Rego v. Liberty Mut. Managed Care, LLC

367 F.Supp.3d 849

Carol REGO, individually and on behalf of all others similarly situated, Plaintiff,

v.LIBERTY MUTUAL MANAGED CARE, LLC, Defendant.

Case No. 17-C-66

United States District Court, E.D. Wisconsin.

Signed March 11, 2019

Filed March 12, 2019

Alexander M. Baggio, Hinshaw & Culbertson LLP, Paige C. Fishman, Rebekah L. Bailey, Rachhana T. Srey, Nichols Kaster PLLP, Minneapolis, MN, for Plaintiff.

Andrew J. Voss, John H. Lassetter, Littler Mendelson PC, Minneapolis, MN, for Defendant.

DECISION AND ORDER GRANTING IN PART PLAINTIFFS' AND DEFENDANT'S MOTIONS FOR SUMMARY JUDGMENT

William C. Griesbach, Chief Judge

On January 17, 2017, Carol Rego filed a complaint against Liberty Mutual Managed Care, LLC (LMMC), alleging that she and others similarly situated¹ were entitled to overtime pay under the Fair Labor Standards Act (FLSA), 29 U.S.C. § 201 et seq. , for work they performed while employed as Utilization Management Nurses (UMN) at LMMC. LMMC denied liability, claiming that the UMN positions plaintiffs hold fall within the professional and/or administrative exemptions of the FLSA overtime provisions. Before the court are the parties' cross-motions for summary judgment and motions to seal. Both parties seek summary judgment on LMMC's administrative and professional exemption affirmative defenses. In addition, Plaintiffs seek summary judgment on LMMC's good faith defense, while LMMC seeks summary judgment on the method for calculating Plaintiffs' overtime pay rate. The court will grant the motions to seal and, for the reasons below, grant in part Plaintiffs' motion with respect to the administrative and professional exemptions and grant in part LMMC's motion with respect to the overtime pay rate.

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.

Since 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 of 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. , 201 F.3d 973, 975 (7th Cir. 2000). A fact is material only if it might affect the outcome of the case under governing law. Anweiler v. Am. Elec. Power Serv. Corp. , 3 F.3d 986, 990 (7th Cir. 1993). The ordinary standards for summary judgment remain unchanged on cross-motions for summary judgment: a court construes facts and inferences arising from them in favor of the party against whom the motion under consideration is made. Blow v. Bijora, Inc. , 855 F.3d 793, 797 (7th Cir. 2017). When cross-motions for summary judgment are filed, "[i]n effect the judge is asked to decide the case as if there had been a bench trial in which the evidence was the depositions and other materials gathered in pretrial discovery." Cook Inc. v. Boston Scientific Corp. , 333 F.3d 737, 741 (7th Cir. 2003). "The existence of cross-motions for summary judgment does not, however, imply that there are no genuine issues of material fact." R.J. Corman Derailment Servs., LLC v. Int'l Union of Operating Eng'rs, Local Union 150, AFL-CIO , 335 F.3d 643, 647 (7th Cir. 2003).

DISCUSSION

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. 29 U.S.C. § 207(a)(1). Exempt from this overtime pay are employees "employed in a bona fide executive, administrative, or professional capacity." 29 U.S.C. § 213(a)(1). The FLSA does not separately define the administrative or professional exemptions. Instead, Congress delegated the task of defining and delimiting the terms in 29 U.S.C. § 213(a)(1) to the Secretary of Labor. See 29 U.S.C. § 213(a)(1) ; 29 C.F.R. Part 541. LMMC contends that Plaintiffs are exempt from overtime pay under both the administrative and professional exemptions.

A threshold requirement for an employee to be exempt under the...