IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
FRANCIS G. KUTNEY,
Plaint iff,
v.
RONALD SAGGESE, D.C.
FIRST CHOICE HEALTH CARE
INC., a Delaware Corporation, and
MED PLUS MANAGEMENT, INC.
Defen dants .
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CA No. 99C-11-205-JEB
Submitted: January 31, 2002
Decided: July 8, 2002
Decision after Trial.
Appearances:
James S. Green , Esquire
Attorney for Plaintiff.
Joseph J. Longo bardi, III, Esquire
Attorney for Defendants.
JOHN E. BABIARZ, JR., JUDGE.
This is the Court’s decision following trial on Plaintiff Francis Kutney’s action
for unpaid compensation against his former employers, Defendants First Choice
Health Care, Inc. and Med Plus Management, Inc. Plaintiff contends that he was an
employee of Defendants, Defendants contend that Plaintiff was an independent
contractor.
Although the parties disagree about most of the factual questions, certain facts
are undisputed. Plaintiff worked as Medical Director of First Choice Health Care
from February 1997 until he resigned on June 30, 1999. From 1997 until the end of
1998, he was an employee of First Choice for purposes of the Wage Payment and
Collection Act (“the Wage Act”).1 In January 1999, the terms of his employment
changed, but a written contract was never completed. Most other facts are in
contention.
Plaintiff argues that he was an employee of First Choice within the meaning of
the Wage Act from January 1999 until he left his job on June 30, 1999, and is
therefore entitled to full relief under the Act. Defendants concede that Plaintiff was
an employee under the Act from 1997 until the beginning of 1999, but argue that he
became an independent contractor in January 1999, when negotiations for a new
contract failed. Defendants emphasize the undisputed facts that Plaintiff received
1
Title 19 Del.C. § 1101--§ 1115.
2
straight checks and used his own equipment in 1999. Defendants concede that, based
on an oral understanding between Plaintiff and Saggese, Plaintiff was entitled to
receive $2000 per week for his work in June 1999. However, Defendants argue that
Plaintiff did not work the last two weeks in June and that there was no agreement as
to additional wages for special services or vacation time.
The Wage Act was enacted by the General Assembly to provide payment of
employees’ wages and to enforce collection.2 It also provides for a penalty in an
amount equal to the amount of the outstanding wages, if the employer has withheld
pay from an employee without reasonable grounds.3 Under 19 Del.C. § 1101(a)(4),
an “employee” is “any person suffered or permitted to work by an employer under a
contract of employment either made in Delaware or to be performed wholly or partly
therein.” The legislative intent was to have the courts decide, on a case-by-case basis,
whether a person is an employee for purposes of the Act.4 There are three criteria to
be considered in such a determination: (1) whether the employer retained control over
the means and methods of doing the work; (2) whether the person was taxed like an
employee; and (3) whether other benefits consistent with a standard employment
2
Rypac Packaging Machinery Inc. v. Poges, 2000 WL 567895 at *13 (Del.Ch.) (citing
State of Delaware v. Planet Ins. Co., 321 A.2d 128, 133 (Del.Super.1974)).
3
Title 19 Del.C. § 1103(b).
4
Fairfield Builders, Inc. v. Vattilana, 304 A.2d 58, 60 (Del.1973).
3
contract were provided.5
In the case at bar, the parties dispute who controlled Plaintiff’s work. At trial,
Saggese testified that neither he nor anyone else at First Choice exercised any control
over Plaintiff’s duties and responsibilities. Saggese stated that Plaintiff set his own
hours and scheduled his own patients. Plaintiff asserts that First Choice instructed
him as to the days, hours and locations of his work. In support of this position, he
points to the contract Saggese offered him in January 1999, which reflects four, 7hour work days at two different office locations. However, Plaintiff never accepted
this contract, and his reconstructed calendars do not conform to the suggested
schedule. Plaintiff also asserts that First Choice employees did his scheduling for
him, but no witnesses testified to the manner in which Plaintiff’s appointments were
set up or whether Plaintiff specified which days he would be available.
Even if employees handled scheduling for Plaintiff, staff support does not
constitute supervision or oversight, and does not establish that an employer has
retained control over an employee, unless the supervisor dictates the schedule.
Nothing in the record suggests that Saggese dictated Plaintiff’s schedule. The parties
agree that Plaintiff diagnosed patients and prescribed their treatment plans without
any oversight. Furthermore, in 1999, Plaintiff used his own EMG equipment for
5
Id.
4
which he was not reimbursed by Defendants.6 He saw patients according to his own
availability and was not overseen by Saggese or any other individual at First Choice.
Based on the evidence presented, the Court finds that Plaintiff maintained active
control over his work.
The second factor to be considered is whether the person was taxed like an
employee. The parties agree that Plaintiff was issued straight checks without tax
deductions for his 1999 work. Plaintiff asserts that Saggese suggested this change
and that the testimony of Dana May Downing corroborates this assertion. Saggese
testified that Plaintiff requested this form of payment. The only relevant fact is that
during 1999 Plaintiff was offered and accepted direct, non-payroll checks that did not
make deductions for taxes or other withholdings.
The third factor is whether Plaintiff was provided with the benefits typically
provided to an employee. The parties agree that Defendants provided Plaintiff with
a vehicle, automobile insurance and malpractice insurance. The record is silent as to
health insurance, which means that none was provided. As to vacation, the only
controversy seems to be whether Plaintiff could carry over vacation days from one
6
Delaware courts have recognized that whether a worker supplies his own
instrumentalities is a factor that may be considered in determining whether the worker is an
employee or an independent contractor. Fisher v. Townsend, Inc., 695 A.2d 53, 59 (Del.1997);
Miller v. Preston, 1998 WL 733191, at **4.
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year to the next. However, there is no evidence as to how much vacation Plaintiff
could take. The Court finds that, although Defendants did provide Plaintiff with
certain benefits, this factor alone is not sufficient to establish that Plaintiff was an
employee within the meaning of the Wage Act.
As this Court has previously stated, an independent contractor is one who has
agreed to work in an independent manner, is accountable only for the results obtained
and is not subject to the control or supervision of the employer.7 In this case, Plaintiff
retained control over his work and was paid non-payroll checks that did not withhold
taxes or other deductions. For these reasons, the Court finds that Plaintiff, despite
having received certain benefits from Defendants, was an independent contractor for
purposes of the Wage Act from January 1999, when the employment relationship
indisputably changed, until June 1999, when Plaintiff quit. Therefore he is not
entitled to any relief under the Wage Act.
The parties concede that in January 1999 Plaintiff and Saggese agreed that
Plaintiff would be paid $2000 per week. They dispute when this agreement started
and which day was Plaintiff’s last day of work. They also dispute whether Plaintiff
is entitled to payment for vacation time and special services.
7
Miller v. Preston Trucking, 1998 WL 733191 at ** 4 (Del.Super.) (citing Weiss v.
Security Storage Co., 272 A.2d 111, 114 (Del.Super.1970)).
6
The evidence as to the beginning date of the $2000 per week wage is scant.
However, Plaintiff’s Exhibit at Tab 5 shows that in January 1999 he worked 42 hours
for $75 per hour, totaling $3150. He was paid a total of $3612 for January and is
therefore not owed any additional hourly wage for January. This concession
eliminates the need to decide the exact start date of the agreement. For both February
and March, Plaintiff was paid $7000 for four weeks’ work, and therefore entitled to
an additional $1000 for each of those two months. Plaintiff was paid the full $8000
for April, and he was overpaid $336 in May. (Plaintiff credited this amount against
his special services fees, which are addressed below.) Plaintiff’s calendars also show
that in May 1999 Plaintiff was offered and accepted a biweekly wage of $3850, or
$1925, instead of $2000 per week.
In June, Defendants stopped payment on two checks to Plaintiff for $3850,
resulting in a $16.00 bank overdraft fee charged to Plaintiff’s account. Defendants
allege that Plaintiff abandoned his practice and that his last day of work was June 17,
1999. Plaintiff asserts that he worked through the end of June and also seeks punitive
damages for the $16.00 overdraft fee. As to Plaintiff’s final day of work, the Court
finds that Plaintiff is entitled to his weekly wage of $1925 through the end June 1999,
as indicated in his letter of resignation, dated June 15, 1999. He is also entitled to
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recoup the $16 bank overdraft fee but not to punitive damages.8 For weekly services,
Plaintiff is awarded $9716.00.
As to vacation, Defendants do not assert that Plaintiff was not entitled to
vacation but merely argue that Plaintiff could not carry over vacation from 1998 into
1999. Plaintiff’s Exhibit 5 shows that he took eight days of vacation in May 1999
and was apparently paid for them. He claims that he is entitled to payment for four
more vacation days which he did not take, but he has not offered any evidence to
support this contention. The Court finds that Plaintiff is not entitled to compensation
for vacation.
Plaintiff’s special services included EMG’s, trigger point injections and
depositions that he gave in his capacity as medical director of First Choice. The
record shows that Plaintiff received payment for depositions, and Defendants do not
dispute this contention. Plaintiff’s Exhibit at Tab 17 charges Defendants $1500 for
a deposition regarding Rashawn King, but Plaintiff’s Exhibit at Tab 19 presents a
check dated October 20, 1999, made out to “Dr. Francis Kutney” and endorsed as a
deposit into First Choice’s account. Plaintiff is entitled to this fee, as well as any
8
See E.I. DuPont de Nemours & Co. v. Pressman, 679 A.2d 436, 445 (Del.Supr.) (noting
that the goal of contract law is compensation for losses resulting from the breach and that
punitive damages are not recoverable for breach of contract unless the conduct also amounts
independently to a tort).
8
other outstanding deposition fees.
As to EMG’s and injections, Defendants cannot dispute that Plaintiff was paid
for services which were paid by insurance companies because Defendant’s Exhibit
2, Tab 11 verifies this fact, as does the testimony of Dana Downing, office manager
at First Choice during Plaintiff’s tenure. The Court finds that Plaintiff is entitled to
each $200 EMG fee and each $20 injection fee for which First Choice has been
reimbursed by insurance carriers. The record in its current form shows payments
made through June 1999, but Defendants are liable to Plaintiff for any fees covered
by insurance carriers since that date.
For the reasons stated herein, judgment is entered for Plaintiff together with
interest from June 30, 1999. The parties are to present and order on notice.
It Is So ORDERED.
______________________________
Judge John E. Babiarz, Jr.
JEB,jr/bjw/rmp
Original to Prothonotary
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