Mayhew v. General Medicine, PC, a Michigan Corporation

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF ILLINOIS

JAMI MAYHEW, individually and as sole )

owner of PRIMARY HEALTHCARE )

SOLUTIONS, INC., )

)

Plaintiff, )

) Case No. 18-cv-2177-RJD

v. )

)

GENERAL MEDICINE, PC, and DR. )

THOMAS M PROSE, )

)

Defendants. )

MEMORANDUM AND ORDER

DALY, Magistrate Judge:

This matter is before the Court on Defendants’ Motion for Summary Judgment (Doc. 37).

Plaintiff filed a response which included a cross-motion for summary judgment on Plaintiff’s

declaratory judgment claim (Doc. 79). Defendants filed a Reply (Doc. 81). For the reasons set

forth below, Defendants’ motion is GRANTED, and Plaintiff’s cross-motion is DENIED.

Background

Plaintiff Jamie Mayhew, a licensed nurse practitioner, began working for Defendant

General Medicine in October 2007 (Doc. 80 at 1, 81-4). Plaintiff has an Associate Degree in

Science, a Bachelor of Science Degree in Nursing, and Master of Science Degree in Nursing MSN

FNP (Docs. 37-11, 37-12). Plaintiff is licensed by the State of Illinois Department of Professional

Regulation as an advanced practice nurse who is authorized to prescribe controlled substances as

authorized by a physician (Doc. 37-13). General Medicine is a medical company providing

medical services at nursing home facilities (Doc. 80 at 8). Defendant Thomas M. Prose, M.D. is

President of General Medicine (Doc. 37-4 at 1).

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When Plaintiff began her employment with Defendant, she was hired as a nurse practitioner

and paid on a salary basis (Doc. 37-1 at 9). In the compensation plan, Defendant General

Medicine agreed to provide Plaintiff healthcare benefits, paid time off, continuing medical

education reimbursement, malpractice insurance, and a retirement plan (Id.). The initial

Employment Agreement contained a non-compete provision, which provided that Plaintiff was

prohibited from competing with Defendant within a 20-mile radius for a period of three years (Id.

at 4). The Agreement also contained a forum selection clause in favor of the Circuit Court for the

County of Oakland, State of Michigan (Id. at 5).

On October 16, 2014, Plaintiff re-negotiated her compensation (Doc. 80 at 1). Plaintiff

and a representative of Defendant signed a “Letter of Understanding” modifying Plaintiff’s

compensation from a salaried position to a fee per patient encounter (Doc. 37-2). The entire

contents of the letter were as follows:

Effective November 1st, 2014 your compensation will be $26 per patient encounter.

You agree to take call for your patients during the week and rotate call on the weekends

with other clinicians in your call group.

General Medicine will cover your malpractice for General Medicine patients only.

You agree to give General Medicine a 90-day notice prior to ending your relationship with

General Medicine, so that General Medicine may find coverage for your patients.

You agree in the event your relationship with General Medicine ends, you will not provide

services in those facilities that General Medicine provides services.

(Id.). On December 13, 2016, Plaintiff signed a “Memorandum of Understanding” which stated

“Effective January 1, 2017, your compensation will be $27 per patient encounter. All other terms

noted in the letter dated October 16, 2014 remain in effect” (Doc. 37-3).

Plaintiff attested, pursuant to the 2014 agreement, she was only paid $26 per patient visit

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regardless of how much time she spent with a patient or the time spent charting following the

patient encounter (Doc. 80 at 2). Plaintiff did not receive overtime pay for hours that she worked

in excess of 40 in a given week (Id.). She did not receive any payment for time she was required

by Defendant to be on call (Id.). Plaintiff attested she was routinely required to work in excess of

8 hours per day and 40 hours per week to do the job required by Defendant (Id.). In December

2016, Plaintiff’s compensation was modified to $27 per patient visit (Id. at 2-3). Plaintiff’s total

yearly compensation from Defendants for the years of 2014 through 2018 was as follows:

2014 $174,830.75

2015 $222,480.00

2016 $228,402.00

2017 $219,872.00

2018 $130,356.00

(Doc. 37-7 at 1).

Plaintiff declared, while providing services for General Medicine, she “did not use many

of the skills or training that she received in her formal education” (Doc. 80 at 3). According to

Plaintiff, while a registered nurse typically uses her discretion and judgment to evaluate a patient

and perform services, while employed by Defendant, she lacked autonomy and decision-making

ability with respect to the care that she provided on behalf of Defendant (Id.). Plaintiff’s care was

performed pursuant to a “script” dictating the treatment to be provided (Id.). She was expected

to follow specific, enumerated “elements of an encounter” attached as Exhibit D to her Declaration

(Id. at 3-4, 23-58). Defendant asserts the attachment Plaintiff refers to as a “script” is in fact the

Guidelines for Evaluation and Management prepared and distributed by the federal government

through CMS (Centers for Medicare and Medicaid Services). Plaintiff states she was

reprimanded by Defendant if she tried to conduct a lower level visit than that which Defendant

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General Medicine prescribed (Doc. 80 at 4). After Plaintiff provided the prescribed treatment to

a patient, she was required to chart the visit as directed by Defendant (Id.). Plaintiff attested she

lacked autonomy in the charting process and General Medicine’s Rebecca Coccia would regularly

require that she revise the charts she had prepared so that the work performed appeared to be more

extensive for Defendant’s benefit (Id). Plaintiff stated she did not have the freedom to chart for a

patient as she wanted (Id.). Defendant does not dispute that Plaintiff was not free to chart as she

wanted, and contends her charting was required to conform with CMS guidelines.

In addition to her regularly scheduled shifts for Defendant, Plaintiff was required to be “on-

call” (Doc. 80 at 4). The on-call schedule was generated by General Medicine and Plaintiff would

be scheduled to be on call “several” times a month (Id.). During the course of her regularly

scheduled shifts and on-call shifts, Plaintiff received urgent and non-urgent calls, as well as text

messages, to which she was required to reply (Id.). Plaintiff attested when she was on-call she

was required to be available by telephone and to make patient visits at General Medicine facilities

as though she was on a regularly scheduled shift (Id. at 5). According to Plaintiff if she was on-

call she was regularly not able to attend her own personal events or obligations (Id.). Plaintiff

would put in requests to not be on call so that she could attend specific personal events (Doc. 80

at 5, 59-76). Plaintiff received no payment for time she spent on call (Id. at 5). Plaintiff attested

she would be disciplined by General Medicine if she failed to respond to calls while on-call (Id.).

Defendant Dr. Prose attested the on-call requirements were that Plaintiff (1) have a phone available

to her; (2) have phone service where she was located; and (3) answer the phone when available

and respond to the caller (Doc. 37-4). According to Prose, Plaintiff was not required to travel to

a facility when she was on-call and she was free to travel, including leaving the State as long as

she was available to answer questions by phone (Id.). In the event Plaintiff was unable or chose

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not to respond to a call, one of two back-up persons would be called by the facility (Id.). Prose

attested that Plaintiff was not disciplined for failing to respond to a call while on-call (Id.).

In November 2017, Plaintiff was contacted by federal agents to participate in a

governmental investigation of potential Medicare and/or Medicaid fraud committed by General

Medicine (Doc. 80 at 6). Plaintiff spoke with two agents and provided information about her

observations of General Medicine’s business practices, specifically the patient encounters and

billing practices she believed to be “problematic” (Id).

In December 2017, Plaintiff founded her own company which she called Primary

Healthcare (Doc. 80 at 6). According to Plaintiff, the only services she provided through Primary

Healthcare were ear cleaning services (Id.). General Medicine did not provide ear cleaning

services, so the services provided by Plaintiff through Primary Healthcare were distinct from the

services she provided while simultaneously working for General Medicine (Id.). General

Medicine disputes that Plaintiff’s company only provided ear cleaning services. A compilation

of the billing records from Primary Healthcare shows approximately 9% of the services were for

ear cleaning (Doc. 81-3 at 1). Primary Healthcare’s billing records list twelve procedure codes

that were billed by both Primary Healthcare and General Medicine (Id.). Defendant cites the

billing records to assert that 86% of Primary Healthcare’s services overlapped with General

Medicine (Id.).

Plaintiff was approached by federal investigators a second time in February 2018 (Doc. 80

at 7). Plaintiff informed General Medicine and was told to speak with General Medicine’s legal

counsel (Doc. 80 at 7). Plaintiff did not speak with authorities (Doc. 2 at 5).

On November 2, 2018, General Medicine received a rejection of a claim submitted for a

patient encounter conducted by Plaintiff (Doc. 37-8). The General Medicine claim was rejected

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for payment because Plaintiff had billed for a patient encounter with the same patient on the same

day through her own company, Primary Healthcare (Id.). A practitioner is not permitted to bill

twice for a service to a patient on the same day per CMS regulations (Doc. 37-4). Defendant

Prose declares he became aware Plaintiff had started her own company while still employed by

Defendant General Medicine on or about December 1, 2018 (Id.). Plaintiff’s yearly total patient

encounters in 2017 were 7,768 and her yearly total patient encounters in 2018 were 4,407 (Doc.

37-14).

Between December 5, 2018 and December 12, 2018, Plaintiff received multiple messages

from Dr. Prose that she interpreted as threats (Doc. 2 at 6). Defendant Prose demanded she forfeit

all moneys earned by Primary Healthcare through providing services to General Medicine patients

(Id., Doc. 80 at 8). Prose threatened legal action (Id.). Plaintiff resigned her employment with

Defendant General Medicine on December 11, 2018 (Doc. 37-4 at 6).

Legal Standard

Summary judgment is appropriate only if the moving party can demonstrate “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); Celotex Corp. v. Catrett, 477 U.S. 317, 322(1986); see also Ruffin-

Thompkins v. Experian Information Solutions, Inc., 422 F.3d 603, 607 (7th Cir. 2005). The

moving party bears the initial burden of demonstrating the lack of any genuine issue of material

fact. Celotex, 477 U.S. at 323. Once a properly supported motion for summary judgment is

made, the adverse party “must set forth specific facts showing there is a genuine issue for trial.”

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). A genuine issue of material fact exists

when “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.”

Estate of Simpson v. Gorbett, 863 F.3d 740, 745 (7th Cir. 2017) (quoting Anderson, 477 U.S. at

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248). In determining a summary judgment motion, the district Court views the facts in the light

most favorable to, and draws all reasonable inferences in favor of, the nonmoving party. Apex

Digital, Inc. v. Sears, Roebuck & Co., 735 F.3d 962, 965 (7th Cir. 2013) (citation omitted).

Analysis

Counts I and IV – Fair Labor Standards Act

Plaintiff alleges Defendants violated the FLSA by (1) not paying Plaintiff for “working on

call from 2014-2018” and (2) not paying Plaintiff overtime at “1½ times her regular wage for time

worked in excess of 40 hours during many pay periods from 2014 through 2018” (Doc. 2 at 6-7).

On-Call

According to the Supreme Court, whether hours spent “on call” should be treated as work

depends on whether one has been “engaged to wait” or is “waiting to be engaged.”

Compare Armour & Co. v. Wantock, 323 U.S. 126 (1944), with Skidmore v. Swift & Co., 323 U.S.

(1944). The Seventh Circuit has determined that in analyzing whether an employee is working

while on call, “it is best to ask what the employee can do during on-call periods. Can the time be

devoted to the ordinary activities of private life? If so, it is not “work.” Dinges v. Sacred Heart

St. Mary's Hosps., Inc., 164 F.3d 1056, 1056–57 (7th Cir. 1999). The plaintiffs in Dinges were

EMTs who, while on-call, had to appear at the hospital within seven minutes (not just answer a

call), and they were on-call during roughly half of their evenings. They could not drink alcohol

and the short seven-minute window meant that they had to decline to attend any out-of-town family

events, holidays, and other events that occurred during their call periods. One of the plaintiffs

was forced to maintain an “on call” babysitter to care for her children in the event she was called

away. The Court concluded that plaintiffs experienced less than a 50% chance that there would

be any call in a 14– to 16–hour period, so their time could be used effectively for sleeping, eating,

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and many other activities at home and around town. Id. at 1058.

Similarly, in Jonites v. Exelon Corp., the Seventh Circuit addressed the on-call scheme

operated by Commonwealth Edison. 522 F.3d 721, 723–24 (7th Cir. 2008). The company

required employees to accept a certain minimum number of call-outs for emergency repairs.

Rather than being “on call” for specific shifts, however, employees were expected generally to

respond to at least 35 percent of the call-outs over the course of the year, and these calls could

occur 24 hours a day. That is, the employees were not required to answer calls during specific

periods, but employees had to answer a certain number of calls overall. The employees argued

that “the frequent call outs disrupt their home life,” id. at 722, but the Seventh Circuit gave the

employees' argument short shrift. Citing 29 C.F.R. § 785.17, the Court noted that the “call-out

procedure does not require that the worker stay at home or at any other designated location, but

only that he be reachable by the company, and the regulation ... goes on to provide that ‘an

employee who is not required to remain on the employer's premises but is merely required to leave

word at his home or with company officials where he may be reached is not working while on

call.’” Id. at 723–24. The fact that employees must accept a certain number of call-outs at

unpredictable hours was burdensome, no doubt, but the Court rejected the notion that it was so

restrictive that employees should be fully compensated. “[T]hat does not mean that he must stay

in the house all weekend. He just must stay within a two-hour radius of his normal duty station

(for that is the time he is allowed for getting there if he accepts the call out). Is that such a hardship

that it turns his waiting into working? We think not ...” Id. at 724.

Here, although Plaintiff alleges she was unable to travel or leave the state while on call and

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that she had to be available to make a patient visit at a facility in the event of an emergency,1 the

restrictions were not such that her time could not be used effectively for personal and social

activities. Based on Plaintiff’s own allegations, she could request that she not be on call when

she wanted to take her daughters to a specific event or planned to travel out of town. Answering

phone calls, and even the need to visit a facility on occasion, would not preclude Plaintiff from

doing other personal and social activities. When one considers all of an individual's potential

personal activities—things like eating, sleeping, doing housework, reading, watching television,

exercising, shopping—it is clear that the on-call rules as alleged by Plaintiff were not particularly

restrictive at all. The restrictions placed on the plaintiffs in Dinges were certainly more restrictive

than those alleged by Plaintiff in this case. Plaintiff’s time while on call was effectively her own

and the FLSA does not compel compensation. Defendants are entitled to summary judgment

regarding Plaintiff’s on-call claims.

Overtime

The Fair Labor Standards Act “(“FLSA”) requires that employers pay employees overtime

pay if they work more than 40 hours in a given week. 29 U.S.C. § 207(a)(1). However,

employees employed in a “bona fide professional capacity” are exempt from overtime. 29

U.S.C.A. § 213(a)(1). As set forth in the regulations the term “employee employed in a bona fide

professional capacity” means any employee: (1) compensated on a salary or fee basis pursuant

to § 541.600 at a rate of not less than $684 per week, exclusive of board, lodging or other facilities;

and (2) whose primary duty is the performance of work requiring knowledge of an advanced type

in a field of science or learning customarily acquired by a prolonged course of specialized

1 There is no evidence of the number of times Plaintiff actually visited a facility during her 11

years of working on call.

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intellectual instruction. 29 C.F.R. § 541.300(a).

The term “fee basis” is explained as:

(a) administrative and professional employees may be paid on a fee basis, rather than on a

salary basis. An employee will be considered to be paid on a “fee basis” within the

meaning of these regulations if the employee is paid an agreed sum for a single job

regardless of the time required for its completion. These payments resemble piecework

payments with the important distinction that generally a “fee” is paid for the kind of

job that is unique rather than for a series of jobs repeated an indefinite number of times

and for which payment on an identical basis is made over and over again. Payments

based on the number of hours or days worked and not on the accomplishment of a given

single task are not considered payments on a fee basis.

(b) To determine whether the fee payment meets the minimum amount of salary required

for exemption under these regulations, the amount paid to the employee will be tested

by determining the time worked on the job and whether the fee payment is at a rate that

would amount to at least the minimum salary per week, as required by §§ 541.600(a)

and 541.602(a), if the employee worked 40 hours. Thus, if the salary level were $913,

an artist paid $500 for a picture that took 20 hours to complete meets the minimum

salary requirement for exemption since earnings at this rate would yield the artist $1000

if 40 hours were worked.

29 C.F.R. § 541.605 (as amended at 81 FR 32551, May 23, 2016). It is the employer's burden to

prove the application of the executive exemption. Bankston v. State of Ill., 60 F.3d 1249, 1252

(7th Cir. 1995). The Supreme Court has instructed that we “have no license to give the

[professional] exemption anything but a fair (rather than a “narrow”) reading.” Encino

Motorcars, LLC v. Navarro, 138 S. Ct. 1134, 1142 (2018); Flood v. Just Energy Mktg. Corp., 904

F.3d 219, 228 (2d Cir. 2018) (recognizing that the application of the narrow‐construction principle

to the FLSA exemptions “is not the rule anymore”).

Defendants contend Plaintiff was not entitled to be paid “overtime” because from October

2014 through December 2018 (1) she was paid on a fee basis and (2) she met the requirements for

the professional employee exemption. Plaintiff contends the fact that she was paid on a “per-

visit” basis does not alone render her an exempt employee. Plaintiff argues that even though she

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was employed as a “nurse practitioner” the work she actually performed did not render her an

exempt employee under the learned professional exemption because it did not require the

consistent exercise of discretion and judgment and her advanced knowledge was not generally

required to perform her work. Plaintiff asserts when seeing patients in the nursing facilities she

performed certain routine enumerated tasks in accordance with specific “elements of evaluations.”

The Court does not find persuasive Plaintiff’s argument that the services she performed did

not qualify for the learned professional exemption. The regulations provide that “registered

nurses who are registered by the appropriate State examining board generally meet the duties

requirements for the learned professional exemption.” 29 C.F.R. § 541.301. Here, not only was

Plaintiff a registered nurse serving in a clinical setting, she was a licensed Advanced Practice Nurse

with a Master’s Degree and authorization to prescribe controlled substances as authorized by a

physician. The fact that Plaintiff was instructed to follow the Guidelines for Evaluation and

Management distributed by the federal government is not evidence Plaintiff lacked any discretion

or autonomy in the provision of services. Neither Plaintiff, nor Defendants provide many details

as to the duties Plaintiff actually performed, but Plaintiff acknowledges that she was responsible

for patient encounters and completing “charting.” Dr. Prose never witnessed Plaintiff perform a

patient encounter. After each patient encounter, Plaintiff would document the nature of the visit

and any relevant observations during the visit. In order to determine observations that were

“relevant” Plaintiff had to rely on her specialized education and training. Additionally, in

answering urgent calls from facilities, as alleged by Plaintiff, she had to rely on her specialized

medical knowledge to respond to questions. Plaintiff’s primary duties as a nurse practitioner

assessing and treating patients were the performance of work requiring advanced knowledge in a

field of science that is customarily acquired by a prolonged course of specialized intellectual

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instruction.

Plaintiff does not dispute she was paid on a “per patient encounter” basis starting in

November 2014. Based on her salary history this change was financially advantageous to

Plaintiff. For most of 2014, Plaintiff was on a salary basis and paid $174,803.75. In 2015, the

first year Plaintiff was paid on a “per patient encounter” basis, Plaintiff was paid $222,480, or an

average of $4,278.46 per week. Plaintiff both qualified as a professional employee and was

compensated more than the minimum required for a fee basis. Plaintiff is exempt from the

FLSA’s overtime requirements and Defendants are entitled to summary judgment on Counts I and

IV.

Counts II, III, V, VI – Illinois Minimum Wage Act and Illinois Whistleblower Act

Pursuant to 28 U.S.C. § 1367(c)(3), the Court is permitted to decline to exercise

supplemental jurisdiction over a state-law claim if it has dismissed all claims over which it has

original jurisdiction. In this circuit, “the general rule is that, when all federal claims are dismissed

before trial, the district court should relinquish jurisdiction over pendent state-law claims rather

than resolving them on the merits.” Kennedy v. Schoenberg, Fisher & Newman, Ltd., 140 F.3d

716, 727 (7th Cir.1998). Having determined that summary judgment is appropriate on Plaintiff’s

federal claims against Defendants, the Court declines to exercise supplemental jurisdiction over

Plaintiff’s Illinois state law claims and Counts II, III, V and VI are dismissed without prejudice.

Count VII – Declaratory Judgment

Plaintiff seeks a permanent injunction restraining Defendants from enforcing the contract

language which states “You agree in the event your relationship with General Medicine ends, you

will not provide services in those facilities that General Medicine provides services.” Plaintiff

alleges the language unreasonably restricts her ability to earn a living and that injunctive relief is

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her only means of securing adequate relief.

Defendants assert the Employment Agreement and subsequent modifications are the

subject of a lawsuit currently pending in the Circuit Court of Oakland County, Michigan, General

Medicine, P.C. vs. Jami L. Mayhew, NP, individually and as sole owner of Primary Healthcare

Solutions, Inc., an Illinois Corporation, Case Number 2108-170568-CB, scheduled for trial on

April 6, 2020. That action consists of two counts against Plaintiff and her company: (1) breach

of contract by violating the Covenant Not to Compete and by using confidential information

obtained as an employee of General Medicine which she improperly shared with her own

company, and (2) intentional interference with contractual and business relations. Defendants

contend the Initial Employment Agreement contained a forum selection clause and any

interpretation of the employment agreements should, by agreement of the parties, be made by the

Court in Michigan. Plaintiff argues the 2016 Agreement superseded and replaced the Initial

Employment Agreement and that the operative employment agreement contained no forum

selection clause.

“Under what is known as the Wilton/Brillhart abstention doctrine, district courts possess

significant discretion to dismiss or stay claims seeking declaratory relief, even though they have

subject matter jurisdiction over such claims.” R.R. Street & Co., Inc. v. Vulcan Materials Co., 569

F.3d 711, 713 (7th Cir.2009). This discretion arises from the Declaratory Judgment Act, 28

U.S.C. §§ 2201–2202 itself, which provides that district courts “may declare the rights and other

legal relations of any interested party seeking such declaration.” 28 U.S.C. § 2201(a). The

discretionary nature of the Act led the Supreme Court to hold in Brillhart and Wilton that district

courts have substantial discretion in deciding whether to declare the rights of litigants and may, in

the sound exercise of their discretion, stay or dismiss an action seeking a declaratory judgment in

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favor of an ongoing state court case. See Brillhart v. Excess Ins. Co. of Am., 316 U.S. 491, 494–

95 (1942); Wilton, 515 U.S. at 288 (noting “a district court is authorized, in the sound exercise of

its discretion, to stay or to dismiss an action seeking a declaratory judgment”). While there are

“no set criteria” under Wilton-Brillhart for determining proper declination, the “classic example”

is declining to hear a federal declaratory action while an action pending in state court between the

same parties will answer “the same precise legal question.” Envision Healthcare, 604 F.3d at

986–87.

The case before the Michigan Court addresses the same legal questions regarding the terms

of the “operative agreement” now being raised in the declaratory judgment claim. The Court will

exercise its discretion and abstain from needlessly interfering with the ongoing Michigan state

court proceedings. Plaintiff’s declaratory judgment claim is dismissed on the ground of

abstention.

Conclusion

For the reasons set forth above, the Defendants’ Motion for Summary Judgment (Doc. 37)

is GRANTED and Plaintiff’s cross-motion is DENIED. Judgment shall be entered in favor of

Defendants and against Plaintiff. The Clerk of Court is DIRECTED to enter judgment

accordingly and to close the case.

IT IS SO ORDERED.

DATED: January 21, 2020

s/ Reona J. Daly

Hon. Reona J. Daly

United States Magistrate Judge

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