MEMORANDUM-DECISION and ORDER*fn1
Pending before the Court are Motions seeking the certification and the denial of certification of proposed Rule 23 classes for alleged violations of New York, California, and Illinois wage and hour laws. See Dkt. Nos. 197, 198, 200, 204. For the reasons that follow, Plaintiffs' consolidated Motion for class certification (Dkt. No. 204) is denied, and Defendant's Motions for denial of certification of a New York Rule 23 class (Dkt. No. 197); a California Rule 23 class (Dkt. No. 198); and an Illinois Rule 23 class (Dkt. No. 200) are granted.
Plaintiffs are all registered nurses ("RNs"), employed, or previously employed by Defendant WellPoint, Inc. ("Defendant" or "WellPoint") in the position of "Utilization Review Nurse," "Case Management Nurse," or "Medical Management Nurse." Am. Compl. (Dkt. No. 166) ¶ 1. WellPoint, one of the nation's largest health benefits companies, is a complex corporate entity headquartered in Indianapolis, Indiana, which provides health insurance benefits and services to approximately 34 million customers nationwide. Among the services WellPoint provides are "medical management," "case management," and "utilization review."*fn2 Formed in 2004, WellPoint has a corporate presence in California, Colorado, Connecticut, Georgia, Indiana, Kentucky, Maine, Missouri, Nevada, New Hampshire, New York, Ohio, Virginia, and Wisconsin. See Ginzinger Decl. (Dkt. No. 53-3) ¶¶ 2-4.
WellPoint's current structure is the result of numerous mergers and acquisitions, some of which are pertinent to the instant Motions. See Ginzinger Decl. (Dkt. No. 53-3) ¶¶ 3-4; WelkerFinney Decl. (Dkt. No. 200-2) ¶¶ 4-6. In 1992, Blue Cross of California created a for-profit entity, WellPoint Health Networks Inc., to operate its managed care business. Blue Cross of California, a managed care program in California, and Blue Cross Life and Health Insurance Company, an insurance program in California, became subsidiaries of WellPoint Health Networks Inc., operating under the trade names Anthem Blue Cross and Anthem Blue Cross Life & Health Insurance Company (collectively "Anthem Blue Cross"). Welker-Finney Decl. (Dkt. No. 200-2) ¶¶ 4-6.
UniCare Life & Health Insurance Company ("UniCare") existed as another subsidiary of WellPoint Health Networks Inc. and in 1995 became the brand name for the parent company's non-Blue Cross Blue Shield businesses operating outside of California. In early 2000, WellPoint Health Networks Inc. acquired Rush Prudential Health Plazas in Illinois. Id. ¶ 5.
WellPoint, Inc. was formed in November 2004, when WellPoint Health Networks Inc. merged with Anthem, Inc. Ginzinger Decl. ¶ 3-4; Welker-Finney Decl. (Dkt. No. 200-2) ¶¶ 4-6. Anthem Blue Cross continues to operate in numerous locations throughout California, including Anaheim, Camarillo, Costa Mesa, Fresno, Glendale, Los Angeles, Modesto, Newbury Park, North Hollywood, Oakland, Pomona, Rancho Cordon, Sacramento, San Bernardino, San Diego, San Francisco, San Jose, Santa Barbara, Thousand Oaks, Visalia, Walnut Creek, West Hills, and Woodland Hills; it employs registered nurses in the following job positions: Nurse Case Manager I, Nurse Case Manager II, Nurse Case Manager Senior, Nurse Case Manager Lead, Nurse Medical Management I, Nurse Medical Management II, Nurse Medical Management Senior, and Nurse Medical Management Lead. Welker-Finney Decl. (Dkt. No. 200-2) ¶ 7-8. Unicare continues to operate in a number of locations in Illinois, including: Chicago, Deerfield, Mt. Vernon, Schaumburg, and Westchester; it employs registered nurses in the following job positions: Nurse Case Manager I, Nurse Case Manager II, Nurse Case Manager Senior, Nurse Case Manager Lead, Nurse Medical Management I, Nurse Medical Management II, Nurse Medical Management Senior, Nurse Medical Management Lead, and HMC Nurse Care Manager Senior. Id. ¶¶ 9-10.*fn3
Subsequent to its formation, WellPoint continued expanding its operations, including through its December 2005 acquisition of WellChoice Inc. and WellChoice Inc. subsidiary, Empire Blue Cross Blue Shield ("Empire"). Through that deal, WellPoint acquired Empire's New York operations, including those in Albany, Brooklyn, Melville, and New York City. Pekrol Decl. (Dkt. No. 197-1, Ex. 6) ¶¶ 1, 3. Under Empire, all nurse employees, regardless of their duties, carried the same title, "Case Manager." Id. ¶ 6. Following Empire's acquisition by WellPoint, all of Empire's employees became employees of WellPoint. As part of the restructuring, nurse employees previously designated uniformly as "Case Managers" took on various job titles including "Utilization Review Nurse," "Medical Management Nurse," and "Case Manager Nurse." Id.
According to WellPoint, the legacy organizations from which its current structure is derived employed registered nurses in differently titled positions who performed a wide array of duties that varied based on the entity that employed them. Ginzinger Decl. WellPoint insists that variation survives to date, yielding significant differences among its nurses nationwide in terms of the duties they perform and their compensation structure both within and across job categories. See, e.g., Ginzinger Decl. (Dkt. No. 53-3); Pekrol Decl. ¶ 8; Fooks Decl. (Dkt. No. 200-6) ¶ 10; Nieweglowski Decl. (Dkt. No. 200-6) ¶ 7. Nurses in the job titles at issue work in a variety of different departments, often specializing in discrete areas of WellPoint's business, and are employed in different settings including large buildings, small office complexes, hospitals, and their own homes. Dkt. No. 53 at 4-5. Nevertheless, Plaintiffs contend that WellPoint has devoted itself to a program of "job mapping" that has achieved substantial uniformity nationwide, and they have submitted job descriptions for the "job families" of Medical Management and Case Management that they claim are applicable to all WellPoint employees. Mem. in Supp. Mot. to Certify (Dkt. No. 204-2) ("Pls.' Certification MOL") at 15-16; Selby Dep. at 64-72, 77-80, 85-89, 101, 120-21; Srey Aff, Exs. D-E (Dkt. Nos. 204-7, 204-8). Each job family contains several subcategories, or grades, and while some of the "Core Content" and "Roles" for the subcategories overlap, variation based on grade is also readily apparent in the descriptions. For example, in the Medical Management family, all grades conduct pre-certification, concurrent, and retrospective reviews, guide customers to covered care options, identify discharge planning needs, and work with hospitals and healthcare providers; the higher grades handle complex cases, act as company representatives, develop training materials, and monitor and prioritize workflows. See Dkt. No. 204-7. Similarly, in the Case Management family, all grades conduct assessments to identify insured's needs and goals, prepare and implement suitable case management plans, link policy holders with appropriate care facilities and providers, and participate in "rounds." The higher grades are described as fulfilling additional functions, such as acting as a preceptor, facilitating conflict resolution, monitoring workflows, and evaluating the Utilization Management processes. Dkt. No. 204-8. Both job families' descriptions note that all grades shall be expected to "[p]erform other related duties as required."
Some WellPoint nurses utilize various guidelines and regulations, produced or endorsed by WellPoint, as tools in making their managed care recommendations. These include, but are not limited to the Milliman Guidelines, WellPoint Clinical Guidelines, NICU Guidelines, ACOEM Guidelines, MTUS Guidelines, and McKesson Guidelines. See, e.g., Whitney Decl. ¶ 6; Parisi Dep. (Dkt. No. 215-15) at 29; Kennedy Dep. (Dkt. No. 204-14) at 17:1-3. From the interrogatory responses and deposition testimony, the Milliman Guidelines appear to be widely used in utilization review. Numerous deponents and declarants attest to collecting clinical information on an insured, comparing these against the insured's policy and the Milliman Guidelines and approving the requested benefit or service if the relevant Milliman criteria were met; if they were not met, under WellPoint policies, the nurse could not deny the request but would send the insured's information to a physician reviewer. But see Sager Dep (Dkt. No. 214-15) at 49-51 (Nurses in Nation Accounts can authorize a requested benefit even if it does not meet the guidelines). Similar testimony exists from Case Managers, with WellPoint care plans providing the criteria for evaluating an insured's needs and generating appropriate care plans. See Pls.' Certification MOL at 7-13 (overviewing certain testimony).
The Milliman Guidelines open with a disclaimer:
The appropriate use of these Guidelines requires professional medical judgment . . . . Professional medical judgment is required in all phases of the health care delivery and management process that should include consideration of the individual circumstances of any particular patient. These Guidelines are not intended as a substitute for this important professional judgment.
Use of the Guidelines as a basis for denying authorization for treatment without proper consideration of the unique characteristics of each patient or as a basis for denying payment for treatment received is an inappropriate use of the Guidelines.
Milliman Care Guidelines: Inpatient and Surgical Care, 8th ed. (Dkt. No. 216-4) at viii. The Guidelines' Introduction reiterates this point: "Use of the Guidelines requires, and never replaces, clinical judgment." Id. at 1.
WellPoint issues company-wide policies emphasizing that it does not provide medical services and strives to avoid the appearance of providing such services. The policies coach employees on the correct vocabulary to employ so as to ensure the understanding that WellPoint nurses assist in providing health benefits, health education, and other health related services for "members," but do not engage in the practice of medicine for "patients." Srey Aff., Ex. A, WellPoint Do's and Don't(s) Guidelines (Dkt. No. 204-4).
On February 21, 2008, Plaintiffs Fay Ruggles, Antoinette Boone, and Georgia Woodruff, on behalf of themselves and all similarly situated employees, filed a class action and collective action Complaint, alleging, inter alia, that Defendant failed to pay required overtime compensation in violation of the Fair Labor Standards Act ("FLSA"), 29 U.S.C. §§ 201 et seq., and state labor law and regulations. Compl. (Dkt. No. 1). Ruggles, Boone, and Woodruff claim that Defendant's failure to pay overtime wages results from its improper classification of utilization review nurses, case management nurses, and medical management nurses as "exempt" salary employees. Id. Accordingly, they brought a collective action under the FLSA on behalf of all persons who Defendant employed nationwide in those three job categories. Id. Defendant denies any violation and avers that the nurses in the relevant positions qualify under the "administrative" or "professional" exemptions provided for by state and federal law. Answer (Dkt. No. 79). On largely the same facts, Plaintiff Ruggles asserts a claim arising under New York Labor Law §§ 190 et seq., New York Labor Law §§ 650 et seq., and the New York State Department of Labor Regulations, 12 N.Y.C.R.R. Part 142. Compl. ¶ 21. Ruggles brings the New York claim as a class action, pursuant to Federal Rule of Civil Procedure 23. Compl. ¶¶ 9, 19; see also Am. Compl. ¶ 25.
On May 5, 2008, Defendant moved to dismiss or strike the New York class action allegations and claims for individual relief asserted by Ruggles, and to dismiss or strike certain claims arising under the FLSA. Dkt. No. 19. Shortly thereafter, Ruggles, Boone, and Woodruff moved for conditional certification and court-authorized notice pursuant to 29 U.S.C. § 216(b). Dkt. No. 37. On September 24, 2008, this Court largely denied Defendant's Motion to dismiss, and found that while Plaintiffs' Complaint was facially sufficient, certification of the proposed Rule 23 class would be premature as there was insufficient evidence at that juncture to determine whether the conditions for certification are met. Ruggles v. Wellpoint, Inc., 253 F.R.D. 61, 65-67 (N.D.N.Y. 2008) (Kahn, J.). The Court noted, [t]o determine whether Plaintiff Ruggles is entitled to certification of the putative New York class, the Court requires a significant amount of information that will likely surface in discovery. Namely, the similarity or dissimilarity of the three job classifications Plaintiff Ruggles seeks to represent is an outstanding factual question that is central to the scope of the putative class. Without evidence addressing the actual duties of case management nurse, medical management nurse, and utilization review nurse . . . the Court cannot be assured that any of the four prerequisites delineated in Rule 23(a) are satisfied.
On November 6, 2008, Magistrate Judge Treece granted conditional certification under the FLSA (the "FLSA class"), ordering that "the class of potential opt-in plaintiffs entitled to notice is defined as utilization review nurses, case management nurses, and medical management nurses . . . nationwide during the three-years prior to the filing of the Complaint." Dkt. No. 73. On October 16, 2009, after the expiration of the FLSA opt-in period, Plaintiffs filed an Amended Complaint, re-alleging the earlier claims; naming Maurice Billman, Karen Hawkins, Harriet Childress, and Nancy Coleman as additional Plaintiffs (collectively with Ruggles, Boone, and Woodruff, the "Named Plaintiffs"); asserting additional state law claims under California and Illinois wage and hour laws on behalf of the individual Named Plaintiffs and as Rule 23 class actions. Dkt. No. 166. The Amended Complaint states seven causes of action, each for essentially the same conduct, improperly classifying the Named Plaintiffs and proposed class members as "exempt" salary employees under federal and state labor laws that mandate overtime wages for hours worked over forty hours per week. The claims for relief are brought as follows: the first under the FLSA; the second under New York Labor Law Article 19, §§ 650 et seq. and 12 N.Y.C.R.R. 142; the third through sixth under California Wage Order No. 4, the California Labor Code §§ 510 and 1198, 226 and 1174, and 201, 202, and 203, and California Unfair Competition Law, California Business and Professional Code § 17200 et seq.; and the seventh under the Illinois Minimum Wage Act, 820 Ill. Comp. Stat. § 105/1, et seq., and the regulations promulgated thereunder, Ill. Admin. Code, tit. 56 §§ 210.100 et. seq.
Discovery has proceeded with great divisiveness between the parties, requiring numerous discovery-related conferences and court orders by Magistrate Judge Treece. The scope of discovery was partially resolved by Judge Treece's January 4, 2010 Memorandum-Decision and Order, which allowed ten interrogatories, drafted by the Court, to be directed to each opt-in Plaintiff, but limited depositions to 25% of randomly selected Plaintiffs and restricted these depositions to 2.5 hours each. Dkt. No. 176. The interrogatories provided by the Court include requests for Plaintiffs to identify and produce degrees, diplomas, certificates, and licenses; state the number of hours worked as a case management, utilization review, or medical management nurse; and describe the duties and responsibilities associated with those positions and the amount of time devoted to each on a daily basis. Dkt. No.176, App. A.
After extensive discovery, on March 26, 2010, Defendant preemptively filed three separate Motions to deny Rule 23 class certification of the New York class (Dkt. No. 197), Illinois class (Dkt. No. 200), and California class (Dkt. No. 198). On March 30, 2010, the Named Plaintiffs filed a Consolidated Motion to certify all three classes pursuant to Rule 23(b)(3). Dkt. No. 204. The Named Plaintiffs seek to be designated class representatives and Nichols Kaster, PLLP to be named class counsel.*fn4 Pls.' Certification MOL at 35. Each side has attached to its various submissions hundreds of pages of deposition testimony from numerous putative class members, declarations, interrogatory responses, documentation of WellPoint policies, job descriptions, and other materials. Plaintiff argues this documentation supports class certification; Defendant asserts it demonstrates the unsuitability of the class action vehicle to this litigation.
Under New York Department of Labor Regulations, "[a]n employer shall pay an employee for overtime at a wage rate of one and one-half times the employee's regular rate in the manner and methods provided in and subject to the exemptions of sections 7 and 13 of 29 U.S.C. § 201."*fn5 12 N.Y.C.R.R. § 142-2.2. While the Regulations expressly reference the exemptions of the FLSA, New York law also contains its own exemptions. See 12 N.Y.C.C.R.R.142-3.12(c)(2). Thus, state and federal regulation exempt those who "work in a bona fide executive, administrative, and professional capacity from these overtime wage laws." Id.; N.Y. LAB. LAW § 651(5)(c); 29 U.S.C. § 213(a)(1); Reiseck v. Universal Commc'ns of Miami, Inc., 591 F.3d 101, 105 (2d Cir. 2010).
Illinois law generally requires employers to compensate non-exempt employees at not less than one and one-half times their regular rate for any work performed in excess of forty hours per workweek. See 820 ILL. COMP. STAT. 105/4a(1). An exemption applies to "[a]ny employee employed in bona fide executive, administrative or professional capacity . . . as defined by or covered by the Federal Fair Labor Standards Act of 1938 and the rules adopted under that Act . . . ." 820 ILL. COMP. STAT. 105/4a(2)(E); Ross v. RBS Citizens, N.A., No. 09 CV 5695, 2010 WL 3980113, at *7 n.9 (N.D. Ill. Oct. 8, 2010).
Under California law, subject to certain exemptions, employers must pay employees an overtime rate of not less than one and one-half times their regular rate where such employees work more than eight hours in any workday or more than forty hours in any workweek. CAL. LAB. CODE §§ 510, 1198; Cal. Indus. Welfare Comm'n Wage Order ("IWC Wage Order") 4-2001. State law additionally requires that, at the time of each payment of wages, an employer shall provide each employee with a wage statement itemizing, among other things, the total hours worked by the employee in the pay period. CAL. LAB. CODE § 226(a).
As noted, both New York and Illinois law incorporate, at least in part, the exemptions from the overtime pay requirement that are provided for under the FLSA and its attendant regulations.*fn6 See 29 U.S.C. § 213(a)(1) (exempting those "employed in a bona fide executive, administrative, or professional capacity"). Under the United States Department of Labor's ("DOL") Regulations the administrative employee exemption applies to any employee:
(1) Compensated on a salary or fee basis at a rate of not less than $455 per week . . .;
(2) Whose primary duty is the performance of office or non-manual work directly related to the management or general business operations of the employer . . . ; and
(3) Whose primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.
29 C.F.R. § 541.200(a). For the purpose of this exemption the Regulations define "primary duty" asthe principal, main, major or most important duty that the employee performs. Determination of an employee's primary duty must be based on all the facts in a particular case, with the major emphasis on the character of the employee's job as a whole. Factors to consider when determining the primary duty of an employee include, but are not limited to, the relative importance of the exempt duties as compared with other types of duties; the amount of time spent performing exempt work; the employee's relative freedom from direct supervision; and the relationship between the employee's salary and the wages paid to other employees for the kind of nonexempt work performed by the ...