Rego v. Liberty Mut. Managed Care, LLC
Rego v. Liberty Mut. Managed Care, LLC
Opinion of the Court
On January 17, 2017, Carol Rego filed a complaint against Liberty Mutual Managed Care, LLC (LMMC), alleging that she and others similarly situated
BACKGROUND
A. Utilization Management Nurse Position
Managed care companies, like LMMC, employ nurses to conduct utilization reviews, which determine whether certain requested services or benefits are "medically necessary" and thus covered by insurance. LMMC employs a team of UMNs whose primary duty is to conduct these utilization reviews for its workers' compensation insurance products. In certain states, utilization reviews in workers' compensation cases are statutorily required.
*852Since 2009, LMMC only hires UMNs with Registered Nurse (RN) licensure, and it requires UMNs to keep their RN licenses current. LMMC prefers, but does not require, UMNs to have a bachelor's degree and three to five years of clinical experience. Although UMNs perform the bulk of LMMC's utilization reviews, LMMC sends a portion of its reviews to a third party vendor that allows only RNs to conduct the reviews. To the extent that LMMC has learned that the third party vendor has allowed a non-RN to review an LMMC file, LMMC has addressed the issue to ensure that only RNs complete LMMC reviews. LMMC has strictly enforced this RN-only principle since it hired Kristal Reich, Utilization Management Department Manager, but whether it enforced the policy prior to Reich's hiring is unclear.
LMMC's job description for the UMN role lists the following responsibilities:
1. Conducts specialized clinical review for medical necessity of Workers' Compensation (WC) claims based on state regulatory guidelines and nationally accepted protocols.
2. Utilizes clinical judgment and critical thinking to determine appropriateness of requested treatment within evidence-based clinical guidelines.
3. Demonstrates self-motivation, time management and communication skills in order to meet daily production and quality expectations.
4. Performs the UM Process within state regulated timeframes by: gathering pertinent medical information and researching the claim; applying appropriate clinical guidelines in conjunction with nursing rationale; initiating referrals for physician review if necessary; documenting accordingly per quality assurance standards; communicating decision to provider and/or claims if required.
ECF No. 54-10 at 2.
LMMC classifies UMNs as exempt from the overtime requirements of the FLSA. As a result, LMMC compensates UMNs with a salary and does not pay them overtime to the extent that they work in excess of forty hours per week. LMMC's employee handbook states: "It is Company policy to pay exempt employees their full weekly salary for any week in which they perform any work for the Company, without regard to the number of days or hours actually worked ...." ECF No. 48-1 at 40.
B. Utilization Review Process
A utilization review can occur before, during, or after the requested medical service is administered. Requests for utilization reviews can be made externally by a claimant-employee's provider-physician or internally by, for example, a claims adjuster. Authorization requests are assigned on a round-robin basis using LMMC's electronic Medical Necessity Review (MNR) system. Each UMN has a queue of reviews that they are responsible for completing. Upon assignment of an authorization request, a UMN will review the request to gain an understanding of the treatment requested. Next, the UMN will look to a guideline for the type of treatment requested. Each state in which utilization reviews are conducted designates a specific hierarchy of medical necessity guidelines to be used for utilization reviews in that state. A frequently used set of guidelines is the Official Disability Guidelines (ODG). In the absence of state-specified guidelines, LMMC requires UMNs to use the ODG. Once the UMN identifies the appropriate guideline, the UMN compares the treatment request to the appropriate guideline. The UMN consults the patient's medical records to identify the presence or absence *853of various criteria identified in the guideline. In instances where a UMN is not able to certify a request due to missing documentation, the UMN may contact the medical provider to request the necessary documentation. After reviewing all relevant documents and the applicable guideline, the UMN then decides whether to certify (or approve) the request. UMNs may only certify requests that are medically necessary. If a UMN cannot certify a request, the UMN sends the request to a physician to undergo peer review. Whether certifying a request or sending it to peer review, UMNs must provide written rationale for their decision, including identification of the specific portions of the appropriate guideline(s) relied upon.
C. Accreditation Standards
The Utilization Review Accreditation Commission (URAC) is a nonprofit organization that issues accreditations to companies that conduct utilization review services focusing on quality and confidentiality. URAC is one of the largest accreditation organizations for workers' compensation. Some states require that companies conducting utilization reviews be URAC-accredited. LMMC has been URAC-accredited since 1996, and it is re-accredited every three years. URAC requires that UMNs use written clinical review criteria, such as the medical necessity guidelines, when reviewing treatment requests and that non-certified requests be reviewed by a physician. LMMC establishes its policies and procedures related to the utilization management process to comply with URAC standards.
To achieve URAC compliance, LMMC conducts quality assurance audits of its UMNs' work product. Although URAC permits the use of Licensed Practical Nurses (LPNs) to perform utilization reviews, LMMC has elected to require RN licensure to perform this function. LMMC hires only RNs in the UMN position because RNs have additional education and experience compared to LPNs and because the RN-only practice helps to differentiate LMMC in the market. Rego and all of the representative plaintiffs are licensed RNs, and each has past experience working in clinical settings. At all times relevant to this suit, Plaintiffs worked as UMNs at LMMC; Devore and Trisvan eventually obtained senior status.
LEGAL STANDARD
Summary judgment is proper where there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). An issue is genuine if a reasonable trier of fact could find in favor of the nonmoving party. Wollenburg v. Comtech Mfg. Co. ,
*854DISCUSSION
The FLSA requires employers to pay employees an overtime premium rate of one and one-half times the regular rate for each hour an employee works in excess of forty hours per week.
A threshold requirement for an employee to be exempt under the FLSA' professional and/or administrative exemptions is that the employee be compensated on a salary or fee basis at not less than $ 455 per week.
A. Administrative Exemption
To qualify as administratively exempt: (1) the employee must meet the salary requirement; (2) the employee's primary duty must consist of the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer's customers; and (3) the employee's primary duty must include the exercise of discretion and independent judgment with respect to matters of significance.
1. Directly Related to Management or General Business Operations of LMMC or Its Customers
The phrase "directly related to the management or general business operations" refers to "the type of work performed by the employee."
Plaintiffs argue that UMNs produce the services that LMMC provides to the market and that utilization reviews are not functional work that "must be performed no matter what the business produces" such that UMN work can be *855considered administrative. Davis v. J.P. Morgan Chase & Co. ,
The court agrees with Plaintiffs that their performance of utilization reviews does not directly relate to the management or general business operations of LMMC. As a managed care company, one of LMMC's core functions is to determine whether treatment requests are medically necessary under applicable guidelines by conducting utilization reviews, and the primary duty of LMMC UMNs is to conduct these reviews. Because the work of UMNs is essential to LMMC's core function, UMN work cannot be properly considered administrative. See Schaefer-LaRose ,
The court is not persuaded that Plaintiffs' UMN work directly relates to the management or general business operations of LMMC's customers. As an initial matter, LMMC's reliance on Roe-Midgett is misplaced. In Roe-Midgett , the Seventh Circuit held that the work of insurance claim adjusters claim was directly related to the administrative operations of the employer's customers because the adjusters were "service providers" providing for "the administration of insurance claims."
Unlike the claims adjusters in Roe-Midgett and Withrow , UMNs at LMMC do not manage all aspects of a claim. Aside from "evaluating and making recommendations regarding coverage of claims" based on pre-set guidelines, UMNs do not perform any of the duties in
That UMNs perform work the ultimate consequence of which may impact the employee benefits and health of the employees of LMMC's customers does not automatically satisfy the "directly related" prong. See
2. Exercise of Discretion and Independent Judgment on Matters of Significance
The second prong of the primary duty test requires that an employee's primary duty involve "the exercise of discretion and independent judgment with respect to matters of significance."
Plaintiffs urge the court to follow the Fifth Circuit's reasoning in Clark v. Centene Company of Texas, L.P. to find that LMMC UMNs' primary duty does not involve the exercise of discretion and independent judgment.
Although LMMC's failure to satisfy the "directly related" prong independently defeats its administrative exemption defense, the defense is doubly defeated because Plaintiffs do not exercise discretion and independent judgment as UMNs at LMMC. The court finds the Fifth Circuit's reasoning in Clark persuasive. In Clark , the Fifth Circuit affirmed the district court's grant of summary judgment for plaintiffs on the administrative and professional exemptions to the FLSA overtime requirements.
LMMC's attempt to distinguish Clark is unpersuasive. First, LMMC's observation that Clark was decided on the basis of a narrow, now-superseded standard for construing FLSA exemptions does not make the Clark court's reasoning any less applicable. Second, LMMC's claim that Plaintiffs are somehow different than the plaintiffs in Clark because UMN work at LMMC requires more than "connecting the dots" finds little support in the record. Trisvan described UMN work at LMMC as follows: "you just applied the information that was in front of you ... We compared the information to the guidelines." Trisvan Dep., ECF No. 48-1, at 40:9-10. When asked about her decision making process, Trisvan testified: "ODG tells me what I should say, what I should be finding, what the clinical notes should have in it, and if that language is not in the clinical notes, ODG tells me it's not medically necessary."
LMMC's reliance on Roe-Midgett to argue that Plaintiffs exercised discretion and independent judgment is similarly unpersuasive. Although "independent judgment is not foreclosed by the fact that an employee's work is performed in accordance with strict guidelines," Roe-Midgett ,
Rieve v. Coventry Health Care, Inc. ,
The same is true of Locke . In finding that claims adjusters exercised discretion and independent judgment in Locke , the court relied on the fact that the directives the adjusters were to follow did not dictate "how to evaluate coverage and damage claims, negotiate settlements and communicate with individual insureds in the states of mind and circumstances unique to each claim."
*859Because the court finds that Plaintiffs' primary duty as LMMC UMNs was not directly related to the management or general business operations of LMMC or LMMC's customers and did not involve the exercise of discretion or independent judgment, the court need not analyze whether Plaintiffs' work involved "matters of significance," and summary judgment in Plaintiffs' favor on the administrative exemption is appropriate.
B. Learned Professional Exemption
To qualify for the learned professional exemption, (1) the employee's primary duty must be the performance of work requiring advanced knowledge; (2) the advanced knowledge must be in a field of science or learning; and (3) the advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction.
1. Work Requiring Advanced Knowledge
"Work requiring advanced knowledge" means work that is "predominantly intellectual in character, and which includes work requiring the consistent exercise of discretion and judgment, as distinguished from performance of routine mental, manual, mechanical or physical work."
LMMC argues that because registered nurses generally satisfy the duties requirements for the learned professional exemption, § 541.301(e)(2), and because LMMC requires that all UMNs have RN licensure, Plaintiffs should be classified as exempt. Citing Crowe v. ExamWorks, Inc. ,
Plaintiffs' work conducting utilization reviews did not require advanced knowledge. For the reasons previously explained, Plaintiffs' work did not involve "the consistent exercise of discretion and judgment," meaning they did not, by definition, engage in work requiring advanced knowledge. See
*860prong is the job requirements rather than the education the employee received ...."). Thus, the fact that all LMMC UMNs have RN licenses does not mean that the knowledge acquired in obtaining such licenses is used in performing utilization reviews. Indeed, Plaintiffs repeatedly testified in their depositions that their nursing backgrounds, while helpful for understanding terminology in medical records, was not required to perform utilization reviews given the specificity of the guidelines they were required to follow. See Rego Dep., ECF No. 48-1, at 48:24-51:2; Devore Dep., ECF No. 48-1, at 16:9-10; Trisvan Dep., ECF No. 48-1, at 85:24-86:18.
LMMC insists that Plaintiffs' work involved using advanced knowledge because they employed "nursing rationale" when conducting utilization reviews. Reflecting on the use of nursing judgment in the UMN role, Devore testified:
As a utilization review nurse, we have to stay objective. That is the-one of the key things in utilization review is staying objective, looking to the guidelines and staying objective to the review. If you get-start using too much nursing judgment, then you can get too involved, and which I had problems with that moving from case management into the utilization review role because I was using more nursing judgment in the nurse-as a case manager and then moved into the UR role.
Devore Dep., ECF No. 48-1, at 37:13-38:1. To the extent Devore admitted to using "nursing judgment" as a UMN, it is unclear what she understood such judgment to mean in light of her testimony that nursing judgment is ingrained in her, that she uses nursing judgment to some degree in everything she does, and that a nursing degree is likely not necessary to perform the UMN role. Id. at 16:9-10, 38:9, 40:22-24. Indeed, to the extent Devore described utilization review in the abstract, she emphasized the need to remain objective, follow the guidelines, and avoid using nursing judgment. Other deposition testimony from Plaintiffs regarding their use of nursing rationale, clinical judgment, or critical thinking is similarly inconsistent. That Plaintiffs may use the words "nursing rationale" or "clinical judgment" when speaking about their work does not transform the nature of the work itself. To allow the use of such terminology to trigger an exemption without a close look at the job duties would undermine the purpose of the FLSA maximum hours provision. As the Fifth Circuit explained in Clark , Plaintiffs performed inspector-type work under
Ultimately, the court finds Crowe , upon which LMMC places great reliance, unpersuasive. In Crowe , the court held that "[t]he [utilization review nurse] plaintiffs employ advanced, technical knowledge in the medical field to exercise independent judgment in determining whether a particular treatment request for a particular patient satisfied the applicable guidelines."
I would expect to see a diagnosis. We already get the date of injury from the adjuster, and that is the most accurate date of injury. We would expect to see-okay, he has a decreased range of motion, say, in his lumbar spine. He has muscle spasm in that area. Let's see. Possibly they've already done an x-ray or an MRI. Are there any herniated *861disks ? Whatever. It depends upon the timeframe also for that.
2. Customarily Acquired By a Prolonged Course of Specialized Intellectual Instruction
Like the administrative exemption, all prongs of the learned professional exemption must be met to exempt an employee. Because the court determined that Plaintiffs' primary duty as UMNs was not the performance of work requiring advanced knowledge, this exemption is not satisfied. Even if the court found that Plaintiffs' work required advanced knowledge, such knowledge was not customarily acquired by a prolonged course of specialized intellectual instruction. "The phrase 'customarily acquired by a prolonged course of specialized intellectual instruction' restricts the exemption to professions where specialized academic training is a standard prerequisite for entrance into the profession."
LMMC argues that Plaintiffs' advanced knowledge was customarily acquired by a prolonged course of specialized intellectual instruction because § 541.301(e)(2) recognizes that registered nurses generally satisfy the exemption and because LMMC requires that all of its UMNs and all third-party UMNS performing LMMC utilization reviews have RN licenses. This requirement, LMMC contends, carries with it the expectation that LMMC UMNs will perform higher quality utilization reviews that rely on their RN backgrounds. Plaintiffs argue that although LMMC maintains an RN-only policy, LMMC cannot demonstrate that utilization review work itself requires RN-level knowledge. Plaintiffs assert that, in fact, utilization review work only requires LPN-level knowledge, meaning Plaintiffs cannot be said to have used advanced knowledge customarily acquired by a prolonged course of specialized intellectual instruction under § 541.301(e)(2). The parties agree that courts should examine *862the minimum requirements of the UMN job in assessing whether the specialized instruction prong is met, but they disagree on what requirements are relevant. LMMC insists that the employer's requirements are controlling, while Plaintiffs contend that the de facto requirements necessary to perform the job are controlling. LMMC thus insists that its RN-only policy carries the day, while Plaintiffs insist that this prong is not satisfied because LPNs can perform utilization reviews.
The court agrees with Plaintiffs' interpretation. The Department of Labor's regulations makes clear that the learned professional exemption is reserved for professions "where specialized academic training is a standard prerequisite for entrance into the profession."
Because Plaintiffs' primary duty as LMMC UMNs did not require the performance of work requiring advanced knowledge and because the advanced knowledge alleged was not customarily acquired by a prolonged course of specialized intellectual instruction, summary judgment in Plaintiffs' favor on the learned professional exemption is appropriate.
C. Section 260 Good Faith Defense
An employer who violates the FLSA's overtime compensation provision is liable to the employees affected in the amount of unpaid overtime compensation "and in an additional equal amount as liquidated damages."
LMMC argues that Plaintiffs' summary judgment motion on LMMC's good faith defense is premature given that no finding of liability under the FLSA has occurred and that a triable issue exists as to whether LMMC's burden is met given that it conducted an analysis of the UMN position in 2014, which LMMC contends involved a compensation specialist with knowledge and training related to the FLSA's overtime requirements. Plaintiffs essentially make a specificity argument, claiming that LMMC's vague reference to its 2014 UMN position analysis, without more, fails to meet LMMC's "substantial burden" under the good faith defense. See Jackson v. Go-Tane Servs., Inc. ,
A genuine issue of material fact exists as to whether LMMC satisfies its good faith defense. LMMC's assertion that, in 2014, it relied upon a compensation specialist with knowledge and training related to the FLSA's overtime requirements to conduct an analysis of the UMN position creates a triable issue as to whether LMMC has met its burden under the good faith defense. See Chao v. A-One Med. Servs., Inc. ,
D. Overtime Pay Rate
While the FLSA normally entitles a non-exempt employee to an overtime pay rate of one and one-half times his ordinary rate for all hours worked in excess of forty hours per week, an exception to this rule exists in misclassification cases. See
The Missel method is applicable here, as Plaintiffs understood that their salaries compensated them for all hours worked. Rego testified that she understood that she would not be paid overtime and that her salary was meant to cover all hours she worked. Rego Dep., ECF No. 48-1, at 44:9-46:6. Similarly, Trisvan testified that she was paid the same salary no matter how many hours she worked each week and that LMMC had a no-overtime policy. Trisvan Dep., ECF No. 48-1, at 29:11-31:11. York-Winkler testified that, aside from periodic bonuses based on yearly evaluations and LMMC's performance, the only compensation she was owed for her UMN work was her salary. York-Winkler Dep., ECF No. 48-1, at 31:2-32:10. Devore testified that she understood that she was a salaried, exempt employee, although she did not expect to work ten to twelve hours a day. Devore Dep., ECF No. 48-1, at 20:7-18. Jaster testified that she would receive the same fixed salary and that she also expected to receive merit and cost-of-living raises, additional "comp time," and other "awards" that were sometimes monetary. Jaster Dep., ECF No. 48-1, at 11:6-12:24. This testimony sufficiently demonstrates that Plaintiffs understood their salaries to compensate them for all hours worked.
Plaintiffs' testimony about receiving compensation beyond their salaries (e.g. bonuses, raises, awards) and about their hours expectations does not create a triable issue of fact on the question of whether they understood their salaries to compensate them for all hours worked. Plaintiffs did not testify that any additional compensation they received was tied to overtime hours. Rather, regarding overtime, several of the plaintiffs acknowledged that they were exempt from overtime and that their salaries compensated them for all hours worked. That some of the plaintiffs expected to work fewer or a fixed number of hours is unavailing. See Urnikis-Negro ,
Because Plaintiffs understood that their salaries compensated them for all hours worked, any overtime compensation owed to them must be calculated using the Missel method.
CONCLUSION
For the foregoing reasons, Plaintiffs' motion for summary judgment (ECF No. 50) is GRANTED in part with respect to LMMC's administrative and professional exemption affirmative defenses and otherwise denied. LMMC's motion for summary judgment (ECF No. 45) is GRANTED in part with respect to the method for calculating Plaintiffs' overtime pay rate and otherwise denied. Plaintiffs' motion to restrict document (ECF No. 41) is GRANTED . LMMC's motions to restrict documents (ECF Nos. 43 and 56) are GRANTED .
On March 7, 2018, the court approved the parties' representative discovery agreement wherein each party selected two opt-in plaintiffs who serve as representative of the non-testifying opt-in plaintiffs for purposes of discovery and trial. The four representative plaintiffs are Johnette Devore, Cynthia Jaster, Tabitha Trisvan, and Tara York-Winkler.
Plaintiffs do not argue that the second element of the learned professional exemption-that the advanced knowledge be in a field of science or learning-is not met, so it will be treated as satisfied.
Reference
- Full Case Name
- Carol REGO, individually and on behalf of all others similarly situated v. LIBERTY MUTUAL MANAGED CARE, LLC
- Cited By
- 5 cases
- Status
- Published