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OAH 58-6220-20822-3 |
STATE OF
OFFICE OF ADMINISTRATIVE HEARINGS
FOR THE
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In the Matter of the Claim of Dr. John Jesme for Relocation Benefits |
FINDINGS OF FACT, CONCLUSIONS, AND ORDER |
The above matter came on
for hearing before Administrative Law Judge
Jon W. Morphew, Schnitker & Associates, appeared on behalf of Dr. John Jesme (Claimant).
Rick J. Sheridan, Assistant Hennepin County
Attorney appeared on behalf of the
At the time the County
acquired a parcel of property located at
Based on the evidence in the hearing record, the Administrative Law Judge makes the following:
1.
More than a decade ago,
2.
The Claimant is a doctor of chiropractic who
began practicing following his graduation from Northwestern College of
Chiropractic in 2001. In 2003, the
Claimant began a training and mentoring program at NCC under Dr. Olson’s
tutelage. NCC was then still located at the
3. Initially, the Claimant entered into a six-month contract with NCC as an employee. During the first three months of the program at NCC, NCC treated the Claimant as an associate. NCC paid the Claimant either an hourly wage or a percentage of collections, whichever was greater. During the final three months of the initial six-month period, NCC paid the Claimant based solely on a percentage of collections of fees for the Claimant’s services. During the initial six-month period, NCC paid the Claimant’s malpractice insurance by withholding from the Claimant’s paychecks amounts for that purpose.[4]
4.
When the six-month initial contract ended, the
Claimant entered into an Independent Contractor Agreement (ICA) with NCC
whereby NCC would pay the Claimant a commission based on a schedule.[5] Operating expenses for rent, utilities,
advertising, and staff were included in the commission calculation, although
the amounts deducted for these items were not specified in the
5.
In addition to practicing at NCC, the Claimant
operated a chiropractic business out of his home (the
6.
While the Claimant was under contract with NCC,
he was responsible for procuring his own patients and providing them with
chiropractic services. He had a business
card that identified him as “John Jesme, DC, Doctor of Chiropractic.” The business card showed the Claimant’s
address as the
7.
The Claimant regularly received mail at NCC’s
address. The mail was addressed to the
Claimant as “John Jesme DC”.[10] When the Claimant corresponded, he used
letterhead that identified him as a Doctor of Chiropractic and listed the
addresses for both the
8.
NCC staff handled the billings for services the
Claimant provided to his patients at the
9.
The outdoor building sign at the
10.
The Claimant paid his own taxes, liability
insurance, transportation, and continuing education expenses.[16] For tax purposes, the Claimant filed returns
as a sole proprietor on Schedule C of Form 1040 from 2005-2007.[17] NCC issued a 1099 for the commissions the
Claimant generated in 2006. The
compensation paid to the Claimant is listed as “nonemployee compensation.” The State of
11.
The 2005-2007 Schedules C listed the Claimant’s
12.
Evergreen Land Services (ELS) provided
relocation services for the
13.
Means told the Claimant he was eligible to
receive a benefit for having his personal property moved, but Means did not
explain anything about other relocation benefits. Means explained that the Certification form
was to ensure that the Claimant was a
14.
On November 30, 2007, the Claimant moved from
the
15.
The Claimant eventually found an established
business to purchase. He then relocated
to
16. The Claimant filed with the County claims for commercial moving costs and costs of searching expense for a replacement site. The County disputed the claim, and a contested case was scheduled to hear the dispute. Before hearing, the County concluded that the Claimant was eligible for moving expenses and relocation assistance as a “displaced person.”[29] The contested case was then withdrawn.[30]
17. At some point, the Claimant requested benefits for his reestablishment expenses. The County subsequently obtained additional information from the Claimant and determined that the Claimant did not operate a business separate from NCC. Meanwhile, however, the County had paid the Claimant $400.00 for moving expenses and, in addition, $2,500.00 for searching expenses. The County believed the latter payment may have been made in error, but the County did not seek reimbursement.[31]
18.
By a Notice of and Order for Hearing dated
September 15, 2009, the County commenced a contested case to resolve the issue
of whether the Claimant is entitled to payment for his reestablishment expenses
as a result of the taking of the
Based on these Findings of Fact, the Administrative Law Judge makes the following:
1. The Administrative Law Judge has jurisdiction in this matter pursuant to Minn. Stat. § 117.52, subd. 4.
2. The Claimant received timely notice of the hearing.
3. The purpose of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (“URA”) is, in part, to ensure that persons displaced as a result of a governmental taking of property for a public project are treated fairly, consistently, and equitably so that such persons are not disproportionately injured as a result of the public project.[32]
4.
The
URA provides at 42 U.S.C. § 4622(a) that:
Whenever
a program or project to be undertaken by a displacing agency will result in the
displacement of any person, the head of the displacing agency shall provide for
the payment to the displaced person of
(1) actual
reasonable expenses in moving himself, his family, business, farm operation, or
other personal property;
. . .
(3)
actual reasonable expenses in searching for a replacement business or farm; and
(4)
actual reasonable expenses necessary to reestablish a displaced farm, nonprofit
organization, or small business at its new site, but not to exceed $10,000.[33]
5.
Under URA, a
“displaced person” who must move from a place of business because of a
government taking is entitled to payment of actual moving and related expenses.[34]
6. A “displaced person” is anyone who must move as a consequence of the government taking of property.[35] A person means “any individual, family, partnership, corporation or association.”[36]
7. In addition to the moving and related expenses available under Minn. Stat. §§ 24.301 and 24.303, a small business is entitled to receive a payment for expenses actually incurred in relocating and reestablishing the small business at a replacement site.[37] A “small business” is a business that has no more than 500 employees.[38] A “business,” as pertinent to this matter, is a lawful activity that is conducted “for the sale of services to the public.”[39]
8. The Claimant has the burden of proof as to entitlement to relocation and reestablishment benefits.[40]
9.
The Claimant has shown, by a preponderance of
the evidence, that he conducted a small, independent business at the
Based upon these Conclusions, and for the reasons explained in the accompanying Memorandum, the Administrative Law Judge makes the following:
Based upon these Conclusions, IT IS HEREBY ORDERED: that the County shall pay to the Claimant any unpaid relocation and reestablishment expenses, to the extent provided by law.
Dated: January 26, 2010
s/Linda
F. Close
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LINDA
F. CLOSE Administrative
Law Judge |
Reported: Digitally
recorded
No
transcript prepared
The Claimant is claiming actual
reestablishment expenses under 49 C.F.R. § 304 to compensate him for his move
from the Lowry location to the
The ALJ concludes that the Claimant has met his burden of proving that he did conduct a business independent of and separate from that of NCC at the Lowry location. Section 304 does not address what happens when two or more businesses at the same location make reestablishment claims. Under section 305, however, a business may make an “in lieu of” reestablishment claim for a fixed amount. Unlike section 304, section 305 does address how to determine whether more than one business at a location is entitled to reestablishment benefits. Although section 305 is not directly involved here, it is instructive on the issue of which displaced businesses are entitled to reestablishment benefits.
Section 305 enumerates factors to be considered to determine whether multiple businesses at a single location are eligible to claim reestablishment benefits. The factors include the extent to which:
· the same premises or equipment are shared;
· substantially identical or interrelated business functions are carried out and business and financial affairs are commingled;
· the entities are held out to the public, and to those customarily dealing with them, as one business;
· the same person or closely related persons own, control, or manage the affairs of the entities.[41]
NCC and the Claimant shared premises and equipment at the Lowry location,
it is true. But the County ignores that
the Claimant had a specific examination room set aside for his exclusive use
and that the Claimant used his own chiropractic tools. It is also true that NCC and the Claimant
shared business functions such as a receptionist and staff to do billing and
collection. These facts, however, flow
naturally from the business arrangement the Claimant had with NCC. It was the ability to share staff that made
the arrangement beneficial for both NCC and the Claimant. While the County claims that funds were
“co-mingled” between the businesses, nothing in the record supports that. The mere fact that NCC staff billed for and
collected amounts from the Claimant’s patients does not mean that NCC used the
Claimant’s funds as its own. On the
contrary, the
The County makes much of the outdoor signage as demonstrating that the
Lowry location housed but one business.
This ignores the many facts showing that the Claimant operated his own
business. The
As to the final factor listed in section 305, the Claimant showed that he alone controlled his business. He made all treatment decisions and determined the schedule on which they were to be treated. He billed insurance companies and patients in his own business name. His patients were his alone, not those of NCC. When he left the Lowry location, he was entitled to take all of those patients with him.
All of these facts point to the Claimant’s representing himself as a business independent of NCC. They demonstrate that there were two separate businesses at the Lowry location—NCC’s and the Claimant’s.
The County asks the ALJ to adopt its view that the Claimant was an
employee of NCC. In this regard, the
Claimant’s argument based on Boily v.
Commissioner of Economic Security, 544 N.W.2d 295 (
· The right to control the means and manner of performance;
· The mode of payment;
· The furnishing of materials or tools;
· The control of the premises where the work is done; and
· The right of the employer to discharge.[43]
Applying these factors to the dentists in Boily, the Court viewed as indicative of the dentists’ independent contractor status the following facts:
1. The clinic owner did not reserve the right to control the manner in which the dentists performed their treatments;
2. The dentists set their own schedules;
3. The dentists decided the type of treatment for each patient;
4. Even though the dentists were paid on a monthly basis by the clinic, their compensation was based upon a percentage of their billings attributable to the services each dentist rendered rather than a fixed salary; and
5. Even though the clinic provided the major items of equipment such as patient chairs and drills, each dentist provided their own specific dentistry tools, paid their own malpractice insurance and continuing education fees.[44]
The facts of Boily are highly similar to the facts of the Claimant’s business arrangement with NCC. NCC did not control how and when the Claimant did his work or reserve in any manner the right to control the Claimant’s practice. As in Boily, the basis for the Claimant’s compensation was monthly collections for services rendered by the Claimant. As in Boily, the Claimant used major items of NCC’s equipment, but he used his own tools and paid his own malpractice insurance premiums and continuing education expenses. The ALJ sees no difference at all in the application of the Boily factors to the independent contractors there and the Claimant. Although the instant case does not involve reemployment insurance benefits, the Court’s analysis of the broader question of who is an independent contractor is highly instructive. Based on that analysis, the ALJ concludes that the Claimant ran his own business at the Lowry location.
The County argues that the Claimant has failed to show that his was a small business entitled to reestablishment benefits. In essence, the County seems to maintain that the regulation precludes a sole proprietor, from ever being eligible for reestablishment benefits. By its very nature, a sole proprietorship is operated by an individual. Section 304 does not state that a small business must be organized as a partnership or corporation or any other specific type of entity. Instead, the regulation makes the benefit available to a business that employees 500 or fewer workers, is conducted lawfully, and exists to provide services to the public. There appears to be no basis in law for the County’s position. Nor has the County offered any policy reason why one business form should be allowed section 304 benefits and another business form should not.
The County points to the Claimant’s filing income tax returns as
depicting a position inconsistent with his having a business at the Lowry
location. The Claimant filed returns
showing his business to be a sole proprietorship. The Claimant’s returns listed the
The County also points to the Claimant’s having attributed all of his
income to the
At hearing, the Claimant called a relocation expert who opined that the Claimant is unquestionably entitled to benefits for his reestablishment expenses. The expert has worked in the relocation arena since the late ‘60s, when the URA was in the process of congressional enactment. He continued to work with relocation matters from that time to the present. The expert testified that he had worked on hundreds of relocation cases involving more than one business at the displaced location. When there are multiple businesses at a location, he testified, each is eligible for benefits as a displaced business.
49 C.F.R. § 24.304 makes reestablishment benefits available to small businesses. A small business is defined as “. . . a business having not more than 500 employees working at the site being acquired or displaced by a program or project, which site is the location of economic activity.” A “business,” in turn, is defined, in relevant part, as “. . . any lawful activity . . . that is conducted . . . primarily for the sale of services to the public.”[45]
The Claimant operated a small business under the regulation. He was the only person employed at his
business, and he conducted his business at a site that was displaced by the
Lowry project. His business was lawful
and was conducted for the purpose of making chiropractic services available to
the public. Once the County acquired the
Lowry location, the Claimant was forced to relocate his business. Within two months of leaving the Lowry
location, he had discovered a business to acquire and had signed a lease for
that new location in
L. F. C.
[1] Testimony of Carol Lezotte-Anderson; Test. of Claimant. Ms. Lezotte-Anderson testified that she worked on the project for ten years.
[2] Test. of Claimant.
[3] Test, of Claimant.
[4] Ex. 13; Test. of Claimant.
[5] The schedule was entered into evidence by the County as Exhibit 103.
[6] Ex. 13; Test. of Claimant.
[7] Test. of Claimant.
[8] Test. of Claimant; Ex. 1. The second phone number on the
[9] Test. of Claimant.
[10] Ex. 2; Test. of Claimant.
[11] Ex. 3; Test. of Claimant.
[12] Test. of Claimant; Ex. 13.
[13] Test. of Claimant; Ex. 4.
[14] Ex. 13; Test. of Claimant.
[15] Ex. 102; Test. of Claimant.
[16] Ex. 13; Test. of Claimant.
[17] Exs. 7-9.
[18] Test. of Claimant; Ex. 6. The exhibit appears to include a second 1099 from NCC, but most of the printed matter on that 1099 is missing, including the year in which NCC paid the Claimant an amount of $56,257.00. Both this 1099 and the 1099 for 2006 issued by NCC appear to have a typographical error. The social security number on the two 1099s does not correspond to the one shown on the Claimant’s returns.
[19] Ex. 7.
[20] Ex. 8; Ex. 9.
[21] Exs. 7-9.
[22] Test. of Scott Means; Ex. 101.
[23] Test. of S. Means.
[24] Test. of Claimant.
[25] Test. of S. Means.
[26] Test. of Claimant; Ex. 5; Ex. 12.
[27]
Test. of Claimant; Ex. 112. Exhibit 112 is the lease for the premises at
the
[28] Ex. 10; Test. of Claimant.
[29] Ex. 11.
[30] Test. of Carol Lezotte-Anderson.
[31] Ex. 12; Test. of Claimant; Test. of C. Lezotte-Anderson.
[32] 42 U.S.C. § 4621 (b); 49 C.F. R. §
24(b).
[33]
[34] 49 C.F.R. §§ 24.301; 24.303.
[35] 49 C.F.R. § 24.2 (9). The County has conceded that the Claimant was a displaced person as a result of the acquisition. Ex. 11.
[36] 49 C.F.R. § 24.2(21).
[37] 49 C.F.R. § 24.304.
[38] 49 C.F.R. § 24.2 (24).
[39] 49 C.F.R. § 24.2 (4).
[40]
[41] 49 C.F.R. § 24.305(b)(1)-(4).
[42] Ex. 103; Ex. 13.
[43] Boily, 544 N.W.2d at 296.
[44] Boily, 544 N.W.2d at 296-7.
[45] 49 C.F.R. § 24.2(a)(4)(ii).