Bates v. Northwestern Human Services, Inc.
Decision Date | 11 December 2006 |
Docket Number | Civil Action No. 04-2116 (RBW). |
Citation | 466 F.Supp.2d 69 |
Parties | Barbara BATES, et al., Plaintiffs, v. NORTHWESTERN HUMAN SERVICES, INC., et al., Defendants. |
Court | U.S. District Court — District of Columbia |
Mary Nell Mcgarity Clark, Sandra J. Bernstein, University Legal Services, Inc., Thomas Winfried Mitchell; Bruce J. Klores & Associates, Washington, DC, for Plaintiffs.
Joseph T. Kelley, III, Kelley & Murphy, Michael Alan Hamilton, Salvatore G. Rotella, Jr., Cozen O'Connor, PC, Philadelphia, PA, L. Barrett Boss, Cozen O'Connor, PC, Washington, DC, Patrick G. Murphy, Blue Bell, PA, for Defendants.
Barbara Bates and Bonnie Bell ("the plaintiffs"), on behalf of themselves and a putative class of similarly situated individuals, bring this action against Northwestern Human Services, Inc. ("NHS") and its two wholly-owned subsidiaries, Northwestern Human Services of Lehigh Valley, Inc. ("NHSLV") and NHS MidAtlantic, Inc. ("NHSMA") (collectively "the defendants"), asserting various statutory, regulatory, and common law violations in connection with the defendants' alleged misappropriation and misuse of the plaintiffs' federal benefits payments and other funds while acting as the plaintiffs' representative payee under the Social Security Act. Complaint ("Compl.") ¶¶ 1-11 Currently before the Court is the defendants' motion to dismiss for failure to state a claim upon which relief maybe granted () .1 For the reasons that follow, the Court grants in part and denies in part the defendants' motion to dismiss and permits the plaintiffs to file an amended complaint in accordance with this Opinion.2
(III) a State or local government agency with fiduciary responsibilities, or
(IV) a designee of an agency (other than of a Federal agency) referred to in the preceding subclauses of this clause, if the Commissioner of Social Security deems it appropriate.
42 U.S.C. §§ 405(j)(2)(C)(v) and 1383(a)(2)(B)(vii); see also 20 C.F.R. §§ 404.2021 and 416.621. Once appointed, representative payees are authorized to receive an individual's benefit payments and disburse monies to the individual for that individual's use and benefit. 42 U.S.C. §§ 405(j)(1)(A) and 1383(a)(2)(A)(ii)(I); see also 20 C.F.R. §§ 404.2035 and 416.635. The payees are subject to "a system of accountability monitoring" under which they are forbidden from "misus[ing]" an individual's benefit payment in any way, 42 U.S.C. § 405(j)(1)(A); see also 42 U.S.C. § 1383(a)(2)(A)(iv) ( ), and are required to report to the SSA at least once per year "with respect to the use of such payments," 42 U.S.C. §§ 405(j)(3)(A) and 1383(a)(2)(C)(i).6 According to the plaintiffs, the defendants provided them with mental health services and served as their representative payee as of some unspecified date,7 see Compl. ¶ 28 ( ); id. ¶ 30 ( ), until some date no later than June 2004, see id. ¶ 34 ( ); id. ¶ 47 ( ). The plaintiffs allege that the defendants in their capacity as the plaintiffs' representative payee, "misused and/or misappropriated a substantial amount of [the plaintiffs' federal benefits payments] for their own purposes," id. ¶ 2; see also id. ¶ 33 ( ), and subsequently "left the jurisdiction[ ] without ever properly accounting for or returning the [p]laintiffs' misspent and unaccounted for funds," id. ¶ 2; see also id. ¶ 34 ( ). The plaintiffs further allege that the defendants, contrary to federal law, "failed to implement policies or procedures to enable them to account properly for [the][p]laintiffs' funds." Id. ¶ 35.
The plaintiffs brought this action on December 6, 2004, asserting a panoply of statutory, regulatory, and common law claims against all three defendants. Id. ¶¶ 48-124. First, the plaintiffs allege that the defendants violated Sections 1962(c) and (d) of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1962 (2000) ("RICO"), by "participat[ing and conspiring] in the conduct of an enterprise's affairs through a pattern of racketeering activity" — specifically, repeated acts of mail and wire fraud — in order to misappropriate the plaintiffs' federal benefits payments. Compl. ¶¶ 52, 62, 72; 18 U.S.C. § 1962(c) ("Section 1962(c)"); see generally Compl. ¶¶ 48-83. Second, the plaintiffs allege that the defendants violated 42 U.S.C. § 1983 (2000) ("Section 1983") by acting under color of state law to deprive them of a federally protected right to receive their benefits payments. Compl. ¶¶ 84-90. Third, the plaintiffs allege that the defendants violated 42 U.S.C. §§ 405 and 1383, as well as their associated regulations, by failing to comply with the requirements of the relevant representative payee provisions. Compl. ¶¶ 91-104. Finally, the plaintiffs assert claims of breach of fiduciary duty, negligence, conversion, and "money had and received" in connection with the allegedly misused and misappropriated funds. Id. ¶¶ 110-124. The plaintiffs seek an accounting of all funds received, spent, and possessed by the defendants in their capacity as the plaintiffs' representative payee, as well as "a court determination of all unlawful and unauthorized expenditures" of those funds. Id. at 30; see also id. ¶¶ 105-109. The plaintiffs also seek, inter alia, compensatory, consequential, and punitive damages. Id at 30.
On January 25, 2005, the defendants moved to dismiss all but three counts of the plaintiffs'...
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