Thompson v. Health Mgmt., Inc.

• Decision Date: 11 June 2015
• Docket Number: Case 2014 CA 007859 B
• Parties: MICHAEL THOMPSON, et al. Plaintiffs, v. HEALTH MANAGEMENT, INC., et al Defendants.
• Court: D.C. Superior Court

MICHAEL THOMPSON, et al. Plaintiffs, v. HEALTH MANAGEMENT, INC., et al Defendants.

Case 2014 CA 007859 B

SUPERIOR COURT FOR THE DISTRICT OF COLUMBIA CIVIL DIVISION

June 11, 2015

Judge Michael O'Keefe

ORDER

Before the Court is Defendants Health Management. Inc. ("HMI") and Robinson Abraham's Preliminary Motion to Dismiss Amended Complaint, filed February 18, 2015, and the responsive pleadings thereto. The parties came before the Court for a motions hearing on May 29, 2015, at which time, this Court orally resolved all issues but one. The Plaintiffs withdrew Count II of the Amended Complaint, the Court denied the motion to dismiss as to Count III, the motion was granted in part as to Count IV regarding the Plaintiffs who provided companionship services to the elderly or in firmed and denied as to all other Plaintiffs. The Court then dismissed the counts as to Defendant Abraham and Defendant Gomez in their individual capacities, and denied without prejudice the request to sever the case. The remaining issue left to be addressed in this Order is Defendants' motion to dismiss Plaintiffs' Count I - violations of the Living Wage Act ("LWA"), D.C. Code § 2-220. et seq. For the reasons set forth below, Defendants' motion to dismiss the Living Wage Act claim is denied.

Standard of Review

A complaint should be dismissed under Rule 12(b)(6) if it docs not satisfy the requirement of Rule 8(a) that a pleading contain a "short and plain statement of the claim showing that the pleader is entitled to relief":

The pleading standard Rule 8 announces docs not require detailed factual allegations, but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation. 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. A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Where a complaint pleads facts that are merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility of entitlement to relief.

Potomac Development Corp. v. District of Columbia, 28 A.3d 531, 544 (D.C. 2011) (omitting brackets, ellipses, and quotations from and citations to Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009), and Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007)). The standard for evaluating Rule 12(b)(6) motions follows from these principles:

[A] court considering a motion to dismiss can choose to begin by identifying pleadings that, because they are no more than conclusions, arc not entitled to the assumption of truth. While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations. When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.

Potomac Development Corp., 28 A.3d at 544 (quoting Iqbal, 129 S. Ct. at 1950); see Papsan v. Allain, 478 U.S. 265, 286 (1986) ("Although for the purposes of this motion to dismiss we must take all the factual allegations in the complaint as true, we are not bound to accept as true a legal conclusion couched as a factual allegation."). Although a plaintiff may survive a Rule 12(b)(6) motion even if "recovery is very remote and unlikely," the facts alleged in the complaint "mustbe enough to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555-56 (quoting Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)).

Discussion

In 2006, the D.C. Council passed the Living Wage Act ("LWA"), codified as D.C. Code § 2-220, et seq. Among its numerous functions, the statute mandates a living wage for all employees of recipients of the District of Columbia government's assistance in the amount of $100,000 or more. These entities arc required to pay their employees no less than the living wage as defined by the LWA. The Department of Employment Services ("DOES") adjusts the living wage based on the Consumer Price Index ("CPI") for all Urban Consumers in the Washington Metropolitan Statistical Area published by the Bureau of Labor Statistics.¹

When it passed in 2006, the LWA included a provisional exemption for home care agencies, community residence facilities, and group homes for persons with intellectual disabilities. These types of employers did not have to "pay a living wage until implementing rules are published in the District of Columbia Register and any necessary state plan amendments are approved." D.C. Code § 2-220.11(b). Exactly when the exemption expired is subject to much debate and is at issue in this case.

Plaintiffs argue that they were employed by HMI as home health aides, and that because HMI is a recipient of contracts in excess of $100,000, they are entitled to the rights, protections,and benefits provided under the LWA. Pl. Am. Compl. 13 ¶¶ 45, 46. According to Plaintiffs, HMI violated the LWA by failing to pay Plaintiffs and class members the living wage hourly rate. Id. ¶¶ 47-48. They ask for back pay in the amount of their unpaid compensation representing the difference between what they were paid and what the law required, liquidated damages equal to treble their back pay pursuant to D.C. Code § 2-220.08 and D.C. Code § 32-1303(4), and to recover attorneys' fees and costs. Id. ¶¶ 50-51, 53.

HMI's motion to dismiss raises four arguments for dismissal of Count I, three of which were discussed during the motions hearing on May 29, 2015. The only argument currently under consideration by the Court is HMI's second argument concerning § 2-220.11(b), which states:

[A] home care agency, community residence facility, or group home for persons with intellectual disabilities shall not be required to pay a living wage until implementing rules are published in the District of Columbia Register and any necessary state plan amendments are approved.

HMI contends that the LWA could not go into effect until both prongs of this provision were met, i.e., that the implementing rules were published in the D.C. Register and the state plan² amendments were approved. HMI argues that the state plan amendments were not approved until July 4, 2014, therefore it was exempt from compliance with the LWA until at least that date.³

Plaintiffs fervently contest this interpretation of the LWA. The parties agree that April 1, 2011, marks date of implementation of the rules in the D.C. Register. See 58 DCR 2831 (April 1, 2011). As to the second requirement, Plaintiffs maintain that no state plan amendments werenecessary when the rules were implemented in 2011, thereby leaving it un-triggered. As the second requirement was inapplicable, they maintain that HMI has been subject to the LWA since April 1, 2011. Plaintiffs also contend that even if the Court finds that the LWA did not go into effect until July 2014, their claim for back pay from July 2014 to present must remain.

Implementation and interpretation of the LWA in the District has been inconsistent if not entirely absent. The parties provide several sources as support for their own interpretations, including testimony of agency representatives, proposed bills,⁴ and newspaper articles. Plaintiffs submit the testimony of Wayne Turnage, the Director of the Department of Health Care Finance ("DCHF"), the agency responsible for administering the state plan. See D.C. Code § 7-771.05(6); Attorney General Certificate Attachment 1.1-A.⁵ Turnage testified before the Council of the District of Columbia Committee of Health on July 9, 2014, in which he directly addressed the two requirements. He staled that the second prong regarding the approval of "any necessary" state plans "is hollow since there are no state plan amendments which must be executed to pay a higher wage to non-exempt Medicaid providers."

Plaintiffs also submit the "2013 Living Wage FAQs" found on the Department of Employee Services ("DOES") website, which unambiguously states that home care agencies are not exempt from paying a living wage: "These entities must pay a living wage. Section 111 of the Living Wage Act of 2006 requires these entities to begin paying a living wage once the law's rules are published and state plan amendments are approved. Both of these have occurred." While explicit in its answer, it does not unlock the secret of the actual and exact date of effect.

Conversely, HMI maintains that it was exempt under the LWA until at least 2014 when the first amendment to the Medicaid State Plan increasing reimbursement rates was approved. HMI points to a letter provided by Attorney General Karl Racine responding to a request for an opinion on the applicability of the statute to home health agencies. Addressing the requirements of 111(b), he states that the implementing rules published in the D.C. Register and any necessary state plan amendment were approved "not later than July 2014." HMI Ex. 7. This answer does not provide the same succinct and definite timeline that HMI proposes the Court should adopt in its analysis of the LWA, as the letter only states that the latest point at which it could be effective is July 2014 rather than that it could not have been effective until July 2014. Despite the ambiguity left by the letter, it does illustrate the confusion that has plagued this statute.

HMI also provides an October 2013 Washington Post article reporting on DOES Director Lisa Mallory who sent a memorandum to Mayor Gray's policy director "asking for a determination on whether the living-wage law should apply to group workers and home health aides" and received no response. HMI Ex. 1. Mallory testified before the D.C. Council on October 3, 2013, stating that "[w]hile the law continues to have a laudable goal, the law's application remains broad, difficult to track and many interpretations exist." Def. Ex. 2. Similar to the letter from Attorney General...