Harris v. Blue Ridge Health Servs., Inc.
Harris v. Blue Ridge Health Servs., Inc.
Opinion of the Court
This matter is before the court on what Plaintiffs LaTia and Octavia Harris style as a motion for summary judgment against Defendant Blue Ridge Health Services, Inc. ("Blue Ridge"), pursuant to Federal Rule of Civil Procedure 56. (Doc. 22.) Because Plaintiffs base their motion on facts established by the entry of default against Blue Ridge, the court construes their filing as a motion for default judgment pursuant to Rule 55. See Auto-Owners Ins. Co. v. Rippy, No. 4:18-cv-02698-RBH,
For the reasons that follow, the motion will be granted as to Plaintiffs' claims under the False Claims Act ("FCA"),
I. BACKGROUND
The basic facts alleged in the complaint are as follows: Plaintiffs, who were both formerly employed by Blue Ridge, are a same-sex married couple. (Doc. 1 ¶¶ 9, 12, 14.) LaTia began working at Blue Ridge on December 14, 2013, and Octavia began on August 29, 2015. (Id. ¶¶ 9, 12.) While working at Blue Ridge, Plaintiffs became aware that Blue Ridge was submitting reimbursement claims to Medicaid while out of compliance with Medicaid requirements.
*637(Id. ¶¶ 17-18, 25, 34). Plaintiffs made multiple attempts to bring Blue Ridge into compliance, including notifying their supervisor, Lynn Taylor, and Blue Ridge's owner, Lubna Reece, of the compliance issues, as well as contacting "Sandhills Center, the Local Management Entity-Managed Care Organization above [Blue Ridge], to talk about [Blue Ridge]'s compliance issues and how to fix them." (Id. ¶¶ 19-21, 34.) Taylor resisted Plaintiffs' attempts to remedy Blue Ridge's noncompliance and - after Plaintiffs went over her head to discuss the noncompliance issues with Reece - began openly expressing hostility towards Plaintiffs, including telling Octavia "that she would not forgive [Octavia] for telling Reece about their noncompliance issues and that the best thing Octavia could do would be to find another job." (Id. ¶¶ 22, 33, 41.)
Blue Ridge also failed to pay Plaintiffs the legally required overtime wage for overtime work. (Id. ¶¶ 43-44, 65.) When Plaintiffs complained about this to Taylor, she told Octavia "that she needed to get on board or find another job" and that any employee "who did not like it could 'kick rocks.' " (Id. ¶¶ 51-53.) Finally, Taylor told Octavia that Reece "was not comfortable with gay people" and that Plaintiffs should keep quiet about their marriage in order to avoid a confrontation with Reece. (Id. ¶¶ 11-13.) When Reece eventually found about Plaintiffs' sexual orientation, she gave Octavia a copy of the Quran and told her that "same sex marriage is not in God's will," but that she "would pray about it and hope it all worked out." (Id. ¶¶ 37-38.) On November 4, 2016, Reece "expressed that if she had it her way she never would have hired [Plaintiffs] in the first place because she disapproved of their being gay." (Id. ¶ 63.)
Later that day, Plaintiffs were fired. (Id. ¶ 64.) After receiving right-to-sue letters from the EEOC and the North Carolina Department of Labor, Plaintiffs instituted this action against Blue Ridge. (Id. ¶¶ 67-70.) Blue Ridge never answered, and the Clerk of Court entered default at Plaintiffs' behest. (Doc. 6.) Plaintiffs then moved for default judgment (Doc. 7); however, the court denied the motion and set aside the default because Plaintiffs did not properly serve Blue Ridge. (Doc. 9.) The court extended the time for service to be made, and Plaintiffs timely re-attempted service. (Docs. 17, 18.) The Clerk then re-entered default (Doc. 20), and Plaintiffs filed the instant motion. (Doc. 22.) Blue Ridge's response was struck by the Magistrate Judge because it lacked an original signature as required under Federal Rule of Civil Procedure 11(a) and because, as a corporation, Blue Ridge may only appear through an attorney, see Local Civil Rule 11.1(a). (Doc. 27.) Blue Ridge was provided time in which to file a corrected response, but it did not do so. On June 17, 2019, the court held a hearing on the motion and requested supplemental briefing from Plaintiffs. Blue Ridge did not appear at the hearing. Plaintiff timely filed the requested supplement, and the motion is now ripe for decision.
II. ANALYSIS
When a "motion for default judgment is unopposed, the court must exercise sound judicial discretion to determine whether default judgement should be entered." United States v. Williams, No. 1:17-cv-00278,
A. Service of Process
Federal Rule of Civil Procedure 4(h)(1)(A) allows service on a corporation consistent with Rule 4(e)(1), which permits service that "follow[s] state law for serving a summons in an action brought in courts of general jurisdiction in the state where the district court is located or where service is made." The relevant North Carolina statute allows service on a corporation by, among other ways, "mailing a copy of the summons and of the complaint, registered or certified mail, return receipt requested, addressed to the officer, director or agent to be served." N.C. Gen. Stat. § 1A-1, Rule 4(j)(6)(c).
In this case, "Plaintiffs have provided evidence that they have served the Defendant by serving its registered agent, Gregory S. Williams, via certified mail, return receipt [requested]." (Doc. 18 at 1.) Plaintiffs properly addressed the certified mail to the registered agent at the agent's mailing address as maintained on the North Carolina Secretary of State's website. See (Doc. 17-1); Business Corporation Page for Blue Ridge Health Services, Inc., Secretary of State: Elaine F. Marshall, https://www.sosnc.gov/online_services/search/by_title/_Business_Registration (last visited June 21, 2019) (search "Blue Ridge Health Services, Inc." and follow the hyperlink). Although the mail was undeliverable at that address, the United States Postal Service delivered it to the forwarding address associated with the original address, where it was received and signed for. (Docs. 17, 17-1, 17-2, 17-3.) The forwarding appears to have been effective, as Blue Ridge attempted to make its first filing in the case thereafter in the form of a response (Doc. 25) to Plaintiffs' dispositive motion, although - as previously noted - the response was later struck as deficient by the Magistrate Judge. (Doc. 27.) On this record, it appears that Plaintiffs have properly served Blue Ridge.
B. Liability
Plaintiffs allege five causes of action. Each is addressed in turn.
1. False Claims Act
As to Plaintiffs' FCA claim, the statute provides that an employee
shall be entitled to all relief necessary to make that employee ... whole, if that employee ... is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment because of lawful acts done by the employee ... or associated others in furtherance of an action under this section or other efforts to stop 1 or more violations of this subchapter.
Here, Plaintiffs' undisputed allegations show that they attempted to remedy Blue Ridge's lack of compliance with Medicaid requirements and that Blue Ridge was well aware of these efforts. See, e.g., (Doc. 1 ¶¶ 17-18, 25-29, 31-32, 34, 66). Because submission of Medicaid claims without disclosing lack of compliance with Medicaid requirements can be a violation of the FCA, see Universal Health Services, Inc. v. United States, --- U.S. ----,
Because Plaintiffs have pleaded facts sufficient to make out a prima facie case under the McDonnell Douglas framework, the burden shifts to Blue Ridge "to produce evidence of a legitimate, non-retaliatory reason for the adverse action." Nifong,
2. North Carolina Medical Assistance Provider False Claims Act
As to Plaintiffs' NCFCA claim, the statute provides:
Any employee of a provider who is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment by the employee's employer because of lawful acts done by the employee on behalf of the employee or others in furtherance of an action under G.S. 108A-70.12, including investigation for, initiation of, testimony for, or assistance in an action filed or to be filed under G.S. 108A-70.12, shall be entitled to all relief necessary to make the employee whole.
*640N.C. Gen. Stat. § 108A-70.15(b). Section 108A-70.12 makes it unlawful for North Carolina Medical Assistance Program
(1) Knowingly present, or cause to be presented to the Medical Assistance Program a false or fraudulent claim for payment or approval; or (2) Knowingly make, use, or cause to be made or used a false record or statement to get a false or fraudulent claim paid or approved by the Medical Assistance Program.
While it is not certain that the North Carolina Supreme Court would apply the McDonnell Douglas framework to NCFCA retaliation claims, "state courts often look to federal decisions for guidance in ruling on cases of first impression arising under state law, particularly in the area of employment discrimination," Dantzler v. Nationwide Credit, Inc., No. 1:98CV00837,
In the circumstances of this case, Plaintiffs have pleaded facts sufficient to support a claim under the NCFCA for the same reasons discussed in the FCA analysis above. As a result, the court will grant default judgment to Plaintiffs on their NCFCA claim.
3. North Carolina Retaliatory Employment Discrimination Act
As to Plaintiffs' REDA claim, the statute provides:
No person shall discriminate or take any retaliatory action against an employee because the employee in good faith does or threatens to ... [f]ile a claim or complaint, initiate any inquiry, investigation, inspection, proceeding or other action, or testify or provide information to any person with respect to ... Article 2A ... of this Chapter.
In this case, the undisputed allegations of the complaint support all these elements. Plaintiffs' right-to-sue letter was issued on February 2, 2018, and their lawsuit was timely filed on February 19, 2018. (Doc. 1 ¶¶ 69-70.) Blue Ridge failed to pay Plaintiffs the proper overtime wage under the Wage and Hour Act. (Id. ¶¶ 23, 30, 35, 43-46.) Plaintiffs' internal reporting of the Wage and Hour Act violations went all the way up to Reece, Blue Ridge's owner, and Octavia also contacted a third party - the North Carolina Department of Labor - about the practice. (Doc. 1 ¶¶ 35, 43-46.) Plaintiffs clearly suffered an adverse employment action when they were fired. (Id. ¶ 64.) Finally, Plaintiffs' firing took place less than two weeks after an episode in which Octavia reiterated to Taylor that Blue Ridge's overtime wage policy was illegal, only to be told to "get on board or find another job." (Id. ¶¶ 51-54.) Because temporal proximity between a protected activity and an adverse employment action "is sufficient to make a prima facie case of causality" under REDA, Fatta v. M & M Props. Mgmt., Inc.,
As a result, the court will grant default judgment to Plaintiffs on their REDA claim.
4. Fair Labor Standards Act
As to Plaintiffs' FLSA claim, the statute provides that "no employer shall employ any of his employees ... for a workweek longer than forty hours unless such employee receives compensation for his employment in excess of the hours above specified at a rate not less than one and one-half times the regular rate at which he is employed."
In the FLSA context, a plaintiff must make out the same prima facie case required in the REDA context: that "(1) [s]he engaged in an activity protected by the FLSA; (2) [s]he suffered adverse action by the employer subsequent to or contemporaneous with such protected activity; and (3) a causal connection exists between the employee's activity and the employer's adverse action." Darveau v. Detecon, Inc.,
As a result, the court will grant default judgment to Plaintiffs on their FLSA claim.
5. Title VII
As to Plaintiffs' Title VII claim, the statute provides that "[i]t shall be an unlawful employment practice for an employer ... to discharge any individual, or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual's ... sex." 42 U.S.C. § 2000e-2(a)(1). Plaintiffs claim that they were terminated because of their "sexual orientation." (Doc. 1 ¶ 86.) However, "[i]t is explicitly the law of the Fourth Circuit that Title VII does not protect against discrimination based on sexual orientation." Hinton v. Va. Union Univ.,
As a result, Plaintiffs have not demonstrated entitlement to default judgment on their Title VII claim.
C. Damages
Recognizing that they have an election of remedies and their damages claims are largest under the FCA and REDA, Plaintiffs focus their request for damages on whichever of the two theories provides the greatest award. (Doc. 23 at 18-20.) The court will therefore limit its damages analysis to these two bases for liability.
Relief under the FCA's retaliation provision "shall include ... 2 times the amount of back pay, interest on the back pay, and compensation for any special damages sustained as a result of the discrimination, including litigation costs and reasonable attorneys' fees."
As previously indicated, "[t]he court does not accept factual allegations regarding damages as true, but rather must make an independent determination regarding *643such allegations." Samler,
As to whether Blue Ridge's REDA violations were willful, Plaintiffs' affidavits affirm the complaint's allegations that Plaintiffs repeatedly informed Blue Ridge of its overtime wage obligations and violations over period of months, yet they were met with indifference or outright hostility each time. See, e.g., (Doc. 1 ¶¶ 23-24, 30, 35, 51-54). Under the circumstances of this case, the court finds that Blue Ridge violated REDA willfully, and therefore that any damages awarded under REDA will be trebled pursuant to
As to back pay, Plaintiffs' evidence is that LaTia was paid $13 per hour for office work, $12 per hour for rehabilitation technician work, and $10.50 per hour for personal care and respite work. (Doc. 23-3 ¶ 6.) She worked 43 hours per week in the office and averaged around 12 hours of work per weekend, of which about 3 hours were for rehabilitation technician work and 9 hours were for personal care and respite work. (Id. ¶¶ 7-10.) Including the overtime rate, where applicable, LaTia's approximate weekly pay was therefore $709. Octavia was paid $13 per hour and worked 43 hours per week. (Doc. 23-2 ¶ 5.) Her approximate weekly pay was therefore $578.50. Plaintiffs were terminated on November 4, 2016, and Blue Ridge was dissolved approximately 85 weeks later, on June 19, 2018.
This brings the court to a legal issue: should the initial back pay amounts be doubled (under the FCA) or trebled (under REDA) before subtracting the mitigation amounts, or afterwards? Plaintiffs argue for the former, citing U.S. ex rel. Mooney v. Americare, Inc.,
*644Miniex v. Houston Hous. Auth., No. 4:17-00624,
As to FCA mitigation, the court finds the reasoning of Hammond and Miniex more persuasive than that of Mooney and Neal.
As to REDA mitigation, Plaintiffs provide no argument or authority whatsoever for their request that the initial back pay calculation be trebled before applying mitigation. In the only North Carolina case this court found on the issue - albeit in the context of a reduction in damages for failure to mitigate - neither the parties nor the court took Plaintiffs' view. See Morris v. Scenera Research, LLC, No. 09 CVS 19678,
One issue remains before the court can calculate and compare damages amounts under the FCA and REDA: the amount of emotional distress damages Plaintiffs should be awarded under the FCA. See Jones v. Southpeak Interactive Corp.,
The Fourth Circuit has stated that "[a]n award of compensatory emotional distress damages requires evidence establishing that the plaintiff suffered demonstrable emotional distress, which must be sufficiently articulated; neither conclusory statements that the plaintiff suffered emotional distress nor the mere fact that a violation occurred supports an award of compensatory damages." Doe v. Chao,
In the court's view, Plaintiffs' brief testimony in this case regarding "feelings of hopelessness" and marital "strain" is only barely sufficient to make out a non-conclusory case for emotional distress damages and is certainly nowhere close to sort of concrete evidence that would be necessary to support the large awards that Plaintiffs request. (Doc. 23-2 ¶¶ 10-15, Doc. 23-3 ¶¶ 16-20.) Consequently, the court will award Plaintiffs $5,000 apiece in emotional distress damages.
This resolved, the court may finally calculate and compare Plaintiffs' damages under the FCA and REDA. As previously noted, Plaintiffs request an award under whichever of these statutes provides the greatest recovery. To calculate LaTia's FCA damages award, the court starts with her initial back pay amount of $60,265, subtracts her mitigation amount of $29,010.75, and doubles the result, equaling $62,508.50. The court then adds the $5,000 emotional distress award, equaling $67,508.50. For Octavia, the court starts with her initial back pay amount of $49,172.50, subtracts her mitigation amount of $23,521.97, and doubles the result, equaling $51,301.06. With the emotional distress award, Octavia's FCA total is 56,301.06. Plaintiffs' REDA damages awards are three times their post-mitigation back pay figures. For LaTia, this equals $93,762.75. For Octavia, it equals $76,951.59. In both contexts, Plaintiffs would receive pre-judgment interest at the rate of 8% per annum on the back pay and *646post-judgment interest at the federal rate on the total sums.
Therefore, because the REDA award exceeds the FCA award, and because Plaintiffs have specifically requested judgment based on the theory of recovery that produces the larger amount to be awarded (Doc. 23 at 21), the court will grant Plaintiffs relief under REDA.
III. CONCLUSION
For the reasons stated,
IT IS THEREFORE ORDERED that:
(1) Plaintiffs' motion for summary judgment (Doc. 22), construed as a motion for default judgment, is GRANTED, and Plaintiff LaTia Harris shall have and recover of Blue Ridge $93,762.75, plus pre-judgment interest at 8% per annum and post-judgment interest at the federal rate, and Plaintiff Octavia Harris shall have and recover of Blue Ridge $76,951.59, plus pre-judgment interest at 8% per annum and post-judgment interest at the federal rate.
(2) Plaintiffs shall be awarded costs as prevailing parties.
(3) Plaintiffs, as prevailing parties, may file an appropriate motion for attorneys' fees and costs pursuant to Local Civil Rule 54.2. Given Blue Ridge's default, counsel is excused from the Local Rule's requirement that the parties attempt to reach an agreement on the proper fee award. However, counsel should comply with the remainder of Local Rule 54.2 by filing any motion for attorneys' fees within 60 days and supporting it with "affidavits, time records, or other evidence, setting forth the factual basis for each criterion which the Court will consider in making such an award" under the applicable law. As to costs, counsel should similarly comply with Local Rule 54.1. To the extent counsel in his affidavit requests in camera review of his fee documentation rather than filing it in compliance with the Local Rules (Doc. 23-1 ¶ 5), the request is denied, but counsel is free to edit his fee documentation prior to submission if necessary to preserve any applicable privilege.
"Although the Fourth Circuit has not explicitly held that the McDonnell Douglas burden-shifting framework applies in FCA retaliation cases, there is little doubt that the framework applies there as the Fourth Circuit has applied the framework in similar contexts, including retaliation claims under Title VII. Moreover, other circuits and district courts in this circuit have routinely applied the framework to FCA retaliation claims." U.S. ex rel. Bachert v. Triple Canopy, Inc.,
Although Taylor primarily communicated with Octavia, LaTia also participated in noncompliance reporting that angered Taylor; moreover, the FCA prohibits not only discharge of an employee for her own protected acts, but also for the protected acts of "associated others,"
" 'Medical Assistance Program' means the North Carolina Division of Medical Assistance and its fiscal agent." N.C. Gen. Stat. § 108A-70.11(5). The Division of Medical Assistance has traditionally been "responsible for administering the State's Medicaid program," Charlotte-Mecklenburg Hosp. Auth. v. N.C. Dep't of Health & Human Servs.,
Ordinarily, employees may also be reinstated under either statute; however, because Blue Ridge has been dissolved, this remedy is unavailable.
Plaintiffs originally provided a back pay period running from the time of their termination to the time they filed the instant motion. See (Doc. 23-2 ¶ 6; Doc. 23-3 ¶ 12). However, because "the underlying premise for awarding back pay is that, absent the employer's unlawful conduct, the employee would have remained in the specified position at the designated rate of pay," Barbara T. Lindemann & Paul Grossman, Employment Discrimination Law 2771 (4th ed. 2007), the court finds that the appropriate end date for the back pay period is the date Blue Ridge was dissolved - after which date Blue Ridge could not possibly have employed Plaintiffs. Cf. E.E.O.C. v. Regency Architectural Metals Corp.,
Neal provides essentially no reasoning on this point, instead simply providing the calculation.
District courts generally have discretion in choosing a pre-judgment interest rate, including "choos[ing] to apply the interest rate provided for by state law." E.E.O.C. v. Liggett & Myers Inc.,
Reference
- Full Case Name
- Latia HARRIS and Octavia Harris v. BLUE RIDGE HEALTH SERVICES, INC.
- Cited By
- 28 cases
- Status
- Published