SUSAN GALLAGHER vs. CEREBRAL PALSY OF MASSACHUSETTS, INC., & others. [Note 1]

LEMIRE, J. Susan Gallagher, a personal care attendant (PCA) who provided in-home services for an elderly man (consumer [Note 2]), brought an action in Superior Court against Cerebral Palsy of

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Massachusetts, Inc.; its president, Donald Uvanitte; and its treasurer, David Sprague (collectively, CPM), alleging that CPM was her employer and that it failed to pay her for her overtime hours, including failing to do so at an overtime rate. A judge granted CPM's motion to dismiss on the ground that, pursuant to the MassHealth regulations (regulations) governing Gallagher's work arrangement, she was employed by the consumer, not CPM. Gallagher appeals from the judgment, and we affirm.

Standard of review. Although there were exhibits attached to both CPM's motion to dismiss and Gallagher's opposition, the judge ostensibly declined to treat the motion as one for summary judgment, and she excluded the additional material from consideration. See Mass.R.Civ.P. 12(b), 365 Mass. 754 (1974). But in a footnote explicitly listing the excluded exhibits, the judge did not identify as having been excluded one of CPM's submissions: excerpts from a contract it executed with the Executive Office of Health and Human Services. That document establishes the applicability of certain of the regulations, including CPM's role within that regulatory framework as a "fiscal intermediary," i.e., an entity that serves in a facilitative role with regard to payroll and related matters. 130 Code Mass. Regs. § 422.402 (2006). These facts were not reflected in the complaint, but the judge cited them as dispositive. By relying on facts outside of the complaint, the judge essentially rendered a decision in the nature of summary judgment. Doucette v. Massachusetts Parole Bd., 86 Mass. App. Ct. 531 , 533-534 (2014).

We will review the decision as such, including taking into consideration the other excluded material. We may do so without risk of procedural unfairness for two reasons. First, both parties in their briefs to this court addressed the implications of the facts reflected in the materials, compare Marram v. Kobrick Offshore Fund, Ltd., 442 Mass. 43 , 45 n.4 (2004), and Gallagher's brief, in particular, argued that a summary judgment standard should have been applied. Second, as we will explain further, we agree with the judge's conclusion that CPM was entitled to judgment as a matter of law; this result could not be overcome with further evidence. "Accordingly, we review the judge's dismissal of this action as though [she] had granted a motion for summary judgment." Cousineau v. Laramee, 388 Mass. 859 , 860 n.2 (1983).

We review a grant of summary judgment de novo. Federal Natl. Mort. Assn. v. Hendricks, 463 Mass. 635 , 637 (2012). In doing so, we consider the pleadings and other record evidence,

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viewing them in the light most favorable to Gallagher and drawing all reasonable inferences in her favor, to determine whether, on the undisputed facts, CPM is entitled to judgment as a matter of law. Ibid.

Background. In June, 2006, Gallagher began working as a PCA, providing in-home care to the consumer, who received these services in connection with his MassHealth benefits. Her work was facilitated, in part, by CPM. Pursuant to the regulations governing PCA benefits for MassHealth members, CPM acted as a fiscal intermediary. CPM's duties included forwarding notice of preapprovals, which were issued by MassHealth, for the number of hours of Gallagher's weekly work for which wages would be covered by MassHealth, issuing her paychecks, and making payments into the unemployment insurance system.

In September, 2006, shortly after beginning her work, Gallagher signed a form given to her by CPM, acknowledging that the consumer was her employer. At approximately the same time, she signed two other forms given to her by CPM -- a W-4 form and an I-9 form. Since that time, CPM has issued her annual W-2 forms. Although these tax form interactions are commonly conducted with an employer, here, the W-4 and I-9 forms identified the consumer as the employer, and the single W-2 in the record states that it was issued by CPM "FBO [the consumer]," i.e., for the benefit of the consumer. Additionally, CPM's role with respect to these tax forms was consistent with its duties under the regulations as a fiscal intermediary. See note 9, infra.

During the years she worked as a PCA, Gallagher sometimes worked more than forty hours per week, but she was not paid for any hours worked beyond forty per week. On December 10, 2015, Gallagher filed a verified complaint against CPM, including two of its officers, alleging violations of the Massachusetts Wage Act, see G. L. c. 149, § 148, and the Massachusetts overtime statute, see G. L. c. 151, § 1A. CPM responded with a motion to dismiss, which Gallagher opposed. As stated, both parties attached exhibits to their memoranda. On June 27, 2016, after a hearing, the judge granted CPM's motion on the ground that Gallagher was employed by the consumer, not CPM. Gallagher appeals.

Discussion. 1. Legal standard. The essential question posed by this case is whether CPM may be considered Gallagher's employer for the purposes of the Wage Act, the overtime statute, or both. Although the Wage Act contains two provisions that specifically expand the scope of the term "employer" in certain

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contexts, [Note 3] neither the Wage Act nor the overtime statute includes a self-contained definition of "employer." See G. L. c. 149, § 148; G. L. c. 151, § 1A.

Gallagher relies on Chase v. Independent Practice Assn., 31 Mass. App. Ct. 661 , 665 (1991), and similar cases articulating various factors used at common law to distinguish employees from independent contractors. These factors are "oriented toward determining whether an individual's conduct was subject to the principal's control or right of control." Peters v. Haymarket Leasing, Inc., 64 Mass. App. Ct. 767 , 774 (2005). That inquiry, in turn, forms one of the "essential tests" used to determine the existence of an employment relationship at common law. Griswold v. Director of the Div. of Employment Security, 315 Mass. 371 , 372 (1944).

While the common-law approach has continuing vitality in certain contexts, see, e.g., Peters, 64 Mass. App. Ct. at 773-774 (tort liability under respondeat superior), where the Wage Act and the overtime statute are concerned, the common-law approach has been superseded by G. L. c. 149, § 148B, which defines the over-all employer-employee relationship for all cases arising under G. L. c. 149 and G. L. c. 151.

Chapter 149, § 148B, creates a two-step inquiry. First, "[t]he threshold question is whether the [plaintiff] provided services to the [defendant]." Sebago v. Boston Cab Dispatch, Inc., 471 Mass. 321 , 329 (2015). If this threshold is met, the individual is presumed to be an employee. Id. at 327. Under the second step, the putative employer may rebut that presumption by proving, pursuant to a three-part test, that the person worked as an independent contractor. Ibid.

We apply § 148B here by asking whether Gallagher provided services to CPM. Sebago, supra at 329. Ordinarily, this inquiry presents a question of fact. See id. at 331; National Assn. of Govt. Employees v. Labor Relations Commn., 59 Mass. App. Ct. 471 , 474 (2003). This is not the ordinary case, however, because here there exists a regulatory framework that describes the relationship between the various parties -- Gallagher, CPM, and the consumer -- in extensive detail. See 130 Code Mass. Regs. §§ 422.00 (2002).

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The fact that these regulations applied to Gallagher's work arrangement is confirmed by CPM's contract to act as a fiscal intermediary, as well as by several other exhibits, including many submitted by Gallagher herself. Importantly, for summary judgment purposes, there is nothing in the record to suggest that the regulations did not apply, nor that Gallagher's relationship with CPM differed in any respect from the relationship, as contemplated by the regulations, between PCAs and fiscal intermediaries. Equally important, looking to Gallagher's pleadings, there also are no allegations suggesting that her relationship with CPM differed in any way from that described by the regulations, much less that it differed by virtue of her providing services to CPM. It is for this reason that we stated in our discussion of the standard of review that the result we reach could not be overcome with further evidence.

We thus look to the regulations to understand Gallagher's relationship with CPM and to determine whether she provided services to CPM. [Note 4]

2. The regulations. [Note 5] By the nature of their work, PCAs perform tasks for consumers. These tasks include, for example, mobility assistance, bathing, dressing, meal preparation, laundering, grocery shopping, and general housekeeping. See 130 Code Mass. Regs. §§ 422.402 (2002, 2006) (defining "Activities of Daily Living" and "Instrumental Activities of Daily Living" as being undertaken by, or with assistance from, PCAs); 130 Code Mass. Regs. § 422.410(A)-(B) (specifying particular activities). As a matter of law, consumers have the right to hire and to fire their PCAs, to set their work schedules, to train them, and to supervise them. 130 Code Mass. Regs. §§ 422.411(A)(1)(f), 422.420(A)(6). [Note 6], [Note 7]

Gallagher's relationship with CPM was of a markedly different nature. Fiscal intermediaries such as CPM enter into contracts with MassHealth "to perform employer-required tasks and related administrative tasks." 130 Code Mass. Regs. § 422.402. [Note 8] The definition of "employer-required tasks," in turn, reflects the entities' role as strictly focused on particular finance-related matters. Ibid. This includes preparing PCA payrolls, generating and issuing paychecks, managing certain tax-related matters (e.g., PCA income tax withholdings and filing certain tax documents for members receiving care), [Note 9] paying into the unemployment insurance system, and purchasing workers' compensation insurance. Ibid. Although the fiscal intermediaries are responsible for issuing payments to PCAs, they act only as a conduit for funds that are provided by MassHealth. 130 Code Mass. Regs. §§ 422.411(A), 422.419(B)(12). Another regulation specifically provides that fiscal intermediaries are not responsible for paying PCAs for time worked in excess of what has been authorized by MassHealth, and the regulation does so with language that suggests that consumers would be responsible for payment of wages for that time. See 130 Code Mass. Regs. § 422.416(E)(4)(e). [Note 10] Only MassHealth may approve the number of weekly hours for which it will cover payment of wages, including overtime. [Note 11] See 130 Code Mass. Regs. §§ 422.416, 422.417, 422.418(A). Initial requests for preapprovals, as well as requests to adjust preapprovals, are made not by fiscal intermediaries, but by entities known as personal care agencies, in coordination with consumers, who may initiate such adjustment requests. 130 Code Mass. Regs. §§ 422.416, 422.417, 422.418(A). Rates of payment are set by regulation. 130 Code Mass. Regs. § 422.448.

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Nothing in these regulations suggests that PCAs provide services to fiscal intermediaries. While it is true that the very existence of PCAs does eventually inure to the benefit of fiscal intermediaries -- MassHealth pays fiscal intermediaries "administrative fee[s]" for their work, 130 Code Mass. Regs. § 422.448 -- there are two reasons why this does not alter our conclusion.

First, CPM's entitlement to administrative fees is the result of a work arrangement that was designed by Congress, the State Legislature, and regulatory agencies -- not CPM. [Note 12] As in Sebago, which also involved a highly regulated industry, "[t]his is not a case of defendants concocting an artificial . . . scheme to circumvent the wage laws." 471 Mass. at 330. Nor is this "a case of [an employer] creating a false dichotomy between the administrative and operational aspects of [its] business." Ibid. The administrative fees do not reflect an effort by CPM to make an "end run" around our wage and hour laws. DePianti v. Jan-Pro Franchising Intl., Inc., 465 Mass. 607 , 624 (2013).

Second, focusing our attention more directly on the threshold test under § 148B, we conclude that the relationship between Gallagher's work and CPM's receipt of administrative fees is far too attenuated to permit the conclusion that she provided services to CPM. This aspect of the parties' relationship is similar to that between taxicab drivers and the taxicab garage in Sebago, supra at 331. Gallagher did not provide services to CPM, much as the drivers did not provide services to the taxicab garage; rather, like the garage, which catered to the taxicab industry "as a whole," CPM received administrative fees by virtue of the facilitative services it provided to this MassHealth program as a whole. Ibid.

We therefore conclude that, in the circumstances of this case involving a PCA and fiscal intermediary working wholly within

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the framework of the regulations, Gallagher did not provide services to CPM and cannot be deemed its employee for the purpose of the Wage Act or the overtime statute.

3. Joint employment. Gallagher posits that, even if another person or entity was her employer, [Note 13] CPM was her joint employer. [Note 14] "The Supreme Court defined the concept of a 'joint-employer' as a company possessing 'sufficient control over the work of the employees' of another company." Commodore v. Genesis Health Ventures, Inc., 63 Mass. App. Ct. 57 , 61 (2005), quoting from Boire v. Greyhound Corp., 376 U.S. 473, 481 (1964). "The basis of [a joint employer] finding is simply that one employer while contracting in good faith with an otherwise independent company, has retained for itself sufficient control of the terms and conditions of employment of the employees who are employed by the other employer." Id. at 62, quoting from Swallows v. Barnes & Noble Book Stores, Inc., 128 F.3d 990, 993 n.4 (6th Cir. 1997). As with the existence of an employment relationship, or the distinction between employees and independent contractors, joint employment is ordinarily a question of fact. Id. at 61-62, citing Boire, supra.

We need not address whether the statutory "provision of services" test in § 148B supplants the common-law "right to control" test for purposes of a joint employment theory of liability under the Wage Act or the overtime statute. Gallagher's theory fails under the statutory test, for the reasons already set forth; and it fails under the common-law approach because the regulations we described further reflect that CPM, unlike the consumer, had no right to control Gallagher's work. [Note 15]

Conclusion. Although fiscal intermediaries play an important

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role in MassHealth's regulatory framework, their "[m]ere participation in that system is insufficient" to render them presumptive employers under G. L. c. 149, § 148B(a). Sebago, 471 Mass. at 330. Because Gallagher did not provide services to CPM, it cannot be deemed her employer for the purposes of the Wage Act, nor the overtime statute, and her claims were correctly dismissed. [Note 16], [Note 17]

Judgment affirmed.