Thomas G. Stayton
Nancy G. Tinsley
Baker & Daniels
Attorneys for Appellees
Brown, Todd and Heyburn
New Albany, IN
Ethan M. Posner
Covington & Burling
Appellants (Plaintiffs below ),v.
TENET HEALTHCARE CORPORATION, f/k/a National Medical Enterprises, Inc., f/k/a Psychiatric Institutes of America
Appellees (Defendants below).
) Supreme Court No.
) Court of Appeals No.
June 8, 2000
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.
Indianas 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 defendants contacts with the forum state fall under the long-arm statute.
Second, if they do, the court must then determine whether the defendants
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 If
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 persons 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
defendants 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 companys 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
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 defendants 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 defendants 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[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 plaintiffs 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-husbands new wifes 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
breeders 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 businesss 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 defendants contacts with the forum state are:
(1) whether the claim arises from the defendants 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),
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 States
interest in adjudicating the dispute; (3) the plaintiffs interest in obtaining convenience and
effective relief; (4) the interstate judicial systems 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 courts 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 courts determination of such questions. See Stroud, supra, § 12.3,
Budden v. Board of School Commrs, 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.
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 courts 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.
Tenets activities, including several business trips to Indiana and transactions with Indiana businesses,
including law firms, storage companies, and computer companies, clearly satisfy this requirement.
Next, we must review whether Tenets contacts with Indiana are sufficient to satisfy
the Due Process Clause of the Fourteenth Amendment. First, to esta
personal jurisdiction, Tenets contacts with Indiana must be examined to determine whether they
are continuous and systematic.
See footnote Tenet challenges its contacts with Indiana in several
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 Tenets 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 defendants sales in Indiana were less than .50% of its
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, Tenets 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 Administrations Office of Medicaid Policy and Planning. In
many of these proceedings, the hospitals were referred to as wholly-owned subsidiaries of
See footnote and concerns of the parent corporation, Tenet, were discussed. This shows
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 states interest in adjudicating the dispute; (3) the plaintiffs interest
in obtaining convenience and effective relief; (4) the interstate judicial systems 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
Given Tenets 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.
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 actors 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 Indianas
interest in preventing fraudulent conduct against its citizens, Anthems interest in obtaining a
remedy for the alleged fraud, and the judicial systems 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