Unreported / Non-Citable
Background
The plaintiff, C.Y., a minor, filed a medical malpractice action through his guardian ad litem in Sacramento County Superior Court in March 2024 against several Sutter entities and other medical providers, including a midwife named Catherine Ann McGovern. The complaint alleged negligence in the plaintiff’s prenatal care and delivery.
In February 2025, the United States determined that the midwife was acting within the scope of her deemed federal employment under the Federally Supported Health Centers Assistance Act (42 U.S.C. § 233). That deeming makes the United States — not the individual provider — the defendant for tort claims, and ordinarily requires the claimant first to exhaust an administrative claim under the Federal Tort Claims Act (FTCA). Because the deadline to exhaust had passed, the plaintiff voluntarily dismissed McGovern from the case. Sutter was informed both of the dismissal and that the deeming would also affect any future claims involving McGovern.
Despite that warning, on March 5, 2025, Sutter Davis Hospital filed a crossclaim for indemnity and contribution against McGovern. Because McGovern had been certified as a federal employee, the United States removed the entire action to federal court under 42 U.S.C. § 233(c) and was automatically substituted for McGovern. The United States then moved to dismiss Sutter’s crossclaim for lack of subject matter jurisdiction, invoking the doctrine of derivative jurisdiction.
The Court’s Holding
The court granted the motion to dismiss. The doctrine of derivative jurisdiction, dating back over a century to Lambert Run Coal Co. v. Baltimore & O.R. Co. (1922), holds that if a state court lacked jurisdiction over a removed claim at the time of filing, the federal court likewise lacks jurisdiction even if the claim could have been originally brought in federal court. The doctrine treats a state-court case over which the state court had no jurisdiction as ‘void from its very beginning.’
Applying that doctrine, the court found that the state court could not have entertained Sutter’s crossclaim against McGovern because, by the time of filing, McGovern had been certified as acting within the scope of her federal employment under section 233. That certification meant the only proper defendant for tort claims arising from McGovern’s conduct was the United States, and only a federal court can hear FTCA claims against the United States (28 U.S.C. § 1346(b)). Because the state court lacked subject matter jurisdiction over the crossclaim from the moment it was filed, the federal court — which ‘derived’ its jurisdiction through removal — also lacked jurisdiction.
The court distinguished the FTCA’s exhaustion exception for crossclaims (28 U.S.C. § 2675(a)). While that exception relieves a crossclaimant from the usual administrative-claim requirement, it does not cure the state court’s lack of subject matter jurisdiction over a claim against a deemed federal employee. The court rejected Sutter’s argument that the proper procedure was to recharacterize the crossclaim as a federal one, explaining that the derivative jurisdiction doctrine forecloses any such fix on removal.
The court dismissed the crossclaim for lack of subject matter jurisdiction. Sutter remains free to pursue its indemnity and contribution claims against the United States by filing them as an original federal action in the proper court, subject to the FTCA’s procedural requirements.
Key Takeaways
- The century-old derivative jurisdiction doctrine remains a live trap for state-court litigants who file claims against deemed federal employees and are then swept into federal court via removal.
- Once a healthcare provider has been certified as acting within the scope of her deemed federal employment under 42 U.S.C. § 233, only the United States is a proper defendant — and only federal court can hear the claim.
- The FTCA’s exhaustion exception for crossclaims (28 U.S.C. § 2675(a)) does not save a state-court crossclaim from the derivative jurisdiction bar — it merely excuses administrative exhaustion when the claim is properly in federal court.
- State-court litigants warned that another party has been certified as a federal employee should refrain from filing tort crossclaims against that party in state court.
- The proper procedure for asserting indemnity and contribution against the United States is to file an original federal action in the appropriate federal court.
Why It Matters
For California healthcare providers, this opinion is an important warning about the procedural pitfalls of suing — or attempting to sue — providers who may be deemed federal employees under the Federally Supported Health Centers Assistance Act. Many community-health and midwifery providers in California fall within the scope of section 233 deeming. Cross-defendants who attempt to assert indemnity or contribution against such individuals in state court may end up with no claim at all once the federal government certifies and removes.
For litigators, the case is a useful reminder that the derivative jurisdiction doctrine survives modern removal practice. The fact that a federal court could have heard the crossclaim originally does not save it from dismissal once it has been improperly filed in state court. The remedy is to file as an original federal action — not to litigate the crossclaim through the back door of removal.