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Act for Health v. United Energy Workers Healthcare Corp.

United States District Court, W.D. Kentucky, Paducah

January 11, 2018



          Thomas B. Russell, Senior Judge

         This matter comes before the Court upon two motions. First, Plaintiffs Act for Health d/b/a Professional Case Management (“PCM”) and Professional Case Management of Kentucky, LLC, (“PCMK”), (collectively, “Plaintiffs”), have filed a Motion to Amend Complaint. [DN 107.] Defendant United Energy Workers Healthcare Corporation (“UEW”) has responded. [DN 111.] Plaintiffs have replied, [DN 120], and Defendants have filed a Surreply with leave of the Court. [DN 129.] This matter is ripe for adjudication. For the following reasons, Plaintiffs' Motion to Amend Complaint [DN 107] is GRANTED. Second, Defendants have filed an “Unopposed Motion for Leave to Give Oral Argument” on the Motion to Amend Complaint. [DN 124.] Because the Court has decided to grant Plaintiffs' Motion to Amend Complaint, Defendants' Motion for Leave to Give Oral Argument has been rendered moot, and the Court hereby DENIES it [DN 124] as such.

         I. Background [1]

         Plaintiffs filed this action against UEW and its wholly-owned subsidiary, Kentucky Energy Workers Healthcare, LLC (“KEW, ” and collectively, “Defendants”) in 2015, alleging unfair competition, violations of Kentucky's laws and regulations regarding the licensure of health care service providers, and tortious interference with contractual and prospective business relationships. [See DN 1.] Defendants answered this Complaint on October 6, 2015, and also filed a Counterclaim against Plaintiffs that same day. [See DN 13, DN 14.] In May of 2016, this Court granted Defendants' Motion to Amend Counterclaim, wherein Defendants added a counter-defendant, Cold War Patriots (“CWP”), a Delaware nonprofit corporation, and alleged the following claims: tortious interference with contract and/or prospective business relations, unfair competition, civil conspiracy, and defamation, as well as prayers for injunctive relief and punitive damages. [DN 35.]

         Plaintiffs and Defendants are engaged in a dispute relating to each company's provision of various services to eligible individuals under the Energy Employees Occupational Illness Compensation Program Act of 2000 (“EEOICPA”), 42 U.S.C. § 7384 et seq. EEOICPA is administered by the United States Department of Labor, and affords “benefits to individuals or their survivors for illnesses incurred from exposure to toxic substances while working for the Department of Energy or certain related entities.” Watson v. Solis, 693 F.3d 620, 622 (6th Cir. 2012). Plaintiffs have been engaged in these in-home services since approximately 2002. [DN 1, at 3.] While PCM acts as an enrolled provider with the Department of Labor, its wholly-owned subsidiary, PCMK, serves as a licensed home health agency in the Commonwealth of Kentucky. [Id. at 1, 3, 13.] Similar to PCM and its subsidiary, UEW acts as an enrolled provider with the Department of Labor. [DN 14, at 1.] Its wholly-owned subsidiary, KEW, is authorized and certified to provide personal care services in the Commonwealth. [Id.]

         According to Plaintiffs, KEW has been providing home health care services in Kentucky without the necessary licensure. [DN 1, at 5.] Plaintiffs claim that KEW has solicited (or has attempted to solicit) several of PCMK's clients by offering, for example, free and unrelated services (such as lawn care) as incentives to switch providers. [Id.] Moreover, Plaintiffs allege that KEW classifies its nurses as independent contractors, and thereby unlawfully avoids the cost of complying with various state and federal laws. [Id. at 5-6.] UEW denies Plaintiffs' allegations, [see DN 13, at 2], and makes some of its own. [See DN 35.] In principal part, UEW says PCMK has tortuously interfered with its lawful contracts and business relationships and has defamed it, among other claims. [See DN 35.] Discovery in this matter has been underway for some time, and the case's schedule has been amended on numerous occasions. Currently before the Court is Plaintiffs' Motion to Amend Complaint. [DN 107.]

         Regarding the instant Motion, Plaintiffs seek to add five new Defendants to the action, as well as an additional claim of civil conspiracy. [See DN 107-1.] Specifically, Plaintiffs wish to add Brightmore Home Care of Kentucky, LLC, (“Brightmore”), John Falls (“Falls”), Travis Shumway, Chad Shumway, and Nicholas Bame (“Bame”) to the action. [See id.] Falls is the Chief Executive Officer of UEW; Travis and Chad Shumway are the principal owners and/or managers of Brightmore; Bame is the Area Director for UEW for the Commonwealth of Kentucky. [Id. at 2-3.] Brightmore is a limited liability company, which Plaintiffs allege was formed in 2016 by Travis and Chad Shumway, “apparently with the intent to purchase Private Duty Nursing Agency licenses held by other entities.” [Id. at 8.] Bame is the registered agent in Kentucky for Brightmore. [Id.]

         Plaintiffs have further alleged in their proposed Amended Complaint that “Brightmore began providing home health care services to UEW's and/or KEW's clients, in conjunction with UEW and/or KEW, ” and that “UEW and/or KEW so dominate Brightmore, that UEW/KEW and Brightmore are essentially indistinguishable and lack any meaningful corporate separateness.” [Id.] Moreover, Brightmore and UEW/KEW “share the same common directors and officers, such as Mr. Bame, Mr. Falls, and the Shumways, ” and “UEW/KEW finances Brightmore's operations.” [Id.] Now, the Court must decide if these proposed new Defendants and the additional count of civil conspiracy should be allowed in this case.

         II. Legal Standard

         Federal Rule of Civil Procedure 15(a)(1) permits a party to “amend its pleading once as a matter of course within 21 days after serving it, or if the pleading is one to which a responsive pleading is required, 21 days after service of a responsive pleading or 21 days after service of a motion under Rule 12(b), (e), or (f), whichever is earlier.” However, where that time has passed, Rule 15(a)(2) provides that, “[i]n all other cases, a party may amend its pleading only with the opposing party's written consent or the court's leave. The court should freely give leave when justice so requires.” While the Federal Rules encourage a liberal construction of Rule 15, it may be appropriate to deny leave to amend a complaint “where there is undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of the amendment, etc.” Miller v. Champion Enters., Inc., 346 F.3d 660, 690 (6th Cir. 2003).

         III. Discussion

         As an initial matter, the Court finds it prudent to address this case's timeline. The Court is cognizant of the fact that the Motion to Amend Complaint and the Motion for Oral Argument were filed in May and July of last year, respectively. A good deal of time has passed since these matters became ripe. Due to an oversight, these two matters were not identified until the year-end review and analysis of current cases before the Court. The Court will rule on them now. In the present case, Defendants set forth two principal arguments in their Response regarding why Plaintiffs' instant Motion to Amend Complaint should be denied by this Court: (1) Plaintiffs' proposed amendments are futile; and (2) Plaintiffs' undue delay in filing the Motion warrants its denial because of prejudice to Defendants. [See generally DN 111.] The Court will address each of these arguments in turn.

         A. Futility of the Amendments

          “A court can deny a motion for leave to amend a complaint when granting the motion would be futile; for example, if the amended complaint would not survive a motion to dismiss.” Halcomb v. Black Mountain Resources, LLC, 303 F.R.D. 496, 500 (E.D. Ky. 2014) (citing Hoover v. Langston Equip. Assocs., 958 F.2d 742, 745-46 (6th Cir. 1992)); see also Rose v. Hartford Underwriters Ins. Co., 203 F.3d 417, 420 (6th Cir. 2000) (explaining that “[a] proposed amendment is futile if the amendment could not withstand a Rule 12(b)(6) motion to dismiss.”). This standard is a much more lenient one than that of summary judgment, and proposed amendments should not be examined under the latter, more demanding standard. See Rose, 203 F.3d at 420 (noting that “[t]he test for futility…does not depend on whether the proposed amendment could potentially be ...

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