20 CFR 404.1004(c) and 404.1270
The State of Pennsylvania timely requested a review under Section 218(s) of the Social Security Act, as amended, of the Administration's allowance of credit based on a finding by the United States District Court for the Western District of Pennsylvania that the services performed by an individual as a school dentist were not performed in an employment relationship with the school systems who engaged his services and thus were not covered under the Federal-State section 218 agreement. The State is of the view that the individual was an employee of the school systems and that the services performed were covered under the Pennsylvania agreement for coverage of State and local employees.
The court decision resulted from an appeal, pursuant to Section 205(g) of the Social Security Act, by the individual after he had exhausted all administrative appeals of the Administration's determination that the services in question were performed in an employment relationship. The Administration did not appeal the court decision. However, the substantive facts of the case must again be reviewed since the State, which was not a party to the court action, has requested a review of the credit issued based on the corresponding determination that contributions were not due on the individual's earnings.
The facts in this matter establish that the individual initiated an earnings discrepancy investigation on February 10, 1962, when he requested that wages allegedly paid to him as an employee of the school districts of McCandless Township, Marshall Township, Franklin Township, and Bradford Woods Borough (North Allegheny Joint School System) be deleted from the Administration's records. Subsequent development also disclosed that his services were similarly engaged by the Bellevue Borough School District. While some of his services were performed prior to 1958, at the time he initiated the earnings discrepancy statutory limitations barred the correction of discrepant earnings for years prior to 1958.
On January 10, 1966, the Administration notified the individual of the determination that he was an employee of the school systems in question and that the remuneration he received was properly wages under the applicable provision of the Social Security Act. This determination was a combined initial and reconsideration decision since the individual had prematurely requested a hearing on the matter. He then timely requested a hearing before an Administrative Law Judge of the Bureau of Hearings and Appeals and the hearing decision, dated July 7, 1967, affirmed the initial and reconsideration determination. A request for review of the Administrative Law Judge's decision was denied by the Appeals Council of the Bureau of Hearings and Appeals. The individual then appealed the matter to a U.S. District Court and on February 19, 1969, the U.S. District Court for the Western District of Pennsylvania held that his relationship with the school districts was that of an independent contractor.
The District Court judge on review of the evidence based his decision on the following facts:
(1) The subject individual is a licensed dentist in Pennsylvania.
(2) He applied approximately 93 percent of his professional time to the general practice of dentistry. The remaining 7 percent of his time was spent as a school dentist examining children.
(3) The school districts have no control over the manner, type or method of his examinations, all of which are completely at his own discretion.
(4) He was not compelled to remain at the school district if there were no students to be examined and he was free to change his school schedule to conform to emergencies in his private practice.
(5) His services, as a school dentist, were performed under written contract with the Bellevue Borough School District but he had no written contract with the North Allegheny Joint School System.
(6) The individual was paid either a flat fee for each student examined or an established annual fee.
(7) He was advised by school nurses as to which school should be used for his student examinations.
(8) The individual controlled the manner and method of his school examinations and was not subject to supervision.
Based upon the U.S. District Court decision, the Administration deleted the earnings in question from its records relative to the individual and issued the State credit for the contributions paid with respect to his services as a school dentist. The State timely requested a review, pursuant to Section 218(s) of the Social Security Act, of the determination allowing the issuance of the credit.
Section 210 of the Social Security Act, as amended, reads in pertinent part as follows:
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Subpart K of Social Security Regulations No. 4, in pertinent part, provides as follows:
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Statutory authority for the conduct of school health services is found in Article XIV of the Pennsylvania School Code. This code reads in pertinent part as follows:
The State is of the opinion that an employment relationship existed between the dentist and the school systems that engaged his services. The State also stresses that the request for review under Section 218(s) of the Social Security Act, as amended, constitutes a separate action, apart from the court decision and does not constitute a request for appeal or review of the court's decision.
It is the position of the Social Security Administration that no employer-employee relationship existed between the dentist and the North Allegheny Joint School System and the Bellevue Borough School District. This position is based on the decision issued February 19, 1969, by the United States District Court for the Western District of Pennsylvania. Further consideration of the factual situation leads to the conclusion that the court's decision was the proper conclusion to be drawn in this case.
A provision in the State statute authorizing all school districts to employ school dentists does not per se establish a common-law employment relationship between the respective school districts and the dentists who examine the children's teeth in the local schools. Generally, an employment relationship exists only when the person for whom the services are performed has the right to control and direct the individual who performs the service, not only as to the result to be accomplished by the work but also as to the manner and means by which the result is accomplished. The evidence in this case negates a finding that the school district had authority to direct and control the individual's activities as a school dentist to a degree sufficient to establish an employment relationship.
While the State has the right to request a review of the credit pursuant to section 218(s) of the Act, the court decision concerning the individual's employment status and earnings is binding on the Administration insofar as the issues have been decided vis-a-vis the individual but is not binding on the Administration vis-a-vis the State of Pennsylvania.
The Commissioner found on review pursuant to the State's request, that an employment relationship did not exist between the individual and the school systems who engaged his services during the periods in question. On the basis of this finding the Commissioner affirmed the allowance of credit.
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