AZ Horseman's/Travelers v. ICA/ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Hernandez/Special Fund

Annotate this Case

Download PDF

NOTICE: THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED EXCEPT AS AUTHORIZED BY APPLICABLE RULES. See Ariz. R. Supreme Court 111(c); ARCAP 28(c); Ariz. R. Crim. P. 31.24 IN THE COURT OF APPEALS STATE OF ARIZONA DIVISION ONE ) ) ) Petitioner, ) ) TRAVELERS INDEMNITY COMPANY, ) ) Petitioner Carrier, ) ) v. ) THE INDUSTRIAL COMMISSION OF ARIZONA, ) ) ) Respondent, ) ) ROSA HERNANDEZ, ) ) Respondent Employee, ) ) PEDRO HERNANDEZ SANDOVAL RACING, ) ) Respondent Employer, ) ) SPECIAL FUND DIVISION/NO INSURANCE ) SECTION, ) Respondent Party in Interest. ) ) ARIZONA HORSEMEN S ASSOCIATION, DIVISION ONE FILED: 05/19/2011 RUTH A. WILLINGHAM, CLERK BY: GH No. 1 CA-IC 10-0032 DEPARTMENT B MEMORANDUM DECISION (Not for Publication Rule 28, Arizona Rules of Civil Appellate Procedure) Special Action Industrial Commission ICA Claim No. 20090-5000338, 20090-410040 (Consolidated) Carrier Claim No. None The Honorable Joseph L. Moore, Administrative Law Judge AWARD REVERSED AND REMANDED Klein, Lundmark, Barbarich & LaMont, P.C. By R. Todd Lundmark Attorneys for Petitioners Phoenix Andrew Wade, Chief Counsel The Industrial Commission of Arizona By Suzanne Scheiner Marwil Attorneys for Respondent Party in Interest Phoenix Taylor & Associates, P.L.L.C. By Roger A. Schwartz Attorneys for Respondent Party in Interest Phoenix Snow & Carpio, P.L.C. By Chad T. Snow Attorneys for Respondent Employee Phoenix K E S S L E R, Presiding Judge ¶1 This is a special action review of an Industrial Commission of Arizona ( ICA ) award and decision upon review which found ( Hernandez ) insurance that was policy respondent insured issued employee under to the Horsemen s Association ( AHA ). a Rosa workers Hernandez compensation petitioner, the Arizona For the reasons stated below, we reverse the award and remand the matter to the ICA. FACTUAL AND PROCEDURAL HISTORY ¶2 In December Sandoval ( Sandoval ), 2008, hired groomer at Turf Paradise. kicked Hernandez, fracturing Sandoval Racing, Hernandez to through work as a Pedro horse The day after her hire, a horse her 2 right arm. She filed a workers compensation insurance claim; however, Sandoval Racing did not have workers compensation insurance. 1 The Special Fund denied the claim. Hernandez timely protested the denial of her claim. 2 ¶3 At the evidentiary hearing before the ALJ, Hernandez testified that Sandoval and his brother, Sergio, supervised her work, provided the necessary equipment, and agreed to pay her $450 per week. She also testified that when she reported her injury to Sandoval, he told her that he insured only Sergio and had no insurance for her injury. At the time of her injury, she had never heard of AHA. ¶4 Ricki Hinrichs administers AHA. Hinrichs described AHA as a non-profit organization made up of horsemen to help horsemen navigate the business aspect of horseracing, such as payroll and providing workers compensation insurance, which Turf Paradise requires of the trainers using its stalls. AHA members provide AHA with the money for the members employees paychecks and AHA then gives the money to a payroll service that issues the employees checks. AHA 1 charges members $15 per Accordingly, if Hernandez was considered an employee of Sandoval Racing, respondent party in interest Special Fund Division/No Insurance Section ( Special Fund ) would be responsible for paying any workers compensation benefits to Hernandez. Ariz. Rev. Stat. ( A.R.S. ) § 23-907(B) (Supp. 2010). 2 Pursuant to the record, there were two ICA claim numbers, which have been consolidated. 3 paycheck for this service. AHA did not supervise its member trainers or their employees, and it did not provide any tools or equipment. Hinrichs testified that AHA has no office at Turf Paradise and she handles AHA s programs out of her home. ¶5 AHA also provides an H2-B visa enrollment program. The H2-B program is a federal temporary-work program designed to allow foreign, nonagricultural workers to work legally in the United States. Federal law requires AHA to distribute regular paychecks to workers enrolled in the H2-B program, pay minimum wage, and pay workers compensation insurance. workers compensation insurance coverage from AHA obtained the petitioner carrier, Travelers Indemnity Company ( Travelers ). ¶6 Hinrichs testified that any trainer could join AHA to utilize its services for that trainer s employees. To enroll an employee, a trainer must complete AHA s required paperwork and provide necessary documentation; then, the trainer s employees become AHA s employees for purposes of the H2-B program. Hinrichs testified that she had assisted Sandoval in signing up two employees for enrolled Hernandez. the H2-B program, but Sandoval had not Hinrichs had no knowledge of Hernandez s employment with Sandoval Racing until after the injury. ¶7 Hinrichs testified that she made no effort to determine who AHA s members employ or whether those employees 4 are legally in the United States. She stated that she does not go to Turf Paradise and she has an employee deliver the AHA paychecks. However, it is unclear from the record how Hernandez would have been paid her wages. ¶8 The ALJ entered an award adopting the Special Fund s position that Hernandez was entitled to coverage under AHA s workers compensation policy. AHA timely requested administrative review, and the ALJ supplemented and affirmed the Award. AHA timely appealed. JURISDICTION AND STANDARD OF REVIEW ¶9 This court has jurisdiction pursuant to A.R.S. §§ 12- 120.21(A)(2) (2003), 23-951(A) (1995), and Rule Arizona Rules of Procedure for Special Actions. 10 of the In reviewing findings and awards of the ICA, we defer to the ALJ s factual findings, but review questions of law de novo. Young v. Indus. Comm n of Ariz., 204 Ariz. 267, 270, ¶ 14, 63 P.3d 298, 301 (App. 2003). The ALJ s conclusion whether an employer-employee relationship exists is an issue of law we review de novo. Vance Int l v. Indus. Comm n of Ariz., 191 Ariz. 98, 100, ¶ 6, 952 P.2d 336, 338 (App. 1998). We consider the evidence in a light most favorable to upholding the ALJ s award. Lovitch v. Indus. Comm n of Ariz., 202 Ariz. 102, 105, ¶ 16, 41 P.3d 640, 643 (App. 2002). 5 DISCUSSION ¶10 The result in this case turns on whether an implied contract of employment existed between Hernandez and AHA for purposes of workers compensation insurance coverage. We hold that no such implied contract existed. Accordingly, AHA was not Hernandez s Fund, employer and the Special not AHA and its insurer, is liable for the benefits at issue. ¶11 To be entitled to workers compensation insurance benefits under the Arizona Workers Compensation Act, a worker must have been an employee of an employer subject to the act at the time of the injury. (Supp. 2010). See A.R.S. §§ 23-901(6)(b), -1021(A) There must be a contract of hire for an employer- employee relationship to exist. 2010) (a person operatives is an regularly establishment under See A.R.S. § 23-902(A) (Supp. employer employed contract of if in she employs the same hire ). employment can be express or implied. The workers business contract or or of DeVall v. Indus. Comm n of Ariz., 118 Ariz. 591, 592, 578 P.2d 1020, 1021 (App. 1978). ¶12 To have a contract of hire, there must be by mutual consent an express or implied contract between the putative employer and employee. at 338. Vance, 191 Ariz. at 100, ¶ 9, 952 P.2d To determine if there was a hire in the absence of an express agreement, we look to whether the putative employer was 6 paying the employee and whether the nature of the work was part of the usual trade, business, profession or occupation of the employer. Id. Moreover, while we will also look to whether the putative employer controlled the activities of the employee, no amount of control is sufficient without a contract of hire. Id. at 100-01, ¶¶ 11-12, 952 P.2d at 338-39. ¶13 Here, because Sandoval Racing did not enroll Hernandez in the H2-B program or any other services offered by AHA, there is no express Hernandez. or implied contract of hire between AHA and Nor is there evidence AHA controlled Hernandez s work, that it would or could control Hernandez s duties, or that grooming was application assist AHA s by a trainers usual trade or trainer, AHA s role in navigating business. was the Rather, to upon accommodate business aspect and of horseracing, including providing workers compensation insurance for enrolled employees. Additionally, AHA assisted trainers in obtaining work visas for trainers employees when needed. had no authority authority to to require dictate which trainers employees to become the members, member AHA no trainers enrolled in the program, and no authority over its members or their employees work duties. ¶14 As such, this case is most similar to Cooper v. Industrial Commission of Arizona, 74 Ariz. 351, 249 P.2d 142 7 (1952). In Cooper, the president and sole owner of a farming company hired the claimant for carpentry work on the president s personal residence. was an employee Id. at 352, 249 P.2d at 142. of the company and on its The claimant payroll. Id. However, that arrangement was merely for the accommodation of the president; the company charged his personal reimburse paychecks made out to the claimant. P.2d at 143. commission s The award, Arizona finding employee of the company. AHA s role Sandoval was Racing the that the as the Court affirmed claimant enrolled company s Hernandez role in to Id. at 352, 249 was in AHA s the not Id. at 354, 249 P.2d at 144. same never Supreme account an Here, Cooper. program; therefore, AHA was not Hernandez s employer. ¶15 that The Special Fund argues that it is of no consequence no contract of hire existed between Hernandez and AHA because AHA volunteered to insure all employees of its members. However, the Special Fund fails to provide evidentiary support and develop an argument to show that AHA volunteered to insure employees of its members who did not enroll the employees in AHA s program. ¶16 The Special Fund, citing West Chandler Farms Company v. Industrial Commission of Arizona, 64 Ariz. 383, 173 P.2d 84 (1946), also argues that once AHA 8 expressly insured some of Sandoval Racing s employees, by operation of law, it insured all of Sandoval Racing s employees. It relies on A.R.S. § 23-963, which provides that [e]very policy of insurance covering the liability of the employer for workers compensation . . . shall cover the entire liability of the employer to his employees covered by the policy or contract. The Special Fund argues AHA could of not pick and choose which the members employees would be covered because the policy was a direct policy of insurance covering all AHA members and their employees without the necessity of individually listing covered employees. ¶17 The Special Fund s argument begs the question: the basis of its argument assumes that Hernandez was an employee of AHA. This case is unlike West Chandler Farms, in which the Arizona Supreme Court held that an employer must insure all employees of the business or occupation covered and cannot pick and choose occupation. West which employees it insures within 64 Ariz. at 390-91, 173 P.2d at 89. Chandler Farms, the court found there was a specific However, in an implied contract of hire because the putative employer supervised and controlled the claimant s work. Id. at 388, 173 P.2d at 87. Because there was no contract of hire between AHA and Hernandez, she was not an employee of AHA and not covered by AHA s workers compensation insurance policy. Sandoval 9 Racing s failure to enroll Hernandez into the AHA program does not magically transform AHA into Hernandez s employer. ¶18 Finally, the Special Fund argues that Hernandez s immigration status cannot affect her eligibility for workers compensation insurance. 3 issue before us because This argument has no bearing on the AHA did not contend Hernandez s immigration status precluded her from being its employee for purposes of workers compensation insurance coverage. CONCLUSION ¶19 For all of the foregoing reasons, we reverse and remand the award to the ICA for further proceedings consistent with this decision. 4 /s/ DONN KESSLER, Presiding Judge CONCURRING: /s/ DIANE M. JOHNSEN, Judge /s/ SHELDON H. WEISBERG, Judge 3 Hernandez testified that she did not have a permit to work in the United States. 4 In the Decision Upon Review, the ALJ sua sponte raised the issue of statutory employment pursuant to A.R.S. § 23-902(B). Neither party argues the applicability of this doctrine on appeal. Accordingly, the parties waived consideration of this issue. 10

Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.