Isett v. Aetna Life Insurance Company ( 2020 )

18‐3271‐cv
Isett v. Aetna Life Insurance Company
In the
United States Court of Appeals
for the Second Circuit
AUGUST TERM 2019
No. 18‐3271‐cv
SHARON ISETT, INDIVIDUALLY AND ON BEHALF OF ALL OTHER
SIMILARLY SITUATED INDIVIDUALS,
Plaintiff‐Appellant,
v.
AETNA LIFE INSURANCE COMPANY,
Defendant‐Appellee,
AETNA, INC., AETNA HEALTH OF CALIFORNIA, INC., AETNA MEDICAID
ADMINISTRATORS, LLC, AMERICAN HEALTH HOLDING, INC.
Defendants.
On Appeal from the United States District Court
for the District of Connecticut
ARGUED: OCTOBER 31, 2019
DECIDED: JANUARY 14, 2020
Before: CABRANES, RAGGI, Circuit Judges, and KORMAN, Judge.*
Plaintiff‐Appellant Sharon Isett (“Isett”) appeals from an award
of summary judgment entered in the United States District Court for
the District of Connecticut (Robert N. Chatigny, Judge) in favor of her
employer, Defendant‐Appellee Aetna Life Insurance Company
(“Aetna”). The question presented in this case is whether Isett, a
registered nurse who does not work in a clinical setting, but who
reviews Aetna’s denials of claims for insurance coverage of medical
services; determines whether the requested services are in fact
medically necessary; and, if so, approves such claims without further
review from a physician, is a professional employee exempt from the
Fair Labor Standards Act’s (“FLSA”) overtime‐pay requirement or a
non‐professional employee entitled to overtime compensation.
Therefore, in this appeal, we address the applicability of the FLSA’s
professional exemption to an employee who acts in a manner
consistent with the central characteristics of the profession at issue but
does so outside of that profession’s traditional employment setting.
On de novo review, we conclude, as the District Court did, that
Isett is an FLSA‐exempt professional and, therefore, the judgment in
favor of Aetna is AFFIRMED.
* Judge Edward R. Korman, of the United States District Court for the
Eastern District of New York, sitting by designation.
2
ADAM W. HANSEN, Apollo Law, LLC
(Eleanor E. Frisch, Apollo Law, LLC;
Rachhana T. Srey, Nichols Kaster, PLLP, on
the brief), Minneapolis, MN, for Plaintiff‐
Appellant.
MATTHEW W. LAMPE (Wendy C. Butler, on
the brief) Jones Day, New York, NY, for
Defendant‐Appellee.
JOSÉ A. CABRANES, Circuit Judge:
Plaintiff‐Appellant Sharon Isett (“Isett”) is a registered nurse
who sued her employer, Defendant‐Appellee Aetna Life Insurance
Company (“Aetna”) for unpaid overtime compensation under the Fair
Labor Standards Act (“FLSA”).1 Isett now appeals from a judgment
entered on September 30, 2018, in the United States District Court for
the District of Connecticut (Robert N. Chatigny, Judge) in favor of
Aetna, on the grounds that Isett is a professional who is not entitled to
overtime compensation under the FLSA. On appeal, Isett challenges
the District Court’s conclusion that her duties qualify for the
professional exemption.
1 29 U.S.C. §§ 201–219.
3
Under the FLSA, employees who work more than forty hours
per week generally are entitled to additional compensation for those
excess hours.2 There are certain employees, however, who are not
eligible to receive this additional compensation. Among these exempt
employees are “professionals,” those who work in a bona fide
professional capacity.3 Professionals are those workers who use
specialized knowledge in a field of science or learning, which is
typically obtained through intellectual instruction that generally
results in an academic degree.4
Ordinarily, registered nurses are classified properly as
professionals.5 The question presented in this case is whether a
registered nurse who does not work in a clinical setting, but who
reviews denials of claims for insurance coverage of medical services;
makes determinations of whether the requested services are in fact
medically necessary; and, if so, approves such claims where
appropriate without further review from a physician, is a professional
employee exempt from the FLSA’s overtime‐pay requirement or a
non‐professional employee entitled to overtime compensation.
Therefore, in this appeal, we address the applicability of the FLSA’s
professional exemption to an employee who acts in a manner
2 See id. § 207(a)(1).
3 See id. § 213(a)(1).
4 See 29 C.F.R. § 541.301(a).
5 See id. § 541.301(e)(2).
4
consistent with the central characteristics of the profession at issue but
does so outside of that profession’s traditional employment setting.
On de novo review, we conclude, much for the same reasons
stated in the District Court’s careful and well‐reasoned decision, that
the professional exemption applies. Accordingly, the September 30,
2018 judgment in favor of Aetna is AFFIRMED.
I. BACKGROUND
We draw the facts, which are undisputed, from the District
Court’s recitation and the record before us.6
A. The Parties’ Relationship
Isett worked as an appeals nurse consultant in Aetna’s National
Clinical Appeals Unit from 2011 to 2016. Most employees in the
National Clinical Appeals Unit fall under one of three job categories:
(1) appeals nurse associates (“nurse associates”), who must hold a
certificate as licensed practical nurses and are paid on an hourly basis,
including overtime premiums; (2) appeals nurse consultants (“nurse
consultants”), like Isett, who must hold a license as registered nurses,
are paid on a salary basis, and are classified as exempt from the FLSA’s
overtime protections; and (3) medical directors, who are physicians.
Nurse associates and nurse consultants, jointly, “appeals
nurses,” are responsible for reviewing claims for health insurance
6 See Isett v. Aetna Life Ins. Co., No. 3:14‐cv‐1698 (RNC), 2018 WL 4697278, at
*1 (D. Conn. Sept. 30, 2018).
5
benefits that one of Aetna’s departments initially denied. More
specifically, appeals nurses review appeals seeking authorization for
medical services not yet rendered which are transmitted to the
Appeals Unit when a clinical determination of medical necessity is
required. This process is known as “utilization review.”
On any given appeal where utilization review is conducted,
appeals nurses must review the patient’s file, which typically includes
the patient’s clinical information and the documentation from the
initial review resulting in the claim’s denial. The appeals nurses then
locate the relevant criteria in Aetna’s clinical guidelines and apply the
criteria to the information in the file to analyze whether the requested
services are medically necessary. Any conclusions must be
documented in a template form provided by Aetna.
If the request for coverage does not meet the relevant criteria,
the appeals nurses must forward the appeal to a medical director for
further review and a final decision. Similarly, if the appeals nurses
conclude that it is unclear whether the request meets the relevant
criteria, the appeal is forwarded to a medical director. Only medical
directors are authorized to deny insurance coverage for medical
reasons.
Despite all these similarities in the work of the appeals nurses,
only nurse consultants can authorize insurance coverage. Subject to
some minor exceptions depending on, for example, the subject matter
of the requested benefit, whenever a nurse consultant concludes that
a request satisfies the relevant criteria in Aetna’s clinical guidelines,
6
the nurse consultant also will approve the request for coverage
without further review. By contrast, if a nurse associate reaches the
same conclusion, Aetna requires the nurse associate to forward the
appeal to a nurse consultant or a medical director to review the work
and make the final decision regarding coverage. In short, nurse
consultants, unlike nurse associates, are authorized to make a final
affirmative determination of medical necessity, thereby approving
coverage for a patient’s requested service and binding Aetna to pay
for the service.
Isett worked remotely from home without much day‐to‐day
oversight. On average, she would speak to her supervisor over the
phone approximately less than once a week and never met her
supervisor in person. In performing her work, Isett relied on her
knowledge and experience as a registered nurse, as well as Aetna’s in‐
house training.
B. Procedural History
Isett filed the complaint in this case on behalf of herself and all
other similarly situated individuals, alleging that Aetna unlawfully
misclassified her as exempt from the FLSA’s overtime protections.
Twenty‐eight employees joined the action as opt‐in plaintiffs. Aetna
answered, arguing that Isett was classified properly as exempt under
the FLSA’s professional and administrative exemptions.7 At the
7The FLSA also exempts from its overtime‐pay requirement any employee
employed in a bona fide administrative capacity. See 29 U.S.C. § 213(a)(1).
Administrative employees are those who are “[c]ompensated on a salary or fee
7
direction of the District Court, Isett and Aetna filed cross‐motions for
summary judgment addressing only the application of both
exemptions to Isett’s individual claim.
On September 30, 2018, the District Court granted Aetna’s
motion for summary judgment and denied Isett’s cross‐motion for
partial summary judgment. The District Court held that the
professional exemption applies to Isett’s job and thus declined to
address the applicability of the administrative exemption; it thereupon
entered final judgment in favor of Aetna and dismissed the case. By
stipulation of the parties, the 28 opt‐in plaintiffs were dismissed
without prejudice. This appeal followed.
II. DISCUSSION
On appeal, Isett challenges the District Court’s conclusion that
the FLSA’s professional exemption applies to her job as a nurse
consultant and argues that Aetna failed to prove, in the alternative,
that her job qualified for the administrative exemption. We affirm the
District Court’s judgment that Isett was classified properly as exempt
under the professional exemption, and likewise, decline to address
basis” pursuant to certain salary requirements, and whose primary duty: (1) “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”; and (2)
“includes the exercise of discretion and independent judgment with respect to
matters of significance.” 29 C.F.R. § 541.200; accord Davis v. J.P. Morgan Chase & Co.,
587 F.3d 529 (2d Cir. 2009).
8
Aetna’s alternative argument regarding the administrative
exemption’s applicability.
A. The FLSA and the Professional Exemption
Congress enacted the FLSA to protect “the minimum standard
of living necessary for health, efficiency, and general well‐being of
workers.”8 The FLSA seeks to accomplish this broad purpose, in part,
by requiring that employees who work more than forty hours per
week be compensated for those excess hours at a higher rate.9 The
FLSA, however, also excludes certain classes of employees from its
overtime‐pay requirement. One of those exempted classes consists of
any “employee employed in a bona fide . . . professional capacity.”10
Although the FLSA does not define the term “professional
capacity,” Congress authorized the Secretary of Labor (“Secretary”) to
“defin[e] and delimi[t]” the scope of the professional exemption.11 The
Secretary’s regulations provide, in relevant part, that a “professional”
is any employee whose primary job duty requires “knowledge of an
advanced type in a field of science or learning customarily acquired by
a prolonged course of specialized intellectual instruction.”12
8 29 U.S.C. § 202(a).
9 See id. § 207(a)(1).
10 Id. § 213(a)(1).
11 Id.
1229 C.F.R. § 541.300(a)(2)(i). The governing regulations also require that a
“professional” be an employee who is “[c]ompensated on a salary or fee basis”
9
Accordingly, to qualify for the exemption, the employee must satisfy
a “primary duty test” consisting of three factors or prongs: (1) the work
requires “advanced knowledge,” (2)“in a field of science or learning,”
(3) “customarily acquired by a prolonged course of specialized
intellectual instruction.”13
Regarding the professional exemption’s application to nurses,
the Secretary’s regulations provide that “[r]egistered nurses who are
registered by the appropriate State examining board generally meet
the duties requirements for the learned professional exemption.”14 By
contrast, “licensed practical nurses or other similar health care
employees . . . 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.”15
“All three prongs” of the primary duty test “must be satisfied
for the learned professional exemption to apply.”16 Moreover, the
employer bears the burden of proving that the employee qualifies for
pursuant to certain salary requirements. Id. § 541.300(a)(1). Because there is no
question that Isett satisfies the salary test, we do not address this separate
requirement.
13 Id. § 541.301(a).
14 Id. § 541.301(e)(2).
15 Id.
16 Pippins v. KPMG, LLP, 759 F.3d 235, 238 (2d Cir. 2014).
10
the exemption.17 In interpreting the scope of the FLSA exemptions, we
stated as recently as 2014 that the “FLSA exemptions are to be
‘narrowly construed against the employers seeking to assert them and
their application limited to those establishments plainly and
unmistakably within their terms and spirit.’”18 Thereafter, however,
the Supreme Court characterized this “narrow‐construction principle”
as “flawed,” as it mistakenly presumes “that the FLSA pursues its
remedial purpose at all costs,” notwithstanding that the FLSA
“exemptions are as much a part of the FLSA’s purpose as the overtime‐
pay requirement.”19 As a result, the Supreme Court instructed that we
“have no license to give the [professional] exemption anything but a
fair reading.”20 We do so here.21
17 Flood v. Just Energy Mktg. Corp., 904 F.3d 219, 227 (2d Cir. 2018).
18 Pippins, 759 F.3d at 238 (quoting Bilyou v. Dutchess Beer Distribs., Inc., 300
F.3d 217, 222 (2d Cir. 2002)). We have invoked this narrow‐construction principle
more recently in a non‐precedential summary order. See Domenech v. Parts
Authority, Inc., 653 F. App’x 26, 27 (2d Cir. 2016) (citation omitted).
19Encino Motorcars, LLC v. Navarro, 138 S. Ct. 1134, 1142 (2018) (internal
quotation marks and citations omitted).
Id.; accord Flood, 904 F.3d at 228 (recognizing that the application of the
20
narrow‐construction principle to the FLSA exemptions “is not the rule anymore”).
21In deciding this case, we rely primarily on Pippins, which did reference
the narrow‐construction principle but provided a careful and fair reading of the
FLSA‐implementing regulations relating to the professional exemption, as required
by Encino.
11
Isett does not dispute the fact that her work as an appeals nurse
consultant is “in a field of science or learning,” as required by the
second prong of the primary duty test.22 She does argue, however, that
Aetna failed to prove that her job as a nurse consultant satisfies the
first and third prongs. Therefore, Isett asks us to decide whether a
nurse consultant uses “knowledge of an advanced type” that is
“customarily acquired by a prolonged course of specialized
intellectual instruction.”23
With respect to the first prong, Isett contends that nurse
consultants do not perform work requiring advanced knowledge
because they are not practicing registered nurses and do not perform
the clinical duties that give nursing its professional character. Isett
characterizes utilization review as “more routine mental work than
predominantly intellectual in character.”24 Aetna, in response, asserts
that Isett mischaracterizes her job. It contends that nurse consultants
use the advanced knowledge typical of other registered nurses in
approving insurance coverage for medically necessary services.
As to the third prong, Isett contends that her job did not require
specialized academic instruction and could be performed by anyone
with proper training. Isett states that nurse associates, who are
licensed practical nurses and possess only a year of technical
22 29 C.F.R. § 541.301(a).
23 Id. § 541.300(a)(2)(i).
24 Appellant’s Br. at 53.
12
education, can—and do—perform utilization review. Aetna responds
that nurse associates do not perform the same job as nurse consultants.
B. Standard of Review
We review Isett’s challenge to the District Court’s “grant of
summary judgment de novo, resolving all ambiguities and drawing all
reasonable inferences” in her favor.25 We will affirm a summary
judgment “only if there is no genuine dispute as to any material fact
and . . . the movant is entitled to judgment as a matter of law.”26
The question of whether the professional exemption applies in
particular circumstances “is a mixed question of law and fact.”27
Specifically, the question of how an employee spends her “working
time is a question of fact” and the question of whether an employee’s
primary duty excluded her “from the overtime benefits of the FLSA is
a question of law.”28 Because the parties agree that the relevant,
material facts are not disputed—particularly, how Isett spent her
working time—we turn to the legal question of whether her primary
25 Pippins, 759 F.3d at 239 (internal quotation marks and citation omitted).
26 Id. (internal quotation marks and citations omitted).
27 Id. (quoting Ramos v. Baldor Specialty Foods, Inc., 687 F.3d 554, 558 (2d Cir.
2012) (“The exemption question under the FLSA is a mixed question of law and
fact.” (internal quotation marks and citation omitted)).
28Id. (quoting Ramos, 687 F.3d at 558); accord Icicle Seafoods, Inc. v.
Worthington, 475 U.S. 709, 714 (1986).
13
duty as a nurse consultant placed her beyond the FLSA’s overtime
protections.
C. First Prong of the Primary Duty Test
1. The Advanced‐Knowledge Requirement
We take up first Isett’s argument that her primary duty as a
nurse consultant does not require advanced knowledge for purposes
of the professional exemption.
The Secretary of Labor’s regulations define “work requiring
advanced knowledge” as “work which 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.”29 The
regulations further explain that an employee performing such work
“generally uses the advanced knowledge to analyze, interpret, or
make deductions from varying facts or circumstances.”30
In Pippins v. KPMG, LLP, in 2014, we first addressed the
meaning of the “advanced knowledge” prong and explored its
contours by interpreting the phrase “discretion and judgment,” which
29 29 C.F.R. § 541.301(b) (emphasis added).
30 Id.
14
“does not receive further elaboration in the regulations.”31 We noted
that there is a similar term—“discretion and independent
judgment”—in the Secretary’s regulations defining the administrative
exemption.32 The term “discretion and independent judgment” in the
context of administrative work is manifested by, among other things,
the “authority to commit the employer in matters that have significant
financial impact . . . to waive or deviate from established policies and
procedures without prior approval,” or “to negotiate and bind the
company on significant matters.”33
We declined to import that definition into the professional
exemption because professional “discretion and judgment” is “of a
different character” altogether, as it is based on expertise, special
knowledge, or talents characteristic of the profession at issue.34 We
agreed with the Secretary’s 2004 interpretation of her own regulations
that “the discretion and judgment standard for the professional
Pippins, 759 F.3d at 240 (“We have not yet had occasion to elaborate on the
31
meaning of the ‘advanced knowledge’ prong of the learned professional
exemption.”).
32 Id. (citing 29 C.F.R. § 541.200(a)(3) (stating that an administrative
employee is one “[w]hose primary duty includes the exercise of discretion and
independent judgment with respect to matters of significance”) (emphasis added)).
33 29 C.F.R. § 541.202(b).
34 Pippins, 759 F.3d at 241–42.
15
exemption is ‘less stringent’ than the discretion and independent
judgment standard of the administrative exemption.”35
With this background in mind, Pippins held that junior audit
associates who perform “entry‐level accounting tasks” under close
supervision and who “are automatically promoted to a more senior
accounting position after two years of satisfactory employment” use
“advanced knowledge” in their work and are properly classified
under the professional exemption.36
As relevant here, the principal lessons of Pippins are two‐fold.
First, the burden of satisfying the professional exemption’s advanced‐
knowledge requirement by application of the “discretion and
judgment” standard is not particularly stringent, at least when
compared to the “discretion and independent judgment” standard
applicable to administrative employees. Second, the advanced‐
knowledge inquiry does not take place in a vacuum. In conducting the
inquiry, we do not necessarily look to the freedom of an employee to
deviate from the employer’s policies. Rather, “the professional
exemption requires the exercise of [discretion and] judgment
characteristic of the learned profession at issue.”37
35 Id. at 241 (quoting Defining and Delimiting the Exemptions for Executive,
Administrative, Professional, Outside Sales and Computer Employees, the Preamble to the
2004 Final Rule, 69 Fed. Reg. 22122, 22151 (April 23, 2004)).
36 Id. at 237–38.
37 Id. at 243 (emphasis added).
16
We have not yet had occasion to apply the analytical framework
of Pippins, or to elaborate on its scope, in the context of professional
work performed in non‐traditional settings (e.g., a registered nurse
conducting utilization review for an insurance company).
Accordingly, we take this opportunity to clarify that, with respect to
the first prong of the primary duty test, the rule of Pippins is best
understood as follows: an employee uses “advanced knowledge” for
purposes of the professional exemption under the FLSA if the
employee acts in a manner that requires the discretion and judgment
characteristic of an employee practicing the profession at issue.
Therefore, in applying the advanced‐knowledge requirement,
we conduct a two‐step inquiry: (1) we identify what qualities or skills
are characteristic of the profession at issue (in this instance, registered
nursing); and (2) we determine whether these distinctive qualities or
skills are manifested in the performance of the employee’s primary
duty (here, conducting utilization review and approving insurance
coverage for medically necessary services).
2. Step One: The Advanced‐Knowledge Requirement as
Applied to Registered Nurses
There is no dispute that registered nurses typically use
advanced knowledge in the exercise of their profession.38 Indeed, the
38 See Appellant’s Br. at 33–34, 51–52 (conceding that registered nurses
working in a clinical setting use advanced knowledge and generally qualify for the
professional exemption).
17
work of registered nurses is predominantly intellectual in character, as
they use their special knowledge and skills to analyze, interpret, or
make deductions from varying circumstances relating to each
individual patient.39 For that reason, the Secretary’s regulations
provide that “[r]egistered nurses who are registered by the
appropriate State examining board generally meet the duties
requirements for the learned professional exemption.”40
Under Pippins, however, “[w]e must still . . . identify what
qualities are characteristic of the work of [a registered nurse].”41
Registered nurses, like many professionals, perform their work in a
variety of different settings. Isett’s challenge raises the threshold
question of whether it is only the performance of traditional clinical
duties—e.g., bedside nursing, guiding medical treatment,
administering medications, performing diagnostic tests, and
analyzing results—that endows registered nurses with a status we
describe as “professional.” We conclude that it is not, for at least three
reasons.
39See, e.g., Williams v. Genex Servs., LLC, 809 F.3d 103, 110–11 (4th Cir. 2015);
Rieve v. Coventry Health Care, Inc., 870 F. Supp. 2d 856, 863 (C.D. Cal. 2012); Withrow
v. Sedgwick Claims Mgm’t Serv., Inc., 841 F. Supp. 2d 972, 987 (S.D. W. Va. 2012);
Mudgett v. Univ. of Pittsburgh Med. Ctr., 09‐cv‐254 (WLS), 2010 WL 1838413, *7–*8
(W.D. Pa. May 6, 2010); Powell v. Am. Red Cross, 518 F. Supp. 2d 24, 40–43 (D.D.C.
2007).
40 29 C.F.R. § 541.301(e)(2).
41 Pippins, 759 F.3d at 244.
18
First, the pertinent regulation relating to nurses, by its express
terms, does not limit its characterization of registered nurses as
professionals to those who perform clinical work directly with
patients.42 Had the Secretary of Labor intended to include such a
limitation, the Secretary could have done so. We decline to read a
limitation into the regulation that was so clearly not intended by the
Secretary when acting pursuant to Congress’s explicit delegation of
rule‐making authority.43
Second, the regulations make clear that the advanced‐knowledge
requirement is met where an employee analyzes, interprets, and
makes deductions from varying facts or circumstances—an exercise
that stands in stark contrast to routine mental or physical work.44
There is simply no support for the proposition that only those
registered nurses who perform clinical duties use their specialized
knowledge, whereas registered nurses who work outside of a clinical
setting primarily perform routine mental and physical work. In fact,
there are many registered nurses who do not work directly with
patients or perform clinical duties—for example, nurse educators,
public policy advisors, or researchers—who clearly rely on advanced
42 See 29 C.F.R. § 541.301(e)(2).
43See Lin v. U.S. Dep’t of Justice, 459 F.3d 255, 262 (2d Cir. 2006) (refusing “to
read” a proposed “limitation into the regulation’s text” that is not included in the
“plain language of the regulation”); accord Dean v. United States, 556 U.S. 568, 572
(2009) (courts must “ordinarily resist reading words or elements into a statute that
do not appear on its face” (quoting Bates v. United States, 522 U.S. 23, 29, (1997))).
44 See 29 C.F.R. § 541.301(b).
19
knowledge in the performance of their occupational duties.45 Thus, as
Isett herself recognizes, it is not only “clinical work requiring
advanced knowledge that gives nursing its professional character.”46
Third, Isett’s exclusive focus on “duties” misinterprets the first
step of the analytical framework established in Pippins. Under this first
step, we look to “qualities” or “skills” that reflect the “knowledge of
the[ ] specialty to exercise discretion and judgment that is
characteristic” of the profession.47
45See Nat’l Council of State Boards Nursing Model Act art. III, § 2(b)(6), (12)–
(13), https://www.ncsbn.org/14_Model_Act_0914.pdf (“Nursing Model Act”)
(“The practice of registered nurses shall include . . . [d]esigning and implementing
teaching plans based on patient needs,” “[t]eaching the theory and practice of
nursing,” and “[p]articipating in development of health care policies, procedures
and systems”).
46 Appellant’s Br. at 52 (recognizing that the “fact that Appeals Nurse
Consultants do not engage in clinical nursing does not end the analysis, of course”);
cf. Nursing Model Act, art. III, § 2(b)(10), (15) (stating that registered nursing
includes “the management of health care and the implementation of the total health
care regimen within and across care settings,” as well as “[o]ther acts that require
education and training consistent with professional standards . . . commensurate
with the [registered nurse’s] education, demonstrated competencies and
experience”) (emphasis added).
47 Pippins, 759 F.3d at 243. In Pippins, for example, we did not consider only
specific accountancy‐related tasks that professional accountants perform to
determine if they are also performed by junior audit associates. Rather, in
“identify[ing] what qualities are characteristic of the work of an accountant,” we
looked at accounting tasks generally to conclude that “central to the profession [of
accounting] is the application of appropriate professional skepticism.” Id. at 244
(internal quotation marks and citations omitted).
20
Isett’s own description of the duties that registered nurses
typically perform48 makes clear that the practice of registered nursing
is characterized primarily by the ability to act independent of
direction, or under minimal supervision, on the basis of collected
clinical data.49 Licensed practical nurses collect patient clinical data
and likely even analyze it, but are not trained to interpret it in a way
that allows them to act independently or without direct supervision.50
48See Appellant’s Br. at 50–51 (describing the duties of registered nurses as
consisting primarily of bedside nursing, supervision and administration of patient
care, and the education of patients and family members on how to implement a
health care regimen) (citing U.S. BUREAU OF LABOR OF STATISTICS, Occupational
Outlook Handbook, Registered Nurses: What They Do,
https://www.bls.gov/ooh/healthcare/registered‐nurses.htm#tab‐2).
49 See, e.g., Nursing Model Act art III, § 2(b) (describing “[t]he practice of
registered nurses” as including, for example, “[p]roviding comprehensive nursing
assessment of the health status of patients,” ”[i]mplementing nursing care through
the execution of independent nursing strategies,” “[d]elegating and assigning
nursing interventions to implement the plan of care,” and “[m]anaging,
supervising, and evaluating the practice of nursing”); N.Y. STATE EDUC. DEP’T,
OFFICE OF THE PROFESSIONS, The Differentiated Scope of Practice of Licensed Practical
Nurses (LPNs) and Registered Professional Nurses (RNs),
http://www.op.nysed.gov/prof/nurse/nurse‐scope‐lpn‐rn.htm (“Differentiated Scope
of Nursing Practice”) (explaining that registered nurses are authorized to “execute
medical orders” and “may function independently in providing nursing care” in
different areas) (citing N.Y. Educ. Law. art 139, §§ 6901–02)); Conn. Gen. Stat. § 20‐
87a(a) (defining the practice of registered nursing in similar terms).
50 See, e.g., Nursing Model Act art. III, § 1(b)(“A [licensed practical nurse]
practices . . . under the supervision of a [registered nurse], advanced practice
registered nurse . . ., licensed physician or other health care provider authorized by
the state . . . .”); Differentiated Scope of Nursing Practice (explaining that licensed
practical nurses “may not interpret patient clinical data or act independently on
such data,” and “function by law in a dependent role at the direction of the [registered
21
The ability to act independently requires substantive command of
clinical data, which allows registered nurses, among other things, to
provide, supervise, modify, or approve the administration of
medically necessary services under limited supervision.51
3. Step Two: The Advanced‐Knowledge Requirement as
Applied to Aetna’s Nurse Consultants
We now turn to the critical legal question before us: whether
nurse consultants act in a manner that reflects the central characteristic
of registered nurses. To put it in more precise terms, we must
determine whether Isett acted independently—or, at a minimum,
under limited supervision—on the basis of collected clinical
information when she approved insurance coverage of medical
services. Upon review of the undisputed material facts presented to
us, we conclude that she did.
Isett’s role in the utilization review process consisted of
examining a patient’s file, applying medical criteria found in highly
technical guidelines to a patient’s unique and varying facts,
nurse] or other select authorized health care providers”) (emphasis added); Conn.
Gen. Stat. § 20‐87a(c) (defining the scope of practice of licensed practical nurses “as
the performing of selected tasks and sharing of responsibility under the direction
of a registered nurse or an advanced practice registered nurse . . . and executing the
medical regimen under the direction of a licensed physician or dentist”); Mich.
Comp. Laws § 333.17201(b) (same).
51 To clarify, independence from direction is not an element of the
professional exemption’s advanced‐knowledge requirement. Here, the ability to act
under minimal supervision is important to our inquiry only because it is a central
characteristic of registered nursing.
22
determining whether the requested services are medically necessary
(so that Aetna should pay for them) and, if appropriate, approving
coverage for the medical services. By Isett’s own account, she was
expected to decide: (1) whether certain medical criteria in the clinical
guidelines are satisfied; (2) whether it is unclear if the criteria in the
guidelines are satisfied; and (3) whether the clinical guidelines
themselves are unclear.
Although nurse associates also are expected to make these
decisions as part of the utilization review process, none of the
decisions made by the nurse associates are done independently or
without supervision. When it comes to the work of appeals nurse
associates, medical directors invariably have the last word, as none of
the nurse associates’ decisions is final and binding on Aetna or its
insured population. Nurse consultants, however, have the authority to
make a final approval decision or to forward the file to a medical
director. In doing so, nurse consultants act independent of direction
from the medical directors.52
That nurse consultants can approve coverage, but nurse
associates cannot, is not merely a “formal” distinction, as Isett
contends. Medical directors are required to review de novo the work of
52 Like most professionals, Isett had a supervisor who would provide advice
if needed. And Aetna also conducted routine quality audits of the appeals nurses’
completed work. Notably, however, Isett worked remotely from home and spoke
to her supervisor less than once a week. And the auditors, who were separate and
distinct from the Appeals Unit, had no supervision authority over Isett.
23
nurse associates and correct any mistakes in their review. By contrast,
even if mistaken, a nurse consultant’s decision can be final and
binding, thereby substantively affecting the benefits that an insured
patient will receive and the sums that Aetna is required to pay.53
Nurse consultants “deploy advanced knowledge and practice
professional judgment precisely in order to identify the unique
circumstances that necessitate seeking further advice” or transferring
the file to a medical director.54 Being able to identify those
circumstances in which intervention by a medical director may be
appropriate is an exercise of advanced knowledge that nurse
associates are not expected to possess. After all, “[i]t is a hallmark of
informed professional judgment to understand when a problem can
be dealt with by the professional herself” (i.e., a nurse consultant),
“and when the issue needs to be brought to the attention of a senior
53 Isett contends that, at least more than once, nurse associates were
authorized temporarily to approve requests for coverage—albeit under the
signature, and at the behest, of a nurse consultant. Assuming such approvals were
made, there is no reasonable basis to infer that nurse associates were acting
independently since a nurse consultant was signing the approval decision. And
even if there were some isolated instances in which nurse associates were making
final decisions independently, such instances simply meant that a nurse associate
was performing professional work improperly. No one would argue, for example,
that a paralegal’s infrequent performance of duties belonging to a first‐year
associate at a law firm relegates the first‐year associate to the role of non‐
professional staff. The same conclusion applies here.
54 Pippins, 243 F.3d at 248.
24
colleague” (i.e., a medical director) “with greater experience, wisdom,
or authority.”55
Moreover, “[t]hat the tasks can be broken down into component
parts, and that [nurse consultants] are provided with step‐by‐step
instructions for performing their functions effectively does not mean
that in performing these tasks [nurse consultants] do not demonstrate”
their ability to act independently on the basis of clinical data “and [the]
trained intellect that is characteristic of” registered nurses.56 “Breaking
down tasks into their component parts so that they can be described
in the most banal way possible obscures the judgment that is called for
in determining if workers are learned professionals.”57
In belittling the significance of her own duties, Isett makes a
series of arguments aimed at proving the following syllogism: nurse
consultants essentially do the same work that nurse associates do;
everyone agrees that nurse associates are not professionals; ergo, nurse
55 Id. Isett also argues that registered nurses working with patients can
deviate from medical guidelines and can make decisions regardless of the
guidelines’ clarity, whereas nurse consultants are much more constrained in their
decisions. But that argument presents a question of degree, not kind. The crucial
point is that the work of nurse consultants requires them to act independently on
the basis of collected clinical data. Cf. id. at 247–48. (explaining that, even though
audit associates are more constrained than accountants in the performance of their
duties, audit associates still “apply the skepticism characteristic of the accounting
profession”).
56 Id. at 246.
57 Id.
25
consultants are not professionals. But as we have explained, nurse
consultants and nurse associates do not perform the same job.
Therefore, we reject Isett’s arguments as unpersuasive and the
syllogism as flawed.
Finally, Isett’s reliance on Rego v. Liberty Mutual Managed Care,
LLC,58 an out‐of‐circuit, district‐court decision holding that a
registered nurse conducting utilization review was not a professional,
is misplaced, if not mistaken altogether. Rego’s holding rests on the
mistaken legal premise—foreclosed by Pippins—that because the
nurses’ work “did not involve the consistent exercise of discretion and
judgment” for purposes of the administrative exemption, the nurses
“did not, by definition, engage in work requiring advanced
knowledge.”59
As stated above, the professional exemption’s “discretion and
judgment” standard is less stringent than the administrative
58 367 F. Supp. 3d 849, 859–62 (E.D. Wis. 2019).
59 Id. at 859 (internal quotation marks and citation omitted). Rego further
compounds the error by relying on Clark v. Centene Company of Texas, L.P., 656 F.
App’x 688 (5th Cir. 2016), an unpublished and non‐precedential decision of the
Fifth Circuit that Isett also relies upon to support her position. See id. at 689
(establishing that the “opinion should not be published and is not precedent except
under” the doctrine of res judicata, collateral estoppel, or law of the case) (citing 5th
Cir. R. 47.5.4.)). Clark, which held that case managers conducting utilization review
are not professionals, expressly did “not address the first” prong “of the learned
professional exemption.” Id. at 693.
26
exemption’s “discretion and independent judgment” standard.60
Regardless of the significance of Isett’s duties to Aetna’s business
operations, her ability to decide whether to approve a medical service
herself or to forward the case to a medical director reflects the
professional discretion and judgment of registered nurses.
* * *
In sum, the first prong of the primary duty test of the
professional exemption requires courts to: (1) identify the qualities or
skills characteristic of the profession at issue; and (2) determine if the
employee’s primary duty reflects those qualities or skills.
Isett’s primary duty as a nurse consultant requires the discretion
and judgment characteristic of registered nursing—the ability to act
independently, or under limited supervision, on the basis of collected
clinical data. Accordingly, we conclude that Isett’s job required the use
of advanced knowledge, thereby satisfying the first prong of the
primary duty test.
60 See ante at 16. The exercise of professional discretion and judgment, for
example, need not be substantial and consequential. Compare Pippins, 759 F.3d at
241 (“[P]rofessionals . . . need not exercise management authority to operate as
professionals; what matters is whether they exercise intellectual judgment within
the domain of their particular expertise”) with In re Novartis Wage and Hour Litig.,
611 F.3d 141, 157 (2d Cir. 2010) (explaining that an employee’s relatively minor
choices are insufficient under the administrative exemption), abrogated on other
grounds by Christopher v. SmithKline Beecham Corp., 567 U.S. 142 (2012).
27
D. Third Prong of the Primary Duty Test
It is undisputed that registered nurses, unlike licensed practical
nurses, do receive specialized academic instruction and generally
satisfy the third prong of the primary duty test. Nevertheless, Isett
argues that the duties of a nurse consultant do not require such
instruction because her “work can be—and is—performed by” nurse
associates.61 According to Isett, both nurse consultants and nurse
associates “acquire the skills needed to review appeals ‘by experience
rather than by advanced specialized intellectual instruction.’”62 We
disagree. Isett’s argument again rests on the flawed premise that nurse
associates and nurse consultants perform the same job.
Our focus under the third prong is not circumscribed to the
employer’s decision to require an advanced academic degree.63 While
the employer’s minimum academic qualifications may be relevant—
even highly relevant—our focus is on the actual duties of the job at
issue.64 Specifically, under this prong, a court must identify the job’s
61 Appellant’s Br. at 56.
62 Id. (quoting 29 C.F.R. § 541.301(d)).
63 Pippins, 759 F.3d at 251 (“[A] newspaper cannot deprive [journalists] of
overtime pay by arbitrarily setting a PhD in literary studies as a condition of
hiring.”).
64See, e.g., id.; Young v. Cooper Cameron Corp., 586 F.3d 201, 206 (2d Cir. 2009)
(focusing on what the employee’s work requires); Dybach v. Fla. Dept. of Corr., 942
F.2d 1562, 1565 (11th Cir. 1991) (“[T]he determinative factor is the job requirement
and not the education in fact acquired by the employee”).
28
primary duty to determine if that duty is consistent with the
employer’s requirement of specialized academic instruction. A
primary duty is consistent with the requirement of specialized
instruction where the duty calls on advanced knowledge that is
typically acquired through a prolonged course of study.65
The advanced knowledge of nurse consultants—how to
visualize a sick patient to decide, under minimal supervision, whether
the patient should be admitted to a hospital, whether the correct level
of care was provided, and whether the length of the hospital stay was
appropriate—is derived from specialized academic instruction and
comparable unsupervised clinical experience, as opposed to mere on‐
the‐job training.66 Far from being a “distinction without a difference,”67
the ability to make a final decision about patient care under minimal
supervision is precisely what distinguishes registered nurses, whose
advanced knowledge is obtained in a prolonged course of specialized
study, from licensed practical nurses.68 Accordingly, we have no
difficulty in holding that the primary duty of a nurse consultant is
65 See Pippins, 759 F.3d at 250–51.
66 See ante nn. 49–50.
67 Appellant’s Br. at 60.
68 See ante nn. 49–50; see also Powell, 518 F. Supp. 2d at 39 (explaining that
registered nurses “satisfy[ ] the second and third elements of the primary duty
test”).
29
consistent with Aetna’s requirement of an advanced academic degree
in registered nursing.
Isett argues that “the knowledge (advanced or otherwise) that
[a]ppeals [n]urses gained in nursing school bears solely on the
question of whether the relevant clinical criteria are satisfied”—a
determination that all appeals nurses make.69 For Isett, the “final
step—approving requests when the medical information meets the
established criteria—does not require any additional ‘prolonged
course of specialized intellectual instruction.’”70 But just as an
employee cannot disparage the discretion and judgment employed in
his or her work by breaking down tasks into their component parts,71
an employee cannot break his or her work into separate parts
“described in the most banal way possible” to argue that specialized
instruction is not necessary to perform each task individually.72
Isett’s argument that “Aetna’s on‐the‐ground conduct”
undermines the distinction drawn between nurse consultants and
nurse associates is not to the contrary.73 The “critical inquiry is not
69 Appellant’s Br. at 60.
70 Id.
71 See ante at 25 (citing Pippins, 243 F.3d at 246).
72 Pippins, 243 F.3d at 246.
73 Appellant’s Br. at 60 (arguing that Aetna temporarily authorized nurse
associates to approve requests for coverage on behalf of nurse consultants who
would then sign the approvals); see ante at 24 n. 53.
30
whether there might be a single” or a few nurse associates who
purport to perform the same duties as the nurse consultants despite
“not satisfy[ing] a specific set of academic requirements, but whether
the ‘vast majority’ of [nurse consultants] required a prolonged,
specialized education to fulfill their role.”74 Here, the vast majority of,
if not all, nurse consultants at Aetna are registered nurses who, by
definition, possess an advanced academic degree.
For that reason, we are not persuaded by Isett’s reliance on the
Fifth Circuit’s non‐precedential decision in Clark.75 Unlike here, “the
evidence” in Clark did “not establish [that] the ‘vast majority’ of [case
managers] hired by [the employer]”—who invariably performed the
same job—“received a ‘prolonged, specialized education.’”76 To the
74 Pippins, 759 F.3d at 250. The word “customarily” in the third prong of the
primary duty test—“customarily acquired by a prolonged course of specialized
intellectual instruction,” 29 C.F.R. § 541.301(d)—means we look to the “vast
majority” of cases in which approval decisions were made by nurse consultants and
not the proverbial rare exceptions. See Young, 586 F.3d at 205.
75 See Clark, 656 F. App’x at 693–94 (holding that, under the Secretary’s
regulations, licensed vocational nurses do not satisfy the third prong of the primary
duty test) (citing 29 C.F.R. § 541.301(e)(2)).
76 Clark v. Centene Co. of Texas, L.P., 44 F. Supp. 3d 674, 680 n.5 (W.D. Tex.
2014) (noting that all five named plaintiffs and eleven of the total of thirty opt‐in
plaintiffs were licensed vocational nurses). Moreover, unlike Aetna’s appeals
nurses who perform different jobs, all of the case managers in Clark—licensed
vocational nurses, licensed practical nurses, and registered nurses—approved
benefits on the basis of a computer system with “a green light/red light approach.”
Pls.’ Mem. in Supp. of Mot. for Partial Summ. J. at 14, Clark v. Centene Co. of Texas,
L.P., No. 1:12‐cv‐00174 (SS) (W.D. Tex. 2014), ECF No. 113‐1.
31
extent Clark can be read to support the notion that registered nurses
who independently conduct utilization review and are able to make
final approval decisions do not qualify for the professional exemption,
we reject the decision as unpersuasive.77
* * *
To recapitulate, where the employee is required to possess an
advanced academic degree, the third prong of the primary duty test
triggers a two‐step inquiry: (1) identification of the primary duty of
the job, which requires the use of advanced knowledge; and (2)
determination of whether that duty is consistent with the employer’s
minimum academic qualifications. The third prong is satisfied where
the employee’s primary duty calls on advanced knowledge that is
acquired in a specialized course of study.
77 Clark’s narrow construction of the FLSA exemptions pre‐dates the
Supreme Court’s instruction to afford these exemptions a “fair reading.” Encino
Motorcars, LLC, 138 S. Ct. at 1142. Indeed, its holding stems from a mechanical
application of the Secretary’s regulations concerning licensed practical nurses to
the employer’s minimum qualifications for case managers. See Clark, 656 F. App’x
at 693–94. But that application misunderstands our inquiry under the third prong.
As explained above, we identify the primary job duty requiring advanced
knowledge and determine if such duty is consistent with the employer’s minimum
qualifications. See ante at 28–29. While Clark considered the job’s primary duty for
purposes of the administrative exemption, it did not do so for purposes of the
professional exemption. See Clark, 656 F. App’x at 693 (choosing not to “address the
first . . . element[ ] of the learned professional exemption”). Similarly, in Rego, where
all of the nurses performed the same job, the district court considered the primary
duty with the administrative exemption in mind and did not account for the unique
character of the professional exemption. See Rego, 367 F. Supp. 3d at 859.
32
Isett’s advanced knowledge, which enabled her to make
medical‐necessity determinations and approve medical treatment
under minimal supervision, is at the core of the specialized training
that registered nurses receive before entering their profession. Isett
received the training necessary to work as a nurse consultant through
a prolonged course of specialized intellectual instruction, thereby
satisfying the third prong of the primary duty test.
III. CONCLUSION
To summarize, we hold that:
(1) When interpreting the scope of an FLSA exemption, courts
must give the exemption a fair reading and shall not construe
it narrowly against the employer seeking to assert the
exemption.
(2) The first prong of the professional exemption’s primary duty
test requires courts to: (A) identify what qualities or skills are
characteristic of the work of the profession at issue; and (B)
determine if the employee’s primary duty reflects those
qualities or skills.
(3) Central to the profession of registered nursing is the ability
to act independently, or under limited supervision, on the
basis of collected clinical data.
(4) The District Court did not err in concluding that Isett’s job
satisfies the first prong of the primary duty test. Isett’s
primary duty as an appeals nurse consultant—to conduct
33
utilization review and approve insurance coverage for
medically necessary services under minimal supervision—
reflects the discretion and requires the judgment
characteristic of other registered nurses. Accordingly, Isett’s
job as an appeals nurse consultant required the use of
advanced nursing knowledge.
(5) In cases where, as here, the employer requires the possession
of an advanced academic degree, the third prong of the
primary duty test for the professional exemption of the FLSA
requires courts to: (A) identify the job’s primary duty which
requires the use of advanced knowledge; and (B) determine
if that duty is consistent with the employer’s minimum
academic qualifications.
(6) The District Court did not err in concluding that Isett’s job
satisfies the third prong of the primary duty test. Isett’s
primary duty calls on advanced nursing knowledge that is at
the core of the prolonged course of study that registered
nurses receive before entering their profession.
(7) The undisputed facts demonstrate that Isett was properly
classified as exempt from the FLSA’s overtime‐pay
requirements because she is a professional under the statute
and under the regulations adopted pursuant thereto by the
Secretary of Labor.
For the foregoing reasons, the District Court’s September 30,
2018 judgment is AFFIRMED.
34