Allstate Indemnity Company, et al., Appellants,

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2018).

STATE OF MINNESOTA
IN COURT OF APPEALS
A20-0097

Allstate Indemnity Company, et al.,
Appellants,

vs.

Twin Cities Diagnostic Center, L.L.C., et al.,
Respondents,

Precision Toxicology, LLC, et al.,
Defendants.

Filed July 27, 2020
Affirmed in part, reversed in part, and remanded
Frisch, Judge

Hennepin County District Court
File No. 27-CV-18-18730

Richard S. Stempel, Luke G. Peters, Stempel & Associates, PLC, Hopkins, Minnesota (for
appellants)

Bryan R. Battina, V. John Ella, Trepanier MacGillis Battina P.A., Minneapolis, Minnesota
(for respondents)

Considered and decided by Frisch, Presiding Judge; Bjorkman, Judge; and Bratvold,
Judge.

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U N P U B L I S H E D O P I N I O N
FRISCH, Judge
This appeal arises from a dismissal on the pleadings. Appellants argue that they
stated viable claims against a n advanced diagnostic imaging center not operated by
licensed healthcare professionals for violations of (1) the corporate practice of medicine
doctrine and (2) statutory accreditation requirements . Accepting the allegations set forth
in the pleadings as true, we affirm the dismissal of the statutory claim, reverse the dismissal
of the claim for violation of the corporate practice of medicine doctrine , and remand for
further proceedings.
FACTS
Respondent Twin C ities Diagnostic Center, L.L.C. (TCDC) is owned by
respondents Peter DePrimo, Carlos Fleites, and Katiana Fleites, none of whom are licensed
healthcare professionals. Appellants Allstate Indemnity Company and Allstate In surance
Company (collectively, Allstate ) insure several claimants who received advanced
diagnostic imaging services from TCDC. The parties stipulated before the district court
that a TCDC technician takes magnetic resonance imaging (MRI) scans in Minnesota and
then sends the sc ans to radiologists in Florida for review and evaluat ion. The r ecord
contains no other information regarding the business enterprise.
Allstate incurred over $25,000 in charges from TCDC for MRI scans now in dispute.
Allstate sought a declaratory judgment that these charges are noncompensable, primarily
arguing that ownership of an MRI facility by a non -physician violates the Minnesota
Corporate Practice of Medicine Doctrine (CPMD). Allstate also claim s that TCDC’s

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ownership structure violate s accreditation standards set forth in Minn. Stat. § 144.1225,
subd. 2(a)(2) (2018).1
TCDC and its individual owners moved to dismiss pursuant to Minn. R. Civ.
P. 12.02(e), arguing that Allstate’s amended complaint failed to state a claim upon which
relief could be granted. The district court agreed, dismissing all claims wit h prejudice.
Allstate appeals.
D E C I S I O N
We review de novo dismissal of a complaint pursuant to Minn. R. Civ. P. 12.02(e).
Sipe v. STS Mfg., Inc. , 834 N.W.2d 683, 686 (Minn. 2013). “We accept the facts alleged
in the complaint as true and constru e all reasonable inferences in favor of the nonmoving
party.” Walsh v. U.S. Bank, N.A ., 851 N.W.2d 598, 606 (Minn. 2014). Because
“Minnesota is a notice -pleading state,” a complaint “requires only information sufficient
to fairly notify the opposing part y of the claim against it.” Id. at 604-05 (quoting Hansen
v. Robert Half Int’ l, Inc., 813 N.W.2d 906, 917 -18 (Minn. 2012)). “If a pleading is ‘ so
vague and ambiguous that a party cannot reasonably be required to frame a responsive
pleading,’ that party may move ‘for a more definite statement.’” Id. at 605 (quoting Minn.
R. Civ. P. 12.05).

1 Allstate also brought a claim for misrepresentation of fact that was dismissed by the
district court . Allstate’s written submissions do not discuss dismissal of this claim .
Accordingly, Allstate failed to preserve the dismissal of the misrepresentation claim for
appeal. See Melina v. Chaplin, 327 N.W.2d 19, 20 (Minn. 1982) (declining to reach issue
not argued in briefs).

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I. The amended complaint states a claim that TCDC’s ownership structure
violates the Minnesota Corporate Practice of Medicine Doctrine.
Allstate alleges that the CPMD bars ownership of an MRI facility by non -
physicians. The CPMD is a common -law prohibition against corporations engaging in
healthcare practice “through the employment of licensed professionals except pursuant to
specific statutory or regulatory exceptions.” Isles Wellness, Inc. v. Progressive N. Ins. Co.,
703 N.W.2d 513, 516 (Minn. 2005). This “prohibition on the corporate practice of health
care arises not simply because particular health care practitioners are engaged in ‘healing,’
but also be cause the individual practitioners are members of a state licensed profession,
must undergo significant training and education, and enjoy independent professional
judgment.” Id. at 522. Minnesota courts have never addressed whether an MRI facility
specifically is subject to the CPMD.2
Pursuant to Isles Wellness , we first consider whether TCDC is engaged in the
practice of “healing.” The amended complaint contains an allegation that TCDC is
engaged in the practice of healing, an allegation we must accept as true at this procedural
posture under Walsh.

2 The Isles Wellness court observed that the Minnesota Professional Firms Act, Minn. Stat.
§§ 319B.01-.12 (2018), specifically “permits the formation of professional corporations to
practice certain specified professions.” 703 N.W.2d at 518. TCDC argues that Minnesota
statutes contemplate lay ownership of MRI facilities and cites a statute that requires MRI
facilities to provide the health commissioner with the names of physicians who have “any
financial or economic interest ” in the facility, as well as “all other individuals with a ten
percent or greater financial or economic interest in the facility.” Minn. Stat. § 144.565,
subd. 1(2) (2018). This reporting requirement does not in itself authorize lay ownership or
nullify the applicability of the CPMD.

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Notwithstanding the notice -pleading standard and w ithout analyzing how the
practice of healing is defined under Minnesota law, TCDC argues that the mere taking of
an MRI scan is not the practice of healing. Because the parties stipulated that TCDC sends
its MRI scans to independent radiologists for evaluation, TCDC contends that , as a matter
of law, its practice s do not implicate concerns regarding the corporate practice of
medicine.3 But the stipulated facts do not reveal anything about the relationship between
the MRI technicians and the radiologists or the nature of any professional judgment
required in taking an MRI scan to obtain an accurate diagnosis. Although we must, at this
procedural posture, accept the allegation set forth in the pleading that TCDC is engaged in
the practice of healing, whether the actual work conducted at TCDC involves the practice
of healing, thereby implicating the CPMD, requires discovery to develop a factual record.
Assuming that TCDC is engaged in the practice of healing, the application of the
CPMD also requires consideration of whether individual practitioners “are members of a
state licensed profession, must undergo significant training and education, and enjoy
independent professional judgment. ” Isles Wellness, 703 N.W.2d at 522. Here also, the
record contains no information regarding the profession of MRI technicians. Minnesota

3 TCDC relies on federal cases applying Minnesota law to support its argument. See Ill.
Farmers Ins. Co. v. Mobile Diagnosti c Imaging, Inc. , No. 13 -CV-2820 PJS/TNL, 2014
WL 4104789, at *7 (D. Minn. Aug. 19, 2014) (citing cases). We are not bound by federal
interpretations of Minnesota common law. Further, the cases cited by TCDC either
involved a heightened plausibility plead ing standard not accepted in Minnesota or were
decisions on summary judgment, with the benefit of discovery to shed light on the activities
actually taking place at the MRI facilities at issue. Here, we have no discovery and can
only speculate as to the a ctivities of TCDC employees and the radiologists who interpret
the scans.

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statutes suggest, however, that advanced diagnostic imaging centers must have “standards
for quality control,” “routine performance monitoring by a medical physicist,” and proper
qualification for technologists, “including minimum standards of supervised clinical
experience.” Minn. Stat. § 144.1225, subd . 2(a)(2)(ii)-(iii). And the amended complaint
contains an allegation that TCDC “find[s] more [material] than anyone,” which implies an
exercise of professional judgment. Again, discovery should reveal whether the CPMD
applies to the services rendered by practitioners at TCDC.
The district court reasoned that Allstate failed to state a claim because the amended
complaint did not specifically allege that TCDC technicians “enjoy independent
professional judgment.” But such an allegation is not necessary for notice pleading, which
“requires only information sufficient to fairly notify the opposing party of the claim against
it.” Walsh, 851 N.W.2d at 605 (quotation omitted). Because the amended complaint
contains allegations that ownership of TCDC by non-physicians violated the CPMD, and
that the actual work performed at TCDC implicated the exercise of professional judgment,
the pleading sufficiently notified TCDC that one of the factual issues to be litigated was
the exercise of independent professional judgment at TCDC.
Accordingly, the district court erred by failing to properly apply the Walsh standard
to Allstate’s CPMD claim. Because the amended complaint contained sufficient
allegations to state a claim for violation of the CPMD under the notice-pleading standard,
we reverse the dismissal of the CPMD claim and remand to the district court for further
proceedings.

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II. Allstate fail ed to state a statutory claim that the services of TCDC are
noncompensable.
Allstate also claims that TCDC’s services are noncompensable because TCDC fails
to meet independent accreditation standards. MRI services “shall be reimbursed only if
the facility” is accredited by one of certain, listed entities. Minn. Stat. § 144.1225,
subd. 2(a)(1) (2018). One such entity is the Intersocietal Accreditation Commission (IAC).
Id., subd. 2(a)(1)(ii). It is undisputed that TCDC held IAC accreditation at the time of the
district court proceedings. Allstate contends, however, that the IAC mistakenly accredited
TCDC because the facility is not supervised by a licensed physician and therefore does not
comply with accreditation requirements specified in the statute . Cf. id., subd. 2(a)(2)(i)
(requiring accreditation standards to include “ provisions establishing qualifications of the
physician”).
Allstate has not set forth any legal basis to challenge the allegedly erroneous
accreditation by an independent agency. The statute requires that TCDC obtain
accreditation. Id., subd. 2 (2018). Although the statute sets forth specifications for agency
accreditation standards, Allstate did not identify any recognized legal remedy for the
circumstance where the accrediting agency deviates from its own requirements and
erroneously accredits an imaging cent er. The statute does not appear to authorize a legal
action to challenge accreditation and no case law recognizes a cause of action to do so.
Allstate appears to assert a novel claim that has not been recognized and without supporting
legal authority. Because Allstate did not set forth a legal basis to challenge the actions of
the IAC, we affirm dismissal of Allstate’s statutory claim. See Stephens v. Bd. of Regents

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of Univ. of Minn ., 614 N.W.2d 764, 770 -71 (Minn. App. 2000) (declining to reach claim
where briefs failed to set forth supporting citation or authority), review denied (Minn. Sept.
26, 2000).
Affirmed in part, reversed in part, and remanded.