from the Superior Court in Maricopa County No. CV2014-052143
The Honorable John R. Hannah, Judge
Raczkowski, PC, Phoenix By Mack T. Jones Counsel for
O'Connor & Campbell, PC, Tempe By Daniel J.
O'Connor, J. Edward Doman, Jr. Counsel for
Kent E. Cattani delivered the opinion of the Court, in which
Presiding Judge Peter B. Swann and Judge Donn Kessler joined.
In this appeal, we address whether an employee of a private
contractor working in a state-owned prison is a statutory
employee of the State such that workers' compensation,
rather than a tort action against the State, is the exclusive
remedy for injuries sustained at work. We hold that, because
the State in this case retained the right to control or
supervise the contractor's work, and because the services
constitute a part or process in the usual and regular course
of the State's business, the employee was a statutory
employee of the State and could not pursue a tort action
against the State for her work-related injuries. Accordingly,
and for reasons that follow, we affirm the superior
court's grant of summary judgment in favor of the State.
AND PROCEDURAL BACKGROUND
While working as a clinical social worker at a prison
operated by the Arizona Department of Corrections
("ADC"), Nancy Wagner slipped and fell on an
unmarked wet floor. Wagner was working at the time as an
employee of Wexford Health Services, Inc., which had a
contract with ADC to provide healthcare services at
Wagner filed a workers' compensation claim against
Wexford and received benefits. She also sued the State,
arguing that ADC negligently failed to maintain the prison
where she fell.
After conducting discovery, the State moved for summary
judgment, arguing that because ADC was Wagner's statutory
employer under Arizona Revised Statutes ("A.R.S.")
§ 23-902(B), workers' compensation was her exclusive
remedy under A.R.S. § 23-1022(A). The court entered
summary judgment for the State on that basis, and Wagner
Wagner argues that summary judgment was improper, alleging
that ADC was not her statutory employer under A.R.S. §
23-902(B) because ADC did not have sufficient control or
supervision over her work, and because the work provided by
Wexford was not a part or process of ADC's trade or
business. We review the court's summary judgment ruling
de novo, and view the facts in the light most favorable to
the non-moving party. Tilley v. Delci, 220 Ariz.
233, 236, ¶ 7 (App. 2009). Summary judgment is
appropriate only if "the moving party shows that there
is no genuine dispute as to any material fact and the moving
party is entitled to judgment as a matter of law." Ariz.
R. Civ. P. 56(a); see also Orme Sch. v. Reeves, 166
Ariz. 301, 309 (1990).
Unless an employee specifically rejects workers'
compensation before injury, the workers' compensation
system is the exclusive remedy for that employee to recover
damages resulting from his or her employer's negligence.
A.R.S. § 23-1022(A); Anderson v. Indus.
Comm'n, 147 Ariz. 456, 457 (1985). Under A.R.S.
§ 23-902(B), an entity that hires a contractor may be
the statutory employer of the contractor's employees for
workers' compensation purposes if (1) the entity
"retains supervision or control" over the
contractor's work and (2) the contractor's "work
is a part or process in the trade or business of the
[entity]." See also Young v. Envtl. Air Prods.,
Inc., 136 Ariz. 158, 163-64 (1983). The statutory
employer provision generally "covers all situations in
which work is accomplished which th[e] employer, or employers
in a similar business, would ordinarily do through
employees." Basurto v. Utah Constr. & Mining
Co., 15 Ariz.App. 35, 41 (App. 1971).
Wagner argues that a provision in the contract between
Wexford and ADC, which provides that neither Wexford nor its
employees should be considered employees of ADC "under
any circumstances, " creates a fact question as to
whether she was a statutory employee of ADC. But the label
parties give to their relationship does not end our inquiry
into whether one party is an employee of the other. Anton
v. Indus. Comm'n,141 Ariz. 566, 568 (App. 1984).
Rather, we look to the substance of the contract,
id., recognizing that we should strictly construe