Court Opinion

ID: 3163164
Source: CourtListenerOpinion
Date Created: 2015-12-16 16:06:00.665364+00
Date Added: 2024-06-11T07:38:43.210983
License: Public Domain

Dec 16 2015, 8:43 am

      ATTORNEYS FOR APPELLANT                                   ATTORNEYS FOR APPELLEE
      Andrew M. McNeil                                          Gregory F. Zoeller
      Philip R. Zimmerly                                        Attorney General of Indiana
      Bose McKinney & Evans LLP
      Indianapolis, Indiana                                     Frances Barrow
                                                                Deputy Attorney General
                                                                Indianapolis, Indiana

                                                 IN THE
          COURT OF APPEALS OF INDIANA

      Circle Health Partners, Inc.,                             December 16, 2015
      Appellant-Employer,                                       Court of Appeals Case No.
                                                                93A02-1503-EX-183
              v.                                                Appeal from the Final Judgment of
                                                                the Indiana Department of
      Unemployment Insurance                                    Workforce Development
      Appeals of the Indiana                                    The Honorable Aija Funderburk,
      Department of Workforce                                   Liability Administrative Law
      Development,                                              Judge

      Appellee-Claimant.                                        Case No.
                                                                67702

      May, Judge.

[1]   Circle Health Partners, Inc., (“CHP”) appeals the decision of the Liability

      Administrative Law Judge (“LALJ”) that certain workers were employees of

      Court of Appeals of Indiana | Opinion 93A02-1503-EX-183 | December 16, 2015                    Page 1 of 13
      CHP, rather than independent contractors, such that CHP’s payments to those

      workers were “wages” as defined in Ind. Code § 22-4-4-2 for which CHP was

      liable to the State of Indiana for additional unemployment taxes.

[2]   We affirm.

                                  Facts and Procedural History
[3]   In 2013, the Department of Workforce Development (the Department)

      undertook an audit of CHP’s business and tax records. It determined CHP

      “had additional taxable wages in 2009, 2010, and 2011 based on payments

      made to individuals for services that constituted employment.” (App. at 3.)

      CHP filed a timely protest of those Findings.

[4]   An LALJ conducted a hearing in January 2015 and, thereafter, entered an

      order that affirmed the Department’s decision. That order included the

      following findings of fact:

              [CHP] is a pre-claim cost control consulting business located in
              Indianapolis, Indiana and serves clients in various states.
              [CHP]’s typical clients are employers that provide health
              insurance benefits to their employees. [CHP] creates strategies
              for its clients to reduce healthcare costs and save lives. [CHP]’s
              mission is to “lead our country in pre-claim cost control
              strategies[;] [d]eliver truly integrated health and wellness
              strategies that save lives and impacts [sic] the bottom line for our
              clients[; and] [c]hange the corporate health delivery model so
              that employers and members can focus on their core business and
              success.” See Department’s Ex. 4.

      Court of Appeals of Indiana | Opinion 93A02-1503-EX-183 | December 16, 2015   Page 2 of 13
        [CHP] generally offers its clients wellness programs,
        pharmaceutical benefit management, administration, reporting,
        and a web portal to achieve its mission goals. [CHP]’s
        pharmaceutical benefit management includes identifying
        medications that the employer makes available to its employees
        and finding lower cost alternatives or substitutions for those
        medications. [CHP] uses a web portal to obtain confidential
        information and data to develop and implement its cost control
        strategies. [CHP] also offers the web portal to its clients to
        communicate with their employees. [CHP] reports data and
        information to its clients and provides administrative services.

        [CHP] designs wellness programs for its clients after a
        consultation with top executives to determine the work
        environment and culture and the goals for the program.
        Typically, [CHP] offers three strategies as part of its wellness
        programs: awareness, education and motivation. With respect
        to awareness, [CHP] uses data from a questionnaire and health
        screenings to help an individual understand where they [sic] are
        on the health spectrum and to analyze its clients’ employees’
        highest risk areas. Through the education component of the
        wellness programs, [CHP] offers seminars, e-learning, lifestyle
        management programs, and a web portal health encyclopedia to
        its clients and their employees. [CHP] uses a motivation strategy
        in its wellness programs to encourage health and cost control by
        providing incentives, rewards and coaching to its clients’
        employees.

        As stated, [CHP] uses data from health screenings to implement
        the awareness strategy of its wellness programs. As part of its
        wellness services, [CHP] regularly offers health screenings to its
        clients. See Department’s Ex. 4. Depending on a client’s needs
        and/or budget, [CHP] conducts health screenings at the client’s
        facility for an additional cost. In some cases, clients choose not
        to use the health screenings at all. In other cases, clients may
        choose to have another entity perform a health screening or

Court of Appeals of Indiana | Opinion 93A02-1503-EX-183 | December 16, 2015   Page 3 of 13
        perform their own health screenings. For example, in 2010,
        approximately 7,000 of [CHP]’s 49,000 covered individuals had a
        health screening completed by [CHP].

        When [CHP] performs the health screenings, [CHP] hires
        licensed registered nurses and certified phlebotomists to do so.
        [CHP] also hires licensed nurses to conduct personal
        consultations to discuss the results of a questionnaire and
        biometric screening with its clients’ employees, when that service
        is selected by the client. [CHP] generally hires nurses that are
        employed by other entities, such as hospitals and, typically, finds
        them by word of mouth. See Department’s Ex. 3. [CHP] is
        unaware as to whether the nurses and phlebotomists offer
        services to other entities as independent contractors.

                                              *****

        The Department conducted an audit of [CHP]’s business for
        years 2009, 2010 and 2011. As part of the audit process, Steve
        Husk, President/Principal, completed a Compliance Audit
        Questionnaire. See Department’s Ex. 2. On the questionnaire,
        Mr. Husk described [CHP]’s business activity as “WELLNESS
        CONSULTING, PROGRAM SCREENING &
        CONSULTATION[,] WEB TOOL SUPPORT SERVICES[.]”
        Department’s Ex. 2. In addition, Mr. Husk communicated with
        the auditor, Tracy Robbins, via email to explain [CHP]’s
        business and the services that individuals that received 1099 tax
        forms provided. See Department’s Ex. 3.

        In the email, Mr. Husk explained that [CHP] uses the services of
        registered nurses, certified phlebotomists, and wellness
        professionals in the delivery of its on-site wellness service to its
        clients. Mr. Husk also stated that “if [CHP] could not rely on
        [registered nurses, certified phlebotomists, and wellness
        professionals] to execute the on-site wellness program, [CHP]

Court of Appeals of Indiana | Opinion 93A02-1503-EX-183 | December 16, 2015   Page 4 of 13
              would not offer that service and instead would limit its business
              to expert wellness consulting and web-based programs.”
              Department’s Ex. 3 at p3.

      (Id. at 3-5.) The LALJ concluded:

              1.       The [LALJ] has jurisdiction over this matter pursuant to
                       Indiana Code §22-4-32-1. et. seq.

              2.       The [LALJ] concludes that the nurses and phlebotomists
                       at issue were not free from direction and control in
                       contract and in fact.

              3.       The [LALJ] concludes that the services that the nurses and
                       phlebotomists performed were not outside the usual course
                       of [CHP]’s business.

              4.       The [LALJ] concludes that the nurses and phlebotomists
                       were customarily engaged in an independently established
                       trade, occupation, profession, or business of the same
                       nature as that involved in the service performed.

              5.       Accordingly, the [LALJ] concludes the services provided
                       by the nurses and phlebotomists at issue constitute
                       employment and that payments made to those individuals
                       as remuneration for those services constitute wages.

      (Id. at 5-6.)

                                      Discussion and Decision
[5]   “Any decision of the liability administrative law judge shall be conclusive and

      binding as to all questions of fact.” Ind. Code § 22-4-32-9(a) (1995). However

      Court of Appeals of Indiana | Opinion 93A02-1503-EX-183 | December 16, 2015   Page 5 of 13
      we “are not bound by an agency’s interpretation of the law.” Jug’s Catering, Inc.

      v. Indiana Dep’t. of Workforce Dev., Unemployment Ins. Bd., 714 N.E.2d 207, 210

      (Ind. 1999), trans. denied. When a party challenges an administrative law

      judge’s decision as contrary to law, we may consider “both the sufficiency of

      the facts found to sustain the decision, and the sufficiency of the evidence to

      sustain the finding of facts.” Ind. Code § 2-4-32-12 (1990). When undertaking

      our review, we must look at the record in the light most favorable to the

      administrative decision, and we may neither reweigh the evidence nor assess

      the credibility of the witnesses. Jug’s Catering, 714 N.E.2d at 209. “Under this

      standard, basic facts are reviewed for substantial evidence, conclusions of law

      are reviewed for their correctness, and ultimate facts 1 are reviewed to determine

      whether the ALJ’s finding is a reasonable one.” Bloomington Area Arts Council v.

      Dep’t of Workforce Dev., Unemployment Ins. Appeals, 821 N.E.2d 843, 849 (Ind. Ct.

      App. 2005) (footnote added).

[6]   Circle Health argues the LALJ erred by determining the nurses and

      phlebotomists are employees of CHP within the meaning of Ind. Code § 22-4-8-

      1. For purposes of determining when an employer is liable for unemployment

      taxes, employment means “service . . . performed for remuneration or under

      any contract of hire, written or oral, expressed or implied.” Ind. Code § 22-4-8-

      1(a). Any service

      1
       “Ultimate facts are conclusions or inferences from the basic facts.” Bloomington Area Arts Council v.
      Department of Workforce Dev., Unemployment Ins. Appeals, 821 N.E.2d 843, 849 (Ind. Ct. App. 2005).

      Court of Appeals of Indiana | Opinion 93A02-1503-EX-183 | December 16, 2015                       Page 6 of 13
        performed by an individual for remuneration shall be deemed to
        be employment subject to this article irrespective of whether the
        common-law relationship of master and servant exists, unless
        and until all the following are shown to the satisfaction of the
        department:

        (1) The individual has been and will continue to be free from
        control and direction in connection with the performance of such
        service, both under the individual’s contract of service and in
        fact.

        (2) The service is performed outside the usual course of the
        business for which the service is performed.

        (3) The individual:

                 (A) is customarily engaged in an independently established
                 trade, occupation, profession, or business of the same
                 nature as that involved in the service performed; or

                 (B) is a sales agent who receives remuneration solely upon
                 a commission basis and who is the master of the
                 individual’s own time and effort.

Ind. Code § 22-4-8-1(b) (2006). Pursuant to that definition, all workers are

presumed to be employees until an employer demonstrates all three factors. See

Bloomington Area Arts Council, 821 N.E.2d at 849 (noting employing unit had

burden of proof as to three elements). When we review a decision, we must

consider those three statutory provisions “conjunctively.” Id. Furthermore,

because assessments made by the commission against “employing units [are]

prima facie correct,” Ind. Code § 22-4-29-2 (2009), CHP has the burden of

Court of Appeals of Indiana | Opinion 93A02-1503-EX-183 | December 16, 2015   Page 7 of 13
      demonstrating it proved the nurses and phlebotomists at issue met all three

      factors in that test.

[7]   The first factor that an employing unit must demonstrate to prove a worker is

      not an employee is that the worker is “free from control and direction in

      connection with the performance of such service, both under the individual’s

      contract of service and in fact.” Ind. Code § 22-4-8-1(b)(1). To meet this

      requirement “requires more than the mere power to have the [workers] cease

      their performance of the service upon a showing that such service was not being

      performed in the manner in which it should be performed.” Alumiwall Corp. v.

      Indiana Emp’t Sec. Bd., 130 Ind. App. 535, 541, 167 N.E.2d 60, 62 (1960).

      Instead, the employer must exert “some control and direction over the manner,

      method and means in which the services are performed.” Id. “What

      constitutes control and direction under the statute is a factual question. Each

      case must be decided upon its own particular facts.” Norman A. Boerger Ins., Inc

      v. Indiana Emp’t Sec. Bd., 158 Ind. App. 154, 158, 301 N.E.2d 797, 800 (1973).

[8]   The LALJ concluded “the nurses and phlebotomists at issue were not free from

      direction and control in contract and in fact.” (App. at 5.) She explained:

              The [LALJ] notes that the reason for the service is to gather
              health information and to inform individuals receiving health
              screenings. The employer’s contract, however, directs the
              manner and/or method by which the individuals perform the
              health screenings and consultations. Indeed, the Description of
              Services document for health screenings instructs the nurses and
              phlebotomists to set up the screening in an efficient manner,
              collect money, start discussions with client employees, show the

      Court of Appeals of Indiana | Opinion 93A02-1503-EX-183 | December 16, 2015   Page 8 of 13
        employees how to complete the employer’s computer
        questionnaire, tear down and clean up the screening room, and
        provide customer service. See Department’s Ex. 6.

        Likewise, the Description of Services document for personal
        consultations requires nurses to discuss preventative tests, discuss
        the participant’s health record and applicable company benefits,
        and set goals for healthier living, etc. See Department’s Ex. 5.
        Per the Description of Services document, the nurse consultant is
        also responsible for giving out pamphlets, filling out a no
        show/show list, gathering contact info and goals for at risk
        clients and recording. The Description of Services documents do
        more than list information that the individuals must gather or list
        services; it directs the individuals on how to conduct the
        screenings and consultations. Therefore, the [ALJ] concludes
        that individuals at issue were not free from the employer’s
        direction and control in contract.

(Id. at 7.) Her order also included the following pertinent findings of fact:

        When the employer performs the health screenings, the employer
        hires licensed registered nurses and certified phlebotomists to do
        so. The employer also hires licensed nurses to conduct personal
        consultations to discuss the results of a questionnaire and
        biometric screening with its clients’ employees, when that service
        is selected by the client. The employer generally hires nurses that
        are employed by other entities, such as hospitals and, typically,
        finds them by word of mouth. See Department’s Ex. 3. The
        employer is unaware as to whether the nurses and phlebotomists
        offer services to other entities as independent contractors.

        Each nurse and phlebotomist is required to sign an Independent
        Contractor Agreement (agreement) with the employer. Per the
        agreement, the nurses and phlebotomists agree to provide
        services listed in a Description of Services document and are paid

Court of Appeals of Indiana | Opinion 93A02-1503-EX-183 | December 16, 2015   Page 9 of 13
              an hourly rate for hours worked that are billable to the employer
              or its clients. See Department’s Ex. 6. The agreement also states
              that the nurses and phlebotomists are entitled to reimbursement
              for travel and other expenses incurred in providing services.

              The Description of Services document for either the health
              screening or the personal consultation is attached to the
              agreement, as Exhibit A. See Department’s Ex. 5, 6. For a
              health screening, nurses are to perform eighteen (18) different
              steps, including “Setup screening in an efficient manner[;] …
              Facilitate discussion of recommended tests if applicable[;]
              …Collect money for additional tests if applicable[;] … Measure
              the participant’s height and weight[;] … Measure the
              participant’s blood pressure and heart rate[;] … Direct individual
              as needed on how to complete the computer questionnaire[;] …
              Properly tear down and restore the room to before screening
              state; … Provide quality customer service throughout the
              contracted time[.]” See Department’s Ex. 6.

              For a personal consultation, nurses should review health
              screening results, discuss preventative tests, discuss the
              participant’s health record and applicable company benefits, and
              set goals for healthier living, etc. See Department’s Ex. 5. The
              consultation is also supposed to include a discussion of exercise,
              weight, stress, and family preventative health. The consultant is
              responsible for giving out pamphlets, filling out a no show/show
              list, gathering contact info and goals for at risk clients and
              recording, etc. See Department’s Ex. 5.

      (Id. at 4) (italics in original).

[9]   CHP argues “the undisputed evidence reveals” the workers at issue were like

      the workers in Alumiwall, 130 Ind. App. 535, 167 N.E.2d 60, and Twin States

      Publ’g Co., Inc. v. Indiana Unemployment Ins. Bd., 678 N.E.2d 110 (Ind. Ct. App.

      Court of Appeals of Indiana | Opinion 93A02-1503-EX-183 | December 16, 2015   Page 10 of 13
       1997), trans. denied, two cases in which we held LALJs incorrectly determined

       workers were employees. (Br. of Appellant at 10.) We disagree.

[10]   Alumiwall was a siding and roofing business that sold and supplied the

       materials to be attached to the exterior of buildings. After selling materials to a

       customer, Alumiwall contracted with an “applicator” to attach the materials to

       the building. 130 Ind. App. at 537, 167 N.E.2d at 60. The contracted

       applicator could hire as many workers as desired at whatever pay rate the

       applicator chose, and the applicator had complete discretion as to when and

       how the application was performed. Id. In addition, the applicator provided

       the tools and equipment necessary to perform the work. Id. at 540, 167 N.E.2d

       at 62. “The only restriction was that they perform such services in a good and

       workmanlike manner.” Id. at 540-41, 167 N.E.2d at 62. We held the right to

       have the applicators cease work if the service was not being done in a

       workmanlike manner was not the statutory “direction and control” over

       workers that made them employees because an expectation of workmanlike

       performance “is inherent in all services performed by one for another.” Id. at

       541, 167 N.E.2d at 62.

[11]   Twin States Publishing Company printed newspapers and shopping guides that

       it then hired individuals to deliver. Twin States, 678 N.E.2d at 111. Those

       individuals had approximately twenty-four hours to deliver the publications

       using any method or means, and they could hire others to help complete

       deliveries. On appeal, we reversed the LALJ’s determination that those

       delivery people were employees for purposes of Ind. Code § 22-4-8-1 because:

       Court of Appeals of Indiana | Opinion 93A02-1503-EX-183 | December 16, 2015   Page 11 of 13
               They have complete discretion over the manner, method and
               means of performing their work. The only restrictions are that
               the carriers deliver the guides by 5:00 p.m. on Tuesdays, place
               the guides in a dry place, and perform their services in a
               workmanlike manner.

       678 N.E.2d at 114.

[12]   The nurses and phlebotomists who contracted to work for CHP had more

       restrictions on them than just performing in a workmanlike manner, although

       they were required to so perform. (See, e.g., Ex. 6 at 5) (“Provide quality

       customer service throughout contracted time”). They were not simply told to

       conduct a health screening or “collect biometric information,” (id.), and then

       left to their own devices. Rather, they were given eighteen specific steps to

       complete. (Id.) Furthermore, as the first step is to “1. Setup screening in an

       efficient manner,” (id.), and one of the last is to “16. Properly tear down and

       restore room to before screening state,” (id.), one could reasonably infer the

       eighteen steps are listed in the order they are to be completed during the health

       screening. The workers in Alumiwall and Twin States could hire others to

       complete the contracted work for them, but there is no indication those

       contracted to work for CHP could send others to complete the work. Nor could

       those nurses and phlebotomists conduct the screenings at times other than the

       hours scheduled for the screenings. The facts in this case are not like those in

       Alumiwall and Twin States, and we see no error in the LALJ’s conclusion the

       phlebotomists and nurses were not free of CHP’s direction and control.

       Court of Appeals of Indiana | Opinion 93A02-1503-EX-183 | December 16, 2015   Page 12 of 13
[13]   As a business must meet all three of the factors in Ind. Code § 22-4-8-1 in order

       to prove a worker is not an employee, CHP’s inability to prove the LALJ erred

       as to the first factor is sufficient to require us to affirm the LALJ’s decision.

       See Bloomington Area Arts Council, 821 N.E.2d at 849 (all workers presumed to be

       employees until employer demonstrates all three statutory factors).

                                                  Conclusion
[14]   The evidence supports the LALJ’s findings, and those findings support the

       LALJ’s conclusion “the nurses and phlebotomists at issue were not free from

       direction and control in contract and in fact.” (App. at 20.) Accordingly, we

       affirm.

[15]   Affirmed.

       Crone, J., and Bradford, J., concur.

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