Kutty v. U.S. Dep't of Labor

• Decision Date: 19 August 2011
• Docket Number: No. 3:05-CV-510,3:05-CV-510
• Parties: MOHAN KUTTY, M.D., Petitioner, v. UNITED STATES DEP'T OF LABOR, Respondent.
• Court: U.S. District Court — Eastern District of Tennessee

MOHAN KUTTY, M.D., Petitioner, v. UNITED STATES DEP'T OF LABOR, Respondent.

No. 3:05-CV-510

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF TENNESSEE AT KNOXVILLE

Dated: August 19, 2011

MEMORANDUM AND ORDER

On October 9, 2002, an Administrative Law Judge ("ALJ") found that Dr. Mohan Kutty ("Dr. Kutty") violated multiple provisions of the Immigration and Nationality Act ("INA"). Specifically, the ALJ held that Dr. Kutty, a medical doctor with five clinics in Tennessee, violated the INA's "no benching" and anti-discrimination provisions. 8 U.S.C. §§ 1101(a)(15)(H)(i)(b), 1182(n), and 1184©. The ALJ also assessed back wages totaling $1,044,940.00 and civil monetary penalties in the amount of $108,800.00. On May 31, 2005, the United States Department of Labor Administrative Review Board ("ARB") affirmed the ALJ's decision.

On February 16, 2007, Dr. Kutty filed a petition seeking review of the ARB's "Final Decision and Order." [Doc. 18]. On October 19, 2007, the Department of Labor ("DOL") filed its response. [Doc. 30]. On December 20, 2007, Dr. Kutty filed a supplemental brief in support of his petition. [Doc. 32]. On February 29, 2008, the DOL filed a supplemental response. [Doc. 35]. The matter is now ripe for adjudication, with the following issues before the Court:

[] First, did the American Competitiveness and Workforce Improvement Act of 1998 ("ACWIA") (which amended the INA) apply to the medical clinics when they allegedly violated the "no benching" provision?

[] Second, was the ARB "arbitrary and capricious" in finding that the medical clinics violated the "no benching" and anti-discrimination provisions of the INA? In addition, did the approval of allegedly "defective" Labor Condition Applications ("LCAs") and H-1B petitions by the Department of Labor and the Immigration and Naturalization Services relieve Dr. Kutty and the medical clinics from having to comply with the INA?

[] Third, was the ARB "arbitrary and capricious" in deciding to pierce the corporate veil of the medical clinics, thereby holding Dr. Kutty personally liable for the INA violations?

[] Fourth, was the ARB reasonable in ordering Dr. Kutty to reimburse the H-1B doctors for the expenses incurred in filing the LCAs and H-1B petitions?

[] Fifth, was the ALJ's conduct during the administrative hearings procedurally arbitrary and capricious?

Having reviewed the Administrative Record ("AR"), the pleadings, and the relevant caselaw,

Dr. Kutty's Petition for Review [Doc. 18] is DISMISSED. Accordingly, the ARB's ruling is AFFIRMED.

I. BACKGROUND

On October 9, 2002, the Honorable Alice M. Craft, Administrative Law Judge ("ALJ"), issued her "Decision and Order" in an action brought by the Department of Labor Administrator, Wage and Hour Division. [AR 07854-07964]. Specifically, the ALJ concluded that Dr. Kutty violated multiple provisions of the Immigration and Nationality Act ("INA"), including portions of 8 U.S.C. §§ 1101(a)(15)(H)(i)(b), 1182(n), and 1184©. Dr. Kutty then appealed that decision to the United States Department of Labor Administrative Review Board ("ARB"). On May 31, 2005, the ARB issued its "Final Decision and Order" ("Final Decision") upholding and affirming the ALJ's "Decision and Order." [AR 9080-9102].

As background, Dr. Kutty opened five health care clinics in rural areas of Tennessee between1998 and 2000. [AR 09081]. He hired seventeen alien doctors¹, each of whom held a J1 non-immigrant visa ("J1 Visa"), to staff and operate the clinics. [AR 01424-01429]. The doctors' J1 Visas allowed them to enter the United States to receive graduate medical education and training, but the visas also required them to return to their home countries for two years before they could subsequently apply for an immigrant or nonimmigrant visa or permanent residence. [AR 09081]. However, it is possible to obtain a waiver of the two-year home resident requirement if an interested state agency requests waivers on their behalf. [AR 09081-09082]. The aliens must show that they have employment agreements to practice medicine for at least three years in an area designated as having a shortage of health care professionals by the Secretary of Health and Human Services. [AR 09082]. If the alien secures a J1 waiver, then he or she may obtain an H-1B visa. [AR 09082].

Each of the seventeen doctors obtained J1 waivers. [Id.]. Dr. Kutty, acting as the medical director of the various medical clinics, signed and filed the Labor Condition Applications ("LCAs") with the Department of Labor ("DOL"). [Id.]. The DOL then certified the LCAs. [Id.]. Dr. Kutty also signed and filed the H-1B Visa petitions on behalf of the doctors. [Id.]. The Immigration and Naturalization Service ("INS") approved the petitions, and issued H-1B visas for the seventeen doctors. [Id.].

Dr. Kutty operates his medical practice from Florida via the "Center for Internal Medicine, Inc." [AR 07864]. The Center for Internal Medicine is a Florida corporation that Dr. Kutty and his wife, Sheela Kutty, jointly own and operate as the sole officers and directors. [Id.]. Dr. Kutty handled the administration of all his operations (both in Florida and Tennessee) through the Floridacorporate office. [Id.]. All major decisions about staffing, salaries, billing disputes, and miscellaneous employee questions were decided by Dr. Kutty in Florida. [AR 07864, AR 06725-26].

In the latter part of 2000, Dr. Kutty's clinics encountered some financial difficulties. [AR 09082]. Shortly thereafter, in January 2001, Dr. Kutty began to reduce some of the doctors' salaries. [Id.]. In response, eight of the doctors hired attorney Robert Divine ("Mr. Divine"). [Id.]. In February 2001, Mr. Divine wrote to Dr. Kutty demanding payment of the past-due salary amounts for his clients. [Id.]. Mr. Divine also stated that he would notify the DOL of Dr. Kutty's noncompliance with the terms of the LCAs, in the event that Dr. Kutty did not pay. [Id.]. Mr. Divine also informed Dr. Kutty that he was prohibited from discriminating against the doctors for their complaints about the INA violations. [Id.].

After Dr. Kutty received the letter, he stopped paying the eight doctors represented by Mr. Divine (except for one partial payment). [AR 09082]. As a result, Mr. Divine filed a complaint with the DOL on behalf of his clients. [Id.]. The ALJ held hearings over the course of several days in June 2001. [AR 07856]. Dr. Kutty, however, required hospitalization on June 7, 2001. [DOL's Response in Opposition to Dr. Kutty's Petition, Doc. 30, at 16]. The hearings continued in Dr. Kutty's absence-at the direction of Dr. Kutty's personal attorney. [Id.]. While Dr. Kutty claims that he did not attend the hearings because he was ill all summer, counsel for the DOL states that Dr. Kutty went on vacation to India after his surgeries. [Id.]. Dr. Kutty did not attend the hearings on June 8, 18, 19, 20, 21, 22, 25, 26, 27, or 28th. [Id.]. During the hearings, the ALJ admitted the deposition testimony of Dr. Kutty from a prior related proceeding into evidence. [Id.].

The hearings were scheduled to resume on November 26, 2001. [AR 01343]. However, onOctober 17, 2001, Dr. Kutty's counsel filed a motion requesting to withdraw as counsel because Dr. Kutty had not paid his legal bills and there was a breakdown in the attorney-client relationship. [AR 01343-45]. The ALJ granted the motion to withdraw and the hearings resumed in December 2001. [Id.]. Dr. Kutty elected to represent himself, and Basavaraj Hooli ("Mr. Hooli") was appointed as the "corporate representative." [Id.].

The hearings concluded on December 5, 2001, and the ALJ issued her "Decision and Order" on October 9, 2002. [AR 07854]. The ALJ found that the medical clinics violated the INA by willfully failing to pay the doctors their required wages and discriminating against nine of the doctors for engaging in a protected activity. [Id.]. The ALJ also decided to "pierce the corporate veil," thereby holding Dr. Kutty personally liable for the violations. [Id.]. As a result, Dr. Kutty was ordered to pay back wages and civil monetary penalties, and was barred from employing aliens from the H-1B program for two years. [Id.].

On May 31, 2005, the ARB affirmed the ALJ's decision in its "Final Decision and Order." [AR 09080]. Dr. Kutty now seeks review of the ARB's decision.

II. STANDARD OF REVIEW

This Court's jurisdiction arises under the Administrative Procedure Act ("APA"), pursuant to which this Court may generally review "final agency action." See 5. U.S.C. § 704 (2006). The review of a final agency action, however, is highly deferential, and requires "this Court to defer to the inferences that the DOL derives from the evidence." Ind. Mich. Power Co. v. U.S. Dep't of Labor, 278 F. App'x 597, 602 (6th Cir. 2008) (citing Varnadore v. Sec'y of Labor, 141 F.3d 625, 630 (6th Cir. 1998)). The Court may reverse the Secretary of Labor's decision, announced via the ARB, if it is "arbitrary, capricious, an abuse of discretion or otherwise not in accordance with the law" orif it is "unsupported by substantial evidence." 5 U.S.C. § 706(a)(2)(A), (E); e.g., Sassé v. U.S. Dep't of Labor, 409 F.3d 773, 778 (6th Cir. 2005) (quoting Varnadore, 141 F.3d at 630).

The arbitrary and capricious standard "is the least demanding review of an administrative action." Coal. for Gov't Procurement v. Fed. Prison Indus., 365 F.3d 435, 475 (6th Cir. 2004). "It requires the party challenging the agency's action to 'show that the action had no rational basis or that it involved a clear and prejudicial violation of applicable statutes or regulations.'" Id. at 475 (quoting McDonald Welding v. Webb, 829 F.2d 593, 595 (6th Cir. 1987)). As the Supreme Court has stated, an agency's action is arbitrary and capricious "if the agency has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before...