Act for Health et al v. United Energy Workers Healthcare Corp et al

Filing 34

MEMORANDUM OPINION & ORDER granting 24 Motion to Amend Counterclaim. Signed by Senior Judge Thomas B. Russell on 5/3/2016. cc: Counsel(KJA)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
PADUCAH DIVISION
CIVIL ACTION NO. 5:15-CV-00195-TBR-LLK
ACT FOR HEALTH, d/b/a
Professional Case Management, et al.,

Plaintiffs/Counterclaim Defendants,

v.
UNITED ENERGY WORKERS
HEALTHCARE CORP., et al.,

Defendants/Counterclaimants.

MEMORANDUM OPINION AND ORDER
In this diversity action, United Energy Workers Healthcare Corp. (UEW) and its
wholly-owned subsidiary, Kentucky Energy Workers Healthcare, LLC (KEW), seek
leave to file an amended counterclaim. That effort comes past the time set for amending
pleadings in the Court’s scheduling order, and so ACT for Health, d/b/a Professional
Case Management (PCM), and its wholly-owned subsidiary, Professional Case
Management of Kentucky, LLC (PCMK), question UEW’s diligence. Nonetheless, the
Court concludes that UEW has demonstrated good cause under Federal Rule of Civil
Procedure 16 for failing to seek leave to amend prior to the pertinent deadline.
Accordingly, UEW’s Motion to File Amended Counterclaim, R. 24, is GRANTED.
I.
A.
The instant dispute relates to Professional Case Management (PCM) and United
Energy Workers Healthcare Corp.’s (UEW) 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. Administered by the U.S. Department
of Labor, the EEOICPA affords “benefits to individuals or their survivors for illnesses
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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).
PCM has been providing skilled home health services to EEOICPA-eligible
patients since around 2002. R. 1 at 3, ¶ 12 (Complaint). While PCM acts as an enrolled
provider with the Department of Labor, id., ¶ 13, its wholly-owned subsidiary,
Professional Case Management of Kentucky, LLC (PCMK), id. at 1, ¶ 2, serves as a
licensed home health agency in the Commonwealth of Kentucky, id. at 3, ¶ 13. Similar
to the relationship between PCM and PCMK, UEW acts as an enrolled provider with the
Department of Labor, R. 14 at 1,¶ 1 (Counterclaim), and Kentucky Energy Workers
Healthcare, LLC (KEW), its wholly-owned subsidiary, see R. 13 at 1, ¶ 2 (Answer), is
authorized and certified to provide personal care services in the Commonwealth, R. 14 at
1, ¶ 2.
According to PCM, KEW has been providing home health care services in
Kentucky without the necessary licensure. R. 1 at 5, ¶¶ 19–20. PCM claims 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., ¶¶ 21–23. Moreover, PCM alleges 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, ¶¶ 24–26, 31–32.
UEW denies PCM’s allegations, see R. 13 at 2, ¶ 6, and makes some of its own,
see R. 14 at 2–3, ¶¶ 5–14. In principal part, UEW says PCMK has attempted to induce
its clients to discontinue existing “personal care services contracts” by characterizing
KEW’s business practices as illegal. R. 14 at 2, ¶ 5. UEW claims such statements, along

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with other “untruthful and disparaging characterizations of [KEW] and its personal care
services,” threaten UEW’s relationships with current and prospective clients. Id., ¶ 6.
B.
On August 31, 2015, PCM and PCMK filed this action against UEW and KEW,
alleging claims for unfair competition, tortious interference with contractual and
prospective business relations, as well as violations of Ky. Rev. Stat. § 216B.010 et seq.
See R. 1 at 6–8, ¶¶ 28–50. UEW filed a counterclaim for tortious interference with
contractual and prospective business relations and for defamation on October 6, 2015.
See R. 14 at 1–3, ¶¶ 4–14. Now, UEW and KEW move for leave to file an amended
counterclaim to join Cold War Patriots (CWP), a Delaware nonprofit corporation, as an
additional counterclaim defendant, and to add claims of unfair competition and civil
conspiracy. See R. 24 at 1 (Motion to File Amended Counterclaim). PCM and PCMK
oppose UEW’s motion as untimely. See R. 27 at 2–3 (Response in Opposition to Motion
to File Amended Counterclaim).
II.
While Federal Rule of Civil Procedure 15 entitles any party to “amend its
pleading once as a matter of course” before being served with a responsive pleading, Fed.
R. Civ. P. 15(a)(1), and instructs the Court to freely “give leave [to amend] when justice
so requires” in all other cases, Fed. R. Civ. P. 15(a)(2), that “window of opportunity does
not remain open forever,” Shane v. Bunzl Distribution USA, Inc., 275 F. App’x 535, 536
(6th Cir. 2008). Once a pleading deadline has passed, litigants must meet the higher
threshold for modifying a scheduling order found in Federal Rule of Civil Procedure 16
first. See Leary v. Daeschner, 349 F.3d 888, 909 (6th Cir. 2003) (citing Sosa v. Airprint

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Sys., Inc., 133 F.3d 1417, 1418 (11th Cir. 1998) (per curiam)); Shane, 275 F. App’x at
536. Scheduling-order modifications, Civil Rule 16 says, are available only “for good
cause and with the judge’s consent.” Fed. R. Civ. P. 16(b)(4). “‘The primary measure of
[Civil] Rule 16’s “good cause” standard is the moving party’s diligence in attempting to
meet the case management order’s requirements,’ though courts may also consider
prejudice to the nonmoving party.” Smith v. Holston Med. Grp., P.C., 595 F. App’x 474,
478 (6th Cir. 2014) (quoting Inge v. Rock Fin. Corp., 281 F.3d 613, 625 (6th Cir. 2002)).
If the movant demonstrates “good cause,” then the Court will grant leave to amend—
except, of course, where there has been “undue delay in filing, lack of notice to the
opposing party, bad faith by the moving party, repeated failure to cure deficiencies by
previous amendments, undue prejudice to the opposing party, or futility of the
amendment.” Brumbalough v. Camelot Care Ctrs., Inc., 427 F.3d 996, 1001 (6th Cir.
2005) (citing Coe v. Bell, 161 F.3d 320, 341–42 (6th Cir. 1998)); see also Foman v.
Davis, 371 U.S. 178, 182 (1962).
III.
UEW concedes its effort to amend was tardy, but argues that its diligence and the
lack of prejudice to any party support a finding of good cause under Civil Rule 16. See
R. 24 at 2–3; R. 31 at 2–4 (Reply). Moreover, UEW asserts (and PCM does not appear to
contest) that, under Civil Rule 15, leave to amend is otherwise proper. See R. 24 at 2–3;
R. 31 at 2–4 (Reply). UEW is correct on both points.
A.
UEW has adequately explained why it failed to seek leave to amend at an earlier
date: It was unaware of the facts supporting those claims until the eve of the January 8,

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2016 deadline for filing amended pleadings. See R. 31 at 2–3; see also R. 21 at 1, ¶ 2
(Scheduling Order). For example, UEW first heard rumors in late December 2015 that
PCMK might be offering home health services in various Kentucky counties despite
lacking the necessary authorization. See R. 31 at 2. It was not until early February 2016,
however, that UEW obtained “credible evidence” to support that speculation. Id. The
same is true for UEW’s claims against CWP. Though UEW knew something of CWP’s
activities before the deadline to file amended pleadings had passed, it lacked the evidence
to support the alleged affiliation between CWP and PCM until late January 2016. See id.
at 2–3. UEW filed its motion to amend on February 26—only a handful of weeks after
uncovering the necessary factual material to support its new claims. Accordingly, UEW
has exhibited diligence in trying to meet the deadlines set in the scheduling order. See
Fee v. Millcreek-W. Unity Sch. Dist. Bd. of Educ., No. 3:12-CV-01723, 2013 WL
821521, at *3 (N.D. Ohio Mar. 5, 2013) (finding movant acted diligently by seeking
“leave to amend [her] complaint shortly after she developed sufficient factual support to
proceed” with the new claim).
In addition, PCM has not explained why it would be prejudiced by the proposed
amendment. As UEW points out, discovery remains open, the parties have exchanged
very little written materials, and “no depositions have [been] taken.” R. 31 at 4. No
party will be prejudiced by allowing UEW to amend its counterclaim. See Arnold v. City
of Columbus, No. 2:08-CV-31, 2010 WL 319942, at *3 (S.D. Ohio Jan. 20, 2010)
(finding no prejudice where discovery remained open and no dispositive motions had
been filed).

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Consequently, the Court concludes that UEW has demonstrated good cause under
Civil Rule 16 for its failure to seek leave to amend prior to the deadline set in the Court’s
scheduling order. See Fed. R. Civ. P. 16(b)(4).
B.
Although PCM does not address the point, the Court further concludes that leave
to amend is proper under Civil Rule 15. See Fed. R. Civ. P. 15(a)(2). There has been no
showing that UEW either unduly delayed before asking to amend, or acted in bad faith.
As discussed earlier, no party will suffer prejudice. Accordingly, the Court will grant
UEW leave to file an amended counterclaim.
IV.
IT IS HEREBY ORDERED that Defendants United Energy Workers Healthcare
Corp. and Kentucky Energy Workers Healthcare, LLC’s Motion to File Amended
Counterclaim, R. 24, is GRANTED. The Clerk of the Court is DIRECTED to docket
the attached First Amended Counterclaim of Defendant United Energy Workers
Healthcare Corp., R. 24-1.
IT IS SO ORDERED.
Date:

May 3, 2016

cc:

Counsel of Record

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