Cmty. Ties of Am., Inc. v. NDT Care Servs., LLC

Decision Date06 February 2015
Docket NumberNO. 3:12-CV-00429-CRS,3:12-CV-00429-CRS
PartiesCOMMUNITY TIES OF AMERICA, INC PLAINTIFF v. NDT CARE SERVICES, LLC d/b/a Homeplace Support Services, LLC, et al. DEFENDANTS
CourtUnited States District Courts. 6th Circuit. United States District Court of Western District of Kentucky

COMMUNITY TIES OF AMERICA, INC PLAINTIFF
v.
NDT CARE SERVICES, LLC d/b/a Homeplace Support Services, LLC, et al.
DEFENDANTS

NO. 3:12-CV-00429-CRS

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF KENTUCKY AT LOUISVILLE

February 6, 2015


MEMORANDUM OPINION

This matter is before the court on motion of the Plaintiff, Community Ties of America, Inc., for partial summary judgment as to Counts I, II, III, IV, VI, VII, XI, and XII in the Complaint, on motion of the Defendants, Stephen M. Foreman and Barbara J. Foreman (the "Foremans"), for summary judgment as to all Counts in the Complaint, and on motion of the Defendants, NDT Care Services d/b/a Homeplace Support Services, LLC, The Carla Barrowman Corporation d/b/a Barrowman Case Management, and Carla Barrowman Clevenger (the "Clevenger Defendants"), for summary judgment as to all Counts in the Complaint. DN 1. Fully briefed, the matter is now ripe for adjudication. Having considered the parties' respective positions, the Court concludes that there are no material issues of fact in dispute as to all Counts against the Defendants. For the reasons set forth below, the Court will grant the Defendants' motion for summary judgment and deny the Plaintiff's. DN 87-1; DN 89-1.

I.

Community Ties of America, Inc. ("CTA") is a corporation based in Nashville, Tennessee that, as of the time the actions described herein began, provided "Behavior Support" and "Residential Services" to individuals with severe developmental disabilities across several states. In 2009, CTA's Chief Executive Officer ("CEO") Ron Lee ("Lee") decided to expand

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CTA's business into Kentucky. Lee enlisted Tim Lloyd ("Lloyd"), Executive Director of CTA, and Stephen Foreman, a Behavior Analyst, to lead this expansion. He appointed Stephen Foreman to supervise the Kentucky operations and gave him the title of Program Manager. Barbara Foreman, Stephen's wife and fellow Behavior Analyst, also relocated to Kentucky to continue working for CTA. Through their positions, Stephen and Barbara Foreman (the "Foremans") had access to CTA's client files, employee files, and client lists, which were kept under "double lock and key" in their home office. The Foremans are now employed by Homeplace Support Services, LLC ("Homeplace"), which comprises one part of the, and is closely related to the remaining, Clevenger Defendants. CTA's claims against the Foremans and the Clevenger Defendants arise from the following facts that, except as noted, are undisputed.

From its entry into the Commonwealth and up to the events in question, CTA's Kentucky revenue was almost wholly comprised of reimbursements it received from the Commonwealth under its enrollment in what is known as the Supports for Community Living ("SCL") program.1 Kentucky's SCL program provides Medicaid reimbursements to organizations like CTA that maintain a Medicaid Provider Number, Medicaid Certification, and a Medicaid Contract with the Commonwealth, all of which enable them to provide services to Medicaid-eligible individuals. The Kentucky Cabinet for Health and Family Services (the "Cabinet") administers the SCL program and furnishes Medicaid Provider Numbers to organizations like CTA. CTA obtained a Provider Number in 2009 and used it to supply reimbursable services on two fronts: through its Residential Supports program, where it provided services to clients living in supervised group homes, and through its Behavior Supports program, where it provided services to privately-housed clients. CTA had several group homes in Kentucky, although the Behavior Supports program comprised the majority of its business in the Commonwealth.

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On June 12, 2011, CTA employee Trevor Brock murdered a CTA client, Shawn Akridge, in a CTA Residential Supports group home in Paint Lick, Kentucky. News coverage ensued, and the Cabinet responded by placing CTA on its second moratorium - an act that prevents a provider from taking on any new clients - in a period of six months. In response to the moratorium, CTA wrote the Cabinet on June 15, 2011 to indicate that it would be voluntarily ceasing the Residential Supports portion of its Kentucky operations but desired to continue its Behavior Supports program. DN 89-20. During this time, at least one CTA Behavior Analyst expressed concern about CTA's future and its employees' job security. DN 82-14. The Foremans allege that Lee did not reach out to CTA's Kentucky employees during this time, even though Lloyd had warned Lee that CTA's staff was disgruntled.

Around July 13, 2011, while the investigation of Akridge's death continued to unfold, Carla Barrowman Clevenger ("Clevenger"), owner of Homeplace and Barrowman Case Management ("BCM"), approached Stephen Foreman to discuss the possibility of him transferring to Homeplace, which had a valid Medicaid Provider Number at the time, and creating a Behavior Supports Division there. Clevenger was aware of the murder and assumed it would result in the Cabinet "terminating" CTA's Medical Provider Contract and Number - an assumption that would eventually prove correct. DN 82-2. She then set up a dinner with the Foremans, and they agreed to attend as part of the their larger plan to "interview[] other companies to see who would be viable and who would be the best fit for [CTA's] clients." DN 82-17, p. 108. It is undisputed that Clevenger offered the Foremans employment at Homeplace during that dinner, DN 82-1, p. 84-85, and that they discussed what a transition of CTA's clients and Behavior Analysts to Homeplace "would look like." DN 82-1, p. 24-25. Then, as early as

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June 18, the Foremans began "brainstorming some place to hold meetings" with CTA's Behavior Analysts. DN 89-23.

Then on June 25, 2011, Clevenger confirmed her assumption that the Cabinet would terminate CTA's Medical Provider Contract and Number. She spoke to a Cabinet employee who indicated that the Cabinet was preparing to terminate a SCL provider's Medicaid Contract - a provider Clevenger deduced was CTA. DN 82-2, p. 126-27. Clevenger called Stephen Foreman to inform him of the impending termination, and, that same day, decided to offer employment to all of CTA's Behavior Analysts. Id. at 147. She and Stephen's conversation rested on the continued assumption that CTA's termination would prevent CTA from serving Medicaid clients and, thus, removing its need and ability to employ Behavior Analysts. Id. at 149-53.

Next, the Cabinet issued the anticipated Notice of Termination letter to CTA on July 26, 2011. DN 89-24. The letter advised CTA that "as of July 29, 2011, [its] certification as an SCL provider will hereby be terminated . . . [and it] shall not be entitled to receive any reimbursement for []SCL[] services provided after July 29." Id. It explained that the "[t]ermination . . . [wa]s necessary to protect the health, safety, and well[-]being of residents who have been placed under its care" and based on the indictment of Tyler Brock. Id. The Cabinet cited two critical provisions in the letter: Sections 1(39) and 6(19) of 907 Ky. Admin. Regs. 1:671. Section 1(39) defines the operative term "terminated" as meaning "a provider's participation in the Medicaid Program has been ended, and that a contractual relationship no longer exists between a provider and the department for the provision of Medicaid covered services." 907 Ky. Admin. Regs. 1:671 § 1(39). Relevant here, Section 6(19) explains that the Cabinet "may terminate a provider immediately, if necessary to protect healthy, safety, or well-being of Medicaid recipients" - not coincidentally, the same language the Cabinet invoked as its basis for the termination. 907 Ky.

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Admin. Regs. 1:671 § 6(19); DN 89-24. The letter explained, critically, that the Cabinet would be "seeking immediate alternative placement" for CTA's clients and warned that "[a]ny efforts by [CTA], its staff, or anyone working in concert with it to disrupt or impede the orderly relocation of the[se] individuals . . . shall be subject to any and all remedies provided by law." Id. Nothing in it, however, prevented CTA from continuing to provide non-SCL services to private-paying clients.

The Notice went on to explain that CTA had the right to apply for reinstatement as a SCL provider, and that it could appeal the termination in "an administrative hearing pursuant to 907 KAR 1:671, Section 9." DN 89-24. So on August 1, 2011, after hiring counsel, CTA filed an appeal of the Notice of Termination. DN 89-25. In a CTA conference call to which Stephen Foreman and Lloyd were parties, Lee explained that CTA was appealing the termination and that it planned to continue paying its employees and serving clients during the appeal. DN 82-5; DN 82-1. Stephen Foreman and Lloyd then participated in strategy calls with CTA management and Lee, during which CTA's future was discussed. Id. During these calls, Stephen Foreman never mentioned Homeplace, his plans to leave CTA, or any plans to transition CTA's Behavior Analysts and clients to Homeplace. Id. Nor did he reveal the actions that he was taking action to see these plans through.

So what actions was Stephen Foreman taking? In an e-mail dated July 26, 2011, Stephen told Clevenger that he had copied CTA's "employee files," DN 89-27, though he never requested CTA's permission to do so. Then on July 27, 2011, the Foremans invited CTA's Behavior Analysts to an "urgent" meeting through their CTA e-mail accounts. DN 89-16. At the meeting, the Foremans informed the Behavior Analysts in attendance about the Notice of Termination letter, of their plans to begin working for Homeplace, and that Homeplace was willing to employ

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any CTA Behavior Analyst that desired to transfer with them. DN 82-1. The Foremans communicated the same by telephone to the Behavior Analysts who could not attend. Id. They did not explain to the Behavior Analysts, however, that CTA planned to appeal the termination, continue paying its Behavior Analysts, and continue serving its...

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