James et al v. Midlands Choice, Inc.

Filing 83

ORDER - IT IS ORDERED: The plaintiff's Motion for Leave to File Amended Complaint (Filing No. 66 ) is granted as set forth above. James shall have until July 11, 2014, to file her amended complaint. Pursuant to NECivR 72.2 any objection to t his Order shall be filed with the Clerk of the Court within fourteen (14) days after being served with a copy of this Order. Failure to timely object may constitute a waiver of any objection. The brief in support of any objection shall be filed at the time of filing such objection. Failure to file a brief in support of any objection may be deemed an abandonment of the objection. Ordered by Magistrate Judge Thomas D. Thalken. (TCL )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA

DEBRA K. JAMES ex rel
UNITED STATES OF AMERICA,
8:13CV69
Plaintiff,
vs.

ORDER

MIDLANDS CHOICE, INC., a
Nebraska corporation,
Defendant.
This matter is before the court on the plaintiff’s, Debra K. James (James), Motion
for Leave to File Amended Complaint (Filing No. 66). James filed a brief (Filing No. 69)
in support of the motion. The defendant, Midlands Choice, Inc. (Midlands), filed a brief
(Filing No. 73) in opposition. James filed a brief (Filing No. 82) in reply.

BACKGROUND
This case involves James’ termination from Midlands in June of 2012. See Filing
No. 1 - Complaint. James generally alleges Midlands terminated her for exercising her
rights under the Family Medical Leave Act (FMLA) and for identifying Midlands’ breach
of contract with a health care provider. Id. James, an at-will employee, worked full-time
as Midlands’ Director of Provider Contracting from 2004 to June 1, 2012. Id. at 4-10.
James’ job responsibilities included negotiating contracts with health care providers. Id.
In late 2010, James discovered and reported to Midlands’ management that Midlands
failed to implement negotiated contract terms with a provider. Id. As a result, the
pricing on claims was incorrect.1 Id. James alleges Midlands unilaterally altered the
effective date of the negotiated contract with the provider to avoid re-adjudicating the
claims. Id. James reported to senior management failure to implement the contract
terms was illegal and fraudulent. Id.

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The contract pricing with providers was the basis for calculating and submitting claims to
primary insurers and secondary government programs such as Medicare, Medicaid, and an Iowa
reimbursement program. See Filing No. 1 - Complaint.

During James’ employment she suffered a non-work related injury in May of 2011
and a work related injury in April of 2011. Id. The second injury required surgery and
rehabilitation. Id. James took FMLA leave for the second injury. Id. Midlands did not
timely report or file James’ workers’ compensation matter regarding the second injury.
Id. Following James’ inquiry into Midlands’ treatment of her FMLA leave time for both
injuries, Midlands recalculated the amount of time attributed to James’ leave.

Id.

James also questioned Midlands’ allocation of time attributed to workers’ compensation
for work related injuries James reported.

Id.

Within months after raising such

questions, Midlands terminated James’ employment. Id.
James filed her complaint against Midlands on March 1, 2013. See Filing No. 1 Complaint. On October 7, 2013, Midlands filed an answer and counterclaim. See Filing
No. 28 - Answer. Midlands generally denies James’ allegations and asserts several
affirmative defenses. Id. at 1-16. In Midlands’ counterclaim, Midlands alleges James
breached her Employee Confidentiality Agreement by removing and disclosing
confidential and proprietary information belonging to Midlands without Midlands’
knowledge or authorization. Id. at 16-19.
On November 12, 2013, the court entered an initial progression order. See Filing
No. 31. The deadline to amend pleadings was December 17, 2013. Id. The court
entered a final progression order on February 7, 2014. See Filing No. 46. The court set
August 29, 2014, as the deadline for discovery and October 20, 2014, as the date of
trial.

Id.

On May 6, 2014, Midlands’ management employees, Greta Vaught and

Sharon Rasmussen, were deposed.

See Filing No. 73 - Response.

James was

deposed on June 11, 2014. Id. The following day, James filed the instant motion to
amend her complaint.

See Filing No. 66 - Motion.

James seeks to amend her

complaint for the first time to add a cause of action for wrongful discharge. Id.
James argues her amended complaint is made in good faith, is not futile, will not
cause undue delay, and will not unduly prejudice Midlands. See Filing No. 69 - Brief.
James argues her failure to include her workers’ compensation claim was an oversight.
Id. James contends the issues in James’ wrongful discharge claim are substantially
related to the claims pleaded in her original complaint. Id. James asserts Midlands is
well aware of the facts underlying James’ wrongful discharge claim. Id. Lastly, James
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argues she would suffer hardship if she were denied a trial on the merits of her wrongful
discharge claim. Id.
Midlands argues James fails to show good cause for modification of the court’s
scheduling order. See Filing No. 73 - Response. Midlands argues James has been
fully aware of her additional claim since the time James filed her complaint.

Id.

Additionally, Midlands contends it would suffer prejudice if James is allowed to amend
her complaint because depositions of the relevant management employees have
already occurred.

Id.

Midlands contends neither its management employees nor

James were questioned about the workers’ compensation issue. Id. Lastly, Midlands
argues the amendment would be futile because James is already pursuing a retaliation
claim under the FMLA. Id. If James is allowed to amend the complaint, Midlands asks
for costs and fees associated with any additional discovery. Id.
In reply, James argues she has established good cause for the amendment
because she has not sought a prior extension of deadlines, the proposed amended
complaint does not add new or unknown factual allegations or parties, and Midlands
has already provided documents relevant to James’ injuries underlying the workers’
compensation issue. See Filing No. 82 - Reply. James also argues Midlands will not
suffer prejudice because discovery remains open. Id. James contends to the extent
Midlands does not possess records pertaining to the workers’ compensation issue, such
records will be produced as James recently filed notices of intent to serve subpoenas on
Midlands’ workers’ compensation insurance carrier and James’ treating physician and
surgeon. Id. (citing Filing Nos. 75-77). Lastly, James’ argues her amendment is not
futile because she is permitted to plead alternative theories of recovery. Id.

ANALYSIS
A court should grant leave to amend freely “when justice so requires.” Fed. R.
Civ. P. 15. However, “[a] district court may deny leave to amend if there are compelling
reasons such as undue delay, bad faith, or dilatory motive, repeated failure to cure
deficiencies by amendments previously allowed, undue prejudice to the non-moving
party, or futility of the amendment. Duplicative and frivolous claims are futile.” Reuter
v. Jax Ltd., Inc., 711 F.3d 918, 922 (8th Cir. 2013) (internal quotation and citation
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omitted). The party opposing the amendment has the burden of demonstrating the
amendment would be unfairly prejudicial. Roberson v. Hayti Police Dep’t, 241 F.3d
992, 995 (8th Cir. 2001); see Hanks v. Prachar, 457 F.3d 774, 775 (8th Cir. 2006).
There is no absolute right to amend. See Hartis v. Chicago Title Ins. Co., 694 F.3d
935, 948 (8th Cir. 2012). Whether to grant a motion for leave to amend is within the
sound discretion of the district court. See Popoalii v. Corr. Med. Servs., 512 F.3d 488,
497 (8th Cir. 2008). Additionally, the court may consider whether the “late tendered
amendments involve new theories of recovery and impose additional discovery
requirements.” Id. at 497.
“If a party files for leave to amend outside of the court’s scheduling order, the
party must show cause to modify the schedule.” Id. (citing Fed. R. Civ. P. 16(b)(4) (“A
schedule may be modified only for good cause and with the judge’s consent.”); see
Hartis, 694 F.3d at 948. “The primary measure of good cause is the movant’s diligence
in attempting to meet the order’s requirements.”
omitted).

Hartis, 694 F.3d at 948 (citation

“While the prejudice to the nonmovant resulting from modification of the

scheduling order may also be a relevant factor, generally, we will not consider prejudice
if the movant has not been diligent in meeting the scheduling order’s deadlines.”
Sherman v. Winco Fireworks, Inc., 532 F.3d 709, 717 (8th Cir. 2008). “Where there
has been no change in the law, no newly discovered facts, or any other changed
circumstance . . . after the scheduling deadline for amending pleadings, then we may
conclude that the moving party has failed to show good cause.” Hartis, 694 F.3d at 948
(internal quotation marks omitted) (alteration in original).
A district court’s denial of leave to amend a complaint may be justified if the
amendment would be futile. See Geier v. Mo. Ethics Comm’n, 715 F.3d 674, 678 (8th
Cir. 2013) (finding amendment futile where court had already considered argument in
dispositive motion). However, a motion to amend should be denied on the merits “only
if it asserts clearly frivolous claims or defenses.” Becker v. Univ. of Neb. at Omaha,
191 F.3d 904, 908 (8th Cir. 1999) (internal quotations and citations omitted). Further,
“likelihood of success on the new claim or defense is not a consideration for denying
leave to amend unless the claim is clearly frivolous” or “legally insufficient on its face.”
Becker, 191 F.3d at 908; Williams v. Little Rock Mun. Water Works, 21 F.3d 218,
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225 (8th Cir. 1994) (citation omitted). “When the court denies leave [to amend] on the
basis of futility, it means the district court has reached the legal conclusion that the
amended complaint could not withstand a motion to dismiss under Rule 12(b)(6)[.]”
Briscoe v. Cnty. of St. Louis, Mo., 690 F.3d 1004, 1015 (8th Cir. 2012) (first alteration
in original) (citation omitted). “The party opposing such amendment ha[s] the burden of
establishing that leave to amend would be . . . futile.” Sokolski v. Trans Union Corp.,
178 F.R.D. 393, 396 (E.D.N.Y. 1998) (citation omitted). The court is mindful of the
liberal policy toward amendments and “the underlying purpose of Rule 15–to facilitate
decision on the merits rather than on the pleadings or technicalities.” Sharper Image
Corp. v. Target Corp., 425 F. Supp. 2d 1056, 1080 (N.D. Cal. 2006) (internal citation
omitted); see Am. Family Mut. Ins. Co. v. Hollander, 705 F.3d 339, 348 (8th Cir.
2013).
James has shown good cause to substantiate her motion for leave to amend her
complaint. First, James’ wrongful discharge claim is not futile. James is allowed to
plead alternative theories of recovery. See Fed. R. Civ. P. 8(d)(2); Foman v. Davis,
371 U.S. 178 (1962) (permitting leave to amend when the plaintiff’s claim “did no more
than state an alternative theory of recovery.”). Second, while James explains her failure
to timely amend her complaint to include the wrongful discharge claim was an oversight,
there is no indication James acted in bad faith or had any dilatory motive. This is
James’ first request for leave to amend. James does not seek to add new parties or
new and unknown facts. The facts underlying her current claims in the complaint are
the same facts underlying the wrongful discharge claim in the proposed amended
complaint. Midlands has been aware of such facts and some discovery pertaining to
James’ workers’ compensation issue has occurred.

Regardless, discovery remains

open until August 29, 2014, and permitting James leave to amend would not create
undue delay. Additionally, James is in the process of obtaining and producing records
from her treating physician and surgeon and Midlands’ workers’ compensation
insurance carrier. See Filing Nos. 75-77. In the event Midlands requires additional
depositions of James and Midlands’ management employees, Greta Vaught and
Sharon Rasmussen, James will be responsible for paying the costs associated with the

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deposition and Midlands’ attorney fees covering one attorney’s attendance at the
deposition. This will alleviate any prejudice Midlands may suffer from James’ oversight.

IT IS ORDERED:
The plaintiff’s Motion for Leave to File Amended Complaint (Filing No. 66) is
granted as set forth above. James shall have until July 11, 2014, to file her amended
complaint.

ADMONITION
Pursuant to NECivR 72.2 any objection to this Order shall be filed with the Clerk
of the Court within fourteen (14) days after being served with a copy of this Order.
Failure to timely object may constitute a waiver of any objection. The brief in support of
any objection shall be filed at the time of filing such objection. Failure to file a brief in
support of any objection may be deemed an abandonment of the objection.

Dated this 8th day of July, 2014.
BY THE COURT:
s/ Thomas D. Thalken
United States Magistrate Judge

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