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NY Health Provider Must Face Claims It Shortchanged Workers

Law360, New York

New York City Health and Hospitals Corp., the nation’s largest municipal health care provider, can’t duck a proposed class action claiming it failed to pay overtime wages, a federal judge said Wednesday, ruling HHC isn’t a “political subdivision” that would be exempt under state law.

At issue is whether the corporation — as a distinct legal entity established by the city of New York in 1969 — qualifies as a political subdivision of government that would be shielded from the wage requirements of the New York State Labor Laws.

HHC is being sued along with subsidiary MetroPlus Health Plan Inc. by marketing representatives who say they “often make little more than the Medicaid- and Medicare-eligible individuals they assist.”

Employees “work long hours, well into the night after a full day’s work” and are forced to sign time cards that understate hours clocked, the lawsuit alleges.

U.S. District Judge Brian M. Cogan concluded that HHC — a $6.7 billion network serving 1.3 million patients annually — lacked the strong government ties that would protect it from the lawsuit.

The corporation only controls about 20 percent of New York’s hospitals, making it unlike a state agency that would dominate its sector, the judge said.

In addition, HHC has an independent board that includes non-city employees and has budgetary independence, Judge Cogan wrote.

“Thus, there is no reason that HHC, like its counterparts in the private sector, should not be required to pay its employees according to New York labor law,” the order said.

The marketing representatives’ lawsuit mirrors one filed earlier by the same firm, Outten & Golden LLP, in which MetroPlus and HHC faced similar claims. That suit ultimately settled last year for $492,000, and the new lawsuit was brought to cover employees who didn’t opt in to the settlement.

In the first case, U.S. District Jed S. Rakoff reached an opposite conclusion to Judge Cogan's, saying HHC did qualify as a political subdivision and was, in fact, exempt under state law.

Judge Rakoff said HHC received “a substantial amount of financial support from public sources of funding” and that it was “considered a governmental entity and political subdivision in a wide variety of contexts.”

Although the plaintiffs were able to proceed in that case under the Fair Labor Standards Act, their claims could only go back two or three years, according to Molly A. Brooks of Outten & Golden, counsel for the marketing representatives. Under state law, they can now seek pay going back six years, she said.

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The plaintiffs are represented by Molly A. Brooks, Melissa E. Pierre-Louis, Justin Mitchell Swartz ... of Outten & Golden LLP.

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The case is Massiah et al. v. MetroPlus Health Plan Inc. et al., case number 1:11-cv-05669, in the U.S. District Court for the Eastern District of New York.