Deakin v. Magellan Health, Inc., et al

Filing 357

ORDER by District Judge Matthew L. Garcia GRANTING 284 Motion for Summary Judgment (fs)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW MEXICO
____________________
MAUREEN DEAKIN, RACHEL CLERGE,
CHERYL JOHNSON, LESLEY MITCHELL,
MAY WOJCIK, DALE KESSLER,
and all others similarly situated,
Plaintiffs,
v.

Case No. 1:17-cv-00773-MLG-KK

MAGELLAN HEALTH, INC., and
MAGELLAN HSRC, INC.,
Defendants.
MEMORANDUM OPINION AND ORDER
Plaintiff Maureen Deakin worked as a care coordinator (“CC”) for Defendants Magellan
Health, Inc., and Magellan HSRC, Inc. (collectively “Magellan”), to provide care coordination
services to New Mexico Medicaid members. Deakin, and the class of CCs she represents, 1 seeks
to recover unpaid overtime wages from Magellan under the Fair Labor Standards Act of 1938
(“FLSA”), 29 U.S.C. § 201 et seq., and the New Mexico Minimum Wage Act (“NMMWA”),
NMSA 1978, § 50-4-19, et seq. See generally Doc. 121. Magellan’s primary defense is that Deakin,
as class representative, was an administrative employee and therefore exempt from state and
federal overtime requirements. 2 Doc. 122 at 48 ¶ 373. Deakin now moves for summary judgment
on this specific issue. Doc. 284 (“Motion”). Having reviewed the relevant filings and the applicable

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The Court certified Deakin’s proposed class in a separate order. See Doc. 355.

2

Magellan also raised the FLSA’s professional exemption as a defense to Deakin’s claims. Doc.
122 at 48, ¶ 372. However, Magellan now concedes that the professional exemption does not apply.
Doc. 296 at 11 n.3.
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law and having held a hearing on the motion on January 17, 2024, Doc. 340, the Court grants
Deakin’s Motion.
BACKGROUND
I.

Care Coordination Process
The New Mexico Human Services Department (“HSD”) has implemented several
programs intended to increase access for care to our state’s Medicaid recipients. See Doc. 283-1 at
1-3. Among these efforts is the implementation of a “care coordination infrastructure” whereby
managed care organizations (“MCOs”) provide care coordination services to “members.” 3 Id. at
4. Care coordination services, as the name suggests, are how MCOs enable members to access the
full panoply of available healthcare services. Id. at 3. HSD contracts with several MCOs, including
Presbyterian Health Plan (“PHP”), to provide care coordination services to New Mexico’s
Medicaid population pursuant to a managed care services contract (“HSD Contract”). See id. at 3;
see generally Doc. 283-3. PHP, in turn, subcontracts with Magellan to assist with its contractual
obligations, including care coordination services. See generally Doc. 283-5; see also Doc. 283-15
at 14; Doc. 283-16 at 2, 11:18-20. Magellan’s contract with PHP mandates strict adherence to all
care coordination requirements contained in the HSD Contract. Doc. 283-5 at 4; Doc. 283-16 at 3,
12:2-5; see also Doc. 233-1 at 2.
Deakin and other CCs are tasked with implementing the care coordination process, which
begins with an initial health risk assessment of a newly enrolled member or one who had a change
in health care condition to obtain basic health and demographic information. See Doc. 283-3 at 7
(setting the general requirements for the care coordination process). The CC completes this initial

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Members are individuals enrolled in New Mexico’s Centennial Care Program (i.e., Medicaid)
who are entitled to receive physical, behavioral, and long-term care services from MCOs. See, e.g.,
Doc. 283-5 at 3 ¶¶ M, P; 5 ¶¶ EE, JJ; see also Doc. 283-1 at 3.
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assessment through the administration of a survey tool, which is comprised of a series of predetermined questions. See id. at 8-10. If the member’s responses to that questionnaire indicate
certain health risks, then the CC administers a second survey tool, referred to as a Comprehensive
Needs Assessment (“CNA”). Id. at 11. Like the initial health risk assessment, the CNA is a
standardized questionnaire. Id. at 12; see also Doc. 283-16 at 19-20, 103:25-104:4.
After completing the CNA, the CC enters the member’s responses into a computer and an
algorithm assigns a “Care Coordination level” of 1, 2, or 3. Doc. 283-3 at 10 ¶ 4.4.3.1. At levels 2
and 3, the CC generates a care plan based on the CNA and follows up with Touchpoint evaluations.
Id. at 17 ¶ 4.4.9.1. These Touchpoints are simply phone calls or in-person visits to check on the
member’s compliance and comfort with the care plan. See id. at 14, 16; Doc. 283-16 at 18, 102:24; Doc. 283-17 at 5, 105:6-9.
To ensure compliance with all contractual obligations, Magellan’s CCs are subject to close
supervision and continual auditing. See Doc. 283-16 at 10-11, 61:21-62:10 (Chief Operating
Officer (“COO”) Sarah Lopez’s testimony detailing the extensive audit process for Magellan’s
care coordination services). Magellan utilizes a variety of audit processes to closely track CCs’
performance and work product, from the number of care plans and CNAs performed, see Doc.
283-13, to production timelines and care plan completion. See Doc. 283-11.
II.

Deakin’s Work as a CC and the Initiation of Litigation
Deakin worked as a care coordinator for Magellan from September 2016 to December
2017. Doc. 283-7 at 7, 164:19-24; Doc. 283-8 at 1. Her duties included personal visits with
members to complete CNAs, Doc. 296-1 at 40-41, 31:20-33:4, and following up to ensure that the
resultant care plans were effective. See id. at 52, 89:3-21. Deakin spent approximately eighty
percent of her time inputting the data necessary to produce CNAs and care plans, along with an

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additional unspecified amount of time on Touchpoints. Doc. 283-7 at 8, 301:1-18. Magellan
audited Deakin to ensure that she carried out her duties within contractually obligated timeframes.
Id. at 9, 316:4-22. When Deakin did not meet her required metrics, Magellan placed her on a
performance improvement plan and specifically noted her inability to adhere to the timelines set
by the HSD and PHP Contracts. See Doc. 283-9 at 1-2, 4-5, and 7. Magellan ultimately fired
Deakin while she was on medical leave. Doc. 284 at 5.
Deakin subsequently sued Magellan to recover allegedly unpaid overtime wages for herself
and her fellow CCs under the NMMWA and the FLSA. See generally Doc. 121. Magellan denies
liability asserting that Deakin is not entitled to overtime wages because CCs are exempt from
overtime pay under the FLSA’s administrative exemption. Doc. 122 at 48 ¶ 373. Deakin now seeks
summary judgment on that matter. Doc. 284.
STANDARD OF REVIEW
Summary judgment is proper where “the movant shows that there is no genuine dispute as
to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.
56(a). When applying this standard, the Court views the evidence and draws reasonable inferences
in the light most favorable to the nonmoving party. Utah Animal Rts. Coal. v. Salt Lake Cnty., 566
F.3d 1236, 1242 (10th Cir. 2009). The moving party bears the burden to establish that no genuine
issue of material fact exists. Adamson v. Multi Cmty. Diversified Servs., Inc., 514 F.3d 1136, 1145
(10th Cir. 2008). A fact is material if it could influence the outcome of the lawsuit under the
applicable law. Id. A dispute over a material fact is genuine if a rational jury could find for the
nonmoving party based on the evidence presented. Id. So, the inquiry on a motion for summary
judgment is “not whether [the judge] thinks the evidence unmistakably favors one side or the other

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but whether a fair-minded jury could return a verdict for the [nonmoving party] on the evidence
presented.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986).
DISCUSSION
The FLSA and the NMMWA require employers to pay overtime wages to workers who
perform more than forty hours of work per week. 29 U.S.C. § 207(a); NMSA 1978, § 50-4-22(D)
(2021). Certain employees are exempt from overtime requirements, including those “employed in
a bona fide executive, administrative, or professional capacity.” 29 U.S.C. § 213(a)(1); NMSA
1978, § 50-4-21(C)(1) (2021). Whether a particular job duty falls within that exemption is
determined by reference to United States Department of Labor (“DOL”) regulations. 4 See
generally 29 C.F.R. §§ 541.0-541.710 Those regulations provide that an “employee employed in
a bona fide administrative capacity” (and therefore an employee exempt from overtime laws) as
one who: (1) is salaried at a rate of at least $844 per week; 5 (2) “[w]hose 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) “[w]hose primary duty includes
the exercise of discretion and independent judgment with respect to matters of significance.” 29
C.F.R. § 541.200(a)(1)-(3) (effective July 1, 2024). Thus, the question presented is whether

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While the NMMWA has no analogous set of interpretive regulations, New Mexico courts
frequently look to federal regulations when addressing the NMMWA’s exemptions. See Rivera v.
McCoy Corp., 240 F. Supp. 3d 1150, 1155 (D.N.M. 2017) (collecting New Mexico cases applying
federal minimum wage regulations).
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The 2016 and 2020 versions of 29 C.F.R. § 541.200 were effective during this lawsuit and set a
salary amount of not less than $684 per week. Cf. 29 C.F.R. § 541.600(a)(1) (outlining the current
salary requirement).
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Deakin, as Magellan’s employee, meets these three criteria. Because the parties do not dispute the
regulation’s salary requirement, the Court cabins its analysis to the second and third elements.
I.

The “Directly Related” Criteria
The parties’ first dispute whether Deakin’s duties 6 are (or are not) “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.” 29
C.F.R. § 541.201(a). Deakin, arguing in the negative, frames her position in terms of the
administrative-production dichotomy. See Doc. 284 at 10-12. This principle distinguishes
employees who oversee the affairs of a business from those whose “primary duty is producing the
commodity or commodities, whether goods or services, that the enterprise exists to produce and
market.” Rodriguez v. Peak Pressure Control, L.L.C., No. 2:17-cv-00576, 2020 WL 3000414, at
*4 (D.N.M. June 4, 2020) (quoting Dewan v. M-I, L.L.C., 858 F.3d 331, 336 (5th Cir. 2017)). Those

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Courts typically define the scope of an employee’s primary duties before determining whether
those duties disqualify the employee from FLSA protections. Maestas v. Day & Zimmerman, LLC,
664 F.3d 822, 827 (10th Cir. 2012). An employee’s primary duty is “the principal, main, major, or
most important duty that the employee performs.” 29 C.F.R. § 541.700(a). The primary duty
determination is “based on all the facts in a particular case,” with primary emphasis on the
employee’s whole job. Id. Here, Deakin spent the bulk of her time performing CNAs, generating
care plans, and following up with Magellan’s clients via Touchpoints. Doc. 284 at 4-5; Doc. 2837 at 8, 301:10-18. There is no material dispute on this issue. Magellan admits that Deakin’s main
responsibilities were working with members for several hours to complete CNAs and then
continually reviewing whether her care plans were effective by scrutinizing members’ ongoing
needs. Doc. 296 at 3l; see also Doc. 296-1 at 53, 122:19-124:2.
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employees “involved with ‘administering the business affairs of the enterprise’” 7 are exempt while
those “‘producing the commodity’ of the business” are not. Dewan, 858 F.3d at 337.
Deakin’s work as a CC plainly falls on the production side of the dichotomy. Deakin and
other CCs deliver care coordination services, which take the form of CNAs, care plans, and
Touchpoints performed by CCs for PHP members. Doc. 284 at 12. In the provision of these
services, which the HSD contract characterizes as “deliverables,” Doc. 283-3 at 29-33, Magellan
does not allow CCs to make managerial decisions, oversee operations, or oversee high-level
administrative functions. See Doc. 283-16 at 21-27, 111:16-117:5 (testimony from COO Lopez
showing that CCs’ job duties do not involve administrative functions). Magellan further restricts
CCs’ discretion to act outside established HSD guidelines by closely supervising and auditing CCs’
work, subjecting them to penalties for any deviations. See id. at 10-12, 61:21-62:10; see also Doc
283-9 (Deakin’s performance improvement plan subjecting her to penalties for failing to meet
minimum audit scores); Doc. 283-10 (performance improvement plan penalizing CC Michelle
Milliman for audit failures). CCs’ duties are thus limited to the provision of care coordination
services to individual members by Magellan’s own policies. Magellan does not permit CCs to
undertake the administrative tasks necessary to run or service its business.
That Deakin’s duties are better characterized as “production” comports with guidance from
the DOL. In two separate instances, 8 the DOL considered the status of case managers whose

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The “business affairs of the enterprise” involve the running of the business itself by determining
its course or policies—i.e., the general administration of the enterprise rather than the core services
it provides or goods it produces. See Bothell v. Phase Metrics, Inc., 299 F.3d 1120, 1125 (9th Cir.
2002).
8

The DOL’s interpretation of its own regulations is highly persuasive, if not controlling. See, e.g.,
Auer v. Robbins, 519 U.S. 452, 461 (1997) (holding that the DOL’s interpretation of its own
regulations is “controlling unless plainly erroneous or inconsistent with the regulation” (text
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primary duties were to work with their clients to gather information, assess their needs and costs
of care, prepare care plans, and identify and implement services to meet the clients’ needs. See
U.S. Dep’t of Labor, Wage & Hour Div., Opinion Letter Fair Labor Standards Act (FLSA), 2006
WL 4512962 (Sept. 8, 2006); U.S. Dep’t of Labor, Wage & Hour Div., Opinion Letter Fair Labor
Standards Act (FLSA), 2007 WL 541650 (Feb. 8, 2007). Each time, the DOL concluded that case
managers were not subject to the administrative exemption because their duties were to provide
case management services rather than administer their employers’ businesses. 2006 Opinion Letter,
2006 WL 4512962, at *3; 2007 Opinion Letter, 2007 WL 541650, at *2. The DOL reached the
same conclusion for a company seeking guidance on the exempt status of so-called regional
advocates—employees who provided case management services to disabled people. See U.S.
Dep’t of Labor, Wage & Hour Div., Opinion Letter Fair Labor Standards Act (FLSA), 2005 WL
3308601, at *3 (Aug. 29, 2005).
The critical distinction identified in the DOL guidance is between those duties “related to
providing the ongoing, day-to-day case management services” of the employer (including creating
plans of care), which are not exempt, and “performing administrative functions directly related to
managing the employer’s business,” which are exempt. See 2006 and 2007 Opinion Letters, supra.
And in this case, Deakin’s duties are comparable to case management services addressed in the
relevant DOL opinion letters.
Magellan points to Hamby v. Associated Centers for Therapy, 230 F. App’x 772 (10th Cir.
2007) (unpublished), in response, arguing that Deakin is not a production worker and her duties
relate to Magellan’s general business operations. Doc. 296 at 12-13. That case is inapposite; it

only)); Roe-Midgett v. CC Servs., Inc., 512 F.3d 865, 872 (7th Cir. 2008) (applying the conclusions
in a DOL opinion letter to an analogous set of facts involving the administrative exemption).
8

involved an individual who was employed as a “family advocate” whose job was to “assist client
families by advising and counseling them regarding their problems and by advocating for them in
order to promote [her employer’s] goal of helping families of mentally ill children.” Hamby, 230
F. App’x at 783-84. Applying the administrative-production dichotomy, the Tenth Circuit stated
that Hamby’s job duties could not “be likened to the type of work performed on a manufacturing
production line or in selling a product in a retail service establishment.” Id. at 784. The court
concluded that Hamby’s “work was directly related to the general business operations of [her
employer]” and that she was subject to the administrative exemption. Id.
Magellan’s reliance on Hamby is misplaced for several reasons. Hamby applied the 2002
version of the relevant federal regulations, id. at 782-83, which have since been amended multiple
times. See n.4, supra. Further, Hamby’s analysis provides limited guidance as to why the family
advocate in that case performed duties directly related to the servicing of a business. See Hamby,
230 F. App’x at 783-84 (applying the directly related criteria in brief). This truncated analysis is
perhaps explained by the fact that Hamby is an unpublished opinion which does not bind this
Court’s decision. See 10th Cir. R. 32.1(A); see also United States v. Austin, 426 F.3d 1266, 1274
(10th Cir. 2005) (observing that unpublished orders are not binding precedent). Regardless, the
DOL opinion letters provide clearer guidance as to the present matter because they apply current
versions of the applicable regulations and offer in-depth analysis.
The Court acknowledges that the administrative-production dichotomy is an outmoded
analytic device given the nation’s modern service economy. See, e.g., Calderon v. GEICO Gen.
Ins. Co., 809 F.3d 111, 123 (4th Cir. 2015) (“One reason that the dichotomy is imperfect is that
while production-type work is not administrative, not all non-production-type work is
administrative.”); Roe-Midgett, 512 F.3d at 872 (observing that the administrative-production

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dichotomy “is only useful by analogy in the modern service-industry context”). However, in this
case, it remains a useful tool. The PHP Contract requires Magellan to carry out CNAs, generate
care plans, and follow up with Touchpoints in accordance with the HSD Contract. Doc. 283-5 at
8. Magellan, through CCs like Deakin, carries out its contractual obligations by providing care
coordination services to PHP’s members. Deakin (and her fellow CCs) delivers the services—
produces the commodity—that Magellan provides to PHP. Under this framework, her primary
duties are not directly related to Magellan’s management or business operations. Consequently,
Deakin was not exempt from the FLSA and NMMWA’s minimum wage requirements under
Section 541.200(a)(2)’s directly related criteria.
II.

The “Discretion and Independent Judgment” Criteria
An employee may be exempt from overtime laws if their primary duty “include[s] the

exercise of discretion and independent judgment with respect to matters of significance.” 29 C.F.R.
§ 541.202(a). The exercise of discretion and independent judgment generally requires comparison
and evaluation of different courses of action, followed by an action or decision after the
consideration of various possibilities. Id. Moreover, the employee must have the authority to carry
out those actions on matters of significance. Id. As that language suggests, the salient consideration
is “the level of importance or consequence of the work performed.” Id.
Here, Magellan argues that Deakin and other CCs used discretion and independent
judgment in their day-to-day work and are thus exempt administrative employees. Doc. 296 at 17.
Magellan points to evidence establishing that in carrying out CNAs, care plans, and Touchpoints,
CCs would use different methods and employed creative solutions to accomplish their tasks. Id. at
17-19. Magellan also cites testimony from its supervisory employees showing that CCs solved
problems ad hoc as they carried out their duties. Id. at 19-20.

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However, the question is not simply whether CCs used their discretion and judgment to
carry out any job duty, no matter how trivial. Rather, the exercise of discretion and independent
judgment must be addressed to matters of significance including:
whether the employee has authority to formulate, affect, interpret, or implement
management policies or operating practices; whether the employee carries out
major assignments in conducting the operations of the business; whether the
employee performs work that affects business operations to a substantial degree,
even if the employee’s assignments are related to operation of a particular segment
of the business; whether the employee has authority to commit the employer in
matters that have significant financial impact; whether the employee has authority
to waive or deviate from established policies and procedures without prior
approval; whether the employee has authority to negotiate and bind the company
on significant matters; whether the employee provides consultation or expert advice
to management; whether the employee is involved in planning long- or short-term
business objectives; whether the employee investigates and resolves matters of
significance on behalf of management; and whether the employee represents the
company in handling complaints, arbitrating disputes or resolving grievances.
29 C.F.R. § 541.202(b). The salient inquiry is whether the employee has authority to run the
business or to make major decisions on its behalf. See Talbott v. Lakeview Ctr., Inc., No. 3:06cv378,
2008 WL 4525012, at *6 (N.D. Fla. Sept. 30, 2008).
Magellan proffers no compelling evidence that Deakin possessed the requisite authority to
act on matters of significance. Although CCs exercised some limited discretion in carrying out
CNAs, care plans, and Touchpoints, these tasks are merely routine duties. See Doc. 283-16 at 1819, 102:19-103:19 (COO Lopez’s testimony that CCs produce hundreds of care coordination
deliverables per month); Doc. 283-7 at 8, 301:10-18 (Deakin’s testimony that she spent over eighty
percent of her time producing care coordination deliverables). They have no bearing on the
administrative or managerial functions of Magellan’s operations. See Doc. 283-16 at 22, 112:8-10
(COO Lopez affirming that “[CCs] are not responsible for running Magellan’s business”).

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Accordingly, the Court finds that Deakin was not administratively exempt from the FLSA and
NMMWA’s overtime requirements.
CONCLUSION
The undisputed facts of this case show that Deakin’s primary duties were to provide care
coordination services to PHP members in her role as Magellan’s employee. Those duties were
neither directly related to Magellan’s business operations, nor did they involve the exercise of
discretion and judgment on matters of significance. Accordingly, the Court finds that Deakin was
not an administrative employee exempt from the FLSA and NMMWA’s overtime protections. By
extension, neither are the CCs subject to this class action. The Court grants Deakin’s motion for
summary judgment. Doc. 284.
It is so ordered.

____________________________________
UNITED STATES DISTRICT JUDGE
MATTHEW L. GARCIA

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