Lawrence Gwozdz v. Healthport Technologies, LLC
2017 U.S. App. LEXIS 1221
| 4th Cir. | 2017Background
- Gwozdz requested medical records from Maryland hospitals; HealthPort (the hospitals’ contractor) billed him and demanded $23 in sales tax before releasing records.
- Gwozdz paid the charge under protest and filed a putative class action in Maryland state court alleging consumer-protection and common-law claims (fraud, negligent misrepresentation, unjust enrichment, etc.).
- HealthPort removed the case to federal court under the Class Action Fairness Act; it moved to dismiss, arguing Maryland’s statutory administrative refund procedure is the exclusive remedy for disputed taxes.
- The district court dismissed the complaint, holding the exclusive remedy for improper tax collection is to seek a refund from the Maryland Comptroller.
- The Fourth Circuit reviewed whether the Tax Injunction Act (TIA) and related federal-state comity deprived federal courts of jurisdiction, and whether Gwozdz’s artfully pleaded non-tax claims could avoid the administrative scheme.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Maryland’s administrative refund scheme is an adequate remedy that bars federal-court relief under the TIA | Gwozdz: administrative route inapplicable because suit challenges unlawful billing practices, not a tax dispute | HealthPort: Maryland provides an exclusive, comprehensive refund procedure for improperly collected taxes | Held: Administrative scheme is adequate and exclusive; TIA applies, barring federal relief |
| Whether a buyer (payor) can use the administrative refund process despite vendor’s role in collecting tax | Gwozdz: vendors are the real taxpayers under the Code, so buyers lack administrative remedy | HealthPort: Tax Code makes buyer responsible to pay and vendor the collector/ trustee; buyer can pursue refund through state procedures | Held: Tax Code shows buyer paid the tax and may seek refund via Maryland’s procedures |
| Whether pleading consumer-protection and tort claims avoids TIA jurisdictional bar | Gwozdz: claims are against an unlawful billing practice, not a tax, so TIA doesn’t apply | HealthPort: all claims turn on whether the tax collection complied with Maryland tax law; substance controls over form | Held: Artful pleading cannot avoid the TIA when the core dispute is improper tax collection |
| Whether damages claims (not just equitable relief) fall outside comity/TIA constraints | Gwozdz: seeks damages and statutory relief, not purely injunctive relief | HealthPort: damages suits against vendors collecting taxes can be as disruptive as injunctions; comity bars them | Held: Comity and TIA principles bar federal damages claims that would disrupt state tax collection; remand to state court is required |
Key Cases Cited
- Lawyer v. Hilton Head Pub. Serv. Dist. No. 1, 220 F.3d 298 (4th Cir.) (remanding removed portion of consolidated case to state court due to TIA)
- White v. Prince George’s Cty., 387 A.2d 260 (Md. 1978) (describing Maryland’s comprehensive refund scheme)
- Apostol v. Anne Arundel Cty., 421 A.2d 582 (Md. 1980) (statutory refund remedy is exclusive)
- Bowman v. Goad, 703 A.2d 144 (Md. 1997) (administrative remedy exclusive for improperly collected fees)
- Brutus 630, LLC v. Town of Bel Air, 139 A.3d 957 (Md. 2016) (administrative remedy covers all improperly collected fees and charges)
- Hibbs v. Winn, 542 U.S. 88 (2004) (TIA does not categorically bar all constitutional challenges to tax laws)
- Bob Jones Univ. v. Simon, 416 U.S. 725 (1974) (purpose of anti-injunction/TIA to prevent preenforcement interference with tax collection)
- Fair Assessment in Real Estate Ass'n, Inc. v. McNary, 454 U.S. 100 (1981) (comity can bar damages actions that intrude on state tax administration)
- Levin v. Commerce Energy, Inc., 560 U.S. 413 (2010) (comity principle broader than TIA)
- Fredrickson v. Starbucks Corp., 840 F.3d 1119 (9th Cir. 2016) (damages awards for allegedly unlawful tax withholding can be barred by TIA/comity)
- Comptroller of the Treasury v. Zorzit, 108 A.3d 581 (Md. Ct. Spec. App. 2015) (taxpayers must use statutory administrative procedures or risk undermining legislative scheme)