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Smith v. Ochsner Health System

United States District Court, E.D. Louisiana

November 13, 2018

DANIEL G. SMITH
v.
OCHSNER HEALTH SYSTEM AND OCHSNER CLINIC FOUNDATION

         SECTION M (1)

          ORDER & REASONS

          BARRY W. ASHE UNITED STATES DISTRICT JUDGE.

         Before the Court is the motion of defendants Ochsner Health System and Ochsner Clinic Foundation (collectively “Ochsner”) for summary judgment, [1] to which plaintiff Daniel G. Smith (“Smith”) responds in opposition, [2] and in support of which Ochsner replies.[3] Having considered the parties' memoranda and the applicable law, the Court issues this Order & Reasons.

         I. BACKGROUND

         This Fair Labor Standards Act (“FLSA”) action arises out of Smith's allegations that he did not receive overtime compensation while employed as a non-exempt transplant (or organ procurement) coordinator for Ochsner.[4] The job description for a transplant coordinator at Ochsner included the following duties and responsibilities: responding to all calls for organs offered to the Ochsner Transplant Center; evaluating the medical management of the donor; verifying consent; communicating with physicians and surgeons to obtain acceptance of an organ; preserving the organ; arranging transplantation; transporting organs; and completing all associated reports.[5] The parties essentially agree that transplant coordinators at Ochsner rotated among four categories of duties.[6]

         Donor Coordinator.

         The first category of duties was that of “donor coordinator.” In this capacity, the transplant coordinator would receive communications from the Louisiana Organ Procurement Agency (“LOPA”) regarding organs potentially available for transplant.[7] The donor coordinator would then access the donor's information on a database.[8] On occasion, when acting as donor coordinator, Smith would identify a mistake in the database or a need for additional information, and he would contact the donor's hospital to obtain the correct information to provide to the transplant surgeon.[9] After gathering this information, the donor coordinator could either decline the organ or, if the organ satisfied Ochsner's criteria (which is regulated by UNOS), enter a “provisional yes” before contacting the surgeon.[10] The “provisional yes” indicated Ochsner was interested in the organ.[11] To comply with UNOS regulations, Ochsner's established procedure required the donor coordinator to contact the surgeon on call and relay certain standard information.[12] However, Smith testified to having rejected an organ without first contacting a surgeon if, in his experience and as dictated by the UNOS regulations, he knew the surgeon would not accept it.[13] Nonetheless, no coordinator's decision was final; all decisions were reviewed by the surgeon.[14] Dr. George Loss, a transplant surgeon at Ochsner who worked with Smith, testified that “it takes two to say yes … and three to say no” to an organ, a rule of thumb that both parties agree constitutes Ochsner's policy.[15] Specifically, according to Dr. Loss, to accept an organ, the recovery coordinator and the surgeon may say “yes”; but to reject an organ, the recovery coordinator and two surgeons must say “no.”[16] Smith admits that he advocated for very sick Ochsner patients to receive organs ahead of patients at other transplant centers, as directed by his supervisors and as permitted under UNOS protocol.[17]

         Although LOPA could provide the matching program's results directly to the surgeon, Ochsner handled “this aspect in-house” by employing coordinators such as Smith.[18] Smith testified that, as donor coordinator, he communicated to the surgeon basic information generated by LOPA's matching program, such as the potential recipient's status on the list and the recipient's height and weight.[19] On occasion, a donor coordinator would discuss with Dr. Loss, as transplant surgeon, the decision whether to accept the organ.[20] Dr. Loss testified that the organ procurement coordinators were “absolutely critical” to Ochsner's success as a transplant center.[21] Dr. Loss compared his interaction with the donor coordinator to that with a resident about a patient in the ICU: “They don't tell me everything that's going on with that patient …; they tell me the things I need to know. And they know the things I need to know because we work together and we know what's important. But then there are certain parts that I ask more information, and they have to know where to get it or how to get it. And if they don't, they ask me, and I tell them.”[22] According to Smith, the surgeons “depended upon us to be correct. They trusted that the information we gave them would be correct to make a decision.”[23]

         Once an organ was accepted, the donor coordinator would arrange for the transportation of the organs.[24] Although the organ procurement coordinators would not enter into transportation contracts on behalf of Ochsner, they would arrange transportation with companies under contract with Ochsner.[25] In one instance, Ochsner implemented Smith's suggestion to purchase flight hours, rather than renting planes, as a means of managing transportation costs.[26]

         Fly Out Coordinator.

         The second category of duties for transplant coordinators was that of “fly out” coordinator. A fly out coordinator traveled with the medical team to assist in recovering the organ.[27] The fly out coordinator would contact the operating room where the organ was to be recovered, and then the fly out coordinator would apprise the surgeon and Ochsner's operating room of the organ's history and condition (such as the timeline of surgery, biopsy results, size, and viability problems, including whether there had been unexpected occurrences potentially affecting the organ like no heartbeat or no blood pressure).[28] To transport particular organs, Smith helped to create checklists of supplies and then stocked them based upon the surgeon's directives.[29]But Smith insists that his supervisors would authorize supply orders costing more than $10, 000.[30]

         Administrative and Backup Coordinator.

         The third category of a transplant coordinator's duties was that of administrative coordinator. An administrative coordinator was responsible for completing the paperwork related to the organ and Ochsner's patients.[31] For instance, after Ochsner's committee confirmed that a patient needed an organ transplant, the coordinator would input the patient's information into a database to be matched to a donor by the computerized system.[32]

         The fourth and final category of an organ procurement coordinator's duties was that of backup coordinator. In this capacity, an organ procurement coordinator would assist with lab work and donors as needed.[33]

         The Rotating Duties in General.

         Under the supervision of a surgeon, the transplant coordinators working at Ochsner during Smith's employment conferred with each other to establish their schedule of rotating duties.[34] Generally, the hours were Monday through Friday from 8 a.m. to 5 p.m., though the coordinators were permitted to arrive later the next day following a late-night shift.[35] Smith and Kyle Leboeuf, who was also an organ procurement coordinator at Ochsner, testified that they would be on call for four days at a time.[36] Ochsner submits Leboeuf's testimony for the proposition that the organ procurement coordinators spent the majority of their time on donor coordinator duties.[37] Smith disputes this, citing Ochsner's Job Performance Standards that designate duties by weight.[38] These standards designate (1) fifteen percent weight to responding to calls for organ offers (including being on call “24 hours a day, 365 days/year”); (2) thirty percent weight to receiving and transporting organs for transplant preservation (including verifying legal aspects of the donor's consent and medical chart); (3) ten percent weight to having supplies and equipment on hand for cold storage preservation of organs; (4) ten percent weight to sending blood and tissue typing samples to the lab for cross-matching purposes; (5) ten percent weight to exchanges of donor/recipient information; (6) ten percent weight to preserving organs from living donor transplants; and (7) fifteen percent weight to assignment and documentation of costs and charges of the Ochsner Transplant Center's “organ procurement activities (i.e., procurement cost sheets, patient standard acquisition billing, professional fees, etc.).”[39] The parties agree that Smith contacted and interviewed new employee applicants, but Smith insists that he had no authority to approve new hires.[40]

         The parties agree that Ochsner hired Smith in April of 2001, but they disagree about the structure of his pay during the period from 2001 to 2012.[41] While Smith contends that he reported hours worked and received only straight time pay for all hours worked, Ochsner maintains that Smith was paid a yearly salary, plus a nominal hourly fee for on-call time and an additional straight hourly rate for work conducted outside of his normal shifts.[42] However, the parties agree that, from 2012 through his resignation in 2017, Ochsner paid Smith an annual salary and a single bonus.[43] Further, the parties agree that, as of September 29, 2014 (three years prior to the filing of the complaint), Smith's annual salary was $121, 971.20 (a weekly salary of $2, 345.60) and that Smith would have been paid over $100, 000 in 2017 had he not taken medical leave that year, as his weekly salary remained $2, 345.60 until his resignation.[44]

         II. PENDING MOTIONS

         In its motion for summary judgment, Ochsner seeks the dismissal of Smith's overtime claims under the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201, et seq., on the grounds that Smith was exempt from FLSA's overtime provisions pursuant to the administrative and highly compensated employee exemptions.[45] Alternatively, if Smith was not exempt, and thus misclassified, Ochsner contends Smith cannot show that he was misclassified willfully; therefore, FLSA's two-year statute of limitations should apply.[46] Finally, Ochsner proposes that the fluctuating workweek method should apply to calculate any damages.[47] Smith opposes the motion, arguing that Ochsner has not established Smith's exempt status beyond dispute, and that disputed factual issues preclude both the dismissal of the willful violation claim and the application of the fluctuating workweek method.[48]

         III. LAW & ANALYSIS

         a. Summary Judgment Standard

         Summary judgment is proper “if the pleadings, depositions, answers to interrogatories, 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.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (citing Fed.R.Civ.P. 56(c)). “Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which the party will bear the burden of proof at trial.” Id. A party moving for summary judgment bears the initial burden of demonstrating the basis for summary judgment and identifying those portions of the record, discovery, and any affidavits supporting the conclusion that there is no genuine issue of material fact. Id. at 323. If the moving party meets that burden, then the nonmoving party must use evidence cognizable under Rule 56 to demonstrate the existence of a genuine issue of material fact. Id. at 324. To grant summary judgment in favor of a defendant asserting affirmative defenses, the defendant “must establish beyond dispute all of the defense's essential elements.” Bank of La. v. Aetna U.S. Healthcare, Inc., 468 F.3d 237, 241 (5th Cir. 2006).

         A genuine issue of material fact exists if a reasonable jury could return a verdict for the nonmoving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1996). The substantive law identifies which facts are material. Id. Material facts are not genuinely disputed when a rational trier of fact could not find for the nonmoving party upon a review of the record taken as a whole. See Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); Equal Emp't Opportunity Comm'n v. Simbaki, Ltd., 767 F.3d 475, 481 (5th Cir. 2014). “[U]nsubstantiated assertions, ” “conclusory allegations, ” and merely colorable factual bases are insufficient to defeat a motion for summary judgment. See Anderson, 477 U.S. at 249-50; Hopper v. Frank, 16 F.3d 92, 97 (5th Cir. 1994). In ruling on a summary judgment motion, a court may not resolve credibility issues or weigh evidence. See Delta & Pine Land Co. v. Nationwide Agribusiness Ins. Co., 530 F.3d 395, 398-99 (5th Cir. 2008). Furthermore, a court must assess the evidence, review the facts, and draw any appropriate inferences based on the evidence in the light most favorable to the party opposing summary judgment. See Tolan v. Cotton, 572 U.S. 650, __, 134 S.Ct. 1861, 1866 (2014); Daniels v. City of Arlington, 246 F.3d 500, 502 (5th Cir. 2001). Yet, a court only draws reasonable inferences in favor of the nonmovant “when there is an actual controversy, that is, when both parties have submitted evidence of contradictory facts.” Little Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc) (citing Lujan v. Nat'l Wildlife Fed'n, 497 U.S. 871, 888 (1990)). Nor must the court consider uncited evidence in the record. Fed.R.Civ.P. 56(c)(3).

         After the movant demonstrates the absence of a genuine dispute, the nonmovant must articulate specific facts and point to supporting, competent evidence that may be presented in a form admissible at trial. See Lynch Props., Inc. v. Potomac Ins. Co. of Ill., 140 F.3d 622, 625 (5th Cir. 1998); Fed.R.Civ.P. 56(c)(1)(A) & (c)(2). Such facts must create more than “some metaphysical doubt as to the material facts.” Matsushita, 475 U.S. at 586. When the nonmovant will bear the burden of proof at trial on the dispositive issue, the moving party may simply point to insufficient admissible evidence to establish an essential element of the nonmovant's claim in order to satisfy its summary judgment burden. See Celotex, 477 U.S. at 322-25; Fed.R.Civ.P. 56(c)(B). Unless there is a genuine issue for trial that could support a judgment in favor of the nonmovant, summary judgment must be granted. See Little, 37 F.3d at 1075-76.

         b. FLSA's Exemptions Warrant a “Fair Reading”

         The Fair Labor Standards Act requires employers to pay non-exempt employees overtime for working more than 40 hours in a week. 29 U.S.C. § 207(a). Exempt employees are not required to be paid overtime. 29 U.S.C. § 213(a). The employer bears the burden of proving the exemptions as affirmative defenses. Cheatham v. Allstate Ins. Co., 465 F.3d 578, 584 (5th Cir. 2006). The amount of time the employee devotes to particular duties and the significance of those duties are questions of fact; whether an employee's salary and duties ultimately satisfy an exemption is a matter of law. Zannikos v. Oil Inspections (U.S.A.), Inc., 605 Fed.Appx. 349, 352 (5th Cir. 2015) (citing Icicle Seafoods, Inc. v. Worthington, 475 U.S. 709, 714 (1986)); see also Dalhiem v. KDFW-TV, 918 F.2d 1220, 1226 (5th Cir. 1990). FLSA's exemptions must be given a “fair reading” rather than being construed narrowly against the employer. Encino Motorcars v. Navarro, 138 S.Ct. 1134, 1142 (2018).

         c. The Administrative Exemption

         An employee falls under the administrative exemption when (1) the employee is “compensated on a salary or fee basis at a rate of not less than $455 per week”; (2) the employee's “primary duty is the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer's customers”; and (3) the employee's “primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.” 29 C.F.R. § 541.200(a).[49]

         While Smith concedes that the first element is met, [50] he contends that Ochsner has not established beyond dispute the second and third elements.

         i. The Second Element: Whose Primary Duty Is the Performance of Office or Non-Manual Work Directly Related to the Management or General Business Operations of the Employer or the Employer's Customers

         Under this second element, the question is whether Smith's primary duty as a transplant coordinator is the performance of office or non-manual work directly related to the management or general business operations of Ochsner or Ochsner's customers. The term “primary duty” is defined as the “principal, main, major or most important duty that the employee performs.” 29 C.F.R. § 541.700(a). Courts consider the following non-exhaustive factors: (1) “the relative importance of the exempt duties as compared with other types of duties”; (2) “the amount of time spent performing the work”; (3) “the employee's relative freedom from direct supervision”; (4) “the relationship between the employee's salary and the wages paid to other employees for the kind of nonexempt work performed by the employee.” Id. While time is not the sole test, “employees who spend more than 50 percent of their time performing exempt work will generally satisfy the primary duty requirement.” Allen v. Coil Tubing Servs., L.L.C., 846 F.Supp.2d 678, 707 (S.D. Tex. 2012) (quoting 29 C.F.R. § 541.700(b)). Additionally, job responsibilities that “are of principal value to the employer” are considered primary. Id. at 706-07 (quoting Dalheim, 918 F.2d at 1227).

         Office or non-manual work is distinguished from “work involving repetitive operations with … hands, physical skill and energy, ” such as that done by “non-management production-line workers and non-management employees in maintenance, construction and similar occupations such as carpenters, electricians, [and] mechanics.” 29 C.F.R. § 541.601(d).

         For the duty to be “directly related to the management or general business operations of the employer or the employer's customers, ” the type of work must be “directly related to assisting with the running or servicing of the business, as distinguished, for example, from working on a manufacturing production line or selling a product in a retail or service establishment.” Id. § 541.201(a). The employee's duties, rather than the job title alone, are significant. Id. § 541.200. The regulation describes “work directly related to management or general business operations” in an illustrative list of “work in functional areas such as tax; finance; accounting; budgeting; auditing; insurance; quality control; purchasing; procurement; advertising; marketing; research; safety and health; personnel management; human resources; employee benefits; … [and] legal and regulatory compliance.” Id. § 541.201(b). The Fifth Circuit distinguishes such work from “production activity” that creates a commodity sold by the employer. See Dewan v. M-I, L.L.C., 858 F.3d 331, 336 (5th Cir. 2017). This distinction has been termed “the administrative-production dichotomy.” Id. at 336 (citing Dalheim, 918 F.2d at 1230). However, the dichotomy has limited application when the employer provides a service rather than a product. Id. (citing Davis v. J.P. Morgan Chase & Co., 587 F.3d 529, 532 (2d Cir. 2009)). Rather, many courts describe the key distinction to be “between employees directly producing the good or service that is the primary output of a business and employees performing general administrative work applicable to the running of any business.” Davis, 587 F.3d at 535-37 (collecting cases); see also Dewan, 858 F.3d at 337-38.[51]

         In examining the administrative exemption, the Fifth Circuit in Zannikos v. Oil Inspections (U.S.A.), Inc. directly compared the employees' duties to the “functional” examples in 29 C.F.R. § 541.201(b). 605 Fed.Appx. at 353 (5th Cir. 2015). There, the Fifth Circuit upheld the district court's finding that marine superintendents satisfied the second element of the administrative exemption - namely, that the employees' office or non-manual work directly related to the management or general business operations of the employer or its customers. Id. at 354. The employer oversaw oil cargo transfers “to ensure that the oil is transferred in accordance with industry standards and customer specifications.” Id. at 351. It employed marine superintendents to “observe[] oil transfers to verify that performance was accurate, legal, and safe.” Id. Among other duties, marine superintendents “monitored and reported on transfers' compliance with [the employer's] safety policies and nationally recognized safety standards; and performed quality control functions, including inspecting loading and discharging equipment, identifying problems with equipment safety or calibration, and recommending remedial measures.” Id. The plaintiffs' duties were “not considered production” because they “primarily included supervision, quality control, and ensuring compliance with applicable standards, ” which also “included work in several functional areas explicitly listed as administrative in Section 541.201(b), including quality control, safety, and legal and regulatory compliance.” Id. at 353.

         In contrast, the Fifth Circuit in Dewan v. M-I, L.L.C., 858 F.3d 331, 338 (5th Cir. 2017), found that mud engineers, unlike the superintendents in Zannikos, did not unquestionably exercise a supervisory role in ensuring compliance with health and safety standards. There, mud engineers were tasked with ensuring that properties of drilling fluid matched specifications set forth in a “mud plan” prepared by project engineers. Id. at 333. In reversing the district court's summary judgment in favor of the employer, the Fifth Circuit reasoned that “quality control” as listed in the regulations meant broadly ensuring the quality of the mud delivered to customers, “not … monitoring and adding materials to the mud as it is being used in drilling wells to ensure that its properties stay within the specifications set forth in the mud plan developed by project engineers.” Id. at 337. Therefore, the Fifth Circuit held that disputes of material fact existed as to whether the mud engineers fell under the administrative exemption. Id. at 333.

         In advancing the administrative exemption as to Smith, Ochsner compares his duties to several of the illustrative examples of “work in functional areas” listed in 29 C.F.R. § 541.201(b), including quality control, purchasing, procurement, and legal and regulatory compliance.[52]Ochsner emphasizes that procurement was at the core of an organ procurement coordinator's duties and responsibilities.[53] Ochsner contends that “quality control … could be argued as one of the main function [sic] of Plaintiff's position, ” given that organ procurement coordinators must ensure the quality of organs for Ochsner's patients, and that organ procurement coordinators “were largely responsible for the literal procurement, or recovery, of organs … for Ochsner's patients.”[54]Organ procurement coordinators were also responsible for purchasing supplies, which could exceed $10, 000 per order, and which required no pre-approval.[55] Ochsner also urges that Smith contributed to legal and regulatory compliance by correctly advocating for Ochsner to receive an organ when LOPA violated UNOS protocol by withholding it.[56] Finally, Ochsner contends that Smith's role in hiring new candidates contributed to Ochsner's general business operations.[57]

         While not disputing that Smith's primary duties consisted of office or non-manual work, [58]Smith contends that Ochsner mischaracterizes his duties as administrative when, in fact, they were production-oriented, in that Smith primarily helped to “produce” organ transplants. Smith claims that he “exercised zero control over what organs are available nor ensured the quality of those available organs, ” because the donor matching program and UNOS protocol determined availability, and the surgeon determined quality.[59] Moreover, to the extent that he purchased supplies, Smith contends Ochsner puts forward no evidence to show that doing so was his primary duty during the statutory period, nor that $10, 000 orders were of relative importance in Ochsner's general business operations. Smith emphasizes that his job title as “organ procurement coordinator” is irrelevant to whether his job entails procurement related to Ochsner's general business operations under the FLSA regulations; in contrast to business procurement and purchasing agents who enter into contracts on behalf of Ochsner, Smith merely worked with resources already procured (or contracts already negotiated) in arranging organ transportation. Finally, Smith argues that he did not ensure Ochsner's general legal or regulatory compliance; rather, operating under LOPA's and UNOS's strict protocol for organ transplants, Smith suggests that he was merely the regulated party.[60]

         There really is no dispute that Smith's primary duty was that of donor coordinator.[61] In that role, Smith was tasked with providing a “provisional yes” when the organ fit UNOS's regulatory criteria and saying “no” when it did not. These functional duties entailed aspects of quality control and legal and regulatory compliance not unlike the employees in Zannikos who ensured the quality and regulatory compliance of oil transfers. Organ procurement coordinators like Smith play a central role in ensuring the quality and regulatory compliance of Ochsner's business of transplantation. After all, it is Ochsner (not just Smith) that is the regulated entity, and Ochsner depended upon Smith to administer its program of organ procurement and transplant to comply with the legal and regulatory requirements imposed on Ochsner. While Smith's job title as “organ procurement coordinator” is not determinative, it is accurately descriptive, in that Smith's job involves the procurement of organs - a primary duty related to Ochsner's business operation of providing transplant medical services. Moreover, though perhaps not his primary duty, it is undisputed that Smith performed other administrative duties such as ordering supplies that could cost Ochsner $10, 000 or more, arranging for the transportation of the donated organs, and interviewing candidates for positions in Ochsner's transplant department. In sum, even viewing the uncontested facts and inferences in the light most favorable to the nonmovant, the Court concludes, like the court in Zannikos, that Smith's work as a transplant coordinator was office or non-manual and directly related to the management or general business operations of Ochsner in the functional areas of quality control, procurement, and legal and regulatory compliance. Hence, the second element of the administrative exemption is satisfied.

         ii. The Third Element: Whose Primary Duty Includes the Exercise of Discretion and Independent Judgment with ...


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