PITTSBURGH (Legal Newsline) - It's a worst-case scenario for a now-bankrupt Pennsylvania health care company accused by the Department of Labor of not fairly paying its employees.
Pittsburgh federal judge William Stickman IV on July 22 entered judgment against Comprehensive Healthcare Management Services and other defendants in the amount of $35.8 million.
The Labor Dept. sued the nursing home chain in 2018 with allegations it violated the Fair Labor Standards Act. The case was a collective action brought by the DOL on behalf of employees and went through a damages trial earlier this year.
"The overwhelmingly consistent evidence adduced at trial... credibly and conclusively established that Samuel Halper, CHMS Group LLC and all 15 facility defendants created an oversaw a system whereby employees who had worked a fair day, and often more, did not receive their fair day's pay," Stickman wrote.
"Make no mistake, these were not occasional, innocent payroll errors."
The defendants failed to pay overtime and botched their record-keeping duties, Stickman wrote. The company sold seven of its properties for $56 million last year - a move Acting Labor Secretary Julie Su tried to convince Stickman to block while her case was pending.
Bankruptcy for several of the company's remaining facilities followed this May. CHMS operated nursing homes dubbed "The Grove at" places like Irwin, Harmony, Washington, Monroeville and Latrobe, plus the Brighton Rehab and Wellness Center.
Employees there were subjected to an "adversarial" payroll system, Stickman wrote. They were forced to battle for what they earned, while given the "runaround" when using a mechanism to correct payroll errors.
"The frustration and futility of this process led many employees to simply give up, either by quitting their job altogether or making do with the incorrect pay," he wrote. "The evidence credibly establishes not only that Halper and other Defendants violated the FLSA, but that they did so willfully - if not maliciously."
The damages trial took 13 days and featured testimony from 34 former or current employees. Stickman reviewed more than 600 exhibits.
He found the defendants' record-keeping failed to accurately track the hours worked by employees. Employees clocked in and clocked out but the wrong amount of hours - or none at all - were entered for payroll purposes.
It also deducted time for meal breaks when no breaks were taken, Stickman found.
"Regardless of whether the time clocks properly functioned, Defendants would not pay employees based on the hours the time clocks recorded," Stickman wrote.
"Instead, credible evidence established that Defendants paid employees based on their scheduled hours, not the hours actually worked. This resulted in consistently inaccurate paychecks essentially every pay period across Facility Defendants."
When employees complained, they were forced to prove they worked the hours they claimed. Their gripes were sent up the chain to CHMS, which routinely rejected them.
"Employees quickly realized that the process was futile most (if not all) of the time," Stickman wrote.
"Many excuses were given to employees as to why they never heard back from CHMS. Errors continued to mount pay period after pay period."
One registered nurse testified, "There was always an excuse why. Somebody is on vacation. Somebody was fired at their out-of-state facility or corporate office or they're on vacation. You'll have to come back. You'll have to come back. After a short time of that, I just gave up. I did continue to fill the sheets out. Then eventually, I gave that up, too."
Stickman ordered nearly $18 million in backpay, plus the same amount in liquidated damages.