Act for Health v. United Energy Workers Healthcare Corp.
| Decision Date | 03 May 2018 |
| Docket Number | CIVIL ACTION NO. 5:15-CV-00195-TBR-LLK |
| Parties | ACT FOR HEALTH, d/b/a Professional Case Management, et al., Plaintiffs/Counterclaim Defendants, v. UNITED ENERGY WORKERS HEALTHCARE CORP., et al., Defendants/Counterclaimants, v. COLD WAR PATRIOTS NON-PROFIT CORPORATION, Counterclaim Defendant. |
| Court | U.S. District Court — Western District of Kentucky |
ACT for Health, doing business as Professional Case Management, along with its wholly-owned subsidiary, Professional Case Management of Kentucky, LLC (collectively, PCM), filed this action against United Energy Workers Healthcare Corp., (UEW), and its wholly-owned subsidiary, Kentucky Energy Workers Healthcare, LLC, (KEW), along with Brightmore Home Care of Kentucky, LLC, ("Brightmore"), John Falls, Travis Shumway, Chad Shumway, and Nicholas Bame. PCM brings claims for unfair competition, for violating Kentucky law regarding the licensure of health care service providers, for tortious interference with contractual and prospective business relationships, and for civil conspiracy. Defendants have filed a motion to dismiss all of PCM's claims against them for failure to state a claim and for lack of personal jurisdiction. [DN 154.] PCM responded, [DN 177], and Defendants replied, [DN 186.] PCM then moved for leave to file a sur-reply, [DN 190], which Defendants oppose, [DN 193.] For the reasons discussed in detail below, Defendants' motion to dismiss, [DN 154], is GRANTED, and PCM's motion to file a sur-reply, [DN 190], is GRANTED.1
BACKGROUND
This case arises out of a dispute between providers of home-health care services to eligible individuals under the Energy Employees Occupational Illness Compensation Program Act of 2000 (EEOICPA), 42 U.S.C. §§ 7384 to 7385s-16. Administered by the U.S. Department of Labor, the EEOICPA affords "benefits to individuals or their survivors for illnesses incurred from exposure to toxic substances while working for the Department of Energy or certain related entities." Watson v. Solis, 693 F.3d 620, 622 (6th Cir. 2012). Under the EEOICPA, eligible individuals may receive health-care services, including home-health care services and personal-care services, from designated providers, whom the Department of Labor reimburses. See 42 U.S.C. §§ 7384e, 7384t; 20 C.F.R. §§ 30.400, 30.403.
The Commonwealth of Kentucky regulates providers of home-health care services, known as "home health agencies," and providers of personal-care services, called "personal services agencies," differently. To provide home-health care services under Kentucky law, an entity must first obtain a "certificate of need" from the Cabinet of Health and Family Services to establish a "home health agency." See Ky. Rev. Stat. § 216B.061(1)(a); see also id. § 216B.015(9), (13). A "home health agency" is, in broad terms, an "organization . . . which provides intermittent health and health related services, to patients in their place of residence, either singly or in combination as required by a plan of treatment prescribed by a licensed physician." 902 Ky. Admin. Reg. 20:081, § 2. "Health services," in turn, means "clinicallyrelated services provided within the Commonwealth to two . . . or more persons, including but not limited to diagnostic, treatment, or rehabilitative services." Ky. Rev. Stat. § 216B.015(14).
To provide personal-care services, on the other hand, an entity must obtain certification from the Cabinet to operate a "personal services agency." Ky. Rev. Stat. § 216.712(1); see also 906 Ky. Admin. Reg. 1:180, § 2. Generally speaking, a "personal services agency" is an organization "that directly provides or makes provision for personal services." Ky. Rev. Stat. § 216.710(8). "Personal services," in turn, include:
[a]ssisting with a client's ambulation and activities of daily living as defined in KRS 194A.700; . . . [f]acilitating the self-administration of medications if such medications are prepared or directed by a licensed health-care professional or the client's designated representative; . . . [p]roviding services which may be referred to as attendant care, in-home companion, sitter and respite care services, and homemaker services when provided in conjunction with other personal services; and . . . [p]roviding services that enable the client to live safely, comfortably, and independently.
Id. § 216.710(7)(a). The definition explicitly excludes, among other things, services that "require the order of a licensed health-care professional to be lawfully performed in Kentucky," id. § 216.710(7)(b)(6), as well as any "health-care entity or health-care practitioner otherwise licensed, certified, or regulated by local, state, or federal statutes or regulations," id. § 216.710(7)(b)(9).
ACT for Health, doing business as Professional Case Management, furnishes home-health care services to EEOICPA-eligible patients in Kentucky through its wholly-owned subsidiary, Professional Case Management of Kentucky, LLC. [DN 148 at 5, ¶¶ 21-22 (First Amended Complaint).] PCMK is a licensed "home health agency" under Ky. Rev. Stat. § 216B.105(1). [See DN 57-2 at 3 (Home Health Agency License).] United Energy Workers Healthcare Corp., through its wholly-owned subsidiary, Kentucky Energy Workers Healthcare, LLC, also furnishes home-health care services to EEOICPA-eligible patients in Kentucky.
PCM alleges that UEW and KEW have been providing home-health care services without the necessary licensure required for a "home health agency." [See DN 148 at 6-7, ¶¶ 28-30.] Further, according to PCM, "KEW and UEW have solicited or attempted to solicit PCM's patient-clients" and have "offered incentives as a way to induce patients to choose KEW or UEW and/or to switch from PCM, such as offering free, unrelated services (e.g., free lawn care or other services or items)," which PCM contends violates the federal Anti-Kickback Statute, 42 U.S.C. §1320a-7b(b). [Id. at 7, ¶¶ 31-33.] PCM further alleges that KEW and UEW have acted unlawfully by improperly advertising jobs for home health nurses as independent contractors rather than employees, which gives them "an unfair advantage in the market." [Id. at 7, ¶¶ 34-36.]
In support of its proposition that KEW and UEW are operating unlawfully, PCM asserts that, "[d]uring the pendency of this litigation, the Kentucky Office of Inspector General ("OIG") investigated UEW's provision of services in Kentucky, and determined in August 2016 that UEW had exceeded the scope of its Personal Services Agency certification in connection with six out of six patients sampled by OIG." [Id. at 8, ¶ 37.] Additionally, in its First Amended Complaint, PCM adds Brightmore as a Defendant, claiming that Mr. Falls and the Shumways formed Brightmore in August 2016, after this litigation began, "apparently with the intent to purchase Private Duty Nursing Agency licenses held by other entities." [Id. at 8, ¶ 38.]
PCM alleges that, "after its formation, Brightmore began providing home health care services to UEW's and/or KEW's clients, in conjunction with UEW and/or KEW." [Id. at 8, ¶ 40.] PCM further alleges that, "[u]pon information and belief, Brightmore is not a licensed home health agency, as that term is defined under Kentucky law and, therefore, its provision of home health care services is unauthorized," and therefore contends that "any liability resulting from theunauthorized provision of home health care services by Brightmore is attributable to UEW and/or KEW, and vice versa." [Id. at 9, ¶¶ 49, 51.] In essence, PCM believes that "one or more of the Defendants formed Brightmore for the express purpose of hiding and/or limiting UEW's and/or KEW's liability in this litigation." [Id. at 10, ¶ 53.]
PCM brings claims against UEW, KEW, and Brightmore for unfair competition and for violating Chapter 216B of the Kentucky Revised Statutes, which governs the licensure of health care service providers. [Id. at 11-13.] Against all Defendants, including UEW, KEW, Brightmore, and the Individual Defendants (John Falls, Travis Shumway, Chad Shumway, and Nicholas Bame), PCM brings claims of tortious interference with contractual and prospective business relationships and civil conspiracy.
After PCM filed its First Amended Complaint, [DN 148], Defendants filed the instant motion to dismiss, asserting that each of the four claims in PCM's complaint fail to state a claim upon which relief can be granted. [See DN 154 (Motion to Dismiss); DN 155 (Memorandum in Support of Motion to Dismiss).] Additionally, Defendants argue that this Court does not have personal jurisdiction over the Individual Defendants, and therefore that they must be dismissed pursuant to Federal Rule of Civil Procedure 12(b)(2). [DN 154; DN 155.]
STANDARD
A complaint must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). In order to survive a motion to dismiss under Rule 12(b)(6), a party must "plead enough 'factual matter' to raise a 'plausible' inference of wrongdoing." 16630 Southfield Ltd. P'ship v. Flagstar Bank, F.S.B., 727 F.3d 502, 504 (6th Cir. 2013) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). A claim becomes plausible "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that thedefendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678 (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007)). When considering a Rule 12(b)(6) motion to dismiss, the court must presume all of the factual allegations in the complaint are true and draw all reasonable inferences in favor of the non-moving party. Total Benefits Planning Agency, Inc. v. Anthem Blue Cross & Blue Shield, 552 F.3d 430, 434 (6th Cir. 2008) (citing Great Lakes Steel v. Deggendorf, 716 F.2d 1101, 1105 (6th Cir. 1983)). "The court need not, however, accept unwarranted factual inferences." Id. (citing Morgan v. Church's Fried Chicken, 829 F.2d 10, 12 (6th Cir. 1987))....
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