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NEW CHANGES TO FEDERAL JURISDICTION, VENUE, TRANSFER AND REMOVAL
On December 07, 2011, the President signed into law H.R. 394, the "Federal Courts Jurisdiction and Venue Clarification Act of 2011," which amends certain Federal laws of civil procedure related to Federal district court jurisdiction and venue of civil actions, including procedures for removal of certain actions from State courts. The new law applies to any case commenced in or removed to federal court on or after January 6, 2012. Some of these changes are discussed below.
With respect to civil cases involving multiple defendants served at different times, courts were previously split on whether the timing for removal was within thirty (30) days of the time that the first defendant was served or a full thirty days given to all defendants after that defendant is served. The new law resolves this split and adopted the more lenient view, so that each defendant has a full thirty (30) days following service to file a removal notice. See new Section 1446(b)(2)(A).
The amount in controversy to sustain diversity jurisdiction will be the amount demanded in good faith in the initial pleading, except in certain circumstances. Under the new law, a defendant must establish that the amount in controversy exceeds the jurisdictional minimum "by a preponderance of the evidence." See Section 1446(c)(2)B).
Previously, a notice of removal based on diversity jurisdiction needed to be filed no later than one (1) year after the commencement of an action. Under the new Act, a defendant can avoid the one-year time bar by showing that the plaintiff acted in bad faith to prevent removal based on diversity of citizenship. See Section 103(b)(3)(C).
The federal courts previously had discretion to hear state-law claims asserted in a case removed to federal court on the basis of federal question jurisdiction. Although a case involving both a federal question and state-law claims may still be removed to federal court, under the new law, upon removal of any civil action with both removable and non-removable claims, the District Court will sever all non-removable claims and remand them back to the State court from which the action was removed. See Section 103(a)(3).
Venue and Transfer:
The venue provisions of Title 28 have some changes. A new Section 1390 has been created under the Act which generally defines venue and distinguishes it from subject-matter jurisdiction. Note, the venue provisions following Section 1390 do not apply to admiralty or maritime cases or modify the rules for determining proper venue in removed cases.
Under the new Section 1391, venue for any civil action, whether based on federal question jurisdiction or diversity is proper in: 1) a judicial district in which any defendant resides and if all defendants reside in the State where the district is located; 2) a judicial district in which a substantial part of the event(s) or omission(s) giving rise to the action occurred, or where a substantial part of the property is located; or 3) if there is no district in which the action may be brought as provided above, then any judicial district in which a defendant is subject to the court's personal jurisdiction with respect to that action. Other than clarifying the "fallback" provision of (3) above for cases based on federal questions, the Act creates no significant changes.
The Act also provides for a new procedure for transferring venue to a forum where the parties consent that the case can be heard. The Act amends Section 1404 to allow transfer "to any district or division" to which all parties have consented, even if venue would not otherwise be proper in that district. See Section 204.
Department of Transportation Regulations Establish National Requirements For Vehicle Event Data Recorders
By Jim Garrison
Most passenger vehicles and light trucks with gross vehicle weights (GVWRs) of 8500 pounds or less manufactured in September 2012 and later with event data recorders (EDRs) are subject to new Department of Transportation regulations designed to improve accessibility to EDR information and to standardize retained data. The regulations do not require the use of EDRs.
49 C.F.R. 563 requires EDRs to record several types of motor vehicle crash event data including speed, brake status, driver safety belt status, airbag information and Delta-V (a measurement of the change in velocity crucial to determinations of the force of a collision). Manufacturers must also make EDR data retrieval tools accessible publicly.
While EDR information has been available for a number of years, the new regulations will expand that availability, standardize the format of the information, make the information more accessible and, it is hoped, make use of the information more economical.
The Supreme Court of Missouri Upholds Statutory Cap on Non-Economic Damages in Medical Malpractice Cases
By Mark Favazza
On April 3, 2012 the Supreme Court of Missouri upheld in a 5-2 decision the statutory cap on non-economic damages in medical malpractice cases under Missouri's 2005 tort reform legislation. In Sanders v. Ahmed, No. SC91492 (2012), a jury awarded Mr. Sanders $9.2 million in non-economic damages for the wrongful death of his wife who had passed away after suffering brain damage allegedly due to a change in her medication that the defendant neurologist had ordered. The trial court applied the inflation-adjusted statutory damages cap to the verdict which reduced the judgment to $632,603.82 per defendant for a total judgment of $1,265,207.64. Mr. Sanders appealed to the Supreme Court challenging the constitutionality of the damage cap.
The Supreme Court of Missouri ultimately held that because a wrongful death claim is purely a creature of statute, and not of common law, the legislature had the constitutional power to limit recovery in wrongful death actions. That is the same reasoning that the same majority of the Supreme Court used earlier in the year in another 5-2 decision (Estate of Overbey v. Franklin Nat'l Auto Sales N., LLC, No. SC91369) in which it upheld the constitutionality of punitive damages caps in statutorily created causes of action.
These decisions raise an obvious question: what will become of the damage caps when applied to common law causes of action? The narrow grounds of the Supreme Court's decisions in Sanders and Estate of Overbey have almost ensured that we will see a future challenge to the damage caps by a plaintiff who has a common law action. But any future challenge will have the difficult task of convincing a majority of the court that its 1992 decision upholding a prior version of the non-economic damages cap as applied to a common law medical malpractice action was incorrect. It's safe to say that the two dissenting justices in Sanders would overturn the 1992 decision, but a successful challenge would require two more justices to join them. Attorneys and risk management professionals can now at least count on Missouri's non-economic damages and punitive damages caps when evaluating defendants' exposure in statutorily created causes of action.
New Illinois Supreme Court Rule Allows Jurors To Question Witnesses
By Jim Garrison
Effective July 1, 2012, Illinois courts may permit jurors in civil cases to question witnesses. New Rule 343 of the Illinois Rules of Civil Procedure gives courts discretion to determine when circumstances are appropriate for jurors to submit written questions to a witness after the witness has been questioned by counsel. Jurors may not discuss the questions but may submit any number of questions for consideration by the court. Outside the presence of the jury, counsel will have an opportunity to object to proposed questions. The court will rule on any objections and, after consideration, either admit, modify or exclude the questions. The court will ask each admitted or modified question and counsel will be allowed to ask follow-up questions limited to the scope of the new testimony.
Similar rules have been adopted in other jurisdictions with the goal of improving juror comprehension, attention to the proceedings and satisfaction with jury service. At this time, Missouri does not allow juror-submitted questions.
Hand Held Cell Phones Are Out If You Are An Interstate Truck Driver
By James Bax
The United States Department Transportation recently took a significant step to alleviate what it apparently sees as a nationwide problem----use of hand held cell phone by truck drivers.
In late 2011 the U.S. Transportation Secretary announced a final rule addressing this issue. The rule specifically prohibits the use of hand held cell phones by interstate truckers and bus drivers while operating their vehicles. The rule was jointly enacted by the Federal Motor Carrier Safety Administration (FMCSA) and the Pipeline and Hazardous Materials Safety Administration (PHMSA).
The hand-held cell phone ban comes on the heels of the FMCA's ban on texting while operating a commercial truck or bus in 2010. The PHMSA likewise enacted a texting ban on intrastate hazardous material drivers in 2011.
Violators will face progressively stiffer penalties for each violation. Drivers will face fines up to $2,700.00 for each offense and possible disqualification from operating commercial vehicle for multiple offenses. Truckers will also face possible CDL revocation at the state level for 2 or more violations. Commercial trucking and bus companies will face up to $11,000.00 in penalties for allowing their employees to use hand held cell phones while operating their vehicles.
It is believed that this rule will affect as many as 4 million commercial drivers.
Commercial trucking is not the only industry in which cell phones are perceived by some as a hazard. In 2008 The Federal Railroad Administration passed similar regulations prohibiting the use of the cell phones while operating locomotives.
New Trucking Hours of Service Rules Will Impact Industry
By Ralph Godsy
The Federal Motor Carrier Safety Administration recently announced its final rule modifying the hours of service safety regulations. The new rule reduces the number of hours individual truck drivers may be on the road during a 7-day period and impacts all parties in the goods-distribution chain. Drivers will earn less due to fewer hours on the road, mixing centers and warehouses will have to adjust their hours, and trucking companies will have to hire additional drivers and incur extra training and overhead costs. Increased transportation costs will be passed on to retailers and their customers. The reduced number of overnight driving hours will force more trucks on to the road during daylight hours resulting in highways, warehouses, and retail loading zones being more congested during business hours. Trucking industry advocates state that the rule change is unnecessary as truck related fatalities and injuries are declining at a much faster rate than the decline seen among all drivers even though total truck mileage is up.
The basic driving window will not be changed by the new rule. Following a break of at least 10 hours, drivers have a 14 hour window during which they may drive up to 11 hours. Also unchanged is the maximum on-duty rule of 60 hours in 7 days or 70 hours on-duty for 8 days. On February 27, 2012 the definition of "on duty" will be amended. Time spent resting in a parked commercial vehicle will not count as "on duty." Additionally, a team driver will be able to count as "off duty" the time, up to 2 hours, spent in the passenger seat immediately before or after a period of 8 or more hours in the sleeper berth.
Beginning July 1, 2013, drivers must take a 30 minute break within the first 8 hours of a work day. Also starting July 1, 2013, drivers seeking to maximize their weekly work hours may "restart" their 60- or 70-hour on-duty clock by spending at least 34 consecutive hours off-duty. There are two limitations to the "restart". First, it must include at least two nights from 1:00 a.m. to 5:00 a.m., and second, a driver can only "restart" their 60- or 70-hour on-duty clock one time within a 168 hour (7 day) period. Limiting drivers to one 34-hour restart per seven day period has the effect of reducing the maximum time a driver can work per week from 82 hours to 70.
Despite the changes, safety advocates are unhappy with the rule change stating that a 70-hour work week is still too long.
Missouri Supreme Court Upholds Punitive Damages Cap in Statutorily-Created Cause of Action
On January 31, 2012, in a 5-2 decision, the Missouri Supreme Court handed down its opinion in Estate of Max E. Overbey, et al. v. Chad Franklin National Auto Sales North, LLC and Chad Franklin, No. SC91369. In the trial court, the Overbeys were awarded actual and punitive damages against each of two defendants who were found by a jury to have violated the Missouri Merchandising Practices Act (MMPA). The action was brought by the Overbeys pursuant to statute only. The violations of the MMPA arose from conduct involving the sale of a vehicle to the Overbeys by National Auto Sales. National Auto Sales did not appeal the judgment against it ($76,000 in actual and $250,000 in punitive damages); Chad Franklin appealed the judgment against him ($4500 in actual damages and $1 million in punitive damages [reduced by the trial court to $500,000 pursuant to §510.265 RSMo]); and the Overbeys appealed the trial court's reduction of the punitive damage award against Chad Franklin. Although the Supreme Court affirmed all of the trial court's actions in the Overbeys' statutory cause of action, finding that the legislature had a right to set limits on the substantive remedies permitted in a statutorily-created cause of action (including punitive damages), the Court left open the question of whether caps are constitutional common-law cases.
Whether the Missouri Supreme Court's majority will extend this analysis to common law causes of action may be apparent with the future issuance of its decision in the Sanders v. Ahmed, et al. case which was heard on November 2, 2011, the same day as the Overbey case. As we previously reported in Developments in the Law, the issue in Sanders is the constitutionality of medical malpractice caps.
Missouri Supreme Court rejects warrantless DWI blood test
In a case of first impression in Missouri, the Supreme Court has affirmed the suppression of a blood test taken without a search warrant in connection with a person suspected of driving while intoxicated. In so doing, the Supreme Court declined to allow the warrantless search despite the fact that blood-alcohol levels dissipate over time as a limited exception to the warrant requirement established by the U.S. Supreme Court in 1966 in the landmark case of Schmerber v. California. Affirming the trial court's decision to suppress the blood draw evidence in State v. McNeely, the Supreme Court ruled that a warrantless blood draw taken without the consent of an unwilling, suspected drunk driver in a routine DWI stop was an unconstitutional search in violation of the Fourth Amendment because there were no "exigent circumstances under which the time needed to obtain a warrant would endanger life, allow a suspect to escape or risk the destruction of evidence." The Court said special circumstances must exist, such as the officer's involvement in a lengthy accident-scene investigation, to order a warrantless blood test. As there exists a split in how states have interpreted the Schmerber ruling on warrantless blood tests, a plan to appeal to the U.S. Supreme Court is anticipated.
Arizona's Approach Differs from Missouri's in Allowing Railroad to Obtain FELA Plaintiff's Medical Records
On December 29, 2012, the Arizona Court of Appeals, Division 1, declined to follow the reasoning of two California appellate decisions in which the trial court's granting of protective orders to railroad employees was upheld, thereby exempting the employees from submitting work-related medical information required under the Collective Bargaining Agreement (CBA) to the railroad employer, while their FELA cases were pending in state court. In State ex. rel. BNSF Railway Company v. Buttrick, 1 CA-SA11-0227, the Court vacated the trial court's protective order denying BNSF access to the CBA-required medical information from the employee, finding that the CBA grants the railroad certain rights (to obtain work-related information from the employee and holding a disciplinary hearing, if the employee fails to provide it), which exist even during the discovery process of a civil FELA lawsuit. While recognizing that the Arizona courts have broad powers to control their own proceedings, the Court held that those powers do not extend to control independent proceedings conducted under the Railway Labor Act. The Court further held that there was no need to examine the distinction drawn in federal preemption case law between "major" and "minor" disputes under the Act, the approach taken by the Missouri Supreme Court in Ex. Rel. Union Pacific Railroad Co. v. Dierker, 961 S.W.2d 816 (Mo 1998), where a similar conclusion was reached finding that protective orders against compelled submission of medical records exceeded the state trial court's jurisdiction.
Healthcare Reform Court Challenge Update
The U.S. Supreme Court has scheduled oral argument on the Constitutionality of certain portions of the Patient Protection and Affordable Care Act of 2010 for March 26-28, 2012. In an unprecedented move the Court has allotted five and half hours for argument over the three days. Typically the Court allows one hour for argument per case.
One of the issues before the Court is whether the challenge is premature as to that portion of the Act which imposes a fine for not participating in the program. The Court will also hear arguments regarding whether Congress can require individuals to have mandatory health coverage and whether Congress can require states to participate in the reforms mandated by the Act by threatening to cut off federal funds for failing to participate.
A decision is expected before the Supreme Court convenes in June.
Illinois Supreme Court Clarifies Design Defect Duty
By Jim Garrison
The Illinois Supreme Court recently reversed a $43,000,000 jury verdict from Madison County which had been affirmed by the Fifth District Appellate Court. The September 22, 2011, Supreme Court decision in Jablonski v. Ford Motor Co., 2011 IL 110096 clarified the proper duty analysis in negligence actions claiming product design defects.
The Jablonski case arose out of a tragic automobile accident in which the Lincoln Town Car of John, Jr. and Dora Mae Jablonski was rearended at high speed while stopped in a construction zone. The Town Car caught fire, killing Mr. Jablonski and seriously injuring his wife. Evidence was presented at trial indicating that a large wrench in the trunk of the Town Car punctured the gas tank during the collision, causing the fire. The case was tried against the manufacturer of the Town Car on the theory that the gas tank was negligently designed. It was claimed that the tank was improperly located aft of the rear axle without adequate shielding and that Ford's negligence constituted willful and wanton conduct worthy of punitive damages. The verdict included punitive damages of $15,000,000.
In reversing the verdict, the Supreme Court clarified that in determining the extent of the duty of a manufacturer to design a safe product in a negligence case a court must weigh the risks inherent in the product design against the utility or benefit derived from the product. It is incumbent on the trial court to initially balance the risks and benefits to determine whether the facts in evidence warrant submission to the jury. Only after that initial determination is the jury asked to weigh the evidence and determine whether the defendant acted unreasonably.
After analyzing the trial evidence, the Supreme Court determined that there was insufficient evidence to submit the case to the jury. The Court noted that Ford had met and exceeded the industry standard for fuel system integrity, the risk of injury was remote and that plaintiffs' evidence of alternative designs was inadequate. Contrary to the determinations of the trial court and appellate court, the case was simply too weak to present to a jury.
Federal Healthcare Law Update
The U.S. Supreme Court has decided to hear constitutional challenges being raised regarding the 2010 Affordable Care Act.
There have been numerous changes to the Act in which a majority of the Appellate Courts that have ruled found that the Act passes constitutional muster. Of those judges that have found parts of the law invalid, no appellate court judge has found that the entire law is unconstitutional.
The primary challenge to the Act is whether the federal government can compel individuals to purchase healthcare insurance and if so, what are the limits on the power of the government to compel individuals to do other things, such as to purchase only American made products?
These types of questions raise the issue of how far the Federal Government can impose its Will on individuals and restrict the right of individuals to choose whether to participate. Similar questions were raised when Social Security and Medicare were enacted.
A decision is expected before the November 2012 elections
Constitutionality of Medical Malpractice Caps Comes Under Fire in Missouri Supreme Court Argument
On November 2, 2011, the Missouri Supreme Court heard argument in Sanders v. Ahmed, et al. In the appeal, Sanders contends that a trial court's reduction of a non-economic damage jury award was unconstitutional. The argument was that the reduction of damages deprived Sanders of a right to jury trial in that he was unable to recover the full amount of the jury's verdict and that Section 538.210 RSMo 1986 is a violation of the constitutional guarantee of separation of powers. Ahmed's response was that there was no substantive common law right to a determination of damages under the Seventh Amendment and that the legislature can limit a damage award.
Ahmed also filed a cross-appeal and claims, among other things, that the verdict should have been reduced by amounts Sanders received in settlements from co-defendants in the case and that his client should have been permitted to make periodic payments of the award of future non-economic damages, since a timely request to do so was made. Sanders' response was that in order to have received such credit, Ahmed must have made an appropriate request in his pleadings and that the denial of the request to make periodic payments was proper because the statutory provision allowing for periodic payments is unconstitutional.
Although a decision on these issues was expected in December, 2011, none has been issued.
Recent RRB Opinion May effect FELA Outcomes
In the summer of 2010 the U.S. Railroad Retirement Board ("RRB") issued a legal opinion that may have far reaching implications for damages in FELA cases. In its formal opinion (No. L-2010-04) the RRB confirmed that jury verdicts in FELA injury cases brought against railroad employers which include compensation for time lost from work by the employee that lost time compensation is "creditable income" for railroad retirement purposes and is thus taxable upon satisfaction of any FELA judgment by a railroad. Also of significance in this opinion the RRB indicated that railroad employees who have been receiving an RRB disability annuity may be subject to having to repay the RRB for benefits received for the same time period as that covered by their favorable jury verdicts upon satisfaction of a judgment which covers the same time period as the verdict for time lost to avoid an overpayment to the employee. Employees receiving a disability annuity covering time lost from work who receive an FELA judgment for the same lost earnings may need to be concerned about double recovery. Boyle Brasher LLC is cooperating with the railroad industry and its clients to fully understand the ramifications of this RRB opinion.
Railroad's Right to Bring Counterclaim against FELA Plaintiffs
By Tom Bell
Four (4) federal appellate courts agreed in earlier opinions that the FELA does not prevent a railroad from filing a counterclaim against an injured employee for damages caused by the employee's negligence. In December, 2010, however, the 7th Circuit Court of Appeals (Illinois) upheld a lower court's decision granting a Jones Act Plaintiff's motion to dismiss an employer's counterclaim against its employee. Although Boyle Brasher has most recently prevailed for its client on FELA plaintiff's' motions to dismiss this type of counterclaim in Illinois state courts, this issue will remain a hot topic and battleground. The plaintiffs' argument is typically that a counterclaim is a "device" that dampens the claimants' rights under the FELA. Boyle Brasher LLC has countered successfully with the assertion that the FELA has not abrogated a defendant's right to pursue a counterclaim against the FELA plaintiff.
Recent Trends in Medical Malpractice Cases
Boyle Brasher LLC's most recent experience in medical malpractice cases has been that 70% of the cases are either dismissed or result in defendant's verdict. The trend has been towards an increased number of cases being dismissed. Of the last 21 medical malpractice cases assigned by various insurance carriers to me, 14 of these cases have resulted in dismissals. Some of these cases have been dismissed early in the process with little expense. Some of the cases had to be prepared and developed almost to the point of trial. Many of these cases have been dismissed because Boyle Brasher LLC has convinced the plaintiff's attorney that we are willing to try the case and have obtained convincing expert testimony that persuades plaintiff's counsel not to undertake the expense and the risk of losing.
Secondhand Asbestos Exposure Liability
By Linda Self
State courts nationwide have reached conflicting conclusions on whether employers or premises owners have a legally cognizable duty to protect a non-employee spouse or other relatives from secondhand asbestos exposure, so called "take home" exposure cases. Illinois is an example of a jurisdiction in which uncertainty continues to beleaguer defendants. While the Appellate Court for the Second District has refused to extend a premises owner's duty to non-employees who were never present on the premises, the Illinois Appellate Court for the Fifth District a year later extended an employer's duty to include immediate family members of employees, while not expressly limiting the duty to only those family members. This ruling left open the question of just how far and to whom an employer premises owner's duty extends. The case out of the Illinois Fifth District is currently before the Illinois Supreme Court. Boyle Brasher LLC is closely monitoring court decisions nationwide and evaluating the potential impact of those decisions on its clients as it awaits the Illinois Supreme Court ruling.
FRA Draft Model State Safety Statute
In February 2011, the Federal Railroad Administration (FRA), the agency with jurisdiction over railroad safety, issued a draft model law for states to consider adopting in regards to a motorist's obligation upon approaching a railroad grade crossing. The new model law is intended to establish uniform nationwide grade crossing laws in an effort to prevent collisions and casualties to motorists and their passengers. The draft model law is available on the FRA website at fra.dot.gov. In-house counsel, trade association attorneys, and attorneys with practices in the area of railroad casualty law will be interested in following efforts by states' legislators to enact the model law.
Federal Railroad Safety Act and OSHA
An amendment to the Federal Railroad Safety (FRSA) known as the "Whistleblower Act" delegated power to the Occupational Safety and Health Administration (OSHA) to enforce the provisions of the Act against railroads. Recently, OSHA has been focusing on claims of alleged intimidation or retaliation by employers against their employees for reporting personal injuries which is covered under the Act. Many of these OSHA whistleblower cases are based on the mere fact that the employer has enforced its safety rules and found a violation by its employee after a claim for personal injury. Traditionally, jurisdiction for these types of disputes, whether disciplinary actions for violations of safety rules were appropriate, were handled by the Railway Labor Board and still are. However, OSHA can concurrently pursue the same matter and can award actual damages, reinstate employment, back pay with interest, attorneys' fees, costs and punitive damages up to $250,000.00. Although these cases appear to begin as fairly routine administrative procedures, it has been Boyle Brasher LLC's experience that they are best prepared from the beginning anticipating the worst case scenario, i.e. the award of significant damages. Administrative awards by OSHA have ranged from $200,000 to $500,000. In cases where OSHA has failed to act and the plaintiff files suit in a U.S. District Court, verdicts have been returned in excess of $1 million. There are, of course, avenues of appeal. However, it is imperative that employers recognize that to achieve the best possible outcome a whistleblower case must be thoroughly investigated and prepared from the beginning in anticipation that following the administrative process there could well be a need for a trial de novo and/or possible appeal.
Petrillo Doctrine Revisited in Appellate Opinion Involving Contact by Physicians in Group Sued for Medical Malpractice with Other Members of the Same Group
Under the well known Petrillo Doctrine, Illinois defense counsel cannot contact healthcare providers of plaintiff. The Petrillo rule can provide some complicated situations in the medical malpractice setting. In a recent case, Aylward v. Settecase, 2011 WL 1679845 (Ill.App. 1 Dist.), the Illinois Court of Appeals for the First District held that a physicians' group that was being sued for malpractice could not contact physicians who were members of the group who were not named in the lawsuit. The case appears to have serious implications for any entity that defends medical malpractice cases and how they defend themselves.
However, the facts of Alyward somewhat limit the impact of its holding. In Alyward the plaintiff was diagnosed with cancer, and he claimed that his treating physician failed to diagnose the cancer. Plaintiff sued the doctor and the medical group that employed him. The medical group in defending the suit wanted to speak to other doctors in the group. Prior to the court hearing on whether the medical group would be allowed to proceed to contact its other members, plaintiff amended his complaint to clarify he was suing the medical group because of the conduct of the defendant physician, not because of the acts of other servants or employees. Illinois case law has established that a hospital or other healthcare entity can have contact with employees for whose conduct the hospital or entity is alleged to be liable. The Alward opinion does nothing to change that law. However, by limiting his complaint plaintiff made clear that he was not claiming the actions of the other employees of the medical group were the source of his cause of action.
The implications of this case should be carefully reviewed when defending lawsuits against medical groups, hospitals, or other healthcare entities.