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Peschong v. Children's Healthcare

United States Court of Appeals, Eighth Circuit

February 27, 2019

Essie Peschong; D.P.; E.P.P.; E.C.P., minors, by and through their parent and natural guardian, Essie Peschong Plaintiffs - Appellants
v.
Children's Healthcare, doing business as Children's Hospitals and Clinics of Minnesota; Alice Swenson, M.D. Defendants - Appellees

          Submitted: June 14, 2018

          Appeal from United States District Court for the District of Minnesota - Minneapolis

          Before WOLLMAN, ARNOLD, and KELLY, Circuit Judges.

          WOLLMAN, CIRCUIT JUDGE.

         Essie Peschong and her three minor children, D.P., E.P.P., and E.C.P., (collectively, the Peschongs) appeal the district court's[1] dismissal of their complaint against Children's Healthcare and Alice Swenson, M.D., arguing that the district court erred in applying the doctrine of collateral estoppel to their claims. We affirm.[2]

         I.

         Since his birth in 2004, D.P. has undergone numerous medical examinations, tests, and surgeries for various conditions. Children's Healthcare provided D.P.'s primary care from 2004 through 2007. As part of D.P.'s medical care, he received supplemental oxygen and used a wheelchair. By 2015, D.P. had undergone two adenoidectomies, a tonsillectomy, a turbinectomy, numerous laryngoscopies and bronchoscopies, and a half dozen sleep studies. D.P. had also spent forty-one days of his life hospitalized due to breathing difficulties and had been treated in the emergency room nine times for reactive airway disease and pneumonia.

         In 2015, Nurse Practitioner Cindy Brady contacted Dr. Swenson with concerns that D.P. was suffering from medical child abuse. Dr. Swenson reviewed D.P.'s medical records and concluded in a report (the report, or Swenson Report) that Essie Peschong "appears to be misrepresenting [D.P.'s] medical conditions in order to obtain care that D.P. does not need and that may, in fact, be harmful." Swenson Report 4. Dr. Swenson submitted the report on June 22, 2015, to Hennepin County Child Protective Services, which filed a child protection petition with the Hennepin County Juvenile Court (juvenile court). On December 31, 2015, the juvenile court denied Peschong's motion to dismiss the petition. Following a bench trial in January 2016, the juvenile court adjudicated D.P. a child in need of protection or services and ordered that he be transferred to the Hennepin County Child Protective Services for continued foster care placement, in which he remained for some seven months. The juvenile court's ruling was affirmed by the Minnesota Court of Appeals. Peschong's petition for review was denied by the Minnesota Supreme Court.

         The Peschongs filed this action on March 7, 2017, seeking relief under Minnesota and federal law. They alleged that the report was false and caused D.P. to be separated from his family. Children's Healthcare and Dr. Swenson subsequently filed a motion for judgment on the pleadings, which the district court granted, concluding that "because the elements of collateral estoppel have been met, [the Peschongs] are barred from re-litigating the accuracy of the report," a threshold question for each of the Peschongs' district court claims. Peschong v. Children's Healthcare, No. 17-706, 2017 WL 3016767, at *6 (D. Minn. July 14, 2017).

         II.

         We review de novo an order granting a motion for judgment on the pleadings. Wishnatsky v. Rovner, 433 F.3d 608, 610 (8th Cir. 2006). We apply Minnesota's law on collateral estoppel, which "precludes a party from relitigating a legal or factual issue that was actually litigated in a prior proceeding and was essential to the judgment rendered." Mandich v. Watters, 970 F.2d 462, 465 (8th Cir. 1992) (citing Hauser v. Mealey, 263 N.W.2d 803, 806 (Minn. 1978)). For collateral estoppel to apply, Children's Healthcare and Dr. Swenson must show: "(1) the issue was identical to one in a prior adjudication; (2) there was a final judgment on the merits; (3) the estopped party was a party or in privity with a party to the prior adjudication; and (4) the estopped party was given a full and fair opportunity to be heard on the adjudicated issue." Id. (quoting Kaiser v. N. States Power Co., 353 N.W.2d 899, 902 (Minn. 1984)). The Peschongs argue that collateral estoppel cannot be applied here because the relevant issue-whether the report is credible-was not previously adjudicated. We disagree.

         The report's veracity was a central issue in the state court proceedings. The Peschongs have conceded that "[m]ost of the Petition's factual allegations were taken verbatim from the Report." Am. Compl. 8, ¶ 49. Although the similarity between the report and the petition is not dispositive, we agree with the district court that "Ms. Peschong attacked the report and corresponding petition repeatedly throughout [the state court] proceedings, including on appeal." Peschong, 2017 WL 3016767, at *4. The report's credibility was thus necessarily an issue before the Minnesota state courts, and thus not merely an ancillary, undecided matter.

         The Peschongs nevertheless argue that collateral estoppel does not apply because neither the juvenile court nor the Minnesota Court of Appeals explicitly stated that the report was credible. As set forth more fully below, however, it is clear that the juvenile court addressed nearly all of the allegedly false statements that the Peschongs had set forth in their Amended Complaint. The juvenile court found those statements credible and also found "in all respects that the testimony of Dr. Alice Swenson was credible." In re Welfare of the Child of Essie Peschong, No. 27-JV-15-3545, slip op. at 4, ΒΆ 15.0 (Minn. Dist. Ct. Feb. 5, 2016) [hereinafter Juvenile Court Order]. ...


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