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Resurrection Home Health v. Catherine Shannon

January 10, 2013

RESURRECTION HOME HEALTH SERVICES,
PLAINTIFF AND COUNTERDEFENDANT-APPELLEE,
v.
CATHERINE SHANNON, IN HER OFFICIAL CAPACITY AS DIRECTOR OF THE DEPARTMENT OF LABOR, AND THE DEPARTMENT OF LABOR,
DEFENDANTS AND COUNTERPLAINTIFFS-APPELLANTS.



Appeal from the Circuit Court of Cook County. 07 M1 111335 The Honorable Nancy J. Arnold, Judge Presiding.

The opinion of the court was delivered by: Justice Pucinski

JUSTICE PUCINSKI delivered the judgment of the court, with opinion Presiding Justice Lavin and Justice Fitzgerald Smith concurred in the judgment and opinion.

OPINION

¶ 1 BACKGROUND

¶ 2 Resurrection Home Health Services (Resurrection) is a corporation engaged in the business of providing health care services to people in their homes under a physician's supervision, often after they have been discharged from a hospital. Resurrection employees who provide these clinical home health care services include: registered nurses (RNs); physical therapists; occupational therapists; and social workers. Typical functions that RNs perform during home visits include taking vital signs, management of wounds, administration of intravenous infusions, and administration of vitamin and medication injections, drawing laboratory specimens, catheter insertions, care of gastrostomy tube insertion sites, application of compression bandages, and educating clients.

¶ 3 In February 2002, Resurrection changed its compensation structure for its RNs, physical therapists, occupational therapists, and social workers from a fixed salary to a fee-for-visit compensation which was determined by the number and type of home visits they made. The feefor-visit compensation method pays employees a fixed sum for a given task, regardless of the amount of time it takes to complete the task. Under the new compensation method, full-time employees (excluding social workers) were required to make at least 30 visits a week. Part-time employees and full-time social workers were required to make at least 15 visits a week. Casual status employees who were ineligible for employment benefits were required to make at least 10 visits a week.

¶ 4 A routine or regular visit had the lowest fee of $34 for an RN, $43 for a physical therapist and occupational therapists, and $53 for a social worker. RNs received higher fees for other types of home visits. Employees also received a $2 travel fee for each visit. Based on these fees, the minimum weekly compensation based on the minimum fee per visit and the minimum required number of visits for full-time employees for an RN was $1,080, for a physical therapist was $1,350, for an occupational therapist was $1,350, and for a social worker was $825. The new compensation plan also provided that in any week in which an employee did any work, the employee would receive the greater of the amount determined under the fee-for-visit method or a minimum weekly payment of $300. Resurrection's director of human resources testified that the $300 minimum weekly pay was a figure "arrived at based on the advice of counsel."

Resurrection's materials describing the fee-for-visit compensation system referred to the compensation received from the minimum amount of required visits, and not the guaranteed minimum weekly pay, as the " 'base' rate of pay." In addition, Resurrection paid its employees an hourly rate which it labeled "fees" for time spent at in-house training sessions and other corporate meetings, and for paid vacations and sick leave.

¶ 5 In mid-2004, the minimum guaranteed weekly pay was increased for all workers to $475. Resurrection also increased its fee-for-visit rates for admission visits to $53 for RNs and $59 for weekend and evening admissions, $67 for regular admissions for physical therapists and occupational therapists, and $73 for weekend and evening admissions. In July 2006, Resurrection increased the minimum guaranteed weekly pay to $900 per week for full-time RNs and social workers and $1,000 for full-time physical therapists. From April 2004 to September 2007, Resurrection identified about 175 weeks when it supplemented the employees' pay under the fee-for-visit structure to pay the guaranteed minimum weekly pay.

¶ 6 Resurrection did not keep track of the time worked by its employees for their required work responsibilities and has not paid them any overtime for work performed in excess of 40 hours per week. At-home care services are a covered benefit for Medicare recipients which require standardized reports to be completed regarding the patient's condition and treatment. A routine visit for a client may take half an hour or more, and preparation of the required postvisit documentation can require substantial additional time. Initial admission visits take more time than routine visits, both for the actual visit and for the preparation of the paperwork. Also part of the employees' work responsibilities was transporting lab samples, faxing assignments, making telephone calls to order supplies, locating patients, mapping routes for multiple daily visits, and other administrative matters.

¶ 7 On or about July 28, 2003, 16 Resurrection workers submitted overtime complaints to the Illinois Department of Labor (the Department or IDOL) Fair Labor Standards Division. The Department then conducted an investigation into whether Resurrection's home health care clinical workers were exempt from the overtime provisions of the Illinois Minimum Wage Law (820 ILCS 105/1 et seq. (2002))*fn1 under the fee-for-visit compensation scheme. A compliance officer for the Department completed the investigation on March 23, 2004, and concluded that the employees were professional employees exempt from overtime requirements. On April 29, 2004, the 16 employees filed a petition to intervene in the investigation, asserting that the compliance officer's conclusion was incorrect as a matter of fact and law and requesting a hearing. On March 23, 2005, the compliance officer completed a second audit, concluding again that the employees were exempt professional employees who were not entitled to overtime.

¶ 8 After investigation and hearings, on January 11, 2006, an administrative law judge issued a decision concluding that Resurrection violated overtime requirements for the 16 employee nurses, physical therapists, and social workers. Although the administrative law judge found that the workers were bona fide professional employees, she held that Resurrection's compensation structure was not on a "salary basis" or "fee basis" under the Illinois Illinois Minimum Wage Law and incorporated federal regulations, and thus, the employees were not exempt and were owed overtime wages. The Department issued its decision on June 27, 2007, concluding that $59,073.74 was owed in overtime wages to seven employees. The chief administrative law judge held a hearing on Resurrection's request for review of the decision that the 16 employees were owed overtime wages. On June 29, 2007, the chief administrative law judge affirmed the decision. On September 21, 2007, a second audit by the Department concluded that $322,218.46 was owed in overtime wages to another 166 employees. Resurrection sought further review of the Department's decision and appealed the decision internally to the Director on October 5, 2007. On March 6, 2008, an administrative law judge, acting as the representative and designee of the Department and its Director, affirmed the findings of the Department.

¶ 9 Resurrection subsequently brought this action against the Department, seeking review of the administrative law judge's decision of January 11, 2006, and a declaration that the Department's own decision was incorrect, and that its clinical home health care workers were exempt from the Illinois Minimum Wage Law's overtime requirements. The Department filed a counterclaim, alleging the relevant time period for the wage structure was May 8, 2004, through September 2, 2006, and seeking a judgment requiring Resurrection to pay overtime to the affected employees.

¶ 10 Neither Resurrection's second amended complaint nor the Department's counterclaim identified any of the individuals Resurrection claimed were exempt from overtime compensation. A number of Resurrection employees communicated to Resurrection or its attorneys that they did not want to participate in the proceedings. Other employees failed to appear for depositions that Resurrection had scheduled. In its brief, the Department states that one former Resurrection employee testified at her deposition that Resurrection's director of human resources had contacted her and asked whether she wanted to "drop" the case. However, the employee, Margaret Burszcyk, testified that she forgot about her deposition and failed to appear, which is when she received the call from Resurrection's director of human resources. She testified that she called to reschedule her deposition.

¶ 11 Resurrection subsequently filed a motion to "dismiss the claims of individuals who opted-out of this lawsuit or, in the alternative, [to] prevent such individuals from recovering any damages in this case." Resurrection alleged that some of the individuals identified in its motion had refused to sit for depositions and that, consequently, their "claims" should be dismissed. The Department responded that none of the employees in question was a party in the case, and that in any event, section 12 of the Illinois Minimum Wage Law (820 ILCS 105/12 (West 2004)) gives the Department the authority, independent of the right of an employee, to enforce the Illinois Minimum Wage Law and bring an action against the employer. The Department also argued that the court's power to impose discovery sanctions against a party for discovery violations did not authorize the dismissal of its claim as a result of the actions of nonparty witnesses. At the hearing on Resurrection's motion, the circuit court found that while the individuals were not parties who could be dismissed, on the issue of damages it would be unfair for Resurrection to defend against the Department's counterclaim with respect to the individuals who refused to appear for depositions. The court then entered an order granting Resurrection's motion in part and prohibiting the Department from "offering any evidence or making any claim" relating to the issue of damages with respect to any of the individuals identified by Resurrection as so-called "opt-out" claimants.

¶ 12 Resurrection also filed a motion for summary judgment, arguing that its clinical home health care workers were "bona fide professionals" who were exempt from the overtime requirements of the Illinois Minimum Wage Law. The Department filed a cross-motion for summary judgment arguing these employees were not exempt. The Department stipulated that the employees were learned professionals and met the requirements set forth in 29 C.F.R. § 541.301(a) (2012). The stipulation sets forth as follows:

"The IDOL stipulates that at all relevant times to the claims and counter-claims in this lawsuit, RHHS' Registered Nurses, Physical and Occupational Therapists and MSW Social Workers performed work requiring knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction and study as distinguished from a general academic education and from an apprenticeship, and from training in the performance of routine mental, manual, or physical processes within the meaning of 29 C.F.R. 541.301(a)."

The parties remained opposed on the issue of whether the employees were paid on a "salary or fee basis."

¶ 13 The circuit court granted Resurrection's motion for summary judgment and denied the

Department's cross-motion for summary judgment. The court ruled that Resurrection's clinical home health care workers are paid on a salary basis, and not a fee basis, because Resurrection guaranteed the workers a minimum weekly payment of $300.

¶ 14 The Department appeals the grant of Resurrection's motion for summary judgment and denial of its cross-motion for summary judgment, and also appeals the order limiting claims and damages for employees who did not appear for their depositions.

¶ 15 ANALYSIS

¶ 16 The Department argues that the circuit court erred in granting plaintiff summary judgment and in denying their cross-motion for partial summary judgment. The Department also appeals from an earlier order prohibiting the Department from asserting claims or presenting evidence concerning Resurrection employees who did not appear for their depositions.

¶ 17 I. Summary Judgment on the Issue of Salary Basis

¶ 18 At issue are the overtime requirements of the Illinois Minimum Wage Law (820 ILCS 105/1 et seq. (West 2004)), and the incorporated federal regulations, as they apply to home health care workers. The issue of whether health care workers' compensation qualifies for overtime protection has been an issue nationally, with inconsistent results and no clear definitive regulation stating that such workers are either exempt or not exempt. Rather, the applicable version of the regulations in this case necessitates an analysis of the pay structure for these workers. The circuit court below granted Resurrection summary judgment because it found that Resurrection's pay structure exempted the employees from overtime pay. The court denied the Department's cross-motion for summary judgment. We review whether the court's grant of summary judgment in favor of Resurrection was appropriate.

¶ 19 Section 2-1005(b) of the Code of Civil Procedure provides: "A defendant may, at any time, move with or without supporting affidavits for a summary judgment in his or her favor as to all or any part of the relief sought against him or her." 735 ILCS 5/2-1005(b) (West 2008). Summary judgment is appropriate only where "the pleadings, depositions, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." 735 ILCS 5/2-1005(c) (West 2008). See also Farm Bureau Mutual Insurance Co. v. Alamo Rent A Car, Inc., 319 Ill. App. 3d 382, 386 (2000) (holding that summary judgment is appropriate only where there is no genuine issue of material fact and the pleadings, depositions, and affidavits show that the moving party is entitled to a judgment as a matter of law). Although summary judgment is appropriate if a plaintiff cannot establish an element of his claim, it should only be granted when the right of the moving party is clear and free from doubt. Dardeen v. Kuehling, 213 Ill. 2d 329, 335 (2004). "If, from a review of the pleadings and evidentiary material before the trial court, a reviewing court determines that a material issue of fact exists or that the summary judgment was based upon an erroneous interpretation of the law, a reversal is warranted. Pagano v. Occidental Chemical Corp., 257 Ill. App. 3d 905, 909 (1994) (citing Reed v. Fleming, 132 Ill. App. 3d 722(1985), and Warren v. Lemay, 144 Ill. App. 3d 107 (1986)), appeal denied, 155 Ill. 2d 566 (1994). Summary judgment orders are reviewed de novo. Outboard Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill. 2d 90, 102 (1992).

¶ 20 Although the use of a summary judgment procedure is encouraged as an aid in expeditious disposition of a lawsuit, it is a drastic means of disposing of litigation and should only be allowed when the right of the moving party is clear and free from doubt. Purtill v. Hess, 111 Ill. 2d 229, 240 (1986). The court in Williams v. Covenant Medical Center, 316 Ill. App. 3d 682, 688 (2000), explained the two differing types of summary judgment motions:

"A defendant who moves for summary judgment may meet its initial burden of production in at least two ways: (1) by affirmatively disproving the plaintiff's case by introducing evidence that, if uncontroverted, would entitle the movant to judgment as a matter of law (traditional test) (see Purtill v. Hess, 111 Ill. 2d 229, 240-41 *** (1986)), or

(2) by establishing that the non-movant lacks sufficient evidence to prove an essential element of the cause of action (Celotex test) (see Rice v. AAA Aerostar, Inc., 294 Ill. App. 3d 801, 805 *** (1998), citing Celotex Corp. v. Catrett, 477 U.S. 317, 323 *** (1986) ***)."

¶ 21 Here, Resurrection brought the first type of motion under Purtill, and argued that it was entitled to judgment as a matter of law because its employees were exempt. We determine that the circuit court erred in its interpretation of the Illinois Minimum Wage Law, and federal provisions which are incorporated by reference, and that it incorrectly granted summary judgment to Resurrection, as its home health care workers are not exempt from overtime requirements under the Illinois Minimum Wage Law.

ΒΆ 22 Section 4a(1) of the Illinois Minimum Wage Law generally requires employers to pay employees time and a half for any hours worked more than 40 in one workweek. 820 ILCS 105/4a(1) (West 2004). In its counterclaim in the instant case, the Department sought overtime pay for Resurrection workers under Resurrection's wage structure only from May 8, 2004, through September 2, 2006. In its answer to Department's counterclaim, Resurrection admitted that the relevant time period for overtime wages sought under Resurrection's wage structure was May 8, 2004, through ...


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