Pettenato v. Beacon Health Options, Inc.

Decision Date25 October 2019
Docket Number19-CV-1646 (JPO) (BCM)
Citation425 F.Supp.3d 264
Parties Jocelyn PETTENATO, and all others similarly situated, et al., Plaintiffs, v. BEACON HEALTH OPTIONS, INC., et al., Defendants.
CourtU.S. District Court — Southern District of New York

Douglas Michael Werman, Werman Law Office, P.C., Maureen Ann Salas, Sarah J. Arendt, Werman Salas PC, Chicago, IL, Jack Siegel, Siegel Law Group PLLC, Dallas, TX, Travis Hedgpeth, The Hedgpeth Law Firm, PC, Houston, TX, Ravi Sattiraju, Sattiraju & Tharney, L.L.P., East Windsor, NJ, for Plaintiffs.

Barry Miller, Hillary Massey, Seyfarth Shaw LLP, Gregg A. Rubenstein, Beacon Health Options, Boston, MA, Maria Papasevastos, Seyfarth Shaw LLP, New York, NY, for Defendants.


BARBARA MOSES, United States Magistrate Judge.

Jocelyn Pettenato, Jill Law, Anitra Stewart, and sixteen opt-in plaintiffs, all of whom work or worked for defendants Beacon Health Options, Inc. (Options), Beacon Health Strategies LLC (Strategies), and/or ValueOptions Federal Services, Inc. (ValueOptions) (together, Beacon Health) as care management employees, bring this action under the Fair Labor Standards Act (FLSA), 29 U.S.C. §§ 201 et seq. , New York Labor Law (NYLL) §§ 190 et seq. and 650 et seq. , and the Colorado Minimum Wage Act (CMWA), C.R.S. § 8-6-101 et seq. , on behalf of themselves and other similarly situated persons, alleging that Beacon Health misclassified them as exempt employees and failed to pay them overtime compensation in violation of provisions of the FLSA, NYLL, and CMWA. See Am. Compl. (Dkt. No. 44) ¶¶ 131-162.

Now before the Court is plaintiffs' motion (Dkt. No. 37) for conditional certification of their FLSA claims as a nationwide collective action, pursuant to 29 U.S.C. § 216(b), on behalf of "[a]ll individuals employed by Defendant[s] as Care Management Employees in the last three years and who were paid a salary and no overtime pay (including for hours worked in excess of forty (40) hours a week)." Pl. Mem. (Dkt. No. 38) at 7. Plaintiffs also seek approval of a proposed Notice of Lawsuit, Pl. Mem. Ex. O, to send to those individuals. Plaintiffs' motion is "within the scope of my authority under 28 U.S.C. § 636(b)(1)(A)." Sanchez v. Salsa Con Fuego, Inc. , 2016 WL 4533574, at *1 (S.D.N.Y. Aug. 24, 2016) (Moses, M.J.) (quoting Nahar v. Dozen Bagels Co. Inc. , 2015 WL 6207076, at *1 (S.D.N.Y. Oct. 20, 2015) ).

For the reasons that follow, the Court will grant the motion with respect to all individuals employed by Beacon Health as Care Management Employees (as that term is defined in plaintiffs' motion papers) who (a) resided or worked for defendants in New York State; (b) worked over 40 hours in one or more individual workweeks in the three years preceding June 21, 2019 (the date plaintiffs filed their conditional certification motion); (c) were paid a salary and no overtime pay; and (d) were classified as exempt by defendants for purposes of the FLSA.

I decline to conditionally certify a nationwide collective action. I conclude that, in light of the Supreme Court's decision in Bristol-Myers Squibb Co. v. Superior Court of Cal., San Francisco Cnty. , ––– U.S. ––––, 137 S.Ct. 1773, 198 L.Ed.2d 395 (2017), this Court may not exercise specific personal jurisdiction over the FLSA claims of out-of-state plaintiffs against these defendants, none of which is subject to general personal jurisdiction in New York. Because this Order leaves open the question of the status of the current plaintiffs who neither resided in nor worked in New York State during the relevant time period, I will direct Beacon Health to promptly file a motion to dismiss and/or transfer to address that outstanding question.

A. Factual Background

Beacon Health offers "clinical mental health and substance use disorder management, an employee assistance program, work/life support, specialty programs for autism and depression, and analytics to improve the delivery of care." Ans. (Dkt. No. 51) ¶ 1. Defendants Options and Strategies are Beacon Health's "two primary operating entities," while defendant ValueOptions is a wholly-owned subsidiary of Options. Def. Mem. (Dkt. No. 52) at 2. Options and ValueOptions are Virginia corporations with their principal places of business in Virginia. Ans. ¶¶ 19, 22, 26-27. Strategies is a Massachusetts limited liability company; its manager is a Delaware LLC. Ans. ¶¶ 23-24.

Plaintiffs are nineteen individuals who work or worked for Beacon Health in at least eight states, either on a remote basis or in a call center environment, under various job titles generally falling under one of two categories: (1) "Utilization Management Care Managers" (UM Care Managers), and (2) "Care/Case Managers" (Care Managers). Pl. Mem. at 2-5; Declaration of Cheryl Perkins dated July 29, 2019 (Dkt. No. 52-1) ¶¶ 3-33.1 All of the plaintiffs are "independently licensed health professionals," including licensed nurses. Id. ¶¶ 11, 22. According to Perkins, a Senior Vice President for Utilization Management of defendant Strategies, UM Care Managers are generally responsible for "collecting clinical information from facilities and providers and applying Defendants' medical necessity criteria to requests to authorize payment for care," and work "primarily with facilities and providers," rather than members. Perkins Decl. ¶¶ 3-4. In contrast, Care Managers "provide case management directly to high risk members," and work "with the member and all her/his treating providers, medical health plan(s) and family to develop a comprehensive care plan to support the member's recovery." Id. ¶ 18.2

At least five of the nineteen plaintiffs (Pettenato, Schlett, Sanchez, Alvord, and Gay) worked for Beacon Health in New York State. Pl. Mem. Exs. H, J, K, M, N. Each submitted a declaration in connection with plaintiffs' conditional certification motion. Id. Lead plaintiff Pettenato's declaration is representative. Pl. Mem. Ex. J. In it, she attests that Beacon Health – where she worked from August 2015 to October 2016 – referred to her job title "in multiple ways" during her employment, and "interchangeably referr[ed] to [her] as a Care Manager, Case Manager, HARP Care Manager, and HARP Case Manager." Id. ¶ 5. She refers to all of these jobs as within one job family – "Care Management Employees," or CMEs – which encompassed both Care Managers and UM Care Managers. Id. ¶ 1, 5; see also Pl. Mem. Ex. H ¶¶ 1-2; Ex. K. ¶¶ 1-2; Ex. M ¶¶ 2-4; Ex. N. ¶¶ 1-2.

Pettenato describes her job duties as "non-clinical," and states that she was employed to "ask members standardized questions to document their medical circumstances, input answers to those questions into Defendant's computer system, follow established guidelines designed to maximize utilization of plan resources through consistent application of predetermined criteria, coordinate care by performing ministerial tasks like arranging appointments, referrals, and obtaining necessary authorizations from members, supply members with additional information and resources to allow them to educate themselves about their health plans, and other similar non-clinical work." Id. ¶ 1.

Pettenato declares that "[d]espite regularly working at least 45 hours per week," she never received overtime pay. Pl. Mem. Ex. J ¶ 6. She attests that Beacon Health paid her pursuant to an "Overtime Misclassification Policy," which "(1) classified other CMEs and I as exempt, (2) paid other CMEs and I on a salary basis, and (3) denied us all overtime for our regular overtime work." Id. She also attests that "at least 100" other employees in New York worked "under the same conditions as I did during my employment":

They performed similar non-clinical Care Management Work, regularly worked in excess of 40 hours per week, and were subjected to the Overtime Misclassification Policy that denied us all overtime for our regular overtime work. The duties, hours, and Overtime Misclassification applied to CMEs did not depend on the geographic area or region we worked in, but were rather a product of working as CMEs subjected to Defendant's Overtime Misclassification Policy.
I base my belief and knowledge of Defendant's policies on (1) conversations I've had with other CMEs who have talked with me about their job duties, hours of work, and how Defendant paid them during their employment; (2) training calls/webinars that I attended with CMEs from New York and other states; (3) training seminars I attended with other CMEs from across the country; and (4) observing other individuals performing the same job duties and working similar hours when I worked in a call center environment.

Id. ¶¶ 7-8; see also Pl. Mem. Exs. H, K, M, N.

Based on Beacon Health's alleged misclassification of these employees (and others), and Beacon Health's resulting failure to pay them overtime compensation, plaintiffs allege that Beacon Health violated the overtime provisions of the FLSA, NYLL, and CMWA. Pl. Mem. at 1, 6-7; Am. Compl. ¶¶ 131-162.

B. Procedural Background

Plaintiffs filed this action on February 21, 2019. (Dkt. No. 1.) On June 21, 2019, the case was referred to me for general pretrial management and for resolution of the parties' dispute concerning how the Court should sequence plaintiffs' motion for conditional collective certification and defendants' proposed motion for summary judgment (on the "threshold question" of whether the named plaintiffs "were properly subject to the professional exemption"), including related discovery. (Dkt. No. 33.)3 On June 24, 2019, I held an initial case management conference. On July 8, 2019, I issued an Order concluding that, in line with the "ordinary practice" in this Circuit, the parties should brief plaintiffs' conditional certification motion prior to engaging in merits discovery concerning the professional exemption. (Dkt. No. 45.)

Meanwhile, on June 21, 2019, plaintiffs filed their motion for conditional certification (Dkt. No. 37), and on June 28, 2019, filed their First Amended Complaint. On July 29,...

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