EMPLOYEE SERVICE DETERMINATION AUG 3 01996

CSX Transportation Company

Nurse Consultants

This is the determination of the Railroad Retirement Board concerning the status

of nurse consultants who perform services for CSX Transportation Company

(BA No. 1524) (CSXT) as employees under the Railroad Retirement Act (45

U.S.C. §231 et seg.) (RRA) and the Railroad Unemployment Insurance Act (45

U.S.C. §351 et sea.) (RUIA).

Background

During the period of November 1994 through October 1995, the Board's

Division of Audit and Compliance conducted an audit of CSXT to determine the

accuracy of the reporting of creditable compensation and service. The nurse

consultants were identified through review of IRS Forms 1099 "Miscellaneous

Income" and accounts payable invoices issued by CSXT to individuals treated

as independent contractors. The audit found that many of these individuals

have worked exclusively for CSXT for extended periods of time, are paid

monthly, follow CSXT operating instructions and report directly to CSXT

personnel.

The scope of the audit was limited to obtaining an understanding of the

services performed by the nurse consultants, determining the number of

individuals involved, the amount of compensation paid during calendar years

1991, 1992, and 1993, the period(s) of time services were provided, whether

the consultants performed service for other clients, and other information

necessary for the Board to make a coverage determination.

Information Gathered About Nurse Consultants

CSXT pays nurse consultants to provide medical services to injured employees

of the railroad and to assist them with injury recovery and other rehabilitation

services. Nurse consultants perform the following services:

1) Provide injury recovery management and rehabilitation counseling

or consultation to railroad employees as directed by the CSXT Chief

Medical Officer (CMO).

2) Make contact with and perform initial evaluation of injured CSXT

employees and provide other injury recovery and rehabilitation

services as directed by the CMO.

BCD 1996-79 BA # 1524
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3) Provide injury recovery rehabilitation orientation to an assigned

District.

4) Provide, as directed, training and orientation for CSXT claims

personnel.

5) Review and evaluate medical evaluation and rehabilitation facilities,

pain clinics and other medical facilities as directed by the CMO.

6) Submit written monthly reports on all related activities as directed

by the CMO, in addition to maintaining more frequent verbal

contact as required.

Each of the enumerated services is listed in the standard contract that CSXT

uses with its nurse consultants.

The Employee Coverage Investigation Report (Report) stated that the review of

information obtained from the records of CSXT and through correspondence

with the nurse consultants disclosed that the nurse consultants receive an 

annual fee, paid in twelve equal installments on the first day of each month.

In addition, CSXT pays a monthly stipend to defray expenses such as postage,

photocopies, telephone expenses, etc. CSXT also reimburses nurse consultants

a daily fee, not to exceed $500.00 per day, plus expenses, which includes

travel, meals, and lodging, when expert testimony, either by deposition or trial

testimony, is requested by CSXT counsel.

The Report stated that, exceptfortwo individuals who began providing services

prior to that date, nurse consultants began providing services to CSXT in 1 987

and continue to provide services to the company. In 1987, there were 14

nurse consultants located across the CSXT system. During calendar years

1991, 1 992, and 1 993, CSXT employed the services of 1 9 nurse consultants.

Currently, there are 8 nurse consultants under contract to provide services to

CSXT.

The Report stated that Forms 1099 "Miscellaneous Income" issued by CSXT

for calendar years 1991, 1992, and 1 993, and correspondence with individuals

show that nurse consultants were paid a total in excess of $777,000 in 1991,
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Nurse Consultants

$889,000 in 1992, and $577,000 in 1993. Wage and earnings information

was not obtained from all nurse consultants.

Nurse consultants indicated that they provide services to CSXT employees from

their homes or business office locations. On-site work evaluations are 

performed on CSXT property or at the home of the injured employee. Nurse

consultants stated that they set their own work schedules. Generally, work

schedules are set to meet the needs of the client, the medical provider and

CSXT administration. One nurse consultant indicated that she was on 24-hour

on-call availability for medical emergencies.

Nurse consultants must provide a full and complete report of each injury case

to the railroad's Chief Medical Officer (CMC) promptly upon completion of

counseling or consultation with an injured employee. Nurse consultants

complete and maintain the reports and information listed below.

1) Nurse consultants gather reports from medical providers for the

benefit of CSXT's medical department.

2) Nurse consultants approve medical payments beyond that covered

by health insurance.

3) Nurse consultants provide timely information as required by the

Director of Vocational Rehabilitation, Associate CMC, or CMC.

4) Nurse consultants input information directly into the CSXT Medical

Management Computer System and the Injury Recovery Case

Management System and also prepare narrative reports

summarizing patient progress.

Nurse consultants indicated that they follow CSXT Medical Management

Vocational Rehabilitation Program Manual instructions and other procedural

directives when performing their work. Examples of procedures followed

include:

1) Initiation of Medical Management within 24 hours of receiving

notice from a CSXT claim department representative.
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Nurse Consultants

2) Procedures which require closing medical management cases within

prescribed CSXT time frames.

3) Procedures authorizing payment for services as long as medical

treatment encourages recovery and return to work.

4) Guidelines for using and arranging work hardening procedures.

5) Cancellation of medical payment authorizations when injured

employees fail to respond to initial contact.

6) Usage of introductory letters, vocational rehabilitation brochures

and vocational questionnaires when opening medical cases.

7) Procedures relating to forwarding copies of reports, letters and

other correspondence to CSXT claim department representatives.

8) Requirements relating to obtaining signed medical information

release forms.

9) Procedures relating to when to notify insurance companies and

employees that CSXT will no longer pay medical treatment costs.

Nurse consultants provide services in accordance with rules, regulations, and

directives of CSXT, and are subject to quarterly programmatic reviews by

CSXT's CMC. Nurse consultants receive instructions from Ms. Beverly

Jackson, Director of the Vocational Rehabilitation Department, a CSXT

employee. Ms. Jackson is responsible for assessing individual nurse consultant

performance, negotiates contracts, and sets program standards. Nurse

consultants participate in one or two annual medical management meetings held

by CSXT.

Nurse consultants interact daily with injured CSXT employees and medical

department staff on the status of employee medical conditions. Nurse

consultants also interact with other CSXT claim and legal department
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Nurse Consultants

employees handling settlement of employee injury claims and required court

testimony.

Five of the eight nurse consultants currently working for CSXT indicated that

they do not provide services to other clients. Two other consultants spend

50% to 75% of their time handling CSXT employee injury cases.

CSXT provides or has paid for computer equipment, modems, and software

used by nurse consultants to enter medical information into the CSXT Medical

Management Computer System.

Nurse consultants became aware of their jobs through CSXT advertisements in

national professional journals and newspapers or were informed of the job

opening by friends working at CSXT. Seven of the nurse consultants surveyed

indicated that their businesses are not incorporated. Five other consultants

were incorporated. Only two of the nurse consultants surveyed advertise their

services to the public in a nurse registry or trade publication.

In a letter dated May 13, 1996, David J. Stoyanoff, Tax Counsel for CSXT,

responded to the coverage investigation report. Mr. Stoyanoff did not dispute

any of the facts listed in the report, but instead objected to use of various facts

as support for a finding that the nurse consultants were employees rather than

independent contractors. Mr. Stoyanoff summarized his comments by stating

that:

. . . none of the individual findings is indicative of employment

status to any compelling degree, and many are neutral or actually

indicative of independent contractor status.

Applicable Law and Regulations

Section 1(b) of the RRA [45 U.S.C. §231 (b)] defines the term "employee" to

mean any individual in the service of one or more employers for compensation.

Section 1(d)(1) of the RRA provides that an individual is in the service of an

employer if:
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Nurse Consultants

(i)(A) he is subject to the continuing authority of the employer

to supervise and direct the manner of rendition of his service, or (B)

he is rendering professional or technical services and is integrated

into the staff of the employer, or (C) he is rendering, on the

property used in the employer's operations, personal services the

rendition of which is integrated into the employer's operations. [45

U.S.C. §231 (d)(1 )(i)].

Section 1(e) of the RUIA [45 U.S.C. §351 (e)] contains essentially the same

definition.

Section 203.3(a) of the Board's regulations provides that an individual is

performing service for an employer if:

(1) He is subject to the right of an employer, directly or

through another, to supervise and direct the manner in which his

services are rendered; or

(2) In rendering professional or technical services he is

integrated into the staff of the employer; or

(3) He is rendering personal services on the property used in 

the operations of the employer and the services are integrated into

those operations. [20 CFR 203.3(a)].

Discussion and Conclusion

The information summarized above indicates that the definition in either

subsection (A) or (B) may be applicable to the nurse consultants. First, a

majority of the Board finds that the definition in section 1 (d)(1)(i)(A) applies to

the nurse consultants because the evidence indicates that those consultants are

subject to the continuing authority of CSXT to supervise and direct the manner

in which they render their services. The standard contract that CSXT uses to

engage the service of a nurse consultant provides in four of the six paragraphs

enumerating the services to be performed by the nurse consultant that the
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Nurse Consultants

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nurse consultant will provide a particular service, such as injury recovery

management and rehabilitation counseling or consultation to railroad employees,

"as directed by RAILROAD'S Chief Medical Officer." One of the two remaining

paragraphs listing the services to be performed by the nurse consultant states

that the nurse consultant will "provide, as directed, training and orientation for

RAILROAD'S claims personnel." The repeated use of a phrase which gives

CSXT's Chief Medical Officer the right to tell the nurse consultant how to

render a particular service is in and of itself clear evidence that CSXT has the

right to supervise and direct the manner in which the nurse consultant renders

services. Moreover, other information gathered through the audit investigation

also supports the conclusion that CSXT controls how the nurse consultants

perform their work.

Specifically, nurse consultants follow CSXT Medical Management Vocational

Rehabilitation Program Manual instructions and other procedural directives, such

as closing medical management cases within prescribed CSXT time frames and

forwarding copies of reports, letters and other correspondence to CSXT claim

department representatives, when performing their work. In addition, nurse

consultants receive instructions from Ms. Beverly Jackson, the Director of the

Vocational Rehabilitation Department and a CSXT employee. In a memorandum

dated June 2, 1992, to all nurse consultants, Ms. Jackson stated in pertinent

part that:

Following is a restatement of our medical management

goals/protocol which must be followed. There must be no

exceptions.

Ms. Jackson also assesses the performance of individual nurse consultants.

Finally, nurse consultants participate in one or two annual medical management

meetings held by CSXT.

While it is true, as Mr. Stoyanoff commented in his letter, that no one fact

standing alone may support a finding of an employment relation between the

nurse consultants and CSXT, in the opinion of the majority, the facts as a whole

demonstrate that CSXT has the right to both supervise and direct the manner

in which the nurse consultants perform their work. A majority of the Board
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Nurse Consultants

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therefore finds that the nurse consultants are employees of CSXT within the

meaning of section 1 (d)(1)(i)(A) of the RRA.

Turning to the second definition of "employee," the majority finds that the

evidence shows that the nurse consultants also fa!! within the definition of

employee in section 1 (d)(1 )(i)(B) of the RRA, despite the fact that they do not

work on CSXT property. The services performed by the nurse consultants are

professional services, since the nurse consultants had to have particularized

education and training in order to perform those services. A CSXT program

manual describes the nurse consultants as "the medical case manager for

injured employees participating in the Medical Management and Vocational

Rehabilitation Program." The nurse consultants interact daily with injured CSXT

employees and medical department staff on the status of employee medical

conditions. Nurse consultants also interact with other CSXT claims and legal

department employees handling settlement of employee injury claims and

required court testimony. The nurse consultants complete and maintain a

number of reports and other information in connection with injured CSXT

employees. For example, nurse consultants must provide a full and complete

report of each injury case to the CSXT Chief Medical Officer promptly upon

completion of counseling or consultation with an injured CSXT employee.

Although the nurse consultants set their own work schedules, they generally

set those schedules so as to meet the needs of the client (CSXT), the medical

provider, and CSXT administration. The nurse consultants input information

directly into the CSXT Medical Management Computer System and the Injury

Recovery Case Management System and prepare narrative reports summarizing

patient progress. Nurse consultants also gather reports from medical providers

for the benefit of CSXT's medical department, approve medical payments

beyond that covered by health insurance and provide timely information as 

required by the Director of Vocational Rehabilitation, the Associate Chief

Medical Officer, or the Chief Medical Officer.
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Nurse Consultants

A majority of the Board finds that the evidence overwhelmingly demonstrates

that the nurse consultants function as an integral part of the medical

department of CSXT and that they are integrated into the staff of CSXT. A 

majority of the Board therefore finds that the nurse consultants are employees

of CSXT within the meaning of section 1 (d)(1 )(i)(B) of the RR.A. Service is

creditable subject to Basic Board Order 75-9.

V. M. Speakman, Jr.