DocketNumber: C.A. No. PC 98-4723
Judges: <bold><underline>SAVAGE. J</underline></bold>.
Filed Date: 12/30/1999
Status: Precedential
Modified Date: 7/6/2016
For the reasons set forth in this Decision, this Court declares that plaintiffs are not state employees and have never been state employees within the Merit System Act. This Court further declares that plaintiffs were lawfully hired as contract employees, consistent with the State Purchases Act, R.I. Gen. Laws §
To comply with proper tax deductions and withholdings, the Office of Personnel Administration made an emergency filing on October 30, 1991 to amend the State Personnel Rules and Regulations to "set polic[ies] for employee[s] who work under special contract." This emergency filing identified previously labeled independent contractors as "special contract employees." Under this new classification, promulgated in section 4.0226.1 of the State Personnel Rules and Regulations, a "special contract employee" was defined as a "limited, unclassified appointment as authorized by [R.I. Gen. Laws §]
After the expiration of the emergency classification, the Director of the Department of Corrections, George Vose, Jr. ("Vose"), requested advice from the Director of the Department of Administration, Harry Baird. Director Vose inquired whether this "special contract employee" category would continue into fiscal year 1993 and whether any procedural changes in the regulations governing hiring would be promulgated as a result thereof.
The Associate Director of the Department of Administration/Human Resources, Robert Tetreault ("Tetreault"), apparently forwarded this request to the Associate Personnel Administrator, Pasquale Marsella, Jr. ("Marsella"). In correspondence between Marsella and Tetreault dated April 17, 1992, Marsella claimed that the "special contract employee" designation "was not created to respond to situations where there would be a continued uninterrupted employment process . . . [i]n fact, the [s]pecial [c]ontract [e]mployee process was designed to restrict the time period of services to not exceed six months or 1,040 hours." Marsella further opined, however, that "[i]f there are reasons that recruitment for positions in this area of service is not successful, then a review should be conducted to arrive at a viable solution to the situation."
"[P]ersonal on-site dental services for the diagnosis and treatment of inmates' dental needs for a total of thirty-five (35) hours per week. On-site services will begin at 8:00 a.m. and end at 3:00 p.m. Said services will be provided under the supervision of the Chief of Dentistry. Dr. McCloskey is entitled to three (3) days administrative (educational) leave, in order to maintain her license."
The method of paying Dr. McCloskey for her services according to the terms of the 1990 contract were as follows:
"[Department of Corrections] agrees to compensate Provider in the amount of forty dollars ($40.00) per hour. Provider will be paid on a monthly basis following the submission of an invoice showing the exact hours and location(s) such services were provided during the period claimed. Total payment for these services will not exceed sixty-five thousand, eight hundred dollars ($65,800.00) — $40.00 x 35 hrs./wk. x 47 wks."
On January 15, 1992, Dr. McCloskey signed an employment agreement as a contract employee for the term of July 1, 1991 to June 30, 1992. Thereafter, her employment and the subsequent employment of each dentist and hygienist at the Department of Corrections was renewed by a series of similar one-year contractual agreements.
All of these contractual agreements followed the same model initially established by the preliminary agreements between Dr. McCloskey and the State of Rhode Island, Department of Corrections. The most recent contracts covering the term from July 1, 1999 to June 30, 2000 also require each dentist and hygienist to work approximately 35 hours per week, from 8:00 a.m. to 3:00 p.m., at the Adult Correctional Institutions, under the supervision of the Chief of Dental Services. Unlike the preliminary contracts, and prior to the "special contract employee" designation, each dentist or hygienist is required to attend monthly staff meetings on the first Tuesday of each month. Additionally, either party to the agreement has the option to terminate the agreement, in writing, within (5) calendar days (as opposed to the initial 45 days). The State also retains all documents and reports produced by the dentist or hygienist. The contracts further prohibit any alteration, amendment, or other modification to the agreement, except by a writing duly executed by both parties to the contract.
Under these contracts, the State agreed to compensate each dentist or hygienist for his or her services and to pay for their share of social security taxes (FICA). The dentists and hygienists are paid every four weeks on a "special payroll" from which gross amounts of federal and state income taxes and FICA are withheld. Under the 1999 fiscal year contracts, the dentists received a gross wage of $70,735.00, at an hourly rate of $43.00.6 The hygienists in fiscal year 1999 were paid gross wages of $50,760.00, at an hourly rate $27.00.7 The State also stipulated in each contract that its obligations ceased immediately if in any fiscal year the Legislature or federal funding sources failed to appropriate sufficient funds for the contract. Finally, the parties agreed that the law of Rhode Island governed all matters pertaining to the construction, validity, and performance of the contract.
None of the contracts oblige the State to provide the plaintiffs with health insurance, life insurance, membership in the state retirement system, vacation pay, holiday pay, sick leave, and longevity. While the contracts do not explicitly express that plaintiffs are not state employees under the Merit System Act, its terms are inconsistent with such a posture. To supplement the language of the contracts and to buttress their argument that they are state employees within the state service, plaintiffs have submitted sworn affidavits indicating that the Department of Corrections determines their hours of work and the entire scope of services that they provide in the course of their employment. The plaintiffs also maintain in their affidavits that the Department of Corrections sets treatment guidelines to handle the inmate population and determines which inmates will receive such treatment. The plaintiffs also aver in their affidavits that their lunch and other breaks are determined by the Department of Corrections and that the Department provides all dental equipment and instruments utilized in servicing the inmate patients.8
Bucci denied this petition on August 4, 1998. He relied on a provision of the State Purchases Act, R.I. Gen. Laws §
On August 14, 1998, the plaintiffs appealed Bucci's decision to Sandra Crowe, ("Crowe"), the Administrator of Adjudication of the Department of Administration. Crowe would not hear the appeal, claiming a lack of jurisdiction, pursuant to R.I. Gen. Laws §
On September 18, 1998, the plaintiffs filed a petition in this Court for a declaratory judgment, requesting the Court to declare that they are classified state employees pursuant to the Merit System Act, R.I. Gen. Laws §
I. Improper denial of membership in the state classified service since the date of initial employment with the Department of Corrections;
II. Improper denial of all insurance benefits since the date of initial employment with the Department of Corrections, including hospital care, surgical medical service benefits, group life, accidental death, long term health care, and other insurance benefits as authorized by R.I. Gen. Laws §§
36-12-6 ,36-12-14 ;III. Improper denial of participation in the state retirement system since the initial date of their employment with the Department of Corrections, pursuant to R.I. Gen. Laws §
36-10-1 et seq; andIV. Improper denial of sick leave, longevity, vacation and other benefits as provided in the Personnel Rules and Regulations published by the Office of Personnel Administration.
On October 30, 1998, the State filed a motion to dismiss plaintiffs' complaint pursuant to Rule 12 (b)(6). The State argued that it never waived its sovereign immunity and thus is protected from any declaratory judgment against it, pursuant to the Rhode Island Supreme Court's decision in Rhode Island Bridgeand Turnpike Authority v. Nugent,
Pursuant to an agreement between the parties on April 6, 1999, Justice Thompson ordered that this matter be resolved by cross-motions for summary judgment. The parties filed cross-motions for summary judgment, together with extensive exhibits and legal memoranda. This Court heard arguments on these cross-motions for summary judgment on October 6, 1999, after which the parties filed additional supplemental memoranda.
Moreover, there is ample precedent, while not expressly addressing Nugent, that recognizes the appropriateness of declaratory relief as against the State, particularly if it pertains to resolving issues over the legal rights of state employees. In Parente v. Southworth,
This authority, which succeeds the Rhode Island Supreme Court's decision in Nugent, clearly allows declaratory actions against the state to proceed without the bar of sovereign immunity, where a government employee seeks a declaration of his or her rights, status, and legal relations vis-a-vis the state. Were the sovereign immunity defense to prevail in such cases, such plaintiffs might well be denied a forum to clarify their rights as state employees. Accordingly, the State's sovereign immunity defense to plaintiffs' action for declaratory relief must fail. This Court thus will proceed to decision on the merits of plaintiffs' request for declaratory relief.
Plaintiffs counter that they were never hired under the State Purchases Act. They argue that it was not until instituting their present complaint that the State claimed that plaintiffs were hired under the Act. Plaintiffs claim further that, as a matter of law, the State Purchases Act does not allow for their hiring. Arguing that they are full-time state employees under labor contracts with the State, plaintiffs maintain that the State is explicitly prohibited from hiring them under the State Purchases Act.
Plaintiffs assert that it is inconsistent for the State to now take the position that all of the plaintiffs are providing services to the State under the State Purchases Act when the State canceled its purchase orders for all independent contractors in 1991 (pursuant to the IRS audit) and categorized plaintiffs as "special contract employees." The plaintiffs argue that "by clear implication," through their continued full-time employment with the Department of Corrections, and by the absence of a specific exclusion placing them in the unclassified service, they are in the classified service under the Merit System Act.
The State responds that the expiration of the "special contract employee" designation did not expunge its authority to purchase the services of dentists and hygienists. The State maintains that it has had the power historically both before and after the advent of the "special contract employee" designation to purchase and contract for services required by the departments of state government. As there were no full-time state employees available to perform the necessary tasks requested of plaintiffs, and as all parties agreed to contract for such services outside of the Merit System Act, the State argues that it legally procured those services under the State Purchases Act.
The scope of job duties of these state employees within the state service is determined by specifications developed by the Personnel Administrator under R.I. Gen. Laws §§
The Merit System Act, however, is not the only statutory mechanism by which a state department or agency can retain the personal services of an individual. The State Purchases Act, R.I. Gen. Laws §
These services consist of "the rendering by a contractor of its time and effort rather than the furnishing of an end product." R.I. Gen. Laws §
The State Purchases Act makes further explicit provisions for the procurement of professional services that cannot be provided easily within the framework of a civil service system. See, e.g.,
R.I. Gen. Laws §
"(1) For medical or dental consultant services:
(i) The need for the services required, including the scope of the services to be performed;
(ii) That no medical or dental personnel employed by the state on a full-time basis is available to perform the services;
(iii) That funding is available, indicating from which sources the funding is to be provided;
(iv) That medical or dental consultants to be engaged meet the following minimum requirements:
(A) Appropriate professional license or certification and;
(B) Competence to perform the services as reflected by formal training and education, general experience, and experience in providing the required services.
(2) For medical or dental services where those services are readily definitized and the required services are clearly defined:
(i) The need for the services, including the detailed scope of work to be performed;
(ii) That no full-time state employees are available to perform those services;
(iii) That funding is available, indicating from which sources such funding is to be provided; and
(iv) That such medical or dental service providers meet the following minimum requirements:
(A) Possess appropriate professional Rhode Island licenses and certifications; and
(B) Competence to perform such services as reflected by formal training and education, general experience, and expertise in providing the required services.
(b) For medical or dental services, or for temporary services, generally definable over a definite period of time but on an as-needed basis to provide coverage for full-time state employees (doctors, dentists, nurses, etc.) during their absence. The procurements for those services shall be obtained through the use of a blanket-type contract arrangement. Requesting agencies shall provide to purchasing division fully authorized, funded and described requirement via a blanket-type purchase requisition.
(c) Requesting agencies shall provide to the satisfaction of the chief purchasing officer or his or her designee the following:
(1) Rationale that the services are required; and
(2) Certification that medical or dental personnel to be employed possess the appropriate state license or certification, competence to perform those services as reflected by formal training, education, and experience in providing the required service.
(d) Nothing in this law shall prohibit, nor shall anything in this law be interpreted to prohibit, appropriate action by the director or his or her designee to provide needed medical services whether on a regular or emergency basis."
Id. §
In reading together these provisions of the Merit System Act and the State Purchases Act, it appears that generally state employees are hired under the Merit System Act and the Personnel Rules and Regulations which have been promulgated to effectuate that Act. In adopting the State Purchases Act, however, the Legislature has recognized that there are situations in which a state department or agency may need to hire someone by contract outside of the state service to render services to the department or agency.
This view is consistent with the broad powers that the Legislature has extended to department directors to administer their departments efficiently. See State Department ofCorrections v. R.I. Brotherhood of Correctional Affairs,
The Legislature has specifically granted these powers to the Director of the Department of Corrections by statute:
"In addition to exercising the powers and performing the duties which are otherwise given him by law, the director of the department of corrections shall:
(7) Hire, promote, transfer, assign, and retain employees and suspend, demote, discharge, or take other necessary disciplinary action;
(19) Make and enter into any contracts and agreements necessary or incidental to the performance of the duties and execution of the powers of the department, including, but not limited to, contracts to render services to committed offenders, and to provide for training or education for correctional officers and staff;
(22) Make and promulgate necessary rules and regulations incident to the exercise of his or her powers and the performance of his or her duties including but not limited to rules and regulations regarding nutrition, sanitation, safety, discipline, recreation, religious services, communication, and visiting privileges, classification, education, training, employment, care, and custody for all persons committed to correctional facilities."
R.I. Gen. Laws §
By providing in the State Purchases Act that neither the contracts nor the services purchased by a state department or agency can include "labor contracts with employees of State agencies," R.I. Gen. Laws §§
With regard to the hiring of medical or dental personnel, the Legislature has imposed further restrictions: their services may not be procured by a state department or agency unless there is a need for those services, there is funding to pay for the services, and they are appropriately qualified to provide the services. R.I. Gen. Laws §
Thus while a state department or agency does not have unbridled authority to hire medical or dental personnel outside of the state service, it is granted flexibility in hiring such professionals when the need for their services cannot be met by existing state employees within the state service. This statutory scheme presumably grants the State the opportunity to attract persons to work for the State who have no interest in a civil service position, perhaps at a higher rate of pay, but with lesser benefits than that which would be afforded them as civil servants.
As George Vose, the Director of the Department of Corrections, explains in an affidavit dated July 16, 1999, there were two major reasons that obtaining necessary and appropriate dental services at the Department of Corrections was difficult: (1) the state salaries formally attached to the posted, classified Merit System dental positions did not attract candidates to fill the positions; and (2) the rising prison population and active federal involvement with prison conditions forced the Department to greatly expand dental services in an expedited manner. Faced with these difficulties, the State had to utilize methods outside of the Merit System Act and within the authority of the State Purchases Act to contract for the procurement of dental services to the inmate population.
It is disingenuous for the plaintiffs to argue that they were state employees of the Department of Corrections, within the state service, at the time that they entered into contracts with the Department. They were never hired as state employees under the Merit System Act. By contract, they agreed to a one year term of hire and compensation presumably well in excess of that which would have been paid to them within the state service. Their contracts made no provision for payment of benefits available to employees within the state service. They do not dispute that at the time of the expiration of each one of their contracts and the renewal of the next, there were no state employees, within the state service, available to perform the requested services. Each plaintiff could not have been such an employee because he or she was not hired into the state service under the Merit System Act and had no right at that time to continued state employment. Had there been such an employee, there would have been no need for a contract or contract renewal.
As such, the State Purchases Act authorizes the procurement of plaintiffs' services. There was a need for those services, and no person employed by the State on a full-time basis was available to perform those services.
The mere fact that plaintiffs have proceeded to work full-time for the State pursuant to a series of one year contracts and implicitly allowed the State, by contract, to assert certain controls over them in the workplace with regard to the payment of their compensation does not convert them into state employees within the Merit System. The Department of Corrections has the authority under the State Purchases Act to procure their services by contract outside of the Merit System, assuming the strictures of R.I. Gen. Laws §
For the reasons set forth in this Decision, plaintiffs' motion for summary judgment is denied and defendants' cross-motion for summary judgment is granted. This Court declares that plaintiffs are not classified employees within the Merit System Act, R.I. Gen. Laws §§
Counsel should confer and submit to this Court forthwith for entry an agreed upon form of order and judgment which is reflective of this decision.
The Department of Corrections initially hired Dr. Frank as a special contract employee on November 1, 1991. Beginning in 1992, his employment also was governed by a series of one year agreements. His last agreement covered his final employment term from July 1, 1997 to June 18, 1998. Although he no longer seeks to be placed in classified service, he still requests compensation for benefits denied while he was an employee of the Department of Corrections.
The Department of Corrections initially hired Dr. Absi on March 1, 1994. His employment was also governed by a series of one year contracts. His last agreement covers the term from July 1, 1999 to June 30, 2000. Dr. Absi signed the aforementioned contract and the contract for the prior term of July 1, 1998 to June 30, 1999 subject to his rights as determined in the instant litigation.
The Department of Corrections initially hired Joseph Moreno as a dental hygienist on March 1, 1993. His employment was also governed by a series of one year contracts. His last agreement covers the term from July 1, 1999 to June 30, 2000. Joseph Moreno signed the aforementioned contract and the contract for the prior term of July 1, 1998 to June 30, 1999 subject to his rights as determined in the instant litigation.
The Department of Corrections initially employed Timothy Servant as a dental hygienist on July 1, 1993. His employment was also governed by a series of one year agreements with the Department of Corrections. His last agreement covers the term from July 1, 1999 to June 30, 2000. Timothy Servant signed the aforementioned contract and the contract for the prior term of July 1, 1998 to June 30, 1999 subject to his rights as determined in the instant litigation.
State Department of Corrections v. Rhode Island Brotherhood ... , 725 A.2d 296 ( 1999 )
Parente v. Southworth , 448 A.2d 769 ( 1982 )
Rhode Island Turnpike & Bridge Authority v. Nugent , 95 R.I. 19 ( 1962 )
RIH Medical Foundation, Inc. v. Nolan , 723 A.2d 1123 ( 1999 )