Tuohey v. Chenal Healthcare, LLC

• Court: U.S. District Court — Eastern District of Arkansas
• Writing for the Court: J. LEON HOLMES, UNITED STATES DISTRICT JUDGE
• Citation: Tuohey v. Chenal Healthcare, LLC, 173 F.Supp.3d 804 (E.D. Ark. 2016)
• Decision Date: 25 March 2016
• Docket Number: No. 4:15CV00506 JLH,4:15CV00506 JLH
• Parties: Brenda Tuohey, as Personal Representative of the Estate of Mildred May Bryant and on behalf of the wrongful death beneficiaries of Mildred Mae Bryant, and Malvorn May, as Personal Representative of the Estate of Charles R. Stills and on behalf of the wrongful death beneficiaries of Charles R. Stills and all others similarly situated, Plaintiff v. Chenal Healthcare, LLC, d/b/a Chenal Rehabilitation and Healthcare Center, et al., Defendants

173 F.Supp.3d 804

Brenda Tuohey, as Personal Representative of the Estate of Mildred May Bryant and on behalf of the wrongful death beneficiaries of Mildred Mae Bryant, and Malvorn May, as Personal Representative of the Estate of Charles R. Stills and on behalf of the wrongful death beneficiaries of Charles R. Stills and all others similarly situated, Plaintiff

v.Chenal Healthcare, LLC, d/b/a Chenal Rehabilitation and Healthcare Center, et al., Defendants

No. 4:15CV00506 JLH

United States District Court, E.D. Arkansas, Western Division.

Signed March 25, 2016

Brent Lee Moss, Brian David Reddick, Daniel K. Yim, Joshua C. Rovelli, Robert William Francis, Matthew David Swindle, Reddick Moss PLLC, Howard Gregory Campbell, Campbell Law Firm P.A., Little Rock, AR, for Plaintiff.

Gary D. Marts, Jr., Jerry Jon Sallings, Wright, Lindsey & Jennings, Little Rock, AR, Jess L. Askew, III, Jeffrey M. Fletcher, Samantha B. Leflar, Kutak Rock LLP, Fayetteville, AR, for Defendants.

OPINION AND ORDER

J. LEON HOLMES, UNITED STATES DISTRICT JUDGE

Brenda Tuohey and Malvorn May,¹ individually and on behalf of all residents and estates of residents who resided at Chenal Rehabilitation and Healthcare Center from July 23, 2010, through the present, commenced this putative class action against the defendants in the Circuit Court of Pulaski County on June 23, 2015. The amended complaint contains six counts, alleging that the Center was chronically understaffed in violation of the Arkansas Deceptive Trade Practices Act,² the admission agreement, and the Center's provider agreements, that the failure to staff the Center adequately constituted ordinary negligence, that the defendants participated in a conspiracy to understaff the Center, and that the defendants were unjustly enriched. The defendants³ have filed a motion to dismiss all counts other than Count III—ordinary negligence—pursuant to Federal Rule of Civil Procedure 12(b)(6). Document #42. For the following reasons, the motion to dismiss is granted in part and denied in part.

I.

The defendants are a web of corporate entities and individual administrators involved in some fashion with the Chenal Rehabilitation and Healthcare Center, which is a nursing home in Little Rock. The amended complaint alleges that the corporate entities developed the business policies that resulted in the alleged understaffing of the Center, while the individual administrators allegedly acted in conjunction with the corporate entities to reduce staffing levels or maintain staffing at an inadequate level. Document #35 at 27, ¶ 57. Tuohey's mother, Mildred Mae Bryant, was a resident of the Center from approximately June 25, 2007 to December 13, 2014. Id. at 2, ¶ 3. According to the amended complaint, Bryant's stay at the Center accelerated the deterioration of her health, resulting in multiple urinary tract infections, poor hygiene, a broken tibia, a broken fibula, unsanitary living conditions, and ultimately her death. Id. at 37, ¶ 81. Malvorn May's stepfather, Charles R. Stills, was a resident of the Center from approximately September 2012 until his death on March 5, 2013. Id. at 2, ¶¶ 5-7. The amended complaint alleges that Stills's stay at the Center accelerated the deterioration of his health, resulting in multiple urinary tract infections, poor hygiene, a broken hip, unsanitary living conditions, and ultimately his death. Id. at 37, ¶ 82.

Residents of the Center are elderly, disabled, and confined to their beds or unable to rise from a bed or chair independently. Id. at 23, ¶ 46. They rely on staff for skilled nursing care and treatment, as well assistance with basic tasks, such as eating, bathing, dressing, moving from the bed to a wheelchair, and using the toilet. Id. Certified Nursing Aides are the staff primarily charged with providing this type of assistance. Id. at ¶ 47. Tuohey alleges that the defendants systemically failed to meet the needs of residents by limiting the budget for CNA staffing and in turn limiting the number of CNA's on duty at the Center. Document #35 at 23, ¶ 48. There were not enough CNA's to provide regular hygiene care or re-position immobile residents, which left residents in dirty diapers, clothes, and beds, causing discomfort and sores. Id. at 24, ¶ 51. There were not enough CNA's to timely respond to call lights activated by residents in need, causing residents to soil themselves or fall while attempting to walk to the bathroom without help. Id. And there were not enough CNA's to help residents eat at the designated time, contributing to weight loss and dehydration. Id. According to Tuohey, understaffing saved the defendants millions of dollars. Document #35 at 25, ¶ 52. From June 1, 2012 to May 31, 2015, the Arkansas Department of Human Services Office of Long Term Care cited the Center for thirty-five health-related deficiencies, including the failure to provide necessary care and services to maintain the highest well being of each resident. Id. at ¶ 53.

II.

To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), a complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). Although detailed factual allegations are not required, the complaint must set forth “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 1974, 167 L.Ed.2d 929 (2007). “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.” Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009). The court must accept as true all of the factual allegations contained in the complaint, Twombly , 550 U.S. at 572, 127 S.Ct. at 1975, and must draw all reasonable inferences in favor of the nonmoving party. Gorog v. Best Buy Co., Inc. , 760 F.3d 787, 792 (8th Cir.2014). The complaint must contain more than labels, conclusions, or a formulaic recitation of the elements of a cause of action, which means that the court is “not bound to accept as true a legal conclusion couched as a factual allegation.” Twombly , 550 U.S. at 555, 127 S.Ct. at 1965.

A. The Arkansas Deceptive Trade Practices Act

Count I fails as a matter of law because the ADTPA does not apply to the defendants. Tuohey alleges that the defendants engaged in deceptive trade practices in violation of the ADTPA by knowingly failing to adequately staff the Center. Document #35 at 38-42, ¶¶ 87-99. The ADTPA protects Arkansas consumers from a variety of unfair and deceptive practices, but its “safe harbor provision” precludes its application to “[a]ctions or transactions permitted under laws administered by the Insurance Commissioner, the Securities Commissioner, the State Highway Commission, the Bank Commissioner, or other regulatory body or officer acting under statutory authority of this state or the United States, unless a director of these divisions specifically requests the Attorney General to implement the powers of this chapter ....” ARK. CODE ANN. § 4–88–101(3). Tuohey urges this Court to interpret the safe harbor provision narrowly to only preclude actions against defendants who have complied with applicable laws and regulations. Document #49 at 5.

But the Arkansas Supreme Court did not make an inquiry into the specific conduct of the defendants in Arloe Designs v. Arkansas Capital Corp., holding that the ADTPA did not apply to a nonprofit, which was subject to the supervision of the Arkansas State Bank and the Arkansas State Board of Finance, and a national bank, which was regulated by the Office of the Comptroller of Currency and the Federal Deposit Insurance Commission. 2014 Ark. 21, 431 S.W.3d 277, 281. The court stated:

Because both [the nonprofit] and [the national bank] are regulated by a regulatory body acting under statutory authority of Arkansas or of the United States, their actions and transactions are not subject to claims that can be brought under the ADTPA unless a specific request has been made to the Attorney General.

Id. The safe-harbor provision precludes actions pursuant to the ADTPA against regulated entities engaged in regulated conduct. See Ford v. Citimortgage, Inc. , No. 3:15CV00206–DPM, 2015 WL 7429990 at *2 (E.D.Ark. Nov. 20, 2015) (holding “[n]o private right of action exists against CitiMortgage, a regulated entity, in the absence of the Attorney General declining to proceed.”); Gabriele v. Conagra Foods, Inc. , No. 5:14CV05183–TLB, 2015 WL 3904386 at *7 (W.D.Ark. June 25, 2015) (holding “[c]onsistent with the plain language of the ADTPA, it appears that the Arkansas Supreme Court recognizes and applies the so-called general-activity rule. In other words, the safe-harbor provision exempts regulated conduct by regulated actors regardless of whether substantive state law explicitly authorizes or prohibits the precise conduct at issue.”). As this Court explained in RM Dean Farms v. Helena Chem. Co.,

No regulatory body permits deceptive and unconscionable trade practices such as those prohibited by the Arkansas Deceptive Trade Practices Act. Because no regulatory agency permits deceptive and unconscionable trade practices, on [plaintiff's] argument, no conduct that violated the Arkansas Deceptive Trade Practices Act would ever fall within the exception provided in section 4–88–101(3), which would mean that that provision is meaningless.

847 F.Supp.2d 1125, 1127 (E.D.Ark.2012).

First, the Arkansas Department of Human Service regulates nursing homes through the Office of Long Term Care, which licenses and inspects long-term care facilities and has the authority to promulgate rules and regulations governing those facilities. ARK. CODE ANN. § 20–10–203. Second, the United States Department of Human Services regulates nursing homes through its Centers for Medicare and Medicaid Services. 42 C.F.R. § 483.1...