PharmFlex, Inc. v. Division of Employment Sec.
| Decision Date | 30 September 1997 |
| Docket Number | No. WD,WD |
| Citation | 964 S.W.2d 825 |
| Parties | PHARMFLEX, INC., Appellant, v. DIVISION OF EMPLOYMENT SECURITY, Respondents. 53233. |
| Court | Missouri Court of Appeals |
Henry Thomas Herschel, Jefferson City, for Appellant.
Sharon Ann Willis, Div. of Employment Security, Kansas City, for Respondent.
Before BRECKENRIDGE, P.J., and SMART and LAURA DENVIR STITH, JJ.
PharmFlex, Inc., appeals from the Labor and Industrial Relations Commission's ruling that PharmFlex did not show good cause to extend the time period to appeal the determination by a deputy of the Division of Employment Security that PharmFlex was liable for unemployment taxes. The Commission's decision was based upon 8 CSR 10-5.040(4), which defines "good cause" as "those circumstances which are completely beyond the reasonable control of the party and then only if that party acts as soon as practical under the circumstances." On appeal, PharmFlex contends that this regulation violates the intent of the legislature because the regulation is more restrictive than the legislature intended and modifies the meaning of "good cause" as used in § 288.130, RSMo 1994. 1 Alternatively PharmFlex claims that the Commission abused its discretion because its decision that PharmFlex failed to demonstrate good cause was not supported by the evidence.
Because the definition of "good cause" in 8 CSR 10-5.040(4) is in conflict with the legislative intention of § 288.130.4, the regulation is invalid as it pertains to that statute. The Commission acted beyond its powers in applying the invalid definition, and its decision that there was no good cause to extend the time period to appeal is reversed. Since the question whether there is good cause is addressed in the first instance to the sound discretion of the administrative agency, the matter is remanded to the Commission for a determination of whether PharmFlex demonstrated good cause to file an untimely appeal under the common law definition of that term.
Unemployment compensation proceedings are governed by Chapter 288, RSMo, the Missouri Employment Security Law. Merick Trucking v. Dept. of Labor & Indus. Rels., 933 S.W.2d 938, 940 (Mo.App.1996). Under § 288.210, RSMo Supp.1996, decisions of the Labor and Industrial Relations Commission are appealed directly to the appellate courts. An appellate court may modify, reverse, remand for rehearing, or set aside a decision of the Commission only on the following grounds:
(1) That the commission acted without or in excess of its powers;
(2) That the decision was procured by fraud;
(3) That the facts found by the commission do not support the award; or
(4) That there was no sufficient competent evidence in the record to warrant the making of the award.
Section 288.210, RSMo Supp.1996. See also Merick Trucking, 933 S.W.2d at 940; Bartsch v. Moore, 931 S.W.2d 877, 879 (Mo.App.1996). Findings of fact by the Commission, if supported by competent and substantial evidence and in the absence of fraud, are conclusive and the appellate court's jurisdiction is limited to questions of law. Section 288.210, RSMo Supp.1996. Therefore,
Findings and awards of the Commission which are clearly the interpretation or application of the law, as distinguished from a determination of facts, are not binding on the court and fall within the court's province of independent review and correction where erroneous. And, where the findings of ultimate fact are reached not by a process of natural reasoning from the facts alone, but rather by application of law, it is a conclusion of law and subject to reversal by the court.
Davis v. Research Medical Center, 903 S.W.2d 557, 571 (Mo.App.1995). Thus, to the extent this appeal involves questions of law, no deference is given to the Commission. Nell v. Division of Employment Sec., 952 S.W.2d 749, 752 (Mo.App.1997). To the extent the appeal involves evaluating evidence relative to the Commission's findings, however, "we may not substitute our judgment on the evidence for that of the Commission, and we defer to the Commission's determinations regarding the weight of the evidence and the credibility of witnesses." Id. at 752.
The evidence before the Commission was that PharmFlex was a Pennsylvania-based corporation which provided sales and marketing support to pharmaceutical companies by utilizing sales representatives to contact physicians with information about the pharmaceutical company's products. Jennifer Bibik, a PharmFlex sales representative, worked for PharmFlex under a contract titled "Independent Contractor Agreement." PharmFlex did not pay unemployment taxes on her.
When Ms. Bibik left the employ of PharmFlex, she filed for unemployment benefits with the Division of Employment Security. Her application caused the Division to investigate whether PharmFlex was liable for unemployment taxes. At the conclusion of the investigation, PharmFlex received a "Determination of Liability" from a Deputy of the Division informing it that, based on the Division's investigation, Ms. Bibik performed services for "wages" in her "employment" by PharmFlex, as those terms are defined in Chapter 288. Thus, PharmFlex was found to be an "employer" subject to the Missouri unemployment security law and was assigned an unemployment tax contribution rate for each year from 1994 through 1996.
The determination of liability was mailed to PharmFlex on Monday, November 13, 1995, and it was received by PharmFlex on Friday, November 17, 1995. The letter informed PharmFlex that the Deputy's determination would become final "fifteen days after the date of mailing unless, within such fifteen days, a signed, written request for hearing is filed with this Division setting forth in detail your objections." On December 1, 1995, three days after the November 28th deadline, PharmFlex filed its request for a hearing before the Appeals Tribunal of the Division.
As a result of this request, the Appeals Tribunal held an evidentiary hearing by telephone to determine two issues: (1) whether PharmFlex had good cause to file a late appeal; and (2) whether Ms. Bibik was an employee of PharmFlex or an independent contractor. Testifying on behalf of PharmFlex were George Mellilo, the president and chief executive officer; Mr. Mellilo's daughter, Laura Mellilo, the vice president of finance; and Robert Downey, an accountant for PharmFlex. Mr. Mellilo was absent from the office throughout the entire fifteen-day appeal period, so he testified mainly about the business relationship between PharmFlex and Ms. Bibik.
Since Ms. Mellilo authored the appeal letter requesting the hearing, the appeals referee questioned her about the circumstances surrounding the late filing of the appeal. At the time the letter was sent, Ms. Mellilo was the associate director for finance and new business development for PharmFlex. The appeal letter explained that several factors prevented PharmFlex from filing a timely appeal from the determination of liability, including the closing of the office during the Thanksgiving holiday weekend, business travel, and an unexpected death in the family. Ms. Mellilo testified that she was absent from the office on Friday, November 17, when the determination of liability arrived at PharmFlex. She was unsure of her whereabouts on Monday, Tuesday and Wednesday, November 20, 21 and 22. The office was closed on Thursday and Friday, November 23 and 24, for the Thanksgiving weekend. Ms. Mellilo was in the office on Monday, November 27. That afternoon, she was notified that her father's uncle in Connecticut had passed away and she left for the funeral to accompany Mr. Mellilo. The first day Ms. Mellilo and her father were in the office after the funeral was December 1st, the day the request for a hearing was prepared and mailed.
The threshold issue which the Appeals Tribunal addressed was whether PharmFlex demonstrated good cause, within the meaning of § 288.130.4, to extend the fifteen-day time period available to file an appeal under § 288.130.3. Section 288.130, establishing the procedure for an appeal from an administrative determination of liability, provides in part:
3. A deputy shall make an ex parte determination after investigation but without hearing with respect to any matter pertaining to the liability of an employing unit which does not involve a claimant. The deputy shall promptly notify any interested employing units of each such determination and the reason for it. The division shall grant a hearing before an appeals tribunal to any employing unit appealing from any such ex parte determination provided an appeal is filed in writing within fifteen days following the date of notification or the mailing of such determination to the party's last known address. In the absence of an appeal any such determination shall become final at the expiration of a fifteen-day period.... 2
4. The fifteen-day period provided in subsection 3 of this section may, for good cause, be extended.
(Emphasis added).
Under subsection 4, the time period to file an appeal may be extended for good cause. The term "good cause" is defined by regulation in 8 CSR 10-5.040(4) For the purposes of sections 288.070.8 and 288.130.4, RSMo, and of [chapter 5 of these regulations], good cause shall be only those circumstances which are completely beyond the reasonable control of the party and then only if that party acts as soon as practical under the circumstances.
(Emphasis added).
The Appeals Tribunal applied the definition of "good cause" provided by 8 CSR 10-5.040(4) to the evidence presented at the hearing and concluded as a matter of law that "[PharmFlex] has not shown to the satisfaction of the Appeals Tribunal that circumstances completely beyond...
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