Emergency Treatment v. Department Emp. Sec.

• Decision Date: 30 September 2009
• Docket Number: No. 1-08-1437.,1-08-1437.
• Citation: 334 Ill.Dec. 538,917 N.E.2d 135
• Parties: EMERGENCY TREATMENT, S.C., Plaintiff-Appellant, v. The DEPARTMENT OF EMPLOYMENT SECURITY, an Administrative agency of the State of Illinois; and Brenda Russell, Director of the Department of Employment Security, Defendants-Appellees.
• Court: United States Appellate Court of Illinois

917 N.E.2d 135

334 Ill.Dec. 538

EMERGENCY TREATMENT, S.C., Plaintiff-Appellant, v. The DEPARTMENT OF EMPLOYMENT SECURITY, an Administrative agency of the State of Illinois; and Brenda Russell, Director of the Department of Employment Security, Defendants-Appellees.

No. 1-08-1437.

Appellate Court of Illinois, First District, Third Division.

September 30, 2009.

Thomas A. Jefson, John J. Pembroke, John J. Pembroke & Associates, LLC, Park Ridge, IL, for Plaintiffs-Appellants.

Lisa Madigan, Attorney General, State of Illinois, Michael A. Scodro, Solicitor General, Paul Racette, Asst. Attorney General, Chicago, IL, for Defendants-Appellees.

Presiding Justice MURPHY delivered the opinion of the court:

On May 16, 2008, the trial court issued judgment affirming the decision of the Director (Director) of the Illinois Department of Employment Security (IDES), that plaintiff, Emergency Treatment, S.C., was required to pay unpaid employer contributions pursuant to the Illinois Unemployment Insurance Act (Act) (820 ILCS 405/100 et seq. (West 2006)). The Director concluded that certain individuals were employees of plaintiff. Therefore, plaintiff was responsible for contributions owed under the Act associated with wages it paid during the four calendar quarters of 2000. The trial court also rejected plaintiff's claim that the decision violated its due process rights. Plaintiff timely appealed and asserts that the Director's final administrative decision was clearly erroneous in finding that the physicians contracted by plaintiff, plaintiff's scheduler, and plaintiff's auditor were employees and not independent contractors. Plaintiff also asserts that the administration of the Act violates due process. For the following reasons, we affirm the Director's decision.

I. BACKGROUND

Plaintiff is an Illinois corporation with offices located at 2142 North Sedgwick Street, Chicago, Illinois. During the calendar year 2000, plaintiff had an exclusive contract with Rush Copley Medical Center (Copley) in Aurora, Illinois, to provide physicians to staff the Copley emergency room. Following a random audit of plaintiff's taxable wages and contributions made during the 2000 tax year, IDES field auditor Mary Thompson determined plaintiff's liability for unemployment insurance contributions exceeded its payments remitted. IDES issued a "Notice of Determination and Assessment and Demand for Payment" to plaintiff on July 26, 2001. IDES demanded the payment of $562.62 for unpaid contributions and $107.84 for statutory interest on that amount, for a total of $670.46.

On August 15, 2001, plaintiff filed a written protest and petition for hearing to determine if the contracted physicians, scheduler and auditor for plaintiff were employees under the Act. A hearing was held on the matter and presided over by the Director's representative, Joseph Nunes. At the hearing, testimony was presented by: the owner and president of plaintiff, Dr. Marshall B. Segal; the scheduler for plaintiff, Mary Deans-O'Claire; a contracted physician for plaintiff, Dr. Alan Rosenberg; the office manager for plaintiff, Rita Ryan; and IDES field auditor Thompson. Additionally, both parties presented documentary evidence in support of their arguments.

1. Contract Between Plaintiff and Copley

On February 23, 1998, plaintiff and Copley entered into a six-year renewable contract for plaintiff to be the exclusive provider of physicians to staff its emergency room department. Under the contract, plaintiff was responsible for recruiting physicians, setting hourly compensation, and creating schedules in order to assure continuous coverage. These monthly schedules were to be submitted to Copley a month in advance to assure coverage.

Physicians contracted by plaintiff were to be qualified and licensed to practice medicine in Illinois as well as obtain medical staff membership in accordance with Copley's bylaws. Physicians' methods were not controlled by Copley. However, all physicians were subject to compliance with Copley's rules and auditing. In addition, plaintiff was required to cause each physician to comply with Copley's continuing education requirements and any applicable laws, rules, or regulations.

Copley was required to supply space to physicians as well as the supplies and support staff necessary to render emergency services. Additionally, Copley provided professional liability insurance to the physicians and indemnification to plaintiff to the limits of its policy. However, it did not include any physicians in its employee insurance or benefit plans or withhold payment of any income taxes. Copley also represented that it would not hire any physicians associated with plaintiff within 15 months of that relationship.

In addition, the contract named Rosenberg medical director of the emergency department. Specific responsibilities were laid out for the medical director and his relationship with Copley. Rosenberg was required to be accountable to Copley for nonmedical tasks and authorized to provide and implement a long list of services to Copley and its emergency department. Among the listed responsibilities, the medical director was to take part in staffing decisions, serve as liaison between physicians and Copley staff, and perform evaluations of nursing staff and emergency physicians.

2. Physician Contracts With Plaintiff

During the year 2000, 15 physicians were under contract to plaintiff. Each physician entered into the relationship with plaintiff under plaintiff's form "Independent Contractor Agreement" (Agreement) for automatically renewable one-year terms. The Agreement stated that it was expressly understood between the parties that the physician was to perform services as an independent contractor, not as an employee of plaintiff or Copley. However, the physician was to comply with the terms of the contract between plaintiff and Copley. This included the completion and documentation of continuing medical education, maintaining medical staff privileges at Copley, and attending meetings and trainings held by plaintiff and Copley. The Agreement provides that, upon request, plaintiff would provide assistance in securing medical staff privileges. As noted above, the contract between plaintiff and Copley established several additional duties for the medical director, including oversight of the physician staff, serving as liaison between groups, and overseeing the peer-review process for physicians.

The Agreement provided that the physician could be terminated by plaintiff, with or without cause. Additionally, several specific circumstances were listed that would lead to termination. The physician was free to pursue employment outside of his or her responsibility with Copley; however, the Agreement required prior notice to plaintiff of such employment. The physician was obligated under the Agreement to give plaintiff first priority over any other commitments and the submission for approval by plaintiff allowed it to review the request to assure that the physician would continue to meet the contractual requirements. The physician was not permitted to provide continuing treatment at Copley and if the physician's tenure with plaintiff ended, the Agreement barred employment with Copley for three years after the term of the Agreement.

Attached to the Agreement was an 11-page document detailing the scheduling principles and guidelines. The physician was granted discretion in completing schedule requests that were filled out monthly and faxed to the scheduler. However, under the Agreement, the scheduler was charged with creating the schedule and granting time off based as closely as possible to submitted requests.

The physician was required to submit monthly time sheets to plaintiff's auditor. After the auditor reviewed time sheets, the physician was paid on the fifteenth of the month after services were rendered. The physician maintained responsibility to pay all applicable taxes and contributions. Under the Agreement, the physician was to earn a professional fee of $123 an hour. The physician could earn a $2-an-hour bonus for providing 2,000 hours of service and plaintiff would provide an annual federal tax statement Form 1099 or the equivalent. A $100 "scheduling coordinator fee" could be earned for picking up a shift at the request of the scheduler after the monthly schedule had been completed. Plaintiff did not provide any workers' compensation, retirement benefits, vacation or sick pay, personal leave, holidays or insurance benefits.

3. Administrative Hearing

At the administrative hearing, testimony was presented regarding plaintiff's operations and the duties and responsibilities of the scheduler, auditor, and physicians. The testimony explained the provisions of the Agreement outlined above. Testimony was provided that several physicians maintained employment at other hospitals during the pendency of their contracts with plaintiff. While the Agreement grants plaintiff the authority to discharge a physician at-will, testimony indicated that it could not terminate a physician mid-month. However, Copley could effectively do so at any time by revoking medical privileges to that physician.

Extensive testimony was presented regarding the scheduler. The scheduler did not have a contract and worked under an at-will arrangement for a monthly fee of $3,333. The scheduler worked out of her home and was allowed to work for other employers. During 2000, the scheduler worked both as a travel agent and as a scheduler for a separate group of physicians. While the scheduler set up her own home office, plaintiff provided her a separate phone line and answering service. Plaintiff also reimbursed her for office expenses such as photocopies, messenger services, and postage.

The scheduler was trained by her predecessor and she trained another woman herself in case she was required to be away for a period of time. As noted above, the scheduler was to be available to...