Customer Service Reps Get Narrow Collective Cert. In OT Suit

By Abby Wargo/Law360

A Texas federal judge agreed Tuesday to certify a collective of customer service representatives alleging that a medical technologies corporation failed to pay them for off-the-clock work, finding they were all subject to the same policies while declining to toll the statute of limitations and extend the class period.

In an opinion and order, U.S. District Judge Jane J. Boyle granted Angelita Floyd’s motion to certify a Fair Labor Standards Act collective of customer service representatives at Stryker Corp.’s Flower Mound, Texas, facility who did not receive time-and-a-half overtime premiums for hours worked over 40.

However, Judge Boyle would not toll the statute of limitations from Nov. 1, 2022, through April 3, 2023, ruling that there were no outstanding circumstances warranting equitable tolling and limiting the class period to Jan. 2, 2021, to the present. She ordered a 60-day notice period for Floyd to communicate with potential collective members.

Floyd showed that the customer service representatives were all subjected to the same productivity requirements, under the same supervisory umbrella and paid the same $20 hourly rate, regardless of whether they held a senior role or not, the judge found.

Stryker had argued that senior representatives and nonsenior representatives had different job duties and that more senior workers had additional responsibilities, but the judge said the workers do not have to prove they are identically situated and only need to show that they had some commonalities.

Floyd sued in May 2022, alleging that she and other customer service representatives worked off-the-clock without pay for Stryker. Since then, 10 opt-in plaintiffs have joined the lawsuit, records show.

Customer service representatives were all hourly paid and scheduled to work 40 hours a week, Monday through Friday, but Floyd said they often had to work after-hours to keep up with the volume of customer orders, as they were required to process after-hours orders before 10 a.m. the next day. If they failed to do so on time, Stryker would reprimand them and threaten to place them on a performance improvement plan, thus pressuring them into performing unpaid work, Floyd alleged.

A medical technologies corporation based in Kalamazoo, Michigan, Stryker opened its customer service department in Flower Mound in 2020, records show.

Robert J. Valli Jr. of Valli Kane & Vagnini LLP, who is representing the workers, told Law360 the judge’s decision was well-reasoned and thorough. 

“We agree with the court’s decision to credit plaintiffs’ argument that the type of work performed is a more appropriate factor than an employee’s title, when deciding a FLSA motion for certification,” Valli said. 

Counsel for Stryker did not immediately respond to a request for comment Tuesday.

The workers are represented by Alexander M. White and Robert J. Valli Jr. of Valli Kane & Vagnini LLP.

Stryker is represented by Amanda E. Brown, Joseph J. Mammone Jr. and Paulo B. McKeeby of Reed Smith LLP.

The case is Floyd v. Stryker Corp., case number 3:22-cv-01131, in the U.S. District Court for the Northern District of Texas.

–Editing by Abbie Sarfo.

Read the article from Law360 here.

Davita Rx Agrees to Pay $63.7 Million to Resolve False Claims Act Allegations

DALLAS – DaVita Rx LLC, a nationwide pharmacy that specializes in serving patients with severe kidney disease, agreed to pay a total of $63.7 million to resolve False Claims Act allegations relating to improper billing practices and unlawful financial inducements to federal healthcare program beneficiaries, the Justice Department announced today.  DaVita Rx is based in Coppell, Texas.
The settlement resolves allegations that DaVita Rx billed federal healthcare programs for prescription medications that were never shipped, that were shipped but subsequently returned, and that did not comply with requirements for documentation of proof of delivery, refill requests, or patient consent.  In addition, the settlement also resolves allegations that DaVita paid financial inducements to Federal healthcare program beneficiaries in violation of the Anti-Kickback Statute.  Specifically, DaVita Rx allegedly accepted manufacturer copayment discount cards in lieu of collecting copayments from Medicare beneficiaries, routinely wrote off unpaid beneficiary debt, and extended discounts to beneficiaries who paid for their medications by credit card.  These allegations relating to improper billing and unlawful financial inducements were the subject of self-disclosures by DaVita Rx and a subsequently filed whistleblower lawsuit.
“Providers should not make patient care decisions based upon improper financial incentives or encourage their patients to do the same,” said U.S. Attorney Erin Nealy Cox for the Northern District of Texas.  “The U.S. Attorney’s Office has and will continue to work cooperatively with providers that bring such issues to light to redress the losses the federal healthcare system has incurred.”
DaVita Rx has agreed to pay a total of $63.7 million to resolve the allegations in its self-disclosures and the whistleblower lawsuit.  DaVita Rx repaid approximately $22.2 million to federal healthcare programs following its self-disclosure and will pay an additional $38.3 million to the United States as part of the settlement agreement.  In addition, $3.2 million has been allocated to cover Medicaid program claims by states that elect to participate in the settlement.  The Medicaid program is jointly funded by the federal and state governments.
“Improper billing practices and unlawful financial inducements to health program beneficiaries can drive up our nation’s health care costs,” said Civil Division Acting Assistant Attorney General Chad Readler.  “The settlement announced today reflects not only our commitment to protect the integrity of the healthcare system, but also our willingness to work with providers who review their own practices and make appropriate self-disclosures.”
“The conduct being resolved in this matter presents serious program integrity concerns” said CJ Porter, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services, “DaVita Rx’s cooperation in the investigation of this matter was necessary and appropriate to reach this resolution.”
The lawsuit resolved by the settlement was filed by two former DaVita Rx employees, Patsy Gallian and Monique Jones, under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private parties to sue on behalf of the government when they discover evidence that defendants have submitted false claims for government funds and to receive a share of any recovery.  The case is captioned United States ex rel. Gallian v. DaVita Rx, LLC, No. 3:16-cv-0943-B (N.D. Tex.).  The relators will receive roughly $2.1 million from the federal recovery.
The settlement of this matter illustrates the government’s emphasis on combating health care fraud.  One of the most powerful tools in this effort is the False Claims Act.  Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement can be reported to the Department of Health and Human Services, at 800-HHS-TIPS (800-447-8477).  HHS also offers several programs for health care providers to self-report potential fraud.  More information on self-disclosure processes can be found on the HHS-OIG website.
The investigation was conducted by HHS-OIG, the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office for the Northern District of Texas.  The claims asserted by the government are allegations only and there has been no determination of liability.
Assistant U.S. Attorney Lisa-Beth C. Meletta handled this matter for the U.S. Attorney’s Office.
Read the original article from the Department of Justice

Misclassification as an Exempt/Salaried Employee: What it Means to You

Wages and the Law
Starting early in the new millennium, around 2003, article after article appeared in business journals telling businesses to brace themselves. These articles warned employers that if they have been misclassifying employees, and not giving them all the pay they have earned, they should expect wage and hour lawsuits.  These articles, which appeared in high profile business journals such as the Wall Street Journal and Kiplinger’s, proved to be prophetic. Since 2003, wage and hour collective actions have exceeded employment discrimination class action lawsuits. One of the more common violations of wage and hour law is employers classifying an employee as “exempt” when in fact they are not. Exempt employees, as the name suggests, are not subject to certain wage and hour laws. When a salaried employee is misclassified as exempt, they are often unaware that they may be entitled to overtime pay.  Many time, the misclassification by the employer is a method of saving a bundle in overtime and “off the clock” pay.  While most states have a wage and hour law on the books, the federal law applied across the nation is known as the Fair Labor Standards Act (FLSA). Since the most visible impact of the FLSA has been on overtime, it is sometimes referred to as the “overtime law”.  Besides overtime and off the clock work, areas covered by the FLSA are minimum wage, child labor, and equal pay.
Excemptions to the FLSA
As discussed, some jobs are exempt from the FLSA.  Employees who legitimately fall into these exempt jobs are not entitled to minimum wage or overtime as long as the requirements for these exemptions are met.  Examples of jobs excluded from overtime rules are movie theater employees, agriculture employees, and certain commissioned retail sales positions.
There are at least three major exemptions to the overtime law under the FLSA, the Executive/Management, Professional and Administrative Exemptions. Traditionally, the positions falling into these categories are classified as exempt, salaried positions.  However, often they are not.  The exemption that creates the most legal controversy is the Executive/Management Exemption.  Many employers assume that if they classify an employee as management and that employee is salaried at a minimum of $23,600 per year, that employee is exempt. This is a misconception. In addition to the employee merely being classified as management, the employer has to demonstrate the employee is truly working in management and actually has authority and supervises at least two individuals. In fact, an employee is subject to a duties test to determine whether they fit into the exemption. This test involves meeting objective standards to determine if that employee is truly part of management and is not being passed off as management to avoid overtime pay and other FLSA requirements. If the test finds that an employee classified as management has primary duties not involving management, there has been a misclassification as a salary employee and that employee is not exempt from being governed by the FLSA. As such, such an employee would be entitled to be paid for any hours of worked performed over 40 in a work week at the rate of time and half.  Under the FLSA, the employee is also entitled to liquidated damages equaling the amount of overtime pay withheld from the employee, as well as interest and attorney’s fees.
If you think you have been misclassified or are owed overtime pay or minimum wage, you can contact the U.S. Department of Labor, Wage and Hour Division or Valli Kane & Vagnini, LLP to learn what your rights are.

Is Your Employer Passing You Off As An Independent Contractor?

New York discrimination lawyerWhen you provide services for pay, your employment status is that of either an “employee” or an “independent contractor“. Your employment status is important since employment law treats employees and independent contractors very differently. As New York employment law attorneys point out, these differences give employers many administrative and financial incentives to (mis)classify you as independent contractors when employers should classify you as an employee.
New York employment law attorneys put it in simple terms, when an employer classifies you as an independent contractor there is no benefits package, including no overtime pay, sick days, vacations days, health insurance or pensions. The employer does not have to withhold taxes from your pay and avoids paying unemployment insurance, Medicare and Social Security for those workers. Employers provide independent contractors with an Internal Revenue Service (IRS) Form 1099 in place of the Form W-2. Independent contractors are not protected under The Fair Labor Standards Act (FLSA).Texas employment attorneys
Employers can suffer serious consequences for misclassifying employees as independent contractors. Failure to classify properly an employee can lead to substantial financial liability. In addition to retroactive wages and benefits owed the misclassified employees, there are taxes, substantial fines and penalties involved. Areas that misclassification can effect include:

  • Worker injury claims. If an injury occurs on the job, state workers’ compensation laws usually provide compensation for the injured party. If an independent contractor files a claim and is determined to be an employee of the organization, it could result in civil action and fines against the employer.
  • Worker unemployment claims. In some states, unemployment compensation claims by workers classified as independent contractors may trigger an audit of the employer. If the audit finds misclassification, the employer is liable.
  • Discrimination claims. Though anti-discrimination law has not generally afforded protection to independent contractors, caution is in order. Some courts have allowed the protection to spill over to include independent contractors.
  • Federal tax liability. The adjective that comes up most often to describe the financial liability for misclassification of employees is “onerous”.
  • Third party liability. Responsibility for injured third parties may hang on the determination if a worker is properly classified. A word of caution to employers: Some courts have found that using independent contractors does not shield an employer from liability.

New York employment law attorneysState and federal officials have stepped up their pursuit of companies trying to pass off their employees as independent contractors. If you are located in New York and believe an employer has misclassified you as an independent contractor, you may be entitled compensation and should contact New York employment law attorneys for a consultation.

Dionne v. Floormasters Enterprises, Inc. and the FLSA.

The 11th Circuit Court of Appeals, which controls Florida, Georgia, and Alabama, recently ruled that plaintiffs may not recover attorney fees, as they normally would be entitled to under the Fair Labor Standards Act (FLSA), in situations where the defendant-employer pays plaintiffs all the actual damages, liquidated damages, and interest owed to them outside of a negotiated settlement. In Dionne v. Floormasters Enterprises, Inc., the plaintiff filed a lawsuit alleging overtime violations by the defendant. The total amount of damages sought by the plaintiff, including liquidated damages as provided under the FLSA and interest, amounted to $3,000. After the plaintiffs filed the suit, the defendant tendered a payment to the plaintiff for the full amount they were seeking, “in the interests of expeditious resolution of Plaintiff’s claim and efficient use of this Court’s time and resources.” After tendering this payment, the defendant moved to dismiss the claim as moot, since even if the employer was found to be liable, the employer would not have to pay any additional amount to the plaintiff. The court granted the defendant’s motion, dismissing the case with prejudice. However, the employer did not compensate the plaintiff for attorney’s fees and costs, and the court’s dismissal of the case means that the employer’s liability for its illegal conduct was never established.
On appeal, the plaintiff argued that it was owed attorney’s fees, which go above and beyond the $3,000 that the defendant tendered. The FLSA provides attorney fees for the plaintiff, if the plaintiff proves that the employer violated the FLSA wage and overtime laws in his or her suit. Since the only reason that the defendant paid any amount to the plaintiff is that the plaintiff brought a lawsuit, the plaintiff felt he was entitled to the reasonable attorney’s fees that he incurred in bringing the suit and facilitating the payment.
The 11th Circuit Court of Appeals decided that this is a classic application of “catalyst” test, which states that “a plaintiff should be found as prevailing if its ends are accomplished as a result of the litigation even without formal judicial recognition, there is a causal connection between the plaintiff’s lawsuit and the defendant’s actions provided relief to the plaintiff, and the defendant’s actions were required by law.” However, the Court notes, the Supreme Court rejected the “catalyst” test in 2001 in Buckhannon Board & Care Home, Inc. v. West Virginia Department of Health & Human Resources, which requires that plaintiffs demonstrate that such a payment alters the legal relationship between the party’s in order for the plaintiff to be considered the “prevailing party.”
Since the plaintiff is not considered the “prevailing party” as decided in a court of law, it reasons that the plaintiff is not entitled to attorney’s fees as provided by statute.
Even though the 11th Circuit here seems to break new ground, the facts of this case may limit its applicability going forward. For example, the Court distinguishes cases in which plaintiffs are awarded lawyer’s fees and costs following the court’s dismissal of the plaintiff’s claims, where the dismissals incorporate the terms of a settlement between the parties. It is very likely that where there is a settlement between the parties that has been incorporated into a court order, Dionne may not apply. This is supported by the Supreme Court in Buckhannon, which states that judicial imprimatur, or the court’s seal of approval, is a necessary part of establishing a prevailing party in a lawsuit.
Importantly, in this case, the defendant never admitted liability, paid the full amount of damages sought by plaintiffs (including unpaid wages, liquidated damages, and interest), and never entered into a settlement agreement, let alone a settlement agreement that was entered as a court order. For this holding to be applied against plaintiffs in the future, a defendant would have to provide the full amount of unpaid wages, liquidated damages, and interest sought by the plaintiff. While in this case that amount was only $3,000, in many cases that amount may be much higher, and many defendants may be unwilling to pay the entire amount of the damages that plaintiffs seek in lieu of a negotiated settlement.