Westfall Act Savings Clause Does Not Apply to PHSA § 233(c) Substitution in Deemed-PHS Medical Malpractice Cases

I. Introduction

In Denise Evans v. United States of America (7th Cir. Mar. 13, 2025), the Seventh Circuit resolved an issue it had previously identified as open: whether the Westfall Act “savings provision,” 28 U.S.C. § 2679(d)(5), can rescue an otherwise untimely Federal Tort Claims Act (“FTCA”) medical-malpractice claim when the United States is substituted as defendant not under the Westfall Act’s substitution mechanism, but under the Public Health Service Act (“PHSA”), 42 U.S.C. § 233(c).

The plaintiff, Denise Evans, suffered an injury allegedly caused by negligent surgical care. She initially sued in state court, unaware that the surgeon worked for a federally funded health center. The government “deemed” the surgeon a Public Health Service employee and substituted the United States under PHSA § 233(c), removed the case to federal court, and obtained dismissal for failure to exhaust administrative remedies. Evans then pursued administrative presentment, and—after agency inaction—filed an FTCA suit. The government moved to dismiss on the ground that Evans had not presented her administrative claim within the FTCA’s two-year limitations period, 28 U.S.C. § 2401(b).

The key issues on appeal were: (1) whether § 2679(d)(5) applies when substitution occurs under PHSA § 233(c) rather than FTCA/Westfall Act § 2679(d); and (2) whether equitable tolling should excuse late presentment based on Evans’s lack of knowledge that the surgeon was federally “deemed.”

II. Summary of the Opinion

The Seventh Circuit affirmed dismissal. It held:

  • Westfall Act savings provision inapplicable: By its text, 28 U.S.C. § 2679(d)(5) applies only when the United States is substituted “under this subsection,” meaning under § 2679(d). Substitution here occurred under 42 U.S.C. § 233(c), so the savings provision did not apply.
  • No equitable tolling: Equitable tolling is reserved for rare circumstances. Seventh Circuit precedent has repeatedly stated that a provider’s “deemed” status is readily discoverable via Public Health Service resources, and counsel should investigate. Misreading precedent about the savings provision’s availability is not an extraordinary circumstance.

III. Analysis

A. Precedents Cited

1. Standards of review

  • Schlemm v. Pizzala, 94 F.4th 688 (7th Cir. 2024): cited for de novo review of a motion-to-dismiss disposition.
  • Lax v. Mayorkas, 20 F.4th 1178 (7th Cir. 2021): cited for abuse-of-discretion review of equitable-tolling determinations.

2. Sovereign immunity and the FTCA’s limited waiver

  • United States v. Sherwood, 312 U.S. 584 (1941): invoked for the foundational principle that the United States may be sued only to the extent it consents; the FTCA is a limited waiver.

3. Westfall Act background and purpose

  • Westfall v. Erwin, 484 U.S. 292 (1988): the Supreme Court decision Congress reacted to; it narrowed employee immunity by requiring both scope-of-employment and discretionary-function showings.
  • De Martinez v. Lamagno, 515 U.S. 417 (1995): used to explain Westfall’s two-part test and Congress’s response via the Westfall Act.

4. Textualism and statutory interpretation framework

  • Landreth Timber Co. v. Landreth, 471 U.S. 681 (1985): cited for the proposition that statutory construction begins with the text.
  • Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723 (1975): quoted (Powell, J., concurring) through Landreth for the “starting point” principle.
  • United States v. Ron Pair Enters., Inc., 489 U.S. 235 (1989): invoked for enforcing plain statutory language according to its terms.
  • Caminetti v. United States, 242 U.S. 470 (1917): quoted via Ron Pair for the classic “sole function of the courts” formulation when text is plain.

5. PHSA immunity/substitution structure

  • Hui v. Castaneda, 559 U.S. 799 (2010): central to the panel’s structural argument; the Court rejected an attempt to treat PHSA § 233 as incorporating the FTCA wholesale, supporting the Seventh Circuit’s conclusion that § 233 has its own, distinct mechanism and effects.

6. The “open question” and limited value of prior circuit decisions

  • P.W. by Woodson v. United States, 990 F.3d 515 (7th Cir. 2021): the court had flagged in a footnote that the § 2679(d)(5)/§ 233(c) interaction was an open question in the circuit. Here, the court answers it.
  • Chronis v. United States, 932 F.3d 544 (7th Cir. 2019): referenced as dicta only; not controlling on the savings provision’s reach.
  • Oklahoma v. Castro-Huerta, 597 U.S. 629 (2022): cited for the proposition that dicta—even repeated—does not become precedent and cannot override statutory text.
  • Cases Evans cited as “unhelpful” because they involved substitution under § 2679(d) alone or under both schemes, rather than exclusively under PHSA § 233(c): Blanche v. United States, 811 F.3d 953 (7th Cir. 2016); Huertero v. United States, 601 F. App'x 169 (3d Cir. 2015); Arroyo v. United States, 656 F.3d 663 (7th Cir. 2011); Celestine v. Mount Vernon Neighborhood Health Ctr., 403 F.3d 76 (2d Cir. 2005); McLaurin v. United States, 392 F.3d 774 (5th Cir. 2004).

7. Equitable tolling doctrine and “deemed” provider discoverability

  • Wallace v. Kato, 549 U.S. 384 (2007): quoted for the narrowness of equitable tolling (“rare remedy”).
  • Pace v. DiGuglielmo, 544 U.S. 408 (2005): supplies the familiar two-part tolling test—diligence and extraordinary circumstance.
  • Arteaga v. United States, 711 F.3d 828 (7th Cir. 2013): pivotal Seventh Circuit precedent; held that deemed status is “no secret,” given publicly available PHS resources, and that the proper remedy for attorney failure is malpractice, not tolling.
  • P.W. by Woodson v. United States, 990 F.3d 515 (7th Cir. 2021), and Blanche v. United States, 811 F.3d 953 (7th Cir. 2016): reaffirmed Arteaga and rejected tolling based on ignorance of deemed status.
  • Menominee Indian Tribe of Wisconsin v. United States, 577 U.S. 250 (2016): used to reject the argument that counsel’s misreading of precedent is an extraordinary circumstance; it is akin to excusable neglect.

B. Legal Reasoning

1. The holding turns on the limiting words “under this subsection”

The court’s analysis is anchored in the opening condition of 28 U.S.C. § 2679(d)(5): it applies “[w]henever an action or proceeding in which the United States is substituted as the party defendant under this subsection is dismissed” for failure to present an administrative claim. The panel read “this subsection” as referring only to § 2679(d)—the Westfall Act’s substitution/removal subsection.

Because Evans’s substitution occurred under 42 U.S.C. § 233(c) (PHSA), the statutory prerequisite was absent. The court treated this as a straightforward textual boundary: the savings provision is not a general FTCA tolling device; it is a targeted fix for a specific procedural trap created by Westfall Act substitution.

2. The PHSA does not “import” all Title 28 mechanisms—including the Westfall savings clause

Evans argued that language in 42 U.S.C. § 233(c)—that the proceeding “is deemed a tort action brought against the United States under the provisions of Title 28 and all references thereto”— transforms the case into one where all Title 28 provisions, including § 2679(d)(5), apply.

The court rejected this, relying on:

  • Structural differences: PHSA § 233(c) has its own certification/substitution process, which would be redundant if Congress meant to route everything through § 2679(d)(1).
  • Legislative choice to add PHSA-specific tolling in 2003: Congress enacted a narrower tolling provision, 42 U.S.C. § 233(p), without incorporating or referencing the Westfall savings provision, suggesting Congress knew how to provide tolling within the PHSA scheme when it wanted to.
  • Supreme Court guidance in Hui v. Castaneda: the Court had already rebuffed an argument that § 233 broadly incorporates the FTCA, supporting the Seventh Circuit’s refusal to treat § 233(c) as a wholesale “adoption” of FTCA procedures.

3. Equitable tolling fails on both diligence and “extraordinary circumstances”

Applying Pace v. DiGuglielmo and the Seventh Circuit’s malpractice/“deemed status” line of cases, the panel found no abuse of discretion:

  • Ignorance of deemed status is not extraordinary: Under Arteaga v. United States, whether a provider is covered is publicly ascertainable; malpractice counsel are expected to check.
  • Misreading precedent is not extraordinary: Under Menominee Indian Tribe of Wisconsin v. United States, legal mistakes about precedent resemble excusable neglect, not a circumstance “standing in the way.”

Note: the opinion’s final sentence refers to “equitable estoppel,” but the discussion addresses equitable tolling; the holding is plainly that tolling is unavailable on these facts.

C. Impact

  • New Seventh Circuit rule on § 2679(d)(5): Plaintiffs cannot invoke the Westfall Act savings provision when substitution occurs solely under PHSA § 233(c). In deemed-PHS medical-malpractice cases, the plaintiff must satisfy FTCA § 2401(b) without relying on § 2679(d)(5).
  • Sharper filing incentives: Plaintiffs’ lawyers must treat “deemed” status as a threshold issue at intake and promptly present an administrative claim within two years of accrual, even if they pursue parallel state litigation against non-federal defendants.
  • Reduced remedial flexibility after federal substitution: A plaintiff who first learns of deemed status after filing in state court may find that removal and dismissal for non-exhaustion offer no limitations “safety net” unless Congress extends Westfall-like savings to PHSA substitutions.
  • Doctrinal clarity: The decision distinguishes two substitution regimes—§ 2679(d) and § 233(c)—and discourages arguments that PHSA “deeming” automatically triggers every procedural benefit in Title 28.

IV. Complex Concepts Simplified

Sovereign immunity
The United States cannot be sued unless it agrees. The FTCA is a limited permission slip to sue the government for certain torts.
FTCA exhaustion / presentment (28 U.S.C. § 2675(a))
Before filing in federal court, a claimant must first present the claim to the appropriate federal agency and allow the agency time to act.
Substitution and certification
The government can replace an individual defendant with the United States if it certifies the person acted within the scope of federal employment. Under the Westfall Act this is handled in 28 U.S.C. § 2679(d); for Public Health Service (and “deemed”) providers it is handled in 42 U.S.C. § 233(c).
Westfall Act “savings provision” (28 U.S.C. § 2679(d)(5))
A narrow extension mechanism: if a case is dismissed for failure to exhaust after substitution under § 2679(d), the plaintiff gets a short window to present an administrative claim and still be treated as timely.
PHSA “deeming” (42 U.S.C. § 233(g))
Certain federally funded health centers (and their personnel/contractors) can be treated as Public Health Service employees for malpractice purposes, channeling suits to the FTCA and immunizing the individual provider.
Equitable tolling
A court-created pause of a deadline, available only when the plaintiff was diligent and some extraordinary barrier prevented timely filing.
Dicta
Statements in an opinion that are not necessary to decide the case; they are not binding precedent.

V. Conclusion

Evans establishes a clear Seventh Circuit rule: the Westfall Act’s savings provision, 28 U.S.C. § 2679(d)(5), does not apply when the United States is substituted under 42 U.S.C. § 233(c) in a deemed-Public Health Service medical-malpractice case. The court reached this result through strict textual analysis (“under this subsection”), reinforced by statutory structure, legislative history, and Hui v. Castaneda’s rejection of FTCA wholesale incorporation into § 233.

The decision also reaffirms the Seventh Circuit’s hard line on equitable tolling in this context: deemed status is publicly discoverable, and attorney error—whether failure to investigate or misreading precedent—does not constitute the “extraordinary circumstance” necessary to toll § 2401(b). Practically, Evans shifts malpractice litigation strategy toward early verification of federal/deemed status and immediate administrative presentment within two years of accrual.