Schmidt, Sethi & Akmajian Blog

Torts/Workers’ Comp—Employee vs Independent Contractor

Posted by Ted A. Schmidt | May 03, 2017 | 0 Comments

Wagner v. State, 763 Ariz. Adv. Rep. 32 (App. Div. I, April 20, 2017) (J. Cattani)


Wexford Health Services [Wexford]staffed the Arizona Department of Corrections [ADC] with clinical social workers at a state run prison.  Plaintiff was one such social worker who slipped and fell on the job, collected workers' compensation from Wexford and then sued the State of Arizona for negligence.  The trial court granted the state summary judgment finding the plaintiff a statutory employee of the state whose exclusive remedy was workers' compensation.  The Arizona Court of Appeals affirmed.  

Plaintiff argued she was not an employee of the state because the state did not have sufficient control over her work and Wexford's  work was not a “part or process of ADC's trade or business”. Further the contract between Wexford and the ADC specifically provided neither Wexford nor its employees should be considered employees of the state “under any circumstances.”  The court of appeals disagreed stating it  looks beyond the label the parties place on the relationship in determining employee status.

Under A.R.S. §23-902(B), the question is not whether the ADC exercised control over the plaintiff but rather whether it exercised control over the independent contractor Wexford-- retained the right to control or supervise [Wexford's] methods of obtaining a specific result."

In assessing whether an entity exercises adequate supervision or control, the court considers the totality of the circumstances, including the following factors:

(a) the duration of the employment;

(b) the method of payment;

(c) who furnishes necessary equipment;

(d) the right to hire and fire;

(e) who bears responsibility for work[ers'] compensation insurance;

(f) the extent to which the employer may exercise control over the details of the work;

(g) and whether the work was performed in the usual and regular course of the employer's business.

Here the court found adequate control to make the plaintiff a statutory employer of the state based upon the fact the ADC provided and maintained the facilities and fixtures for providing health care to inmates, retained the power to approve hires and terminations of Wexford staff, retained full access and the right to monitor Wexford's staff, their work areas, work product, correspondence and reports, and to assure compliance with ADC mandated procedures ultimately to assure the needs of the inmates were being met. While Wexford provided the workers' compensation insurance this was only because the ADC contractually required it to do so.

Finally, the court found ADC has an ongoing duty to ensure that inmates receive adequate health services statutorily (A.R.S. §31-201.01(D)) and constitutionally (Estelle v. Gamble, 429 U.S. 97, 104 (1976) (holding that "deliberate indifference to serious medical needs of prisoners" violates the Eighth Amendment). Thus the work performed by Wexford was indeed a “part or process of the trade and business” of the ADC.

About the Author

Ted A. Schmidt

Ted's early career as a trial attorney began on the other side of the fence, in the offices of a major insurance defense firm. It was there that Ted acquired the experience, the skills and the special insight into defense strategy that have served him so well in the field of personal injury law. Notable among his successful verdicts was the landmark Sparks vs. Republic National Life Insurance Company case, a $4.5 million award to Ted's client. To this day, it is the defining case for insurance bad faith, and yet it is only one of several other multi-million dollar jury judgments won by Ted during his career. He is certified by the State Bar of Arizona as a specialist in "wrongful death and bodily injury litigation".


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