Mohan Kutty v. United States Dep't of Labor, 764 F.3d 540

Background

Dr. Mohan Kutty operated multiple medical clinics through a web of closely held corporate entities and hired 17 foreign physicians who initially entered on J-1 visas and obtained J-1 waivers and H-1B status to work in underserved areas.
Kutty signed LCAs and H-1B petitions and required physicians to sign employment contracts conditioned on obtaining J-1 waivers and H-1B status; LCAs specified required wage rates higher than the wages actually paid.
The physicians complained to the DOL about unpaid wages; the Wage and Hour Administrator found numerous INA violations (unpaid wages, failure to maintain/produce LCAs/payroll records, and retaliation). Several physicians were fired or constructively discharged.
An ALJ awarded back wages (including costs for obtaining J-1 waivers and H-1B visas/attorney fees), assessed civil penalties, and held Kutty personally liable; the ARB and the district court affirmed. Kutty appealed.
The Sixth Circuit reviewed de novo and affirmed: (1) the DOL reasonably treated H-1B fees and J-1 waiver costs as employer business expenses recoverable as back wages under the regulations/facts, and (2) Tennessee veil‑piercing principles supported imposing personal liability on Kutty. Due process challenges failed.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether costs of obtaining H-1B petitions/attorney fees are employer business expenses that cannot be passed to employees	Kutty: H-1B costs are not employer business expenses when physicians already were in U.S. on J-1; visas only needed for travel, so costs shouldn't reduce required wages	DOL: Regulation treats H-1B petition/attorney costs as employer business expenses; DOL interpretation controls and applies whether petition brings worker in or changes status	Held: Affirmed — DOL reasonably construed 20 C.F.R. §655.731 to bar passing H-1B costs to employees; physicians entitled to reimbursement.
Whether J-1 waiver application costs are employer business expenses	Kutty: J-1 waiver is filed by employee; statute/regulations silent — costs not employer’s	DOL/Kutty’s actions: Kutty’s clinics required waivers, aided/pressured physicians to use a business linked to Kutty, and Kutty filed supporting letters; ALJ treated waiver costs as employer expenses on these facts	Held: Affirmed — on these facts ARB reasonably ordered reimbursement of J-1 waiver costs (not a blanket rule for all cases).
Whether Kutty can be held personally liable (pierce corporate veil) under INA	Kutty: INA refers only to "employer" and is silent on personal liability; Tennessee law does not support veil piercing here (no fraud; mere control insufficient)	DOL: Bestfoods and subsequent circuit precedent permit applying state veil‑piercing principles where federal statute is silent; Tennessee factors (undercapitalization, sole ownership, commingling, interchangeable entities, diversion, control) support piercing	Held: Affirmed — INA’s silence permits application of Tennessee veil‑piercing law; record supports piercing and personal liability for back wages and penalties.
Whether Kutty was denied due process by proceeding in his absence, permitting non‑lawyer representation, relying on prior deposition, and not postponing hearing after hospitalization	Kutty: ALJ should have postponed, non-lawyer representatives improper, reliance on prior deposition unfair, and finding of liability in absence violated due process	DOL: Regulations permit non‑attorney representatives and deposition use; Kutty had counsel at time of hospitalization and waived postponement; he appeared at parts of proceedings and made closing statement	Held: Affirmed — procedures complied with regulations and due process; ALJ adequately considered arguments and explained findings.

Key Cases Cited

United States v. Bestfoods, 524 U.S. 51 (assumption that federal statute silent as to personal liability permits application of common‑law veil‑piercing principles)
Carter Jones Lumber Co. v. LTV Steel Co., 237 F.3d 745 (6th Cir.) (apply state common law for veil piercing where federal statute is silent)
United States v. WRW Corp., 986 F.2d 138 (6th Cir.) (piercing corporate veil to hold shareholders liable under federal enforcement statute)
Mich. Carpenters Council Health & Welfare Fund v. C.J. Rogers, Inc., 933 F.2d 376 (6th Cir.) (use veil‑piercing analysis in enforcing federal law)
Elaine's Cleaning Serv., Inc. v. United States Dep’t of Labor, 106 F.3d 726 (6th Cir.) (deference to DOL’s interpretation of its regulations)