Calderon v. Geico Gen. Ins. Co.

• Decision Date: 29 November 2012
• Docket Number: Civil Case No. 10–1958.
• Citation: 917 F.Supp.2d 428
• Parties: Samuel CALDERON, et al., Plaintiffs, v. GEICO GENERAL INSURANCE COMPANY, et al., Defendants.
• Court: U.S. District Court — District of Maryland

917 F.Supp.2d 428

Samuel CALDERON, et al., Plaintiffs,

v.GEICO GENERAL INSURANCE COMPANY, et al., Defendants.

Civil Case No. 10–1958.

United States District Court,

D. Maryland.

Nov. 29, 2012.

Sundeep Hora, Alderman Devorsetz and Hora PLLC, Washington, DC, Timothy C. Selander, Matthew H. Morgan, Nichols Kaster PLLP, Paul Joseph Lukas, Minneapolis, MN, for Plaintiffs.

Eric Hemmendinger, Shawe and Rosenthal LLP, Baltimore, MD, for Defendants.

MEMORANDUM OPINION

ROGER W. TITUS, District Judge.

On July 19, 2010, Plaintiffs filed a one-count complaint on behalf of a collective class to recover overtime pay allegedly withheld by Defendants (collectively, “GEICO”) in violation of the Fair Labor Standards Act (“FLSA”). Doc. No. 1. Plaintiffs maintain that the position of Security Investigator was improperly classified by GEICO as exempt from overtime under the FLSA. Plaintiffs moved for Conditional Certification and Judicial Notice pursuant to 29 U.S.C. § 216(b) on October 22, 2010. Doc. No. 23. This Court granted the motion on January 12, 2011, 2011 WL 98197. Doc. Nos. 31, 32. Plaintiffs' counsel mailed a court-approved judicial notice to the putative opt-in plaintiffs on January 26, 2011, and the notice period ended ninety days later on April 26, 2011. There are now forty-nine current and former Security Investigators in this case.

Following the close of the notice period, the parties filed a stipulation permitting Plaintiffs to amend the Complaint, Doc. No. 56, which this Court granted on June 1, 2011. Doc. No. 57. The Amended Complaint added an individual and Rule 23 class action claim for overtime pay by opt-in Plaintiff Tom Fitzgerald under New York state law. Doc. No. 56. On August 15, 2011, Plaintiffs filed a Motion to Certify Class Under Rule 23. Doc. No. 61.

On January 30, 2012, a hearing was held on Plaintiffs' motion to certify a Rule 23 class under New York state law. On February 14, 2012, 279 F.R.D. 337 (D.Md.2012), this Court issued a Memorandum Opinion and Order that granted the Plaintiffs' motion, and directed the parties to jointly submit a proposed notice to the class for approval by the Court. Doc. Nos. 67, 68. On March 9, 2012, this Court entered an order approving the Plaintiffs' proposed Rule 23 class notice. Doc. No. 78. On March 1, 2012, the parties filed a stipulation permitting the Plaintiffs to file a second amended class action and collective action complaint (“Second Amended Complaint”), Doc. No. 73, which this Court granted on March 9, 2012. Doc. No. 76. GEICO filed its Answer to the Second Amended Complaint on March 5, 2012. Doc. No. 74.

On May 11, 2012, Plaintiffs filed a Motion for Partial Summary judgment. Doc. No. 80. On July 16, 2012, GEICO filed an Opposition to Plaintiffs' Motion for Partial Summary Judgment and a Cross–Motion for Summary Judgment. Doc. No. 86. On November 5, 2012, this Court held a hearing on the parties' cross-motions for summary judgment.

BACKGROUND FACTS

The Plaintiffs are current and former Security Investigators (hereinafter, “Investigators” or “Plaintiffs”) who worked for GEICO. Doc. No. 80 at 1. GEICO classifies its Investigators as exempt from the overtime pay protections of the FLSA. Id. GEICO is in the business of providing insurance to its policyholders. Rutzebeck Dep. 39:22–40:4.¹ Its purpose is to sell insurance policies and handle customers' claims. Pierce Dep. 65:15–18. ²

When a policyholder submits a claim for insurance coverage to GEICO, it is handled by an employee called a Claims Adjuster in the Claims Department. See Doc. No. 80, Ex. 1 at NKA0001272–1279. The Claims Department is divided into a Liability Division and an Auto Damage Division. Id. at NKA0001268. The Claims Adjuster determines whether to pay or deny a claim, see Rutzebeck Dep. 66:12–17, and his primary job is to “adjust[ ] insurance claims by investigating, assessing, and resolving them.” Doc. No. 80, Ex. 2 Pham Dec. ¶ 3.³

The Investigators work in the Special Investigations Unit (“SIU”), which is part of the Claims Department. Id., Ex. 1 at NKA0001269. They occupy the lowest level of the SIU. The Investigator reports to a Supervisor, the Supervisor reports to a Manager, and the Manager reports to the Assistant Vice–President of Claims. Rutzebeck Dep. 19:7–19. GEICO divides Security Investigators into eight regions across the country. Id. 20:20–21:8. Outside of California, GEICO employs approximately 250 Investigators who normally work out of their homes and connect into GEICO's network through the internet. Id. 46:25–47:4.

The primary job of Investigators is to conduct investigations. Id. 46:2–8. (Investigators“prevent fraud by investigating claims suspected of being fraudulent, educating GEICO adjusters about fraud and serving as liaisons to law enforcement and regulatory agencies.”). They spend approximately “90 percent of their time” on investigations. Id. 47:22–24. Michael College, the former Operations and Training Manager for SIU from February 2003 until March 2011, described the main job of an Investigator as “assist[ing] a claims examiner in uncovering” the facts of a claim and how the claim was reported to GEICO. College Dep. 21:7–18.

The claims process begins when a computer program called Intelligence Claims Evaluation (“ICE”) “flags” a policyholder claim that exhibits indicia of fraud. Rutzebeck Dep. 17:11–13. The flagged claims are then reviewed by an Intake Associate. Id. 28:17–29:24. If the Intake Associate determines that the claim needs further investigation, he will refer it to either the appropriate regional SIU Supervisor or to an Investigator. Id. 27:8–22. If the referral is sent to the SIU Supervisor, he will assign the matter to an Investigator. Id. 28:23–29:1. An Investigator has no control in deciding whether a claim is going to be investigated. Id. 27:5–7.

After an Investigator receives the referral, he is required to adhere to “written procedures for the investigation of possible suspected insurance fraud.” Doc. No. 80, Ex. 3 at NKA000837. GEICO requires that the investigation include:

1. A thorough investigation of the referral.

2. Identification and interviews of potential witnesses who may provide information on the accuracy of the claim and/or application.

3. Utilizing industry recognized databases as deemed necessary in conducting investigations.

4. Preservation of documents and other evidence.

5. Writing a concise and complete summary of the investigation, including the investigators findings regarding the suspected insurance fraud and the basis for their findings.

Id. The investigatory process involves an administratively-regulated four-step procedure: (1) receive an assignment, (2) create a plan of action, (3) gather evidence, and (4) create a written report memorializing the investigation. Rutzebeck Dep. 51:4–10. Investigators are not allowed to deviate from this process without pre-approval from a superior. Derenthal Dep. 32:4–10.

When an Investigator is assigned a claim, he will perform the “pre-work” of reviewing the claim, any attached documents, and public records, if necessary. Rutzebeck Dep. 52:14–21. The plan of action requires the Investigator to “determine what activities [he] need[s] to perform in order to investigate the particular circumstances of that particular case.” Id. 55:21–23. The plan of action contains instructions like, “conduct a complete background investigation of the insured,” “inspect vehicle,” “contact alibi witness ... and interview him about the circumstances of the case,” and “contact [the police] to determine who is assigned to the case.” Doc. No. 80, Ex. 17 at NKA0012436; Ex. 18 at NKA0011257. After completing the plan of action, the Investigator enters it into the SIU Case Management System, or SICM. Rutzebeck Dep. 56:7–17.

An Investigator then begins the third step in the process: gathering evidence. To complete this task, the Investigator interviews witnesses, takes photographs, and reviews property damage, among other evidentiary-gathering procedures. Id. 56:21–57:2. Investigators may also interview an insurance claimant in a more formalized face-to-face interview called an examinationunder oath (“EUO”). Id. 72:18–73:21. Claimants are required to engage in a EUO if asked to do so by GEICO. Doc. 80, Ex. 6 at NKA0000655. The difference between a normal interview and an EUO is that the latter requires the interviewee to be under oath. The purpose of the EUO is to (1) “obtain or clarify information necessary to properly handle a claim,” (2) “provide an opportunity for an insured to explain or further substantiate their claim,” (3) “eliminate as many gray areas as possible,” (4) “evaluate the insured as a witness,” and (5) “preserve testimony.” Id. at NKA0000656.

GEICO maintains that “[a]n interview of a policyholder or other claimant suspected of fraud requires tactical decisions by the investigator.” Doc. No. 86 at 5. It contends that although “GEICO has issued lists of suggested interview questions for certain types of suspected fraud,” each interview is different and requires questions and tactics unique to the situation. Id. at 5–6. For example, an “investigator must decide whether to ask open-ended or leading questions and whether or not to disclose what he has learned already,” and he “formulates follow-up questions based on the answers to initial inquiries.” Id. at 6. Investigators also “observe[ ] body language to see if the witness is being deceptive.” Id. GEICO disputes Plaintiffs' contention that Investigators rely on questions created by the company. Compare Doc. No. 80 at 11 with Doc. No. 86 at 8.

After the investigation is complete, the Investigator completes an initial report, makes appropriate referrals, and submits the report to a supervisor for review. Derenthal Dep. 58:12–18. The Investigator must also call the Claims Adjustor to discuss his initial findings. Id. 58:19–59:12. Approximately 40 to 50 investigators out of 250 have self-approval authority over both their...