Certification Granted in New Directors Behavioral Health Overtime Lawsuit

IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF MISSOURI WESTERN DIVISION MARIA KROTT, individually and on behalf of all others similarly situated, Plaintiff, v.

NEW DIRECTIONS BEHAVIORAL HEALTH, LLC, Defendant.

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No. 4:19-CV-00915-DGK

ORDER CONDITIONALLY CERTIFYING CLASS This putative collective-action case arises out of Plaintiff Maria Krott’s allegations that Defendant New Directions Behavioral Health, LLC violated the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201–219, by failing to pay overtime compensation due her and other similarly situated employees. Now before the Court is Plaintiff’s Motion for Step-One Notice (Doc. 18). Because she has met her minimal burden of showing that she is similarly situated to other salaried Utilization Managers (each a “UM,” collectively “UMs”), the motion is GRANTED. Background Plaintiff formerly worked as a UM for Defendant, a managed behavioral health organization that provides benefit determinations for healthcare plans. Defendant works with insurers to admit or deny claims for treatment by insurers’ members (the “Participants”).

Defendant’s UMs assist in making this determination based on whether requisite criteria are present in health plan Participants’ clinical information.

Plaintiff alleges that all UMs employed by Defendant over the last three years had the same essential job duties: to apply and communicate Defendant’s practices, procedures, guidelines, and

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criteria for the approval of insurance claims on a remote basis or in a call-center environment. If clinical information met established criteria, UMs would approve the insurance benefit request. If the clinical criteria were not met, the UM would send the request to a physician for further “peer review” of the insurance benefit request. UMs were paid a salary and commonly worked overtime hours on a weekly basis. They were not paid for working overtime, however, because Defendant characterized UMs as exempt from state and federal overtime laws.

In November 2019, Plaintiff filed this collective action lawsuit on behalf of herself and other similarly situated UMs alleging Defendants mischaracterized them as exempt under the FLSA. She seeks all unpaid overtime wages due to her and other collective action members, interest, liquated damages, and reasonable attorneys’ fees. Defendant denies that it improperly characterized the UMs as exempt.

On July 24, 2020, Plaintiff filed the instant motion, seeking conditional certification of the following group: All individuals employed by Defendant in non-management job titles containing the term “Utilization Manager” in the last three years who were paid on a salary basis and classified as exempt from overtime compensation (“Collective Action Members”).

(Doc. 19 at 10). Plaintiff alleges she is similarly situated to these other UMs because they perform the same essential job duties and are common victims of Defendant’s company-wide policy to classify UMs as exempt from receiving overtime compensation. In support of a nation-wide class, Plaintiff submitted affidavits from UMs in Florida and Georgia who allege they performed the same duties as Plaintiff; worked over forty hours per week; and were not paid overtime compensation. The affidavits also allege that other UMs across the country experienced the same working conditions.

Plaintiff also seeks this Court’s approval of its notice program, which would send notice 2 Case 4:19-cv-00915-DGK Document 30 Filed 09/10/20 Page 2 of 9

of this lawsuit and a consent form to join the lawsuit to putative class members. The notice details what this lawsuit is about; informs putative class members as to how to join the lawsuit; and provides them with contact information for Plaintiff’s attorneys. Plaintiff requests a sixty-three day opt-in period from the date notice is mailed and an order from the Court (1) requiring Defendant to disclose the names, job titles, dates of employment, last known addresses, and email addresses of putative class members within seven days of an order approving the class; (2) authorizing Plaintiff to send notice and consent forms by mail and email1 to putative class members; and (3) authorizing a reminder notice thirty days after the initial notice mailing.

Standard Under the FLSA, an employer may not subject non-exempt employees to a work week longer than forty hours, unless the employees are compensated for the overtime hours at a rate that is one and a half times their regular hourly wage. 29 U.S.C. § 207. An employer who violates § 207 shall be liable to the employees affected for twice the amount of unpaid overtime compensation. 29 U.S.C. § 216(b).

Any employee may bring an action under § 216(b), and the employee may do so on his own behalf, as well as for those “employees similarly situated.” Id. “Plaintiffs may be similarly situated when they suffer from a single, FLSA-violating policy, and when proof of that policy or of conduct in conformity with that policy proves a violation as to all the plaintiffs.” Bouaphakeo v. Tyson Foods, Inc., 765 F.3d 791, 796 (8th Cir. 2014) (internal quotations and citations omitted).

The plaintiff bears the burden of establishing he or she is similarly situated to other members of the proposed class. Young v. Cerner Corp., 503 F. Supp. 2d 1226, 1229 (W.D. Mo. 2007).

FLSA collective actions differ somewhat from Rule 23 class actions because FLSA classes

1

Plaintiff originally also sought to send notice via text messages, however, she has since withdrawn that request (Doc. 28).

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are inherently “opt-in,” meaning class members must affirmatively agree to join the class by filing individual written consent. See 29 U.S.C. § 216(b) (“No employee shall be a party plaintiff to any such action unless he gives his consent in writing to become such a party and such consent is filed in the court in which such action is brought.”). Because of this opt-in mandate, certification of an FLSA class often proceeds in two steps. See, e.g., Cope v. Let’s Eat Out, Inc., No. 6:16-CV03050-SRB, 2016 WL 10677886, at *2 (W.D. Mo. July 12, 2016); McClean v. Health Sys., Inc., No. 11-CV-03037-DGK, 2011 WL 6153091 (W.D. Mo. Dec. 12, 2011); Kautsch v. Premier Commc’ns, 504 F. Supp. 2d 685, 688 (W.D. Mo. 2007).

The first step is the notice stage. Cope, 2016 WL 10677886, at *2. At this stage, “plaintiff moves for conditional certification . . ., wherein a class is certified for notice purposes” prior to the completion of discovery. Davis v. Novastar Mortg., Inc., 408 F. Supp. 2d 811, 815 (W.D. Mo. 2005). Courts apply a “fairly lenient standard”2 in deciding conditional certification of a class for notice and discovery purposes. Loyd v. Ace Logistics, LLC, No. 08-CV-00188-W-HFS, 2008 WL 5211022, at *2 (W.D. Mo. Dec. 12, 2008). “Substantial allegations” of a policy making class members similarly situated are sufficient to allow for conditional certification. Robertson v. LTS Mgmt. Serv., LLC, 642 F. Supp. 2d 922, 925 (W.D. Mo. 2008); Davis, 408 F. Supp. 2d at 818 (finding conditional certification at step one requires only demonstrating “that there is a group of similarly situated employees who are victims of a single decision, policy, and plan respecting denial of proper overtime compensation”).

“At the second step of the process, the defendant may move to decertify the class.” Fast v. Applebee’s Int’l, Inc., 243 F.R.D. 360, 363 (W.D. Mo. 2007). This is done after the close of

Courts have similarly described the initial burden as “modest,” Kautsch v. Premier Commc’ns, 504 F. Supp. 2d 685, 689 (W.D. Mo. 2007), “not…high,” Austin v. CUNA Mut. Ins. Soc’, 232 F.R.D. 601, 605 (W.D. Wis. 2006), and “not rigorous” Smith v. Heartland Auto. Servs., Inc., 404 F. Supp. 2d 1144, 1149 (D. Minn. 2005).

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discovery when the Court has much more information. Id. Discussion Defendant offers four primary arguments in opposition to Plaintiff’s motion. First, it submits that Plaintiff has not established that she is similarly situated to the proposed class, thereby preventing conditional certification. Second, although Defendant does not contest the substance of Plaintiff’s notice, it argues that notice should not be sent via email since mail notice alone is sufficient. Third, Defendant argues reminder notice is unnecessary and inappropriately encourages party participation by the Court. Finally, Defendant requests that this Court appoint a third-party administrator to collect contact information and send out any Court-approved notice. The Court addresses each argument in turn.

I.

Plaintiff has met her burden of showing conditional certification is proper.

Defendant argues that Plaintiff seeks to certify an “ill-defined, improper collective”

because its UMs span across the country and have varying hours and conditions based on health plan client, region, and supervisor.

The declaration filed by Defendant’s Vice President of Clinical Services, however, admits that UMs share the same primary duty of making medical-necessity determinations using specific guidelines to approve insurance claims (Doc. 25-1 at ¶¶ 4–5). Defendant also does not contest the allegations provided in the four declarations of UMs in Florida and Georgia that all UMs, regardless of location, were classified as exempt. Nor does it contest the allegation that UMs worked more than forty hours per week on occasion and were not paid any overtime.

Defendant instead contests that all UMs worked over forty hours per week. But “whether they actually worked over forty hours goes to the merits and will be addressed at a later stage of the litigation.” Greenwald v. Phillips Home Furnishings Inc., No. 4:08-CV-1128-CDP, 2009 WL

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259744, at *6 (E.D. Mo. Feb. 3, 2009). Moreover, Plaintiff’s notice explicitly states: “If you fit the above definition and you worked more than 40 hours in any workweek during your employment, you are eligible for participation in this lawsuit” (Doc. 29-2). This makes it clear that those who did not work more than forty hours per week will not be entitled to compensation.

Thus, the record before the Court shows that the UMs are similarly situated because they performed similar job duties using the same predetermined guidelines; were subject to the same exempt and overtime classification policies regardless of location; and were uncompensated for any overtime work they performed. Thus, Plaintiff has satisfied her burden through affidavits, supported by admissible evidence, which show the putative members were together “victims of a single decision, policy, or plan.” Davis, 408 F. Supp. 2d at 818. Accordingly, the Court conditionally certifies the following class: All individuals employed by Defendant in non-management job titles containing the term “Utilization Manager” in the last three years who were paid on a salary basis and classified as exempt from overtime compensation (“Collective Action Members”).

II.

Email is a proper form of notice.

Recognizing that conditional certification is proper, Defendant argues the Court should

prohibit Plaintiff from sending notice to potential class members via email because it is redundant of notice through the U.S. Mail. Though not entirely clear, Defendant appears to assert that email would unduly invade the privacy of potential plaintiffs. Plaintiff responds that email is a proper form of notice in the digital age and will ensure that notice reaches all potential plaintiffs.

The Court agrees. “At this stage of litigation, justice is most readily served by notice reaching the largest number of potential plaintiffs” and, today, email is an efficient and cost-effective way to contact potential plaintiffs. Kautsch v. Premier Commc’n, 504 F. Supp. 2d 685, 690 (W.D. Mo. 2007); see also Rhodes v. Truman Med. Ctr., No. 4:13–CV–00990–NKL, 6 Case 4:19-cv-00915-DGK Document 30 Filed 09/10/20 Page 6 of 9

2014 WL 4722285, at *5 (W.D. Mo. Sept. 23, 2014) (“[E]mail provides an efficient and cost-effective means of disseminating notice documents and has been endorsed by courts in the past.”). Defendant’s objection to sending notice via email is overruled.

III.

The Court does not authorize Plaintiff to send a reminder notice.

Next, Defendant urges the Court to prohibit Plaintiff from sending a reminder notice to

potential class members thirty days after the original notice. Defendant argues it is unnecessary and could potentially be interpreted as encouragement by the Court to join the lawsuit. Plaintiff responds that there is nothing improper about reminder notice.

Courts have both authorized and rejected sending reminder notices to potential class members. Compare Brittmon v. Upreach, LLC, 285 F. Supp. 3d 1033 (S.D. Ohio Jan. 23, 2018) (denying reminder notification) with Harris v. Vector Marketing Corp., 716 F. Supp. 2d 835 (N.D. Cal. May 18, 2010) (finding a reminder postcard to be appropriate “[p]articularly since the FLSA requires an opt-in procedure”). But there is a narrow line between advising potential plaintiffs of the existence of a lawsuit and encouraging participation, and, so, the Court is hesitant to authorize duplicative notice so as not to unnecessarily encourage participation or improperly suggest this Court’s endorsement of Plaintiff’s claims. This is even more so true here since potential plaintiffs will receive notice via mail and email in the first instance.

Moreover, Plaintiff has not provided the Court with any proposed letter or email she intends to send as a reminder. For the Court to authorize such notice without knowing the contents of the reminder would be imprudent. Accordingly, Plaintiff’s request to send a reminder notice is denied.

IV.

Appointing a third-party administrator is unnecessary.

Finally, Defendant objects to Plaintiff’s counsel sending notice and consent forms to

potential plaintiffs and instead asks the Court to appoint a third-party administrator. Defendant

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claims that a third-party administrator will protect the confidential information of putative class members, as well as provide a “level of transparency and neutrality to the notice process that simply cannot be achieve when counsel sends the notice” (Doc. 25 at 9). Plaintiff disagrees, noting that Plaintiff’s counsel routinely sends out notice to potential class members and that the privacy concerns are no different with them than with a third-party administrator.

The Court finds Defendants concerns to be unfounded. Employers routinely produce the names, job titles, dates of employment, last known addresses, and email addresses of potential plaintiffs3 to Plaintiff’s counsel for purposes of facilitating notice in collective actions like this one. See THE FAIR STANDARDS ACT § 17.III.B.5.b.(iii) (Ellen C Kearns et al. eds, 3d ed. 2015) (“Typically class counsel is responsible for distributing notice” except when there are “circumstances of misconduct or where there are confidentiality or integrity concerns”); see also Littlefield v. Dealer Warranty Servs., LLC, 679 F. Supp. 2d 1014, 1018 (E.D. Mo. 2010) (“[T]he court does not find that the proposed notice inappropriately solicits potential plaintiffs. The court will not appoint a neutral administrator to issue the notice.”). Defendant has provided, and the Court finds, no reason why doing so here would pose an undue risk to privacy or confidentiality.

Conclusion The class is conditionally certified. Defendant shall produce to Plaintiff the names, job titles, dates of employment, last known addresses, and email addresses of Potential Plaintiffs within seven days. Plaintiff is authorized to send notice and consent forms by mail and email to potential class members, but reminder notice is prohibited. Each potential plaintiff shall have sixty-three days from the date notice is mailed to opt-in to the litigation.

Because Plaintiff no longer seeks to send notice via text messaging, potential plaintiffs’ telephone numbers are no longer needed.

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The parties shall file a joint proposed scheduling order within fourteen days of this Order.

IT IS SO ORDERED. Date:

September 10, 2020

/s/ Greg Kays GREG KAYS, JUDGE UNITED STATES DISTRICT COURT

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