Dynometrics Inc. v. Ariz. Dep't of Econ. Sec.

547 P.3d 1068

DYNOMETRICS INC., Appellant,

v.ARIZONA DEPARTMENT OF ECONOMIC SECURITY, an agency,andJulie Enriquez, Appellees.

No. 1 CA-UB 22-0042

Court of Appeals of Arizona, Division 1.

FILED March 19, 2024

Appeal from the A.D.E.S. Appeals Board, No. U-1737637-001-B, REVERSED AND REMANDED

Meagher + Geer P.L.L.P., Scottsdale, By Spencer T. Proffitt, Counsel for Appellant

Ar izona Attorney General’s Office, Tucson, By Jennifer Blum, Counsel for Appellee Arizona Department of Economic Security

Lewis Roca Rothgerber Christie LLP, Phoenix, By Heather Stanton, Counsel for Appellee Julie Enriquez

Judge Daniel J. Kiley delivered the opinion of the Court, in which Vice Chief Judge Randall M. Howe and Judge Jennifer M. Perkins joined.

OPINION

KILEY, Judge:

¶1 Dynometrics, Inc., dba Comfort Keepers ("Comfort Keepers") challenges the decision by the Appellate Services Administration Appeals Board (the "Appeals Board") of the Arizona Department of Economic Security ("ADES") awarding Julie Enriquez unemployment benefits chargeable to Comfort Keepers. Because ADES made its award without addressing the merits of Comfort Keepers’ argument that Enriquez was not its employee, we reverse and remand for further proceedings.

FACTS AND PROCEDURAL HISTORY

¶2 This case arises from Enriquez’s application for unemployment benefits after the death of "Maria" (a pseudonym), to whom Enriquez had provided caregiving services.

¶3 Maria was a recipient of health care benefits through the Arizona Health Care Cost Containment System ("AHCCCS"). AHCCCS recipients who qualify for longterm care services are allowed to select their caregivers, who receive payment for their services through providers such as Mercy Care. Recipients usually choose family members to serve as their caregivers.

¶4 When Maria became eligible for longterm care services under her Mercy Care plan, she asked that Enriquez be hired to provide caregiving services to her. Before Enriquez began providing care to Maria, she entered into a written agreement with Comfort Keepers which provided in relevant part:

You are being offered employment by Comfort Keepers per a direct request made by [Maria] to be her/his Family Care Attendant. You also came to Comfort Keepers specifically to be hired to provide care for [Maria] and no other clients of Comfort Keepers. You understand and agree that you are not available to work for or on any other clients of Comfort Keepers and no other work will be offered to you.

Under circumstances such as this, when Comfort Keepers does not have complete control of the hiring and termination decisions of an employee; specifically when the hiring selection is made by a client not employed by Comfort Keepers, you agree to resign, quit and otherwise make yourself unavailable for any type of work with Comfort Keepers if:

• your employment should end because [Maria] no longer wants you to be her/his Family Care Attendant,

• or if [Maria] no longer qualifies for care giving services with Comfort Keepers,

• or any other reason why your employment ends with Comfort Keepers which is not a direct result of a decision made by Comfort Keepers.

I, Julie Enriquez, have read and understand the above, and I understand this will affect my rights to file for unemployment insurance against Comfort Keepers.

(Emphasis omitted.) Enriquez and a representative of Comfort Keepers signed the agreement in December 2016. Enriquez then served as Maria’s caregiver, providing feeding, bathing, and other services in the home they shared. Enriquez submitted weekly timesheets to, and received paychecks from, Comfort Keepers.

¶5 After Maria died in March 2021, Enriquez applied for unemployment benefits. A deputy determined that Enriquez did not qualify for benefits, explaining,

You have not shown that you attempted to adjust your grievance with your employer before you quit or that you quit for compelling personal reasons. You voluntarily left work without good cause in connection with your employment.

¶6 Enriquez appealed the deputy’s determination to the ADES Appeal Tribunal, see Ariz. Admin. Code ("A.A.C.") R6-3-1503(A), stating that she did not "quit" and "was not offered a new job" after the "patient [she] was taking care of … passed away."

¶7 Enriquez and Kim Senff, a representative of Comfort Keepers, appeared without counsel at a hearing before the Appeal Tribunal in September 2021. The administrative law judge (the "ALJ") began by identifying "[t]he purpose of the hearing" as

to hear the claimant’s appeal from the Determination of the Deputy … finding that the claimant quit the job without a good cause and was denied benefits. That’s the issue for determination today, separation from employment. Separation from employment breaks down into some sub-issues[:] whether the claimant quit with or without a good cause; whether the claimant was discharged with or without misconduct; or whether the claimant had established a compelling personal reason to quit.

(Emphasis added.) Significantly, the ALJ did not identify whether Enriquez was an employee of Comfort Keepers as an issue to be addressed at the hearing.

¶8 The ALJ then placed Enriquez and Senff under oath and asked them questions. When he asked Enriquez if she "quit’" or was "discharged," she replied, "I didn’t quit and I didn’t discharge [sic], because my client died on the 2nd of March." When the ALJ asked Enriquez if she "ask[ed] Comfort Keepers if [she] could be employed giving care to anyone else" after Maria’s death, she replied in the negative, stating that she "didn’t think about it at the time." Enriquez explained that she had been "in the middle of grieving" Maria’s death while simultaneously "dealing with" funeral arrangements "and stuff like that." Enriquez reiterated, however, that she "had no intention at all to quit" when Maria died. There was no "other reason" for her separation from Comfort Keepers, she testified, "besides the passing of [her] patient."

¶9 During the ALJ’s questioning of Enriquez, the following exchange occurred:

ALJ: All right. When you were working for Comfort. Keepers, were you working as an employee?

Enriquez: Uh, it’s kind of hard to explain because …

ALJ: Well, before we get into, too far into the [inaudible] just ask you some simple questions, Who cut your check, was it the client you were working for or …

Enriquez: Comfort Keepers.

ALJ: … was it Comfort Keepers? Okay. Enriquez: I got paid through Comfort Keepers.

Although Enriquez thus did not complete her answer when the ALJ asked if she was an employee of Comfort Keepers, the ALJ never returned to that subject or invited her to complete her answer. Instead, he moved on to other subjects.

¶10 The ALJ then began to question Senff. She testified that, consistent with the terms of Enriquez’s written agreement with Comfort Keepers, her engagement ended upon Maria’s death. "[O]f course, her Job would end then," Senff stated, "because [Maria] no longer can get the care."

¶11 Senff also testified that Maria directed her own care and selected Enriquez as her caregiver. "Mercy Care clients through AHCCCS," Senff explained, "can decide what their own direct care is gonna [sic] be, and then they can ask the employer to hire a specific caregiver to take care of them." The Mercy Care clients, in other words, "are actually doing the hiring." Comfort Keepers' role, Senff went on, was limited to reviewing the timesheets Enriquez submitted, issuing her checks, and billing Mercy Care. When the ALJ asked, "it sounds like you’re working almost as a temporary agency employing caregivers for specific patients, is that a fair comparison?", Senff replied, "Yeah."

¶12 Before concluding the hewing, the ALJ asked Enriquez and Senff if they had "anything else [they] would like to tell [him]," to which they both answered no.

¶13 After the hearing, the ALJ issued a written decision "set[ting] aside the deputy’s ruling that [Enriquez] quit this employment without good cause," determining instead that Enriquez "was discharged from this employment, but not for … misconduct." The ALJ made no express findings about the circumstances and conditions of Enriquez’s caregiving to Maria or whether Enriquez was an employee of Comfort Keepers as opposed to an independent contractor. Instead, the ALJ assumed Enriquez’s employee status, finding that she "was last employed as a [c]aregiver by the employer, a home health care agency," that the "employer hired [Enriquez] at the request of one of their patients to serve as a home health aide," and that "the employer separated [Enriquez]" when "the patient passed away." Enriquez "did not wish to quit," the ALJ found, and the "employer initiated the separation" without offering her the "option of continuing work." Accordingly, the ALJ concluded that Enriquez "qualifies for benefits" and that the "employer’s account is subject to charges for benefits paid" to Enriquez.

¶14 Comfort. Keepers petitioned the Appeals Board to review the Appeal Tribunal decision, see A.A.C. R3-6-1504, arguing that Enriquez's caregiving services to Maria ended upon the latter’s death and "through no fault of [Comfort Keepers]." Comfort Keepers also stated that Maria, not Comfort Keepers, had "direct[ed] her care" as well as the "hours and location" of services. In support of its petition, Comfort Keepers attached Enriquez's timesheets and a copy of A.R.S. § 23-618.01(A), which defines "employee."

¶15 The Appeals Board adopted the ALJ’s findings of fact and legal conclusions and affirmed the Appeal Tribunal decision. The Appeals Board expressly declined to address whether Enriquez was an employee of Comfort Keepers because Comfort Keepers raised the issue in reliance on "documents not In evidence and … arguments that were not presented at the Appeal Tribunal hearing."

¶16 Comfort Keepers applied for appeal to this Court., arguing that Enriquez was not an employee under the statutory definition. We granted the application for appeal. We have jurisdiction pursuant...