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Unity Healthcare, Inc. v. County of Hennepin

United States District Court, D. Minnesota

May 5, 2015

Unity Healthcare, Inc., Dr. Thomas H. Johnson Housing With Services, Inc., and Beth Balenger, Plaintiffs,
v.
County of Hennepin, a government entity incorporated under the laws of the State of Minnesota, Hennepin County Human Services and Public Health Department, Robin Rohr, John Doe 1 through John Doe 15, Jane Doe 16 through Jane Doe 30, Meridian Services, Inc., Lucy Stewart, individually, People Incorporated, Angela Reid, individually, Carrie Davies, individually, Axis Healthcare, LLC, and Mary Blegen, individually, Defendants.

ORDER

JOAN N. ERICKSEN, District Judge.

Plaintiffs Unity Healthcare, Inc. ("Unity") and Dr. Thomas H. Johnson Housing With Services, Inc. ("HWS") are both Minnesota corporations owned by Plaintiff Beth Balenger, who is an African-American woman. Plaintiffs allege that Defendants discriminated against them in violation of several federal anti-discrimination laws and deprived them of their constitutional substantive and procedural due process rights. Plaintiffs also bring state anti-discrimination, defamation, and tortious interference claims. In a December 2, 2014 Order, the Court dismissed all the claims against Axis Healthcare, LLC ("Axis") and Mary Blegen and most of the claims against Meridian Services, Inc. ("Meridian"), Lucy Stewart, People Incorporated ("People"), Angela Reid, and Carrie Davies. This matter is now before the Court on a motion for judgment on the pleadings filed by Hennepin County and Robin Rohr ("the County Defendants").[1] The County Defendants argue that most, if not all, of the claims against them fail under the reasoning in the December 2 Order. For the reasons provided below, their motion is granted in part and denied in part.

BACKGROUND

Minnesota participates in federal-reimbursement programs, known generally as the waiver programs, which assist qualified individuals in obtaining community- and home-based healthcare. The Minnesota Department of Health ("MDH") licenses treatment providers in Minnesota and monitors their compliance with waiver program regulations. Unity provides healthcare services to its clients, some of whom participate in the federal waiver programs. HWS provides housing to these clients. Unity operates under home care licenses issued by MDH. Hennepin County has financial and administrative responsibilities for the waiver services, which include determining participant eligibility and arranging for case management services. Through a contract with Hennepin County, Meridian, People, and Axis provide case management services to waiver program participants, including to some of Unity's clients. Rohr, a Hennepin County employee, supervises the case managers. Through 2013, Hennepin County also had a contract with Unity and HWS known as the "Provider Agreement, " which governed the amounts Unity and HWS could charge their clients and the standards they had to follow.

On October 11, 2011, MDH issued Unity a publicly available Notice of Noncompliance with Correction Orders and a Notice of Conditional License, which described multiple instances when Unity failed to provide adequate health care and services. Under the conditional license, Unity was barred from admitting new clients and Unity had to disclose to each of its existing clients that MDH had taken this action against Unity. In December 2011, after MDH placed Unity on the conditional license, Hennepin County announced that it would not renew its Provider Agreement with Unity and HWS and that Unity's clients had to move. In December 2011 and early January 2012, Rohr instructed the case managers to relocate Unity's clients. In January 2012, Hennepin County agreed to extend Unity's and HWS's contract for three months, subject to weekly monitoring by the County. Three months later, Hennepin County indicated that the monitoring had gone well and extended the agreement through 2013. Despite the extension, the case managers continued their efforts to remove clients from Unity. MDH lifted the conditional license in the summer of 2013.

Plaintiffs filed their second amended complaint on October 24, 2014. On December 2, 2014, the Court issued an order with respect to Axis, Meridian, People, Blegen, Stewart, Davies, and Reid's motions to dismiss. On January 8, 2015, the County Defendants filed their motion for judgment on the pleadings in the second amended complaint.

STANDARD OF REVIEW

A motion for judgment on the pleadings is reviewed under the same standard as a motion to dismiss for failure to state a claim. Clemons v. Crawford, 585 F.3d 1119, 1124 (8th Cir. 2009). A court must accept the facts alleged in the complaint as true and grant all reasonable inferences in favor of the plaintiff. Crooks v. Lynch, 557 F.3d 846, 848 (8th Cir. 2009). Although a complaint need not contain detailed factual allegations, "[a] pleading that offers labels and conclusions' or a formulaic recitation of the elements of a cause of action will not do.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'" Id. (quoting Twombly, 550 U.S. at 570). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id.

DISCUSSION

A. Plaintiffs' Federal Law Claims

Plaintiffs allege race-based discrimination in violation of 42 U.S.C. §§ 1981, 1983, 1985(3), and 2000(d) ("Title VI"), as well as violations of their substantive and procedural due process rights. The December 2 Order dismissed all the federal claims against Axis, Meridian, People, and their case manager employees, Blegen, Stewart, Davies, and Reid.

Although the injuries giving rise to each race-based claim are somewhat different, intentional discrimination is an element of each one. See Mumid v. Abraham Lincoln High School, 618 F.3d 789, 794 (8th Cir. 2010) ("Title VI prohibits only intentional discrimination."); King v. Hardesty, 517 F.3d 1049, 1056-57 (8th Cir. 2008) (stating that a § 1981 and a § 1983 claim require proof of intentional discrimination), abrogated on other grounds by Torgerson v. Rochester, 643 F.3d 1031 (8th Cir. 2010); Jensen v. Henderson, 315 F.3d 854, 862 (8th Cir. 2002) ("Purposeful discrimination must be established for a party to succeed on a § 1985(3) claim."). The December 2 Order found that Plaintiffs' complaint did not support an inference of race discrimination because there were no allegations showing direct evidence of discrimination or showing that Plaintiffs and their comparators were similarly situated. Plaintiffs do not dispute that their discrimination claims against the County Defendants fail under the reasoning in the December 2 Order. Instead, they argue that the order was wrong.

Plaintiffs rely on Johnson v. City of Shelby, 135 S.Ct. 346 (2014), which held that federal pleading rules "do not countenance dismissal of a complaint for imperfect statement of the legal theory supporting the claim asserted." Id. at 346. However, in the December 2 Order, the Court did not find that Plaintiffs' complaint was deficient for improperly stating the legal theory. Rather, the Court found that the complaint did not plead facts to support a plausible inference of race discrimination under any legal theory.

Plaintiffs also argue that their allegations regarding similarly situated comparators are sufficient to show discrimination at the pleadings stage and the December 2 Order erred by finding otherwise. While the ultimate determination of whether comparators are similarly situated to a plaintiff is a question of fact for the jury, a discrimination claim is subject to dismissal when the complaint fails to allege facts tending to show that the plaintiff was similarly situated to comparators in the respects relevant to the lawsuit. See Hager v. Arkansas Dep't of Health, 735 F.3d 1009, 1015 (8th Cir. 2013) (holding that a § 1983 discrimination claim was insufficiently pled because the complaint "does not allege facts showing that similarly situated [comparators] were treated differently"); Coleman v. Maryland Court of Appeals, 626 F.3d 187, 190-91 (4th Cir. 2010) (holding that a discrimination claim was insufficiently pled, even where the plaintiff identified a comparator, because there was no plausible basis for inferring the comparator was similarly situated) (cited approvingly for this proposition in ...


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