Health Reform WK-EDGE Long-arm statute doesn’t reach parent company in ACA litigation
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Friday, March 30, 2018

Long-arm statute doesn’t reach parent company in ACA litigation

By Bryant Storm, J.D.

The business activity of a subsidiary is insufficient, on its own, to demonstrate that its parent company "transacted business" in the state of Georgia. A district court held that a complaint failed to establish personal jurisdiction over nonresident corporations in a case alleging that parent holding companies—Quorum Health Corporation and Community Health Systems, Inc.—violated Title I of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) (Patterson v. Community Health Systems, Inc., March 21, 2018, Land, C.).

Business in Georgia. The court held that the exercise of minimal operational control over a Georgia subsidiary did not constitute the transaction of business for purposes of Georgia’s long-arm statute. The court determined that Quorum and Community Health Systems are separate and distinct legal entities from their Georgia subsidiaries, with no control over the internal business operation of the subsidiaries.

Complaint. The court noted that the complaint failed to identify the amount of earnings, the extent of operational control, or the presence of policies that the parent companies derive or impose on their subsidiaries. Accordingly, the court granted the parent companies’ motion to dismiss the complaint.

The case is No. 3:17-CV-76 (CDL).

Attorneys: Andrew Rozynski (Eisenberg & Baum, LLP) for Christopher Patterson. Heather L. Ware (Hall Booth Smith, PC) for Clearview Regional Medical Center. Hall F. McKinley, III (Drew Eckl & Farnham LLP) for CHSPSC, LLC and Community Health Systems Inc.

Companies: Clearview Regional Medical Center; CHSPSC, LLC; Community Health Systems Inc.; Quorum Health Corporation

Cases: CaseDecisions GeneralNews GeorgiaNews

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