Wehlage v. Empres Healthcare Inc.

791 F.Supp.2d 774

Phyllis WEHLAGE, on behalf of herself and on behalf of others similarly situated, Plaintiff,

v.EMPRES HEALTHCARE, INC.; EHC Management, LLC; EHC Financial Services, LLC; Evergreen California Healthcare, LLC; Evergreen at Arvin, LLC; Evergreen at Bakersfield, LLC; Evergreen at Lakeport, LLC; Evergreen at Heartwood, LLC; Evergreen at Springs Road, LLC; Evergreen at Tracy, LLC; Evergreen at Oroville, LLC; Evergreen at Petaluma, LLC; and Evergreen at Gridley (SNF), LLC, Defendants.

No. C 10–05839 CW.

United States District Court, N.D. California.

May 25, 2011.

Christopher J. Healey, Luce Forward Hamilton & Scripps, San Diego, CA, Robert Stephen Arns, The Arns Law Firm, Kathryn Ann Stebner, Stebner & Associates, San Francisco, CA, Michael D. Thamer, Law Offices of Michael D. Thamer, Callahan, CA, Michael Joseph Crowley, Janssen Malloy Needham Morrison, et al., W. Timothy Needham, Janssen Malloy Needham Morrison Reinholtsen & Crowley LLP, Eureka, CA, for Plaintiff.Christian Edward Baker, Manatt, Phelps & Phillips, LLP, San Francisco, CA, Barry Scott Landsberg, Andrew Hardenbrook Struve, Brad W. Seiling, Jessica J. Slusser, Manatt, Phelps & Phillips, LLP, Los Angeles, CA, for Defendants.

ORDER GRANTING DEFENDANTS' REQUEST FOR LEAVE TO FILE ADDITIONAL AUTHORITY, DENYING WITHOUT PREJUDICE EMPRES ENTITIES' RULE 12(B)(2) MOTION TO DISMISS, GRANTING EMPRES ENTITIES AND EVERGREEN ENTITIES' RULE 12(B)(6) MOTION TO DISMISS, AND GRANTING IN PART AND DENYING IN PART DEFENDANT EVERGREEN AT LAKEPORT'S MOTION TO DISMISS (Docket Nos. 22, 23, 25 and 45)

CLAUDIA WILKEN, District Judge.

Plaintiff Phyllis Wehlage brings claims against Defendants EmpRes Healthcare, Inc., et al., under California law for their alleged failure to provide sufficient staffing at skilled nursing facilities (SNFs). Defendants EmpRes Healthcare, Inc.; EHC Management, LLC; EHC Financial Services, LLC; and Evergreen California Healthcare, LLC (collectively, EmpRes Entities) and Defendants Evergreen at Arvin, LLC; Evergreen at Bakersfield, LLC; Evergreen at Heartwood Avenue, LLC, erroneously sued as Evergreen at Heartwood, LLC; Evergreen at Springs Road, LLC; Evergreen at Tracy, LLC; Evergreen at Oroville, LLC; Evergreen at Petaluma, LLC; and Evergreen at Gridley (SNF), LLC (collectively, Evergreen Entities) move to dismiss the claims Plaintiff brought against them.¹ Defendant Evergreen at Lakeport, LLC (hereinafter, Evergreen Lakeport), on other grounds, moves to dismiss Plaintiff's complaint. The EmpRes Entities and Evergreen Entities join Evergreen Lakeport's motion. The motions were heard on April 7, 2011. On April 26, 2011, Defendants moved for leave to file a notice regarding the Ninth Circuit's April 25, 2011 decision in Reudy v. Clear Channel Outdoor, Inc., a case cited by Evergreen Lakeport in connection with its motion to dismiss. Having considered oral argument and the papers submitted by the parties, the Court GRANTS Defendants' motion for leave and the EmpRes and Evergreen Entities' motion to dismiss, and GRANTS in part Evergreen Lakeport's motion to dismiss and DENIES it in part.

BACKGROUND

I. Factual Allegations and Procedural History

Plaintiff is a California resident. EmpRes Healthcare, Inc., is a Washington corporation with a principal place of business in Washington. EHC Management, LLC; EHC Financial Services, LLC; and Evergreen California Healthcare, LLC, are Washington limited liability companies that have EmpRes Healthcare as their sole member. Evergreen Lakeport and the Evergreen Entities are Washington limited liability companies that have Evergreen California Healthcare, LLC, as their sole member. The following allegations are contained in Plaintiff's complaint.

Plaintiff resides at Evergreen Lakeport Healthcare (Lakeport Facility), an SNF run by Evergreen Lakeport. She is a “dependent adult,” as defined by California Welfare and Institutions Code section 15610.23, and a “disabled person,” as defined by California Civil Code section 1761(g).²

Evergreen Lakeport did not maintain statutorily-mandated nursing staff levels at the Lakeport Facility. As a result, Plaintiff suffered several “indignities and other harms,” including a lack of or delayed responses to her call light and a lack of assistance with grooming, bathing and eating. Compl. ¶ 44. When Plaintiff was admitted to the Lakeport Facility, Evergreen Lakeport did not disclose that it did not comply with staffing requirements. Plaintiff lost money because of this non-disclosure.

The EmpRes Entities own and operate Evergreen Lakeport and the Evergreen Entities, and “make or approve key decisions” and “procure labor, services and/or merchandise” for them. Compl. ¶ 23. All of the Defendants have overlapping officers, directors and employees, and “operate as a joint venture, single enterprise, are agents of one another, are alter egos, and/or conspire to increase profits by ignoring California's minimum staffing requirements.” Id. ¶ 25. Further, Evergreen Lakeport and the Evergreen Entities communicated with the state department of health services for the benefit of the EmpRes Entities.

Plaintiff brings three claims against Defendants:

(1) violation of California Health and Safety Code § 1430(b); violation of California's Unfair Competition Law (UCL), Cal. Bus. & Prof.Code §§ 17200, et seq. ; and (3) violation of the California Consumers Legal Remedies Act (CLRA), Cal. Civ.Code §§ 1750, et seq. She intends to bring these claims on behalf of a class comprised of residents of all SNFs operated by Evergreen Lakeport and the Evergreen Entities.

Plaintiff filed her lawsuit in Sonoma County Superior Court. It was subsequently removed based on the Class Action Fairness Act of 2005.

II. Statutory and Regulatory Background

Plaintiff's action rests in large part on California Health and Safety Code section 1265.5(a), which provides that, subject to an exception that evidently does not apply here, “the minimum number of actual nursing hours per patient required in a skilled nursing facility shall be 3.2 hours.” Nursing hours, as used in section 1276.5(a), is defined to mean “the number of hours of work performed per patient day by aides, nursing assistants, or orderlies plus two times the number of hours worked per patient day by registered nurses and licensed vocational nurses (except directors of nursing in facilities of 60 or larger capacity).” Cal. Health & Saf.Code § 1276.5(b)(1).

In October 2010, legislation was enacted that amended the California Welfare and Institutions Code by adding section 14126.022. See generally S.B. 853, 2010 Cal. Stat. Ch. 717, at 5. Section 14126.022 requires the California Department of Public Health (CDPH) to impose, beginning in the 2010–2011 fiscal year, administrative penalties on skilled nursing facilities that fail “to meet the nursing hours per patient per day requirements pursuant to Section 1276.5 of the Health and Safety Code.” Cal. Welf. & Inst.Code § 14126.022(f)(2)(A).

On January 31, 2011, CDPH provided skilled nursing facilities with the guidelines it will use “during state audits for compliance with the 3.2 nursing hour per patient day (NHPPD) staffing requirements.” Evergreen Lakeport's Request for Judicial Notice (RJN), Ex. 5, at 2.³ In the guidelines, CDPH noted that the 3.2 NHPPD staffing requirement “does not assure that any given patient receives 3.2 hours of nursing care; it is the total number of nursing hours performed by direct caregivers per patient day divided by the average patient census.” Id.

LEGAL STANDARD

A complaint must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a). Dismissal under Rule 12(b)(6) for failure to state a claim is appropriate only when the complaint does not give the defendant fair notice of a legally cognizable claim and the grounds on which it rests. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). In considering whether the complaint is sufficient to state a claim, the court will take all material allegations as true and construe them in the light most favorable to the plaintiff. NL Indus., Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir.1986). However, this principle is inapplicable to legal conclusions; “threadbare recitals of the elements of a cause of action, supported by mere conclusory statements,” are not taken as true. Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949–50, 173 L.Ed.2d 868 (2009) (citing Twombly, 550 U.S. at 555, 127 S.Ct. 1955).

When granting a motion to dismiss, the court is generally required to grant the plaintiff leave to amend, even if no request to amend the pleading was made, unless amendment would be futile. Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv. Inc., 911 F.2d 242, 246–47 (9th Cir.1990). In determining whether amendment would be futile, the court examines whether the complaint could be amended to cure the defect requiring dismissal “without contradicting any of the allegations of [the] original complaint.” Reddy v. Litton Indus., Inc., 912 F.2d 291, 296 (9th Cir.1990). Leave to amend should be liberally granted, but an amended complaint cannot allege facts inconsistent with the challenged pleading. Id. at 296–97.

DISCUSSION

I. EmpRes and Evergreen Entities' Rule 12(b)(6) Motion to DismissA. Claims under California Health and Safety Code Section 1430(b)

Plaintiff brings claims against the EmpRes and Evergreen Entities under California Health and Safety Code section 1430(b), which provides,

A current or former resident or patient of a skilled nursing facility ... may bring a civil action against the licensee of a facility who violates any rights of the resident or patient as set forth in the Patients Bill of Rights in Section 72527 of Title 22 of the California Code of Regulations, or any other right provided for by federal or state law or regulation.... The licensee shall be liable for up to five hundred dollars ($500)...