18

‐ 3271

‐ cv

Isett v. Aetna Life Insurance Company



## In the



# United States Court of Appeals

**for the Second Circuit**

A UGUST T ERM 2019

No. 18

‐ 3271

‐ cv

S HARON I SETT

, INDIVIDUALLY AND ON BEHALF OF ALL OTHER

SIMILARLY SITUATED INDIVIDUALS

, Plaintiff

‐ Appellant

,

v.

A ETNA L IFE I NSURANCE C OMPANY

, Defendant

‐ Appellee

,

A ETNA

, I NC

., A ETNA H EALTH OF C ALIFORNIA

, I NC

., A ETNA M EDICAID

A DMINISTRATORS

, LLC, A MERICAN H EALTH H OLDING

, I NC

. Defendants.

On Appeal from the United States District Court

for the District of Connecticut

A RGUED : O CTOBER 31, 2019

D ECIDED : J ANUARY 14, 20202 Before: C ABRANES

, R AGGI

, Circuit Judges

, and K ORMAN

, 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.3 A DAM W. H ANSEN

, Apollo Law, LLC

(Eleanor E. Frisch, Apollo Law, LLC;

Rachhana T. Srey, Nichols Kaster, PLLP, on

the brief ), Minneapolis, MN, for Plaintiff

‐

Appellant

.

M ATTHEW W. L AMPE (Wendy C. Butler, on

the brief ) Jones Day, New York, NY, for

Defendant

‐ Appellee

.

J OSÉ A. C ABRANES

, 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. §§ 201–219.4 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).5 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).6 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,7 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

7 The 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 fee8 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).9 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.

12 29 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”10 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).11 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).

19 Encino Motorcars, LLC v. Navarro

, 138 S. Ct. 1134, 1142 (2018) (internal

quotation marks and citations omitted).

20 Id. ; accord Flood

, 904 F.3d at 228 (recognizing that the application of the

narrow

‐ construction principle to the FLSA exemptions “is not the rule anymore”).

21 In 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

.12 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 53.13 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)).

28 Id. (quoting Ramos

, 687 F.3d at 558); accord Icicle Seafoods, Inc. v.

Worthington

, 475 U.S. 709, 714 (1986).14 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.15 “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

31 Pippins

, 759 F.3d at 240 (“We have not yet had occasion to elaborate on the

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 241–42.16 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).17 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).18 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.

39 See, 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 244.19 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).

43 See 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).20 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

45 See 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).21 Isett’s own description of the duties that registered nurses

typically perform 48 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

48 See 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. B UREAU OF L ABOR OF S TATISTICS

, 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. S TATE E DUC

. D EP ’ T

, O FFICE OF THE P ROFESSIONS

, 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 [ registered22 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.23 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.24 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 248.25 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.26 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 693.27 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).28 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.”).

64 See, 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”).29 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”).30 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. 53.31 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

‐ 1.32 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 859.33 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 conduct34 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

.