Labor & Employment Law Daily Wrap Up, WAGE-HOUR—CLASS ACTIONS—E.D. Va.: Utilization reviewers may proceed as collective seeking overtime pay, (Apr 4, 2025)

By Ronald Miller, J.D.

The parties’ primary disagreement was whether the employees’ duties required them to exercise judgment and discretion.

A health insurance company was not entitled to decertify a collective of registered nurses employed as utilization reviewers, who reviewed authorization requests for “medical necessity,” ruled a federal district court in Virginia. The court found that each of the RNs held utilization reviewer roles, they all conducted fundamentally similar work, and they all were classified by the company as exempt. Further, the court determined that at trial, these common issues will predominate. Additionally, the court granted the employees’ motion for partial summary judgment with regard to whether they came under the administrative exemption, but denied the motion with respect to the learned professional exemption (Midkiff v. The Anthem Companies, No. 3:22-cv-417-HEH (E.D. Va. Apr. 2, 2025)).

Utilization reviewers. The employees in this action, who are registered nurses, work for Anthem as utilization reviewers. Their primary responsibility is to conduct “medical necessity” reviews of authorization requests by healthcare providers. They followed a step-by-step process to determine whether the criteria were met. If the criteria were not met, the employees were required to send the request to a medical director, such as a physician. The employees were not permitted to deny authorization requests by themselves.

Guidelines. The National Committee for Quality Assurance (NCQA) sets uniform standards for utilization reviews, and the employer implemented policies to meet those standards. Although the NCQA’s uniform standards did not require utilization reviewers be RNs, the employer required it reviewers to have RN licenses.

Here, the employees alleged that they routinely worked over 40 hours per week to complete their utilization reviews. However, they did not receive overtime compensation because the employer classified them as exempt under the FLSA’s professional and administrative exemptions. On November 10, 2022, the court conditionally certified an FLSA collective action.

The employer then filed a motion to decertify the collective action and sought summary judgment. For their part, the employees filed a cross-motion for partial summary judgment as to whether they are exempt from the overtime protections of the FLSA and the Virginia Overtime Wage Act (VOWA) under the learned professional and administrative exemptions, as well as the good faith defense.

Judgment and discretion. The parties’ primary disagreement was whether the employees’ duties required them to exercise judgment and discretion.

To proceed as a collective, plaintiffs must demonstrate that they are “similarly situated.” In this instance, the employer argued that the plaintiffs “are 27 nurses across three divisions and at least eight different teams, who handled different medical reviews that called upon the use of different guidelines,” and whose duties, hours, and experiences varied. According to the employer, some guidelines may require the use of discretion and judgment, thereby rendering nurses using those guidelines exempt from overtime laws.

In response, the employees argued that the nurses in the collective are similarly situated because they each worked for the employer, they each conducted authorization request reviews, and each of their duties involved reviewing requests against strict guidelines. Moreover, they pointed out a company-wide policy of classifying any nurse in a utilization reviewer position as FLSA exempt. Finally, they argued that even though several different guidelines were used by utilization reviewers, the basic job was similar.

Similarly situated. The court found that the nurses in the collective were similarly situated. All nurses in the collective held the same type of role for the same employer: each of them is an RN and holds a utilization reviewer role. They all conducted fundamentally similar work and were classified as exempt. At trial, these common issues will predominate. While the court acknowledged that many of the employees used different guidelines, and that the factfinder will need to hear evidence on how different types of guidelines were utilized, it nonetheless found that certifying the FLSA collective was the more efficient option. Consequently, the court denied the employer’s motion to decertify.

Exemptions. The court next turned to consider the employees’ cross-motion for partial summary judgment regarding whether they were exempt from overtime under the learned professional and administrative exemptions. Employees are entitled to overtime compensation “unless their employer proves that one of the Act’s many exemptions applies.”

Learned Professional Exemption. For the learned professional exemption to apply, three elements must be met: (1) “The employee must perform 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.”

Under 29 C.F.R. § 541.302(e)(2), registered nurses “generally meet the duties requirement for the learned professional exemption.” Further, § 541.704 provides that the learned professional exemption still applies even if the employee uses guidelines or established procedures. In short, for the learned professional exemption to apply, an employer must prove an employee performed “work requiring the consistent exercise of discretion and judgment.”

Here, the court noted that the parties offered conflicting evidence surrounding whether the employees exercised judgment and discretion. First, the parties disputed what role, if any, the employees’ education as an RN played in their work. The parties also disputed the employees’ claim that the employer hired RNs and licensed practical nurses (LPNs) for “the exact same job.” Further, the parties disagreed over the nature of audits conducted by the employer.

Thus, the court found that the evidence presented by the parties demonstrated “a genuine issue of material fact as to whether the employees exercised discretion and independent judgment in [their] primary duties,” such that the court was precluded from granting summary judgment for or against the employees or employer on the learned professional exemption.

Administrative exemption. For the administrative exemption to apply, an employer must prove that an employee’s “primary duty includes the exercise of discretion and independent judgment with respect to matters of significance,” and also that the employee’s primary duty is 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.”

For the same reasons that the court found there is a genuine issue of material fact as to whether the employees consistently exercised discretion and judgment to satisfy the learned professional exemption, the court found that there is a genuine issue of material fact as to whether the employees’ primary duty included the exercise of discretion and independent judgment for purposes of the administrative exemption. Given the competing evidence as to whether the employees exercised independent judgment, the employer cannot prove that the administrative exemption must apply here, the court found.

However, the facts material to whether the employees’ primary duties were “directly related to the management or general business operations of the employer or the employer’s customers” were not genuinely in dispute. Here, the court determined that the record showed that the employees were far more similar to employees who run day-to-day affairs than those who manage internal operation of a business. Consequently, the court granted the employees’ motion for partial summary judgment as to the employer’s administrative exemption defense.

The case is No. 3:22-cv-417-HEH.

Judge: Hudson, H.

Attorneys: Zev Hillel Antell (Butler Curwood) for Winifred Midkiff. Christine Mary Costantino (Seyfarth Shaw) for The Anthem Companies, Inc.

Companies: The Anthem Companies, Inc.

Cases: WageHour ClassActions Overtime Exemptions VirginiaNews