Act for Health v. United Energy Workers Healthcare Corp.
| Decision Date | 09 August 2019 |
| Docket Number | No. 18-5900,18-5900 |
| Parties | ACT FOR HEALTH, dba Professional Case Management; PROFESSIONAL CASE MANAGEMENT OF KENTUCKY, LLC, Plaintiffs-Appellants, v. UNITED ENERGY WORKERS HEALTHCARE CORP; KENTUCKY ENERGY WORKERS HEALTHCARE, LLC; BRIGHTMORE HOME CARE OF KENTUCKY LLC; JOHN FALLS, an individual; TRAVIS SHUMWAY, an individual; CHAD SHUMWAY, an individual; and NICHOLAS BAME, an individual, Defendants-Appellees |
| Court | U.S. Court of Appeals — Sixth Circuit |
NOT RECOMMENDED FOR PUBLICATION
File Name: 19a0415n.06
HELENE N. WHITE, Circuit Judge. Plaintiff Act for Health, dba Professional Case Management, and its wholly owned subsidiary, Professional Case Management of Kentucky ("PCMK," and collectively with Act for Health, "PCM" or "Plaintiffs"), appeal the district court's dismissal of their amended complaint for failure to state a claim. Plaintiffs compete with three affiliated corporate defendants—United Energy Workers Healthcare Corp. ("UEW"), Kentucky Energy Workers Healthcare, LLC ("KEW"), and Brightmore Home Care of Kentucky ("Brightmore")—in providing home-health services. PCM alleges that UEW and KEW were operating without the required license to provide home-health services and, after the Kentucky Officer of Inspector General investigated them, Defendants John Falls, Travis Shumway, and Chad Shumway formed Brightmore to continue to illegally service UEW and KEW clients. PCM also alleges that UEW and KEW solicit PCM's patients and offer free, unrelated services (such as lawn care) to induce patients to switch from PCM, and also misclassify their employees as independent contractors to gain an advantage in the market.
PCM filed this diversity action alleging several state-law claims, including unfair competition, tortious interference with contract and/or prospective business relations, and civil conspiracy. Finding no error in the district court's dismissal of PCM's First Amended Complaint for failure to state a claim, we affirm.
The federal Energy Employees Occupational Illness Compensation Program Act (EEOICPA) of 2000 provides "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); see 42 U.S.C. § 7384, et seq. Eligible individuals may receive healthcare services, including home-health services and personal-care services, from designated providers that are reimbursed by the Department of Labor. See 42 U.S.C. §§ 7384e, 7384t; 20 C.F.R. §§ 30.400, 30.403.
Providers are also subject to state healthcare regulations. Kentucky has different requirements for providers of home-health services, i.e., "home health agencies," and providers of personal-care services, i.e., "personal services agencies." To establish a home-health agency, an entity must obtain a "certificate of need" from the Kentucky Cabinet for Health and Family Services ("KCHFS"). Ky. Rev. Stat. § 216B.061(1)(a); id. § 216B.015(9), (13). Home-health agencies provide "health and health related services" in a patient's place of residence "as requiredby a plan of care prescribed by a licensed physician." 902 Ky. Admin. Reg. 20:081, § 2. "Health services" are defined as "clinically related 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, an entity must obtain certification from the KCHFS to operate a "personal services agency." Ky. Rev. Stat. § 216.712(1); see also 906 Ky. Admin. Reg. 1:180, § 2. A "personal services agency" is an organization "that directly provides or makes provision for personal services." Ky. Rev. Stat. § 216.710(8). The term "personal services" is defined to include assisting with ambulation and activities of daily living, facilitating the self-administration of medications, and providing attendant care; but the definition specifically excludes services "that require the order of a licensed health-care professional to be lawfully performed in Kentucky" as well as services performed by any "health-care entity or health-care practitioner otherwise licensed, certified, or regulated by local, state, or federal statutes or regulations." Ky. Rev. Stat. § 216.710(7)(b)(6), (9).
Plaintiffs' amended complaint alleges that since 2002, PCM has been providing home-health services to EEOICPA-eligible patients in Kentucky. PCM is an enrolled EEOICPA home-health care provider with the U.S. Department of Labor (DOL), and PCMK is a licensed home-health agency in Kentucky with a certificate of need to provide home-health services in four Kentucky counties. To operate this business, PCM locates eligible persons and assists them in enrolling in and obtaining benefits through the EEOICPA program; it also identifies, recruits and trains qualified home-health providers to serve patients. These activities require a considerable investment of time, effort, and money.
PCM's amended complaint alleges that neither UEW nor KEW has obtained a certificate of need in any of the four counties where PCM is licensed to operate; therefore they are not licensed home-health agencies in those counties. Nonetheless, UEW and KEW provide home-health services in those four counties. UEW and KEW solicit PCM's patients and offer free, unrelated services such as lawn care to induce patients to switch from PCM. They also misclassify their employees by classifying their nurses and other providers as independent contractors, thereby gaining an economic advantage in the market.
After an investigation, in August 2016 the Kentucky Officer of Inspector General (OIG) concluded that UEW's provision of services in Kentucky "exceeded the scope of its Personal Services Agency certification in connection with six out of six patients sampled by OIG." (R. 148, PID 1224.) That month, Falls and the Shumways formed Brightmore, which also lacks the necessary licensure, and Brightmore began providing home-health services to clients of UEW and KEW.
PCM's amended complaint asserts, in relevant part, claims of (1) unfair competition against UEW, KEW, and Brightmore; (2) tortious interference with contract and/or prospective business relations against all Defendants; and (3) civil conspiracy against all Defendants.1 The district court granted Defendants' motion to dismiss the amended complaint for failure to state a claim. Acknowledging that the "boundaries" of an unfair-competition claim under Kentucky law "are somewhat unclear" (R. 195, PID 1655), the district court dismissed the claim because it could find no case (Id. at PID 1660.)
The district court rejected the tortious-interference-with-contract claim on the basis that the relevant contracts are at-will and thus are not breached when patients opt to switch providers. The district court found that PCM's claim of tortious interference with prospective business relations fails because the amended complaint does not plead "significantly wrongful conduct," such as "fraudulent misrepresentation, deceit, coercion, physical violence, civil suits, criminal prosecutions, or any other conduct analogous to these examples." (Id. at PID 1670, 1672.) In arguing that it alleged "significantly wrongful conduct," PCM relied on Defendants' alleged operation without a proper license, misclassification of their employees as independent contractors, forming Brightmore for the purpose of continuing to provide unauthorized healthcare services in Kentucky, and solicitation of PCM's patients by offering services unrelated to healthcare in violation of the federal Anti-Kickback Statute. The district court rejected these arguments. Finally, because PCM's other claims failed, the district court dismissed the civil-conspiracy claim as well.
Plaintiffs appealed.
This court reviews "de novo a district court's decision to grant a motion to dismiss for failure to state a claim under" Federal Rule of Civil Procedure 12(b)(6), construing the complaint in the light most favorable to Plaintiffs. Jackson v. Prof'l Radiology Inc., 864 F.3d 463, 467 (6th Cir. 2017) (citing Lambert v. Hartman, 517 F.3d 433, 438-39 (6th Cir. 2008)). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (). If this court confronts a question that "has not yet been resolved by the [Kentucky] courts, we must attempt to predict what the [Kentucky] Supreme Court would do if confronted with the same question." Himmel v. Ford Motor Co., 342 F.3d 593, 598 (6th Cir. 2003) (citing Stalbosky v. Belew, 205 F.3d 890, 893-94 (6th Cir. 2000)).
PCM argues that the district court interpreted the scope of a Kentucky unfair-competition claim too narrowly. PCM relies primarily on two Kentucky cases, as well as several cases from other jurisdictions, in arguing that an unfair-competition claim covers the conduct alleged here, i.e., providing competing services without proper licensure and in violation of statutes.
Covington Inn Corp. v. White Horse Tavern, Inc., 445 S.W.2d 135 (Ky. 1969), involved a dispute about whether the "White House Inn" was deceptively similar to the "White House Tavern." In defining the contours of an unfair-competition claim, the Court of Appeals of Kentucky explained:
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