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

Filing 84

MEMORANDUM OPINION AND ORDER by Senior Judge Thomas B. Russell on 12/21/2016. IT IS HEREBY ORDERED that ACT for Health and Professional Case Management of Kentucky, LLC's Motion for Preliminary Injunction, (R. 57 ), is DENIED. cc: Counsel; United Energy Workers Healthcare Corp.; Kentucky Energy Workers Healthcare, LLC (CDR)

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,

v.
COLD WAR PATRIOTS NON-PROFIT
CORPORATION,

Counterclaim Defendant.

MEMORANDUM OPINION AND ORDER
ACT for Health, doing business as Professional Case Management, along with its
wholly-owned subsidiary, Professional Case Management of Kentucky, LLC
(collectively, PCM), filed this action against United Energy Workers Healthcare Corp.
and its wholly-owned subsidiary, Kentucky Energy Workers Healthcare, LLC
(collectively UEW), bringing claims for unfair competition, for violating Kentucky’s
laws and regulations regarding the licensure of health care service providers, as well as
for tortious interference with contractual and prospective business relationships. Now,
PCM asks the Court to issue a preliminary injunction to enjoin UEW from providing
allegedly unauthorized home-health care services in Kentucky. For reasons discussed
more fully below, PCM’s Motion for a Preliminary Injunction, [R. 57], is DENIED.

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I.
A.
The instant dispute is between two providers of home-health care services to
eligible individuals under the Energy Employees Occupational Illness Compensation
Program Act of 2000 (EEOICPA), 42 U.S.C. §§ 7384 to 7385s-16. Administered by the
U.S. Department of Labor, the EEOICPA 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).

Under the EEOICPA, eligible individuals may receive health-care

services, including home-health care services and personal-care services, from designated
providers, whom the Department of Labor reimburses. See 42 U.S.C. §§ 7384e, 7384t;
20 C.F.R. §§ 30.400, 30.403.
The Commonwealth of Kentucky regulates providers of home-health care
services, known as “home health agencies,” and providers of personal-care services,
called “personal services agencies,” differently. To provide home-health care services
under Kentucky law, an entity must first obtain a “certificate of need” from the Cabinet
of Health and Family Services to establish a “home health agency.” See Ky. Rev. Stat. §
216B.061(1)(a); see also id. § 216B.015(9), (13). A “home health agency” is, in broad
terms, an “organization . . . which provides intermittent health and health related services,
to patients in their place of residence, either singly or in combination as required by a
plan of treatment prescribed by a licensed physician.” 902 Ky. Admin. Reg. 20:081, § 2.
“Health services,” in turn, means “clinically related services provided within the

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Commonwealth to two . . . or more persons, including but not limited to diagnostic,
treatment, or rehabilitative services.” Ky. Rev. Stat. § 216B.015(14).
To provide personal-care services, on the other hand, an entity must obtain
certification from the Cabinet to operate a “personal services agency.” Ky. Rev. Stat. §
216.712(1); see also 906 Ky. Admin. Reg. 1:180, § 2. Generally speaking, a “personal
services agency” is an organization “that directly provides or makes provision for
personal services.” Ky. Rev. Stat. § 216.710(8). “Personal services,” in turn, include:
[a]ssisting with a client’s ambulation and activities of daily living as
defined in KRS 194A.700; . . . [f]acilitating the self-administration of
medications if such medications are prepared or directed by a licensed
health-care professional or the client’s designated representative; . . .
[p]roviding services which may be referred to as attendant care, in-home
companion, sitter and respite care services, and homemaker services when
provided in conjunction with other personal services; and . . . [p]roviding
services that enable the client to live safely, comfortably, and
independently.
Id. § 216.710(7)(a). The definition explicitly excludes, among other things, services that
“require the order of a licensed health-care professional to be lawfully performed in
Kentucky,” id. § 216.710(7)(b)(6), as well as any “health-care entity or health-care
practitioner otherwise licensed, certified, or regulated by local, state, or federal statutes or
regulations,” id. § 216.710(7)(b)(9).
ACT for Health, doing business as Professional Case Management, furnishes
home-health care services to EEOICPA-eligible patients in Kentucky through its whollyowned subsidiary, Professional Case Management of Kentucky, LLC. [R. 1 at 3, ¶¶ 12–
13 (Complaint).] PCMK is a licensed “home health agency” under Ky. Rev. Stat. §
216B.105(1).

[See R. 57-2 at 3 (Home Health Agency License).]

United Energy

Workers Healthcare Corp., through its wholly-owned subsidiary, Kentucky Energy
Workers Healthcare, LLC, also furnishes home-health care services to EEOICPA-eligible
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patients in Kentucky.

[See R. 13 at 1, ¶¶ 2–3 (Answer); R. 14 at 1, ¶¶ 1–3

(Counterclaim).] KEW is a licensed “personal services agency” under Ky. Rev. Stat. §
216.712(1), [see R. 61-2 at 1 (Personal Services Agency License)], and, more recently, a
“home health agency” too, at least provisionally, [see R. 61-1 at 54 (In re Kentucky
Energy Workers Healthcare, LLC, No. HSAHB CON 16-1008 (September 19, 2016)).]
PCM alleges that UEW has been providing home-health care services without the
necessary licensure as a “home health agency.” [See R. 1 at 5, ¶¶ 19–20.] In support of
that proposition, PCM points to a number of claim forms that UEW filed with the
Department of Labor between April 2014 and September 2016. [See R. 67 at 1–12
(OMB Form 1500).]

In order to bill the Department for care furnished under the

EEOICPA, a provider, such as UEW, must itemize and identify each service performed
using the Physician’s Current Procedural Terminology (CPT) code. See 20 C.F.R. §
30.701(a)–(b). Based on the CPT codes UEW included in its claim forms, it appears as
though KEW has been providing skilled in-home nursing care in Kentucky since at least
April 2014.1 [See R. 67 at 1–12 (billing for services provided under CPT codes “T1017,”
“T1030,” and “S9123”); R. 57-9 at 1–2, ¶¶ 3–6, 8–9 (Fletcher’s Declaration).]
In addition, PCM relies on findings from the Cabinet for Health and Family
Services, Office of the Inspector General’s investigation into whether UEW had been
providing services that exceeded the scope of those allowed for a personal services
agency. [See R. 63-3 at 1 (Statement of Deficiencies).] The investigation revealed, in
pertinent part, that UEW had provided “focused and comprehensive nursing assessments,
lung monitoring medication review, vital sign monitoring, oxygen saturation monitoring,
1

The Department of Labor lists eleven of the most common billing codes in the Unified Federal
(EEOICPA) Procedure Manual § 3-0300, ex. 4 (Jan. 2010), which Curtis Fletcher makes reference to in his
declaration.

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monitoring of skin condition, and education.” [Id. at 2.] Based on a sample of six
patients’ records, the Inspector General concluded that UEW had been furnishing
services far in excess of those authorized under Kentucky law. [See id. at 1–3.]
UEW, as might be expected, disagrees with PCM’s assessment. UEW does not
address PCM’s argument about its billing records, other than to say that it maintained
those billing records in compliance with 906 Ky. Admin. Reg. 1:180. [See R. 61 at 3–4
(Response).] It does point out, though, that UEW has tendered a plan of correction in
response to the investigation, [see R. 61-5 at 1–6 (Plan of Correction)], which the
Inspector General subsequently accepted, [see R. 61-4 at 1–2 (Letter from Inspector
General)].
B.
PCM filed this action against UEW, bringing claims for unfair competition, for
violating Ky. Rev. Stat. §§ 216B.010 to .990, as well as for tortious interference with a
contract and intentional interference with a prospective business relationship. [See R. 1
at 6–8, ¶¶ 28–50.] Now, PCM asks the Court to issue a preliminary injunction (1) to
enjoin UEW “from providing home health care services” beyond the scope of those
properly provided by a personal services agency; (2) to require UEW “to produce and
supplement, every two weeks, billing record disclosures to confirm that [it is] no longer
providing care beyond [its] licensure”; and (3) to oblige UEW to send “notice to [its]
patients, and [its] patients’ physicians, who require home health care services,”
announcing its “inability to continue to provide [those patients] with home health agency
care so that they can select a licensed and authorized provider of their choice.” [R. 57-1

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at 2 (Proposed Preliminary Injunction).] UEW opposes PCM’s request. [See R. 61 at 4–
14.]
II.
A preliminary injunction under Federal Rule of Civil Procedure 65 is “an
extraordinary remedy which should be granted only if the movant carries his or her
burden of proving that the circumstances clearly demand it.” Overstreet v. LexingtonFayette Urban Cty. Gov’t, 305 F.3d 566, 573 (6th Cir. 2002) (citing Leary v. Daeschner,
228 F.3d 729, 739 (6th Cir. 2000)).

When determining the propriety of issuing a

preliminary injunction, the Court weighs the following four factors:
(1) whether the movant has a strong likelihood of success on the merits;
(2) whether the movant would suffer irreparable injury without the
injunction; (3) whether issuance of the injunction would cause substantial
harm to others; and (4) whether the public interest would be served by
issuance of the injunction.
City of Pontiac Retired Emps. Ass’n v. Schimmel, 751 F.3d 427, 430 (6th Cir. 2014) (en
banc) (quoting PACCAR Inc. v. TeleScan Techs., L.L.C., 319 F.3d 243, 249 (6th Cir.
2003), abrogated on other grounds by KP Permanent Make-Up, Inc. v. Lasting
Impression I, Inc., 543 U.S. 111 (2004)). Each of these factors should “be balanced
against one another and should not be considered prerequisites to the grant of a
preliminary injunction.” Liberty Coins, LLC v. Goodman, 748 F.3d 682, 690 (6th Cir.
2014) (quoting Leary, 228 F.3d at 736), cert. denied sub nom. Liberty Coins, LLC v.
Porter, ––– U.S. ––––, 135 S. Ct. 950 (2015).

The party seeking the preliminary

injunction bears the burden of justifying such relief. McNeilly v. Land, 684 F.3d 611, 615
(6th Cir. 2012) (citing Granny Goose Foods, Inc. v. Bhd. of Teamsters & Auto Truck
Drivers Local No. 70, 415 U.S. 423 (1974)).

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III.
PCM seeks the extraordinary remedy of a preliminary injunction to stop, in
essence, UEW from providing allegedly unauthorized home-health care services in
Kentucky. To determine the propriety of that request, the Court will address each of the
four factors, discussed above, in turn. Ultimately, the Court finds that the balance of
those factors weighs against issuing the sought-after injunction.
A.
To begin, PCM has not demonstrated a strong likelihood on the merits of its first,
and principal, claim for common-law unfair competition. [See R. 1 at 6–7, ¶¶ 30, 34–35.]
While a common-law action for unfair competition has long been recognized in the
Commonwealth, and elsewhere, its boundaries remain somewhat nebulous. The essence
of the tort “is the bad-faith misappropriation of the labors and expenditures of another
likely to cause confusion or to deceive purchasers as to the source or origin of goods.”
Kenney v. Hanger Prosthetics & Orthotics, Inc., 269 S.W.3d 866, 871 (Ky. Ct. App.
2007) (quoting 54A Am. Jur. 2d Monopolies, Restraints of Trade, and Unfair Trade
Practices § 1107 (1996)).

Unfair competition under Kentucky law, then, generally

“consists of either (1) injuring the plaintiff by taking his business or impairing his good
will, or (2) unfairly profiting by the use of the plaintiff’s name, or a similar one, in
exploiting his good will.” Covington Inn Corp. v. White Horse Tavern, Inc., 445 S.W.2d
135, 139 (Ky. 1969).
PCM’s allegations fall far afield from that definition. The basis of PCM’s unfaircompetition claim rests, in relevant part, on the accusation that UEW’s provision of
home-health care services without the required licensure gives UEW an unfair advantage

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in the marketplace. [See R. 1 at 6, ¶ 30.] While PCM’s allegation might be true, it does
not appear to support an actionable claim for unfair competition under Kentucky law.
See Auto Channel, Inc. v. Speedvision Network, LLC, 144 F. Supp. 2d 784, 789–90 (W.D.
Ky. 2001) (remarking that “Kentucky has only recognized the claim of unfair
competition in the realm of trademarks”).
PCM sees things differently. “It is well-established in Kentucky,” PCM says,
“that the provision of unregulated services, in violation of Kentucky’s statutes and
regulations, constitutes unfair competition.”

[R. 57 at 11 (Motion for Preliminary

Injunction); see also R. 72 at 5–8 (Reply).] In support of that broad proposition, PCM
points to a single source of authority: the then-Kentucky Court of Appeals’ decision in
McCormack v. Cole, 97 S.W.2d 33 (Ky. 1936). [See R. 57 at 11; R. 72 at 6–7.]
In McCormack, the licensed operator of a taxi service sought to enjoin an
unlicensed competitor from transporting passengers unless the competitor, too, obtained
the appropriate license. 97 S.W.2d at 34. The competitor conceded noncompliance with
Kentucky’s licensure statute, but denied that it had engaged in the business of taxiing. Id.
The trial court entered judgment against the operator without explanation. Id. However,
in the light of overwhelming evidence that the competitor had been “regularly engaged”
in the “unlawful enterprise” alleged, the Kentucky Court of Appeals reversed. Id. at 34–
35. It held injunctive relief to be appropriate. Id. at 35.
PCM reads McCormack as recognizing a cause of action whereby “a competitor
who is otherwise in compliance with [controlling] statutes and regulations may seek
injunctive relief to prevent” an unlicensed competitor from participating in the
marketplace. [R. 57 at 11.] The problem with PCM’s interpretation, however, is that the

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operator in McCormack had an explicit, statutory cause of action against the competitor.
McCormack, 97 S.W.2d at 34 (quoting Ky. Stat. § 2739j-92 (Supp. 1933)). In detail,
section 2739j-92 of Carroll’s Kentucky Statutes expressly provided that:
Any common carrier, contract carrier [taxi drivers] or any other person,
firm or corporation may, at the instance of the Commission or of any
person having an interest in the subject-matter, be enjoined by the courts
of this State from any violation of the provisions of this Act, or of any
order, rule, regulation or requirement of the Commission.
Id. (alteration in original) (quoting Ky. Stat. § 2739j-92 (Supp. 1933)). Section 2739j-92,
the Court of Appeals explained, supplied the operator in McCormack with “complete
authority for the maintenance of [its] action to obtain” injunctive relief against the
competitor. Id. at 34–35.
McCormack, then, cannot be read as broadly as PCM has professed. In the
absence of that authority, the legal basis of PCM’s unfair-competition claim is unclear.
PCM’s likelihood of success on the merits of that claim is questionable too.
For many of the same reasons, PCM’s claim alleging that UEW has violated
chapter 216B of the Kentucky Revised Statutes is unlikely to make headway either. [See
R. 1 at 7, ¶¶ 37, 39–41.] Ostensibly, PCM relies on Ky. Rev. Stat. § 446.070 as the basis
for that claim. [See R. 72 at 8–9.] Ky. Rev. Stat. § 446.070 creates a private right of
action for any person injured on account of a statutory violation so long as two conditions
are satisfied. St. Luke Hosp., Inc. v. Straub, 354 S.W.3d 529, 534 (Ky. 2011); accord
Ezell v. Christian Cty., 245 F.3d 853, 856 (6th Cir. 2001). First, the person injured must
belong to the class of persons intended to be protected by the statute. Davidson v. Am.
Freightways, Inc., 25 S.W.3d 94, 99–100 (Ky. 2000). Second, the injury suffered must
be of the type that the statute was designed to prevent. McCarty v. Covol Fuels No. 2,
LLC, 476 S.W.3d 224, 229 (Ky. 2015).
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Even assuming UEW violated chapter 216B, PCM does not appear to be in the
class of protected persons. Ky. Rev. Stat. § 216B.010 states the General Assembly’s
purpose for licensing home health agencies. It reads, in pertinent part, “the licensure of
health facilities and health services is a means to insure that the citizens of this
Commonwealth will have safe, adequate, and efficient medical care.” Ky. Rev. Stat. §
216B.010. “The statute’s end goal in implementing its licensure provisions, then, is to
protect users of Kentucky health care facilities.” Vanhook v. Somerset Health Facilities,
LP, 67 F. Supp. 3d 810, 823 (E.D. Ky. 2014) (emphasis added); see also United States ex
rel. Doe v. Jan-Care Ambulance Serv., ––– F. Supp. 3d ––––, ––––, 2016 WL 2843909,
at *4 (E.D. Ky. 2016) (same).
PCM is not a user of health facilities or health services. It is a provider of them.
Nothing in chapter 216B, including the General Assembly’s statement in section
216B.010, seems to be intended to protect providers of those services.

Jan-Care

Ambulance Serv., ––– F. Supp. 3d at ––––, 2016 WL 2843909, at *4; cf. Vanhook, 67 F.
Supp. 3d at 823 (finding that resident of a long-term care facility was in the class of
persons intended to be protected). So, it appears that PCM is not among those chapter
216B was designed to protect. Accordingly, the likelihood of PCM succeeding on this
claim is, likewise, doubtful.
Last but not least, PCM has not demonstrated a strong likelihood of success on its
claims for tortious interference with a contract or intentional interference with a
prospective business relationship. [See R. 1 at 8, ¶¶ 44–50.] In Kentucky, a claim for
tortious interference with a contract requires (1) the existence of a contract, (2)
knowledge thereof, (3) the intent to cause a breach, (4) and conduct which, in fact, caused

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a breach, (5) that resulted in damages, (6) in the absence of any privilege or justification
to excuse that conduct. Snow Pallet, Inc. v. Monticello Banking Co., 367 S.W.3d 1, 5–6
(Ky. Ct. App. 2012); accord Ventas, Inc. v. Health Care Prop. Inv’rs, Inc., 635 F. Supp.
2d 612, 618–19 (W.D. Ky. 2009), aff’d sub nom. Ventas, Inc. v. HCP, Inc., 647 F.3d 291
(6th Cir. 2011). Closely related, an action for intentional interference with a prospective
business relationship requires (1) the existence of a valid business relationship or its
expectancy, (2) knowledge thereof, (3) an intentional act of interference, (4) taken with
an improper motive, (5) which caused (6) special damages. Halle v. Banner Indus. of
N.E., Inc., 453 S.W.3d 179, 184 (Ky. Ct. App. 2014); accord Griffin v. Jones, ––– F.
Supp. 3d ––––, ––––, 2016 WL 1092879, at *7 (W.D. Ky. 2016).
Here, PCM failed to discuss either of these claims in its initial briefing. [See R.
57 at 10–12.] It devoted only a single paragraph to explaining its claim for intentional
interference with a prospective business relationship later on, but offered no meaningful
response as to why, for example, it has a valid business relationship or its expectancy
with potential, EEOICPA-eligible clients in Kentucky. [See R. 72 at 10.] In light of the
parties’ limited briefing on that (and other) points, the likelihood of success on either, or
both, of those claims is speculative at this juncture.
B.
Next, PCM has not demonstrated a realistic possibility of irreparable harm. PCM
identifies two injuries it might suffer absent an injunction. First, PCM claims that it has
lost customers and market share on account of the competition between it and UEW in
the home-health services arena. [See R. 57 at 13; R. 72 at 10–12.] The loss of market
share, it is true, most often qualifies as an irreparable injury because the damages flowing

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from that harm are difficult to compute. Collins Inkjet Corp. v. Eastman Kodak Co., 781
F.3d 264, 279 (6th Cir. 2015). On the record before it, however, the Court finds that
computing PCM’s losses does not pose such an insurmountable task as to rise to the level
of an irreparable injury. [See R. 72 at 10 (“In the past two years, UEW has unlawfully
served [seventy-seven] patients in three of the four counties in which PCM [operates] . . .
.”).]

PCM’s losses are better characterized as monetary and, therefore, are not

irreparable. See Basicomputer Corp. v. Scott, 973 F.2d 507, 511 (6th Cir. 1992) (holding
that “harm is not irreparable if it is fully compensable by money damages”); LexingtonFayette Urban Cty. Gov’t v. BellSouth Telecommunications, Inc., 14 F. App’x 636, 639
(6th Cir. 2001).
Second, PCM alleges the UEW’s unlawful provision of home-health services
somehow tarnishes the reputation of lawful providers, such as PCM. [See R. 57 at 13.]
The loss of “established goodwill may irreparably harm a company.” Mich. Bell Tel. Co.
v. Engler, 257 F.3d 587, 599 (6th Cir. 2001). However, the Court fails to see how
UEW’s participation in the marketplace, even absent appropriate licensure, affects the
established goodwill between PCM and its customers. In sum, PCM does not face a
realistic threat of irreparable harm.
C.
Moreover, issuance of PCM’s requested injunction carries the possibility of
causing some harm to UEW. In the main, PCM asks that the injunction require UEW,
among other things, to notify its patients that it must cease providing care to them on
account of this dispute. [See R. 57-1 at 2.] Issuing an injunction of that sort would, of
course, adversely impact UEW’s relationship with existing patients and its reputation in

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the marketplace generally. [See R. 61 at 11–13.] The risk of harm to UEW weighs
against entering an injunction.
D.
Last, the public interest weighs neither for nor against issuance of an injunction.
PCM argues, on one hand, that stopping UEW from “blatantly violating Kentucky’s
laws” relating to the provision of home-health care services “is consistent with the public
interest.” [R. 57 at 15; see also R. 72 at 13–15.] The public has a strong interest in
seeing medical providers regulated consistent with Kentucky law.

See Tri-Cities

Holdings LLC v. Tenn. Health Servs. & Dev. Agency, 598 F. App’x 404, 412 (6th Cir.
2015). However, UEW maintains that entering an injunction of this sort needlessly
interferes with the role of the Cabinet in overseeing entities such as it and PCM. [See R.
61 at 13–14.] The public has a strong interest, too, in leaving the administration of the
state’s regulatory scheme to those officials without federal courts entangling themselves
in that business. See Rhinehart v. Scutt, 509 F. App’x 510, 516 (6th Cir. 2013); cf. R.R.
Comm’n of Tex. v. Pullman Co., 312 U.S. 496, 500–01 (1941). Ultimately, the public
interest as to the issuance of the injunction appears to be in a state of equipoise. In those
circumstances, injunctive relief is not warranted.

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IV.
IT IS HEREBY ORDERED that ACT for Health and Professional Case
Management of Kentucky, LLC’s Motion for Preliminary Injunction, [R. 57], is
DENIED.
IT IS SO ORDERED.
Date:

December 21, 2016

cc:

Counsel of Record
United Energy Workers Healthcare Corp.
614 East Main, Suite C
Riverton, WY 82501
Kentucky Energy Workers Healthcare, LLC
614 East Main, Suite C
Riverton, WY 82501

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