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LLC v. Director

Court of Appeals of Arkansas, Division I

March 16, 2016



         Chisenhall, Nestrud & Julian, P.A., b: Mark W. Hodge, for appellant.

         Phyllis Edwards, for appellee.

         BRANDON J. HARRISON, Judge. GLADWIN, C.J., and WHITEAKER, J., agree.


          BRANDON J. HARRISON, Judge

         Let's Talk Speech Pathology Services, LLC (" Let's Talk" ), appeals from the Arkansas Board of Review's (" Board" ) decision finding that it is required to pay

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unemployment-insurance taxes for the services performed by its speech pathologists. On appeal, Let's Talk argues that the Board erred in applying an out-of-date version of Ark. Code Ann. § 11-10-210(e) and that the Board's decision is not supported by substantial evidence. We affirm.

         On 12 June 2014, the Arkansas Department of Workforce Services (" Department" ) issued an unemployment-tax determination letter of liability to Let's Talk, concluding that Katy Eldridge, a speech pathologist under contract with Let's Talk, and all other workers working under the same or similar conditions, were employees for purposes of unemployment-insurance taxes.[1] Let's Talk filed a request for determination of coverage by the Department director (" Director" ), and a hearing was held on 15 October 2014.

         Christy Wygal, a speech pathologist and co-owner of Let's Talk, testified that Let's Talk provides administrative services that include making arrangements with physicians to get approved speech therapy, contracting with speech therapists to provide that therapy, and billing Medicaid for those services. She explained that once a child in need of services is identified, the parents fill out the required paperwork, Let's Talk determines whether the child qualifies for speech therapy based on the Medicaid guidelines, and if the child qualifies, then the necessary paperwork is sent to a doctor to prescribe the amount of therapy per week. Once the amount of therapy is set, Let's Talk matches the child with a speech therapist in that area. Wygal explained that Let's Talk has contracts with thirty-five speech therapists.

         Wygal testified that Let's Talk does not assist its speech pathologists in obtaining their required licensure, continuing education, or liability insurance. She also explained that each therapist sets his or her own hours and can choose not to work with a particular child. The speech therapist contacts the parents, the daycare, or the school and arranges for the therapy, usually at the child's daycare. Wygal testified that Let's Talk has an office in Little Rock but that the speech therapists are not required to come to that office. She said that the speech therapists determine their own therapy methods and provide their own materials and that Let's Talk does not supervise the therapy sessions. She also testified that Let's Talk does not reimburse its therapists for mileage or materials. The therapists write progress notes on a daily basis and submit those notes to Let's Talk on a monthly basis; billing reports are turned in weekly.

         Wygal explained that Let's Talk has " Independent Contractor Agreements" with the therapists who provide services on behalf of Let's Talk. Those agreements make clear that the therapists are to remit their own taxes, provide their own materials, and pay for their own insurance and licensure fees. The therapists are not prohibited from providing services on behalf of other companies. The therapists submit billing reports to Let's Talk, which in turn bills Medicaid for the number of units each child was seen in that week.[2] Medicaid pays $87.04 per four units, and each speech therapist is paid a flat rate of $50 per hour per the " Independent Contractor Agreement." The additional $37.04 is retained by Let's Talk as payment for its administrative services.

         Wygal stated that Let's Talk keeps up-to-date with the Medicaid guidelines and

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provides an administrative service by collecting Medicaid funds to pay the speech pathologists for their work. She also agreed that it is the custom for private companies such as Let's Talk to treat their therapists as independent contractors. On cross-examination, Wygal agreed that the company interviewed its therapists when hiring them and did not put out a request for qualifications or request for proposals. She also agreed that the therapists are required to wear name tags that identify them with Let's Talk. She explained that Let's Talk or the therapist can terminate a contract with thirty days' notice and that the contract contains a " standard" noncompete clause. She also agreed that Let's Talk was currently carrying workers' compensation insurance on its therapists because it was " misinformed by our ...

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