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Hanis v. Metropolitan Life Insurance Co.

United States District Court, W.D. Missouri, Western Division

September 29, 2016

JOHN HANIS, Plaintiff,


          FERNANDO J. GAITAN, JR., United States District Judge.

         Currently pending before the Court is Metropolitan Life Insurance Company (“MLIC's”) and MetLife Group, Inc. (“MetLife Group's”) Motion for Summary Judgment (Doc. #25), plaintiff's Motion to Certify Class Pursuant to 29 U.S.C.§216(b) (Doc. # 29) and plaintiff's Motion for Partial Summary Judgment (Doc. # 38).

         I. BACKGROUND

         This is a putative collective action brought pursuant to the Fair Labor Standards Act. Plaintiff John Hanis is a former senior insurance underwriter for MetLife. MetLife Group and MLIC are separate and distinct wholly owned subsidiaries of non-defendant, MetLife, Inc., which provides various insurance, annuities, and employee benefit programs and products. MetLife Group offers a variety of “Group, Voluntary & Workplace Benefits” to employers seeking to provide group insurance coverage or optional benefits to their employees, such as dental, life, short-term disability, or long-term disability coverage. MetLife Group hired plaintiff to work in its Kansas City office in June 2006 where he remained until he was terminated in October 2013. Plaintiff claims that MetLife improperly classified him as exempt from the overtime requirements of the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq. and denied him overtime pay for time worked in excess of 40 hours per week. Plaintiff has also raised a similar claim under the Missouri Wage Law. Mo.Rev.Stat.§ 290.500 et seq. MetLife argues that plaintiff was properly classified as an exempt “administrative” employee.

         At the time he was hired, plaintiff had 25 years of experience as a group insurance underwriter. While working for MetLife, as a Senior Underwriter, plaintiff worked on underwriting cases involving up to 500 insured lives. Plaintiff provided underwriting services for multiple lines of coverage. Throughout his tenure with MetLife, plaintiff was paid on a salary basis at an annualized rate of more than $50, 000 per year.

         Plaintiff alleges that the primary job of a Senior Underwriter is “to provide internal underwriting services for MetLife.” Plaintiff agreed that the following description in a MetLife training document represents a “good basic foundation” of the job of a group insurance underwriter: “Underwriting is a prospective exercise where decisions are made about the future plan design and rate for a group based on historical data. The role of the underwriter is multi-faceted. The primary responsibility of the underwriter is [(i)] Evaluating the risk of [a] specific group . . . [; (ii)] Determining appropriate plan design [; and (iii)] Establishing the rate (premium).” (Hanis Dep. at 118:11-22 & Dep.Ex. 16, ML000103-114; see also (Long Decl. ¶ 7, Ex. 2, ML000100 (“Underwriting Process Defined”) (describing the “3 primary activities” of the “case underwriting process” as: (1) “Assessment of Risk”; (2) “Evaluation of Plan Design”; and (3) “Establishment of the Price”). The same training document also lists several “additional underwriting responsibilities that are equally important to the success of [MetLife's] underwriting organization, ” which includes, inter alia: “Negotiation, ” “Decision Maker, ” “Benefits Consultant, ” “Knowledge expert on contract (MetLife and competitors), ” and both “Gatekeeper- Internal” and “Gatekeeper-External.” (Hanis Dep. at 118:11-22; Ex. D-16, Dep. Ex. 16, ML000103-114). Plaintiff testified that, as a Senior Underwriter, he did not market or sell MetLife's various lines of insurance directly to the employers or groups seeking coverage. (Hanis Dep. at 12:2-16). Plaintiff agreed that MetLife “sales reps are those who are responsible for selling insurance on behalf of MetLife” and who were primarily responsible for interacting directly with the employer seeking coverage (through its broker). (Hanis Dep. at 12:2-16). Plaintiff testified that, as an underwriter, he was “a couple of steps away from the actual customer” seeking coverage, and “very seldom would [he] ever contact or be in contact with the actual customer.” (Hanis Dep. at 12:2-8). Plaintiff agreed that, typically, the employer (through an independent insurance broker) would “market the plan, ” meaning to “go find what the best insurance policy at the best price is.” (Hanis Dep. at 12:9-12). Plaintiff explained that after the employer's broker submits a request for a proposal to a MetLife sales representative, the case would then be assigned to a MetLife Group underwriter. (Hanis Dep. at 24:1-7). Plaintiff explained that he “would talk with our sales reps on a daily basis, and part of it is they're trying to get a lower rate, ” while plaintiff's responsibility was “to keep the rate at a level that will continue to make a profit for the company.” (Hanis Dep. at 14:5-14). Plaintiff agreed that during the process of settling on a rate, “there would be a lot of back-and-forth negotiation with the sales rep.” (Hanis Dep. 100:15-18.). Plaintiff testified that, “I would give them the strong - the points of - the facts of the case, and they would give me their argument of why they needed more, and then we would try to come to a mutual agreement.” (Hanis Dep. 14:5-14.). Plaintiff would adjust the rate by gathering additional information to input into MetLife's computer systems which generated the rates and adjusting the margin within certain allowed parameters. Plaintiff explained that certain sales representatives preferred for him to be assigned to their cases in part “[b]ecause I would often look at their cases more than just doing a production thing and running it through.” (Hanis Dep. at 59:20-25). Plaintiff agreed that “of course” there were times when his goal of underwriting “business for a profit . . . to MetLife” conflicted with a sales representative's objective of selling the case and “trying to get the best offer.” (Hanis Dep. at 10:7-17). Plaintiff testified that in the event of such a conflict, his “ultimate responsibility” as “gatekeeper” was “to safeguard MetLife and MetLife's profit.” (Hanis Dep. at 19:6-12). Plaintiff testified that there “[a]bsolutely” were times “when no matter how much [he] wanted to help a particular sales rep, [he] felt [he] couldn't do so because of [his] gatekeeper role.” (Hanis Dep. at 99:4-7). Plaintiff explained that MetLife's sales representatives receive commissions based on sales-“they got money if they sold cases”-while he did not receive any commission compensation. (Hanis Dep. at 100:24-101:5).

         Plaintiff agreed that “if the underwriter as the gatekeeper . . . gets it wrong, there could be significant financial impact to MetLife.” (Hanis Dep. 20:20-23). Plaintiff also testified that the consequence if “the underwriter is making the wrong call in terms of how he or she is pricing” would be that “[MetLife] could lose money.” (Hanis Dep. at 33:9-18). At the time of plaintiff's termination in October 2013, he had an annual “premium limit” of $500, 000. (Hanis Dep. at 22:17-20, 123:21-25, 124:20-23). Plaintiff wrote in a self-assessment for 2012 that overall sales for his cases resulted in more than $2, 000, 000 of total annual premiums to MetLife. (Hanis Dep. at 112:19-113:2; 113:19-25 & Ex. D-15, Dep. Ex. 15, ML000290, at 295). Plaintiff testified that his underwriting decision-making had a direct effect on the corresponding risk of potential exposure and/or liability MetLife would owe in claims to insured policyholders. (Hanis Dep. at 124:24-125:4 (“I mean, as premium increases, there's more inherent risk.”); see also Id. at 127:5-128:14.).

         Plaintiff testified that so long as a case was within his lives and premium authority, he “was able to quote them” and “could do the pricings” independently and without any consultation with a manager or supervisor. (Hanis Dep. at 22:10-16, 22:21-23:13). Plaintiff agreed that “it was up to [him] to decide whether or not to seek advice from others, ” stating that “[w]hen I really went beyond most of the standard guidelines, that's when you confer with others.” (Hanis Dep. at 78:7-16; see also Id. at 23:18-20).

         Plaintiff testified that, upon being assigned a case, he would receive an email containing the information “that I would need to do my analysis, ” which typically included census and demographic data for the entire group, the “current plan design” the group was seeking for the various lines of coverage, any “past claims experience” the group had, and other background information about the employer, such as “where they're located, what they do.” (Hanis Dep. at 25:7-27:16). Plaintiff also analyzed the specific plan design the group sought, stating that it was important because it “is sometimes tailored to the needs of that particular group, ” which in turn could impact the rates plaintiff quoted for the coverage. (Hanis Dep. at 26:14-24). Plaintiff used the plan design to understand what factors to put into the system to generate the best rate, while still allowing MetLife to make a profit. Plaintiff explained that reviewing the group's “past claims experience” would “show how the experience of that particular plan affected their claims. Maybe there was something in that plan that I saw that maybe we don't want to do, and that depended on what detail of information that I was given, ” also agreeing that past claims experience “would be important to determine the risk factor going forward for MetLife.” (Hanis Dep. at 26:25-27:12). Plaintiff testified that there were times when he decided that he needed more information than he was provided initially in order to proceed with a quote, in which case he also decided what information to request from the employer and could reach out to the employer's broker directly. (Hanis Dep. at 27:13-28:5). Plaintiff explained that if he was provided with additional information, he could put that into the system and sometimes achieve a better rate and apply a more aggressive margin because of the confidence of the information. (Hanis Dep. at 29:3-13). Plaintiff also testified that it was his responsibility as an underwriter to identify any anomalies in a group's census data and, if so, whether they were acceptable or whether the anomaly “might be a red flag for us to ask more questions.” (Hanis Dep. at 34:10-36:1). Plaintiff testified that, in addition to demographic data, he often would assess various sources of financial information about the employer seeking coverage, including the company's financial statements and other publicly available information, to analyze the perceived strength or weakness of the company. (Hanis Dep. at 15:18-25, 19:13-20:19).

         Plaintiff explained that he also had to make an initial determination of an appropriate “Standard Industrial Code” (“SIC”) for the particular employees within any given group, a decision within his discretion and authority without manager approval. (Hanis Dep. at 15:12-17:10, 41:14-25). Plaintiff explained that the SIC categorizes the specific industry or occupation in which the employees within the group work, as different occupations or industries carry different risk profiles. (Hanis Dep. at 41:14-42:19, 48:14-20). Plaintiff testified that the risk profile of different industries or occupations also can “depend on the coverage” the employer seeks. (Hanis Dep. at 42:6-19). Plaintiff testified that it was important to determine an appropriate SIC for a particular group, as getting the wrong code “could affect [the rates] anywhere from a couple of percent to maybe even 10 or 15 percent if it was really well off.” (Hanis Dep. at 16:1-16; see also id. at 41:21-25). Plaintiff testified that he would sometimes “get creative” when analyzing a SIC, and if he “didn't feel comfortable with just the basic data that came” from the employer, he would try “thinking of some possibilities of maybe additional questions to ask them that could help reduce the rate” and try to get “additional information, and by doing so, I might be able to come up with a different SIC code.” (Hanis Dep. at 46:10-47:12 & Ex. D-5, Dep. Ex. 5, ML000886).

         Plaintiff testified that when the system did not generate a competitive rate, he would recommend different options for the customer to consider in order to help the sales representative achieve the sale. (Hanis Dep. at 58:8-23; 61:8-62:9). In plaintiff's self-assessment of his performance during 2012, he noted that he had “[b]een aggressive much of the year in suggesting alternative plan options in addition to what was suggested by the broker or rep, which I believe has helped in my success in having several hundred - several 500-plus cases sold and overall sales of more than $2, 000, 000.” (Hanis Dep. at 112:19-113:7 & Ex. D-15, Dep. Ex. 15, ML000290, at 295).

         Plaintiff testified that he had the discretion and authority to decide not to issue a quote-“decline to quote” or “DTQ”-for a particular case, agreeing that this is “a decision that the underwriter makes.” (Hanis Dep. at 28:13-19, 90:20-25). Plaintiff explained that he could decline to quote a particular case “for various reasons, ” including, for example, if plaintiff determined that MetLife is “not competitive, and there's nothing that [he] can see to make us competitive”; if MetLife is not “able to match the current plan design”; if the group's industry was one MetLife typically would not quote; or, most frequently, if plaintiff “felt [he] had insufficient data” such that he was not “in a position to adequately assess risk.” (Hanis Dep. at 91:1-92:7). Plaintiff testified that his decision to decline to quote was not typically reviewed by a manager before plaintiff made his decision, nor was manager approval required. (Hanis Dep. at 28:13-19, 92:20-93:20). Plaintiff explained that his decisions to decline to quote were rarely reversed or questioned by a manager “because [plaintiff] gave real good reasons” for his decisions. (Hanis Dep. at 92:8-93:20).

         Plaintiff testified that after the steps above, he would then determine a “manual rate” for the case using a computer program called “IMPAQS, ” which he referred to as a “rating tool.” (Hanis Dep. at 40:8-25; 50:3-18). Plaintiff explained that the IMPAQS program required several inputs, including the SIC, the plan design, and the census and demographic data. (Hanis Dep. at 50:3-18). Plaintiff explained that on occasions where he did not have all of the information needed to run a “manual” rating in IMPAQS, he might have to make certain assumptions. (Hanis Dep. at 51:6-51:19).

         Plaintiff agreed that the “manual” rate provided by IMPAQS represented “a starting point for [him], as opposed to an end point.” (Hanis Dep. at 56:17-20). When asked in his deposition if he would “stop [his] analysis with what the computer spits out, ” plaintiff answered: “Primarily I did not. I did my job of doing the best I could.” (Hanis Dep. at 56:10-16). According to plaintiff, “if you don't ask the additional questions, you might come up with the best result that your system gave you, but you did not give your sales rep the best potential offer that you could do.” (Hanis Dep. at 111:25-112:4). Plaintiff testified that if the “manual” rate suggested that MetLife is “not going to be competitive and it's basically now a lost cause, ” he might consider, “is there something I can do to work with my sales rep to give him the rate that he might be able to sell? And that's when we would collaborate between each other[.]” (Hanis Dep. at 57:7-17). Plaintiff testified that he might also consider whether modifications to the variables underlying the “manual rate” might affect the outcome, such as altering the SIC or obtaining additional information. (Hanis Dep. at 57:7-58:23). If a case is exclusively a “manually rated” case-meaning there was no additional “experience rating”-plaintiff still had to assess how the “manual” rates compared to the rates the employer was currently paying, and whether and to what extent to use his available “margin” to establish a final rate. (Hanis Dep. at 51:23-52:6).

         As a Senior Underwriter working primarily on larger groups, plaintiff typically also did an “experience analysis” on “[m]ost of the cases, ” and he rarely worked on exclusively “manual” rate cases. (Hanis Dep. at 21:13-21, 24:15-17, 67:15-21, 68:10-14). Plaintiff testified that under certain circumstances, “possibly the entire weight would be based off of the experience and not the manual rate” established through the IMPAQS program. (Hanis Dep. at 68:4-6). Plaintiff explained that the “experience rating” process refers to an additional analysis that incorporates the particular group's prior insurance coverage and claims history-“to utilize the claims information from the former carrier or the current carrier.” (Hanis Dep. at 17:13-20; id. at 24:18-22 (experience rating a case means “if you had past experience to be part of the factor of your final rate”). Plaintiff agreed that the objective of “experience rating” is “to predict how claims will run based on past experience.” (Hanis Dep. at 67:22-68:18; see also id. at 27:9-12 (a group's past claims experience is important to determine the risk factor for MetLife going forward). Plaintiff confirmed at his deposition that an email he wrote to a MetLife sales representative identified the “key components of the experience rating process, ” which includes several steps and lists various sources of information. (Hanis Dep. at 69:16-70:13). Included among these “key components” are, inter alia: “premium vs. lives analysis, ” “[w]hether claims are mature or immature, ” “rate history” and the “trend of how a former carrier thought the case was doing, ” the “weights” assigned to the experience, and the “credibility” of the experience.” (Hanis Dep. at 69:16-86:23). Plaintiff also testified that so long as he was acting within his authority, he had the ability to change the “weighting” assigned to a particular year's experience data “[a]s I saw that it fit the risk.” (Hanis Dep. at 78:1-6). Plaintiff testified that although MetLife guidelines often provided a “default weighting” to afford experience data, plaintiff had discretion to “modify it” and “shift away from the default weighting” under certain circumstances and armed with appropriate information. (Hanis Dep. at 73:24-75:18). At the end of the experience rating, after all of the data has been input, the computer yields an experience rate and a blended rate, using algorithms that are programmed into a spreadsheet, which also produce a credibility factor. (Dep. Tom Long, p..149:11-19). Senior underwriters then choose which rate to work from. Tom Long testified that “its an underwriting decision based on how aggressive they want to be. They are free to omit data, throw pieces of it out, throw pieces of it into the best of their knowledge, and then oftentimes they can change the credibility. So, it might be, you know, 70 percent credible, and they might make the decision that I have a great feeling about this case. I think it's churning the right way. I'm going to give it 100 percent credibility because experience is improving every year. So I'm going to accelerate credibility and base it all on experience.” (Dep. Tom Long, p.149:24-150:10).

         Plaintiff explained that before issuing a final quote, he had discretion to determine what “margin” to apply within his permissible range, which he did without the approval of or consultation with a manager or supervisor. (Hanis Dep. at 51:23-52:6, 62:16-21, 63:10-22). Plaintiff testified that even in “manually rated” cases, after obtaining the manual rate from the IMPAQS program, he still had to decide what margin to use within his permissible range before sending the rates out to the sales representative. (Hanis Dep. at 51:23-52:6). Plaintiff testified that the “manual rate” process automatically incorporates a default margin of “plus six” into the rate provided by IMPAQS. (Hanis Dep. at 63:3-7). Plaintiff explained that he had the discretion to reduce the applicable margin to as low as “minus-two” without manager approval. (Hanis Dep. at 63:2-22). Plaintiff testified that depending on factors such as “how good of details, how good of information I had about the case, how comfortable I felt with it . . . [or] the trend of the claims, ” “that's when I would perhaps go to my manager and maybe we should go even further because I see a lot of what we call . . . good case characteristics.” (Hanis Dep. at 64:20-65:9). Plaintiff explained that in deciding upon an appropriate margin level for quoting each type of coverage he underwrote, he was expected to “carefully evaluate[]” numerous different “case characteristics” spanning several “risk categories.” (Hanis Dep. at 89:8-90:17 & Ex. D-12, Dep. Ex. 12 (ML000138-141)). Plaintiff testified that he, as the underwriter, was responsible for “decid[ing] how much weight to give to each of these positive or negative case characteristics, ” and that “they were part of our judgment.” (Hanis Dep. at 89:8-90:17). Plaintiff agreed that part of his decision on “where [he] moved within [his margin] range depended on how aggressive [he] wanted to be on a specific case, ” although he stated that “it wasn't just that.” (Hanis Dep. at 64:20-23). Plaintiff went on to explain that his decision might be based on the quality of the information he had and “how comfortable I felt with it”; the “trend of the claims” for the group; whether the group had “stayed with the same carrier for years rather than shopping around from year to year”; the “type of people who were being covered by the policy, ” for example, “we preferred, again, blue-collar versus white-collar groups”; or “if there were a fewer number of high-risk people, that would be a better case characteristic.” (Hanis Dep. at 64:20-66:25).

         Plaintiff testified that in performing his duties as a Senior Underwriter, he used certain “guidelines” in helping him assess risk. (Hanis Dep. at 87:1-24.) Plaintiff referred to the underwriting “guidelines” as “a tool [he] used” in performing his job duties. (Hanis Dep. at 87:13-14). According to plaintiff, these guidelines covered various topics, including “margin, what risk that we could quote, . . .why the risk[s] were determined to be good, bad, or otherwise. It had a lot of variations of eligibility, status, who we might want to - the types of questions we might want to ask and so forth. I mean, it was just a broad overview of general underwriting.” (Hanis Dep. at 87:1-12). Plaintiff testified that he “did the research work” and believed that “looking for additional ways of improving [the] quote” was “part of my job and expected of me” and was, in fact, what he “brought to the table” as an underwriter. (Hanis Dep. at 60:10-24).

         II. STANDARD

         A moving party is entitled to summary judgment on a claim only if there is a showing that "there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). "[T]he substantive law will identify which facts are material. Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). If the moving party meets this requirement, the burden shifts to the non-moving party to "set forth specific facts showing that there is a genuine issue for trial." Anderson, 477 U.S. 242, 248 (1986). In Matsushita Electric Industrial Co. Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986), the Court emphasized that the party opposing summary judgment "must do more than simply show that there is some metaphysical doubt as to the material facts" in order to establish a genuine issue of fact sufficient to warrant trial. In reviewing a motion for summary judgment, the court must view the evidence in the light most favorable to the non-moving party, giving that party the benefit of all inferences that may be reasonably drawn from the evidence. Matsushia, 475 U.S. 574, 588; Tyler v. Harper, 744 F.2d 653, 655 (8th Cir. 1984), cert. denied, 470 U.S. 1057 (1985).

         In Lutz v. Huntington Bancshares Inc., No. 2:12-CV-01091, 2014 WL 2890170 (S.D. Ohio June 25, 2014), aff'd, 815 F.3d 988 (6th Cir. 2016), the Court explained:

The exemptions to the FLSA's overtime provisions are to be narrowly construed against the employers seeking to assert [them]. . . .[T]he employer bears not only the burden of proof, but also the burden on each element of the claimed exemption. . . .Defendants must prove each element of the claimed exemption by a preponderance of the evidence. . . .Because the burden of proof is shifted, [the plaintiff] is entitled to summary judgment unless [the defendant] can come forward with evidence at least creating a genuine issue of material fact as to whether [the plaintiff] meets each and every element of the exemption. . . .If [the ...

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