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Robert Probert; Loretta Probert v. Family Centered Services of Alaska

June 23, 2011

ROBERT PROBERT; LORETTA PROBERT, PLAINTIFFS-APPELLEES, GENE GRISSOM; SANDRA GRISSOM; DONNA GRIMES; KENNETH MCDANIELS;
JOHN GRIMES; LEONA MCDANIELS;
ERIC CLONINGER; DEBRA CLONINGER,
PLAINTIFF-INTERVENORS- APPELLEES,
v.
FAMILY CENTERED SERVICES OF ALASKA, INC.;
JOHN W. REGITANO; KATHY CANNOE; SUSAN DALE; LONNIE HOVDE; DEBORAH L. COXON, DEFENDANTS-APPELLANTS.



Appeal from the United States District Court for the District of Alaska Ralph R. Beistline, Chief District Judge, Presiding D.C. No. 4:07-cv-00030-RRB

The opinion of the court was delivered by: Clifton, Circuit Judge:

FOR PUBLICATION

OPINION

Argued and Submitted July 26, 2010-Anchorage, Alaska

Before: Mary M. Schroeder, Diarmuid F. O'Scannlain and Richard R. Clifton, Circuit Judges.

Opinion by Judge Clifton

OPINION

Defendants Family Centered Services of Alaska ("FCSA") and its officers filed this interlocutory appeal challenging the district court's conclusion that FCSA's Therapeutic Family Homes ("Homes") are covered by the Fair Labor Standards Act ("FLSA") and are subject to its overtime provisions. We conclude that the Homes are not covered by that statute because they are not an "institution primarily engaged in the care of the sick, the aged, mentally ill or defective who reside on the premises of such institution." 29 U.S.C. § 203(r)(2)(A). As a result, we reverse and remand for further proceedings.

I. Background

Plaintiffs Loretta and Robert Probert and Plaintiffs-Intervenors Debra and Eric Cloninger, Donna and John Grimes, Gene and Sandra Grissom, and Kenneth and Leona McDaniels are married couples who worked as "house parents" in FCSA's Homes. Each Home housed up to five chil-dren. All the children were "severely emotionally disturbed" as defined by the Alaska law that qualifies the Homes for Medicaid funding, 7 Alaska Admin. Code § 43.471, and each of the children had at least one diagnosed mental disorder under Axis-I of the current Diagnostic and Statistical Manual of Mental Disorders. The children attended local public schools and participated in other activities away from the Homes. The children participated in group therapy conducted by clinicians in the Homes, but received most of their medical and psychological treatment outside the Homes. Plaintiffs were not licensed medical or social service professionals.

Plaintiffs sued FCSA for overtime pay under the FLSA.*fn1

After denying Plaintiffs' first motion for partial summary judgment, the district court granted a similar motion for partial summary judgment in their favor, concluding that FCSA through its Homes, was operating "an institution primarily engaged in the care of the . . . mentally ill or defective who reside on the premises of such institution,' " 29 U.S.C. § 203(r)(2)(A), and was therefore an enterprise subject to the FLSA's overtime provisions, id. § 207(a)(1). The district court observed that the FLSA does not define "institution." As an analogy, the district court looked to a federal Medicaid regulation, not directly applicable to this situation, that defined "institution" as "an establishment that furnishes (in single or multiple facilities) food, shelter, and some treatment or services to four or more persons unrelated to the proprietor," 42 C.F.R. § 435.1010, and concluded that the "Homes (either individually or as a group) could be considered an 'institution.' " The court also relied on FCSA's own website, which described the Homes as "provid[ing] quality residential care to male and female youth ages 6-18 that are experiencing mental health and behavioral issues and are at imminent risk of psychiatric placement outside of their community."

After denying FCSA's motion for reconsideration, the district court certified both orders for an immediate appeal under 28 U.S.C. ยง 1292(b). ...


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