In a recent opinion published by the Louisiana Court of Appeals for the Third Circuit, the appellate court affirmed a finding of an employer-employee relationship and affirmed an award of penalties and attorney’s fees.  Claimant Jill Neece worked as a horse exerciser rider at the Evangeline Downs.  Neece was hired by Damien Simon to exercise horses owned by Simon.  Simon’s horses were stalled pursuant to a sublease agreement between Simon and Scott Gelner, a licensed horse trainer.  The sublease, however, was in violation of Gelner’s Stall Lease Agreement with Evangeline Downs because Simon was not a licensed trainer and did not carry the requisite workers’ compensation insurance.

Neece was subsequently injured riding one of Simon’s horses and filed a claim for workers’ compensation benefits, naming Simon, Gelner, and Louisiana Horsemen’s Benevolent Protection Association (“LHBPA”).  Both Gelner and LHBPA denied an employer-employee relationship because Gelner had never met Neece; Gelner did not hire Neece; Gelner did not pay Neece; and Gelner did not have the ability to fire Neece.

Neece, however, testified that she believed that she worked for the licensed trainer of the horses housed in Gelner’s stalls, and she testified that she would have never accepted work from Simon had she known that Simon was unlicensed and not covered by the proper workers’ compensation insurance.  Simon was “notably absent” from the proceedings.  Further, evidence was introduced reflecting that Neece was hired to exercise horses under Gelner’s training number and that Neece was listed under Gelner’s employee list.

The workers’ compensation court found liability on the part of Gelner and LHBPA, invoking the doctrine of detrimental reliance.  The court reasoned that because Evangeline Downs required that its horse stalls be leased only by licensed trainers and because Neece testified that she would not have ridden horses owned by individuals not carrying workers’ compensation insurance, that it was reasonable for her to rely on representations by Simon that he was properly licensed and covered by insurance.  The court also found that Simon was an agent of Gelner based on the sublease agreement and therefore found employment of Neece by Gelner through agency.

Gelner and LHBPA appealed to the Third Circuit on three issues:  (1) that it was erroneous of the court to find an employer-employee relationship between Neece and Gelner; (2) that it was an abuse of discretion for the workers’ compensation judge to raise issues of detrimental reliance, agency, and estoppel sua sponte; and (3) that penalties and attorney’s fees were not merited.  The Third Circuit held that the court’s findings were not manifestly erroneous and that Gelner/LHBPA received sufficient notice of detrimental reliance and agency theories of liability in pre-trial briefing, even though Neece never plead these theories of liability.  Further, the Third Circuit found penalties and attorney’s fees to be merited due to a lack of investigation on the part of Gelner and LHBPA.  However, one justice dissented the award of attorney’s fees and penalties, noting that Gelner had articulated an objective reason for denying or discontinuing benefits.

Neece v. Louisiana Horsemen’s Benevolent and Protective Assoc.