Thomas G. Stayton
Nancy G. Tinsley
Baker & Daniels
Indianapolis, IN    
            

Attorneys for Appellees

Susan Williams
Brown, Todd and Heyburn
New Albany, IN

Ethan M. Posner
Covington & Burling
Washington, D.C.

Appellants (Plaintiffs below                                  ),

                                                               

TENET HEALTHCARE CORPORATION, f/k/a National Medical Enterprises, Inc., f/k/a Psychiatric Institutes of America et al.,
Appellees (Defendants below).

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)    Supreme Court No.
)    10S01-9909-CV-501
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)    Court of Appeals No.    
)    10A01-9807-CV-243
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    On February 16, 1996, 40 of the Defendants moved to dismiss the claims for lack of personal jurisdiction. Included among these Defendants was Tenet (the parent corporation), National Medical Enterprises Hospitals, Inc., and National Medical Enterprises Psychiatric Properties, Inc., which are two wholly-owned subsidiaries of Tenet, and 37 providers. After discovery and a hearing on the m otion to dismiss, the trial court granted the motion with respect to Tenet, NME Hospitals, and NME Psychiatric Properties. Anthem appealed the dismissal of Tenet and NME Hospitals. See footnote The Court of Appeals affirmed the dismissal of Tenet, but reversed the dismissal of NME Hospitals. See Anthem Insurance Cos. v. Tenet Healthcare Corp., 709 N.E.2d 1060, 1069 (Ind. Ct. App. 1999). Judge Robb dissented, believing that there were sufficient contacts to establish general personal jurisdiction over Tenet. Id. at 1069-70. This Court granted transfer to clarify the criteria for evaluating personal jurisdiction questions and the standard for reviewing trial court personal jurisdiction decisions.

Indiana’s statute is an “enumerated act” statute. Typically, under such a statute, courts must proceed with a two-step analysis. First, the court must determine if the defendant’s contacts with the forum state fall under the long-arm statute. See footnote Second, if they do, the court must then determine whether the defendant’s contacts satisfy federal due process analysis.

The Court of Appeals has frequently recited “‘that Indiana Trial Rule 4.4 is intended to extend personal jurisdiction of courts sitting in this state . . . to the li mits permitted under the Due Process Clause of the Fourteenth Amendment.’” Griese-Traylor Corp. v. Lemmons, 424 N.E.2d 173, 179 (Ind. Ct. App. 1981) (quoting Valdez v. Ford, Bacon & Davis, Texas, Inc., 62 F.R.D. 7, 14 (N.D. Ind. 1974)), transfer denied; accord Conseco, Inc. v. Hickerson, 698 N.E.2d 816, 818 (Ind. Ct. App. 1998); Yates-Cobb v. Hays, 681 N.E.2d 729, 732 (Ind. Ct. App. 1997); North Texas Steel Co. v. R.R. Donnelley & Sons Co., 679 N.E.2d 513, 518 (Ind. Ct. App. 1997), transfer denied; Torborg v. Fort Wayne Cardiology, Inc., 671 N.E.2d 947, 949 (Ind. Ct. App. 1996); Rosowsky v. University of Colorado, 653 N.E.2d 146, 148 (Ind. Ct. App. 1995), transfer denied; Fidelity Financial Servs., Inc. v. West, 640 N.E.2d 394, 397 (Ind. Ct. App. 1994); Brokemond, 612 N.E.2d at 145; Freemond v. Somma, 611 N.E.2d 684, 688 (Ind. Ct. App. 1993), transfer denied. The majority of these opinions then proceed directly to a discussion of the limits of federal due process and the accompanying federal and state case law without first determining whether the conduct in question falls under Indiana Trial Rule 4.4(A). See Hickerson, 698 N.E.2d at 818; Yates-Cobb, 681 N.E.2d at 732; North Texas Steel, 679 N.E.2d at 518; Torborg, 671 N.E.2d at 949; Brokemond, 612 N.E.2d at 145; Griese-Traylor, 424 N.E.2d at 180.

Although the result in many of these cases would likely have been the same, this one-step analysis has the effect of ignoring T.R. 4.4(A). See footnote , See footnote If the Ind iana long-arm statute were intended to be coextensive with the limits of personal jurisdiction under the Due Process Clause, it could be written with general language, such as the “any constitutional basis” statutes used in several other states. Most courts with “enumerated act” statutes, and indeed the correct approach under Indiana Trial Rule 4.4(A) is to, engage in a two-step analysis, first determining whether the conduct falls under the long-arm statute and then whether it comports with the Due Process Clause as interpreted by the United States Supreme Court and courts in this state. See Mart v. Hess, 703 N.E.2d 190, 192-93 (Ind. Ct. App. 1998); Fidelity Financial, 640 N.E.2d at 396-97; Lee, 635 N.E.2d at 215-16; see also FMC Corp. v. Varonos, 892 F.2d 1308, 1310 (7th Cir. 1990); Joseph M. Coleman & Assocs., Ltd. v. Colonial Metals, 887 F. Supp. 116, 118-19 n.2 (D. Md. 1995); Green v. Advance Ross Elecs. Corp., 427 N.E.2d 1203, 1206-07 (Ill. 1981); Lincoln v. Seawright, 310 N.W.2d 596, 599-600 (Wis. 1981).

Indiana Trial Rule 4.4(A) provides:
Acts Serving as a Basis for Jurisdiction. Any person or organization that is a nonresident of this state, a resident of this state who has left the state, or a person whose residence is unknown, submits to the jurisdiction of the courts of this state as to any action arising from the following acts committed by him or her or his or her agent:
(1) doing any business in this state;
(2) causing personal injury or property damage by an act or omission done within this state;
(3) causing personal injury or property damage in this state by an occurrence, act or omission done outside this state if he regularly does or solicits business or engages in any other persistent course of conduct, or derives substantial revenue or benefit from goods, materials, or services used, consumed, or rendered in this state;
(4) having supplied or contracted to supply services rendered or to be rendered or goods or materials furnished or to be furnished in this state;
(5) owning, using, or possessing any real property or an interest in real property within the state;
(6) contracting to insure or act as surety for or on behalf of any person, property or risk located within this state at the time the contract was made;
(7) living in the marital relationship within the state notwithstanding subsequent departure from the state, as to all obligations for alimony, custody, child support, or property settlement, if the other party to the marital relationship continues to reside in the state; or
(8) abusing, harassing, or disturbing the peace of, or violating a protective or restraining order for the protection of, any person within the state by an act or omission done in this state, or outside this state if the act or omission is part of a continuing course of conduct having an effect in this state.

If a person’s contacts with Indiana fall into any of the eight categories described above, Trial Rule 4.4(A) is satisfied.

The United States Supreme Court has addressed the issue of general personal jurisdiction in two cases, Perkins v. Benguet Consolidated Mining Co., 342 U.S. 437, 447-49 (1952), and Helicopteros, 466 U.S. at 414-15. In Perkins, the Court firmly established that personal jurisdiction over a defendant for a cause unrelated to the defendant’s contacts with the forum state may exist if the contacts are “substantial, . . . continuous and systematic.” 342 U.S. at 446-47. The Court looked at the strength and length of the contacts with the forum state to determine that a Philippine corporation could be sued in Ohio for a cause of action unrelated to its Ohio contacts when the corporation had its temporary headquarters in Ohio and had been conducting all of its activities in Ohio since the outbreak of World War II. Id. at 448. In Helicopteros, the Supreme Court determined that a Columbian aviation services company was not subject to general personal jurisdiction in Texas courts when its contacts with Texas were the Columbian company’s continuous purchasing activity and accompanying training. Id. at 416. The Court further made clear that the contacts required for general personal jurisdiction were greater than those needed to establish specific personal jurisdiction. See Helicopteros, 466 U.S. at 414-15.

The Indiana Court of Appeals has also addressed what contacts are necessary to obtain general personal jurisdiction over a defendant in Indiana. In North Texas Steel Co. v. R.R. Donnelley & Sons Co., 679 N.E.2d 513, 519 (Ind. Ct. App. 1997), transfer denied, the court, in determining that no general personal jurisdiction existed over the defendant, discussed some contacts that may constitute general personal jurisdiction, including: (1) direct advertising and solicitation of Indiana residents, (2) offices in Indiana, (3) employees in Indiana, (4) agents in Indiana, and (5) property in Indiana. See footnote The court also noted that “[c]ourts are more demanding when jurisdiction is sustained only on a basis of general jurisdiction.” Id. at 518. This echoed Brokemond v. Marshall Field & Co., 612 N.E.2d 143 (Ind. Ct. App. 1993), where the court stated that if the defendant’s contacts with a forum state were unrelated to the lawsuit, they “must be fairly extensive to confer jurisdiction.” Id. at 145. In that case, the court determined that advertising, delivering merchandise, collecting Indiana sales tax, and distributing credit cards in Indiana were insufficient to obtain general personal jurisdiction over the defendant. Id. at 146. In sum, an Indiana court has general jurisdiction over a defendant if the defendant’s contacts with Indiana are substantial, continuous, extensive, and systematic, which Indiana courts have interpreted to include, among other things, having offices in Indiana, being incorporated in Indiana, and having employees in Indiana.

Contacts are “acts physically performed in the forum state and acts performed outside the forum state that have an effect within the forum.” Moore et al., supra, § 108.42[2][a]. The Supreme Court has held that a single contact with a forum state may be enough to establish specific personal jurisdiction. In McGee v. International Life Insurance Co., 355 U.S. 220 (1957), the defendant, an Arizona life insurance company, sold an insurance policy to plaintiff’s son, a California resident. Id. at 221-23. The policy was renewed through the mail, but the defendant had no offices in California and had not conducted any other business in California. The Supreme Court stated that a single act can support jurisdiction so long as it creates a “substantial connection” with the forum state and the suit is based on that connection. See id. at 223. However, the act must be purposeful, not a “random, fortuitous, or attenuated contact[], or . . . the unilateral activity of another party or a third person.” Burger King, 471 U.S. at 475 (citations and internal quotations omitted).

As the foregoing suggests, the analysis of the contacts for specific personal jurisdiction is determined on a case-by-case basis. See Mart, 703 N.E.2d at 192-93 (jurisdiction existed where former wife sent defamatory letters to ex-husband’s new wife’s workplace, but had no visits or other contact with Indiana); North Texas Steel, 679 N.E.2d at 519 (specific personal jurisdiction existed where the defendant had manufactured and shipped its product to Indiana for use by an Indiana company); Harold Howard Farms v. Hoffman, 585 N.E.2d 18, 20-22 (Ind. Ct. App. 1992) (Michigan horse breeder’s advertisement in Michigan journal that Indiana horse breeder received, and telephone calls and business trips to Indiana were insufficient to establish personal jurisdiction); Baseball Card World, Inc. v. Pannette, 583 N.E.2d 753, 755-56 (Ind. Ct. App. 1991) (no jurisdiction where Pennsylvania card business’s contacts with Indiana were phone conversations with Indiana company and mailing checks to Indiana company), transfer denied; Woodmar Coin Ctr., Inc. v. Owen, 447 N.E.2d 618, 620-21 (Ind. Ct. App. 1983) (jurisdiction existed where defendant initiated relationship with Indiana resident with two out-of-state phone calls, and substantial negotiations and a contract were made with the Indiana resident), transfer denied.

Things to consider when evaluating the defendant’s contacts with the forum state are: (1) whether the claim arises from the defendant’s forum contacts, (2) the overall contacts of the defendant or its agent with the forum state, (3) the foreseeability of being haled into court in that state, (4) who initiated the contacts, and (5) whether the defendant expected or encouraged contacts with the state. In sum, when evaluating issues of specific personal jurisdiction, the court must examine the quality and nature of the activities taking place within the state to determine if they are related to the basis of the lawsuit and the result of deliberate conduct by the defendant. See Fetner v. Maury Boyd & Assocs., Inc., 563 N.E.2d 1334, 1337 (Ind. Ct. App. 1990), transfer denied.

The United States Supreme Court has set out five factors that must be balanced to determine whether the assertion of jurisdiction is reasonable and fair. They are: “(1) the burden on the defendant; (2) the forum State’s interest in adjudicating the dispute; (3) the plaintiff’s interest in obtaining convenience and effective relief; (4) the interstate judicial system’s interest in obtaining the most efficient resolution of controversies; and (5) the shared interest of the several States in furthering fundamental substantive social policies.” Burger King, 471 U.S. at 476-77 (numbering added) (citations and internal quotations omitted). These interests must be balanced and weighed to make certain that asserting jurisdiction is fair in a particular case.

This analysis only occurs if there are sufficient contacts first to establish jurisdiction. See World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 294 (1980). However, the Supreme Court made clear in Asahi Metal Industry Co. v. Superior Court, 480 U.S. 102, 116 (1987), that the fairness inquiry is separate from the contacts question and may be used to defeat jurisdiction even if the defendant has sufficient contacts with the forum state. Id. at 121-22 (“[T]his case fits within the rule that ‘minimum requirements inherent in the concept of fair play and substantial justice may defeat the reasonableness of jurisdiction even if the defendant has purposefully engaged in forum activities.’”) (Stevens, J., concurring) (quoting Burger King, 471 U.S. at 477-78). After the plaintiff establishes that there are minimum contacts, the defendant then carries the burden of proving that asserting jurisdiction is unfair and unreasonable. See Burger King, 471 U.S. at 477 (“[W]here a defendant who purposefully has directed his activities at forum residents seeks to defeat jurisdiction, he must present a compelling case that the presence of some other considerations would render jurisdiction unreasonable.”)

These same interests have been recognized by the Indiana Court of Appeals. See North Texas Steel, 679 N.E.2d at 519; Fidelity Financial, 640 N.E.2d at 398-99; Brokemond, 612 N.E.2d at 146. To determine if the exercise of personal jurisdiction is reasonable in a particular case, the Court of Appeals has also looked at “‘the relationship among the defendant, the forum, and the litigation,’” the preservation of constitutional principles of interstate federalism, and the existence of an alternative forum to hear the dispute. Greise-Traylor, 424 N.E.2d at 180 (quoting Shaffer, 433 U.S. at 204).

“Judicial discretion is the option which the judge may exercise between the doing and the not doing of a thing, the doing of which cannot be demanded as an absolute right of the party asking it to be done.” McFarlan v. Fowler Bank City Trust Co., 214 Ind. 10, 14, 12 N.E.2d 752, 754 (1938). “Discretion, in its true sense, then, contemplates situations where the court upon finding certain facts or circumstances may, rather than must, act in a prescribed fashion.” 4A Kenneth M. Stroud, Indiana Practice § 12.8 (2d ed. 1990) (emphasis in original). The existence of personal jurisdiction over a defendant is a constitutional requirement to rendering a valid judgment, mandated by the Due Process Clause of the Fourteenth Amendment. Personal jurisdiction is a question of law and, as such, it either exists or does not. See North Texas, 679 N.E.2d at 519; Freemond, 611 N.E.2d at 687. The question of its existence is not entrusted to a trial court’s discretion.

The Court of Appeals in this case relied on Mid-States Aircraft Engines, Inc. v. Mize Co., 467 N.E.2d 1242, 1247 (Ind. Ct. App. 1984), as the basis of its abuse of discretion standard of review. In that case, the court stated that “[t]he procedure by which a trial court reaches its decision on a T.R. 12(B)(2) challenge to in personam jurisdiction is within the sound discretion of the trial court.” Id. (emphasis added). However, the issue here is not the procedure used by the trial court, but the result reached by the trial court. The Court of Appeals and indeed, this Court, evaluate questions of law de novo and owe no deference to a trial court’s determination of such questions. See Stroud, supra, § 12.3, Budden v. Board of School Comm’rs, 698 N.E.2d 1157, 1160 (Ind. 1998). Therefore, the de novo standard is employed when appellate courts review questions of whether personal jurisdiction exists. See footnote

It is worth pausing to distinguish between findings of fact and conclusions of law in this context. The legal question of whether personal jurisdiction exists given a set of facts is reviewable de novo. However, the presence of personal j urisdiction is based on the existence of jurisdictional facts. When determining these facts, the trial court is performing its classic fact-finding function, often evaluating the character and truthfulness of witnesses, and is in a better position to determine these issues than a reviewing court. For this reason, a trial court’s findings of jurisdictional facts are generally reviewed for clear error. See Fidelity Financial, 640 N.E.2d at 396. See footnote Because the Court of Appeals used the incorrect standard of review to evaluate the legal issue of whether the trial court had jurisdiction over Tenet and NME Hospitals, we must now reevaluate those issues.

Tenet’s activities, including several business trips to Indiana and transactions with Indiana businesses, including law firms, storage companies, and computer companies, clearly satisfy this requirement. See footnote

Next, we must review whether Tenet’s contacts with Indiana are sufficient to satisfy the Due Process Clause of the Fourteenth Amendment. First, to esta blish general personal jurisdiction, Tenet’s contacts with Indiana must be examined to determine whether they are “continuous and systematic.” See footnote Tenet challenges its contacts with Indiana in several ways.

Tenet first claims that its contacts with Indiana are insufficient given that they constitute only a small percentage of its nationwide business. In support of this proposition, Tenet relies on Landoil Resources Corp. v. Alexander & Alexander Services, Inc., 918 F.2d 1039, 1045-46 (2d Cir. 1990), and Marsin Medical International, Inc. v. Bauhinia, Ltd., 948 F. Supp. 180, 186 (E.D.N.Y. 1996). Neither of these cases is binding authority on Indiana courts. Although the percentage of its nationwide business that is conducted in Indiana may be a factor to consider in determining whether there is personal jurisdiction over a defendant in this state, it is by no means the only or dominant factor. Here, given the extent and nature of Tenet’s contacts with Indiana, this factor is not of overwhelming significance. Compare Gallert v. Courtaulds Packaging Co., 4 F. Supp. 2d 825, 831 (S.D. Ind. 1998) (finding general jurisdiction where defendant argued that its sales in Indiana represented .0055% of its business), with Charlesworth v. Marco Mfg. Co., 878 F. Supp. 1196, 1201 (N.D. Ind. 1995) (finding no personal jurisdiction where defendant’s sales in Indiana were less than .50% of its total).

Tenet also claims that its contacts with Indiana are insufficient to establish personal jurisdiction over it based on its examination of these contacts in isolation, not as a whole, and reliance on cases in which the defendant had only one type of contact with the forum state. See, e.g., Asarco, Inc. v. Glenara Ltd., 912 F.2d 784, 787 (5th Cir. 1990) (only contacts were port calls); Travelers Indemnity Co. v. Calvert Fire Ins. Co., 798 F.2d 826, 833 (5th Cir. 1986) (only contacts were listing as a client of a forum state law firm and listing as defendants in other suits). Tenet breaks down its contacts with Indiana into four categories – employee visits, payments to Indiana businesses, contacts with the Indiana government, and the maintenance of a website – and attacks each category as insufficient. However, Tenet’s contacts with Indiana must be examined together to determine whether they are sufficient to establish general personal jurisdiction. Cf. Hotmix & Bituminous Equip., Inc. v. Hardrock Equip. Corp., 719 N.E.2d 824, 827 (Ind. Ct. App. 1999). Although any one set of contacts may not be enough to establish general personal jurisdiction over Tenet, when examined together, these groups of contacts show that Tenet has continuous and systematic contacts with Indiana.

Although Tenet does not meet the traditional bases for establishing general personal jurisdiction such as offices or property in Indiana, its contacts with Indiana are nonetheless “continuous and systematic.” Tenet made 28 business trips to Indiana, including sending its chief executive officer and several vice-presidents. These trips involved executive-level employees from many different departments and included real estate transactions, recruiting, litigation, interviewing, and operations. Tenet contracted with several Indiana businesses during this time, including consulting firms, storage companies, law firms, and computer services. Also, Tenet corresponded with Indiana entities concerning Medicare and Medicaid audits and requested hearings with the Indiana Family and Social Services Administration’s Office of Medicaid Policy and Planning. In many of these proceedings, the hospitals were referred to as wholly-owned subsidiaries of Tenet, See footnote and concerns of the parent corporation, Tenet, were discussed. This shows Tenet pu rposefully availing itself of the privileges and powers of Indiana law. In addition, Tenet responded to a previous lawsuit filed in Indiana and entered into a settlement agreement with the State of Indiana in October, 1994. Looking at all these contacts together, and not piecemeal as Tenet does, it is clear that Tenet has enough continuous and systematic contacts with Indiana to establish general personal jurisdiction.

The final step to ensure compliance with the Due Process Clause is evaluating whether the exercise of general personal jurisdiction over Tenet “offend[s] traditional notions of fair play and substantial justice.” To make this determination, we look at the five factors from Burger King: (1) the burden on the defendant; (2) the forum state’s interest in adjudicating the dispute; (3) the plaintiff’s interest in obtaining convenience and effective relief; (4) the interstate judicial system’s interest in obtaining the most efficient resolution of controversies; and (5) the shared interest of the several states in furthering fundamental substantive social policies. 471 U.S. at 476-77.

Given Tenet’s contacts with Indiana, its size, and the fact that it has already defended one lawsuit in Indiana, it does not appear it will be too great a burden on Tenet to defend another suit in this state. Furthermore, Indiana has an interest in seeing its residents and corporations protected from fraud. Finally, it is unlikely that any other state will have jurisdiction over all of the parties to the transaction. Therefore, this suit can be most efficiently resolved in Indiana. Given these concerns, we cannot say that the exercise of general personal jurisdiction over Tenet “offend[s] traditional notions of fair play and substantial justice.” See footnote

    Here, however, the phone calls and letters are the very means by which Anthem claims that NME Hospitals perpetrated its fraud. As the United States Supreme Court observed in Burger King, defendants should not be able to escape the consequences of their actions by not physically entering a jurisdiction. 471 U.S. at 467 (“So long as a commercial actor’s efforts are ‘purposefully directed’ toward residents of another State, we have consistently rejected the notion that an absence of physical contacts can deter personal jurisdiction there.”). The Court of Appeals also recognized this doctrine in Mullen v. Cogdell, 643 N.E.2d 390, 398 (Ind. Ct. App. 1994), transfer denied, in which the court found jurisdiction over a defendant whose only contacts with Indiana were letters and phone calls. The court enjoyed jurisdiction in that case because the calls and letters were made in furtherance of a fraudulent real estate deal. “A defendant should expect to answer in the state of residence of those he defrauded when correspondences and telephone calls were purposefully made to that state in furtherance of the fraud.” Rosowsky, 653 N.E.2d at 149 n.1. We agree with the Court of Appeals that “NME Hospitals purposefully availed itself of the benefits and responsibilities of doing business in Indiana when it chose to directly contact Anthem regarding insurance payments.” Anthem Ins. Cos. v. Tenet Healthcare Corp., 709 N.E.2d 1060, 1069 (Ind. Ct. App. 1999). There are sufficient contacts to establish specific personal jurisdiction over NME Hospitals in Indiana.

    Finally, we must balance the fairness factors to determine if the exercise of specific personal jurisdiction is reasonable in this case. Although there will be a substantial burden on the NME Hospitals, this factor is outweighed by Indiana’s interest in preventing fraudulent conduct against its citizens, Anthem’s interest in obtaining a remedy for the alleged fraud, and the judicial system’s interest in avoiding multiple litigation of the same facts. Therefore, the exercise of specific personal jurisdiction over NME Hospitals complies with Indiana Trial Rule 4.4(A) and the Due Process Clause.