Daus v. Walter H. Gardiner, M.D. & Healthquest LLC

• Decision Date: 01 May 2015
• Docket Number: Civ. No. 11-67
• Court: U.S. District Court — Virgin Islands
• Parties: LAURA M. DAUS, Plaintiff, v. WALTER H. GARDINER, M.D. and HEALTHQUEST LLC d/b/a CARIBBEAN KIDNEY CENTER, Defendants.

LAURA M. DAUS, Plaintiff, v. WALTER H. GARDINER, M.D. and HEALTHQUEST LLCd/b/a CARIBBEAN KIDNEY CENTER, Defendants.

Civ. No. 11-67

UNITED STATES DISTRICT COURT DISTRICT OF THE VIRGIN ISLANDS ST. CROIX DIVISION

May 1, 2015

NOT FOR PUBLICATION

OPINION

THOMPSON, U.S.D.J.¹

INTRODUCTION

This matter is before the Court upon the Motion to Dismiss of Defendants Walter H. Gardiner and Healthquest LLC d/b/a Caribbean Kidney Center (collectively, "Defendants"). (Doc. No. 7). Plaintiff Laura M. Daus ("Plaintiff") opposes. (Doc. No. 9). The Court has decided the Motion based on the written submissions of the parties and without oral argument pursuant to Federal Rule of Civil Procedure 78(b). For the following reasons, Defendant's Motion will be granted in part and denied in part.

BACKGROUND

Plaintiff's pertinent factual allegations are as follows. Plaintiff is a resident of Wisconsin who was hired in May 2009 as a dialysis nurse by Defendants, who operate a dialysis clinic on St. Croix in the U.S. Virgin Islands. After she moved to St. Croix and started workingfor Defendants, Plaintiff would regularly work 50-55 hours per week with no overtime pay. In September 2009, in recognition of the long hours Plaintiff worked, Defendants gave her the title of Nurse Manager, increased her pay, and promised her a new contract; however, they never actually offered her a new contract. At one point Defendants also promised Plaintiff that she would be given compensation time for hours she worked beyond 40 hours a week instead of overtime payments, but they never allowed her to take off time from work to use this compensation time. Defendants also promised to provide Plaintiff with health insurance, but they let that coverage lapse on several occasions.

During the course of her time working for Defendants, Plaintiff discovered that Defendants were violating certain Medicare policies. When Defendants learned that Plaintiff had found out about these violations and was discussing the possibility of reporting them, Defendants began to harass Plaintiff by, among other things, making false accusations against her and refusing to speak to her at times. Plaintiff became physically ill because of this harassment.

On May 16, 2011, Defendants fired Plaintiff and failed to pay her for the work she had done through that pay period. The next day, Plaintiff was at the office to clean out her desk, and while there she requested information on how she could continue her health insurance under COBRA. Defendants told her that they would give her a COBRA letter; however, a few days later, Defendants told her that they had changed their minds and would not give her a COBRA letter. Because she had lost her job and her health insurance, Plaintiff was forced to leave St. Croix and return to Wisconsin.

LEGAL STANDARD

When considering a Rule 12(b)(6) motion, a district court must conduct a three-part analysis: "First, the court must 'take note of the elements a plaintiff must plead to state a claim.'" Malleus v. George, 641 F.3d 560, 563 (3d Cir. 2011) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 675 (2009)). Second, the court must accept all of the plaintiff's well-pleaded factual allegations as true and construe the complaint in the light most favorable to the plaintiff, though the court should disregard legally conclusory allegations. Fowler v. UPMC Shadyside, 578 F.3d 203, 210-11 (3d Cir. 2009). Finally, the court must determine whether the "facts alleged in the complaint are sufficient to show the plaintiff has a 'plausible claim for relief.'" Id. at 211. It is not enough for a pleading to offer "only 'labels and conclusions' or a 'formulaic recitation of the elements of a cause of action'" to survive a motion to dismiss; the plaintiff's allegations, taken together, must support a plausible claim under each cause of action. Id. at 210.

DISCUSSION

I. Fair Labor Standards Act

In Count 1 Plaintiff alleges that she is entitled to unpaid overtime wages under the Fair Labor Standards Act ("FLSA"). In order to state a claim for unpaid overtime wages under the FLSA, "a plaintiff must show that '(1) he was an employee who was eligible for overtime (i.e., not exempt from the Act's overtime pay requirements); (2) and that he actually worked overtime hours for which he was not compensated.'" DeSilva v. North Shore-Long Island Jewish Health Sys., Inc., 770 F. Supp. 2d 497, 507 (E.D.N.Y. 2011) (quoting Hosking v. New World Mortg., Inc., 602 F. Supp. 2d 441, 447 (E.D.N.Y. 2009). While an employer bears the burden of proving that an employee falls within an exemption of the overtime requirement, the employee seeking unpaid overtime must plead that she is entitled to overtime, which includes pleading that she isnon-exempt. See id; Bachayeva v. Aermicare Cert. Special Servs., Inc., 2013 WL 1171741, *4 (E.D.N.Y. March 20, 2013). Plaintiff has made no allegations concerning whether she was an exempt or a non-exempt employee, such as whether she was paid by salary or by an hourly rate. See Balgowan v. State of New Jersey, 115 F.3d 214, 216 n.1 (3d Cir. 1997) (noting that "[a]n exempt professional under the salary-basis test is an employee who is, in effect, an executive who is salaried and does not work on an hourly basis.") Accordingly, the Court will dismiss Plaintiff's FLSA overtime claim without prejudice and grant Plaintiff thirty days to file another amended complaint with allegations sufficient to support this claim. If Plaintiff fails to file an amended complaint after thirty days, this claim will be dismissed.

II. COBRA

In Count 2 Plaintiff alleges that she never received a "COBRA letter" after she was fired, and she claims that by failing to provide her with such, "Defendants have violated the COBRA law." (Doc. No. 1, Compl., at ¶¶ 42, 52). The Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") "requires the employer of an employee under a 'Group Health Plan' covered by ERISA to notify the administrator of a qualifying event described in paragraph (1), (2), (4), or (6) of section 1163 of the same title within thirty (30) days of the date of the qualifying event. 29 U.S.C. § 1166(a)(2)." Rodriguez v. Oriental Fin. Grp. Inc., 802 F. Supp. 2d 350, 354 (D.P.R. 2011). Additionally, 28 U.S.C. § 1161(b) exempts employers with fewer than 20 employees from COBRA's requirements. See Alisz v. Benefit Trust Life Ins. Co., 874 F. Supp. 224, 228-29 (N.D. Ind. 1994). Here, Plaintiff has not alleged that Defendants' Group Health Plan was covered by ERISA, that Defendants either were the administrator of the Group Health Plan or that they did not notify the administrator of the Group Health Plan of Plaintiff's termination, or that Defendants had more than 20 employees. While Plaintiff argues that this lastrequirement is an affirmative defense that Plaintiff is not required to anticipate in its pleadings, the Court disagrees. Just as Plaintiff is required to plead that she is nonexempt from the FLSA in order to sufficiently state a cause of action under that statute, here, too, Plaintiff is required to plead that Defendants are subject to COBRA's statutory scheme. Accordingly, the Court will dismiss Plaintiff's COBRA claim without prejudice and grant Plaintiff leave to file an amended complaint on this claim subject to the same conditions as the FLSA claim.

III. False Claims Act Retaliation and Violations of the Virgin Islands Whistleblower Protection Act

In Count 3 Plaintiff alleges that Defendants retaliated against her in violation of the False Claims Act ("FCA"), 31 U.S.C. § 3730(h), and the Virgin Islands Whistleblower Protect Act ("WPA"), 10 V.I.C. § 122. "A plaintiff asserting a cause of action under § 3730(h) must show (1) he engaged in 'protected conduct,' (i.e., acts done in furtherance of an action under § 3730) and (2) that he was discriminated against because of his 'protected conduct.'" Hutchins v. Wilentz, Goldman & Spitzer, 253 F.3d 176, 186 (3d Cir. 2001) (citing United States ex rel. Yesudian v. Howard Univ., 153 F.3d 731, 736 (D.D.C. 1998)). The Third Circuit has further explained that, in order to prove that an employee was retaliated against because of his protected conduct, he must show that his employer was aware of his protected conduct. Hutchins, 253 F.3d at 188. The standard for this knowledge requirement is that the employee "put his employer on notice of the 'distinct possibility' of False Claims Act litigation." Id. (quoting United States ex rel. Yesudian v. Howard Univ., 153 F.3d 731, 740 (D.D.C. 1998)). Here, Plaintiff has simply alleged that she became aware of "Medicare infractions," and that Defendants retaliated against her when they learned that she was "discussing notifying Medicare" of these infractions. (Doc. No. 1, Compl., at ¶¶ 26, 34). Plaintiff offers no allegations as to how she made Defendants aware that she was engaged in conduct protected under 31 U.S.C. § 3730, or that FCA litigationwas within the realm of possibility; she simply asserts that Defendants learned that she was discussing notifying Medicare of violations of their policies. These conclusory allegations are insufficient to establish that Plaintiff put Defendants on notice of the "distinct possibility of False Claims Act litigation." Accordingly, Plaintiff has failed to properly allege a claim for retaliation under the FCA. The Court will dismiss this claim without prejudice and grant Plaintiff leave to file an amended complaint on this claim subject to the same conditions as the FLSA and COBRA claims.

The Virgin Islands WPA provides that "[a]n employer shall not discharge, threaten, or otherwise discriminate against an employee" when the employee "reports or is about to report, verbally or in writing, a violation or a suspected violation of a law or regulation or rule" of the Virgin Islands or the United States. 10 V.I.C. § 122. The elements of a WPA retaliation claim are similar to the elements of a FCA retaliation claim: "a whistleblower must show: (1) he engaged in conduct...