On September 10, 2020, the U.S. District Court for the Western District of Missouri conditionally certified a collective of salaried Utilization Managers in Krott v. New Directions Behavioral Health, LLC, No. 4:19-CV-00915-DGK, over the employer’s objection. In this utilization manager overtime lawsuit, the court held that the plaintiff had met her “minimal burden” of showing she was similarly situated to other salaried UMs. Jack Siegel, with co-counsel, represented the workers.
Judge Greg Kays signed the Order Conditionally Certifying Class on September 10, 2020. The plaintiff, a former UM, filed her motion for step-one notice on July 24, 2020. The definition the court adopted had no geographic limit.
In close paraphrase, the collective the court conditionally certified in 2020 included all individuals employed by New Directions in non-management job titles containing the term “Utilization Manager” in the last three years. Members also had to be paid on a salary basis and classified as exempt from overtime compensation.
New Directions made four main arguments against the motion. The court rejected three of them and agreed with one.
Similarly situated. New Directions argued that its UMs worked across the country with varying hours and conditions based on health plan client, region, and supervisor. The court pointed to a declaration from the company’s own Vice President of Clinical Services. It admitted that UMs shared the same primary duty of making medical-necessity determinations using specific guidelines to approve insurance claims.
The court also noted that New Directions did not contest the four declarations from UMs in Florida and Georgia saying all UMs, regardless of location, were classified as exempt. Nor did it contest that UMs at times worked more than forty hours a week without overtime pay. Whether each UM actually worked over forty hours, the court said, goes to the merits and would be addressed later.
The court concluded that “the UMs are similarly situated because they performed similar job duties using the same predetermined guidelines”.
Email notice. New Directions argued that mailed notice was enough. The court disagreed and allowed notice by mail and email.
Reminder notice. The court sided with New Directions here and did not allow a reminder notice. It was hesitant to authorize duplicate notice that might seem to encourage joining or suggest the court endorsed the claims. The plaintiff also had not provided the text of a proposed reminder.
Third-party administrator. New Directions asked the court to appoint a neutral administrator to send notice. The court found its concerns unfounded and let plaintiff’s counsel send notice.
New Directions had seven days to produce names, job titles, dates of employment, last known addresses, and email addresses. Each potential plaintiff had sixty-three days from the date notice was mailed to opt in. The plaintiff had earlier withdrawn a request to send notice by text message.
The employer pointed to differences in clients, regions, and supervisors. The court looked instead at what the employer’s own declaration admitted about the UMs’ shared primary duty.
The ruling also kept the step-one question separate from the merits. The employer’s dispute over whether every UM worked overtime did not stop notice. The court noted that the plaintiff’s notice made clear that only those who worked more than 40 hours in a workweek were eligible.
This step was preliminary. The court made no finding that UMs were misclassified or that New Directions broke the law, and New Directions denied that it improperly classified the UMs as exempt.
The order describes New Directions as a managed behavioral health organization that provides benefit determinations for healthcare plans. It works with insurers to admit or deny claims for treatment by the insurers’ members.
The plaintiff alleged that all UMs had the same essential job duties. In her account, UMs applied and communicated the company’s practices, procedures, guidelines, and criteria for approving insurance claims. They worked remotely or in a call-center setting. If clinical information met the set criteria, the UM approved the request; if not, the UM sent it to a physician for peer review.
The plaintiff claimed New Directions wrongly classified UMs as exempt under the Fair Labor Standards Act (FLSA). She sought unpaid overtime wages, interest, liquidated damages, and reasonable attorneys’ fees.
As general information, the employer must prove any exemption it claims (see the administrative exemption). The administrative exemption requires pay on a salary basis at or above a set minimum. The worker’s main duty must be office or non-manual work directly related to the management or general business operations of the employer or its customers. That duty must also include the exercise of discretion and independent judgment on matters of significance.
Under the federal rules, discretion and independent judgment does not include recording or tabulating data or other mechanical, repetitive, or routine work. The order does not decide whether any exemption applied.
The court applied, at the time of this 2020 order, a two-step process that it said FLSA certification often follows. At step one, the notice stage, courts apply a “fairly lenient standard”. Substantial allegations of a single decision, policy, or plan are enough (see how collective action certification works). At step two, after discovery, the employer may move to decertify.
Some federal appeals courts have since changed this approach — the Fifth Circuit in Swales v. KLLM Transport Services (2021) and the Sixth Circuit in Clark v. A&L Homecare & Training Center (2023).
This page describes a 2020 court order. The time to join that collective was set by the court in that case. If you have worked in a similar role, the Siegel Law Group can evaluate your own claims.
Have you worked as a utilization manager or in another utilization review role? Did you apply set criteria to approve insurance claims, while paid a salary and classified as exempt? If you worked more than 40 hours in a week without overtime pay, a lawyer can review how you were paid.
Contact the Siegel Law Group for a free consultation.
Related rulings: Bellan v. Capital BlueCross, another overtime case involving utilization review nurses, Drake v. Tufts, another case for salaried utilization review employees, and Snider v. Quantum Health, another case for salaried utilization review employees.
They may, depending on their real duties. A salary and an exempt label are not enough on their own, and the burden to prove an exemption falls on the employer. Federal rules say routine or mechanical work is not the kind of judgment the administrative exemption needs. Whether a UM who mainly applies set criteria to approve claims is exempt depends on the actual duties.
In the New Directions case, yes. The employer argued that hours and conditions varied by health plan client, region, and supervisor. The court relied on the employer’s own declaration that UMs shared the same primary duty of making medical-necessity determinations using specific guidelines. It conditionally certified the group anyway, at this early stage.
Often, yes. In the New Directions case, the employer said mailed notice alone was enough and appeared to raise privacy concerns. The court overruled that objection and allowed notice by both mail and email. It did not allow a follow-up reminder notice, and it let the workers’ lawyers, rather than a third-party administrator, send the notice.
Under the 2020 order, each potential plaintiff got sixty-three days after notice was mailed to opt in. The employer first had seven days to turn over contact details. Utilization managers in similar jobs at other companies can still have a lawyer look at their own pay.
The Siegel Law Group is a national overtime and wage law firm devoted entirely to representing workers denied overtime pay. Where many firms include wage cases as a small part of a broader employment practice, the Siegel Law Group has built its entire practice around overtime litigation — and the results reflect that commitment: $100M+ recovered for workers, 50+ class and collective action certifications, and 100+ federal lawsuits filed in 27+ federal courts nationwide. Founding attorney Jack Siegel is a Bloomberg BNA contributing author on wage and hour law.
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