Greg Hale, on behalf of himself v. ARcare, Inc, originally named as ARcare

United States Court of Appeals
For the Eighth Circuit
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No. 24-1726
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Greg Hale, on behalf of himself and all others similarly situated; Melissa Johnson,
Individually and on Behalf of All Others Similarly Situated; Alicia Gilmore, on
Behalf of Herself and All Others Similarly Situated; Michael Whitkanack, on
Behalf of Himself and All Others Similarly Situated; Jessica White, on Behalf of
Herself and All Others Similarly Situated; Jacquita Engles, on behalf of herself,
and as parent and guarding of minor Marshall Engles and Ana Molina,
individually and on behalf of all others similarly situated; Jeffery Engles, on
behalf of himself, and as parent and guardian of minor Marshall Engles and Ana
Molina, individually, and on behalf of all others similarly situated
lllllllllllllllllllllPlaintiffs - Appellees
v.
ARcare, Inc, originally named as ARcare
lllllllllllllllllllllDefendant - Appellant
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United States of America
lllllllllllllllllllllAmicus on Behalf of Appellee(s)
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Appeal from United States District Court
for the Eastern District of Arkansas - Northern
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Submitted: April 16, 2025
Filed: February 13, 2026
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Before LOKEN, GRUENDER, and GRASZ, Circuit Judges.
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LOKEN, Circuit Judge.
ARcare, Inc. (“ARcare”) is a nonprofit community health center with facilities
across Arkansas, Kentucky, and Mississippi. ARcare receives funding under the
federal Public Health Service Act (“PHSA”) to provide primary care and related
services to communities designated as “medically underserved” by the Department
of Health and Human Services. See 42 U.S.C. § 254b. In the Federally Supported
Health Centers Assistance Act (“FSHCAA”), Congress granted absolute immunity
to health centers receiving PHSA funding “for damage for personal injury, including
death, resulting from the performance of medical, surgical, dental, or related
functions.” 42 U.S.C. § 233(a) (emphasis added). Congress determined that federally
funded health centers were spending too much of their PHSA grants on medical
malpractice insurance premiums and sought to “essentially make[] the U.S.
government the medical malpractice insurer for qualifying § 245(b) health centers”
and their employees. Dedrick v. Youngblood, 200 F.3d 744, 745 (11th Cir. 2000);
see H.R. Rep. No. 102-823, pt. 1, at 3-5, pt. 2, at 4 (House Judiciary Committee
1992); H.R. Rep. No. 104-398, at 6 (House Commerce Committee 1995).
The issue in this case is whether this absolute statutory immunity extends to
patient damage actions for losses caused when an unauthorized third party breached
ARcare’s data network and gained access to patients’ confidential information. The
district court1 concluded that ARcare is not immune from these suits because
protecting confidential patient information is not “the performance of medical,
surgical, dental, or related functions” under § 233(a). ARcare appeals. Reviewing
the issue of statutory immunity de novo, we conclude the district court correctly
1The Honorable Brian S. Miller, United States District Judge for the Eastern
District of Arkansas.
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interpreted the FSHCAA provisions at issue and therefore affirm. See Letterman v.
Does, 859 F.3d 1120, 1125 (8th Cir. 2017) (standard of review).
I. Background
In January and February 2022, an unauthorized third party breached ARcare’s
data network and gained access to patients’ confidential information, including
names, dates of birth, social security numbers, and medical treatment and diagnosis
information. After learning of the network breach, ARcare notified current and
former patients that their confidential information had been accessed without
authorization. Many affected patients sued. ARcare removed the actions to federal
court. After the district court consolidated six pending class action cases on March
1, 2023, Plaintiffs filed a Consolidated Complaint alleging ARcare failed to safeguard
class members’ personal information as required by the federal Health Insurance
Portability and Accountability Act (“HIPAA”) and its implementing regulations.
Plaintiffs allege they received invoices for medical services never rendered and
discovered their confidential information available for sale on the dark web.
ARcare claims absolute immunity from these claims under § 233(a) of the
FSHCAA. Section 233(g) provides that health centers receiving federal funding
under § 330 of the PHSA may be deemed Public Health Service (“PHS”) employees
and are granted immunity from, inter alia, claims that result from the PHS employee’s
“performance of medical, surgical, dental, or related functions.” It is undisputed that
ARcare was a deemed PHS employee during the relevant time period. For entities
deemed PHS employees, “Section 233(a) makes the FTCA remedy against the United
States ‘exclusive of any other civil action or proceeding’ for any personal injury
caused by a PHS officer or employee performing a medical or related function ‘while
acting within the scope of his office or employment.’” Hui v. Castaneda, 559 U.S.
799, 802 (2010). Accordingly, ARcare moved to substitute the United States as
defendant under the Federal Tort Claims Act. The United States had previously
declined ARcare’s request to intervene and opposed the motion to substitute.
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The district court initially held that § 233 permits a court to order substitution
of the United States over its objection, citing district court decisions from other
circuits on an issue we have not addressed. Without moving to intervene and filing
a cross-appeal, the United States filed a Brief for the United States as Amicus Curiae
in support of appellees in which it argues, at the end of the brief, that “Section 233
Does Not Provide Authority to Compel Substitution of the United States,” citing no
supporting judicial authority on this FSHCAA issue. ARcare argues the issue is not
properly before us, noting the established rule that even an appellee may not attack
a decree to enlarge its own rights absent a cross-appeal. We agree and therefore
decline to consider the issue, which in any event would not affect the disposition of
this appeal.
On the merits of the motion to substitute, the district court surveyed judicial
decisions applying § 233(a) and concluded (i) that the data breach did not occur
“during the course of medical treatment within the context of the provider-patient
relationship,” and (ii) that the nexus between protecting patient information from
cyber attacks and the provision of patient care was not close enough to render
ARcare’s failure to protect patient information from this cyber attack a “related
function.” Therefore, ARcare is not entitled to the claimed statutory immunity. We
have jurisdiction over this interlocutory appeal. See Hui, 559 U.S. at 804 n.4. The
United States appears as amicus curiae on behalf of plaintiff-appellees in support of
the district court’s denial of immunity. The merits of Plaintiffs’ claims against
ARcare are not before us.
II. Discussion
On appeal, ARcare does not contend that safeguarding patient information is
itself a medical, surgical, or dental function, so the applicability of § 233(a) absolute
immunity turns on whether ARcare’s data security practices are “related functions.”
ARcare argues that the “broad” and “unqualified” language of § 233(a) provides
“comprehensive” immunity for deemed employees that is not limited to acts and
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omissions occurring during medical treatment. ARcare argues Krandle v. Refuah
Health Center, Inc., No. 22-CV-4977, 2024 WL 1075359 (S.D.N.Y. Mar. 12, 2024),
published a few days after the district court’s Order being appealed, and Friedenberg
v. Lane Cnty., 68 F.4th 1113 (9th Cir. 2023), which the district court distinguished,
are persuasive authority for its interpretation of “related functions.” Appellees urge
us to follow the Fourth Circuit’s more recent decision in Ford v. Sandhills Med.
Found., Inc., which held that § 233(a) immunity did not shield a nonprofit health
center from liability following a cyber attack similar to the one that ARcare sustained.
97 F.4th 252, 254 (4th Cir. 2024), cert. denied, 145 S. Ct. 1308 (2025).
In Krandle, the court concluded that § 233(a) covered a data breach of a New
York nonprofit health center’s systems. “Medical,” “surgical,” and “dental” are
“adjectives that pertain or relate to treatment,” but “they are not exclusively defined
by treatment.” 2024 WL 1075359 at *4. The broad term “related” requires only “a
real relationship to the practice of medicine,” and the health center’s “responsibility
to secure data from internal and external threats . . . is essential to the practice of
medicine.” Id. at *5, 9. Friedenberg involved a damage claim for the failure by a
community health center’s employees to report a patient’s violations of his court-
ordered treatment plan. The Ninth Circuit held that the employees were entitled to
§ 233(a) immunity because “[t]he statutory text clearly shows that immunity is not
tied to whether the tort transpired in caring for the patient. Rather . . . as long as a
claim is derived from providing services to subjects of the health care provider, the
deemed PHS employee is immune from suit.” 68 F.4th at 1127 (emphasis removed).
The employees’ failure to report was sufficiently “intertwined with their provision of
medical services” to qualify as a “related function.” Id. at 1130.2
2The district court noted that Friedenberg, like other cases applying § 233(a)
immunity to claims for failure to protect private information, “involve[d] conduct that
occurred during the course of medical treatment within the context of the provider-
patient relationship.”
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In Ford, on which Appellees rely, the Fourth Circuit held that a nonprofit
health center was not immune from liability under § 233(a) following a cyber attack
similar to the one at issue. The plain meaning of “related functions,” the court
concluded, is a category in the field of health care outside of medicine, surgery, or
dentistry, the terms that precede “related functions” in § 233(a). 97 F.4th at 259.
Therefore, “to trigger immunity, alleged damages giving rise to a lawsuit must arise
from the provision of health care.” Id. at 260. Data protection is not the performance
of an action taken in the course of rendering treatment; the health center retains the
relevant data even after the patient relationship ends. Therefore, the health center’s
argument that § 233(a) applies to any action patients take to obtain medical care, such
as providing confidential health information, “would shield [the center] from any and
all claims despite their lack of relation to their treatment.” Id. at 260-61.
We conclude the Fourth Circuit’s interpretation of § 233(a) in Ford is more
persuasive than the authorities on which ARcare relies. The FSHCAA does not
define “related functions” or any of the terms at issue, so we begin with the text of
§ 233(a), interpreting the words “consistent with their ordinary meaning at the time
Congress enacted the statute.” Wisconsin Cent. Ltd v. United States, 585 U.S. 274,
277 (2018) (cleaned up). We first “determine whether the language at issue has a
plain and unambiguous meaning with regard to the particular dispute . . . by reference
to the language itself, the specific context in which that language is used, and the
broader context of the statute as a whole.” LaCurtis v. Express Med. Transporters,
Inc., 856 F.3d 571, 578 (8th Cir. 2017), quoting Robinson v. Shell Oil Co., 519 U.S.
337, 340-41 (1997). “If the intent of Congress can be clearly discerned from the
statute’s language, the judicial inquiry must end.” United States v. Lester, 92 F.4th
740, 742 (8th Cir. 2024) (cleaned up). But when a provision “is susceptible to more
than one interpretation, we examine other authorities to determine legislative intent.”
Stanley v. Cottrell, Inc., 784 F.3d 454, 466 (8th Cir. 2015).
When the words in a phrase are broad and indeterminate, such as “relating to,”
“context ‘may tug in favor of a narrower reading.’” Barcomb v. Gen. Motors LLC,
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978 F.3d 545, 550 (8th Cir. 2020) (quotation omitted). The context here is the use
of general language following a list of three specific functions. As the Supreme
Court recently explained:
One way to discern the reach of [such a] clause is to look for guidance
from whatever examples come before it. Two general principles are
relevant. First, the canon of noscitur a sociis teaches that a word is
given more precise content by the neighboring words with which it is
associated. . . . And under the related canon of ejusdem generis, a
general or collective term at the end of a list of specific items is typically
controlled and defined by reference to the specific classes that precede
it.
Fischer v. United States, 603 U.S. 480, 487 (2024) (cleaned up); see Christopherson
v. Cinema Enter. Corp., 161 F.4th 525, 528 (8th Cir. 2025).
Related is generally defined as “connected by reason of an established or
discoverable relation,” Webster’s Third New International Dictionary (1968), or
“associated; connected” and “allied by nature,” The American College Dictionary
(1970). Function is defined as “the action for which a person or thing is specially
fitted, used, or responsible or for which a thing exists,” Webster’s, and as “the kind
of action or activity proper to a person, thing, or institution,” The American College
Dictionary. Thus, in the context of § 233(a), related functions are activities having
similar characteristics or that are specially fitted to the preceding enumerated
categories of medical, surgical, or dental functions.
We agree with the court in Ford that the adjectives medical, surgical, and dental
each describe a branch of health care. Therefore, applying the relevant canons of
statutory construction, a related function is “a field of health care outside of medicine,
surgery, or dentistry.” 97 F.4th at 259. Although data security is now integrated into
the modern practice of medicine with the transition to electronic medical records, it
is not itself a field of health care. Data storage and security are standard modern
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business practices and are therefore activities proper for a federally funded health
center, but they are neither specific to the medical field nor “specially fitted” to the
performance of medical, surgical, or dental practices.
The text preceding and following “related functions” in § 233(a) provides
additional support for this interpretation. The statutory immunity applies only to
claims “for damage for personal injury, including death, resulting from the
performance of medical, surgical, dental, or related functions.” Personal injury is “an
injury affecting one’s physical and mental person as contrasted with one causing
damage to one’s property.” Webster’s Third New International Dictionary (1968).
In this context, the terms are most naturally read to encompass damages resulting
from substandard performance in the provision of health care. Interpreting a claim
for damages from wrongful disclosure of patient information as a personal injury
claim “may improperly broaden § 233(a) to encompass misfeasance that results in
other types of damages, such as contract damages.” Ford, 97 F.4th at 260.
ARcare argues that the statute’s application to claims “resulting from the
performance of medical . . . or related functions” requires only “that the action in
some way originates in, stems from, or is a consequence of the deemed defendant’s
performance of medical or related functions.” But the term “related functions” serves
to clarify the scope of an immunity whose meaning is cabined by the preceding
adjectives medical, surgical, and dental. Section 233(a) does not broadly cover
claims originating from the performance of any hospital function, only from
performance of some activity specially fitted to the performance of health care.
ARcare’s reading offers no limiting principle. Almost any task a hospital employee
completes could be characterized as stemming or originating from a hospital function.
Here, plaintiffs did not even allege they remained patients of ARcare at the time of
the data breach. Some of their claims may loosely relate to past treatment but they
did not arise from any actions taken by ARcare in the course of medical treatment.
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As a second contextual clue, Congress in § 233(a) clarified that related
functions include “the conduct of clinical studies or investigation.” The word
“clinical,” which is defined as “concerned with observation and treatment of disease
in the patient,” The American College Dictionary (1970), further reflects a focus on
the provision of health care. By contrast, the meaning of “related functions” urged
by ARcare includes any duties that are merely “interwoven” with medical care, such
as administrative and operational ones. ARcare suggests that this reference to clinical
studies and investigation calls for a broader interpretation of “related functions”
because 42 U.S.C. § 241, which governs PHS research and investigations, also
references non-medical categories -- “water purification, sewage treatment, and
pollution of lakes and streams.” However, § 233(a) does not reference § 241 in
delineating what qualifies as “clinical studies or investigation.” In context, clinical
studies and investigation exemplify what is included in the limited subset of “medical,
surgical, dental, or related functions.”
ARcare looks to other statutory language to support its interpretation of
§ 233(a). Because § 233(a) applies to “any other civil action or proceeding” and
extends immunity to “any commissioned officer or employee of the Public Health
Service while acting within the scope of his office or employment,” ARcare argues
its scope cannot be limited to claims arising from the provision of health care
services. But the reference to “any other civil action or proceeding” reflects the broad
scope of the grant of immunity when § 233 does in fact apply, which is limited by the
meaning of the phrase “medical . . . or related functions.” ARcare rightly notes that
“any commissioned officer or employee” means the related function need not be
performed by a physician, surgeon, or dentist, and that § 233(g)(1)(A) grants
immunity to federally funded health center entities and “any officer . . . or employee.”
However, Congress anticipated that persons involved in providing health care who
are not physicians, surgeons, or dentists, and board members and administrators
overseeing the provision of health care in a hospital, are named in medical
malpractice suits and warrant this grant of immunity.
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ARcare also argues that reading § 233(a) to cover actions resulting from the
provision of health care renders the “related functions” language superfluous,
contrary to proper statutory interpretation. See, e.g., Ysleta Del Sur Pueblo v. Texas,
596 U.S. 685, 698-99 (2022). But appellees and the United States as amicus curiae
note functions that are not medical, surgical, or dental but are sensibly characterized
as related to those categories, such as physical therapy and pharmacy. Under our
reading of the plain language, the term “related functions” is not superfluous.
Based on the plain meaning of the statutory text, confirmed by the statutory
context reflected in the legislative history of the PHSA and the FSHCAA, we agree
with Appellees that § 233(a) does not confer immunity for claims concerning
ARcare’s data security practices. Congress did not intend that the government (i.e.,
taxpayers) bear the cost of subsidizing health centers for types of insurable business
expenses that are not part of “a field of health care outside of medicine, surgery, or
dentistry,” like the damage claims at issue in this case. For the foregoing reasons, we
affirm the district court’s denial of ARcare’s motion to substitute the United States.
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