WORKERS’ COMPENSATION

Arizona Court of Appeals (2008)  Exercise rider an employee for purpose of workers’ compensation.

Hernandez v. Industrial Commission of Arizona

Exercise rider an employee for purpose of workers’ compensation.  ADDED XXXXX 2008

Hernandez v. Industrial Commission of Arizona

Court of Appeals of Arizona, Division 1, Department C.

2008 WL 2410207

UNPUBLISHED OPINION

June 10, 2008

Summary of Opinion

This case involves a review of an Industrial Commission of Arizona award to an injured exercise rider.  The rider worked as an exercise rider at Turf Paradise and was aboard a horse from Hernandez  stable that veered into the rail surrounding the track.  The rider filed a workers’ compensation claim which was denied.  He timely requested a hearing to decide if he was an employee of Hernandez, hence entitled to benefits, or an independent contractor who would not be entitled to benefits.  The administrative law judge found that the rider was an employee and this court affirms.

Text of Opinion

MEMORANDUM DECISION

This is a special action review of an Industrial Commission of Arizona (“ICA”) award and decision upon review for a compensable claim. The petitioner employer, Raul Hernandez (“Hernandez”), presents three issues on appeal:

(1) whether the respondent employee (“claimant”) was Hernandez's employee at the time of his October 28, 2005 injury;

(2) whether the administrative law judge (“ALJ”) abused his discretion by finding Claimant more credible than Hernandez; and

(3) whether the ALJ's award contains legally sufficient findings for judicial review.

Because we find that the accepted evidence of record supports the ALJ's finding that the respondent employee, Felizardo Carrizosa (“Claimant”), was Hernandez's employee on the date of injury, we affirm the award.

JURISDICTION AND STANDARD OF REVIEW

This court has jurisdiction pursuant to Arizona Revised Statutes (“A.R.S.”) sections 12-120.21(A)(2) (2003), 23-951(A) (1995), and Arizona Rule of Procedure for Special Actions 10. We consider the evidence in the light most favorable to upholding the award. Lovitch v. Indus. Comm'n, 202 Ariz. 102, 105, ¶ 16, 41 P.3d 640, 643 (App.2002). In reviewing findings and awards of the ICA, we defer to the ALJ's factual findings, Young v. Indus. Comm'n, 204 Ariz. 267, 270, ¶ 14, 63 P.3d 298, 301 (App.2003), but review the ALJ's ruling concerning a claimant's employment status de novo as an issue of law.Vance Int'l v. Indus. Comm'n, 191 Ariz. 98, 100, ¶ 6, 952 P.2d 336, 338 (App.1998).

FACTS AND PROCEDURAL HISTORY

On October 28, 2005, Claimant was working as an exercise rider at Turf Paradise. He was injured when the horse he was riding startled and veered into the rail surrounding the track. At the time of his injury, Claimant was riding a horse from Hernandez's stable.

Claimant filed a workers' compensation claim, which was denied for benefits, and he timely requested a hearing. Prior to the ICA hearing, the parties filed various records, regarding Claimant's injuries and his employment with Hernandez. See Arizona Administrative Code R20-5-155. The ALJ then held an ICA hearing on two separate days for testimony from Claimant, Hernandez, horse trainer Jose Luis Marquez, and Turf Paradise's general manager.

Following the hearings, the parties submitted simultaneous post-hearing memoranda. The ALJ then entered an award for a compensable claim, and Hernandez timely requested administrative review. On administrative review, the ALJ supplemented and affirmed the award, and Hernandez brought this appeal.

ANALYSIS

Hernandez first argues that the ALJ erred by finding that Claimant was his employee. Whether a worker is an employee or an independent contractor is governed by A.R.S. § 23-902 (2005) which provides in pertinent part:

B. When an employer procures work to be done for the employer by a contractor over whose work the employer retains supervision or control, and the work is a part or process in the trade or business of the employer, then the contractors and the contractor's employees, and any subcontractor and the subcontractor's employees, are, within the meaning of this section, employees of the original employer. For the purposes of this subsection, “part or process in the trade or business of the employer” means a particular work activity that in the context of an ongoing and integral business process is regular, ordinary or routine in the operation of the business or is routinely done through the business' own employees.

C. A person engaged in work for a business, and who while so engaged is independent of that business in the execution of the work and not subject to the rule or control of the business for which the work is done, but is engaged only in the performance of a definite job or piece of work, and is subordinate to that business only in effecting a result in accordance with that business design, is an independent contractor.

In determining whether a particular claimant falls within the statutory definition of an employee, courts look to the totality of the circumstances of the work and examine various indicia of control. See Reed v. Indus. Comm'n, 23 Ariz.App. 591, 593, 534 P.2d 1090, 1092 (1975). These indicia of control include “the duration of the employment; the method of payment; who furnishes necessary equipment; the right to hire and fire; who bears responsibility for workman's compensation insurance; the extent to which the employer may exercise control over the details of the work, and whether the work was performed in the usual and regular course of the employer's business.”Home Ins. Co. v. Indus. Comm'n, 123 Ariz. 348, 350, 599 P.2d 801, 803 (1979).

In their workers' compensation treatise, Professors Larson note that it is the ultimate right of control, under the agreement with the employee, not the overt exercise of that right, which is decisive. 3 Arthur Larson & Lex K. Larson, Larson's Workers' Compensation Law,  § 61.02 at 61-3 (Supp.2007).“[A] worker who is regularly employed in the business of an employer is an ‘employee’ for the purposes of workers' compensation unless the worker is not subject to the employer's control, and is hired only to perform a definite job, and is subordinate solely in effecting a desired result.”Cent. Mgmt. Co. v. Indus. Comm'n, 162 Ariz. 187, 190, 781 P.2d 1374, 1377 (App.1989).

Because of the remedial nature of the Arizona Worker's Compensation Act, the definition of an employee is liberally construed. Hughes v. Indus. Comm'n, 113 Ariz. 517, 519, 558 P.2d 11, 13 (1976). This court makes an independent determination of whether a claimant is an employee or an independent contractor as a conclusion of law. Anton v. Indus. Comm'n, 141 Ariz. 566, 569, 688 P.2d 192, 195 (App.1984).

Claimant and horse trainer Hernandez presented substantially conflicting evidence regarding the various indicia of control. The ALJ resolved these conflicts in favor of Claimant's testimony, and it is necessary for this court to review the evidence of control in light of that resolution.

Claimant testified that he first met Hernandez at the race track in 1998. Hernandez hired Claimant to come to his ranch in Coolidge and work for him during the non-racing season, December to May. Claimant testified that his duties at the ranch included getting horses ready to ride, i.e., saddling, walking, and bathing, in addition to exercise riding. He stated that after May, Hernandez moved his horses, people, and equipment to Yavapai Downs in Prescott.

At Yavapai, Claimant slept in Hernandez's stables. He worked for Hernandez on a daily basis, exercising and brushing horses, cleaning saddles, and taking horses from the stables to the paddock at the track. Claimant testified he worked from a list that Hernandez posted each day with the names of the horses and a description of what needed to be done with each horse that day. Claimant also stated that he occasionally exercised horses for other trainers, but he testified that he only did so when he had Hernandez's permission and he had finished his work for Hernandez. Claimant testified that in September, Hernandez moved his operations to Turf Paradise in Phoenix, but the daily routine remained the same.

With regard to the method of payment, both Claimant and Hernandez testified that between January and May, while they were working at the ranch, the Claimant was paid $350 to $400 per week by check with no deductions. Copies of several checks from January 2001 were placed in evidence, each payable to Claimant in the amount of $300. An April 20, 2004 letter authored by Hernandez also was placed in evidence and stated that he employed Claimant and paid him $350 per week. At the racetracks, Claimant was paid $10.00 for each horse that he exercised and $20.00 for each horse that he took to the paddock to race. Claimant testified that he did not have a regular payday at the track, and he was paid both by check and in cash.

With regard to who furnished necessary equipment, Hernandez provided the horses, saddles, and bridles and all the equipment necessary to set up his stables at the different race tracks. Claimant provided his own helmet, whip, chaps, boots, and vest. With regard to the right to hire and fire an exercise rider, both Hernandez and Marquez testified that they selected their own exercise riders, and if they did not like the job a rider did, they would not use him again.

With regard to workers' compensation insurance, Hernandez testified that he had signed a Turf Paradise stall application which required him to have workers' compensation insurance for his employees. He stated that he now carried workers' compensation insurance for his grooms, but not his exercise riders, because he did not believe that they were his employees. Marquez testified that workers' compensation insurance was a subject of conversation among horse trainers at the tracks, but that most didn't carry insurance for exercise riders because they couldn't afford it.

With regard to the extent that Hernandez could control the details of Claimant's work, both Claimant and Hernandez testified that each day Hernandez posted a list of horses at the barn and detailed what type of work should be done by the exercise rider with that horse, i.e., jog, break, gallop, etc. Hernandez first testified that he told his exercise riders what he wanted them to do with each horse. But when later recalled, he testified that he did not watch the riders or tell them what to do, because they are licensed and know their jobs.

With regard to whether using exercise riders was in the usual and regular course of his business, Hernandez initially testified that as a trainer of young horses, part of preparing the horses to race required the use of a licensed exercise rider. He explained that training required teaching the horses to walk, gallop and run. When he subsequently was recalled to testify, Hernandez downplayed the role of exercise riders stating that he actually could have used the equine pool at the track or trotting machines to accomplish their job.

The record contained a 2005 W-2 issued to Claimant by Hernandez that stated he paid Claimant $11,647.04 and withheld both social security and medicare taxes. Hernandez explained that when he applied for citizenship, it was discovered that he was behind on his taxes. In order to clear up the tax issue, he retained a tax attorney and an accountant and they were responsible for issuing Claimant four years of W-2's.

Based on the ALJ's resolution of the evidentiary conflicts and credibility determinations, we find reasonable evidence in the record to support the finding that Claimant was Hernandez's employee.

Hernandez next argues that the ALJ abused his discretion by finding Claimant credible. It is well settled in Arizona that the ALJ “is the sole judge of witness credibility”.Holding v. Indus. Comm'n, 139 Ariz. 548, 551, 679 P.2d 571, 574 (1984). We have found only two situations in which an ALJ's credibility determination has been questioned: first, when there was a lack of opportunity to observe a witness deemed incredible, Adams v. Indus. Comm'n, 147 Ariz. 418, 422, 710 P.2d 1073, 1077 (App.1985); and second, when the ALJ arbitrarily rejected uncontradicted testimony which was corroborated by a disinterested witness. Ratley v. Indus. Comm'n, 74 Ariz. 347, 350, 248 P.2d 997, 998-99 (1952).

Although an ALJ “may not reject a claimant's testimony simply because it is self-interested, he may reject it if it is self-contradictory, inconsistent with other evidence, or directly impeached.”Holding, 139 Ariz. at 551, 679 P.2d at 574. It is the ALJ's duty to resolve conflicts in the evidence and to draw all warranted inferences, and this court will not disturb an ALJ's conclusion unless it is wholly unreasonable. Malinski v. Indus. Comm'n, 103 Ariz. 213, 217, 439 P.2d 485, 489 (1968).

In this case, Hernandez argues that the ALJ should have rejected Claimant's testimony because at the ICA hearing, he conceded that he had used cocaine before the accident, but he had denied this at the time of his deposition. In resolving inconsistencies in a witness' testimony, the ALJ “may accept as true either statement, or, on account of the discrepancy, may disregard the testimony of the witness entirely.”Royal Globe Ins. Co. v. Indus. Comm'n, 20 Ariz.App. 432, 435, 513 P.2d 970, 973 (1973). In this case, the ALJ implicitly found this inconsistency not fatal to Claimant's credibility. We do not believe that this constitutes an abuse of discretion. The law permits the ALJ to accept as credible Claimant's testimony about his relationship with Hernandez, notwithstanding his conflicting testimony about cocaine use.