LOWER APPEALS DECISION
|IN THE MATTER OF THE APPEAL OF:
Pennsylvania Manufacturers Assoc. Insurance Company
|Decision No.: 3-EA-86
Date: September 17, 1984
Exec. Determ. No.: 4603
Emp. Account No.:
Issue: Whether charges for unemployment insurance benefits paid to
Nancy I. Lee and Ann D. Hopper may be assessed to Account No.
NOTICE OF RIGHT OF FURTHER APPEAL
ANY INTERESTED PARTY TO THIS DECISION MAY REQUEST A FURTHER APPEAL AND SUCH APPEAL MAY BE FILED
IN ANY EMPLOYMENT SECURITY OFFICE, OR WITH THE APPEALS DIVISION, ROOM 515, 1100 NORTH EUTAW STREET, BALTIMORE,
MARYLAND 21201, EITHER IN PERSON OR BY MAIL
THE PERIOD FOR FILING A FURTHER APPEAL EXPIRES AT MIDNIGHT ON October 2, 1984
|For the Appellant:
Mary Louise D. MacMullan, Attorney;
Carol Rusnak, Witness
Joseph Hornig, Rehabilitation Mgr
| For the Secretary:
John Kleylein, Super., Field Investigation and Audit
FINDINGS OF FACT
The employer in this case was the carrier of Workmen's Compensation Insurance for its client, Floyd Culler, an
employer in the Frederick, Maryland area. An employee of Floyd Culler, Robert Matthews, had a severe work-connected
injury and became a third-party beneficiary of the workmen's compensation policy issued by Pennsylvania
Manufacturers Association Insurance Company (hereinafter called PMA). Robert Matthews was rendered a paraplegic by
the accident and required 24-hour borne care for an indefinite time which was expected to extend for the remainder
of his life.
Under the terms of the policy, PMA was responsible for the costs of this care. The patient's wife obtained the services
of an attendant, Charles Jackson, who initiated the home care system and ostensibly served as a defacto administrator.
Because of the 24-hour care requirement other nursing assistants were needed and to secure such services Mrs. Matthews
placed an advertisement in a local newspaper and obtained the services of Ann D. Hopper and Nancy I. Lee, among others.
Prior to beginning work, all persons providing home care did so under an agreement that they were in a "self-employment
status and were specifically provided with IRS instructions for self-employed persons.
The cost of these services ran to $1,200-1,500 weekly and it was beyond the financial capacity of the patient to
advance such funds and seek later reimbursement by the insurer. Accordingly, PMA made direct payment to the nurses
aides without "filtering" the funds through the patient, Charles Matthews. Subsequently, the two nurses aides above
named filed for and received unemployment insurance benefits upon their cessation of services for unspecified
reasons . Charges for these benefits were made against the account of PMA and excepted to by the employer in a
protest filed July 12, 1983. A review determination was prepared on March 2, 1984 which provided that PMA "chose to
become the employer by directly dispersing checks to the nurses aides in lieu of paying a lump sum claim to Robert
Matthews or engaging a private medical service to provide the care . . ."
From this review determination, PMA appeals. It is noted that the last day for filing an appeal is stated in
Agency Exhibit No. 1 to be March 23, 1984 and the request for appeal is dated April 4, 1984. However, evidence
produced by the agency at the hearing shows that the original notification was 'undated and did not constitute
adequate notice of the time for filing an appeal. The agency does not raise the issue of time on this and proceeds
on the merits of the case.
CONCLUSION OF LAW
In view of the apparent irregularity in notification of appeal date, it will be held that the employer filed a
technically late appeal, but with good cause. (See, Premick v. Roper Eastern, 141-BR-83.)
The issue on appeal is whether charges for unemployment insurance benefits paid to Nancy I. Lee and Ann D. Hopper may
be assessed to the account number 00 491345 09 of PMA, under the provisions of Article 95A, §8(g) Annotated Code of
Maryland. Clearly, the greater, and determining, issue is whether PMA was the employer of Lee and Hopper.
It is basic that the relationship of employer and employee arises from a contract (see,
East Coast Freight Lines v. Maryland City Council of Baltimore, 58 A.2d 290), and obviously the first step is to
look for the existence of a contractual relationship between PMA and the two nursing aides. Two of the several basic
elements of contract are mutuality and privity. It is hard to assert mutuality or meeting of the minds between the nursing
aides who may not immediately have been aware of the existence of PMA. They dealt exclusively with Mr. Jackson and Mrs.
Matthews and entered into no employment contract with PMA, thus precluding any privity of contract between them. If, for
example, they had been refused payment for services rendered, would they have had a cause of action against PMA for breech
of an employment contract? Possibly construed as third-party beneficiaries they may have, but that circumstance in itself
is insufficient to establish an employment contract between the aides and PMA. It seems highly unlikely on these facts
that any contract between the aides and PMA can be construed.
Further, the meeting of the minds according to evidence in the record is that the nursing aides were to be
self-employed. Thus, it seems clear that there was no employment agreement, expressed or implied, between PMA and the
Did the aides hold the status of independent contractors? It is generally accepted that an independent contractor is
one who undertakes to do a particular piece of work by his own means and methods without being subject to control by the
contracted, except with regards to the result of the work performed. (See, Greer Lines Company v. Roberts,
139 A.2d 235 and the cases cited therein). That is, if the party is not under close supervision or control he is generally
an independent contractor. Another test of an independent contractor is whether the work performed is part of the regular
business activities of the employer (see, Keitz v. National Paving, 134 A.2d 296). Under these facts, nursing
services are not part of the regular business of an insurance company. The most conclusive test is that an employer is not
only concerned with what is done but how it is done through continuing control and supervision (see,
Globe Indemnity Co. v. Victill Corp., 119 A.2d 423).
It is noted that the agency's contention that PMA pay a lump sum settlement to Mr. Matthews would amount to a violation
of Maryland Workmen's Compensation law in view of PMA's continuing indefinite obligation.
A consideration of the evidence in this case supports conclusions that: (1) there was no intention of an employment
contract between the nursing aides and PMA; and, (2) that the intention of the parties was clear that the aides were to be
engaged as self-employed independent contractors.
It is held that Nancy I. Lee and Ann D. Hopper were not employees of Pennsylvania Manufacturers Insurance Company and
the employer account number 00 491345 09 is not chargeable with benefits paid to these claimants.
Louis Wm. Steinwedel
Date of Hearing: August 13, 1984
COPIES MAILED TO:
Dr. Brent Johnson - Secretary
Joel Lee - Assistant Secretary
M. C. Ashley - U. I. Director
John Roberts - Legal Counsel
Anthony Monaco - Field Investigation
Jack Hand - Chief of Contributions
Jerry Placek - Room 411