La-State Dept. of Labor, Office of Regulatory Services v. United Medical Staffing, Inc.

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

08-767

STATE OF LOUISIANA,
DEPARTMENT OF LABOR
OFFICE OF REGULATORY SERVICES,
STEPHANIE ROSAYA, ORS CHIEF

VERSUS

UNITED MEDICAL STAFFING, INC.

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APPEAL FROM THE
FIFTEENTH JUDICIAL DISTRICT COURT,
PARISH OF LAFAYETTE, NO. C-2008-0123; DIV. “H”
HONORABLE DAVID A. BLANCHET, DISTRICT JUDGE

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JIMMIE C. PETERS
JUDGE

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Court composed of Sylvia R. Cooks, John D. Saunders, and Jimmie C. Peters,
Judges.

REMANDED.

Caprice Ieyoub
Kathryn W. Landry
Ieyoub & Landry, L.L.C.
Post Office Box 82659
Baton Rouge, LA 70884
(225) 803-6819
COUNSEL FOR PLAINTIFF/APPELLEE:
State of Louisiana, Department of Labor
Office of Regulatory Services

Mark G. Artall
A Professional Law Corporation
109 South College Road
Lafayette, LA 70503

(337) 233-1777
COUNSEL FOR DEFENDANT/APPELLANT:
United Medical Staffing, Inc.

PETERS, J.

The defendant, United Medical Staffing, Inc. (UMS), appeals from a judgment

of the trial court making executory an assessment and lien filed against it by the

plaintiff, the State of Louisiana, Department of Labor, Office of Regulatory Services

(hereinafter referred to as the “Department” or the “state”). After the judgment was

made executory, UMS filed a motion for a new trial, which the trial court set for

hearing. However, before the motion could be heard, the trial court granted UMS this

present appeal. For the following reasons, we remand the matter to the trial court to

allow UMS ten days to file an application for an injunction and to furnish security.

DISCUSSION OF THE RECORD

On January 7, 2008, the Department filed a petition against UMS seeking to

have an assessment for unpaid employer contributions owed to the State of Louisiana

made executory. The assessment, which was issued to UMS on March 2, 2007,

sought unpaid employer contributions owed by UMS to the state unemployment

compensation program in the amount of $3,991.77. The petition asserted that the

Department had complied with the notice requirements of La.R.S. 23:1725, that the

assessment and lien were final and enforceable, and that they should be made

executory pursuant to La.R.S. 23:1730. However, the petition contained no evidence

of compliance with the statutory notice requirements. Based on the pleadings, before

it, on January 9, 2007, the trial court granted the Department executory judgment as

prayed for. The trial court set UMS’s subsequently filed motion for new trial for

hearing on April 14, 2007. However, before the motion was heard, UMS filed a

motion for devolutive appeal, which the trial court granted on March 18, 2008.

On appeal, UMS raised two assignments of error:

1) The trial court erred in granting an Order of Appeal while a
Motion for New Trial was pending.

2) The trial court erred in granting the Executory Judgment at issue
herein because Appellee failed to demonstrate to the Court that it
had complied with the statutory requirements of La.R.S. 23:1546
and La.R.S. 23:1721 et seq. and, further, failed to demonstrate to
the trial court that due process requirements of notice of
opportunity to be heard had been satisfied.

The first assignment of error has already been addressed in State of Louisiana,

Dep’t of Labor, Office of Regulatory Servs., Stephanie Rosaya, ORS Chief v. United

Medical Staffing, Inc., 08-767 (La.App. 3 Cir. 9/24/08), ___ So.2d ___, wherein this

court concluded that a new trial is not available in suits in which the Department

sought to have a tax assessment made executory. Therefore, we need only address

UMS’s second assignment of error.

OPINION

The procedural statutes that address the state’s collection of unemployment

compensation are set out in La.R.S. 23:1721, et seq. One of the vehicles by which the

Department may seek to enforce collection of contributions or payments due is by

means of an assessment and executory procedure set forth in this series of statutes.

La.R.S. 23:1721. The procedure is triggered by the failure of an employer to make

and file any report that might be required relating to contributions, interest, penalties,

or other payments that might be due under the unemployment compensation scheme.

La.R.S. 23:1722. When an employer fails to timely file a required report, the

Secretary of the Department of Labor [hereinafter referred to as the “administrator”

as defined in La.R.S. 23:1472(1)] has the responsibility of determining the amount

owed by the employer and of notifying the employer by certified or registered mail

of the determination and the Department’s intent to assess that amount within ten

calendar days from the date of the notice absent a protest by the employer. La.R.S.

23:1722. The employer’s protest rights are set forth in La.R.S. 23:1723, which

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provides that the employer need only send a protest to the administrator by certified

or registered mail within the ten day period set forth in La.R.S. 23:1722.

Absent a timely protest, the administrator is then allowed to proceed to assess

the amount due from the employer, and the written assessment shall remain a part of

the administrator’s official records. La.R.S. 23:1724. Once the assessment is

completed, the administrator is required to notify the employer of the assessment by

certified or registered mail. La.R.S. 23:1725. Additionally,

The administrator shall notify the employer of the assessment by
sending a notice of assessment by certified or registered mail to the
employer’s last known address.

Nothing in this part shall be construed so as to deprive the
administrator of the right and power to reassess an employer for any
report, contributions, interest or penalty in the event a deficiency in the
amount of assessment is discovered.

La.R.S. 23:1725.

An employer dissatisfied with the final assessment has the right to file a

petition for judicial review within ten days of the date of the notice of the assessment.

La.R.S. 23:1728. Even then, the judicial review process is limited to questions of law

and the factual findings of the administrator “shall be conclusive if supported by

substantial and competent evidence.” Id.

In the matter now before us, UMS neither filed a protest under La.R.S. 23:1723

nor sought judicial review as provided for in La.R.S. 23:1728. Therefore, the

Department’s assessment is “tantamount to and the equivalent of judgments of

courts.” La.R.S. 23:1276.

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The Department’s authority for making the assessment executory is found in

La.R.S. 23:1730:

The administrator may file an ex parte petition complying with
Article 891 of the Code of Civil Procedure together with a copy of the
notice of assessment annexed praying that the assessment be made
executory. The court shall immediately render and sign this judgment
making the assessment of the administrator executory.

The assessment thus made executory may be executed and
enforced immediately as if it had been a judgment of that court rendered
in an ordinary proceeding.

The administrator fully complied with this statute, and the trial court granted a

executory judgment accordingly. However, La.R.S. 23:1731 provides that,

The execution of an assessment made executory under this part
may be arrested by injunction only if the judgment is extinguished or
otherwise legally unenforceable. No temporary restraining order or a
preliminary writ of injunction may be issued, however, unless the
applicant therefor furnishes security in an amount of one and one-half
times the amount of the assessment including contributions, interest and
penalty.

In the matter before us, the record establishes that the assessment to UMS was

issued on March 2, 2007. Therefore, at that time, and assuming proper notice, the

assessment was “tantamount to and the equivalent of” a judgment of the court.

La.R.S. 23:1726. UMS took no action during the ten-day window provided for in

La.R.S. 23:1728. The first and only indication of notice deficiencies is found in the

form of a letter attached to UMS’s motion for new trial which is addressed to the

administrator and reads as follows:

Mrs. Smith with the local Louisiana Department of Labor’s office
(337-262-5542) advised me on June 19, 2007 that your office
reclassified the earnings of James Rhodes to that of an employee
opposed to that of an independent contractor. As I understand, Mr.
Rhodes made a claim for unemployment insurance benefits in
September 2006. Prior to that time, Mr. Rhodes performed services as
a registered nurse for United Medical Staffing, Inc. and was paid as an
independent contractor. It is our position that Mr. Rhodes was in fact an

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independent contractor and that your classification of his wages was
improper.

Accordingly, please consider this letter as a formal request for an
administrative tax hearing to protest the tax liability assessed by your
office, and further to protest the erroneous classification of James
Rhodes as an employee of United Medical Staffing, Inc. Please notify
my office of the date and time of the hearing and provide all pertinent
information regarding what type of evidence the administrative hearing
officer will review.

The letter was signed by Mark G. Artall, but his relationship to UMS is not made

clear. However, and again assuming timely mailing of the notice required by La.R.S.

23:1722, this request had no effect on the assessment as it was already final. Once

the executory judgment was rendered on January 9, 2008, UMS’s only recourse was

to seek to arrest the judgement by way of an injunction and it did not follow this

procedure.

Despite UMS’s failure to pursue the injunctive relief available to it, we feel

compelled to follow the supreme court decision in State, Department of Labor, Office

of Employment Security v. S/J Travel Executives New Orleans, Inc., 98-548 (La.

5/8/98), 709 So.2d 682, which addressed the very issue now before us. In that matter,

the administrator seeking to have an assessment made executory included an affidavit

stating that it had complied with the Louisiana Employment Security Law notice

requirements in assessing the defendant. As is the case now before us, the defendant

in that matter complained that the record contained no evidence that the state had

complied with the notice requirements. The fourth circuit reversed the trial court’s

grant of executory relief on that ground. State, Dep’t of Labor, Office of Employment

Sec. v. S/J Travel Executives New Orleans, Inc., 97-734 (La.App. 4 Cir. 11/26/97),

704 So.2d 819. However, the supreme court reversed the fourth circuit and remanded

the matter to the trial court giving the defendant ten days from the date of its order to

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seek an injunction to arrest the execution of the judgment pursuant to La.R.S. 23:1731

and to furnish the appropriate security. In following the supreme court’s guidance on

this issue, we further notice that La.R.S. 23:1731 contains no minimum time in which

the defendant can request injunctive relief.

DISPOSITION

For the foregoing reasons, we remand the matter to the trial court to allow

United Medical Staffing, Inc. ten days from the date of this order to file an application

for an injunction and furnish security. We assess costs of this matter equally between

the parties, $176.72 assessed to the State of Louisiana, Department of Labor, Office

of Regulatory Services, Stephanie Rosaya, ORS Chief. La.R.S. 13:5112(A).

REMANDED.

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