Act for Health et al v. United Energy Workers Healthcare Corp et al
MEMORANDUM OPINION & ORDER Signed by Senior Judge Thomas B. Russell on 1/11/2018 granting 107 Motion to Amend Complaint denying 124 Motion for Oral Argument. Denying 111 Motion to Dismiss. cc: Counsel(KJA)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
CIVIL ACTION NO. 5:15-cv-195-TBR
ACT FOR HEALTH, et al.,
UNITED ENERGY WORKERS
HEALTHCARE CORPORATION, et. al.,
MEMORANDUM OPINION AND ORDER
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.
Plaintiffs filed this action against UEW and its wholly-owned subsidiary, Kentucky
Energy Workers Healthcare, LLC (“KEW,” and collectively, “Defendants”) in 2015, alleging
This background section is largely taken from this Court’s previous Memorandum Opinion and Order granting
Defendants’ Motion to Amend Counterclaim. [See DN 34.]
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).
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 yearend 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 dismissed on a motion for summary judgment….”). Here,
Defendants argue that Plaintiffs’ proposed new claim, for civil conspiracy, is futile and that this
Court should deny the instant Motion accordingly. [See DN 111, at 25.]
“A claim for civil conspiracy requires ‘a corrupt or unlawful combination or agreement
between two or more persons to do by concert of action an unlawful act, or to do a lawful act by
unlawful means.’” Ellington v. Federal Home Loan Mortg. Corp., 13 F. Supp.3d 723, 730 (W.D.
Ky. 2014) (quoting Peoples Bank of Northern Kentucky, Inc. v. Crowe Chizek & Co., LLC, 277
S.W.3d 255, 261 (Ky. Ct. App. 2008)). Further, “[t]he elements of a civil conspiracy are: 1) an
agreement or combination, 2) that is unlawful or corrupt, 3) entered into by two or more persons,
4) for the purpose of accomplishing an unlawful goal.” Id. (internal citations omitted). Notably
though, “civil conspiracy is not a free-standing claim; rather, it merely provides a theory under
which a plaintiff may recover from multiple defendants for an underlying tort.” Id. (internal
The Court is satisfied that Plaintiffs’ proposed Amended Complaint sufficiently lays out
factual allegations, which, taken as true, cannot be considered “futile,” especially when given the
liberal construction of Rule 15(a) and this Court’s duty to grant leave to amend pleadings when
justice so requires. Defendants argue that Plaintiffs fail “to adequately plead that the alleged
conspirators took any overt act that caused [Plaintiffs] harm.” [DN 111, at 26.] Of course, part of
showing that a civil conspiracy took place is alleging and proving that some act was taken in
furtherance of the conspiracy: this stems from the “concert of action” requirement noted above.
See Ellington, 13 F. Supp.3d at 730; see also Peoples Bank of Northern Kentucky, Inc., 277
S.W.3d at 260-61. While Defendants are correct in noting the “concert of action” requirement,
the Court finds that Plaintiffs’ proposed Amended Complaint meets this, and the other,
requirements for alleging a civil conspiracy.
Specifically, Plaintiffs allege that Brightmore was formed and is being operated “for the
corrupt and unlawful combination or agreement to further service UEW’s and KEW’s current
and/or former patient-clients in order to reduce or limit UEW’s and/or KEW’s liability in this
litigation.” [DN 107-1, at 15.] Plaintiffs also allege that the formation and continuing operation
of Brightmore constitutes an effort “to further unlawfully deprive PCM of both its current and
prospective business relations….” [Id.] In the Court’s view, these certainly constitute “overt
acts” or, in the language of Ellington, unlawful “concert of action…..” Ellington, 13 F. Supp.3d
at 730. Defendants argue that the formation of Brightmore does not constitute an “overt act,”
[DN 111, at 26], but in that they are mistaken. Moreover, even if the formation of the company
itself were insufficient, the proposed Amended Complaint alleges its continued operation to be
illegal and a part of the alleged conspiracy, thereby further satisfying this requirement.
However, in addition to alleging an agreement/combination and a concert of action,
Plaintiffs were also required to allege (1) its illegality, (2) actions by two or more people, and (3)
an unlawful goal by those parties. See id. This the Plaintiffs have done. First, Plaintiffs are
explicit in their allegations that the act of forming and operating Brightmore with the purpose of
interfering with Plaintiffs’ business and limiting their liability constitute illegal acts; implicit in
these allegations is an unlawful goal: illegally providing certain health care services and
unlawfully interfering with Plaintiffs’ contracts and business relations. [See DN 107-1, at 15.]
Finally, Plaintiffs allege that UEW, KEW, Falls, Bame, and the Shumways were/are involved in
this alleged conspiracy, thereby satisfying the requirement of “two or more persons….” See
Ellington, 13 F. Supp.3d at 730. The civil conspiracy count against Defendants is not futile and
the Court refuses to prevent its inclusion in the present action. Defendants do not argue futility
with respect to the addition of Brightmore, Falls, Bame, or the Shumways, and the Court
declines to address the issue further. The civil conspiracy count is against all of these individuals
and because the claim is itself not futile, it follows that the persons and/or entities against whom
relief is sought in the count are properly joined to the action as well.
B. Undue Delay in Filing the Motion
The second argument proffered by Defendants is that the period of time which elapsed
between Plaintiffs becoming apprised of the necessary facts to file an amended pleading and
Plaintiffs actually doing so constitutes undue delay. [DN 111, at 27.] This, Defendants contend,
would prejudice them, and is sufficient to deny the instant Motion. [Id.] The Court finds no
undue delay, and further finds that any prejudice to Defendants would be relatively light, and
therefore declines to deny Plaintiffs’ Motion.
This case commenced on August 31, 2015 when Plaintiffs filed their initial Complaint.
[DN 1.] Thereafter, Defendants filed their Answer on October 6, 2015. [DN 13.] That same day,
Defendants filed a Counterclaim. [DN 14.] On November 5, 2015, this Court issued a scheduling
order in the case. [DN 21.] This schedule has been amended by the Court numerous times
throughout 2016 and 2017. [See generally Case Docket, 5:15-cv-195.] Apparently, in deposing
Bame on December 12, 2016, Plaintiffs learned about Falls and the Shumways creating
Brightmore earlier that year. [DN 107, at 3.] Plaintiffs further learned that Brightmore had
allegedly begun to service UEW’s patients, although the care “was still being provided by
UEW’s caregivers….” [Id.] According to Plaintiffs, UEW fired its counsel after this deposition,
thereby temporarily halting any further depositions Plaintiffs wished to take at that time. [Id.] At
the beginning of 2017, Plaintiffs sought further disclosures concerning Brightmore from UEW’s
newly-retained counsel, which were apparently hard to come by. [Id.] Thereafter, according to
Defendants, Plaintiffs waited until May of 2017, roughly five months later, to file the instant
Motion. Defendants do not dispute when Plaintiffs became apprised of the existence of
Brightmore or its alleged connection with UEW, KEW, or any of those companies’ respective
officers. Defendants challenge the merit of Plaintiffs’ claims with respect to Brightmore and the
alleged civil conspiracy, but that contention is largely irrelevant to the question of undue delay
and prejudice. Instead, that argument goes to the futility of the proposed claim, which the Court
has already addressed above.
The Court finds that the time which elapsed between the filing of Plaintiffs’ initial
Complaint at the commencement of this lawsuit and the December 12, 2016 deposition of Bame
does not bear upon the undue-delay analysis. Indeed, according to Plaintiffs, Brightmore was not
even formed until sometime in 2016, after the lawsuit began. Thus, the essential question is
whether the time period between Plaintiffs’ stated desire to file a motion to amend their
Complaint in January 2017 and the actual filing of that motion on May 12, 2017 constitutes
undue delay which would prejudice Defendants. The Court looks to the Sixth Circuit Court of
Appeals for guidance on this issue: “it is well-settled that delay alone is not a sufficient reason
for denying leave” to amend a complaint. Moore v. City of Paducah, 790 F.2d 557, 562 (6th Cir.
1986) (quoting Buder v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 644 F.2d 690, 694 (8th Cir.
1981)). Instead, such a “delay must have [also] resulted in prejudice to the party opposing the
motion.” Id. And as Plaintiffs have pointed out, where such prejudice to the defendant is
“relatively light,” this, in and of itself, will be insufficient to deny a plaintiff the opportunity to
amend his or her pleading. See id. See also [DN 120, at 19.]
Here, Defendants only argue that the prejudice they would suffer is derivative of the
delay in Plaintiffs’ filing of the instant Motion. Stated a different way, Defendants do not proffer
specific, independent reasons why they will suffer prejudice as a result of the Amended
Complaint being filed. Rather, they simply argue that the delay, and the likely case schedule
amendments that will follow, will inevitably prejudice them in this case. The Court is
unpersuaded by this. Five months is not an unreasonable length of time. To be sure, Plaintiffs
could have been more diligent in filing the proposed Amended Complaint, but certain discovery
matters could have been ongoing at that juncture and the Court is simply not prepared to call this
delay “undue.” Moreover, at the time Plaintiffs filed this Motion, just three weeks had passed
since the Court issued a new scheduling order. This scheduling order placed the discovery
deadline at January 19, 2018, or roughly eight months after the Motion was filed. Given the long
period of time between the filing of the Motion and the discovery deadline, it stretches credulity
to argue that prejudice would befall Defendants with respect to the case and discovery schedule.
Indeed, it is only because this Court initially overlooked the instant Motion that the discovery
deadlines will need to be amended, and that is through no fault of Plaintiffs.
In short, the liberal construction given to Rule 15(a) and its demand that leave to amend
be given by the Court when justice so requires, coupled with the fact that this would constitute
Plaintiffs’ first amended pleading, leads this Court to conclude that there was no undue delay and
justice demands that Plaintiffs be given an opportunity to try all of their claims in this case.
C. Defendants’ Response as a Motion to Dismiss
As a final matter, the Court finds it prudent to address Defendants’ Response to the
instant Motion to Amend Complaint. [See DN 111.] In their Response, Defendants argue, of
course, that Plaintiffs should not be allowed to amend their Complaint, but further argue that all
of Plaintiffs’ claims are “futile” and the entire Complaint (or Amended Complaint) should be
dismissed for failure to state a claim upon which relief can be granted. [See generally id.]
However, even assuming Defendants have brought this motion in a proper manner from a
procedural standpoint under the Federal Rules of Civil Procedure, the Court is not inclined to
rule on it at this time. This is for multiple reasons. First, the long delay from the time of the filing
of Plaintiffs’ Motion to Amend Complaint and this Court’s occasion to rule on it; additionally,
because Defendants have moved in a Response and not in a separate filing, the docket did not
present it to the Court as a filing which required a ruling. The Court feels that the better
procedure would be to deny Defendants’ motion without prejudice, and provide them with leave
to refile it, should they choose to do so, in light of this Court’s decision to grant Plaintiffs’
Motion to Amend Complaint. Defendants shall have fourteen days from the issuance of this
Memorandum Opinion and Order to refile any motion to dismiss relating to Plaintiffs’ claims
or to the joined Defendants, provided that it is procedurally proper under the Federal Rules of
Civil Procedure. Thereafter, Plaintiffs will have fourteen days to respond, and Defendants
will have seven days to reply.
For the reasons stated herein, IT IS HEREBY ORDERED as follows:
Plaintiffs’ Motion to Amend Complaint [DN 107] is GRANTED.
Defendants’ Motion for Oral Argument [DN 124] is DENIED AS MOOT.
Defendants’ Motion to Dismiss [DN 111] is DENIED WITHOUT PREJUDICE.
Defendants may refile a motion to dismiss, if they choose to do so, within fourteen (14) days
of the issuance of this Memorandum Opinion and Order. Thereafter, Plaintiffs shall have
fourteen (14) days to respond, and Defendants shall have seven (7) days to reply.
Counsel for Defendants shall notify the Court and opposing counsel by email at the
following address when the matter is ripe for a decision: Kelly_P_Harris@kywd.uscourts.gov
The Clerk is directed to file Plaintiffs’ First Amended Complaint [DN 107-1] as of the
date of entry of this Memorandum Opinion and Order.
IT IS SO ORDERED.
January 11, 2018
Counsel of Record
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