Date: February 4, 1999

Case No. 1998-ARN-3

In the Matter of:

ADMINISTRATOR,
U. S. DEPARTMENT OF LABOR,
WAGE AND HOUR DIVISION,
   Prosecuting Party

    v.

BEVERLY ENTERPRISES, INC.,
BEVERLY HEALTH AND REHABILITATION SERVICES, INC.,
   Respondent

Daniel W. Teehan, Regional Solicitor
Susanne Lewald, Esq.
    U.S. Department of Labor
    Office of the Regional Solicitor
    71 Stevenson Street, Suite 1110
    San Francisco, California 94105
      For the Prosecuting Party

Julie M. Carpenter, Esq.
John B. Morris, Esq.
Steven N. Berk, Esq.
Christopher A. Bracey, Esq.
    Jenner & Block
    601 13th St., N.W.
    Washington, D.C. 20005

Hugh Reilly, Chief Counsel for Labor and Employment
    Beverly Enterprises, Inc.
    5111 Rogers Ave., Suite 40-A
    Fort Smith, Arkansas 72919
       For the Respondent

Before: ALFRED LINDEMAN
    Administrative Law Judge

   This action arises under the Immigration and Nursing Relief Act of 1989 (hereinafter "INRA" or "the Act"), 8 U.S.C. §§1101(a)(15)(H)(i)(a), 1182(m); 29 C.F.R. Part 504; 20 C.F.R. §§655.400(b), 655.405(c), 655.405(d), 655.415, 655.425. On March 13, 1998, the

Administrator issued the determination letters that are the subject of this proceeding, finding Respondent in violation of the INRA and seeking payment of approximately $3,200,000 in backwages and ,000,000 in civil money penalties. Respondent having filed a timely request for hearing, the matter was thereafter referred to the Office of Administrative Law Judges for hearing and decision. After Respondent filed a Motion to Stay Administrative Proceedings pending the resolution of its case filed in United States District Court for the District of Columbia, which motion was denied by Chief Judge John M. Vittone on April 21, 1998, the Administrator filed a "Motion for Order Compelling Discovery" on July 29, 1998. On August 20, 1998, Respondent filed a response to the motion, which challenged the Administrator's authority to promulgate regulatory provisions authorizing non-complaint-based investigations, the authority to treat the State Department as an "aggrieved party," the requirement to pay "prevailing wages" for foreign and domestic nurses, and the authority to obtain back wages after April of 1995. Counsel for the Administrator's declaration in support of the discovery motion having cited the existence of certain "threshold issues," by Order dated August 24, 1998, the parties were ordered to file simultaneous motions for summary judgment and memoranda supporting their respective positions on such issues.

   The parties thereafter filed their respective responsive and reply briefs on the issues of: 1) whether this is an appropriate forum for resolution of the threshold issues; 2) whether the Administrator exceeded the statutory authority granted it by Congress under the INRA in issuing the subject determination letters based on an investigation commenced as a result of a telegram received from a State Department officer rather than a nurse or other "aggrieved party"; 3) whether the proceeding is time-barred by virtue of the Administrator's delay beyond 180-days in issuing the determination letters; 4) whether the "prevailing wage"

regulation that the Administrator seeks to enforce is invalid as a matter of law; and 5) whether the pending discovery issues should be considered at this time. See "Administrator's Memorandum in Support"; "Respondents' Memorandum in Support"; "Administrator's Response Memorandum"; "Respondents' Memorandum in Opposition."¹

   In considering the instant motions, I accept the parties' stipulations and find that the following essential facts are not in dispute. In January of 1995, the Administrator received a telegram from a Department of State official in the Philippines, which contained information to the effect that U.S. "petitioners" of registered nurses may be acting unlawfully in their recruitment of foreign nurses under the INRA, and that an investigation was warranted. See "Joint Stipulation of Facts" at Attachment 1. The telegram, mentioning Respondent by name, stated, inter alia, that the Philippines is home to "the world's largest visa fraud post," that large amounts of money are involved in nurse recruiting there, that recruiters often collect fees from foreign nurses and then fail to seek employment for them, or profit by under-employing them. Id. The telegram further estimated that more than fifty per cent of 8 U.S.C.A. §1101(a)(15)(H)(i)(a)² visa recipients from the Philippines do not wind up working in status in the U.S. Id. The telegram was forwarded to the "Wage and Hour" office of the Department of Labor Employment Standards Administration, in Sacramento, California, on February 17, 1995, and that office opened its investigation of Respondent on or about March 3, 1995. "Joint Stipulation of Facts" at 1.

   On April 6, 1995, the Wage and Hour Division sent a letter to Respondent advising that it would conduct an on-site review on April 18, 1995, to ensure compliance with the INRA, and requesting documents on all of Respondent's H-1A and H-1B employees. See "Statement of Undisputed Material Facts" at Attachment A. Initially, Respondent agreed to provide the Administrator with various documents requested. See "Statement of Undisputed Material Facts" at Attachment B. However, by May of 1996, Respondent refused to comply with the Administrator's document requests and contested the authority to conduct such investigation. See id. at Attachment C. Finally, after completing the review/investigation, on March 13, 1998, the Administrator issued the letters that are the subject of this proceeding, by which it was determined that a basis exists to make a finding that "a facility (for which an attestation is made) has failed to meet a condition attested to or that there was a misrepresentation of material fact in the attestation"; civil money penalties, back wages and other administrative remedies were sought, which were to be held in abeyance "pending a hearing and any appeal." 8 U.S.C. §1182(m)(2)(E)(iii-v); 20 C.F.R. §§655.410, 655.415.

I. Authority to resolve the threshold issues

   The first issue for determination is whether an administrative law judge (ALJ) has the authority to resolve the issues here presented. The Administrator asserts that the

threshold issue of the investigation's validity cannot be considered before an ALJ, because procedural regulations specifically prohibit an ALJ from ruling on the validity of a regulation, see 20 C.F.R. §655.440(b), and because the regulations expressly authorize the Administrator to conduct investigations without a complaint.³ In addition, regarding Respondent's citation to OFCCP v. American Airlines, 94-OFC-9, Decision and Order (Sept. 19, 1995) (finding that OFCCP did not have authority to subject a federal contractor to compliance review absent a complaint), the Administrator contends it is factually distinguishable in that the regulation there did not expressly grant OFCCP the authority to investigate without a complaint, whereas the regulation in the instant case does; thus, the Administrator argues that there was an interpretation of a regulation, not a challenge to its validity, as there must be here. "Administrator's Response Memorandum" at 3.⁴

   Respondent contends that in the interest of fairness and efficiency the threshold issues of this case should be resolved before the parties go through an extensive and costly discovery process. "Respondents' Memorandum in Support" at 4, 12; "Respondents' Memorandum in Opposition" at 1-2. Moreover, Respondent notes that it has filed a pending, parallel action in U. S. District Court, in response to which the Administrator has argued that the case is properly before an ALJ. "Respondents' Memorandum in Support" at 13.

   In my view, by presenting legislative history and public policy arguments as to how the specific statutory provision and the corresponding regulations should be interpreted, the parties have made clear that the basic question here, i.e., whether a non-complaint-based investigation is authorized by the inclusion of the words "or otherwise" in the implementing regulation, is one of interpretation that can be accomplished by applying well-accepted principles of statutory construction, see infra, and without ruling on the validity of any regulations, just as the similar issue was able to be considered in OFCCP v. American Airlines, supra. See "Respondents' Memorandum in Opposition" at 9, 10, 15 and Exhibit 1; "Administrator's Response Memorandum" at 4; "Administrator's Memorandum in Support" at 11, 22-23, Attachment A at 2. I therefore conclude that this is a proper forum for resolution of the threshold issues here presented.

II. Administrator's authority to conduct non-complaint based investigation

   As indicated above, the essential issue for determination is whether the Administrator was authorized to conduct an investigation of Respondent in this case based on the "complaint" received from the State Department officer in the Philippines. It is a cardinal rule of statutory construction that the first step is to ascertain whether the language of the

8 U.S.C. §1182(m)(2)(E)(ii). In my judgment, it is clear from the quoted language that in order to find that the investigation in this case was authorized, and thus a valid basis for the determination letters issued on March 13, 1998, it must first be found that the investigation was based on a complaint of an aggrieved party.⁵

"Aggrieved Party"

   As indicated above, the INRA states that "[c]omplaints may be filed by any aggrieved person or organization (including bargaining representatives, associations deemed appropriate by the Secretary, and other aggrieved parties as determined under regulations of the Secretary)." 8 U.S.C. § 1182(m)(2)(E)(ii). The Administrator asserts that the telegram issued by the Department of State, alleging unlawful practices by foreign nurse recruiters, constitutes a valid complaint by an aggrieved party, on which its investigation of Respondent was properly based. "Administrator's Response Memorandum" at 5-6; "Respondents' Memorandum in Support" at Attachment F. The Administrator argues that the Department of State qualifies as an "aggrieved party," because the Secretary has defined it as such in the regulations for the H-1B program⁶ and "identical words used in different parts of the same act are intended to have the same meaning." "Administrator's Memorandum in Support" at 23, quoting Gustafson v. Alloyd Co., Inc., 513 U.S. 561 (1995); "Administrator's Response Memorandum" at 6, citing Administrator v. Alden Management Service, Inc., 1996-ARN-3 (ALJ, 1998), a decision by Judge Jeffrey Tureck, holding that the Department of State could be an aggrieved party).

   Regarding Gustafson v. Alloyd Co., Inc., supra, it is noted that the statutory bases for the H-1A and H-1B programs were enacted separately,⁷ and that there is no evidence that the Secretary ever promulgated any regulation defining "aggrieved parties" under the

   As far as Judge Tureck's opinion in Administrator v. Alden Management Service, Inc., supra, is concerned, I note that it relied on the assertion that "the Department of Labor, Department of State, and the Immigration and Naturalization Service work together to administer the H-1A program" and thus "[i]f . . . the telegram is not a complaint . . . , it would force each of these agencies in many circumstances to turn a blind eye to alleged violations of law discovered by the other agencies administering the Act" (emphasis added), which is "clearly not what Congress intended." "Administrator's Response Memorandum" at Attachment B, p. 6. In effect, that was a finding that the Department of State was an aggrieved person because its "enforcement interest" falls within the "zone of interests" sought to be protected by the statute. See Director, OWCP, v. Newport News Shipbuilding & Dry Dock Co., 514 U.S. 122 (1995). As I read the legislative history of the INRA and Newport News, this assertion is misplaced. Clearly, the purpose of INRA, enacted in 1989, was a limited one, "to assist in alleviating the national shortage of registered nurses by allowing . . . for the admission of foreign registered nurses . . . ." H.R. No. 101-288 at 2 (October 16, 1989). And to effectuate that end, the Secretary of Labor was empowered to establish provisions for the receipt of complaints from those directly affected by the law, the nurses themselves or their bargaining representatives, or others identified by regulation by the Secretary as aggrieved (which has not been done). In particular, as indicated above, see footnote 6 supra, the Secretary has not included the State Department, the INS or "governmental officials" in the implementing regulation for the H-1A program. Under these circumstances, therefore, and in the absence of any evidence that the Department of State's and INS's roles, including their own ability to investigate visa and immigration fraud, are impaired if the Secretary of Labor does not investigate for them, I find that the State Department was not an aggrieved party and thus the telegram could not be the basis of the "complaint" contemplated by the INRA.⁸ Other possible grounds for investigation under H-1A program

   In the absence of a complaint from an "aggrieved party," the only other possible bases for the investigation and issuance of determination letters in this proceeding are: 1) the statutory provision that provides "[t]he Secretary shall conduct an investigation under this clause if there is reasonable cause to believe that a facility fails

to meet conditions attested to," 8 U.S.C. §1182(m)(2)(E)(ii) (emphasis added), and 2) the implementing regulation that states "[t]he Administrator, either pursuant to a complaint or otherwise, shall conduct such investigations as may be appropriate . . ." 20 C.F.R. §655.400(b) (emphasis added). The Administrator interprets the provisions to provide express authority to investigate in either circumstance, i.e., when there is a complaint or when there is reasonable cause, and cites to the House Report issued by the Judiciary Committee that listed "reasonable cause" as the first of two bases for initiating an investigation (filing a complaint by an aggrieved party was the second). "Administrator's Memorandum in Support" at 13; "Administrator's Response Memorandum" at 4.⁹ Respondent contends that the words "under this clause" limit this phrase to mean that the Administrator can investigate only when there is a complaint and "reasonable cause," and that because the statute is otherwise silent on whether such investigations require a complaint, it should be strictly construed as granting only authority for complaint-based investigations. "Respondent's Memorandum in Opposition" at 5, citing Walker v. Luther, 830 F. 2d 1208, 1211 (2d Cir. 1987)("[A statute should be] strictly construed as granting only those powers granted expressly or by necessary implication.").

   As stated above, the first step required to resolve these arguments is an analysis of the statutory language authorizing the Secretary to investigate "under this clause." As I read the language, it is significant that the section in question is three sentences, and the sentence containing the investigatory authority is the third, appearing only after the sentence authorizing the Secretary to set up a procedure for receipt of complaints, and after the sentence describing who the complaints must come from. Thus viewed, it is the clear and unambiguous purpose of the third sentence to empower the Secretary to proceed with an investigation "under this clause" if it is determined, after reviewing a complaint received pursuant to the first and second sentences, that such complaint contains enough information indicating that there is "reasonable cause" to make further inquiry. In other words, the third sentence gives the Secretary discretion either to commence an investigation or to decline to investigate in those instances where it is determined that the complaint received does not present a reasonable basis to expend further resources. Indeed, that is exactly what the implementing regulations provide: "the Administrator shall determine whether there is reasonable cause to believe that the complaint warrants investigation and, if so, shall conduct an investigation"; "if the Administrator determines that the complaint fails to present reasonable cause for an investigation, . . . shall notify the complainant." See 20 C.F.R. §§655.405(c). Therefore, the Administrator's position -- i.e., that the Secretary may investigate "under this clause" even without receipt of a complaint -- is inconsistent with the implementing regulations, and illogical on its face in that it would render the first two sentences superfluous.

   In addition to the foregoing ground, the March 13, 1998, determination letters are subject to challenge based on the applicable statutory provision which states: "[t]he Secretary shall provide, within 180 days after the date such complaint is filed, for a determination as to whether or not a basis exists to make a finding described in clause (iv)."¹⁰ 8 U.S.C. §1182(m)(E)(iii)(emphasis added). The implementing regulations thus provide, in relevant part, 1) that the Administrator is to determine if there is reasonable cause to believe that the complaint warrants investigation, and "if so, [he] shall conduct an investigation, within 180 days of the receipt of a complaint," and 2) that "when an investigation has been conducted, the Administrator shall, within 180 days of the receipt of a complaint, issue a written determination . . . ." 20 C.F.R. §§655.405(c), 655.405(d).

   Thus, based on those provisions it is clear that the Administrator's determination letters were required to be issued within six months of the date the complaint was received. I find that the Administrator did not meet this statutory deadline under any theory of the case. As measured from receipt of the State Department "complaint" telegram in January 1995, it was about 38 months until the issuance of the determination in March 1998; from

   The Administrator argues that noncompliance with the 180-day requirement does not bar him from pursuing this action. "Administrator's Memorandum in Response" at 11 [citing to Brock v. Pierce County, 476 U.S. 253 (1986)("When . . . there are less drastic remedies available for failure to meet a statutory deadline, courts should not assume that Congress intended the agency to lose its power to act.")]. Respondent contends that implicit in the language "the Secretary shall provide . . . " is the notion that the Secretary does not have jurisdiction after the expiration of the time limit. 8 U.S.C. §1182(m)(E)(iii)(emphasis added); "Respondent's Memorandum in Opposition" at 21.¹¹

   As I read the relevant case law, I note, first, that Brock v. Pierce County, supra, did not establish a blanket rule that statutory deadlines are never jurisdictional. Indeed, the Court stated:

We need not, and do not, hold that a statutory deadline for agency action can never bar later action unless that consequence is stated explicitly in the statute. In this case, we need not go beyond the normal indicia of congressional intent to conclude that § 106(b) permits the Secretary to recover misspent funds after the 120-day deadline has expired.

   The next consideration is whether the very long period of delay in the completion of the Administrator's "written determination" investigation, i.e., until 18 to 32 months after the expiration of the statutorily prescribed six months, was prejudicial to Respondent. First, I find some prejudice in that what appears to be a fundamental disputed issue regarding the alleged activity by an entity called "Nurses Exchange of America, a placement agency in Los Angeles," which was cited in the State Department's January 1995 telegram, and whether or not such entity is a subsidiary or affiliate of Respondent, was not able to be pursued by Respondent at the earliest possible time. See "Respondents' Memorandum in Support" at Exhibit F. In addition, the opportunity to gather evidence and prepare the case for trial should have commenced as early as July of 1995 (i.e., 180 days from the date the State Department's January 1995 "complaint" telegram was received). Respondent also points to the added and unnecessary costs stemming from not being able to move earlier to assert its legal challenges in Federal District Court, and to the escalation of its potential liability in back wages and civil penalties. See "Respondents' Memorandum in Support" at 32-33. Having considered these factors as well as the evidence that the Wage and Hour Division referred to its activity as "a routine audit" - - not the result of a "complaint" - - until April or May of 1996,¹² and the undisputed fact that it was still another two years until the "written determination" letters were issued in March 1998, I find that Respondent was significantly prejudiced by the delay in the completion of the investigation.¹³

   In view of the foregoing findings and conclusions, I decline to consider the remaining issues.¹⁴

¹ "Administrator's Memorandum in Support," "Respondents' Memorandum in Support," "Administrator's Response Memorandum" and "Respondents' Memorandum in Opposition" refer, respectively, to "Administrator's Response to Order to Show Cause and Memorandum in Support of Administrator's Motion for Partial Summary Judgment," dated October 27, 1998; "Respondents' Memorandum in Support of Respondents' Motion for Summary Judgment on the Threshold Issues," dated October 26, 1998; "Administrator's Response to Respondents' Memorandum in Support of Motion for Summary Judgment," dated December 11, 1998; and "Respondents' Memorandum in Opposition to Administrator's Response to Order to Show Cause and to Administrator's Motion for Partial Summary Judgment," dated December 11, 1998.

² Hereinafter referred to as "H-1A."

³ I.e., 20 C.F.R. 655.400(b) states that "[t]he Administrator, either pursuant to a complaint or otherwise, shall conduct such investigations as may be appropriate . . . ." (emphasis added).

⁴ I note, however, that the Administrator initially asserted that what is here at issue is not the validity of regulations, but the Secretary's interpretation of those regulations. See "Administrator's Memorandum in Support" at 2.

⁵ It is noted in this connection that representatives of Respondent attest to the fact that the Administrator initially characterized the investigation as a "routine audit," and that after 16 months it was asserted for the first time that there were complaints from the Department of State which justified the investigation. "Respondents' Memorandum in Support" at Attachments B, C, D.

⁶ Compare 20 C.F.R. §655.805(d), which states that "any aggrieved person or organization (including bargaining representatives and government officials) may file a complaint" (emphasis added) under the H-1B program, with 20 C.F.R. §655.405(b) which states that "any aggrieved person or organization may file a complaint" under the H-1A program.

⁷ Section 1182(n), the basis for the H-1B program, was created by the Immigration Act of 1990, Pub. L. No. 101-649, § 205(c), 104 Stat. 4978, 5020-22 (1990). Section 1182(m), the basis for the H-1A program, arose from the INRA of 1989, Pub. L. No. 101-238, § 3(b), 103 Stat. 2099, 2100-2103 (1989). See "Respondents' Memorandum in Opposition" at 16.

⁸ Though rendered moot by this finding, it is noted that Respondent also argued that the telegram did not constitute a complaint, as it "does not relate to a facility' or to the veracity of any attestation filed by a facility," as is required by statute. "Respondents' Memorandum in Support" at 26. As the INRA states that "[t]he Secretary of Labor shall establish a process for the receipt, investigation, and disposition of complaints respecting a facility's failure to meet conditions attested to or a facility's misrepresentation of a material fact in an attestation," 8 U.S.C. §1182(m)(2)(E)(ii), and the regulations provide that "(n)o particular form of complaint is required, except that the complaint shall be written or, if oral, shall be reduced to writing by the Wage and Hour Division official who receives the complaint . . . and (shall) set forth sufficient facts for the Administrator to determine what part . . . of the attestation or regulations have allegedly been violated," I find that the contents of the telegram would be sufficient to constitute a valid complaint (if received from an "aggrieved party") as long as the Wage and Hour official was satisfied that it supplied the necessary ingredients. See 20 C.F.R. § 655.405(b).

⁹ I note that Judge Tureck's opinion in Administrator v. Alden Management Service, Inc., supra, also relies on the same citation of authority. See "Administrator's Response Memorandum," Attachment B at p. 6.

¹⁰ The finding referred to is that a facility "has failed to meet a condition attested to or that there was a misrepresentation of material fact in the attestation." 8 U.S.C.A. § 1182(m)(2)(E)(iv).

¹¹ The Administrator and Respondent also differ as to whether Respondent "cooperated fully" with the investigation and should thus be held responsible for any delay. See "Administrator's Memorandum in Support" at 32; "Administrator's Response Memorandum" at 13-14; "Respondent's Memorandum in Support" at 30-31; "Respondent's Memorandum in Opposition" at 21-23, 29.

¹² See "Respondents' Memorandum in Support" at Exhibits A, B, C, D.

¹³ Regarding the Administrator's assertion that there was delay caused by "the paucity of information provided by Beverly," see "Administrator's Response Memorandum" at 15, it is noted that such delay could also be viewed as further evidence of prejudice to Respondent from the inordinate length of time it took for the investigation to be completed by the Administrator under 20 C.F.R. §§655.405(c) and (d).

¹⁴ With respect to the "facility rate vs. prevailing geographic area wage rate" issue, I note that there remain disputed material factual issues regarding the identity and compensation of individuals named as employees, as well as a conflicting citation of authority regarding Congressional intent, all of which precludes a ruling on motions for summary decision. See 29 C.F.R. §18.41(a); "Administrator's Response Memorandum" at Attachments A, F, G, I; "Respondents' Memorandum in Opposition" at Exhibit 1.