Kaiser To Pay $5 Million For Shorting Workers

SAN DIEGO (CN) - Insurance company Kaiser, masquerading as a healthcare organization, has agreed to pay $5 million to technical employees it shorted on overtime.

A dispute over unpaid overtime wages against a prominent healthcare company is one step closer to resolution after a federal court approved a preliminary class action settlement.

Kaiser Foundation Health Plan developed an internal computer system called Health Connect, and required numerous technical employees to work in excess of 40 hours a week as part of the program's "Go Live" phase. Specialists were required to be on call 24 hours a day, seven days a week in some instances, and in other instances were required to work up to 13 hours per day for six days per week.

Kaiser denied these employees overtime wages on grounds that they were exempt from overtime wage laws because the employees were executive, administrative, or professional employees.

Plaintiffs disputed this categorization and sued for violation of overtime wage laws, seeking over $6 million in damages.

The parties negotiated a settlement, and petitioned the district court for approval of the settlement. Judge Irma Gonzalez of the Southern District granted the petition, first certifying the class before approving the settlement.

"There are 619 product specialists and 151 site support specialists involved in this litigation. They are far too numerous to be joined as plaintiffs in this lawsuit. The proposed class satisfies the numerosity requirement.

"The plaintiffs have satisfied the commonality requirement. Kaiser's alleged misclassification [of plaintiffs] is the basis for the claims of both the named plaintiffs and the proposed class. This misclassification is uniform across the class and satisfies the commonality requirement.

"In the instant case, plaintiffs satisfy the typicality requirement. The claims of both the named plaintiffs and the members of the class arise from Kaiser's conduct, involve similar work performed in connection with the computer systems, and originate from the same legal theories.

"Predominance requires more than proof of common issues of law or fact. The common questions must present a significant aspect of the case that can be resolved for all members of the class in a single adjudication. Here, the plaintiffs had uniformity in work duties and experiences that diminish the need for an individualized inquiry. Members of the putative class had the same job titles, work duties, work experiences, and Kaiser uniformly applied the exemption to members of the class.

"Therefore, common questions predominate. For the foregoing reasons, the court grants preliminary certification to the class for purposes of settlement."

The court then turned to approving the settlement itself.

"Plaintiffs found two primary weaknesses in their case. First, they were uncertain whether the court would find the administrative exemption, as defined in two federal regulations, bars recovery. Additionally, plaintiffs feared two federal decisions might persuade the court to find plaintiffs exempt.

"In Bagwell v. Florida Broadband, the court found a network operation engineer exempt because of his primary duty to develop, improve, and ensure the reliability of a network. In Koppinger v. American Interiors, the court found a plaintiff exempt because of his responsibility to maintain the company's computers.

"Second, plaintiffs worried the class would not be certified duo to a predominance problem. Based on these considerations and the issue with predominance already noted, this factor weighs in favor of preliminarily approving the settlement.

"The claims against Kaiser totaled $6,016,568.39. The settlement payment of $5,400,000 constitutes 89.75% of the subject claims. Even after deducting attorney's fees and costs, and class representative incentive awards the Net Fund Value is still $3,725,000 or 62% of full recovery. This factor weighs toward finding the settlement is fair, reasonable and adequate.

"Class counsel has conducted extensive informal discovery and has sufficient information to make an informed decision about settlement. Class counsel served interrogatories, inspection demands, and notices of depositions to Kaiser. Kaiser provided records and data in response to plaintiffs' discovery requests.

"Plaintiffs had sufficient time to examine the records and submitted the records to a class action damage analysis expert for review. Class counsels' extensive investigation, discovery and research weighs in favor of preliminary settlement approval.

"The court grants the parties' motion for preliminary certification of the class for settlement purposes, and preliminary approval of the settlement."

Plaintiff is represented by Norman Blumenthal at Blumenthal and Nordrehaug.

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