Free Response to Motion - District Court of Colorado - Colorado

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EXHIBIT D

Case 1:03-cv-02485-MSK-PAC
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u.s. Departent of Labor

Employment Standards Administration Wage and Hour Divsion
WashIngton, D.C. 20210

AUG 2 6 2005

Dear Mr. Garry:

This is in response to your request for an opinion concernng whether insurance claims adjusters employed by your client qualify for the administrative exemption under section 13(a)(1) of the Fair Labor Standards Act (FLSA). You request a reply based on an analysis of the. revisions to 29 C.F.R. Par 541, which were published as a final rule in the Federal Register on April 23, 2004 (69 FR 22122), with a scheduled effective date of
August 23, 2004. The new Par 541 regulations apply prospectively, beginning August

the regulations, as there were no substantive changes in the primar duty test requirements for the administrative exemption.
You state that the claims adjusters in question are employed by your client, which acts as a third party administrator. The third pary administrator at issue exists to sell claims
adjusting and other services to insurance companes, insurance brokers and/or self-

23, 2004. Our response is applicable under both the old and revised version of

insured companies. Your client charges a fee to provide the claims adjusting services, typically based upon the number arid complexity of claims handled. A self-insured company may also contract directly with your client to provide claims adjusting services for their self-insured plan.
Your client employs three le'f~I$z~tltÏlS.tt~lîn:~~~!ijl!~im.;tøtrS'l1 (1) Claims Specialist I;

(2) Claims Specialist II; and (3) Senior Claims Specialist. They are paid on a salary basis at least $455 per week. These Claims Specialists provide claims adjusting services to customers of your client in two areas: workers' compensation and general liabilty. In your letter you describe the duties and responsibilties of the Claims Specialist I and II and Senior Claims Specialist. Each position is discussed next.
at a rate of

Claims Specialist I Claims Specialist 1's perform non-manual work in an office setting. On the general liability side, Claims Specialist 1's priarily handle bodily injury claims stemming from non-employee injuries that occur on the premises of commercial enterprises, and also from product liability claims. On the workers' compensation side, Claims Specialist l's handle employee injury claims.

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In handling workers' compensation claims, typically coverage is a foregone conclusion. The Claims Specialist I investigates the facts relating to the claim. This normally involves questioning the claimant, the claimant's employer and the claimant's treating physician. Then, in consultation with the supervsor, the Claims Specialist I sets
an initial reserve amount by estimating the ultimate value of

initial reserve amount, the Claims Specialist I relies on his experience and lmowledge in adjusting claims and on advice from his supervisor.

the claim. In arving at this

The Claims Specialist I maintains and documents the claim fie; evaluates the facts and the law to determine compensability and the amounts owed; makes workers' compensation disability determnations; deterines whether vocational rehabiltation services are required; determines whether an injured employee can retu to work and what, if any, accoinodations need to be made at the workplace to faciltate the retur; monitors the ongoing need for an accommodation, such as light duty, after the inJured
worker has retured to work; evaluates the claim for possible subrogation opportties;

and attempts to resolve the claim through settlement. £tl~~
itiÒÕñ'sultatiøl1 wi th. aid imdßt trresupétvsiøn;øit:tafl2: ~t"t\S:~§:I¡B~~l,¡Q;r.

evaluates the claim for possible thud; decides whether additional investigation is needed

Each file that is handled by a Claims Specialist I is reviewed by his supervisor periodically for completeness and to make sure that the Claims Specialist I is handling
judgment of the Claims Specialist I to determine what, if any, additional investigative .actions need to be taken, that discretion and judgment is typically exercised after discussion with the Claims the fie appropriately. In addition, while it is withi the discretion and

Specialist 1's supervisor.

If a more-in-depth investigation is deemed necessary, the Claims Specialist I gathers facts
such as the location of injur, time of loss, and the injured worker's previous history of

filing workers' compensation claims. The Claims Specialist I, among other steps, also interviews witnesses, determines whether to pursue surveilance of claimant, and when necessary, disputes the treating physician's diagnosis and prognosis by requesting a
medicai~.l~¥al .:v~l~a.~i?~..of the injured worker. ,MiDyl'ØjM\í!s.ëjtRt~I"~:(êlliG\t~'lIl~W;t~:ht%
,Pwei.fWrãiHrs';Sjjê¿iälist'1''S.'supenwÍsør.

The Claims Specialist I also assists in administerg benefits. He communicates with doctors about the injured employee's continued need for treatment, reviews medical and lab reports, decides whether to extend medical payment coverage and makes decisions on approving or challenging medical bils, when appropriate. Thoughout this process, the Claims Specialist I consults with his supervisor for advice and guidance.
The Claims Specialist I is responsible for negotiating a full resolution of

the clai..~JI

~~\it!t\~t~'t~l\~~l'S,;b~'\¥l:~~\~fue:t((Wåììñ;sWiî3'~~ißi8¡~F'~.1.1tiiliimI¡1~fl-I~.~l.t~ìI...'... ",*.

;~ìlii'(rr~~'~mBi However, before a Claims Specialist I can settle a claim, he must frequently seek approval from the customer whose account the Claims Specialist I is
~wt(;~~~~:~~~::~:t:~:::tgl§l~I~t:~~R~~~l'ilP. Once set~lem~nt auth~ntY is .

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approved, the Claims Specialist I deals directly with either the claimant or the claimant's
representative in settling the claim.
The Claims Specialist I on the general

liability side performs similar work and has similar

responsibility and types of supervision. The two positions differ in that the Claims
because state laws sometimes dictate the value of a settement of

Specialist I handling liabi1ty claims has more leeway in settlement negotiation. This is workers' compensation
liabilty claims.

claims while no such legal strictues apply to the settlement of general

Also, Claims Specialist I's on the gerieralliability side spend less time investigatig and dealing with vocational rehabilitation and disabilty issues. Furthermore, Claims Specialists 1's who work on the generaL liabilty side spend much more time on coverage,

subrogation and contrbution issues.
Claims Specialist 1's on both the workers' compensation and general

not to be assigned complex and difficult claims, such as those that could involVe litigation or arbitration. In a discussion with a member of the Wage and Hour Division staff on November 4, 2004, you stated that new employees are hired as Claims Specialist
I's. and after six months to a year of satisfactory employment, Claims Specialist I's are transitioned to the Claims Specialist II position.

liabilty areas tend

Claims Specialist II The Claims Specialist II job duties are the same as the Claims Specialist I job duties.
,HØM'~MØjJ;,Øläiñts" f8I5ticíalist....rn. eltPi9;~~~si..aa~nÇlt.as..J~1Q.s;~l:y.su."llW¿~~~~i§\1fi~~\

..,.$:j~ifiH\i'Sj!l~ts, Where every claim that a Claims Specialist I handles is subject to review

by his supervisor, supervisors Q.i\l~\Slu~t\l:(¡lt~~kj,the work of Claims Specialist II's. ALso,

while a CLaims Specialist I wil typically discuss his plans for handling each claim with
his..

supervisor both at the outset and as the claim proceeds"iaG;lai~Æ,*li~eftfii(§trffØwilflij.;

';(1 '~W9n;~a\~.i$q.tlaRl9tl;;WJtnllsd~tlP:M~i;aØìi¡;\~~l11t~~b~l.s,~H~i~ls.tt.i.l!~%¡¡~~lt~ltf

In addition, the cases handled by Claims Specialist II's tend to be more complex. Compared to their junior coiinterpars, Claims Specialist II's are more likely to evaluate independent medical examinations and independent investigations of accident scenes.
1íì~~;;aîfelñlllr~''JtKei:y.tQ.A'li!le¡¡ançlxil'~~r!Gt,with vocational rehabiltation specialists and
nursing services to assist claimants in ongoing disabilties. Claims Specialist II's on the general

severe and complex product liabilty claims, Wbiohd,l!eauiv(l,a.1igåe¡ttk~¥~)jiø':fj1lci~ell~aQ4
4~Jí0Wh~'i'l~;.

their return to work or in dealing with their liabilty side also handle more

Claims SpeciaList II's handle all claims that are in arbitration or court litigation. Specifically, Claims Specialist II's å'e,lr~itlll4~tiatelÍ~$ with the attorney assigned to the case as to how the case is to be defended. Claims Specialist IT's approve litigation
strategy, paricipate in and approve the hiring of experts to testify and work with counsel

for the insured in presenting expert testimony. Along with counsel, ClaIms Specialist II's act as lead negotiators in any settlement discussions.

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Claims Specialist II's spend a significant amount of

their time direct1y'5servicingH¡ctQ~

Gii!)tQll~l1. Claims. SpecialistU'snieetfre~uep~?,\Vith the.custoniers QfY~M£slilm~.tSl;;

whomtheyareprovidìngclaims services to discuss trends intheiraç;çQJyltaan~: .. '. '..
additionafs'afètyprecaiiions that

can be undertaken to protect theiu againsiffber

claims, iriclUding ovëiàll strategies to reducethecostsofcllUS~ Approxiately 20% of the Claims Specialist II's time is spent in these discussions that take place on a monthly basis.

Senior Claims Specialist Senior Claims Specialists perfonn the same duties as Claims Specialist II's with no more than the same level of supervision. The only difference between the two positions is that the Senior Claims Specialists typically have more experience in handling claims and
Senior Claims S pecialists it~ñdtõlià.fidlethêiñÔSf'CôÌrl'jtiG'ateø.iamgii¡!fill\l~¥'/&?lili~s¥!¡

S.e.ti9L9l.aiffs§~~çi~lists.als~ s¡:e~?at ieast~O% ofthefrwõiiktimê'ptepäFitg.fØr;õl' ....
enga(gtñg'irlö1i!erttd~èrVêIi1g maftersasdes-cribedabQYeJ!

Analvsis Under the revised regulations at 29 C.F.R. 541.200(a), "the term 'employee employed in
a bona fide administrative capacity' in section 13(21)(1) ofthe Act shall mean any

employee:
1) Compensated on a salary or fee basis at a rate of exclusive of

not less than $455 per week...,

board, lodging or other facilities;

2) Whose primary duty is the performance of offce or non-manual work directly related to the management or general business operations of the employer or the employer's customers; and 3) Whose primary duty includes the exercise of discretion and independent judgment
with respect to. matters of signficance. II

work performed" and "the level of importance or consequence of the work performed." See 69 . FR at 22139. With regard to the type of work performed, the preamble explains that the
The administrative exemption thus has requirements pertaining to both the "type of

"exemption is intended to be limited. .. to employees whose work involves S~~it¡lftl;.thet bÜiñrêss;its~ld!~'and thus inapplicable to employees whose work relates to the
"mtød\lct.t)íV'öpetáttofis'6f,!tñ"è;!bu:si'nessrF~;~ FR at 22141. Although the production

versus staff dichotomy is ilustrative, rather than dispositive, it is a useful tool in appropriate cases to identify employees who are excluded from the administrative exemption.
We discuss below the second criteria of followed by an analysis of

the adinistrative exemption, which is then
whether the primar duty of

the Claims Specialist 1'.8 and II's

and Senior Claims Specialists is thè performance of office or non-manual work directly related to the management or general business operations of the employer or the employer's customers.
Direct! v Related to the Management or General Business Operations

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(

"The phrase 'directly related to management or general business operations' refers to the work performed by the employee. To meet this requirement, an employee must perform work directly related to assisting with the runng or servicing of the business, as
type of

distinguished, for example, from working on a manufactung production line or sellng a

product in a retail or service establishment." 29 C.F.R. 541.201(a).
"Work directly related to management or general business operations includes, but is not
limited to, work in fuctional areas such as tax; finance; accounting; budgeting; auditing;

insurance; quality control; purchasing; procurement; advertsing; marketing; research; safety and health; personnel management; human resources; employee benefits; labor relations; public relations; governent relations; computer network, internet and database
adminstration; legal and regulatory compliance; and similar activities." 29 C.F.R.

541.201(b).
"An employee may qualify for the administrative exemption if duty is the performance of operations of

the employee's primary work directly related to the management or general business

the employer's customers. Thus, fore~~plet employees actiJigi.as:ailvi~~l's,j
be

or c6risûltantstutheir'MìpioY~rds.ciili~tSQr allstomêrå (as tax experts or financial'¡;"r
consultant§~ for example) llay

exempt" 29 C.F.R. 541.201(c).

"The term 'primary duty' means the principal, main, major or most important duty that
the employee performs. Determination of an employee's primary duty must be based on

all the facts in a paricular case, with the major emphasis on the character of the
employee's

job as a whole." 29 C.F.R. 541.700(a).

As you represent, in perfoffiing work on behalf of a contracting insurance company, the Claims Specialist 1's and II's aiid.Senior Claims Specialists service the insurance policies. sold by your client's customers. Indeed, for carrers with whom your client contracts, the Claims Specialist 1's and 11's and Senior Claims Specialists provide claims adjusting services which are necessary to service the insurance policy sold by the insurance company. For your client's other customers, such as insurance brokers, the Claims Specialist I's and II's and Senior Claims Specialists also provide claims adjusting
services for the final product that the broker in turn sells to his customer. For the selfinsured companies, Claims Specialist 1's and II's and Senior Claims Specialists adjust

the self~insured entity in their every day business activities. In addition, Claims Specialist IT's and Senior Claims Specialists frequently
claims brought by employees of

discuss certain trends in the customer's account, andpr0\'~~(~g!:~~:'r~ra,tltrtl'(ai.ciitioll~lF4
sa'£et'Yè'Pf,\?Q,autiQn~itiia,kUie,,Gli!,nt:s:¡.~(li,lø.'itR~e¡,tll;'lllJd:líi.è:.tFíê'''é'Õst .O'têfãfnis. ,. .. ..

Thus, the primary duty of

in either the workers' compensation or general.

the Claims Specialist I's and II's and Senior Claims Specialists liabilty side is S~lëml!'t;&'I~p;~lll'~'S~~

;t~61k'~~1i1Yre~~;r~:::~::~;~::::=::~iS:::~~:~~::::::::l~htj
,;:\aißas;i¡~~i.~llrat1Qe~saf0ty..a:qj~a;lth¡,..p~fS.orlel,iaJJa'ß(¡lTelltrlil:an;r~%9Ut~sf,,l~.,g~~,llÐd

reguiat~r'Y:çQin~U11nt¡~¡'¡f.See 29 C.F.R. 541.201(b).. ..

l,

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Based on an analysis of

the information provided, we believe that the Claims Specialists I

and II and Senior Claims Specialist positions meet the second criteria of the administrative exemption test in that their primar duty involves the performance of office or non-manual work directly related to the management or general business of the employer's customers. See Opinion Letters dated November 19,2002 and Augut 6, 2002 (copies enclosed).

the administrative exemption, which whether the primary duty ofthe Claims Specialist 1's and II's and Senior Claims Specialists includes the exercise of discretion and independent judgment with respect to matters of significance.
We proceed with a discussion of the third criteria of is then followed by an analysis of

Discretion and Independent Judgment Section 541.202(a) states that in order "(t)o qualify for the admstrative exemption, an
employee's primary duty must includet~e:xerpi$ø9f~j~~t¥tl!J!%~~,i~dep"~rtd~ììf

!jl;~~ltntwithX~~R~çftqmatt~rs qfsj~tlcan9~' In general, the exercise of discretion and independentjüdgmentinvolves the comparson and the evaluation of possible courses of conduct, and acting or making a decision after the varous possibilities have
been considered. The term 'matters of significance' refers to the level of importance or
consequence of

the work performed."

As indicated in section 541.202(b):
"The phrase 'discretion and independent judgment' must be applied in the light of all the facts involved in the paricular employment situation in

which the question arses. Factors to consider when determining whether
an employee exercises discretion and independent

judgment with respect

to matters of signficanceinclude, but are not limited to: whether the
emplo yee has:åUthôritytöfötíul¡¡te¡,a¡ff(¡Gtf'illt~q;.lie;t¡. or implefieht
:)ttMa'g~meirtpx)liciesöI"ép'erátingprl!~tiéê§fwhether the emp lo yee car es
out major assignents in conducting the operations of

the business; whether the employee performs work that affects business operations to a
the employee's assignents are related to

substantial degree, even if

"'lîå'salîtldntytéCôl'tttheefup1tl,eï' m':~nt ù:'fil1ál~ffl'lfll'â'6't':whether the employe !atä,.
;~fW(\ti'wes~a,b.I,i~li~ø.,,~liGies¡'OOd:p'Fö'Q,ecLu,re$';~tbqJ;R,l\i#iR,J;.'ffi'~,J~i:¥al; w hethêr'

operation of a paricular segment of the business;,Whö'tli:tth:ee~lQY~e

the emp loyee has authQFr~ytØ;t1êg¡¡tiiât~0âI''d'!t;'lf;ø\,tiit\tQ'Øm'~~i~n :ù'S'i;glifø'âÌÍt'll\lltt~ts~;iw;hether the employee provides consultation or expert

advice to management; whether the employee is involved in planing long- or short-term business objectives; whether the employee investigates and resolves matters of significance on behalf ofmanagement; and whether the employee represents the company in handling complaints,
arbitrating disputes or resolving grevances."

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Section 541.202(c) describes an employee's exercise of discretion and independent judgment as including the authority to make an independent choice that is free from immediate direction or supervisiqn. However, this section does not imply tliat ap..
employee does not exercise discretiònandindependentjw:igtent if the ~i:p19,yee' s
decisions or recommendations are

reviewed ata higher leveL. ... "The fact that an

employee's decision may be subject to review and that upon occasion the decisions are revised or reversed after review does not mean that the employee is not exercising discretion and independent judgment." Id. Section 541.202( e) furter Clarfies that the "exercise of discretion and independent judgment must be more than the use of skil in applying well-established technques, procedures or specific standards described in manuals or other sources."

Finally, section 541.203(a) provides that insurance claims adjusters "generally meet the duties requirements for the administrative exemption, whether they work for an insurance company or other type of company, if their duties include activities such as interviewing insureds, witnesses and physicians; inspecting propert damage; reviewing factual information to prepare damage estimates; evaluating and makng recommendations regarding coverage of claims; determining liabilty and total value of a claim; negotiating settlements; and making recommendations regarding litigation." As noted in the preamble to the revised regulations at 69 FR 22144: ".. . there must be a case-by-case assessment to determine whether the employee's duties meet the requirement ofthe exemption. "
Claims Specialist I As described in the prior paragraphs, Claims Specialist 1's working in either the workers' compensation or general liabilty side perform several of the duties and responsibilties of an exempt claims adjuster characterized in section 541.203(a). For example, the Claims Specialist I's interview the claimant, the claimant's employer, and the treating physician. Claims Specialist 1's review factual information to set and adjust the initial reserve amount. Also, Claims Specialist 1's decide whether additional investigation is needed
and attempts to resolve claims through settlement. We note, however, that Claims
Specialist 1's in both the workers' compensation and general liabilty areas pedorm their duties under close supervision by their managers. As mentioned above, a Claims Specialist I must consult with his supervisor in setting the initial reserve amount. Most of the tasks perfDrmed after the setting of the initial reserve amount are done in consultation

with and under the supervision ofthe Claims Specialist 1's supervisor. In addition, each

fie handled by a Claims Specialist I is reviewed periodically for completeness in order to
ensure that the fies are handled appropriately.

If a Claims Specialist I feels that a claim needs additional investigation, the Claims Specialist I must discuss the investigation with his supervisor and seek approval. If such actions are deemed necessary, any steps taken are fuher discussed with the supervisor. In performing the duties of monitoring the claim and assisting in administering benefits, a
Claims Specialist I consults with his supervisor for advice and guidance. Furthermore, in

settling a claim, a Claims Specialist r frequently consults with his supervsor to discuss
the appropriate amount to settle a claim.

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Based on a review of the information provided, we believe that the Chiims Specialist I

liabilty side is so closely of his duties tlat the ClaimsSpechilist I does not have the authority to make independent phoiçes tliatare free :fomimmediãte directionutsupervision. See 29 C.F.R. 541.202(c). Thus, the Claims Specialist 1's fail to meet the third criteria of the administrative exemption in that the work of Claims Specialist ls does not meet the requisite degree of discretion and independent judgment with regard to matters of signficance contemplated under the
employed in either the workers' compensation or general súpeMsed by the Claims. SpecìalIst I's ina.llger iIithe performance

revised reguations. Therefore, it is our opinion that Claims Specialist 1's in either the
workers' compensation or general

liability side canot qualify for the administrative exemption under the revised regulations at 29 C.F.R. 541.200. Hence, Claims Specialist

I's are covered by the minimum wage and overtime provisions of

Opinion Letter dated January 7,2005 (copy enclosed); Robinson-Smith v. GEICO. 323

the FLSA. See

F.Supp.2d 12 (D.D.C. 2004) (automobile damage claims adjusters not exempt because they do not exercise suffcient discretion and independent judgment); In re Farmers Insurance Exchanger 336 F.Supp.2d 1077 (D.Ore. 2004) (automobile and certain property damage adjusters lack adequate discretion and independent judgment, while personal
injur and death claims adjusters are exempt).

Claims Specialist II and Senior Claims Specialist As described in the prior paragraphs, Claims Specialist II's and Senior Claims Specialists working in either the workers' compensation or general liabilty side perform the
activities of an exempt claims adjuster characterized in section 541203(a). For example,

Claims Specialist II's and Senior Claims Specialists interview the claimant, the claimant's employer and the claimant's treating physician; set and adjust the reserve amoultt; evaluate the facts and the law to detennine compensability and the amounts owed; make workers' compensation disabilty determinations; determine whether vocational rehabilitation services are needed, and also whether an injured employee can
retu to work and what, if any, accommodations need to be made at the workplace to
faciltate the employee's retu; identify and pursue subrogation, contrbution,

the settlement burden; evaluate the claim for possible subrogation opportunties and for possible fraud;

indemnfication or other opportunities to force third paries to bear par of

negotiate settlements; and make recommendations regarding litigation.

In your letter, you state that the claims adjusting services that the Claims Specialist I and II and Senior Claims Specialist provide are important to all ofthe customers your client
serves, which we take to mean, for discussion puroses, as satisfying the requirement that

the Claims Specialist II's and Senior Claims Specialists' exercise of discretion and independent judgment involves matters that are significant to your client's customers.
See 29 C.F.R. 54L202(a) and 541.202(f) and Opinion Letter dated November 19, 2002.

The discussion necessarily turs to whether a Claims Specialist II and Senior Claims
Specialist, in the performance of their claims adj usting dutieS)'l1âVe\~~att~A~l!'fM0to::rnak¡e)an,,:

",inCiepsndêl1f'öfiöi'ee;'tfêê'lrõñltmm'êtìalê'''tfiretttt:g,,!qi,, Gu~,~~~ii¡,i:,t and also whether a

Claims Specialist II and Senior Claims Specialist's "exercise of discretion and

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independent

judgment" in the performance oftheIr work involves "more than the use of

skil in applying well-established technques, procedures or specific standards described
in manuals or other sources." Sections 541 .202(c) and 541.202(e).

With regard to Claims Specialist II's and Senior Claims Specialists working in either the workers' compensation or general liability side, we note that in handling each claim, Claims Specialist II's and Senior Claims Specialists are not as closely supervised compared with their junior counterpars. Supervisors only.spøt",enook4heirwork, and any discussions with supervisors dealing with casework are at the Claims Specialist II's and Seiuor Claims Specialists' discretion. Claims Specialist II's and Senior Claims Specialists perform their work more independently than Claims Specialist I's, typically without involvement of their supervisor on each claim. Claims Specialist II's and Senior Claims Specialists also handle casework that is in arbitration or litigation. Claims
Sp~~i~list II's ~dSen~or~l~in:~Sp~cialists determinethe.strategyanGtacticsto be llsed

â:unnglii.gationâl1dirttñe settl'errellt oflitigated claims and also act as lead negotiators
in settlement discussIons. In additiòn, Claims Specialist II's and Senior Claims
SpecialistsmeetfI'q~entlY~ith. theeinPloyer' s eustoinets to whont they

ölaffus;sëtvitrestodíscúss trendsintheiracèuuntand additiuhal såfety preoautions that can bëÚndertaken to protect them against fuher claims and overall strategies tOll':duce 'tlié'cbsts ofc.Üaiws.

are proyiging

After reviewing the information provided, we believe that Claims Specialist II's and Senior Claims Specialists in performing their work have "authority to make an
independent choice, free from immediate direction or supervsion." 29 C.F.R.

541.i02(c).
We also.believe that performing the duties and responsibilities of

the Claims Specialist

II'S and Senior Claims Specialists require "more than the use of skil in applying well-

established techniques, procedures or specific standards described in manuals or other
sources." 29 C.F.R. 541.202(e). For example, Claims Specialist II's and Senior Claims Specialists, compared to their junior counterpars, handle more complex cases. Claims

Specialist II's and Senior Clais Specialists are more likely to evaluate independent
medical examinations and independent investigations of accident scenes. Claims

Specialist II's and Senior Claims Specialists are also more likely to hire and interact with
vocational rehabilitation specialists and nursing services to assist claimants in their retu

to work or in dealing with ongoing disabilties. Claims Specialists II's and Senior Claims Specialists on the general liabilty side also handle more severe and complex product
liabilty claims, which require a higher level of judgment and kiowledge. Furtermore, as stated earlier, Claims Specialist II's and Senior Claims Specialists handle claims that are in arbitration or court litigation. Specifically, Claim Specialist II's and Senior Claims Specialists approve litigation strategy, participate in and approve the hiring of experts to testify and work with counsel for the insured in presenting expert testimony. Also, along with counsel, Claims Specialist II's and Senior Claims Specialists act as lead negotiators in any settlement discussions.

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We conclude that these facts demonstrate that Claims Specialist II's and Senior Claims Specialists exercise a great deal of discretion in deciding how to handle all tyes of claims. They: areuot.mere,ly using a standardized format for resolvingclaInÎ's, but rather are using their own judgment about what the facts show, who is liable, what a claim is worth, and how to handle the negotiations with the claimant or the claimant's
representative in order to achieve a successful resolution. Hence, Claims Specialist IT's

and Senior Claims Specialists employed in either the workers' compensation or general liability side exercise the requisite discretion and independent judgment in matters of significance in the performance of their work as contemplated in the revised regulations.
the administrative exemption. Therefore, based on the information provided, it is our opinion that Claims Specialist II's and Senior Claims Specialists qualify for the administrative exemption under section 13(a)(l) of the FLSA and its revised implementing regulations at 29 C.F.R. 541.200.
Claims Specialist IT's and Senior Claims Specialists meet aU three criteria of

This opinion is based exclusively on the facts and circumstances described in your request and is given on the basis of your representation, express or implied, that you have provided a full and fair description of all the facts and circumstances that would be pertinent to our consideration of the question presented. Existence of any other factual or historical background not contained in your request might require a different conclusion than the one expressed herein. You have represented that this opinion is not sought by a pary to a pending private litigation conceniing the issue addressed herein. You have also represented that this opinion is not sought in connection with an investigation or litigation between a client or firm and the Wage and Hour Division or the Deparent of LabOr.
This opinion letter is issued as an offcial ruling of puroses of

the Wage and Hour Division for the Portal~to-Portal Act, 29 U.S.C. 259. See 29 C.F.R. 790.17(d), 790.19;
Lancaster. Nebraska, 913 F.2d 498,507 (8th Cir. 1990).

Hitltgren v. County of

We trst that the above is responsive to your inquiry.
Sincerely,

Aile::s~;'
Deputy Administrator

Enclosures: Opinion Letters dated January 7,2005; November 19, 2002; August 6, 2002

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