They aren’t saying they goofed, but the insurance broker for the American Veterinary Medical Association’s Professional Liability Insurance Trust (AVMA PLIT) plans to “clarify” advice that came out in 2009, stating that relief veterinarians needed workers' compensation insurance even though most are independent contractors.
Relief veterinarians are hired to work weekends, holidays and other periods when a member of a veterinary practice or animal hospital cannot be present. The statement by the PLIT's longtime broker Hub International Midwest, Ltd., that relief veterinarians should be covered by workers' compensation insurance created confusion among practitioners. Critics of the advice argued that it ran contrary to the distinction and tax status of many relief veterinarians as independent contractors, in addition to forcing the practice owners hiring them to pay increased insurance premiums.
Mike Ahlert, executive vice president of Hub International, said the clarification will be issued in the next AVMA Business Insurance Update, a quarterly advice column that goes out to PLIT policyholders. The article, slated for release in April, will feature counsel originally drafted for the San Diego County Veterinary Medical Association (SDCVMA), authored by William K. Browning, an employment lawyer at Klinedinst PC in San Diego.
"Workers' comp is only for employees, not independent contractors retained by an employer,” Browning said in an interview.
Browning's article for the SDCVMA reviewed tests that veterinary practices and relief veterinarians can use to determine independent contractor status, which can be complicated and yield legal problems and even fines if determined incorrectly. For example, veterinarians who are independent contractors retain the right to determine on their own the means and methods used to treat patients. If they are employees, the practice owner has the right to specify how the job is performed.
Ahlert said the 2009 article in the AVMA Business Insurance Update titled “Questions and Answers — Relief Veterinarians,” was intended to bring clarity to the independent contractor issue but ended up muddying the question all the more. He said there is no “black and white answer” to independent contractor status question; each state has its own guidelines.
Hub International is not the only broker of workers' compensation insurance for the veterinary profession but is a major player. Ahlert estimated that about a quarter of veterinary practices in the United States buy their workers' compensation coverage through PLIT-sponsored programs. The Hartford is the major underwriter for workers' compensation insurance offered through PLIT-sponsored programs, he said. (To further illustrate the relationship, Hub International acts as a store front selling The Hartford policies. The PLIT sponsors the broker's insurance programs for AVMA members.)
David Smith, a spokesman for the Pennsylvania Department of Labor and Industry, said Pennsylvania does not have specific independent contractor guidelines for relief veterinarians and that there is no general “litmus test” to make that determination. He pointed to Internal Revenue Service Publication 1779, “Independent Contractor or Employee?” for federal guidance on the definition of an employee. Smith noted that relief veterinarians do not qualify for workers' compensation insurance if they're determined to be independent contractors.
The uproar concerning the 2009 article largely was limited to Southern California, home to many relief veterinarians, Ahlert said. Pauline White, executive director of the San Diego County Veterinary Medical Association (SDCVMA), said a member contacted her to complain after the article appeared. White’s initial attempts to clarify the matter with HUB International yielded hazy answers.
Claims and Counter Claims
The issue quieted but resurfaced when a second SDCVMA member expressed concern, reporting that she was being required to obtain workers' compensation insurance by the practice where she was working as a relief veterinarian. Complaints also came from Dr. Elizabeth Kelly, who stated that The Hartford was overcharging her as a practice owner—a claim that Ahlert flatly denies. Last fall, the carrier tried to force Kelly, owner of Jamacha Veterinary Clinic in El Cajon, Calif., to pay workers' compensation insurance for the relief practitioners she has hired since 2009, if she could not prove that they purchased personal coverage.
Another issue, and one that plagues many policyholders: Kelly was being charged to insure herself, even though California law allows practice owners to opt out of covering themselves with workers' compensation insurance. In an email to the VIN News Service, Ahlert insisted that The Hartford and Hub International follow state labor laws. "As I explained to Dr. Kelly, this subject is open to interpretation ... The fact that Dr. Kelly does not agree with Hartford does not mean they are cheating her," he stated.
"If I cave and agree to pay for my relief vet's workers' compensation, then it opens me up to an IRS audit because they would be classified as employees and I would owe back taxes," she stated in an email to the VIN News Service in December. In a later interview, she said: "They wanted certificates of insurance for anyone who worked on the premises making more than $600 in my clinic. That includes the guy who tunes up our anesthesia machine and the person who sharpens our clipper blades."
Kelly added that her premiums for workers' compensation insurance are calculated at 3.8 percent of payroll. She spends $60,000 to $100,000 a year on relief veterinarians and mobile surgeons, and when she failed to fill out the audit form required by The Hartford and sent to her via Hub International, the underwriter automatically upped her premiums by 15 percent.
Talking It Out
In response the troubles reported by Kelly and others, the SDCVMA's White arranged a meeting between Dr. Deborah Harvazinski, the secretary-treasurer of the SDCVMA who also is a relief veterinarian, and Dr. Rodney G. Johnson, CEO of the AVMA PLIT. Harvazinski provided the perspective of a relief veterinarian affected by information in the article, White said. Bottom line: Assessments of an individual's employment status are conducted by relevant tax and labor authorities—not insurance underwriters or agencies.
Just before Christmas, the company changed its stance. Ahlert assured Kelly that The Hartford and Hub International would no longer charge her in reference to the independent contractors she hires to work in her practice and issued her a refund on the premium she'd been paying to insure herself. Around the same time, the PLIT's Johnson assured the SDCVMA that the issue surrounding independent contractors would be clarified.
“We are very involved in looking after the interests of our members. We look forward to AVMA clarifying that article," White said.
This article originally was distributed by the VIN News Service and is reprinted with permission. Author David DeKok is a freelance journalist based in Harrisburg, Penn. Journalist Jennifer Fiala contributed to the article.