." Id. § 233(g)(1)(A) (emphasis

added). This includes “a licensed or certified provider of

services in the fields of family practice, general internal

medicine, general pediatrics, or obstetrics and

gynecology.” Id. § 233(g)(5). The contracts between the

physicians and the Center were titled the “Agreement for

Management and Medical Services,” and state, for

example, that: 

the “Agreement”[] is made effective . . . by and

between El Rio Santa Cruz Neighborhood Health

Center, Inc., an Arizona non-profit corporation

(“El Rio”) and [name of physician], M.D., P.C., an

USCA Case #04-5089 Document #876169 Filed: 02/08/2005 Page 22 of 27
23

Arizona professional corporation (“Contractor”).

The Agreement is signed by the named physician as

“President.” In addition, the district court found that each

Agreement was accompanied by a separately signed

guarantee of the individual physician, stating, for example:

The undersigned hereby accepts and agrees to

perform and be bound by the terms and conditions

of the Agreement for Management of Medical

Services made on February 12, 1999 by and

between El Rio Santa Cruz Neighborhood Center,

Inc., an Arizona non-profit corporation and J.

Manuel Arreguin M.D., P.C., an Arizona

corporation, and guarantees the performance by

the Contractor of the terms and conditions

thereof.

The guarantees are signed by each individual practitioner.

HHS denied the physicians medical liability coverage

under the FTCA because the physicians contracted with the

Center through their individual professional corporations

(“eponymous corporations”) instead of as individual

employees of the Center. The Gianturco letter stated, in

relevant part:

[The physicians] cannot be deemed employees of

the Public Health Service because their contracts

were between the health center and a professional

corporation. See BPHC Policy Information

Notice 99-08, Section IV. Based upon the above,

this agency has determined that this matter does

[not] meet the criteria under the FSHCAA for

coverage under the . . . FTCA[] and for

representation by the United States government.

The PIN cited in the letter stated, in relevant part, that “[a]

USCA Case #04-5089 Document #876169 Filed: 02/08/2005 Page 23 of 27
24

contract between a deemed Health Center and a provider’s

corporation does not confer FTCA coverage on the

provider.” BPHC PIN 99-08 (April 12, 1999), at § IV.

Thus, as the district court found, there was relevant

evidence before HHS that it does not appear to have

examined. The record supports the district court’s finding

that the guarantees, which were signed by the individual

practitioner and provided that the undersigned “guarantees

the performance by the Contractor of the terms and

conditions,” functioned as direct contracts between each

physician and the Center. As such, the district court

concluded they satisfied HHS’s interpretation of § 233(g)

as requiring a contractual relationship between the

individual health care provider and the clinic. The

Gianturco letter provided no explanation for ignoring these

direct contractual obligations assumed by each physician,

for neither the text of the letter nor the referenced PIN

addresses the fact that the physicians had a direct contract

between the health center and themselves as individuals.

In the district court, HHS argued that because there

had been no discovery it did not know whether the

eponymous professional corporations were “solelyowned,” and that the terms of each physician’s contract

were different. Also, HHS stated that “[n]either can

[HHS] agree that the ‘Guarantee’ signed by each

[p]hysician[] is a ‘legally separate’ contract,” for in HHS’s

view, “the latter statement of fact [is] ambiguous [and] it

is not legally material.” HHS has abandoned these

arguments on appeal, and instead, discusses the

physicians’ individual guarantees only to dispute the

district court’s reliance on state law to find a direct

contractual relationship between the physician and health

USCA Case #04-5089 Document #876169 Filed: 02/08/2005 Page 24 of 27
25

center. HHS has therefore missed the point of the district

court’s finding with respect to the guarantee. In denying

the coverage to the physicians, HHS never explains why it

did not find the individually signed guarantees sufficient

to create a direct contract between the Center and the

physicians, and its failure to provide a satisfactory

explanation renders its decision to deny FTCA coverage

based on their contractual relationship with the Center

arbitrary and capricious.

Accordingly, we hold that the district court had

jurisdiction of the physicians’ APA challenge to HHS’s

denial of FTCA coverage, that the Rooker-Feldman

doctrine is no bar to that challenge, and that the denial of

FTCA coverage was arbitrary and capricious because HHS

failed adequately to address relevant evidence before it,

and we affirm the grant of summary judgment remanding

the matter to HHS.

So ordered.

USCA Case #04-5089 Document #876169 Filed: 02/08/2005 Page 25 of 27
 1 To qualify as a contractor, moreover, the “individual” must either

“normally perform[] on average at least 32 1/2 hours of service per

week for the entity for the period of the contract” or, “in the case of an

individual who normally performs an average of less than 32 1/2 hours

of services per week for the entity for the period of the contract,” must

be “a licensed or certified provider of services in the fields of family

practice, general internal medicine, general pediatrics, or obstetrics

and gynecology.” 42 U.S.C. § 233(g)(5)(A)-(B). 

KAREN LECRAFT HENDERSON, concurring: 

I write separately because I believe that the United States

Department of Health and Human Services (HHS) violated the

Administrative Procedure Act, 5 U.S.C. § 706(2)(A), in two

ways rather than one: in denying the physicians medical

malpractice liability coverage under the Federal Tort Claims Act

(FTCA), 28 U.S.C. § 1346, I believe the HHS acted arbitrarily

and capriciously and contrary to law. In my view, the HHS

erred in concluding that the physicians do not qualify as

“contractor[s]” under the Federally Supported Health Centers

Assistance Act of 1995 (FSHCAA), 42 U.S.C. § 233(g)(1)(A),

merely because they contracted with the El Rio Santa Cruz

Neighborhood Health Center through their respective

eponymous—and solely-owned—professional corporations,

Joint Appendix (J.A.) 19. See El Rio Santa Cruz Neighborhood

Health Ctr., Inc. v. HHS, No. 03CV1753, slip op. at 13 (D.D.C.

Jan. 15, 2004) (mem.) (finding physicians’ “solely-owned

eponymous corporations functioned as mere alter egos”),

reprinted in J.A. 332. The FSHCAA extends FTCA coverage

to “any contractor” of a federally-funded community health

center “who is a physician.”1 42 U.S.C. § 233(g)(1)(A). While

the contractor must be an “individual” to receive coverage, id.

§ 233(g)(5)(A)-(B); see Dedrick v. Youngblood, 200 F.3d 744,

746 (11th Cir. 2000) (“[S]trict interpretation requires that a

contractor be an ‘individual’ who contracts with an eligible

entity.”), nowhere does the FSHCAA elevate contractual form

above substance. Cf. 42 U.S.C. § 233(g). Of course, statutes

that expand government liability—like the FSHCAA—must be

construed strictly, see Dep’t of the Army v. Blue Fox, Inc., 525

USCA Case #04-5089 Document #876169 Filed: 02/08/2005 Page 26 of 27
2

 2 WILLIAM SHAKESPEARE, ROMEO AND JULIET, act 2, sc. 2 (“What’s

in a name? That which we call a rose/ By any other word would smell

as sweet.”). 

U.S. 255, 261 (1999), but, as in Shakespeare’s play,2a physician

who signs his name to a professional services contract followed

by “P.C.”—manifesting his business name—is no less an

individual under the FSHCAA than one who signs his name

followed simply by “M.D.” See Alexander v. Mt. Sinai Hosp.

Med. Ctr. of Chicago, 165 F. Supp.2d 768, 772 (N.D. Ill. 2001)

(holding physician who performed services at federally-funded

health center “under a contract he himself signed on behalf of an

eponymous professional corporation he founded and of which

he is the sole shareholder and employee” qualified as

“contractor” under FSHCAA) (emphasis in original); cf.

Dedrick, 200 F.3d at 747 n.4 (holding physician employed by

entity that contracted with federally-funded health center did not

qualify as “contractor” under FSHCAA, but declining to address

“whether an individual doctor who contracts with an eligible

entity through his professional corporation would be

protected.”). 

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