Harris v. Blue Ridge Health Servs., Inc., 1:18cv114

• Decision Date: 21 June 2019
• Docket Number: 1:18cv114
• Citation: 388 F.Supp.3d 633
• Court: U.S. District Court — Middle District of North Carolina
• Parties: Latia HARRIS and Octavia Harris, Plaintiffs, v. BLUE RIDGE HEALTH SERVICES, INC., Defendant.

388 F.Supp.3d 633

Latia HARRIS and Octavia Harris, Plaintiffs,

v.BLUE RIDGE HEALTH SERVICES, INC., Defendant.

1:18cv114

United States District Court, M.D. North Carolina.

Signed June 21, 2019

Wilson F. Fong, Hensel Law, PLLC, Greensboro, NC, for Plaintiffs.

MEMORANDUM OPINION AND ORDER

THOMAS D. SCHROEDER, Chief District Judge.

This matter is before the court on what Plaintiffs LaTia and Octavia Harris style as a motion for summary judgment against Defendant Blue Ridge Health Services, Inc. ("Blue Ridge"), pursuant to Federal Rule of Civil Procedure 56. (Doc. 22.) Because Plaintiffs base their motion on facts established by the entry of default against Blue Ridge, the court construes their filing as a motion for default judgment pursuant to Rule 55. See Auto-Owners Ins. Co. v. Rippy, No. 4:18-cv-02698-RBH, 2019 WL 122922 (D.S.C. Jan. 7, 2019) (construing motion for summary judgment filed after entry of default as motion for default judgment); Phillips Factors Corp. v. Harbor Lane of Pensacola, Inc., 648 F. Supp. 1580, 1583 (M.D.N.C. 1986) (finding that [s]ummary judgment would be an inapt procedural vehicle" where the "issues have not been actually litigated but established by default," and that "the appropriate procedure for plaintiff to follow is a default judgment pursuant to Fed. R. Civ. P. 55(b)(2)").

For the reasons that follow, the motion will be granted as to Plaintiffs' claims under the False Claims Act ("FCA"), 31 U.S.C. § 3730(h)(1), the North Carolina Medical Assistance Provider False Claims Act ("NCFCA"), N.C. Gen. Stat. § 108A-70.15, the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201 et seq., and the North Carolina Retaliatory Employment Discrimination Act ("REDA"), N.C. Gen. Stat. § 95-240 et seq. The motion will be denied as to Plaintiffs' claim under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq.

I. BACKGROUND

The basic facts alleged in the complaint are as follows: Plaintiffs, who were both formerly employed by Blue Ridge, are a same-sex married couple. (Doc. 1 ¶¶ 9, 12, 14.) LaTia began working at Blue Ridge on December 14, 2013, and Octavia began on August 29, 2015. (Id. ¶¶ 9, 12.) While working at Blue Ridge, Plaintiffs became aware that Blue Ridge was submitting reimbursement claims to Medicaid while out of compliance with Medicaid requirements.

(Id. ¶¶ 17–18, 25, 34). Plaintiffs made multiple attempts to bring Blue Ridge into compliance, including notifying their supervisor, Lynn Taylor, and Blue Ridge's owner, Lubna Reece, of the compliance issues, as well as contacting "Sandhills Center, the Local Management Entity-Managed Care Organization above [Blue Ridge], to talk about [Blue Ridge]'s compliance issues and how to fix them." (Id. ¶¶ 19–21, 34.) Taylor resisted Plaintiffs' attempts to remedy Blue Ridge's noncompliance and — after Plaintiffs went over her head to discuss the noncompliance issues with Reece — began openly expressing hostility towards Plaintiffs, including telling Octavia "that she would not forgive [Octavia] for telling Reece about their noncompliance issues and that the best thing Octavia could do would be to find another job." (Id. ¶¶ 22, 33, 41.)

Blue Ridge also failed to pay Plaintiffs the legally required overtime wage for overtime work. (Id. ¶¶ 43–44, 65.) When Plaintiffs complained about this to Taylor, she told Octavia "that she needed to get on board or find another job" and that any employee "who did not like it could ‘kick rocks.’ " (Id. ¶¶ 51–53.) Finally, Taylor told Octavia that Reece "was not comfortable with gay people" and that Plaintiffs should keep quiet about their marriage in order to avoid a confrontation with Reece. (Id. ¶¶ 11–13.) When Reece eventually found about Plaintiffs' sexual orientation, she gave Octavia a copy of the Quran and told her that "same sex marriage is not in God's will," but that she "would pray about it and hope it all worked out." (Id. ¶¶ 37–38.) On November 4, 2016, Reece "expressed that if she had it her way she never would have hired [Plaintiffs] in the first place because she disapproved of their being gay." (Id. ¶ 63.)

Later that day, Plaintiffs were fired. (Id. ¶ 64.) After receiving right-to-sue letters from the EEOC and the North Carolina Department of Labor, Plaintiffs instituted this action against Blue Ridge. (Id. ¶¶ 67–70.) Blue Ridge never answered, and the Clerk of Court entered default at Plaintiffs' behest. (Doc. 6.) Plaintiffs then moved for default judgment (Doc. 7); however, the court denied the motion and set aside the default because Plaintiffs did not properly serve Blue Ridge. (Doc. 9.) The court extended the time for service to be made, and Plaintiffs timely re-attempted service. (Docs. 17, 18.) The Clerk then re-entered default (Doc. 20), and Plaintiffs filed the instant motion. (Doc. 22.) Blue Ridge's response was struck by the Magistrate Judge because it lacked an original signature as required under Federal Rule of Civil Procedure 11(a) and because, as a corporation, Blue Ridge may only appear through an attorney, see Local Civil Rule 11.1(a). (Doc. 27.) Blue Ridge was provided time in which to file a corrected response, but it did not do so. On June 17, 2019, the court held a hearing on the motion and requested supplemental briefing from Plaintiffs. Blue Ridge did not appear at the hearing. Plaintiff timely filed the requested supplement, and the motion is now ripe for decision.

II. ANALYSIS

When a "motion for default judgment is unopposed, the court must exercise sound judicial discretion to determine whether default judgement should be entered." United States v. Williams, No. 1:17-cv-00278, 2017 WL 3700901, at *1 (M.D.N.C. Aug. 25, 2017) (internal quotation marks omitted). "Upon the entry of default, the defaulted party is deemed to have admitted all well-pleaded allegations of fact contained in the complaint." J & J Sports Prods., Inc. v. Romenski, 845 F. Supp. 2d 703, 705 (W.D.N.C. 2012). "However, the defendant is not deemed to have admitted conclusions of law ...." Id. The party moving for default judgment must still show that the defaulted party was properly served, Md. State Firemen's Ass'n v. Chaves, 166 F.R.D. 353, 354 (D. Md. 1996), and that the "unchallenged factual allegations constitute a legitimate cause of action," Agora Fin., LLC v. Samler, 725 F. Supp. 2d 491, 494 (D. Md. 2010) ; see Romenski, 845 F. Supp. 2d at 705 (default judgment is proper when "the well-pleaded allegations in the complaint support the relief sought"). Finally, "[i]f the court determines that liability is established, the court must then determine the appropriate amount of damages. The court does not accept factual allegations regarding damages as true, but rather must make an independent determination regarding such allegations." Samler, 725 F. Supp. 2d at 494 (citation omitted).

A. Service of Process

Federal Rule of Civil Procedure 4(h)(1)(A) allows service on a corporation consistent with Rule 4(e)(1), which permits service that "follow[s] state law for serving a summons in an action brought in courts of general jurisdiction in the state where the district court is located or where service is made." The relevant North Carolina statute allows service on a corporation by, among other ways, "mailing a copy of the summons and of the complaint, registered or certified mail, return receipt requested, addressed to the officer, director or agent to be served." N.C. Gen. Stat. § 1A-1, Rule 4(j)(6)(c).

In this case, "Plaintiffs have provided evidence that they have served the Defendant by serving its registered agent, Gregory S. Williams, via certified mail, return receipt [requested]." (Doc. 18 at 1.) Plaintiffs properly addressed the certified mail to the registered agent at the agent's mailing address as maintained on the North Carolina Secretary of State's website. See (Doc. 17-1); Business Corporation Page for Blue Ridge Health Services, Inc., Secretary of State: Elaine F. Marshall, https://www.sosnc.gov/online_services/search/by_title/_Business_Registration (last visited June 21, 2019) (search "Blue Ridge Health Services, Inc." and follow the hyperlink). Although the mail was undeliverable at that address, the United States Postal Service delivered it to the forwarding address associated with the original address, where it was received and signed for. (Docs. 17, 17-1, 17-2, 17-3.) The forwarding appears to have been effective, as Blue Ridge attempted to make its first filing in the case thereafter in the form of a response (Doc. 25) to Plaintiffs' dispositive motion, although — as previously noted — the response was later struck as deficient by the Magistrate Judge. (Doc. 27.) On this record, it appears that Plaintiffs have properly served Blue Ridge.

B. Liability

Plaintiffs allege five causes of action. Each is addressed in turn.

1. False Claims Act

As to Plaintiffs' FCA claim, the statute provides that an employee

shall be entitled to all relief necessary to make that employee ... whole, if that employee ... is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment because of lawful acts done by the employee ... or associated others in furtherance of an action under this section or other efforts to stop 1 or more violations of this subchapter.

31 U.S.C. § 3730(h)(1). In the absence of direct evidence of retaliatory intent, the court applies the burden-shifting framework set out in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973).¹ Under that framework, Plaintiffs must first make out a prima facie case composed of three elements: (1) they engaged in a protected activity, (2) the employer knew about the activity, and (3) the employer took adverse action against them as a result. Nifong v. SOC, LLC, 234 F. Supp. 3d 739, 752 (E.D. Va. 2017).

Here, Plaintiffs' undisputed allegations show that they attempted to remedy Blue Ridge's lack of compliance with Medicaid...