Utilization review employees are often misclassified as exempt from state and federal overtime laws and denied overtime pay. A decision from a federal judge in Wisconsin highlights that such personnel policies are misguided. In Rego v. Liberty Mutual Managed Care, LLC, 367 F.Supp. 3d 849 (E.D. Wisc. 2019), the plaintiff sued her employer, alleging that she and others similarly situated violated the Fair Labor Standards Act by misclassifying Utilization Management Nurses as exempt from overtime pay. The UMNs were paid a salary and denied overtime pay. The defendant argued that they were subject to the professional and/or administrative exemptions. Both parties moved for summary judgment on this issue.
The Court first addressed the 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. 29 C.F.R. § 541.200(a). An employee’s “primary duty” is “the principal, main, major or most important duty that the employee performs.” § 541.700(a). The Court found that the Defendants could not prove either (1) that Plaintiffs’ duties related to the management or general business operations of the employer or (2) that the Plaintiffs’ primary duty included the exercise of discretion and independent judgment. The Court stated that it agreed with the Plaintiffs that their performance of utilization reviews did not directly relate to the management or general business operations of LMMC. The Court reasoned, “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.” The Court also found that Plaintiffs’ primary duty did not include exercising discretion and independent judgment. The Court concluded that “Plaintiffs’ work of certifying or sending to peer review treatment requests is more similar to work performed on a manufacturing production line than work servicing the operations of a business.” As such, the Court granted summary judgment in favor of the Plaintiffs on the administrative 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. 29 C.F.R. § 541.301(a). Registered nurses “generally meet the duties requirements for the learned professional exemption.” § 541.301(e)(2). “Licensed practical nurses and other similar health care employees, however, generally do not qualify as exempt learned professionals because possession of a specialized advanced academic degree is not a standard prerequisite for entry into such occupations.” Id.
The Court found that the UMNs did not require advance knowledge, reasoning:
“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.” The Court also found that the advanced knowledge alleged was not customarily acquired by a prolonged course of specialized intellectual instruction, holding that the UMNs only used Licensed Practical Nurse-level knowledge in performing their job duties. As such, the Court granted summary judgment in favor of the Plaintiffs on the professional exemption as well.
This case is an important reminder that just because employees are classified as exempt does not mean that they are. Insurance and health care companies frequently misclassify utilization review personnel and other related positions as exempt even though they are not. The following positions are often misclassified as exempt and wrongfully denied overtime pay:
- Utilization Review Employees, including Care Review Clinician, Utilization Management (UM) Nurse, On Call UM Nurse, Concurrent Review Nurse, Clinical Review Coordinator, Utilization Manager
- Claims Examination Employees
- Clinical Claims Reviewers, Behavioral Health Utilization Management Care Coordinators, Authorization Coordinators, Pre-Authorization Coordinators
If you worked in the insurance or health care industry within the past three years and were paid a salary and denied overtime pay, you should speak with an experienced overtime attorney as soon as possible to learn of your legal rights. Josh Borsellino is a Texas attorney that represents workers on claims for overtime pay. Call Josh at 817.908.9861 for a free evaluation of your overtime pay matter.