# Appendix — Incor v. Fowler (No. 08-278)

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386019_1831%3A2

## Record

- **Collection:** Supreme Court brief
- **Document type:** Appendix
- **Published:** January 1, 2008

## Text

oe seated ty eg Mak SE alia)
Aor pea, ROE Coolie

Supreme Oourt, U.S.
FILED

08-27 8 AUG 286 2008

NOPRICE OF THE CLERK

IN THE
Supreme Court of the United States

INCOR, SHELTERED WORK ACTIVITY

PROGRAM, INC., ET AL.,
Petitioners,

vs.

KENT W. FOWLER, ET. AL., INDIVIDUALLY AND
STANDING IN THE STEAD OF OTHER PERSONS

SIMILARLY SITUATED
Respondents.

OF ene Oe

ON PETITION FORA WRIT OF CERTIORARI TO
THE UNITED STATES COURT OF APPEALS
FOR THE TENTH CIRCUIT

PETITION FOR A WRIT OF CERTIORARI
APPENDIX

Adam Scott Weintraub
Counsel of Record

Terry S. O’Donnell

Savage, O'Donnell, Affeldt,
Weintraub & Johnson

110 W. 7th Street, Suite 1010
Tulsa, OK 74119

(918) 599-8400

Attorneys for Petitioners

TABLE OF CONTENTS

I rd PAGES Al-A54
ORDER AND JUDGMENT OF THE UNITED STATES
COURT OF APPEALS FOR THE TENTH CIRCUIT

PPG Tosa conch cab oc ann eens PAGES B1-B190
JUDGMENT AND FINDINGS OF FACT AND
CONCLUSIONS OF LAW OF THE UNITED STATES

DISTRICT COURT FOR THE EASTERN DISTRICT
OF OKLAHOMA

PI tio cacwhnk cad décdsctsctcceccsecacsn aes CiCe2
ORDER DENYING PETITION FOR REHEARING

UNITED STATES COURT OF APPEALS FOR THE
TENTH CIRCUIT

BP BF aoa is Di bkka bk bth nen tw PAGES D1-D8
AMERICANS WITH DISABILITIES ACT OF 1990,

42 U.S.C. § 12101, §§ 12131-12134

A-1

UNITED STATES COURT OF APPEALS

FOR THE TENTH CIRCUIT

KENT W. FOWLER; CODY
FOWLER: MICHAEL LEACH;
LARRY BURRIS; FRANCES
WOODS; ROSEOLA
THORNBURG; KATHERINE
CARROLL; BETTIE BURNETT:
LISA SMITH; ALICE SMITH;
LESA HORNEY; CHRISTINE
LANE-HUCKABAY; KENYA
WASHINGTON; YOLANDA
WHITE; ANGELA MCVAY:;
WAKEETHA ATKESON;
ANGIE MILLER; RUBY

MCGEE; CARMEN KIRKLAND;

ANNTONETT TAYLOR;
DELORIS WILSON; TIA
SALLIS; SHERRY SALLIS;
BRUCE MCCARTHY; NICOLE
PIERCE; CYNTHIA
WHITEFIELD: JORETTA
TRUITT; JUDY BLACKMER;
LAJOYA DAVIS; LECEIF
SPRING; MISTY GRAHAM;
SONYA JULY; STEPHANIE
NEWMAN: individually and
standing in the stead of other
persons similarly situated,

Plaintiffs-Appellants,

i i i a i i a a a a a a a a a a a ee a a a a a a a ae ee ee ee

FILED |
United States Court of Appeals 7
Tenth Circuit |

May 12, 2008

Elisabeth A. Shumaker
Clerk of Court

No. 05-7113

A-2

INCOR; SHELTERED WORK
ACTIVITY PROGRAM, INC.,
d/b/a INCOR; EDWARD
BREEN; BETSY BREEN,

Defendants-Appellees.

Appeal from the United States District Court
For the Eastern District of Oklahoma
(D.C. No. 6:03 — CV — 00321 — RAW)

ORDER AND JUDGMENT’

Before HENRY, Chief Judge, ANDERSON and
MCCONNELL, Circuit Judges.

Appellee Incor is in the business of providing

services to developmentally disabled adults in

* After examining the briefs and appellate record, this panel
has determined unanimously to grant the parties’ request for
a decision on the briefs without oral argument. See Fed.
R.App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument. This order and
judgment is not binding precedent, except under the doctrines
of law of the case, res judicata, and collateral estoppel. It may
be cited, however, for its persuasive value consistent with
Fed. R.App. P. 32.1 and 10th Cir. R. 32.1.

A-3
northeastern Oklahoma, including operation of a
residential program. Its _ residential-program
employees work as habilitation training specialists
and/or house managers, responsible for round-the-
clock care of Incor's clients, most of whom have
physical disabilities and function at mental levels
ranging from a one-year to six-year-old. The
employees sued for unpaid wages under the Fair
Labor Standards Act, 29 U.S.C. §§ 201-219 (FLSA).
Prior to trial, the district court entered summary
judgment for Incor that denied liquidated damages
and applied a two-year statute of limitations.
Following a bench trial, the court made findings of
fact and conclusions of law, and entered judgment
in favor of Incor and against the employees on all of

their claims.2 We affirm the court's summary

: The trial court ruled that Edward Breen and Betsy Breen,

A4
judgment order applying a two-year statute of
limitations to the employees' claims. However, we
vacate the court's findings of fact and conclusions of
law, reverse its order on summary judgment
denying liquidated damages, and remand the case
for further proceedings consistent with this order

and judgment.

I. PRIVATE HOMES

A. The Statutory And Regulatory Framework

The employees' first claim was for overtime
wages on the theory that they were not providing
companionship services in private homes. The
FLSA requires payment of overtime compensation

for certain employees who work more than forty

the owners of Incor, are employers under 29 U.S.C. § 203(d)
and thus jointly and severally liable for any judgment. The
Breens do not cross-appeal from the ruling and are bound by
it.

A-5
hours per week. 29 U.S.C. § 207. At the same time,
29 U.S.C. § 213(a)(15) provides an exemption for
overtime to, inter alia, “any employee employed in
domestic service employment to _ provide
companionship services for individuals who

(because of age or infirmity) are unable to care for

themselves{]” A related Department of Labor

(DOL) regulation provides that “domestic service
employment” means “services of a household
nature performed by an employee in or about a
private home ... of the person by whom he or she is

employed.” 29 C.F.R. § 552.3.3

3 In Long Island Care at Home, Ltd. v. Coke, 127 S.Ct. 2339,
(2007), the Supreme Court upheld the validity of § 552.109(a),
which extends the application of the companionship services
exemption to workers employed by a third party such as
Incor. See also Welding v. Bios Corp., 353 F.3d 1214, 1217 n.
3 (10th Cir. 2004) (“The exemption can apply even when the
domestic service employee is actually employed by a service
agencyI.}”); Johnston v. Volunteers of Am., Inc., 213 F.3d 559,
562 (10th Cir. 2000) (same). In the interest of judicial

A-6
B. The Burden Of Proof

The Supreme Court has held that FLSA
“exemptions are to be narrowly construed against
the employers seeking to assert them and their
application limited to those establishments plainly
and unmistakably within their terms and spirit.”
Arnold v. Ben Kanowsky, Inc., 361 U.S. 388, 392
(1960). Further, “the general rule [is] that the
application of an exemption under the [FLSA] is a
matter of affirmative defense on which the
employer has the burden of proof.” Corning Glass
Works v. Brennan, 417 U.S. 188, 196-97 (1974); see

also Sanders v. Elephant Butte Irrigation Dist. of

N.M,, 112 F.3d 468, 470 (10th Cir. 1997). In light of

these principles, we have held that an employer

economy, we delayed our review of this case pending the
decision in Long Island Care.

A-7

must prove an exemption by “clear and affirmative
evidence.” Aaron v. City of Wichita, 54 F.3d 652,
657 (10th Cir. 1995).

Our use of “clear and affirmative evidence,”
id., has lead to confusion whether this in fact
means clear and convincing evidence — a burden
beyond the preponderance of evidence standard
traditionally applied in civil cases. This is not the
case; instead, clear and affirmative evidence is
simply an “invocation of the familiar principle of
statutory interpretation that exemptions from a
statute that creates remedies that should be
construed narrowly,” Yi v. Sterling Collision
Centers, Inc., 480 F.3d 505, 508 (7th Cir. 2007),

and “also that the burden of proof is on the

[employer], since entitlement to an exemption is an

affirmative defense.” Jd. at 507. “[A] silent or

A-8
ambiguous record” is not affirmative evidence.
United States v. Bush, 405 F.3d 909, 921 (10th Cir.
2005).

C. The Standard Of Review

In determining whether an exemption to the

FLSA applies, we review the trial court's factual
determinations for clear error and its legal
conclusions de novo. Sanders, 112 F.3d at 470.
Specifically, the key factors described in Welding v.
Bios Corp., 353 F.3d 1214 (10th Cir. 2004), used to
determine whether a residence is a private home,
are questions of fact reviewed under a clearly
erroneous standard. Sanders, 112 F.3d at 470.
However, the question of whether a particular
living unit is a private home and therefore excluded
from overtime, is a question of law reviewed de

novo. /d. Further, “[wlhether the district court

A-9
failed to consider or accord proper weight or
significance to relevant evidence are questions of
law [this court] review[s] de novo.” Flying J Inc. v.

Comdata Network, Inc., 405 F.3d 821, 829 (10th

Cir. 2005) (quotation marks and citations omitted).

Despite our disapproval of the practice,‘ the
trial court essentially adopted verbatim’ the
proposed findings of fact and conclusions of law
submitted by MIncor. Compare “Defendant's
Findings of Fact and Conclusions of Law,” Aplt.
App., Vol. X at 5414-86, with “Findings of Fact and
Conclusions of Law,” id. at 5487-5584. But we need

not decide whether the findings of fact are clearly

* We disapprove of the practice for many reasons, including
that “[t]he court's wholesale adoption of one party's proposed
findings of fact and conclusions of law provides little aid on
appellate review, particularly in the likely event that the
adopted submission takes an adversarial stance.” Flying J
Inc. v. Comdata Network, Inc., 405 F.3d 821, 830 (10th Cir.
2005) (citation omitted).

A-10
erroneous, because the findings and conclusions
misstate the law and fail to consider or give proper
weight to relevant evidence, which are legal
questions we review de novo. On remand, we direct
the court to make its own findings of fact based on
its review of the evidence and to apply the law set
forth in this order and judgment.
D. Analysis
In determining whether companionship

services are provided in a private home, “the object

of evaluation is the living unit of the person

receiving the services, i.e., the client. The client's
living unit consists of the client's bedroom and the

common areas to which the client has access.5 The

> In addition to a traditional single-family home, Department
of Labor -regulations. provide that “[a] separate and distinct
dwelling maintained by an individual or a family in an
apartment house, condominium or hotel may constitute a
private home.” 29 C.F.R. § 552.101(a).

A-11
court must evaluate each living unit separately[.]”
Welding, 353 F.3d at 1218.

The key inquiries to determine whether the
living unit is a private home are “who has ultimate
management control of the living unit and whether
the living unit is maintained primarily to facilitate
the provision of assistive services.” /d. at 1219.
There are several factors used to answer these key
inquiries, including: (1) did the client live in the
living unit as his or her private home before
receiving services; (2) who owns the living unit; (3)
who manages and maintains the residence; (4)
would the client be allowed to live in the living unit
if he or she was not receiving services; (5) the
relative difference in the cost/value of the services
provided and the total cost of maintaining the

living unit; and (6) whether the service provider

A-12

uses any part of the living unit for its own business
purposes. /d. at 1219-20.

“The first factor is whether the client lived in
the living unit as his or her private home before
beginning to receive the services.” /d. As Welding
teaches, having lived in the living unit as a private
home prior to the onset of services is “a powerful
indicator that the residence is a private home.” /d.
There is the “easy-to-spot private home. . . where
the families lived in their homes prior to and
independent of their receipt of companion services,”
id. (citation and quotation marks omitted),
compared to non-private homes where the clients
have never lived without the assistance of a service
provider. In its proposed conclusions of law, Incor
tried to explain away the lack of any evidence on

this factor by representing that “[mlore importantly

A-13

. the uncontradicted evidence at trial was that
Incor's clients were always allowed to freely move
into different residences and with roommates, if
they so choose.” Aplt. App., Vol. X at 5573. Setting
aside the fact that this sweeping conclusion lacks
record support, it has nothing to do with whether
the client lived in the living unit as Ais or her

private home before beginning to receive services.
“The second factor is who owns the living
unit. Ownership is significant because it evidences
control.” Welding, 353 F.3d at 1219. In situations
where the living units are owned by a third party,
“that is a more ambiguous indicator, and the court
must look to see who leases the unit from the third

’

party.” Jd. Contrary to Incor's finding that “no
evidence was presented at trial that Incor had any

possessory interest in, or right to, the client's

A-14
homes,” Aplt. App., Vol. X at 5574, Incor was listed
as the tenant/lessee or responsible party on four
leases (2200 Turner Street, 901 Erie, 200 East
Monroe, and 505 North G Street), which “is some
indication that it is not a private home.” Welding,
353 F.3d at 1219. And although it is true that the
clients signed or made their marks on the leases for
the remaining living units, which “is some
indication that {they are] private homels],” sd., that
is not the end of the inquiry. Instead, “residences
| Imanaged by [habilitation training specialists] . . .
do not fit plainly and unmistakably into the
ordinary connotation of the words ‘private home’ ...
notwithstanding the fact that the lease may bear
the name of a developmentally disabled person.”

Johnston v. Volunteers of Am., Inc., 213 F.3d 559,

565 (10th Cir. 2000).

A-15

“The third factor is who manages and
maintains the residence. In other words, who
provides the essential things that the client needs
to live there, such as paying the mortgage or rent,
paying for gas, electricity, and water, providing
clean linens and clothes, and providing food?”
Welding, 353 F.3d at 1219. “If many of the
essentials of daily living are provided for by the
client or the client's family, that weighs strongly in
favor of it being a private home. If they are
provided for by the service provider, that weighs
strongly in favor of it not being a private home.” /d.
at 1220. Incor's findings failed to consider “who
provides the essential things that the client needs

to live there [.]” Instead, it offered that because the

clients and/or their guardians participated in

developing individual training plans and had

A-16
service agreements with Incor, they had
management control. This distorts Welding, which
states that the object of evaluation is the hving unit
— not ancillary agreements.

“The fourth factor is whether the client
would be allowed to live in the unit if the client
were not contracting with the provider for services.”
Id. at 1220. As a matter of common sense, “lilf the
client would be allowed to live in the unit without
contracting for the services, that weighs in favor of
it being a private home. If the client would not be
allowed to live in the unit without contracting for
the provider's services, that weighs in favor of it not
being a private home.” Jd. Contrary to Welding,

Incor re-framed the inquiry as the “[plotential

[clontinuity of fo]ne [cllient in the [rlesidence,”

Aplt. App., Vol. X at 5575, and reasoned that

A-17
because it was not the landlord, a client would be
allowed to live in the unit even if he or she fired
Incor. This ignores the fact that there was no
evidence that any landlord would have rented to
any of these clients unless they had a service
provider. In the absence of such evidence, Incor
could only speculate that “there is no reason to
believe a client could not remain in their home in
the event Incor's services were terminated.” Jd.
The error was compounded by relying on 42 U.S .C.
§ 3604(f(1)(A) for the conclusion that a landlord
could not terminate the lease and/or refuse tc rent
to disabled persons. The statute, however, applies

only to properties owned, operated, or financed by

the federal government. See id. § 3603(a)(1)(A)-(D).

A-18

“The fifth factor is the relative difference in
the cost/value of the services provided and the total
cost of maintaining the living unit (including
government subsidies).” Welding, 353 F.3d at 1220.
As Welding explains, this factor “relate[s] to the
purpose for which the living unit is primarily
maintained.” /d. “If the cost/value of the services is
incidental to the other living expenses, that weighs
in favor of it being a private home. If the cost/value
of the services is a substantial portion of the total
cost of maintaining the living unit, that weighs in
favor of it not being a private home.” Jd. Incor
tortured the fifth factor beyond recognition.
Because its analysis is not easily summarized, we

quote it in full:

[T]he HTS services were paid in full
by the DHS (ie. the client paid
nothing for the services). Conversely,

A-19

the client was responsible to ‘pay up to

90% of the income, not to exceed

$14.00 per day’ to cover the expenses

of maintaining the living unit (e.,

rent, insurance, utilities, groceries,

etc.). Thus, the cost of the HTS

services to the client was not any

portion of the total cost to the client

for maintaining his or her home.
Aplt. App., Vol. X at 5575. An example of how the
fifth Welding factor should be applied is Edward
Breen testified for one client for one year at 505
Judy Lane, daily living expenses were $47,000,
habilitation services were $60,736, and
transportation costs were $3,700. The trial court
should then compare the relative difference

between $60,736 (the cost/value of the habilitation

services) against $110,436 (the total cost of

maintaining the living unit). Because $60,736 “is a

substantial portion of the total cost of maintaining

A-20
the living unit, that weighs in favor of it not being a
private home.” Welding, 353 F.3d at 1220.

[T]he sixth [and final] factor is whether the
service provider uses any part of the residence for
the provider's own business’ purposes.” /d.
Although Incor did maintain desks, file cabinets,
and store paperwork in some of the homes, its
proposed findings and conclusions ignored the
specific evidence with regard to specific residences.

Although the district court purported to
conduct the home-by-home analysis required by
Welding, in some respects it misstated the law and
failed to apply the key factors to the relevant
evidence. For example, instead of inquiring
whether Incor's clients had previously lived in their

current homes, as We/ding prescribes, 353 F.3d at

1219, the court pointed instead to what it called

A-21
“uncontradicted evidence at trial ... that Incor's
clients were always allowed to freely move into
different residences and with roommates, if they so
choose.” Aplt. App., Vol. X at 5573. We have some
doubts that the record supports this reading, but
more importantly, it is a different question than
that framed by our precedents. Similarly, the court
found that Incor had no possessory interest in any
of the units, zd. at 5574, but did not explain how
this analysis applied to the four units (2200 Turner
Street, 901 Erie, 200 East Monroe, and 505 North
G Street) for which Incor was listed as the
tenant/lessee or responsible party. For a _ third
example, We/ding requires that the _ court
determine whether the value of the services
provided is a “substantial portion” of the total cost

of maintaining the living unit. 353 F.3d at 1220.

A-22
The district court, instead, looked to the proportion
of total cost borne by the client, as opposed to the
DHS. Aplt. App., Vol. X at 5575.

We therefore remand the case for new
findings of fact in light of the law explained above.
We also remind the court that Incor bears the
burden of proving that these are private homes by a
preponderance of the evidence.

IT. GENERAL HOUSEHOLD WORK
A. The Statutory And Regulatory Framework

The employees' second claim was _ for
overtime compensation based on the theory that
even if they were working in private homes, they
spent more than twenty percent of the total hours
worked each week performing general household
tasks. As a general rule, the FLSA requires

payment of overtime compensation for employees

A-23
who work more than forty hours per week. See 29
U.S.C. § 207. However, it provides an exemption to
“any employee employed in domestic service

employment to provide companionship services for

individuals who (because of age or infirmity) are

unable to care for themselves[.]” 29 U.S.C. §
213(a)(15). In turn, the DOL _. defines
“companionship services” as

those services which provide
fellowship, care, and protection for a
person who, because of advanced age
or physical or mental infirmity, cannot
care for his or her own needs. Such
services may include household work
related to the care of the aged or
infirm person such as meal
preparation, bed making, washing of
clothes, and other similar services.
They may also include the
performance of general household
work: Provided, however, {t]hat such
work is incidental, 7.e., does not exceed
20 percent of the total weekly hours
worked.

29 C.F.R. § 552.6.

Section 552.6 distinguishes household work
related to the care of a client, which includes meal
preparation, bed making, laundry, and other
similar services, from general household work,
which is unrelated to the care of the client. In
McCune v. Oregon Senior Services Division, 643 F.
Supp. 1444, 1450 (D.Or. 1986), affd, 894 F.2d 1107
(9th Cir. 1990), (interpreting Section 552.6 to
determine whether the minimum wage
requirement of 29 U.S.C. § 206 apply) the court set
forth the general test as

[dJusting or cleaning [the client's

bedroom or living room] appears to be

routine, general household work,
rather than work related to the
individual. Cleaning a spill by the
client in either room, by contrast,

would be. non-routine care more
related to the individual than the

A-25

general household, and would not be
included in the twenty percent figure.

The regulation defines care related to
the individual as including meal
preparation, bed making, washing of
clothes and ‘other similar services.’
These similar services would
presumably include other types of
personal care, such as_ bathing,
feeding, or cleaning spills.
Care related to the individual has been expanded to
include more frequent vacuuming and dusting for a
chent with allergies, mopping and sweeping for
clients who crawl on the floor, and habilitation
training, which often includes training the client to

do housework, cooking, and attending to personal

hygiene. See Terwilliger v. Home of Hope, Inc., 42

F. Supp. 2d 1231, 1241-42, 1253 (N.D. Okla. 1999).

A-26

B. The Burden Of Proof

For the reasons explained in Section I, B,
supra, Incor bears the burden of proving its
entiiiement to this exemption under a remedial
statute that must be narrowly construed. The
district court, however, imposed the burden of proof
on the employees. The court based its conclusion on
language in Terwilliger, 42 F.Supp.2d at 1252, that

calls the “'20% rule’ ... an exception to the

companionship services exemption.” Aplt. App.,

Vol. X at 5578 n. 17. This, however, does not shift
the burden of proof. There is no “exception to an
exemption” in 29 C.F.R. § 552.6; instead, the
exemption is the “companionship _ services’
exemption in 29 U.S.C. § 213(a)(15). Further, even
if § 552.6 was an exception, the employer would

still bear the burden of proof. See, e.g., Acton v.

A-27

City of Columbia, 436 F.3d 969, 976 (8th Cir. 2006)
(holding that “[t]he burden is on the employer to
establish that the remuneration in question falls
under an exception [to the FLSA];” Johnson v. City
of Columbia, S. C., 949 F.2d 127, 129-30 (4th Cir.
1991) (holding that “felxemptions from or
exceptions to [the FLSA's] requirements are to be
narrowly construed against the employer asserting
them[,] and [slince the [employer] seeks to come
within the . . . exceptions, the burden is on the
[employer] to show that it is entitled to the benefits
of those exceptions”) (quotation omitted); Donovan
v. Brown Equip. & Serv. Tools, Inc., 666 F.2d 148,
153 (5th Cir. 1982) (same).

The district court also ruled, in the
alternative, that it would rule in favor of Incor

“even if [it] were to place the burden of proof

A-28
regarding the 20% rule on [Incor],” Aplt. App., Vol.
X at 5580. We are unable to review that alternative
holding on this record. The relevant facts were
disputed, and the court did not separately identify
which factual conclusions rested on the erroneous
allocation of the burden of proof. For example, the
court rejected the employees' estimates of how
much time they spent on general household work
because they did not “attempt[ ] to reconstruct
through contemporaneous time records the amount
of housework that he or she performed while
serving as an HTS, whether the housework was
related to the client or general in nature.” /d. at
5537. The question, however, should have been
whether Incor introduced sufficient evidence to
establish that the exemption applied. The lack of

contemporaneous time records could be relevant to

:
2
:
a
:
2
4
:
q

eae

A-29

the ultimate conclusion (assuming that such
recordkeeping was required, which appears not to
have been the case), but the district court erred in
basing its conclusion on a defect in the employees'
case rather than on the content of the employer's
evidence. The court did not explain how, on this
record, it could have reached the alternative
holding that the employer it would rule in favor of
Incor even if the employer bore the burden of proof.

We think it better to vacate this portion of
the decision and allow the district court to
undertake a fresh evaluation of the case in light of
the proper burden of proof.

TT. TRAINING TIME
A. The Statutory And Regulatory Framework
The employees’ third claim was for regular

wages for time spent in training classes under the

A-30

theory that their attendance was involuntary. The
FLSA obligates an employer to pay its employees
for all hours worked. “Work” is not defined in the
FLSA, but an employee generally must be paid for
his time that is controlled and required by the
employer regardless of whether it involves any
mental or physical exertion. See 29 C.F.R. §§§
785.1, 785.6, 785.7; Armour & Co. v. Wantock, 323
U.S. 126, 133 (1944). To that end, the DOL has
promulgated regulations regarding training,
including 29 C.F.R. § 785.27, which provides:

Attendance at lectures, meetings,

training programs and _—_ similar

activities need not be counted as

working time if the following four

criteria are met:

(a) Attendance is outside of the

employee's regular working hours;

(b) Attendance is in fact voluntary;

(c) The course, lecture, or meeting is

not directly related to the employee's
job; and

A-31

(d) The employee does not perform any

productive work during such

attendance.
The regulations further provide that training is not
“voluntary” if an employee's “{a]ttendance ... is ...
required by the employer. It is not voluntary in fact
if the employee is given to understand or led to
believe that his present working conditions or the
continuance of his employment would be adversely
affected by nonattendance.” 29 C.F.R. § 785.28.

B. The Burden Of Proof

An employer seeking to avoid application of
the FLSA's general rule that work is compensable
bears the burden of proving an exception. Acton,
436 F.3d at 976; Johnson, 949 F.2d at 129-30;
Donovan, 666 F.2d at 153. For the reasons

explained in Section I, B, supra, Incor bears the

burden of proving its entitlement to this exemption

A-32
under a remedial statute that must be narrowly

construed.

C. The Standard Of Review
The trial court's factual determinations are

reviewed for clear error, Sanders, 112 F.3d at 470,

but whether a given set of facts constitutes “work”
under the FLSA is a question of law reviewed de
novo. Chao v. Tradesmen Int'l Inc., 310 F.3d 904,
907 (6th Cir. 2002); Birdwell v. City of Gadsden,
970 F.2d 802, 807 (11th Cir. 1992). Further,
“[wlhether the district court failed to consider or
accord proper weight or significance to relevant
evidence are questions of law [this court] review(s]
de novo.” Flying J Inc., 465 F.3d at 829.
D. Analysis
The DOL acknowledges that “[t]he ultimate

decision on interpretations of the [FLSA] are made

A-33

by the courts. 29 C.F.R. § 785.2. Nonetheless,
because the agency “must determine in the first
instance the positions [it] will take in the
enforcement of [the FLSAI,” the regulations “seek
to inform the public of [the] positions” that it will
take. Jd. “[They] should thus provide a ‘practical
guide for employers and employees as to how the
office representing the public interest in its
enfercement will seek to apply [the FLSA].” Jd.
(quoting Skidmore v. Swift & Co., 323 U.S. 134, 138
(1944)). Because 29 C.F.R. §§ 785.27 and 785.28
are interpretative regulations, the courts should
defer to them only to the extent they have the
power to persuade. Skidmore, 323 U.S. at 138.
Similarly, the courts are not bound by informal
administrative opinions; instead, “[ilnterpretations

such as those in opinion letters -— _ like

ra
A
ao
*y
Be
Bi.
iy
¥
yi
-
:

Ey
is
2
*
+
7

eer

bee Se

Pa re ‘
a ee bee

oie

A-34

interpretations contained in policy statements,
agency manuals, and enforcement guidelines, all of
which lack the force of law — do not warrant
Chevron-style deference.” Christensen v. Harris
County, 529 U.S. 576, 587 (2000); see also
Rodriguez v. Whiting Farms, Inc., 360 F.3d 1180,
1189 (10th Cir. 2004).

Although the trial court erroneously afforded
Chevron deference® to § 785.28 and an opinion
letter concerning the child-care industry, we find
these sources persuasive under Skidmore, and
therefore employ them in our analysis. Section
785.28 provides that training is not “voluntary” if
an employee's attendance ...is... required by the

employer. It is not voluntary in fact if the

© Chevron deference refers to Chevron U.S.A., inc. v. Natural
Resources Defense Council, Inc., 467 U.S. 837 (1984).

A-35
employee is given to understand or led to believe
that his present working conditions or the

continuance of his employment would be adversely

”

affected by nonattendance.” And the opinion letter

states in relevant part that

where a State requires employers to
provide training as a condition of the
employer's license to remain open for
business-e.g ., a day care center
operator's license is conditional on all
employees receiving a fixed number of
hours of child care training each year.
As the operator would typically
require employees to attend such
training, it would not be voluntary,
and this criterion would not be met.

Opinion Letter from Dept. of Labor, Wage and
Hour Div. (Sept. 9, 1996), 1996 WL 1031798.
Despite its length, the district court's
analysis of this point, which was adopted word-for-
word from the employer's proposed findings, does

not relate the evidence to the legal standard. The

A-36
evidence, as we discern it from the record, consisted
of testimony from employees and Betsy Breen, and
some documentary evidence. The employees
testified that any employee who missed training
faced removal from the work schedule or being
fired. Ms. Breen testified that the consequences of
the failure to attend training varied “dependling]
on what the training was and how many times they
missed it. If it was a first training and they'd
missed it, then they just continued on their
schedule. If it was a repeated failure to attend a
required training, then they might be removed from
the schedule.” Aplt. App., Vol. X at 5608. The
documentary evidence included a letter from Incor
to an employee stating that she was “taken off the
schedule due to not having [a required course]” and

that she could only get back on the schedule when

A-37
she “received a certificate.” Jd., Vol. XVI at 8484.
The district court does not explain how this
evidence supports a conclusion that the training
was voluntary, for purposes of § 785.28. We
therefore vacate this portion of the decision and
remand to the district court to evaluate the

evidence in light of the regulatory criteria.

IV. LIQUIDATED DAMAGES AND STATUTE OF
LIMITATIONS

A. The Statutory And Legal Framework

The employees argue that the trial court
erred in granting Incor's motion for summary
judgment as to liquidated damages and the
application of a two-year statute of limitations to
their claims. Because the court applied the wrong
definition of willfulness and misapplied the burden

of proof as to liquidated damages, we reverse and

A-38

remand the liquidated damages claim for further
proceedings consistent with this order and
judgment. We affirm the court's order applying a

two-year statute of limitations.

Although a standard of willfulness applies to
both liquidated damages and the statute of
limitations under the FLSA, the definitions and
burdens of proof differ for each. Ordinarily, an
employer who violates FLSA is liable for both
unpaid wages and an additional equal amount as
liquidated damages. 29 U.S.C. § 216(b). To avoid
such damages, the employer must show “to the
satisfaction of the court that the act or omission
giving rise to such action was in good faith and that
he had reasonable grounds for believing that his
act or omission was not a violation of the [FLSA].”

29 U.S.C. § 260. Good faith is a subjective test that

A-39

requires “the employer have an honest intention to
ascertain and follow the dictates of [the FLSA].”
Dep't of Labor v. City of Sapulpa, 30 F.3d 1285,
1289 (10th Cir. 1994) (quotation omitted).
Reasonableness “imposes an objective standard by
which to judge the employer's behavior.” Jd. Only
in those instances where the court finds that the
employer meets this burden, it may, “in its sound
discretion,” deny liquidated damages. Pabst v.
Okla. Gas & Elec. Co., 228 F.3d 1128, 1136 (10 4
Cir. 2000); see also City of Sapulpa, 30 F.3d at 1289
(holding that even if the trial court finds that the
employer acted in good faith and reasonably, it may
still award liquidated damages).

A two-year statute of limitations applies to
an action for unpaid wages under the FLSA, except

where an employer acts willfully, in which case, a

A-40

three-year period applies. 29 U.S.C. § 255(a). The

employee bears the burden of proving that the
employer acted willfully. McLaughiin v. Richland
Shoe Co., 486 U.S. 128, 135 (1988); see also
Gilligan v. City of Emporia, 986 F.2d 410, 413 (10th
Cir. 1993). For purposes of the statute of
limitations, “willful” means “the employer either
knew or showed reckless disregard for the matter of
whether its conduct was prohibited by [the FLSA].”
McLaughiin, 486 U.S. at 133; see also Rerch v.
Monfort, Inc., 144 F.3d 1329, 1334 (10th Cir. 1998).
B. The Burden Of Proof

Summary judgment is proper if the
pleadings, discovery materials, and any affidavits
show that there is no genuine issue as to any
material fact, and the moving party is entitled to a

judgment as a matter of law. Fed.R.Civ.P. 56(c).

A-41
The district court must view the evidence and draw
all reasonable inferences therefrom in the lght
most favorable to the nonmoving party. Jn re Wal-
Mart Stores, Inc., 395 F.3d 1177, 1189 (10th Cir.
2005). As part of this function the court may not
make credibility determinations or weigh the
evidence, and must disregard all evidence favorable
to the moving party that the trier of fact is not
required to believe. Gossett v. Oklahoma, 245 F.3d
1172, 1175 (10th Cir. 2001).

Summary judgment “necessarily implicates
the substantive evidentiary standard of proof that
would apply at the trial on the merits.” Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 252 (1986).
Therefore, a party opposing summary judgment

who does not bear the burden of proof at trial, is

not required to come forward with evidence to

A-42
defeat summary judgment. On the other hand,
where the nonmoving party bears the burden of
proof at trial, he cannot rely on his pleadings to
defeat summary judgment; instead, he must come
forward with evidence sufficient to create a genuine
issue of material fact. Celotex Corp. v. Catrett, 477
U.S. 317, 322 (1986). Under either scenario, the
moving party must demonstrate its entitlement to

judgment as a matter of law.

C. The Standard Of Review

“We review the district court's grant or
denial of summary judgment de novo.” Gilligan,
986 F.2d at 412. Applying the same legal standard
as the district court and viewing the evidence in the

light most favorable to the party opposing the

- motion, “li]f there is no genuine issue as to any

material fact and the movant is entitled to

‘A-43

judgment as a matter of law, summary judgment is
appropriate.” Jd. (quoting Rule 56(c)).

D. The Evidence On Summary Judgment

1. Incor'’s Evidence
a. Edward Breen's Affidavit

Edward Breen attended a conference in
Oklahoma in 1993 at which Joni Fritz, the
executive director of the American Network of
Community Options and Resources (ANCOR), was
invited to speak. According to Mr. Breen, Ms. Fritz
told the group that the companionship services
exemption “would apply to HTS services provided
in the homes of the clients.” Aplt. App., Vol. II at
1156-57. At or about the same time, Mr. Breen
heard that another Oklahoma service provider,

BIOS, had received confirmation from the DOL

that HTS services “provided in the clents' homes

A-44

was [sic] exempt from the FLSA _ overtime
requirements.” /d. at 1157. This news prompted
him to contact the DOL, at which time he spoke to
Steven Voss, who told him that “the [DOL] was
treating HTS services as ‘companions' under the
FLSA and that HTS services were exempt from
overtime requirement.” /d.

In April 1994, the Oklahoma Department of
Human _ Services, Developmental Disabilities
Services Division (DDSD) sponsored a conference
where Ms. Fritz was again invited to speak. “Once
again, Ms. Fritz advised the service providers to
utilize the companion exemption with respect to
HTS services provided in the homes of the clients.”
Id. Mr. Breen revised Incor's HTS job description

in 1995, to incorporate the companionship

exemption. /d. at 1158.

A-45

b. Joni Fritz’s Affidavit

Joni Fritz was the executive director of
ANCOR from 1976 through 1999. ANCOR is a
“national organization whose purpose is to provide
information and advice to organizations that
support people with mental retardation and other
developmental disabilities.” /d., Vol. III at 1354.
She received a letter from the DOL, “which
informed us for the first time about the Section
13(a)(15) exemption for employees who provide
‘companionship services.” Jd.

In 1993, in response to the closure of a state
mental institution, Ms. Fritz was invited to speak

at a conference in Oklahoma attended by Edward

Breen, where she told the group that the

A-46
companionship exemption “would apply _ to
habilitation training services provided that those
services were performed in the homes owned or
leased by people with developmental disabilities
who required support.” /d. at 1355. In April 1994,
Ms. Fritz returned to Oklahoma for another
conference, which was again attended by Mr.
Breen. Once again, she told the group that the
exemption applied and “it was [herl impression
that the State of Oklahoma officials were endorsing
the use of the companionship exemption in order to
provide better and more consistent services to
people with developmental disabilities while
reducing the state's operating costs.” /d.
c. The BIOS Form
Incor provided two pages from a 1991-93

DOL investigation of BIOS, a service provider in

A-47
Oklahoma, titled “WHISARD Compliance Action
Report.” Jd. at 1358. In the conclusions and
recommendations section it states that it conducted
an office audit for BIOS, which is under contract
with the state to provide care for clients released
from a state institution, and “13A15 Companion
Services Applicable.” Jd. at 1359.
d. Incor Memorandum

A June 28, 1993, memorandum from Edward
Breen to Incor's employees memorializes his
telephone conversation with DOL employee Steven
Voss. In response to the employees' questions about
overtime, Mr. Breen contacted the DOL, and Mr.
Voss allegedly told him the DOL “is treating the

HTS category under the heading of Companion.” /d.

at 1361.

A-48
e. John Rowe's Affidavit

John Rowe worked as a case management
supervisor for Oklahoma from 1983 through 1994.
He attended the two conferences where Joni Fritz
spoke about issues “affecting organizations that
provide services to the developmentally disabled.”
Id. at 1364. He echoed that Ms. Fritz explained
that “the overtime provisions of [FLSA] did not
apply to individuals providing services like a [HTS]
in the homes of the clients,” sd, and that the
“companion exemption’ allowed provider
organizations to pay [HTSs] their regular hourly
rate, regardless of the number of hours worked,
when providing HTS/companion services.” /d. Mr.
Rowe opined that the state did not favor overtime

pay because it would save money and provide more

consistent care. Following Ms. Fritz's presentations

A-49
and her “endorsement by state officials as an
authority, many provider organizations began
utilizing the companion exemption in the mid to
early 90's.” Jd. at 1365.
2. The Employees‘ Evidence

The employees presented evidence divine
what Incor did not do to investigate the propriety of
relying on the companionship services exemption.
Among other things, the employees' evidence
established: (1) Incor never read a legal opinion
concerning the companionship exemption; (2) Incor
never sought the advice of a lawyer about the
exemption; (3) prior to being sued, Incor never
questioned its decision not to pay overtime; (4)
prior to being sued, Incor was aware of lawsuits

against other service providers but never inquired

how those companies operated; (5) Betsy Breen

A-50
never read any of the opinions in the lawsuits
against other service providers; (6) Incor's auditors
informed it that a lawsuit involving overtime and
the exemption had gone to court; and (7) employee
Kent Fowler was “told to cut shifts down to 40
hours where possible,” id., Vol. Vuil at 4415, so
Incor could “avoid a lawsuit.” Jd., Vol. IX at 4981-
82.
£. Analysis

Regarding the statute of limitations, we
apply the same standard as the district court and
review whether the employees' evidence, viewed in
the light most favorable to them, was sufficient to
create a genuine issue of material fact as to
whether Incor acted willfully, i.e, whether it

“eitner Knew or showed reckless disregard for the

matter of whether its conduct was prohibited by

A-51
{the FLSA].” McLaughlin, 486 U.S. at 133; see also
Gilligan, 986 F.2d at 413. We agree that the
evidence failed to create a triable issue of fact and
that Incor was entitled to judgment as a matter of
law. Although cases involving knowledge, motive,
and/or intent are not well suited to summary
disposition, Baum v. Great W. Cities, Inc., 703 F.2d
1197, 1210-11 (10th Cir. 1983), this does not mean
that summary judgment is never proper. Instead,
the evidence, viewed in the light most favorable to
the employees, showed that Incor relied on the
advice of industry consultants and state officials in
implementing a policy that was in widespread use
in Oklahoma and elsewhere. Admittedly, Incor did
not consult a lawyer or investigate the lawsuits

against other service providers, however this is not

enough to prove recklessness. Therefore, we affirm

A-52
the court's summary judgment order for the
application of a two-year statute of limitations.

As to liquidated damages, the district court
erred because it applied the test of willfulness used
for the statute of limitations and reasonableness
and placed the burden of proof on the employees.
Aplt. App., Vol. IX at 4984. Because the trial court
misapplied the law, we remand the issue of
liquidated damages for further proceedings
consistent with this order and judgment. For Incor
to obtain summary judgment, the material facts
must be undisputed and establish its right to
judgment as a matter of law. This means that Incor
must satisfy the subjective test of good faith that
requires “an honest intention to ascertain and

follow the dictates of [the FLSAI,” City of Sapulpa,

30 F.3d at 1289 (quotation omitted), and the

A-53
objective test of reasonableness. Jd. Even if Incor
meets this burden, she court may in its discretion
award liquidated damages. /d. If the issue cannot
be resolved on summary judgment, the court is
directed to conduct a hearing to determine whether
liquidated damages are appropriate. We also
remind the court that it may not make credibility
determinations on summary judgment, Gossett,
245 F.3d at 1175,and thus must disregard any
credibility determinations made at trial to shore up

its summary judgment order.”

’ The trial court's findings of fact and conclusions of law
comment on the credibility of Edward Breen and Betsy Breen.
In particular, the court noted that even if they violated the
FLSA, it “would be wholly incapable, after observing their
testimony and demeanor on the witness stand, of believing
such violations resulted from bad faith, malicious intent or
even wilful (sic) negligence[.}” Aplt. App., Vol. X at 5498-99.

A-54

V. CONCLUSION

We AFFIRM the trial court's order applying

a two-year statute of limitations to the employees'
claims. We VACATE the court's findings of fact and
conclusions of law and REVERSE its order on
summary judgment denying the employees' claim
for liquidated damages, and REMAND the case for
further proceedings consistent with this order and
judgment.
Entered for the Court

Michael W. McConnell
Circuit Judge

B-1

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF OKLAHOMA

KENT W. FOWLER, CODY )
FOWLER, LARRY BURRIS, }
MICHAEL LEACH,
FRANCES WOODS, )

)

FILED

SEP 23, 2005
ROSEOLA THORNBURG, WIL B. GUTHRIE
KATHERINE CARROLL, Clerk. U.S. District Court
BETTIE BURNETT, LISA

SMITH, ALICE SMITH, LESA) ~ ne Gon
HORNEY, CHRISTINE _)
LANE-HUCKABAY, KENYA)
WASHINGTON, YOLANDA}
WHITE, ANGELA MCVAY, )
WAKHEETHA ATKESON, _}
ANGIE MILLER, RUBY _s
MCGEE, CARMEN )
KIRKLAND, ANNTONETT )
TAYLOR, DELORIS )
WILSON, TIA SALLIS, )

)

)

)

)

SHERRY SALLIS, BRUCE
MCCARTHY, NICOLE
PIERCE, CYNTHIA
WHITEFIELD, JORETTA
TRUITT, JUDY BLACKMER, )
LAJOYA DAVIS, LECEIF }
SPRING, MISTY GRAHAM, )
SONYA JULY and )
STEPHANIE NEWMAN, )
Individually and }
standing in the stead of )
other persons similarly _)}

B-2

situated,
Plaintiffs,

VS. )
) No. CIV-03-321-WH
INCOR, SHELTERED )
WORK ACTIVITY )
PROGRAM, INC., an )
Oklahoma Corporation, }
d/b/a INCOR, EDWARD }
BREEN, BETSY BREEN, )

Defendants.)

JUDGMENT

In accordance with the Findings of Fact
and Conclusions of Law entered contempo-
raneously herewith,

IT IS ORDERED, ADJUDGED and DECREED

that judgment is entered in favor of the

defendants and against the plaintiffs.

Dated this 23 day of September, 2005.

/s/ Ronald A. White
RONALD A. WHITE
UNITED STATES DISTRICT JUDGE

B-3

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF OKLAHOMA

KENT W. FOWLER, CODY )
FOWLER, LARRY BURRIS, )
MICHAEL LEACH, )
FRANCES WOODS, )
)
)

FILED

SEP 23, 2005

WILLIAM B. GUTHRIE
Clerk, U.S. District Court

By:

ROSEOLA THORNBURG,
KATHERINE CARROLL,
BETTIE BURNETT, LISA

SMITH, ALICE SMITH, LESA) Deputy Clark
HORNEY, CHRISTINE
LANE-HUCKABAY, KENYA)
WASHINGTON, YOLANDA)
WHITE, ANGELA MCVAY, )
WAKHEETHA ATKESON, _ )

ANGIE MILLER, RUBY )
MCGEE, CARMEN )
KIRKLAND, ANNTONETI |)
TAYLOR, DELORIS )
WILSON, TIA SALLIS, )
SHERRY SALLIS, BRUCE )}
MCCARTHY, NICOLE )
PIERCE, CYNTHIA )
WHITEFIELD, JORETTA )
TRUITT, JUDY BLACKMER, )
LAJOYA DAVIS, LECEIF _ )
SPRING, MISTY GRAHAM, }
SONYA JULY and )
STEPHANIE NEWMAN, )
Individually and )
standing in the stead of }
other persons similarly _)

B-4

situated,
Plaintiffs,

VS. )

) No. CiV-03-321-WH
INCOR, SHELTERED ) :
WORK ACTIVITY )
PROGRAM, INC., an )
Oklahoma Corporation, )
d/b/a INCOR, EDWARD )
BREEN, BETSY BREEN, )

Defendants.)

FINDINGS OF FACT AND
CONCLUSIONS OF LAW

This matter came on for non-jury trial on
December 6-10, 2004. The parties submitted
proposed findings of fact and conclusions of law
on May 2, 2005. Having considered the record
as whole, the Court hereby enters its Findings of
Fact and Conclusions of Law pursuant to Rule
52(a) F.R.Cv-P.

|. STATEMENT OF THE CASE

On June 4, 2003, three Plaintiffs brought this
action under the Fair Labor Standards Aci,
(“FLSA"), 29 U.S.C. § 201 et seq, for alleged failure

B-5

to pay overtime wages and alleged failure to
pay regular rate wages for time spent receiving
state-mandated training consistent with the FLSA.
Over the ensuing months several Plaintiffs joined
this action, eventually bringing the total number
of Piaintiffs to forty-nine. In addition to the
Plaintiffs’ claims for back overtime and training
time compensation, several of the Plaintiffs
brought claims for alleged Adverse Actions
allegedly taken against them by the Defendants
as a result of their filing/joining this action!.
Plaintiffs are employees, or former employees, of
the Defendant, Supported Work Activity
Program, Inc, d/b/a Incor, Inc. (“Incor’.) The
primary Defendant in this action, Incor, is a non-
profit corporation which provides a variety of
services to developmentally disabled individuals.

Incor did not pay Plaintiffs time and one
half for overtime hours from June 4, 2001 forward
when the respective Plaintiffs worked in Incor's

Residential Program as_ Habilitation § Training

' See 29 U.S.C. § 215{a)(3).

B-6

Specialists (“HTS"), House Managers, or both.
Kent Fowler, in addition to his time spent as an
HTS, also worked as a Program Coordinator in a
supervisory capacity over Defendants’ various
employees. During the pertinent period of time,
Incor claimed to be exempt from paying
overtime wages to Plaintiffs commensurate with
the “Companionship Services” exemption found
in 29 U.S.C. § 213(a)(15), which exempts payment
of overtime wages to employees who provide
“Companionship Services” for individuals who are
unable to care for themselves. Additionally,
Incor did not compensate Plaintiffs at their
regular hourly rate for undergoing _ state-
mandated training to provide _ habilitation
training services (“Training Time Claims").
Instead, for training time, Incor awarded Plaintiffs
with “training vouchers” which compensated
Plaintiffs at minimum wage for each hour of
training completed.

In challenging Defendant's use of the

Companionship Services exemption, Plaintiffs

B-7

claimed that the HTS services provided were not
rendered in the “private home” of the individual
receiving the services. Plaintiffs also relied upon
an exception to the companionship services
exemption which requires overtime payment to
the employees if they are found to have spent
more than 20 percent of their total weekly hours
worked performing general household work
unrelated to the care of the individuals whom
they serve ("20% exception”). The "20%
exception" is found in 29 C.F.R. § 552.6.

In response, Incor maintains that the
clients’ homes were “private” for purposes of
utilizing the Companionship Exemption and that
Plaintiffs did not spend more than 20% of their
time performing general household work
unrelated to the care of the individuals, and thus
the Plaintiffs do not fall within the “20%
exception”. Moreover, Incor claims that fhe

state-mandated training required to provide HITS

services meets the criteria set out by the United

B-8

States Department of Labor exempting “training
time” as hours worked.

Finally, Incor asserts that it took no Adverse
Action against any employee for filing or joining
this lawsuit.

This Court has subject matter jurisdiction
over this action. 28 U.S.C. § 1331; 29 U.S.C. §
216(b). Venue is appropriate in this Court 28
U.S.C. § 1391.

li. HISTORY OF THE LITIGATION PRIOR TO TRIAL

The following is a chronology of pertinent

dates and rulings which significantly affected this

litigation prior to tral.

A. On June 4, 2003, Plaintiffs filed the original
Complaint naming the following: Kent W.
Fowler, Cody Fowler, and Lary Burris,

Plaintiffs, v. Incor, Sheltered Work Activity

Program, Inc., an Oklahoma Corporation,

d/b/a Incor, Edward Breen, Betsy Breen,

2 The Court uses “significantly affected" to mean orders
which resulted in a final resolution of issues. Numerous
motions of the defendants for summary judgment were
also denied, leaving such issues for trial.

B-9

Mitzi Woodburn, Mike Chastain, John

Sterling, James Farley, Nedra Lewis, Bill

Reynolds and Martin Weaver, Defendants:
Case No. ClV-03-321-WH, in the United

States District Court for the Eastern District

of Oklahoma.

On September 4, 2003, Plaintiffs filed their
First Amended Complaint adding the
following Plaintiffs: Michael Leach, Frances
Woods, Roseola Thornburg, Katherine
Carroll, Bettie Burnett, Lisa Smith, and Alice
Smith.

On October 10, 2003, Plaintiffs filed a
Second Amended Complaint adding the

following Plaintiffs: Adrian Brewer, Cindi

Cookson, Debbie Eversole, Lesa Horney,
Christine Lane-Huckabay, Leslie Bryant,
Kenya Washington, Yolanda White, Angela
McVay, Wahkeetha’ Atkeson, Robert
Alfred, Casey Alfred, Dionne Cullom, Angie
Miller, Ruby McGee, Carmen Kirkland,

B-10

Anntonett Taylor, Carol Sellers, Deloris
Wilson, and Warren WhitekKiller.

On October 10, 2003, the following Plaintiffs
fied Notices of Intent to opt into the
lawsuit: Judy Blackmer, Sherry Gardenhire,
Lajoya Davis, James Dement, Misty
Graham, Sonya July, Stephanie Newman,
Nicole Pierce, Mark Reel, Leonard Triggs,
Amy Vasquez, and Cynthia Whitfield.

On October 20, 2003, Plaintiffs filed a Third
Amended Complaint adding the following
Plaintiffs: Tia Sallis, Sherry Sallis, Evelyn Sallis,
Bruce McCanmhy, and Jennifer Wilson.

On October 20, 2003, Plaintiff Joretta Truitt
opted into the lawsuit by filing a Notice of
Intent.

Although not clearly delineated in the
various complaints, the following Plaintiffs
asserted Adverse Action claims against the
Defendants: Kent Fowler, Yolanda White,
Christine Lane-Huckabay, Carmen

Kirkland, Alice Smith, Angela McVay, Ruby

B-11

McGee, Joretta Truitt, Cody Fowler,
Cynthia Whitfield, Wahkeetha Atkeson,
Bettie Burnett and Stephanie Newmans.

H. On July 2, 2004, Plaintiffs filed a Fourth
Amended Complaint adding the following
plaintiffs to the caption: Nicole Pierce,
Amy Vasquez-McClurg, Cynthia Whitfield,
James Dement, Joretta Truitt, Judy
Blackmer, Lajoya Davis, Leceif Spring,
Leonard Triggs, Mark Reel, Misty Graham,
Sherry Chatman-Gardenhire, Sonya July
and Stephanie Newman.

I. On July 8, 2004, the Court granted
Defendants’ Motion for Partial Summary
Judgment on Willfulness, Statute’ of
Limitations and Liquidated Damages.

Jb. On July 8, 2004, the Court granted

Defendants’ Motion for Summary

3 In their proposed Findings of Fact and Conclusions of Law,
defendants list Nicole Pierce among the plaintiffs asserting
an Adverse Action claim. The Court does not find such a
claim on her behalf reflected in the briefing or the resulting
Order (#363).

B-12

Judgment of Defendants James Farley,
Nedra Lewis, Bill Reynolds and Martin
Weaver.

On August 3, 2004, the Court granted the
motion of Plaintiffs’ counsel to withdraw on
behalf of named plaintiffs Carol Sellers,
Jennifer Wilson and Debbie Eversole and
dismissed their claims without prejudice.

On August 3, 2004, the Court granted
Defendants’ Motion for Sanctions against
Plaintiffs Debbie Eversole, Mark Reel, Carol
Sellers and Warren’ Whitekiller, and
dismissed Plaintiffs Mark Reel and Warren
Whitekiller without prejudice.

On August 27, 2004, the Court granted
Defendants’ Motion for Summary
Judgment of Defendants Mitzi Woodburn,
Mike Chastain and John Sterling.

On August 31, 2004, the Court granted
Defendants’ Motion for Partial Summary
Adjudication Regarding the
Companionship Exemption to the FLSA and

B-13

Regarding Plaintiff Leonard Triggs. The
Plaintiff joined in the action outside the
statutorily prescribed deadline for filing or
joining a claim for overtime pay or to claim
any unpaid compensation.

On September 3, 2004, the Court granted
Defendants’ separate Motions for Partial
Summary Adjudication Regarding the
Companionship Exemption to the FLSA and
Regarding Plaintiffs James Dement, Sherry
Gardenhire, Amy Vasquez, Dionne Cullom,
Adrian Brewer, Robert Alfred, and Evelyn V.
Sallis. These Plaintiffs joined in the action
outside the statutorily prescribed deadline
for filing or joining a claim for overtime pay
or to claim any unpaid compensation.

On September 16, 2004, the Court granted
Defendants’ Motion for Partial Summary
Adjudication Regarding Plaintiff Kent
Fowler, dismissing his Adverse Action claim

against Defendants.

B-14

On September 17, 2004, the Court granted

Defendants’ separate Motions for Partial

Summary Adjudication Regarding Plaintiffs

Christine Lane-Huckabay, Carmen
Kirkland, Alice Smith, and Angela McVay,
dismissing their Adverse Action claims
against Defendants.

On September 20, 2004, the Court granted
Defendants’ separate Motions for Partial
Summary Adjudication Regarding Plaintiffs
Ruby McGee, Joretia Truitt, and Cody
Fowler, dismissing their Adverse Action
claims against Defendants.

On September 21, 2004, the Court granted
Defendants’ separate Motions for Partial
Summary Adjudication Regarding Plaintiffs
Cynthia Whitfield, Wahkeetha Atkeson,
Bettie Burnett, and Stephanie Newman,
dismissing their Adverse Action § claims
against Defendants.

On September 21, 2004, the Court granted

Defendants’ separate Motions for Partial

B-15

Summary Adjudication Regarding the
Companionship Exemption to the FLSA and
Regarding Plaintiffs Cindi Cookson, Leslie
Ann Bryant, and Casey Alfred. These
Plaintiffs joined in the action outside the
statutorily prescribed deadline for filing or
joining a claim for overtime pay or to claim
any unpaid compensation.

FINDINGS OF FACT

FACTS, ISSUES AND CLAIMS
JUDICIALLY DETERMINED PRIOR TO TRIAL

Given the posture of this litigation as

outlined above, the following Facts, Issues and

Claims were determined prior to trials:

1. In 1980, the Sheltered Work Activity
Program, Inc. (“SWAP") was formed to
serve and = support individuals’ with

developmental disabilities (i.e., those with

* During trial, plaintiffs presented various offers of proof and
evidence in opposition to various rulings already made by
the Court. Plaintiffs made a clear record that they did not
waive their nghts to appeal as to any Finding of Fact or
Conclusion of Law contained herein or in previous Orders
entered in this case.

B-16

an IQ of 75 or below). In 1981, SWAP was
incorporated as a not for profit corporation
in Oklahoma and in 1982, and received a
501(c}({3) designation from the Internal
Revenue Service. In 1982, SWAP began
doing business as Incor. (July 8, 2004
Order, page 2.)

Commensurate with its mission, Incor serves
the needs of the developmentally disabled
with several different services, including: a
workshop that employs developmentally
disabled individuals, employment training.
job development, job coaching,
recreation and supported living services
(aka the “Residential Program”). The
Residential Program, which began in
December 1989, is intended to normalize
the lives of the developmentally disabled
individuals by providing them with
fellowship, care, training and protection.

This is done in their own homes, rather than

in an institutional setting. The Residential

B-17

Program also seeks to integrate’ the
developmentally disabled into their
community and help them be as
independent as possible. (July 8, 2004
Order, page 2.)

Incor’s services are provided to
developmentally disabled clients (“client”)
by Habilitation Training Specialists (“HTS”)
and “House Managers." House Managers
are simply HTS that also perform added
administrative duties. Both the HTS and
House Managers provide their services in
the client's own home. _ In addition to
providing care, training, protection and
fellowship in the client’s home, the HTS
assist clients in interacting in the
community. (July 8, 2004 Order, page 2-3.)
Incor's Residential Program is regulated by
and funded through the Oklahoma
Department of Human Services (“DHS”).
Approximately 98% of the funding for the

residential programs is provided by state

B-18

and federal funding through the State of

Oklahoma. The DHS is charged with
monitoring the services provided to the
developmentally disabled throughout the
state and insuring that service providers,
such as Incor, provide quality service to the
clients. In order to ensure quality services
for the developmentally disabled, the DHS
entered into contracts with each different
service provide. These contracts set out
requirements that must be met before the
provider can be reimbursed for services
provided to the developmentally disabled.
The DHS contract requirements are
enforced through state-employed Case
Managers who are assigned to, among
other things routinely visit client home.
monitor the client's progress, set
appropriate client goals, and review
necessary documentation concerning the
client's activities, care and protection.

Pursuant to the DHS contract with service

B-19

providers, HTS hours are reimbursed to the
service providers at a flat rate, regardless
of whether the individual HTS worked over
forty (40) hours during that particular week
(July 8, 2004 Order, page 3). (The acronym
“DHS" has been substituted for “DDSD”
where appropriate for consistency
throughout this Order.)

In 1993, the President of Incor, Ed Breen,
attended a conference on behalf of Incor
at Western Hills State Lodge concerning
issues affecting the developmentally
disabled and those organizations providing
services to them. At that conference, the
executive director of ANCOR (The
American Network of Community Options
and Resources) based in Washington, D.C.,
Joni Fritz, advised those in attendance that

the companionship exemption would

apply to HTS services provided in the
homes of the clients. At the time, ANCOR

was one of the leading national

B-20

organizations providing advice to
organizations that provided services to the
developmentally disabied. (July 8, 2004
Order, pages 3-4.)

At or near the time of the Western Hills’
conference, Mr. Breen learned that
another Oklahoma provider of HITS
services, BIOS, had received confirmation
from the U.S. Department of Labor that HTS
services provided in the clients’ homes
were exempt from the FLSA overtime
requirements. in turn, Mr. Breen contacted
the U.S. Department of Labor and spoke to
Mr. Steven Voss. Mr. Voss confirmed that
the Department of Labor was treating HTS
as “companions” under the FLSA and that
HTS services were exempt from the
overtime requirement. Following Mr.
Breen's conversation with Mr. Voss, and
given the’ information that he had
received, Incor also began utilizing the

companion ship exemption fro HTS services

a
¢:
ad

33
zs
:

“3
t
i
Z

B-21

provided in the client's home (July 8, 2004
-Order, page 4.}

On or about April 15, 1994, Mr. Breen
attended a DHS sponsored conference in
Tulsa for the service providers at which Ms.
Fritz was invited to speak. Once again, Ms.
Fritz advised the service providers to utilize
the companionship exemption with
respect to HITS services provided in the
homes of the clients. Given the context of
the DHS sponsored conference, Mr. Breen
considered Ms. Fritz’ opinions to be
authontative on the subject and an
endorsement by the DHS that service
providers should utilize the Companionship
exemption with respect to HTS services.
(July 8, 2004 Order, page 4.)

Ms. Fritz’ presentations at Western Hills State
Lodge in 1993, and in Tulsa in 1994, were
attended by DHS Case Management

Supervisor, John Rowe, Upon learning of

the companionship exemption, OHS

B-22

recognized that its utilization would
represent two advantages: — significant
savings to the state and more consistent
training and care to the developmentally
disabled. As a result of Ms. Fritz’ advice
and her endorsement by state officials as
an authority, many provider organizations
began _—siuttilizing the |= companionship
exemption in the mid to early 90's. Some
of those provider organizations include:
Home of Hope, Inc.; BIOS, inc.; Volunteers
of American, iInc.; Gatesway; and
Developmental Services of Tulsa. (July 8.
2004 Order, pages 4-5.)

Mr. Breen considered the advise of Ms. Fritz
and the DHS to be authoritative with
respect to utilization of the companionship
exemption. Moreover, Mr. Breen’s belief
was further strengthened by the USS.

Department of Labor's position on BIOS's

use of the Companionship exemption as

4
4
_
Fi
7

;

ES

m Pe pe OU

10.

11.

12.

B-23

well as his own discussions with Mr. Voss.
(July 8, 2004 Order, page 5).

In 1995, Mr. Breen revised Incor's job
description for Habilitation Training
Specialists to incorporate the
companionship exemption. Although
specific duties are listed in the job
description for Habilitation Training
Specialists, the overall responsibility for HTS
is to provide protection, care and training
for the client. Even though the job
description for HTS at Incor has undergone
some slight modification over the years, it
has always been Incor’s intention that the
HTS job description reflect companionship
services consistent with the FLSA
exemption. (July 8, 2004 Order, page 5.)
Defendant's conduct was not “willful”
under the FLSA. (Order July 8, 2004).

The Court's Order of July 8, 2004 regarding
the alleged “willfulness” of Defendant's

conduct affect both the statute of

pe
s Le
ia
a
x

B-24

limitations for Plaintiffs’ Claims and
Damages and Plaintiffs’ potential recovery
of Liquidated Damages. Pursuant to 29
U.S.C. § 255(a) a “willful” violation of the
FLSA is accorded a three year statute of
limitations period. Otherwise, the statute of
limitations is two years. Further, the same
“willfulness” standard utilized for the statute
of limitations applied to Plaintiffs’ claims for
liquidated damages. By its July 8, 2004
Order, the Court ruled that the applicable
statute of limitations for each Plaintiff's
claims and damages was two years from
the date each person was added as a
party, either by amended complaint or
written consent, and not two years from
the date the original Complaint was filed
consistent with 29 U.S.C. § 256. Thus,
liquidated damages will not be awarded
to the Plaintiffs in any event. (Order of July
8, 2004.)

ae
4
199
ae

13.

14.

B-25

The client's residences located at 710 W.
Indianola; Rt. 1, Box 225C; 520 Maple; 1716
N. Jones; 715 S. York; 408 Belmont; 2302
Monta Avenue; 1135 Summitt; and
Bethany Anne Ellis’ foster home (orders ##
322, 332, 333, 335, 336, 337, 337, 342, and
334, respectively) are private homes for the
purposes of applying the companionship
services exemption.
FACTS RELATING TO ALL CLAIMS

The Court observed that during their
testimony, both Ed and Betsy Breen were
competent and knowledgeable. They
obviously knew all aspects of the provisions
of companionship services to the
developmentally disabled. They obviously
care deeply about both their clients and
their employees. During cross examination
by opposing counsel, they were never
intentionally evasive. The Court believed
them both to be highly credible. Even if

any violations of law were found to have

aa
a
Fae -

B-26

occured, the Court would be wholly
incapable, after observing their testimony
and demeanor on the witness stand, of
believing such violations resulted from the
bad faith, malicious intent or even willful
negligence of the Breens.

15. Conversely, many of the individual Plaintiffs
seemed to have little clue why they were
present and testifying. Some of their
demeanor was _— lackadaisical and
uncaring. Some of them were resentful
and obviously had an axe to grind with
Incor.s Notable exceptions to _ this
description of their general demeanor do

exist; however, overall, the credibility of the

* Throughout this Order, the Court may refer to such
individuals as “axe-grinders.” This phrase is intended to be
merely descriptive. See, e.g., Nixon v. Runyon, 856 F.Supp.
977, 985 (E.D.Pa. 1994) (“The Court does not find Ms.
Bearden credible, given her demeanor on the stand, her
relationship to the plaintiff. and the axe she has fo grind
with the Postal Service.”) It is simply a_ short-hand
description of those Plaintiffs who decided to voluntanily
forego the opportunity to testify objectively and
respectfully, and instead engaged in excessive advocacy
for their cause, and exhibited peculiar animosity towards
incor.

B-27

Plaintiffs was far surpassed by that of the
Breens.

FACTS RELEVANT TO THE “EMPLOYER” STATUS
OF DEFENDANTS ED AND BETSY BREEN UNDER
THE FLSA

16. Incor ts a_ not-for-profit corporation in

Oklahoma and has been designated as a
501(a)(3) corporation by the _ Internal
Revenue Service. (Defendant's Exhibit 50,
page 188; Trial Transcript, page 28, line 22-
page 279, line 2.)

i. Ed Breen is the CEO at Incor. {Trial
Transcript, page 7, lines 3-6.)

18. Betsy Breen has ween the director of
operations at Incor for the last ten years.
(Trial Transcript, page 4, lines 17-21.)

19. There are no outstanding shares of stock in
Incor. (Trial Transcript, page 39, lines 3-6.)

20. No one owns stock in Incor. (Trial
Transcript, page 39, lines 7-8.)

21. Ed and Betsy Breen's salary or bonuses are

not based upon Incor's financial status, or

B-28

Incor's profits or losses.. (Trial Transcript,
page 39, lines 9 — page 40, line 1.)

FACTS RELATED TO THE PLAINTIFFS'
“TRAINING TIME” CLAIMS

In order to provide Companionship services

as an HTS in the State of Oklahoma, the
Oklahoma Department of Human Services
(“DHS") requires a certain level of basic

training regarding the developmentally

disabled. (Trial Transcript, page 43, line 11-

21; Defendants’ Exhibit 50, pages OOOl,
0006-0008.)

The DHS also requires that HTS remain
current on their training by mandatory
updated training on an annual basis.
(Defendants Exhibit 50, page 0008; Trial
Transcript, page 51, line 21-23.)

Only certain courses certified by the State
meet the required’ training — criteria.
(Defendants' Exhibit 50, page 0008; Trial
Transcript, page 51, line 24 —- page 52, line
13.)

25.

26.

27.

B-29

Based upon the facts that the State-
mandated training was not specifically
related to any client served by Incor and
was transferable by the HTS should they
chose to move to another provider of HTS
services, Incor did not consider the time
spent by employees for HTS training as
compensable under the FLSA consistent
with Oklahoma Department of Labor
Regulation 380:30.1-12(b)(2). (Defendants'’
Exhibit 50, page 0241; Trial Transcript, page
56, line 17 — page 58, line 5.)

Incor’s policy concerning compensation
for training time was also based upon
wage and hour seminars attended by
Incor's management. (Trial Transcript,
page 53, line 5 - page S55, line 13:
Defendants’ Exhibit 50, page 0017, 0091,
0092.)

In the event one of Incor's clients had
special needs which required specialized

training for the HTS, an “in-service” was

28.

2?.

B-30

conducted, at which the HIS were paid
their regular hourly rate. (Trial Transcript,
page 50, line 12-25.)

Although the HTS training time was not
compensable, Incor paid Training vouchers
to HTS for time spent taking State-
mandated training. The training vouchers
amounted to approximately minimum
wage for each hour the employee
completed in training. (Trial Transcript,
page 55, line 16-page 54, line 16.)

To fulfill the State's training requirements,
Incor would notify the HTS two weeks to
one month in advance of the training so
that the House Manager and HTS could
adjust their respective schedules and the
HTS complete their regular number of
working hours that week and still receive
the training. In other words, the HTS could
complete the state-mandated training

and still work a full work week. (Trial

Transcript, page 47, line 25 — page 48, line

B-31

8; page 73, line 24 — page 74, fine 21;
Plaintiffs’ Exhibit 188, page 06270.)

Incor does not require any additional
training than that already required by the
DHS to service as a Habilitation Training
Specialist in the state of Oklahoma. {Trial
Transcript, page 44, line 7-10; page 77, line
23-25.)

Incor pays for the costs of the employee's
habilitation training. (Trial Transcript, page
44, lines 3-6; page 80, line 25 — page 81, line
1.)

In the event the training Course did not fit
the HTS' schedule, the HTS would advise
Incor and the HTS would be rescheduled
for training at another approved course in
the future. (Trial Transcript, page 48, line 9-
12.)

lf the HTS was enrolled in the course and
did not attend, the course’ provider

generally would charge Incor a “no-show”

fee. If the HTS’ absence from the training

Ss

34.

35.

B-32

was not adequately explained, Incor
reserved the right to pass on the “no-show”
fee to the HTS. (Trial Transcript, page 48,
line 9 — page 49, line 14.)

in the event incor's HTS were ever found to
be untrained or their training had lapsed,
incor was subject to forfeiting to DHS the
money charged to the State for any hours
worked by an “untrained” HTS. Such a
forfeiture potentially works a double
penalty on Incor because it is almost
certain that the HTS will have already been
paid for the HTS hours worked before DHS
deciares the HIS) “untrained” and
demands return of any money charged for
HTS hours worked while out of compliance.
(Trial Transcript, page 76, line 4 — page 77,
line 18.)

DHS requires Incor's training policy to
match DHS' policy. (Trial Transcnpt, page
82, lines 12-17).

B-33

36. Incor has no choice in its training policy.
(Trial Transcript, page 82, lines 12-20.)

37. DHS required twenty hours of annual
training for Habilitation Training Specialists
and Incor imposed no additional! training
requirements. (Trial Transcript, page 51,
lines 21-23; Defendants’ Exhibit 40, page
0005.)

FACTS RELATED TO “PRIVATE HOUSE” STATUS:
FACTS COMMON TO ALL HOMES

38. Incor's purpose is to serve’. the

developmentally disabled adults in
northeastern Oklahoma. (Trial Transcript,
page 27, lines 11-13.)

39. Developmentally disabled are typically
individuals with an |.Q. of 75 or less. (Trial
Transcript, page 27, lines 14-19.) |

40. _ _ Incor provides services to developmentally
disabled individuals pursuant to a contract
with the Oklahoma Department of Human
Services (“DHS"). (Trial Transcript, page 35,
lines 3-20.)

4\.

42.

B-34

The contract between Incor and DHS

requires that the Daily Living Support
provided by HIS is “... furnished to adults
who reside in a home that is leased or
owned by the person(s) receiving
services.” (Defendants’ Exhibit 40, page
0015, addendum 2002-03.)

The contract between Incor and DHS
further provides:

The Agency will comply” with

assurances contained in the consent

decree including but not limited to:

a. supporting the active involve-
ment of consumers and their
parents and guardians in the
team process.

b. complying with contract and
policy provisions including but
not limited to the Individual
Plan Policies, Health Policy.

Si supporting and implementing

the individual plan.

43.

44.

45.

B-35

d. supporting whenever possible
the views, preferences and
advice of the individuals, his or
her parents or guardian.

e. residential supports that are
least restrictive and consistent
with individuals’ plans.

f. assuring individuals live in a

home of their choice and with

roommates, if they so choose.
(Defendants’ Exhibit 40, page 00164,
addendum 2003-04.) (emphasis added.)

HTS received specific training on teaching

clients to make choices. (Defendants’
Exhibit 40, page 0143.)

incor did not require clients to have
roommates or determine the composition
of any home. (Trial Transcript, page 180,
lines 17-20; page 235, lines 5-14.)

Incor did not lease, Own or have any

possessory interest in the homes leased by

B-36

their clients.6 (See, relevant Lease
Agreements, Footnote 3.)

46. The provision of Incor’s services was not
dependent upon the clients residing in any
particular location. (Trial Transcript, page
199, lines 13-25.)

47. The parents/guardians of the clients are
allowed fo screen/dismiss HTS staff from the
home if they wish to exercise that

prerogative. (Trial Transcript, page 389,

* Yarbrough, Swindler, Leflore Lease Agreements,

Defendants’ Exhibit 47, pages 810 Snherwood-2222-2223; 505
Judy Lane Lease Agreement, Defendants’ Exhibit 42,
pages 505 Judy-1409-1412; Capps Lease Agreement,
Defendants’ Exhibit 51, page 315 N. 15th-0003; D.B. & J.T.,
551 Sherwood Lease Agreement, Plaintiffs’ Exhibit 24,
pages Plaintiffs'°-O0738-00739; 505 N. G Street Lease
Agreement, Plaintiffs’ Exhibit 34, pages Plaintiffs'-O1089-
01091; 919 Choctaw Lease Agreement, Plaintiffs’ Exhibit 46.
page Plaintiffs'O1395; E. Jordan, 925 Callie Lease
Agreement, Plaintiffs’ Exhibit 64, page Plaintiffs'-01630; 1135
Summit Lease Agreement, Plaintiffs’ Exhibit 66, pages
Plaintiffs'-01636-01637; 300 N. 40" Lease Termination.
Defendants’ Exhibit 38, page 300 N. 40-1123; 826 S. York.
#1B Lease Agreement, Defendants’ Exhibit 35, pages 826 S.
York-0001-0002, 0113; 901 Efic Lease Agreement,
Defendants’ Exhibit 44, page 901 Erie-0368; 2200 Turner
Lease Agreement, Plaintiffs’ Exhibit 19. Plaintiffs'-O0583-
00586.

B-37

lines 9-11; Trial Transcript, page 325, line 23
— page 326, line 2.)

Incor does not guarantee any repairs,
maintenance, or conditions of the premises
after the clients leave. (Trial Transcript,
page 200, line 22 — page 201, line 1.)

A client typically begins receiving services
after a referral through a DHS case
manager (“Case Manager"). (Trial
Transcript, page 36, lines 11-21.)

Normally, the client and his
parent/guardian will interview several
provider agencies and then select one.
(Trial Transcript, page 36, lines 11-21.)

Once Incor is selected by the client as his
provider, the client's parent or guardian
enter into a Service Agreement/Financial
Agreement (collectively “Service
Agreement”) in which the parent/guardian
requests Incor to perform certain

responsibilities for the care and well-being

B-38

of the client.’ (See, relevant Service

Agreements, Footnote 4.)

7 Harison Service Agreements, Defendants’ Exhibit 44,
pages 901 Erie-0448-0458; Yarbrough Service Agreements,
Defendants’ Exhibit 47, pages 810 Sherwood-2229-2236;
Swindier Service Agreements, Defendants’ Exhibit 47,
pages 810 Sherwood-2317-2320 and Plaintiffs’ Exhibit 28,
pages Plaintiffs’'-O0882-00883; Leflore Service Agreements,
Defendants’ Exhibit 47, pages 810 Sherwood-2393-2395;
Lawmaster Service Agreements, Defendants’ Exhibit 42,
pages 505 Judy-1413-1416; Haas Service Agreements, |
Defendants Exhibit 42, pages 505 Judy-1530-1535; Capps
Service Agreements, Defendants’ Exhibit 51, pages 315 N.
15! 0004-0005; Ballard Service Agreement, Defendants’
Exhibit 51, pages 315 N. 15'* 0006-0007; Thomas Service
Agreement, Defendants’ Exhibit 51, page 315 N. 15» 0008;
JT. Service Agreements, Plaintiffs’ Exhibit 23, pages
Plaintiffs’ -O0723-00724, pages Plaintiffs'-O0730-00731, pages
Plaintiffs'-O0733-00735: D.B. Service Agreements, Plaintiffs’
Exhibit 23, pages Plaintiffs'-O0725-00729; Breen Service
Agreements, Plaintiffs’ Exhibit 33, pages Plaintiffs'-O1085-
01088; K.J. Service Agreement, Plaintiffs’ Exhibit 37, pages
01148-01149; B.C. Service Agreements, Plaintiffs’ Exhibit 45,
pages Plaintiffs-O1380-01390; J.S. Service Agreements,
Plaintiffs’ Exhibit 54, pages Plaintiffs'-O1528-01531; Ballard
Service Agreement, Plaintiffs’ Exhibit 60, page Plaintiffs’-
01615; E. Jordan Service Agreement, Plaintiffs’ Exhibit 63,
pages Plaintiffs’°-O1628-01629; ET. Service Agreement,
Plaintiffs’ Exhibit 67, page Plaintiffs'-01639; G.K. Service
Agreement, Plaintiffs’ Exhibit 67, page Plaintiffs'-01640:
Moore Service Agreement, Plaintiffs’ Exhibit 50. pages
Plaintiffs'-01489-01492; Wilkie Service Agreement, Plaintiffs’
Exhibit 7, pages Plaintiffs’-O00107-00108, 00113-00114, 00119-
00120; Oman Service Agreement, Plaintiffs’ Exhibit 18.
pages Plaintiffs’°-O0577-00582; Reece Service Agreements.
Plaintiffs’ Exhibit 18, pages Plaintiffs'-00569-00576.

B-39

52. The Service Agreements dictate what
services Incor will provide io the client.
Generally, the Service Agreement requires
that Incor provide: Habilitation Training
Services as prescribed by the client's
Interdisciplinary Team (“IP Team”);
transportation services; assist the client with
his/her finances; dictates how the client's
money will be spent; that Incor will provide
trained HTS staff. Further, the Service

Agreement confirms the client's/

Lawmaster Financial Agreements, Defendants’ Exhibit 42,
pages 505 Judy-1409-1412; Wilkie Financial Agreement.
Defendants’ Exhibit 42, pages 505 Judy-1478-1483; Haas
Financial Agreement, Defendants’ Exhibit 42, pages 505
Judy-1528-1529; J.T. Financial Agreement, Plaintiffs’ Exhibit
23, page Plantiffs’-O0732; D.B. Financial Agreement,
Plaintiffs’ Exhibit 23, pages Plaintiffs'-O0736-00737;
Yarbrough Financial Agreements, Plaintiffs’ Exhibit 28,
pages Plaintiffs’ 00867-00872: Swindier Financial
Agreements, Plaintiffs’ Exhibit 28. pages Plaintiffs’-00884-
00890; J.S. Financial Agreements, Plaintiffs’ Exhibit 33, pages
Plaintiffs'-01073-01080; K.J. Financial Agreement, Plaintiffs’
Exhibit 37, pages Plaintiffs’-O1150-01151; B.C. Financial
Agreements, Plaintiffs’ Exhibit 45, pages Plaintiffs’ Exhibit 45,
pages Plaintiffs'-01391-01394; K.M. Financial Agreement
Plaintiffs’ Exhibit 50, pages Plaintiffs’-O1489-01492; E.T.
Financiat Agreement, Plaintiffs’ Exhibit 67, page Plaintiffs'-
01638.

53.

54.

B-40

guardian's ultimate responsibility with
respect to home management. (Trial
Transcript, page 37, lines 2-11; See Service
Agreements, Footnote 4.)

Incor is not paid for providing financial
services to the client (i.e., maintaining
eligibility for State and Federal benefit:
assistance in client bill paying, balancing
client's cash and receipts in the home lock
box). (Trial Transcript, page 37, lines 18-29;
page 6/7, lines 1-13; page 144, fines 9-20;
page 244, lines 22-24, page 268, lines 4-7;
Service Agreements, Footnote 4.)

In the event there was no Service
Agreement in place between the client's
parent/guardian and Incor, the
parent/guardian would be responsible to
provide ancillary services (e.g. financial,
transportation, etc.) for the cltent. (Trial
Transcript, page 37, line 25 — page 38, line
10.)

95.

56.

2/.

B-41

None -of the Lease/Rental Agreements
between the individual clients and their
respective landlords condition residency
on the continued provision of services by
Incor. (Lease Agreements listed in
Footnote 3; Trial Transcript, page 199, line
13-25.)

There is no cost to the client for the services
provided by Incor; the HITS services are
paid in full by DHS. (Services Agreements,
listed in Footnote 4, typically in paragraph
1; Trial Transcript, page 205, line 25 ~ page
206, line 3.)

The clients pay their own living expenses,
not to exceed $14.00 per day up to ninety
percent (90%) of their earned or unearned
income. (Trial Transcript, page 37, lines 12-
24; Service Agreements listed in Footnote
4.)

Incor is not responsible for the
maintenance of the client's residence or

home management. (Service Agreements

59.

60.

él.

62.

63.

B-42

listed in Footnote 4; Trial Transcript, page
200 line 22 - page 201, line 1.)

None of Incor's clients could care for
themselves without the assistance of Incor
or a similar provider. (Trial Transcript, page
67, lines 19-22.)

Client's money is maintained in a
consumer account segregated solely for
the use of the client. (Trial Transcript, page
149, lines 5-25.)

Although Incor may assist the client in
writing checks for the client's bills, at all
times the client's funds are used to pay
his/her bills. (Trial Transcript, page 150, lines
1-7.)

Incor is subjected to multiple financial
audits each year. (Trial Transcript, page
150, lines 8-17.)

DHS requests that some records and
documents associated with the client be

maintained in that client's home (Trial

Transcript, page 165, lines 4-18.)

B-43

Incor’s clients were allowed to change
homes) and/or rcommates at their
discretion or that of their parent/guardian
or IP Team. (Trial Transcript, page 206, line
12 — page 207, lines 1-4.)

Incor does not negotiate leases or rental
agreements on client's homes. (Trial
Transcript, page 198, lines 1-16.)

DHS prepares a “Plan of Care” that
dictates the State's financial resources to

be expended upon the client. (Trial

Transcript, page 203, line 21 — page 204,
line 12.)

The number of units included in the client's

“Plan of Care” is set by the DHS case
manager. (Trial Transcript, page 205, lines
2-9.)

Incor has no policy, plan or scheme to
control the homes of their clients. (Trial
Transcnpt, page 206, lines 8-11.)

Incor’s HTS only assist clients/Quardians in

locating a home at the request of the

70.

7\.

72.

B-44

client, parent/guardian or IP Team. (Trial
Transcript page 207, line 5 page 208, line
6.)

Client’s homes are selected by their
families, advocates, the clients themselves
or Case Managers, but not by Incor. {Trial
Transcript, page 234, line 22 — page 235,
line 4.)

The Service Agreements between Incor
and the client's parent/guardian may vary
from client to client, such as: whether the
client is receiving vocational services;
whether a family member is acting as the
client's health care coordinator; or
whether a family member is assisting the
client with his finances. (Trial Transcript,
page 237, lines 6-18.)

The “interdisciplinary Team" or “IP Team” is
a group of individuals, including the client
and ,their DHS case manager, therapist,
health care providers, and others close to

the client that consider and resolve issues

73.

74.

7S.

76.

B-45

regarding the care and provision of
services provided to the client. (Trial
Transcript, page 238, line 1-19; page 246,
lines 8-18.)

lf transportation responsibilities are not
included in the Service Agreement, the
parent/guardian is responsible to provide
those services. (Trial Transcript, page 239,
line 10-21.)

Incor only assists the clients with their
financials as part of the Service Agreement
and at the request of the parent/guardian.
(Trial Transcript, page 240, lines 3-14.)

In the event the client's money must be
expended to maintain certain
governmental benefits (“spend down"),
the client's IP Team approves the
purchase. (Trial Transcript, page 241, line
14- pace 247, line 6.)

DHS dictates for what purpose room and

board funds provided by the State may be

B-46

used. (Trial Transcript, page 242, line 7 -
page 243, line 21.)

HTS are trained to treat the residence as
the client's home. (Defendants’ Exhibit 40,
page 0126, page 0179; Trial Transcript,
page 245, line 25 —- page 2464, line 7.)

DHS reserves the right to review and
approve the Service Agreements between
Incor and the client's parent/guardian.
(Trial Transcript, page 247, line 25 — page
248, line 7.)

Individualized Plans (“I.P.s") are generated

by the DHS Case Managers and IP Teams

for the clients. (Trial Transcript, page 249,

line 16-20; See also, Footnote 5.)§

8 individual Plans for: Harrison, Defendants’ Exhibit 44,
pages 901 Erie-0479-0488; Duty, Defendants’ Exhibit 44,
pages 90! Erie-0383-0386; Moore, Defendants’ Exhibit 38,
pages 300 N. 40th-1148-1161; Yarbrough, Defendants’
Exhibit 47, pages 810 Sherwood-2269-2281; Swindler,
Defendants’ Exhibit 47, pages 810 Sherwood-2345-2358;
LeHore, Defendants’ Exhibit 47, pages 810 Sherwood-2396-
2404; Lawmaster, Defendants’ Exhibit 42, pages 505 Judy-
1435-1449; Wilkie, Defendants’ Exhibit 42, pages 505 Judy-
1504-1526; Haas, Defendants’ Exhibit 42, pages 505 Judy-
1547-1663.

80.

81.

82.

83.

84.

B-47

Several of the clients’ parents/guardians
do not live in the same town as the
child/ward. (Trial Transcript, page 250, line
21-24.)

incor does not retain any of the money
paid by the state for the client's room and
board. {Trial Transcript, page 260, lines }-
16.)

The only funds received by incor from the
state are the hours billed for HTS services.
(Trial Transcript, page 260, lines 1-16.)

Any general household work listed in the
client's IP under a “Schedule of Events"
was a guideline prepared by the DHS Case
Manager and not a schedule for each
shift. (Trial Transcript, page 276, line 24 -
page 278, line 13.)

if clients request that the paperwork be
removed from their homes, those requests
are met. {Trial Transcript, page 521, line 20

-— page 5272, line 1.)

85.

86.

87.

88.

B-48

DHS requires that medications be locked
up in the client's home for safety. (Trial
Transcript, page 308, line 25 — page 309,
line 5.)

The homes in which the clients live in
Incor's Residential Program are much
different than an institutional setting, in that
freedom of choice and freedom of
movement in the client's home are much
less restricted than in an institutional setting.
(Trial Transcript, page 311, line 17 — page
312, line 21.)

“Outcomes” which are set out in the client
IP are training activities designed to
increase the client's independence. (Trial
Transcript, page 320, line 8-13.)

HTS are directed by the treatment team to
complete certain documentation
regarding the client, whether the client

lives in their parents’ homes or separate

homes/apartments. (Trial Transcript, page
309, line 6-17.)

89.

90.

91.

92.

B-49

incor management does not issue keys to
the client's home to the HTS for use at the
HTS convenience. (Trial Transcript, page
309, lines 22-25.)

All points on the Service Agreement
between incor and the client's
parent/guardian are negotiable. (Trial
Transcript, page 313, lines 23-25.)

DHS required that certain documents/data
collection related to the services being
provided to the client be kept on site with
the client. (Trial Transcript, page 394, lines
1-11.)

FACTS COMMON TO SPECIFIC HOMES’

50£ JUDY LANE
Clients Haas, Lawmaster and Wilkie leased

the property located at 505 Judy Lane,

* The Court denied summary judgment as to private home
status regarding the following homes for which no tral
evidence was presented by either party. 608 S. Woter
(Order #331); 1493 Lane Avenue (Order #338); 101 David
Lane, Apt. 606 (Order #340) and 611 Austin (Order #340).
Because Plaintiffs did not present evidence demonstrating
that any plaintiff worked at these houses, judgment is
entered in favor of Defendants as to these four homes.

93.

94.

95.

B-50

from Kathy Morrissey beginning October 1,
1997, for $925 per month. (Lease
Agreement, Defendants’ Exhibit 42, pages
505 Judy-1409-1412.}

Incor is not listed as a lessee on the lease
documents and does not maintain any
interest in the property located at 505 Judy
Lane. (Lease Agreement, Defendants’
Exhibit 42, pages 505 Judy-1409-1412.)
Clients Haas, Lawmaster and Wilkie require
assistance in all aspects of home
management and personal daily living at
505 Judy Lane. Each of these ladies is
profoundly disabled. (Trial Transcript, page
907, lines 14-21.)

Ms. Haas, Ms. Lawmaster and Ms. Wilkie
pay for the monthly expenses in the home
including lease payments, utilities,
furnishings, and groceries from __ their
respective monthly benefit checks, not to

exceed $14.00 per day. (Lawmaster

Service Agreements, Defendants’ Exhibit

96.

97.

B-51

42, pages 505 Judy-1409-1416; Haas
Service Agreements, Defendants’ Exhibit
42, pages 505 Judy-1528-1535; Wilkie
Service Agreement, Defendants’ Exhibit 42
pages 505 Judy-1478-1483.)

The Rental Agreement executed between
Ms. Haas, Ms. Lawmaster, Ms. Wilkie and
Kathy Mornissey does not condition
residency on the continued provision of
services by Incor. (Lease Agreement,
Defendants’ Exhibit 42, pages 505 Judy-
1410-1412.)

Incor is not responsible for the
maintenance of the residence at 505 Judy
Lane. (Lawmaster Service Agreements,
Defendants’ Exhibit 42, pages 505 Judy-
1409-1416; Haas Service Agreements,
Defendants’ Exhibit 42, pages 505 Judy-
1528-1535; Wilkie Service Agreement,
Defendants’ Exhibit 42, pages 505 Judy-
1478-1483.)

98.

99.

100.

101.

102.

103.

B-52

There is no space reserved as office space
at 505 Judy Lane. (Trial Transcript, page
253, lines 19-24.)

2200 TURNER

Incor does not rent the 2200 Turner home
to the clients living there. (Trial Transcript,
page 301, lines 18-20.)

The 2200 Turner address was selected by
the IP team and the guardian of Mr.
Oman. (Trial Transcript, page 301, lines 21-
24.)

The clients at 2200 Turner chose each other
as roommates. (Trial Transcript, page 302,
7-19.)

Services provided to clients at 2200 Turner
were not contingent upon their residing at
that address. (Trial Transcript, page 302,
lines 20-23.)

Incor has no possessory interest in the
home at 2200 Turner. (Trial Transcript, page
302, line 24 — page 303. line 1.)

ee

104.

105.

106.

107.

108.

B-53

The Service Agreement between incor and
client Oman's guardian indicates that tne
client and/or his guardian is ultimately
responsible for the management of the
home. (Trial Transcript, page 303, line 20 —
page 304, line 12.}

The client and guardian choose who
comes and goes from the home (tral
Transcript, page 304, line 13-15.)

The client and guardian have a choice as
to which HTS enter the client's home. (Trial
Transcript, page 304, line 16-18.)

The client and guardian can dismiss an HTS
from the client’s home. (Trial Transcript.
page 304, line 19 — page 3085, line 3.)

The Lease Agreement for 2200 Turner
indicates that it is privately owned by Bill
and Pat Perry. (Trial Transcript, page 306,
lines 4-9, Plaintiffs’ Exhibit 19, pages
Plaintiffs'-00583-00586.)

109.

110.

ii.

112.

113.

114.

B-54

Bill and Pat Perry have no relationship with
Incor management. (Trial Transcript, page
301, lines 12-17.)

incor does not expend its own money for
the management and maintenance of the
client's home. (Trial Transcript, page 307,
line 13-21.)

lf the clients at 2200 Turner changed
service providers, the clients would not
have to leave the home. (Trial Transcripf,
page 302, lines 20-23; 307, line 22 — page
308, line 1.)

Incor does not maintain an office at 2200
Turner. (Trial Transcript, page 308, lines 19-
24.)

DHS required that medications be locked
up in the client's home for safety. (Trial
Transcript, page 308, line 25 — page 309,
line 5.)

HTS are directed by the treatment team to
complete certain documentation regard-

ing the clients, regardless of whether the

115.

116.

117.

118.

119.

B-55

client lives in their parents’ homes or
separate homes/ apartments. (Trial
Transcript, page 309, line 6-17.)

Incor did not generate chore lists for the
HTS working at 220 Turner. (Trial Transcript,
page 309, line 18-21.)

incor manayement does not issue keys to
the client’s home fo the HTS for use at the
HTS convenience. (Trial Transcripf, page
309, lines 22-25.)

All points on the Service Agreement
between incor and the client's
parent/guardian are negotiable. (Trial
Transcript, page 313, lines 23-25.)

The clients at 2200 Turner are given choices
on how they live. (Trial Transcript, page
310, line 23 —- page 311, line 16.)

The homes in which the clients live in
Incor's Residential Program are much
different than an institutional setting, in that
freedom of choice and freedom of

movement in the client's home are much

120.

121.

122.

123.

124.

B-56

less restricted than in an institutional setting.
(Trial Transcript, page 311], line 17 — page
312, line 21.)

“Outcomes” which are set out in the client
IP are training activities designed to
increase the client's independence. (Trial
Transcript, page 320, line 8-13.)

Clients Oman and Reece leased the
property located at 2200 Turner from Bill
and Patricia Perry for $600.00 per month.
(Lease Agreement, Plaintiffs’ Exhibit 19,
Plaintiffs’-O0S583-00586.)

810 SHERWOOD

The residence at 810 Sherwood is owned
by David Doyle; he is not affiliated in any
way with Incor. (Trial Transcript, page 323,
lines 15-20.)

The home at 810 Sherwood was chosen for
the clients by their respective guardians.
(Thal Transcript, page 323, lines 21-23.)

Clients would not be required to leave 810

Sherwood if they were not receiving

B-57

services from Incor. {Trial Transcript, page
324, line 7-10.)

Incor does not have any possessory interest
in 810 Sherwood. (Trial Transcript, page
324, line 11-13.)

The clients and guardians have control of
who comes and goes from the 810
Sherwood home. _ (Trial Transcript, page
324, line 15-17.)

The Service Agreements for the clients at

810 Sherwood are essentially the same.

(Trial Transcript, page 327, lines 1-6.)

The clients who reside at 810 Sherwood
were originally served by a _ different
agency in a poorly maintained home. The
guardians of the clients demanded the
clients change homes. (Trial Transcript,
page 327, lines 7-16.)

The clients at 810 Sherwood were living
together before Incor became _ their
service provider. (Trial Transcript, page
327, lines 16-20.)

130.

131.

132.

133.

134.

135.

B-58

incor agrees to provide assistance with the
clients’ finances at no charge as part of
their responsibility to protect the clients.
(Trial Transcript, page 328, line 23 — page
329, line 10.)

The clients at 810 Sherwood would be
allowed to live at that address even if they
no longer received services from Incor.
(Trial Transcript, page 329, line 14-17.)

incor has no right to move the clients at
810 Sherwood. (Trial Transcript, page 329,
lines 18-20.)

Incor does not reserve any type of office
space at 810 Sherwood. (Tral Transcript,
page 329, line 25 — page 330, line 2.)

There is no office or desk at 810 Sherwood.
incor does not designate where the HITS
must complete their paperwork. (Trial

Transcript, page 330, lines 3-9.)

Incor did not generate a chore list for the
HTS to follow at 810 Sherwood. _ (Trial
Transcript, page 330, lines 10-12.)

136.

137.

138.

139.

140.

B-59

Keys are not issued to the HTS at 810
Sherwood. (Trial Transcript, page 330, line
16-21.)

The clients at 810 Sherwood are profoundly
disabled. (Trial Transcript, page 331, lines
12-13.)

Every service provided by the HTS, pursuant
to their job description, is related to the
care, protection, training, and
companionship of the clients at 810
Sherwood. (Trial Transcript, page 331, lines
14-18.)

If there were no Service Agreement in
place, Incor would not provide services to
the clients. (Trial Transcript, page 342, lines
22-24.)

Incor clients Yarbrough. Swindier and
Leflore leased the property located at 810
Sherwood in Muskogee Oklahoma from

“David D.” beginning November 1, 2000.

(Lease Agreement, Defendants’ Exhibit 47,
pages 810 Sherwood-2222-2225.)

141.

142.

143.

B-60

The Clients, Yarbrough, Swindler and
Leflore, lease the home from “David D.” for
$750.00 per month. (Lease Agreement,
Defendants’ Exhibit 47, pages 8:10
Sherwood-2222-2225.)

Incor was not responsible for the
maintenance of the dwelling at 810
Sherwood. The landlord was responsible
for maintaining the dwelling. (See, Lease
Agreement, Defendants’ Exhibit 47, pages
810 Sherwood-2222-2225.)

Clients Yarbrough, Swindler and Leflore
each pay $14.00 per day for all living
expenses. Each client pays for her share of
the monthly living expenses in the home
including lease payments, utilities,
furnishings and groceries using monthly
benefit checks. Each client pays for her
own clothing, toiletnes, and incidentals.
Incor employees do not maintain the
home or its property. Rather, the clients,

their guardians or the landlords are

144.

145.

146.

147.

Ne Ae ae eee a eee ee eS Pe ee rete = ae log “See et Pee ee

B-61

responsible for maintenance and its cost.
(Yarbrough Service Agreements,
Defendants, Defendants’ Exhibit 47, pages
810 Sherwood-2229-2236; Swindler Service
Agreements, Defendants’ Exhibit 47, pages
810 Sherwood-2317-2320; LeFlore Service
Agreements, Defendants’ Exhibit 47, 810
Sherwood-2393-2395.}

901 ERIE ST.

The clients previously residing at 901 Erie
now live at a different location. (Trial
Transcript, page 355, lines 3-6.)

The 901 Erie home was selected by the
clients and one of the clients’ mothers.
(Trial Transcript, page 356, line 14-15.)

The clients and one of the client's mothers
are responsible for the ultimate
management and control of the home.
(Trial Transcript, page 356, lines 16-20.)

The clients at 901 Erie are not profoundly

disabled and have jobs in the community.

148.

149.

150.

151.

152.

B-62

(Trial Transcript, page 356, line 21 — page
357, line 14.)

901 Erie was leased from Monte Sneligrove.
Mr. Sneligrove is not associated with Incor.
(Trial Transcript, page 358, line 4 — page
359, tine 2; Lease Agreement, Defendants’
Exhibit 44, page 901 Erie-0368.)

The clients’ occupancy at 901 Erie was not
contingent upon the clients receiving
services from Incor. (Trial Transcript, page
359, line 8-10.}

The clients previously at 901 Erie are no
longer there by the choice of one of the
clients. (Trial Transcript, page 363, line 18 —-
page 364, line 9.)

The clients at 901 Erie exercised choice in
what they wanted with some guidance.
(Trial Transcript, page 366, lines 1-10.)

The clients at 901 Erie were allowed to

move about their home freely. (Trial

Transcript, page 366, lines 22-24.)

3
4
a

153.

154.

155.

156.

157.

B-63

The lock box in the clients’ home is used for
storing the clients’ medications and
keeping them safe from the clients. (Trial
Transcript, page 366, line 17 — page 367,
line 7.)

The clients at 901 Erie were given a great
deal of choice inside and outside their
home as to their activities. (Trial Transcript,
page 36/7, line 6— page 370, line 1.)

The clients at 901 Erie paid the deposit on
their home. (Trial Transcript, page 3872, lines
7-11.)

The training provided to the clients was
performed in their home and in the
community. (Trial Transcript, page .. 384,
lines 20-22.)

Incor clients Duty, Harrison and Thomas
leased the property located at 901 Erie St.
in Muskogee Oklahoma from Monte
Sneligrove beginning July 6, 1997, for
$600.00 per month. Incor is not listed as a

lessee on the lease documents. (Lease

158.

159.

160.

161.

B-64

Agreement, Plaintiffs’ Exhibit 44, page 901,
Erie-0368.)

The lease executed between Duty,
Harrison, Thomas and Sneligrove does not
condition residency on the continued
provision of services by Incor. (Lease
Agreement, Plaintiffs’ Exhibit 44, page 901
Erie-0368.)

Clients Duty and Harrison each pay $14.00
pr day for all living expenses. (See, Harrison
Service Agreements, Defendants’ Exhibit
44, pages 901 Erie-0448 — 901 Erie-0458.)

551 SHERWOOD

The clients at 551 Sherwood have mental
ages of between one and three years old
and require extensive assistance in the skills
of everyday living. (Trial Transcript, page
387, lines 11-22.)

551 Sherwood is owned by Gary and Carla
Dunlop. (Trial Transcript, page 388, lines 2-
7.)

Bt

B-65

The guardians selected 551 Sherwood for
the clients. (Triol Transcript, page 388, lines
8-15.)

Incor has no possessory interest in 551
Sherwood. (Trial Transcript, page 388, lines
20-22.)

The continuation of Incor’s services was not
contingent upon the clients living at 551
Sherwood. (Trial Transcript, page 388, lines
16-19.)

Gary and Carla Dunlop are not associated
with Incor. (Trial Transcript, page 388, lines
23-24.)

The clients and their guardians were
ultimately responsible for the management
and control of their home. (Trial Transcript,
page 389, lines 9-11.)

The clients and guardians of 551 Sherwood

have control over who has access to the

home. (Trial Transcript, page 390, lines 4-6.)

The client's money is used to maintain the

client's home. (Trial Transcript, page 391,

169.

170.

171.

7a

B-66

lines 8-9; Brandon Service Agreements,
Plaintiffs’ Exhibit 23, pages Plaintiffs’-00725-
00729.)

The client’s room and board money was
utilized consistent with their Service
Agreements and DHS requirements therein.
(Trial Transcript, page 392, line 6 -— page
393, line 15; Brandon Service Agreements,
Plaintiffs’ Exhibit 23, pages Plaintiffs'-O0725-
00729.)

No portion of 551 Sherwood is segregated
for the business purpose of Incor. (Trial
Transcript, page 393, lines 20-25.)

DHS requires that certain documents/data
collection related to the services being
provided to the client be kept on site with
the client. (Trial Transcript, page 394, lines
1-11.)

Incor did not generate a chore list for 551
Sherwood. (Trial Transcript, page 394, lines
12-15.)

173.

174.

175.

176.

177.

178.

B-67

incor does not issue keys to the HTS who
work in the home at 551 Sherwood. (Trial
Transcript, page 394, line 25 — page 395,
line 1.)

To the extent possible, the clients af 551]
Sherwood expressed their choices and
exercised their freedom. (Trial Transcript,
page 394, line 19 —- page 396, line 1.)

Case managers are employed by the DHS
to monitor the benefits and = services
provided by the clients. (Trial Transcript,
page 399, lines 6-19.)

Incor does not bill for room and board, but
paperwork is generated and kept internally
for audit purposes. (Trial Transcript, page
401, page 25 - page 4072, line 12.)
Guardians can request that the client's
paperwork be kept outside of the house.
(Trial Transcript, page 402, lines 13-21.)

The clients Brandon and Techau leased the

property located at 551 Sherwood from
Gary and Carla Dunlap for $650.00. (Lease

179.

180.

181.

B-68

Agreement, Plaintiffs’ Exhibit 24, pages
Plaintiffs’-00738-00739.)

Incor is not listed as a lessee on the lease
extension documents. Incor does not
maintain any interest in the property
located at 551 Sherwood. (Lease
Agreement, Plaintiffs’ Exhibit 24, pages
Plaintiffs ’-O0738-00739.) ;
The clients retained responsibility for all
aspects of home management and daily
personal living with the assistance of Incor.
(Brandon Service Agreement, Plaintiffs’
Exhibit 23, pages Plaintiffs'-O0725-00729;
Techau Service Agreements, Plaintiffs’
Exhibit 23, pages Plaintiffs’'-O0723-00724 and
pages Plaintiffs°00730-00735.)

The lease between Brandon and Techau
and the Dunlaps does not condition
residency on the continuation of services
provided by Incor. (Lease Agreement,
Plaintiffs’ Exhibit 24, pages Plaintiffs'-00738-
00739.) .

eS a, RE ee ee

Na:

182.

183.

B-69

The clients each pay up to $14.00 per day
for their living expenses. (Brandon Service
Agreement, Plaintiffs’ Exhibit 23, pages
Plaintiffs'-O0725-00729; Techau Service
Agreements, Plaintiffs’ Exhibit 23, pages
Plaintiffs’-O0723-00724 and pages Plaintiffs’-
00730-00735.)

The clients paid for the monthly expenses in
the home _ including lease payments,
utilities, furnishings, and groceries from their
monthly benefit checks, not to exceed
$14.00 per day. The clients paid for their
own clothing, toiletries, and incidentals.
Incor employees assist the clients in home
management and personal daily living, but
the maintenance of the home was the
responsibility of the clients or them
guardian/representative. (Brandon Service
Agreement, Plaintiffs’ Exhibit 23, pages
Plaintiffs'-O0725-00729; Techau Service
Agreements, Plaintiffs’ Exhibit 23, pages

184.

185.

186.

B-70

Plaintiffs’-O0723-00724 and pages Plaintiffs'-
00730-00735.)

There is not cost to the client for the
services provided by Incor. (Brandon
service Agreement, Plaintiffs’ Exhibit 23,
pages Plaintiffs'00725-00729; Techau
Service Agreements, Plaintiffs’ Exhibit 23,
pages Plaintiffs’'-O0723-00724 and pages
Plaintiffs'-O0730-00735.)

505 NORTH G STREET

Clients Smith, Ballard and Breen leased the
property located at 505 North G Street,
beginning October 1, 2000 from Roy
Hawkins for $550.00 per month. (See.
Lease Agreement, Plaintiffs’ Exhibit 34,
pages Plaintiffs'-01089-01091.)

The clients retained the responsibility for all
aspects of home management and daily
living needs. (See, Smith Service
Agreements, Plaintiffs’ Exhibit 54, pages
Plaintiffs '-0O1528-01531; Smith Service
Agreements, Plaintiffs’ Exhibit 33, pages

B-71

Plaintiffs’-01073-01080; Breen Service
Agreements, Plaintiffs’ Exhibit 33, pages
Plantiffs'-01085-01088; Ballard Service
Agreement, Plaintiffs’ Exhibit 60, page
Plaintiffs'-01615.)

187. incor did not obtain or retain any

possessory interest in the home by virtue of
the Lease Agreement. (Lease Agreement,
Plaintiffs’ Exhibit 34, pages Plaintiffs'-01089-
01091.)
188. Clients Smith, Ballard, Breen, Wells and
Rowland paid up to $14.00 per day for all
living expenses in the home including lease
payments, utilities, furnishings, and
groceries from their monthly benefit
checks. The clients paid for their own
clothing, toiletries, and incidentals. Incor
employees did not maintain the home or
its property. Rather, the clients or someone
appointed by his or her representative, was

responsible for maintenance and to pay

for it. (See, Smith Service Agreements,

189.

190.

Ee Re RE Pye te a NE RS ae ES CS te eM ee PN Bee NT Oe RL a Ue CNC cee Se eae eee
‘ z - = at * ey nh ste ge Sie <=} ia

B-72

Plaintiffs’ Exhibit 54, pages Plaintiffs'-01528-
01531; Smith Service Agreements, Plaintiffs’
Exhibit 33, pages Plaintiffs-01073-01080;
Breen Service Agreements, Plaintiffs’ Exhibit
33, pages Plaintiffs’-01085-01088; Ballard
Service Agreement, Plaintiffs’ Exhibit 60,
page Plaintiffs’'-01615.)

There is no cost to the client for the services
provided by Incor. (See, Smith Service
Agreements, Plaintiffs’ Exhibit 54, pages
Plaintiffs’-0 1528-01531; Smith Service
Agreements, Plaintiffs’ Exhibit 33, pages
Plaintiffs’-0 1073-01080; Breen Service
Agreements, Plaintiffs’ Exhibit 33, pages
Plaintiffs'-O1085-01088; Ballard Service
Agreement, Plaintiffs’ Exhibif 60, page
Plaintiffs’-01615.)

The clients had ultimate management and
control! of the 505 North G_ Street
apartment. (Trial Transcript, page 428, lines
17-20.)

: . R : ‘ oe . Se Aree ees Fae none oe Os ee NE
x = . aie _. ae >. o OP AO shirt ied ail nay Cg ee ieee 2S Lure pres, nel a OOS hae ee ee
Pe ee” NE eee rE ee eT OEE MS Gl My ye Oe AG eras hh on. ET a SOLE te eM, te er ees as

191.

192.

193.

194.

195.

196.

197.

B-73

505 Norih G Street was not maintained to
facilitate the provision of assistive services.
{Trial Transcript, page 428, lines 21-23.)

The clients were responsible to pay the rent
at 505 North G Street. (Trial Transcript,
page 429, lines 9-10.)

lf any of the clients dismissed Incor, they
would be allowed to live aft that
apartment. (Trial Transcript, page 429, lines
22-24.)

Incor did not have any possessory right to
any part of 505 North G Street. = (Trial
Transcript, page 430, lines 8-10.)

Incor did not issue keys to 505 North G
Street to the HTS. (Trial Transcript, page
430, line 15 — page 431, line 2.)

Each client at 505 North G Street chose
how their personal space was decorated.
(Trial Transcript, page 430, lines 3-9.)

The clients at 505 North G Street owned the
furniture in their apartment. (Trial

Transcript, page 433, lines 19-20.)

B-74

826 S. YORK, APT. # 1B :
198. Clients Joe Smith and Christie Ballard
leased the property located at 826 S. York, :
Apt. 1B, from Sullivan Properties, beginning
May 29, 2002, for $359.00 per month.
(Defendants' Exhibit 35, page 0002.)
199. Incor is not listed as a lessee on the lease.
(Lease Agreement, Defendants’ Exhibit 35,
pages 826 S. York 1B-00072.)
200. The consumers retained the responsibility
for ali aspects of home management and
daily living needs. Smith and Ballard paid
for the monthly expenses in the apartment
including lease payments, utilities,
furnishings and groceries from their monthly
benefit checks, not to exceed $14.00 per
day. Smith and Ballard paid for their own
clothing, toiletries, and incidentals. (Smith
Service Agreements, Plaintiffs’ Exhibit 54,
pages Plaintiffs'-01528-01531; Smith Service
Agreements, Plaintiffs’ Exhibit 33, pages
Plaintiffs'-01073-01080; Ballard Service

201.

202.

203.

204.

20S.

B-75

Agreement, Plaintiffs’ Exhibit 60, page
Plaintiffs’-O1615.)

The apartment complex was responsible
for managing and maintaining the
apartment complex. (Lease Agreement,
Defendants’ Exhibit 35 pages 826 S. York
1B-0001-0002, 0113.)

The clients and one guardian chose the
826 S. York, #1B apartment. (Trial
Transcript, page 423, lines 2-17.)

The clients had ultimate management and
control of 826 S. York, #1B. (Trial Transcript,
page 424, lines 10-11.)

826 S. York, #1B was not maintained
primarily to facilitate the provision of
assistive services. (Trial Transcript, 424, lines
12-14.)

The clients were responsible for paying the
rent at 826 S. York, #1B. (Trial Transcript,
page 425, lines 3-4.)

Se a AOR Se Oe TS Nae SP CeEe Pee Ne Sek oh ee

ee ee ee Py eee

206.

207.

208.

B-76

826 SOUTH YORK, APT. # 27B
Client Joe Smith leased the property
located at 826 South York, Apt. 27B, from
Sullivan Properties d/b/a Southpoint
Apariments, beginning September 12, 2001
for $275.00 per month. (Defendanis’
Exhibit 35, page 0001.)

The client retained the responsibility for all
aspects of home management and daily
living needs. (Smith Service Agreements,
Plaintiffs’ Exhibit 54, pages Plaintiffs-01528-
01531; Smith Service Agreements, Plaintiffs’
Exhibit 33. pages Plaintiffs'-0O 1073-01080.)
Joe Smith paid for the monthly expenses in
the home _ including lease payments,
utilities, furnishings, and groceries. Joe
Smith paid for his own clothing, toiletries,
and ___ incidentals. (Smith Service
Agreements, Plaintiffs’ Exhibit 54, pages
Plaintiffs-O 1528-01531; Smith Service
Agreements, Plaintiffs’ Exhibit 33, pages
Plaintiffs'-01073-01080.)

CANO REA RE GUS Un NE |

Le Ne ee RTE ae CSO IPS Gree

209.

210.

eit

212.

213.

B-77

Incor employees did not maintain the
nome or its contents. Rather, the manager
of the apartment complex was responsible
for maintenance and the upkeep of the
unit. (Smith Service Agreements, Plaintiffs’
Exhibit 54, pages Plaintiffs-O1528-01531;
Smith Service Agreements, Plaintiffs’ Exhibit
33, pages Plaintiffs'-0 1073-01080.)

The clients selected apartment 27B at 826
S. York. (Trial Transcript, page 419, lines 10-
12.)

The client had ultimate management and
control of the 826 S. York, #27B apartment.
(Trial Transcript, page 419, lines 13-15.)

The 826 S. York, #27B apartment was not
maintained to facilitate the provision of
assistive services. {Trial Transcript, page
419, lines 16-20.)

919 CHOC7AW

Client Bobby Creekmore leased _ the
property located at 919 Choctaw. on

December 8, 2000 from “Benny Morgan"

ee ee at Fe tT oe Pee oa

214.

215.

216.

B-78

for $500.00 per month. (See, Rental
Agreement, Plaintiffs’ Exhibit 46, page
Plaintiffs'-01 395.)

The consumer retained the responsibility for
all aspects of home management and
daily living needs. (Creekmore Service
Agreements, Plaintiffs’ Exhibit 45, pages
Plaintiffs’-O 1380-01390.)

The rental agreements executed between
Bobby Creekmore and Benny Morgan do
not condition residence on the continued
provision of services by Incor. (See, Rental
Agreement, Plaintiffs’ Exhibit 46, page
Plaintiffs'-01395.)

Client Creekmore paid $14.00 per day for
all living expenses. Bobby Creekmore paid
for the monthly expenses in the home
including lease payments, utilities,
furnishings, and groceries from him monthly
benefit checks. Bobby Creekmore paid for
his own clothing, toiletries, and incidentals.

incor employees did not maintain the

217.

218.

219.

220.

B-79

home or its property. Rather, the client or
someone appointed by him or his
representative was responsible for
maintenance and to pay for it.
(Creekmore Service Agreements, Plaintiffs’
Exhibit 45, pages Plaintiffs’-O 1380-10390.)
The client bought the range and
refrigerator at 919 Choctaw with his own
money. (Trial Transcript, page 457, lines 19-
23.)

The lessor, Benny Morgan, has no affiliation
or relationship with Incor. (Trial Transcript,
page 458, lines 13-17.)

The client was responsible for paying the
rent at 919 Choctaw. _ (Iral Transcript,
page 458, lines 22-24.)

If the client at 919 Choctaw dismissed
Incor, he would still be allowed to continue

living at that home. {Trial Transcript, page

459, line 14-16.)

Z2t.

222.

223.

224.

225.

226.

B-80

The client at 919 Choctaw did not pay for
his HTS services. (Trial Transcript, page 459,
lines 17-19.)

The client at 919 Choctaw kept his own key
and arranged the furniture in his home.
(Trial Transcript, page 460, lines 6-9.)

The client at 919 Choctaw made many of
his own choices. (Trial Transcript, page 461,
lines 15-23.)

incor had no right or possessory interest in
919 Choctaw. (Trial Transcript, page 461,
line 24 — page 462, line 5.)

Incor did not reserve space at 919
Choctaw for Incor's business purposes.
(Trial Transcript, page 462, lines 6-15.)

915 LAKELAND

Former Incor client Keith July leased the
property located at 915 Lakeland,
Checotah, Oklahoma, from Vicki Cooper,
beginning May i, 1999 for $375.00 per
month. Incor is not listed as a lessee on the

lease documents. (Rental Agreement,

aay.

228.

229.

230.

B-81

Defendants’ Exhibit 36, page 915 Lakeland-
0005.)

Vickie Cooper was the landlord at 915
Lakeland. She is not affiliated with Incor.
(Trial Transcript, page 470, line 25 — page
471, line 12.)

The client at 915 Lakeland dismissed Incor’s
services and remained at the same
residence. (Trial Transcript, page 471, line
22 — page 4772, line 4.)

Incor was not responsible for the
maintenance of the dwelling at 915
Lakeland. (Rental Agreement,
Defendants’ Exhibit 36, page 915 Lakeland-
0005.)

The rental agreement executed between
Keith July and Vicki Cooper does not
condition residency on the continued
provision of services by Incor. Keith July
was able to live at 915 Lakeland whether

he was receiving services from Incor or nof.

231.

232.

B-82

(Rental Agreement, Defendants’’ Exhibit
36, page 915 Lakeland-0005.)

Keith July paid for the monthly expenses in
the home including lease payments,
utilities, furnishings, and groceries from his
monthly benefit checks. not to exceed
$14.00 per day. Keith July paid for his own
clothing, toiletries. and incidentals. Incor
employees did not maintain the home or
its contents. Rather, the client, or someone
appointed by him or his representative,
was responsible for maintenance and to
pay for it. (July Financial Agreement,
Plaintiffs’ Exhibit 23, page Plaintiffs’-00732;
July Service Agreement, Plaintiffs’ Exhibit
37, pages Plaintiffs’-01 148-01 149.)

Incor did not segregate any portion of 915
Lakeland for its own business purposes
unrelated to the provision of services to
client July. Although Mr. July's home
contained a desk and fax machine,

everything was maintained for the benefit

erties mee PT a Oe, PM RN ae Te PIG Oe eR hOB OL Oe FR raw eR PAE pn ar TEER BERLE oy, eRe IR Se Eh OO he Mee Ee ce, Maan? DERN GaP ee eee OMe

B-83

of the client. incor did not use any part of
915 Lakeland for its own business purposes
unrelated to the provision of services to the
client. Keith July's desk, utilized by Incor
employees, contained paperwork reiated
to Keith July's medicine or other issues
related to his care. (Trial Transcript, page
476, line 25 — page 477, line 15.)

233. Incor had no possessory interest or right to
915 Lakeland. (Trial Transcript, page 472,
lines 5-14.)

234. The client was responsible for all aspects of
home management and personal daily
needs at 915 Lakeland. (Trial Tre script,
page 472, line 20 —- page 473, line 4.)

235. The client controlled who came and went
from the 915 Lakeland property. _ (Trial
Transcript, page 473, lines 8-10.)

236. The client at 915 Lakeland was responsible
to pay for his essential items. (Trial
Transcript, page 474, line 25 — page 475,
line 13.)

B-84

Incor did not generate a chore list for the
915 Lakeland property. (Trial Transcript,
page 477, line 25 — 478, line 3.)

300 NORTH 40°

Client Keith Moore leased the property
located 300

[Text truncated at 120,000 characters. The full text is on the page linked above.]

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386019_1831%3A2. Public record. Not legal advice.