Cook v. Carestar, Inc., Case No. 2:11-CV-00691

CourtUnited States District Courts. 6th Circuit. United States District Courts. 6th Circuit. Southern District of Ohio
Writing for the CourtAlgenon L. Marbley
PartiesKERI JEAN COOK , et al., Plaintiffs, v. CARESTAR, INC., et al., Defendants.
Docket NumberCase No. 2:11-CV-00691
Decision Date16 September 2013

KERI JEAN COOK , et al., Plaintiffs,
CARESTAR, INC., et al., Defendants.

Case No. 2:11-CV-00691


Dated: September 16, 2013

Magistrate Judge Norah M. King


This matter is before the Court on the Motion of Plaintiffs Keri Jean Cook, et al. ("Plaintiffs") for Partial Summary Judgment, (Doc. 33), and the Motion of Defendants Carestar, Inc. and Thomas R. Gruber (collectively "Defendants") for Summary Judgment, (Doc. 34). For the reasons set forth herein, Plaintiff's Motion is GRANTED in part and DENIED in part and Defendant's Motion is DENIED.


A. Factual Background

Plaintiffs bring this action for unpaid overtime and related relief under the Fair Labor Standards Act ("FLSA" or "the Act"), 29 U.S.C. § 216(b), and Ohio Revised Code §§ 4111.03 and 4111.10., on behalf of themselves and a class of current and former Case Managers employed by Defendant Carestar, Inc. ("Carestar" or the "Company"). (Amend. Compl., Doc. 3.) Carestar provides services to assist chronically disabled individuals to stay in the community and out of nursing homes. Defendant Thomas Gruber ("Gruber") is co-founder and President of

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Carestar, owns 11% of the Company, and has extensive control over a number of significant aspects of Carestar's operations.1 (Gruber Dep., Doc. 29, 8:23-9:13, 37:6-8.)

The Ohio Department of Job and Family Services ("ODJFS"), which supervises Ohio's Medicaid Program, has contracted Carestar to be ODJFS's Case Management Agency ("CMA") for the Home and Community Based Services Waiver Program (the "HCBS Waiver Program").2 As ODJFS's designated CMA, Carestar performs case management and care coordination functions throughout Ohio for Medicaid recipients ("consumers") enrolled in the HCBS Waiver Program. (Moscardino Aff., Doc. 34-1, ¶¶ 2, 4, 10.)

Plaintiffs in this case were employed by Carestar as case managers, whose duties included "development and implementation of medical care plans and evaluations of the appropriateness, quality and cost effectiveness of Medicaid and other community services provided to persons with chronic illnesses or disabilities." (See Amend. Compl., Doc. 3, ¶¶ 5, 7, 9 and 11.) Carestar has classified its case managers as exempt from the compensation and overtime protections of the Fair Labor Standards Act ("FLSA").

1. Case Manager Qualifications and Job Duties

Carestar's Case Manager job description describes the duties and responsibilities that position as follows:

The Case Manager is responsible for on-going case management services to the consumer, including service coordination, education and referral; authorization of services/changes; advocacy, assisting the consumer and team members with problem-solving; the ongoing monitoring of consumer outcomes, health, safety, eligibility and costs.

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(Job Description, Doc. 29-6.) Carestar's definitions of "case management" further describe the role of its case managers as being: (1) a liaison to those who can provide medical services (e.g. persons practicing as nurses) or social services (e.g., persons actually practicing as social workers); and (2) a gate-keeper, to screen out consumers who are not eligible for government-funded services.3

Defendants assert that, in addition, case managers must evaluate the appropriateness of medical and community services, the quality and effectiveness of these services, and determine whether the services are being delivered to the consumers in accordance with their "All Service Plans." (See Weed Aff., Doc. 34-6, ¶ 10; see also Farrell Aff., Doc. 34-2, ¶ 13.)4 Cases managed by Carestar case managers can range from a newborn on a respirator, to a child with autism, to persons using wheelchairs, to the elderly suffering from dementia. (Farrell Aff., Doc. 34-2, ¶¶ 16-18.)

Federal Medicaid regulations require that ODJFS assure that all providers under this program meet the state licensure and certification requirements. (Moscardino Aff., Doc. 34-1. ¶

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6.) In accordance with that mandate, the Ohio Administrative Code, 5101:3-45-01(K), defines a Case Manager" as a "registered nurse (RN), licensed social worker (LSW) or licensed independent social worker (LISW) employed by the CMA who provides case management services to consumers enrolled on an ODJFS - administered waiver." (Moscardino Aff., Doc. 34-1, ¶ 11.) The Ohio Administrative Code imposes various educational requirements to obtain these licenses. (See Farrell Aff., Doc. 34-2, ¶¶ 10 - 12) (detailing educational requirements for RN, LSW, and LISW licenses).

Carestar's Case Manager job description likewise requires that case managers be licensed in either nursing or social work. Carestar's job description does not, however, require any specific level of academic achievement in any specific discipline. (Job Description, Doc. 29-6.) In addition, licensed nurses employed as case managers are prohibited from providing actual hands-on nursing care. (Gruber Dep., Doc. 29, 116:11-15.)

Plaintiffs argue that the knowledge required to perform their jobs comes primarily from Carestar training and on-the-job experience. Specifically, Plaintiffs present evidence that their actions are dictated entirely by processes set forth in Carestar's Case Management Practice Guidelines, Occurrence Reporting Form Manual, and other Carestar materials, and that there is a Carestar case management script for every situation. (See Case Mgmt. Practice Guidelines, Doc. 29-11; All Service Plan ("ASP") Instructions, Doc. 29-12; Supp. Cook Aff., Doc. 35-5.) It is undisputed that, upon hiring, Carestar requires that its case managers attend a three-week orientation program. (Weed Aff., Doc. 34-6, ¶ 19.) As part of the orientation training process, case managers are trained in Carestar's electronic recording system, as well as in how to use the various tools that Carestar uses to assess the acuity and needs of its consumers. (Id. at ¶ 20; see Gruber Dep., Doc. 29, 100:4-18; Case Mgmt. Practice Guidelines, Doc. 29-11; ASP Instructions,

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Doc. 29-12.) In addition, Carestar utilizes periodic "Education Days" to disseminate specific information about Carestar and the Ohio Home Care Program. Defendants assert that Carestar's training is not a substitute for specialized RN, LSW, or LISW knowledge, which Carestar contends is necessary for case managers to perform their primary duties. (Weed Aff., Doc. 34-6, ¶ 15, 21.)

2. Case Manager Compensation

The facts of Carestar's compensation system for case managers are not in dispute. Each case manager is assigned a number of consumers or cases that he or she is responsible for managing. Each case is assigned one of three acuity levels depending upon the "needs/situation" of that particular case. The acuity levels have an associated point value ranging from 1.66 to 2.00 to 3.33. A case manager's total caseload is determined by totaling the point value of his or her assigned cases.

Upon hiring, a case manager is given a dollar value for each point in his or her caseload. This amount is determined based upon the individual case manager's educational level, credentials (i.e., RN/LSW/LISW) and experience. The Case Manager's compensation per pay period is determined by adding up the total number of points in his or her caseload and multiplying that by the dollar value of the points. (See Case Manager Compensation Review, Doc. 34-7.)

The compensation system pays case managers an amount for each case managed, regardless of the time expended in performing such management duties. As Plaintiffs point out, Carestar's compensation system guidelines nowhere discuss the amount of time expected to be worked by case managers in performing their duties.

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3. Carestar's Actions Related to Case Manager Classification

Defendants assert that, in classifying its case managers as exempt, Carestar relied in good faith on a letter from its attorney. In 2006, Gruber and Carestar's Human Resources Manager attended a seminar in 2006 where the topics discussed included exemptions under the FLSA. Following this seminar, Gruber contacted an attorney to inquire specifically about the classification of its Case Managers especially in light of their points-based compensation system. Specifically, Gruber engaged attorney Mark D. Katz, a former U. S. Department Of Labor attorney, who had prosecuted employers for violations of the Fair Labor Standards Act, for an opinion. Gruber provided an oral description of the case managers' duties, including the requirement that the case managers have valid licenses as either a Registered Nurse, Licensed Social Worker, or Licensed Independent Social Worker, and the description of the points-based compensation system. Katz was not given, nor did he review, any pertinent documents. Plaintiffs highlight Gruber's deposition testimony indicating that he is not personally knowledgeable about case managers' job duties.

Based on Gruber's oral representations alone, on November 15, 2006, Katz issued an opinion letter, which concluded that Carestar case managers were "Learned Professionals" exempt from the requirements specified in 29 C.F.R. § 541.301. Katz also concluded that the points-based compensation system was a "fee basis" of payment as defined in 29 C.F.R. 541.605. Katz advised that, "In the future, I would suggest on a quarterly basis that the company performs an audit wherein a designated number of Case Managers and a designated number of workweeks are 'tested' in order to determine compliance with the requirements set forth above." This audit appears to have been aimed at assuring that Case Managers continued to receive the

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minimum weekly rate necessary to qualify as a fee under 29 C.F.R. 541.605. Plaintiffs assert that Carestar did not adquately follow up on Katz's recommendations.

B. Procedural History

On August 2, 2011, Plaintiffs filed this collective action against Defendants Carestar and Gruber,...

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