Intra-National Home Care, LLC v. United States Dep't of Labor

• Decision Date: 20 July 2022
• Docket Number: Civil Action 20-1545,20-1773
• Parties: INTRA-NATIONAL HOME CARE, LLC, and AMERICARE HOME HEALTHCARE SERVICES, LLC, Plaintiffs, v. UNITED STATES DEPARTMENT OF LABOR, et al., Defendants. AGEWELL HOME HELPERS, INC. d/b/a AGEWELL CAREGIVER SERVICE, Plaintiff, v. UNITED STATES DEPARTMENT OF LABOR, et al., Defendants.
• Court: U.S. District Court — Western District of Pennsylvania

INTRA-NATIONAL HOME CARE, LLC, and AMERICARE HOME HEALTHCARE SERVICES, LLC, Plaintiffs,
v.
UNITED STATES DEPARTMENT OF LABOR, et al., Defendants.

AGEWELL HOME HELPERS, INC. d/b/a AGEWELL CAREGIVER SERVICE, Plaintiff,
v.
UNITED STATES DEPARTMENT OF LABOR, et al., Defendants.

Civil Action Nos. 20-1545, 20-1773

United States District Court, W.D. Pennsylvania

July 20, 2022

MEMORANDUM OPINION

W. Scott Hardy, United States District Judge.

These consolidated cases^[1] involve claims brought by Plaintiffs Intra-National Home Care, LLC, Americare Home Healthcare Services, LLC, and Agewell Home Helpers, Inc., d/b/a Agewell Caregiver Service, against Defendants United States Department of Labor, Martin J. Walsh, Secretary of Labor, and Jessica Looman, Principal Deputy Administrator of the Wage and Hour

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Division (collectively, the “DOL”).^[2] Plaintiffs allege at Count One of the consolidated Amended Complaint for Declaratory and Injunctive Relief (“Consolidated Amended Complaint”) that the DOL's regulation codified at 29 C.F.R. § 552.109 conflicts with the text of the Fair Labor Standards Act (“FLSA”) and otherwise is contrary to law. (Docket No. 25, ¶¶ 156-60). At Count Two, Plaintiffs allege that the DOL did not provide adequate justification or explanation when promulgating the current version of 29 C.F.R. § 552.109, thus rendering it arbitrary and capricious. (Docket No. 25, ¶¶ 161-67). Plaintiffs also asserted additional claims at Counts Three and Four, but they voluntarily dismissed those claims pursuant to a Stipulation filed on May 18, 2021. (Docket No. 34).

Presently before the Court is Defendants' Renewed Motion to Dismiss Pursuant to Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure and Memorandum in Support (Docket Nos. 30, 33), Plaintiffs' Memorandum in Opposition (Docket No. 38), and Defendants' Reply (Docket No. 45). The Court heard oral argument on November 18, 2021. (Docket Nos. 58, 63). Defendants' motion is ripe for decision.

I. Background^[3]

As set forth in the Consolidated Amended Complaint, the FLSA, 29 U.S.C. §§ 201 et seq., generally requires covered employers to pay non-exempt employees a minimum wage and overtime pay. (Docket No. 25, ¶¶ 58, 59). In 1974, Congress amended the FLSA to extend its minimum wage and overtime provisions to employees in “domestic service.” See Long Island Care at Home, Ltd. v. Coke, 551 U.S. 158, 162 (2007) (citing Fair Labor Standards Amendments

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of 1974 (“1974 Amendments”), Pub. L. No. 93-259, §§ 7(b)(1), (2), 88 Stat. 55, 62 (adding 29 U.S.C. §§ 206(f), 207(1))). At the same time, Congress also exempted defined categories of domestic service workers from certain of its provisions, including companionship and live-in domestic service workers. (Docket No. 25, ¶¶ 60-63); see also Long Island Care at Home, 551 U.S. at 162 (citing 1974 Amendments, § 7(b)(3), 88 Stat. 55, 62 (codified at 29 U.S.C. § 213(a)(15)); 29 U.S.C. § 213(a)(15) (the “Companionship Exemption”) and 29 U.S.C. § 213(b)(21) (the “Live-in Exemption”). The 1974 Amendments also included a grant of rulemaking authority empowering the Secretary of Labor to “prescribe necessary rules, regulations, and orders with regard to the amendments made by this Act.” 1974 Amendments, § 29(b), 88 Stat. 55, 76; see Long Island Care at Home, 551 U.S. at 165.

In 1975, shortly after Congress enacted the Companionship and Live-In Exemptions, the DOL promulgated a regulation permitting individuals employed by third-party agencies to be covered by these statutory exemptions. (Docket No. 25, ¶¶ 64-67 (citing 29 C.F.R. § 552.109(a) (prior to Jan. 1, 2015))). Plaintiffs contend that from 1975 to 2015, third-party agencies relied upon the DOL's Companionship and Live-In Exemptions when establishing their operations and pay practices, especially regarding direct care workers paid pursuant to the Medicaid Waiver Program. (Docket No. 25, ¶¶ 12, 71, 73). In 2007, the United States Supreme Court upheld the Companionship Exemption and its application to third-party agencies in Long Island Care at Home, Ltd. v. Coke, 551 U.S. 158 (2007). (Docket No. 25, ¶ 69). However, after several unsuccessful attempts to change this regulation in 1993, 1995, and 2001, the DOL did revise 29 C.F.R. § 552.109 to eliminate the ability of third-party agencies to avail themselves of these exemptions. (Docket No. 25, ¶ 74); see Home Care Ass'n of America v. Weil, 799 F.3d 1084, 1088-89 (D.C. Cir. 2015). The DOL published this revised regulation in the Federal Register on

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October 1, 2013, and it became effective on January 1, 2015. (Docket No. 25, ¶¶ 13, 79 (citing Application of the Fair Labor Standards Act to Domestic Service, 78 Fed.Reg. 60454, 60455 (Oct. 1, 2013); 29 C.F.R. § 522.109 (2015)); see Home Care Ass'n of America, 799 F.3d at 1088-89.

Plaintiffs are third-party agencies which employ or otherwise process service and payroll documents for direct care workers who mostly provide in-home companionship and assistance services to elderly and disabled family or household members of low-income families in Pennsylvania, Ohio, Michigan, and Iowa through the Medicare Waiver Program. (Docket No. 25, ¶¶ 1-2, 9). As described by Plaintiffs:

Under the Medicaid Waiver Program, the federal government waives medical assistance rules intended for institutional care and allows States to use Medicaid reimbursement funds to provide care to elderly and disabled persons in their homes State agencies administer the Medicaid Waiver Program by contracting with private intermediary entities, which determine the recipients' eligibility, create individual service plans, and approve Providers of in-home services. The Providers, which include third-party agencies such as Plaintiffs, then engage, coordinate training, and complete payroll services for the Direct Care Workers. The third party agencies receive Medicaid reimbursement funds from which the agencies pay the Direct Care Workers' wages, administrative costs, and FICA taxes.

(Id. ¶ 10).

As a consequence of the DOL's revisions to 29 C.F.R. § 552.109 that became effective in 2015, Plaintiffs restructured the rates of pay applicable to their direct care workers to allow for overtime pay within the financial constraints of the Medicaid Waiver Program. (Docket No. 25, ¶ 100). The DOL deems this restructured arrangement to be a “serious violation” of the FLSA. (Id. ¶ 101). Plaintiffs contend that the DOL's decision to no longer permit them to avail themselves of the Companionship and Live-In...