Court Opinion

ID: 9942656
Source: CourtListenerOpinion
Date Created: 2024-02-21 18:00:40.59436+00
Date Added: 2024-06-11T13:48:23.067565
License: Public Domain

PRECEDENTIAL

  UNITED STATES COURT OF APPEALS
       FOR THE THIRD CIRCUIT
           _______________

                No. 23-1924
              _______________

            JOHNATHON MOHR,
    for himself and others similarly situated

                       v.

          TRUSTEES OF THE
    UNIVERSITY OF PENNSYLVANIA,
                             Appellant
           _______________

On Appeal from the United States District Court
   for the Eastern District of Pennsylvania
           (D.C. No. 2-23-cv-00731)
  District Judge: Honorable Chad F. Kenney
              _______________

Submitted Under Third Circuit L.A.R. 34.1(a):
             February 1, 2024
            _______________

  Before: KRAUSE, PORTER, and CHUNG
             Circuit Judges.

          (Filed: February 21, 2024)
             ________________

Adam R. Pulver
Allison M. Zieve
Public Citizen Litigation Group
1600 20th St. NW
Washington, DC 20009

Counsel for Appellee

Paul J. Bond
Eric Yoon
Holland & Knight LLP
1650 Market St.
One Liberty Place, Suite 3300
Philadelphia, PA 19103

Mark S. Melodia
Holland & Knight LLP
31 W. 52nd St., 12th Floor
New York, NY 10019

Counsel for Appellant
              ______________

         OPINION OF THE COURT
             ______________

                       2
PORTER, Circuit Judge.

       Plaintiffs filed a putative class action in state court
against the Trustees of the University of Pennsylvania (Penn),
which controls and operates the Hospital of the University of
Pennsylvania Health System (Penn Medicine). Using mobile
devices or desktop computers, patients can access and provide
information to Penn Medicine. Plaintiffs allege that Penn
Medicine shares patients’ identities, sensitive health
information, and online activity from its patient portals with
Facebook in violation of Pennsylvania privacy law. Penn
removed the case to federal court, invoking the federal-officer
removal statute, 28 U.S.C. § 1442(a)(1). It argued that, in
operating Penn Medicine’s patient portals, it was “acting
under” the federal government. The District Court rejected this
argument and remanded the case to state court. We will affirm.

                               I

       In 2009, Congress enacted the Health Information
Technology for Economic and Clinical Health Act (HITECH
Act). Pub. L. No. 111–5, §§ 13001–13424, 123 Stat. 115, 226–
79 (2009). Its goal was to encourage healthcare providers to
adopt and use health information technology, such as
electronic health records (EHR). See 42 U.S.C. § 300jj-11(b).
In part, the HITECH Act directed the Department of Health
and Human Services (HHS) to make incentive payments to any
Medicare-participating provider that is a “meaningful EHR
user.” 42 U.S.C. § 1395w-4(o)(1)(A)(i). Beginning in 2015,
the law also instructed HHS to reduce Medicare
reimbursements to any Medicare-participating provider that is
“not a meaningful EHR user.” 42 U.S.C. § 1395w-
4(a)(7)(A)(i).

                              3
        In 2010, the Centers for Medicare and Medicaid
Services (CMS), an agency within HHS, promulgated
regulations to implement the HITECH Act and created a
program called the Meaningful Use Program (the Program).1
42 C.F.R. §§ 495.2–495.110. Under the Program, CMS created
certain objectives and measures that providers must meet in
order to qualify as a “meaningful EHR user” and thus receive
incentive payments and avoid reductions in Medicare
reimbursements. 42 C.F.R. §§ 495.20–495.24. For example,
one objective is whether a provider uses health information
technology to “provide[] patients . . . with timely electronic
access to their health information,” which participating
providers often accomplish through the use of an online patient
portal. 42 C.F.R. § 495.24(d)(5)(i)(A).

        Penn Medicine has operated an online patient portal
since 2008. Starting in 2011, it began receiving incentive
payments from the federal government for qualifying as a
“meaningful EHR user” based on its patient portal meeting
certain objectives and measures under the Program. And
starting in 2015, Penn Medicine began avoiding any reduction
in Medicare reimbursements by continuing to qualify as a
“meaningful EHR user.”

       In January 2023, Plaintiffs filed a putative class action
against Penn in the Court of Common Pleas of Philadelphia
County. According to the Plaintiffs, Penn Medicine’s patient
portal surreptitiously allows Facebook’s Tracking Pixel

       1
        The Program is now called the Promoting
Interoperability Program. See 42 C.F.R. § 495.4.

                               4
software to access and collect confidential patient information
from Penn Medicine’s patient portal and transfer it to
Facebook’s servers. Facebook then allegedly processes and
analyzes the patient data for targeted advertising. Plaintiffs
assert that this transfer of confidential information to Facebook
violates Pennsylvania privacy law.

        In February 2023, Penn removed the case to federal
court, invoking the federal-officer removal statute as a basis
for jurisdiction. 28 U.S.C. § 1442(a)(1). It argued that, because
Penn operates Penn Medicine’s patient portal to receive
incentive payments under the Program and avoid reductions in
Medicare reimbursements, it is “acting under” the federal
government. Plaintiffs filed a motion to remand for lack of
subject-matter jurisdiction, which the District Court granted.
Penn appealed.

                               II

        The District Court had the obligation and power to
determine its own jurisdiction. Nuveen Mun. Tr. ex rel. Nuveen
High Yield Mun. Bond Fund v. WithumSmith Brown, P.C., 692
F.3d 283, 293 (3d Cir. 2012). We have jurisdiction to review
the District Court’s remand order under 28 U.S.C. §§ 1291 and
1447(d).

       We review the District Court’s decision to remand for
lack of subject-matter jurisdiction de novo. Maglioli v. All. HC
Holdings LLC, 16 F.4th 393, 403 (3d Cir. 2021). Like the
District Court, we construe Plaintiffs’ motion to remand as a
facial challenge to the District Court’s subject-matter
jurisdiction because Plaintiffs did not dispute the facts alleged
in Penn’s notice of removal. Papp v. Fore-Kast Sales Co., 842

                               5
F.3d 805, 811 (3d Cir. 2016) (explaining the differences
between facial and factual challenges in the context of a motion
to remand). Thus, we must accept the factual allegations in
Penn’s notice of removal as true and construe them in the light
most favorable to Penn. Id.

                               III

        28 U.S.C. § 1442(a)(1) “permits certain officers of the
United States to remove actions to federal court.” Maglioli, 16
F.4th at 404. It also allows “private persons who lawfully assist
[a] federal officer in the performance of his official duty” to
remove a case to federal court. Watson v. Philip Morris Cos.,
551 U.S. 142, 151 (2007) (internal quotation marks and quoted
source omitted). The “central aim” of § 1442(a)(1) is to
“protect[] officers of the federal government from interference
by litigation in state court while those officers are trying to
carry out their duties.” Papp, 842 F.3d at 811.

       “To remove a case under § 1442(a)(1), a defendant must
meet four requirements: (1) the defendant must be a ‘person’
within the meaning of the statute; (2) the plaintiff’s claims
must be based upon the defendant ‘acting under’ the United
States, its agencies, or its officers; (3) the plaintiff’s claims
against the defendant must be ‘for or relating to’ an act under
color of federal office; and (4) the defendant must raise a
colorable federal defense to the plaintiff’s claims.” Maglioli,
16 F.4th at 404 (quoting § 1442(a)(1)). The defendant bears the
burden of establishing that each requirement is met. Avenatti v.

                               6
Fox News Network LLC, 41 F.4th 125, 130 (3d Cir. 2022). This
case turns on the second, “acting under” requirement.2

                                 A

       To satisfy the “acting under” requirement, the defendant
must show that the plaintiff’s allegations “involve conduct that
occurred when [the defendant] was ‘acting under’ the direction
of a federal officer or agency.” Papp, 842 F.3d at 813. The
defendant is not “required to [show] that the complained-of
conduct itself was at the behest of [the federal government].”
In re Commonwealth’s Motion to Appoint Couns. Against or
Directed to Def. Ass’n of Phila., 790 F.3d 457, 470 (3d Cir.
2015). It is “sufficient . . . that the [plaintiff’s] allegations are
directed at the relationship between” the federal government
and the defendant. Id.

         The “acting under” requirement is to be liberally
applied in favor of removal, but “[it] is not boundless.”
Maglioli, 16 F.4th at 404. At bottom, a private party is acting
under the federal government when it is “involve[d] [in] an
effort to assist, or to help carry out, the duties or tasks of the
federal superior.” Watson, 551 U.S. at 152. This “special
relationship” arises when the federal government “delegat[es]
. . . legal authority” to the private party to “undertake” a duty
or task “on the Government[’s] . . . behalf.” Id. at 156–57. In
other words, “[t]he [private] party does the business of the

       2
         Plaintiffs argue that Penn also fails the third and
fourth requirements. Because we conclude that Penn does not
satisfy the second requirement and therefore is not entitled to
removal, we decline to address the other requirements.

                                 7
federal government and not merely its own.” Doe v. BJC
Health Sys., 89 F.4th 1037, 1043 (8th Cir. 2023).

       “Merely complying with federal laws and regulations is
not ‘acting under’ a federal officer for purposes of federal-
officer removal.” Maglioli, 16 F.4th at 404. That includes
private parties who are “subject to detailed regulations and
whose activities are highly supervised and monitored[.]” Id.
(internal quotation marks and quoted source omitted). If the
defendant’s relationship to the federal government sounds
merely in “regulation, not delegation,” the defendant fails the
“acting under” requirement. Watson, 551 U.S. at 157.

        “Government contractors are [the] classic example” of
private parties who are acting under the federal government.
Maglioli, 16 F.4th at 405. That is because they “help[] the
Government to produce an item that it needs”—which, “in the
absence of a contract with a private firm, the Government itself
would have had to perform.” Watson, 551 U.S. at 153–54. In
other words, they “go[] beyond simple compliance with the
law and help[] officers fulfill other basic governmental tasks.”
Id. at 153.

                               B

       Penn argues that the Plaintiffs’ allegations regarding
Penn Medicine’s patient portal involve conduct that occurred
while Penn was acting under the federal government. Penn
receives incentive payments from the federal government
under the Program and avoids reductions in Medicare
reimbursements, in part, because it operates Penn Medicine’s
patient portal. According to Penn, this relationship shows that

                               8
it is “fulfill[ing]” the federal government’s policy and thus
acting under it. App. 29. We disagree.

       The federal government did not delegate any legal
authority to Penn to operate a patient portal on behalf of the
government. See Watson, 551 U.S. at 156. Absent private
action, the federal government itself would not be operating
any patient portal. See id. at 153–54; Maglioli, 16 F.4th at 405.
When Penn operates Penn Medicine’s patient portal, it is not
doing the government’s business; it is doing its own. See BJC
Health, 89 F.4th at 1043. To be sure, Penn does advance the
government’s policy by operating a patient portal that meets
certain objectives and measures under the Program. But that is
mere compliance “with federal laws and regulations.”
Maglioli, 16 F.4th at 404. Advancing governmental policy
while operating one’s own business is not the same as
executing a delegated governmental duty.

       According to Penn, it is acting under the federal
government because it has a contractual relationship with the
government. In particular, Penn signed a written enrollment
application with CMS to participate in Medicare, which in turn
allowed it to participate in the Program.3 But simply because a
private party has a contractual relationship with the federal
government does not mean that it is acting under that federal
authority. See, e.g., City of Hoboken v. Chevron Corp., 45 F.4th
699, 713 (3d Cir. 2022) (companies that produced oil under
government leases were not acting under the government
because the leases did not “impose close federal control” and

       3
      Penn also claims that its course of dealings with
CMS constituted a contractual agreement.

                               9
the oil was not specifically produced for the government);
Maglioli, 16 F.4th at 405–06 (nursing home did not act under
the government by complying with CMS regulations, even
though compliance was required by contract). We must look to
the nature of the relationship between the private party and the
federal government. See Watson, 551 U.S. at 152–54; Maglioli,
16 F.4th at 405. Here, that relationship demonstrates that Penn
is not acting under the federal government in operating Penn
Medicine’s patient portals.

        Penn also urges us to follow Doe I v. UPMC, No. 2:20-
cv-359, 2020 WL 4381675 (W.D. Pa. July 31, 2020). There,
based on nearly identical facts to Plaintiffs’ case, the district
court concluded that UPMC acted like a government contractor
in operating its patient portal and receiving payments under the
Program. Id. at *6. We reject the court’s holding in Doe I. A
defendant acts as a government contractor when, for example,
a manufacturer produces a product for the federal government,
doing so “under the specific supervision of . . . the
[government].” Papp, 842 F.3d at 810, 813 (finding that The
Boeing Company was a government contractor in producing a
military cargo plane for the military). But Penn’s relationship
to the federal government is nothing of the sort. It is not
producing or operating any patient portal for the government;
absent private action, the government itself would not provide
this service.

        In short, Penn fails to show that it was acting under the
federal government for purposes of § 1442(a)(1). In reaching
this holding, we join at least one of our sister circuits and many
district courts that have addressed nearly identical issues. See,
e.g., BJC Health, 89 F.4th at 1044–47 (healthcare provider did
not act under the federal government in creating and operating

                               10
its patient portal to participate in the Program); Doe v.
Washington Twp. Health Care Dist., No. 23-cv-05016-SI,
2023 WL 8438564, at *3–6 (N.D. Cal. Dec. 5, 2023) (same);
Doe v. Christ Hosp., Nos. 1:23-cv-27, 1:23-cv-31, & 1:23-cv-
87, 2023 WL 4757598, at *6–9 (S.D. Ohio July 26, 2023)
(same); Valladolid v. Mem’l Health Servs., No. 23-3007, 2023
WL 4236179, at *7–12 (C.D. Cal. June 27, 2023) (same); Doe
v. Sarah Bush Lincoln Health Ctr., No. 23-cv-2170, 2023 WL
7690179, *3–7 (C.D. Ill. Nov. 13, 2023) (same); Progin v.
UMass Mem’l Health Care, Inc., Nos. 23-cv-10113, 22-cv-
12022, & 22-cv-40154, 2023 WL 4535129, at *3–5 (D. Mass.
July 13, 2023) (same); Martin v. LCMC Health Holdings, Inc.,
No. 23-411, 2023 WL 4540547, at *3–5 (E.D. La. July 5, 2023)
(same).

                        *      *       *

        Penn fails the second requirement under § 1442(a)(1)
and is therefore not entitled to removal. The District Court thus
lacked subject-matter jurisdiction and properly remanded the
case to state court. For these reasons, we will affirm.

                               11