Essie Peschong v. Children's Healthcare, d/b/a Children's Hospitals and Clinics of Minnesota; Alice Swenson, M.D.

Essie Peschong and her three minor children, D.P., E.P.P., and E.C.P.,

(collectively, the Peschongs) appeal the district court’s1 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

1The Honorable David S. Doty, United States District Judge for the District of

Minnesota.

2We requested on our own motion a copy of the trial transcript of the state court

hearing. Peschong has moved to vacate our order to supplement the record, arguing

that the parties had agreed that the trial transcript was not, and would not be, a part

of the record. Passing no judgment on that assertion, we grant the motion to vacate

and will return the transcript to the state court unread. Peschong’s alternative motion

for leave to file a supplemental brief regarding the transcript is denied as moot.

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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

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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, ¶ 15.0 (Minn. Dist. Ct. Feb. 5, 2016) [hereinafter Juvenile Court

Order]. We conclude that the juvenile court implicitly ruled that the report was

credible in its entirety and that the Peschongs are thus precluded from relitigating this

issue.

III.

We review the district court’s application of collateral estoppel in the light of

the juvenile court’s factual findings. Having compared the allegedly false statements

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in the report to the analysis contained in the Juvenile Court Order, we conclude that

the juvenile court essentially came to the same conclusions as those set forth in Dr.

Swenson’s report, as illustrated by the juvenile court’s observations set forth in the

following paragraphs.

The Peschongs allege that the report falsely stated that D.P. was the victim of

medical child abuse. Am. Compl. 8, ¶ 40. The juvenile court concluded that “[D.P.]

[wa]s a victim of medical child abuse perpetrated by [Peschong]. [Peschong] has

subjected [D.P.] to numerous unnecessary medical procedures and interventions, and

as a result [D.P.] is without the required care for [his] physical and mental health.”

Juvenile Court Order 20, ¶ 1.1.

The Peschongs also allege that the report falsely stated that an “[e]valuation of

D.P.’s medical records indicates a clear long-standing pattern of [Peschong] reporting

symptoms that are not observed by the medical staff.” Swenson Report 3; Am.

Compl. 7, ¶ 39. In addressing this issue, the juvenile court stated:

[T]here are several related yet rejected diagnoses which [Peschong]

reported as confirmed, and for which [Peschong] sought treatment that

was invasive and harmful to [D.P.]. Many of the symptoms reported by

[Peschong] were never observed in a clinical environment under medical

observation, and the diagnoses were ruled out by medical professionals.

Juvenile Court Order 9-10, ¶ 29.0. The juvenile court similarly noted:

[Peschong] reported to medical providers that [D.P.] was unable to walk

long distances and could not maintain adequate oxygen saturations.

This is not credible. During the time of [Peschong’s] claim regarding

[D.P.’s] need for supplemental oxygen related to his inability to walk

longer distances without tiring, [D.P.] was also actively participating in

gymnastics.”

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Id. at 14, ¶ 32.1.5 (footnotes omitted). The juvenile court thus concluded that

Peschong reported symptoms that were not observed by medical staff and that

Peschong’s characterization of D.P.’s ability to walk long distances and maintain

adequate oxygen saturation was not credible.

The Peschongs next allege that the report falsely stated that “[D.P.] has

undergone numerous polysomnography studies, none of which has demonstrated

severe sleep apnea.” Swenson Report 3; Am. Compl. 7, ¶ 37(d). Again, the juvenile

court disagreed with Peschong’s claim, ruling that D.P.’s sleep apnea was “[m]ild to

moderate,” not severe. Juvenile Court Order 8, ¶ 28.3. The juvenile court went on

to state that “[Peschong] reported symptoms associated with [D.P.’s sleep apnea] that

were never observed by medical providers. This resulted in multiple invasive and

unnecessary medical procedures, which posed a risk to the child’s physical safety and

emotional wellbeing.” Id. at 11, ¶ 31.8.1. The juvenile court thus explicitly rejected

Peschong’s characterization of D.P.’s sleep apnea.

The Peschongs additionally allege that the report falsely stated that “D.P. has

been tethered to external oxygen for his entire life with no clear reason.” Swenson

Report 4; Am. Compl. 7, ¶ 38. Although the juvenile court could not determine the

“exact amount of time [D.P.] was actively using supplemental oxygen,” Juvenile

Court Order 14, ¶ 32.1.4, the court noted that “[D.P.] has a ‘lifetime’ prescription for

supplemental oxygen.” Id. at 13, ¶ 32.1.1 (footnote omitted). The court further noted

that although “[Peschong] testified that [D.P.] no longer needed supplemental oxygen

following his tracheostomy, [] Dr. Smeltzer renewed [D.P.’s] oxygen prescription

after the surgery, in November of 2014.” Id. at 13, ¶ 32.1.3 (footnote omitted).

Furthermore, “[o]n or about July 8, 2015, [Peschong] [] told investigation child

protection social worker Ken Maher that she would provide [D.P.] with oxygen when

he appeared tired or out of breath.” Id. at 13, ¶ 32.1.2 (footnote omitted). When the

report is viewed as a whole, we conclude that the juvenile court agreed that D.P. was

using supplemental oxygen up to the point when he was removed from the

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Peschongs’ home. Although the juvenile court did not employ the report’s language

verbatim, it reached the same conclusion as that set forth in the report.

The Peschongs further allege that the report falsely stated that “[D.P.] was

repeatedly noted to have no real need for supplemental oxygen” and that “[p]roviders

began expressing skepticism about D.P.’s diagnoses and medical needs.” Swenson

Report 3; Am. Compl. 7, ¶ 37(e) and (f). The juvenile court observed, however, that

D.P. was referred to Dr. Swenson because Nurse Practitioner Brady expressed

concerns regarding medical child abuse. Juvenile Court Order 7, ¶ 25.1. Specifically,

“Ms. Brady was concerned that [D.P.] was on supplemental oxygen for a long period

of time and a trach was placed in [D.P.] without any objective reason to do so.

Dr. Paula Mackey, the child’s former primary care physician at Children’s Hospital

and Clinics, shared Dr. Brady’s concerns.” Id. at 7-8, ¶ 25.1 (footnote omitted).

Nurse Practitioner Brady’s concerns regarding medical child abuse reveal that health

care providers were skeptical of D.P.’s diagnoses and medical needs.

The Peschongs also argue that the report falsely stated that D.P.’s oxygen

desaturations were not observed while he was an inpatient.3 Am. Compl. 7, ¶ 37(c);

see also Swenson Report 2. The juvenile court stated, however, that “[t]he significant

desaturations reported by [Peschong] were not documented in the hospital, and [D.P.]

was discharged and/or continued on the same treatments after medical providers

confirmed that [D.P.’s] oxygen levels were consistently normal.” Juvenile Court

Order 12, ¶ 31.8.3 (footnote omitted).

The Amended Complaint raises two fact issues not specifically addressed by

the juvenile court. First, the report stated that after D.P. was released from the

3The report referred to an August 25, 2004, incident. Swenson Report 2. The

Amended Complaint characterized the report’s statement as a general assertion.

Under either characterization, we conclude that the juvenile court addressed the issue

or facts embracing the issue.

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hospital following his June 18-July 6, 2004, initial hospitalization, he was placed on

an “increased calorie formula for failure to thrive, a diagnosis based primarily on

[Peschong’s] reports of difficulty feeding.” Swenson Report 1-2. Second, the report

also stated that “D.P. was again hospitalized on 7/12/2004 for increased work of

breathing. He was reported to be desaturating at home but no respiratory

abnormalities were noted on exam.” Id. at 2. Although it did not specifically address

these two hospitalizations, the juvenile court, as shown above, repeatedly concluded

that Peschong reported symptoms that medical professionals did not observe,

resulting in “numerous unnecessary medical procedures and interventions.” Juvenile

Court Order 20, ¶ 1.1. We thus conclude that given the similarity between the report

and the petition, the finding that Dr. Swenson’s testimony was credible, and its own

detailed findings, the juvenile court necessarily found the report credible.

Finally we reject the Peschongs’ argument that the district court’s application

of collateral estoppel is unfair or inequitable. The district court’s order contains no

specific reference to the concept of equitableness. Nevertheless, we are satisfied from

the district court’s reference to relevant Minnesota case law that a finding of

equitableness inheres its decision to apply the doctrine in the circumstances of this

case. See Hauschildt v. Beckingham, 686 N.W.2d 829, 837 (Minn. 2004) (observing

that collateral estoppel is not to be rigidly applied but instead invoked only after a

determination of whether its application would work an injustice on the party against

whom it is urged).

The judgment is affirmed.