This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2004).
STATE OF MINNESOTA
IN COURT OF APPEALS
Metropolitan Property and Casualty Insurance Company,
Full Circle Physical Therapy, Inc., et al.,
Minnesota Institute of Neurology, P.A., et al.,
Twin Cities Open MRI, Inc., et al.,
Filed December 19, 2006
Affirmed in part, reversed in part, and remanded
Hennepin County District Court
File No. MC 04-7118
Michael W. Lowden, The Lowden Law Firm, L.L.C., 5001 American Boulevard West, Suite 670, Bloomington, MN 55437 (for appellant)
Charles J. Lloyd, Livgard & Rabuse, P.L.L.P., 2520 University Avenue Southeast, Suite 202, Minneapolis, MN 55414 (for respondents Full Circle Physical Therapy, Inc., et al.)
John B. Wolfe, Jr., 406 Spruce Tree Center, 1600 University Avenue, St. Paul, MN 55104 (for respondents Minnesota Institute of Neurology, P.A., et al.)
Considered and decided by Kalitowski, Presiding Judge; Lansing, Judge; and Dietzen, Judge.
Appellant challenges the district court order (1) denying its claim that respondents provided physical therapy services in violation of the corporate-practice-of-medicine doctrine and the Minnesota Professional Firms Act, and, therefore, its services are not compensable under Minnesota’s No-Fault Act; and (2) dismissing, sua sponte, its claims of no-fault fraud, civil theft-by-swindle, and conspiracy to commit fraud, arguing that the district court abused its discretion. Because we conclude that the district court properly applied the law in denying appellant’s first claim, we affirm in part. But because we conclude that the district court abused its discretion in dismissing, sua sponte, appellant’s other claims, we reverse in part and remand.
Appellant Metropolitan Property & Casualty Insurance Co. (Metropolitan) sells auto insurance in Minnesota and provides no-fault medical expense benefits for policies of automobile insurance sold in the state pursuant to the Minnesota No-Fault Act, Minn. Stat. § 65B.41-.71 (2004). Respondents are medical clinics (clinics) that provide, inter alia, MRI imaging, chiropractic, massage, physical therapy services, and neurology medicine. The clinics are all located in the same building.
Starting in 2002, Metropolitan investigated five insurance claims that involved treatment provided by the clinics. All of the claims involved automobile accidents, many of which were low-velocity accidents. Based on its investigation, Metropolitan concluded that the clinics self-referred patients to each other and ordered various types of medical treatment without justification.
May 2004, Metropolitan brought suit against the clinics, asserting that the
clinics provided medical services in violation of the corporate-practice-of-medicine
doctrine and contrary to the Minnesota Professional Firm Act, Minn. Stat.
§ 319B.02, subd. 19 (2004).
Metropolitan further alleged that the clinics engaged in fraudulent
conduct, theft-by-swindle, and conspiracy to commit fraud. For its remedy, Metropolitan sought recovery
of the no-fault benefits it paid to the clinics on the basis that the clinics’ medical
services were not compensable under
When the clinics failed to answer the complaint, Metropolitan moved for default judgment. The district court denied the motion and issued a scheduling order. Subsequently, Metropolitan brought a second motion for default judgment, arguing that the clinics had failed to answer the complaint or comply with the scheduling order. The clinics argued that Metropolitan had abandoned the case and had not sought any discovery. Following arguments, the district court granted a default judgment for Metropolitan and ordered that the determination of damages be postponed, pending the outcome of a case then pending in the Minnesota Supreme Court, Isles Wellness, Inc. v. Progressive N. Ins. Co.
September 2005, the supreme court filed its decision in Isles Wellness. 703 N.W.2d
The district court,
relying on Isles Wellness, held that the
corporate-practice-of-medicine doctrine did not apply to two of the clinics,
D E C I S I O N
appeal, Metropolitan argues that
acknowledges that the recent case of Isles
Wellness is directly on point. In Isles Wellness, a massage therapy clinic,
a physical therapy clinic, and a chiropractic clinic, all of which were owned by
a non-licensed professional, filed complaints against two insurance companies
alleging breach of contract and unfair claims practices in connection with
unpaid bills for treatment provided by the clinics. Isles
Wellness, Inc. v. Progressive N. Ins. Co., 703 N.W.2d 513, 515 (
Metropolitan nonetheless argues that as a matter of public policy, this court should apply the corporate-practice-of-medicine doctrine to physical therapists. Metropolitan contends that because physical therapists are members of a state-licensed and regulated profession, they should be governed by the corporate-practice-of-medicine doctrine. Also, both the American Physical Therapy Association (APTA), a national physical therapy organization, and the Minnesota Board of Physical Therapy (MBPT), the state licensing agency for physical therapists, have adopted guidelines indicating that physical therapy clinics should be exclusively owned and operated by licensed physical therapists. Metropolitan argues that this court should follow the guidelines adopted by the APTA and the MBPT and apply the corporate-practice-of-medicine doctrine to physical therapists.
But we conclude
that the decision in Isles Wellness is
dispositive of this issue and binding on this court. Thus, we reject appellant’s invitation that
as a matter of public policy, we apply the corporate-practice-of-medicine to
physical therapists. See Sefkow v. Sefkow, 427 N.W.2d 203,
argues that the district court erred by dismissing, sua sponte, and without
notice to either party, the fraud and theft-by-swindle claims for failure to
plead them with particularity. Minn. R.
Civ. P. 9.02 states that “[i]n all averments of fraud or mistake, the
circumstances constituting fraud or mistake shall be stated with particularity.”
“Malice, intent, knowledge, and other
conditions of mind of a person may be averred generally.”
states that “[t]he court may upon its own initiative, or upon motion of a
party, and upon such notice as it may prescribe, dismiss an action or claim for
failure to prosecute or to comply with these rules or any order of the court.” Rule 41.02 “is designed to let the [district]
court manage its docket and eliminate delays and obstructionist tactics by use
of the sanction of dismissal . . . . In
other words, Rule 41.02(a) permits dismissal for trial management reasons, not
for lack of substantive merits of a claim.” Lampert
Lumber Co. v. Joyce, 405 N.W.2d 423, 425 (
The clinics argue
that Alho v. Sterling, 266
Thus, the dismissal in this case was not based on Metropolitan’s failure to comply with an order for a more definite statement. In the absence of a motion by the clinics or a procedural violation that implicates the court’s power to supervise and manage its docket, the district court’s dismissal was unauthorized. Therefore, we reverse in part and remand.
Affirmed in part, reversed in part, and remanded.
 For ease of reference we will refer to Metropolitan’s claims that the clinics provided medical services in violation of the corporate-practice-of-medicine doctrine and contrary to the Minnesota Professional Firms Act collectively as its corporate-practice-of-medicine claim.