New Procedures for Filing Forms 21/26 Agreements for Payment of Permanent Partial Disability Compensation (Chief Deputy Commissioner Stephen T. Gheen's September 14, 2004 memo)

The requirements for submission and approval of Industrial Commission Forms 21/26 agreements for payment of permanent partial disability compensation (“PPD”) has been affected by the recent North Carolina Supreme Court decision in Atkins v. Kelly Springfield Tire Co., __ N.C. ___ , 358 S.E.2d 128 (2004). This memorandum is to advise that interim procedures and criteria for review of these Industrial Commission Form agreements are being instituted as of the posting of this notice.

A discussion of the interim procedures and criteria may are located at the conclusion of this memorandum. Thorough understanding and compliance with the interim guidelines will result in timely approval of Form agreements.

Claims Examiners have begun evaluating Forms 21/26 agreements currently pending before the Industrial Commission to determine compliance of the PPD submission with the new guidelines. It would appear that a substantial number of Forms 21/26 submissions will be returned for additional information.

Questions regarding the interim guidelines are anticipated and should be directed to my office. Because of the volume of inquiries anticipated, inquiry by email is requested, but not required.

North Carolina Industrial Commission:
Submission of Permanent Partial
Disability Agreements

The procedure and requirements for submission to the Industrial Commission of Forms 21/26 for payment of permanent partial disability compensation (PPD) has been affected by the recent North Carolina Supreme Court decision in Atkins v. Kelly Springfield Tire Co., __ N.C. ___ , 358 S.E.2d 128 (2004). This decision, in effect, upheld the Court of Appeals’ decision at 154 N.C. App. 512, 571 S.E.2d 865 (2002), which held that in order to approve an agreement for permanent partial disability compensation, the Industrial Commission must review the full and complete medical reports, as required by N.C. Gen. Stat. §97-82(a). The Court of Appeals specifically held that the review of a Form 25R—Evaluation for Permanent Impairment was not sufficient to meet the statutory requirement that the Industrial Commission review full and complete medical reports.[i]

In order to comply with the mandate of the appellate courts, the parties must submit to the Commission the complete medical records related to the injury which are known to exist, as well as a newly-adopted Form 25A (linked to this memo below and found on our website at http://www.comp.state.nc.us/ncic/pages/form25a.pdf). The Form 25A includes a certification by the parties that complete medical reports known to exist in the case have been filed with the Commission. The Form 25A must be signed by a representative of the self-insured employer, carrier, administrator or their attorney, and by the employee or their attorney. As of Monday, August 23, 2004, the Claims Section will not approve and will return any Forms 21/26 for payment of PPD submitted without complete medical reports and a Form 25A.

The Atkins case also requires a different level of review of these agreements to ensure that the claimant is afforded an election between possible benefits to ensure that the employee may elect between the most favorable benefit to which he/she is entitled under the Workers’ Compensation Act. The following procedures and criteria will be used to comply with the Atkins decision until the Full Commission can implement final procedures and criteria.

The procedures explained in this document are interim procedures to permit the Industrial Commission to timely process PPD submissions until such time as the Full Commission establishes formal policies and procedures. As these interim procedures are instituted, your questions, comments and suggestions are most welcomed.

Forms 21/26 filings for PPD cases will continue to be filed with the Claims Section of the Industrial Commission who will process the submission to ensure that it is complete. Review of the agreements for approval or disapproval will be the responsibility of the Deputy Commissioner Section.

The Industrial Commission receives some 7,000 to 8,000 PPD submissions each year.

Forms 21/26/25A will be filed with the Claims Section. All submissions should be directed to Ms. Rose Frazier, Claims Examiner, telephone 919-807-2502. Ms. Frazier will be responsible for logging all submissions into an internal tracking system.

Practice Pointer: In mailing PPD submissions, it is strongly recommended that the mailing container indicate that it is to the attention of Ms. Rose Frazier at 4335 Mail Service Center, Raleigh, North Carolina 27699-4335. Note on the outside of the envelope that it contains a PPD submission.

Practice Pointer: Adjusters or claimants wanting to know the status of a PPD submission may still call the general number for the Claims Section of the Industrial Commission. All Claims Examiners will have access to the internal tracking system and direct parties to the proper person.

Ms. Frazier will divide the PPD submissions among the six Claims Examiners as is currently the practice. Claims Examiners will verify that the PPD submission is complete. Claims Examiners will verify that the following Forms and records are submitted:

What are “all relevant medical records”? While the fact pattern of each case dictates what medical records are required, some guidelines should assist adjusters. “Relevant medical records” would certainly include any medical record that:

c. Notes all ratings assigned at any time by any physician, whether “approved” or “non-approved,” to any body plane.

Claims Examiners will ascertain that all forms are complete and properly executed; including Form 25A and Forms 21/26 Agreement. (Some cases will have a lump sum agreement, Form 31, which accompanies these documents).

Practice Pointer: A Form is not complete unless the entire form, both sides where applicable, is submitted. For example, the Form 21 contains an important notice of rights to the claimant on the backside of the Form. The Form 21 signed by the claimant must have the notice of rights on the backside of the Form. If adjusters are using two pages for the Form 21, the notice of rights being on a second sheet of paper, the claimant should be instructed to initial and date the second sheet. Any Form 21 executed by the claimant and not containing the notice of rights on the back of the Form submitted to the Industrial Commission or initialed and dated on a second page, if that option is used, will be rejected and returned to the carrier.

1. Review and locate the Form 25R to be placed on top of the medical records or other document(s) containing the rating(s).

2. Verify the average weekly wage if a Form 22 is present in the file and claimant requests verification.

4. Verify that Line 8 on the Form 21 is completed showing that the employee has returned to work. If Line 1, “return to work” is not checked on the Form 26, or if there is evidence that the employee has not returned to work, a Form 24 has to be submitted with the application to pay PPD.

If the submission is not complete, the Claims Examiners will return the PPD submission to the appropriate party with a Form 53 requesting that all deficiencies be corrected. If a Claims Examiner notes any substantive items of note that would be of interest to the Deputy Commissioner reviewing the submission, the Claims Examiner will make that notation on top of the file.

Once a package is verified as complete, the PPD submission will be forwarded to a Deputy Commissioner by Ms. Frazier. It is anticipated that PPD submissions will be equally divided among Deputy Commissioners.

Ms. Frazier will enter all data on the internal flow chart tracking the status of every PPD submission. A copy of the flow chart will be placed on the desktop of every Deputy, Legal Assistant and Claims Examiner.

The following standards are to ensure that the agreements are “fair and just.” The agreement is fair and just only if it allows the injured employee to receive the most favorable disability benefits to which he/she is entitled.

1. Verify from the medical records that the injured person has been released to return to work, with or without restrictions, as agreed upon on the Forms 21 and 26.

2. If a Form 21 is filed showing the days missed from work and weeks applied to the PPD rating total 21 days, ensure that employer has paid the TTD portion. If a Form 60 is in the file, that document is sufficient verification. If no Form 60 is in the file, the Deputy Commissioner may verify payment by telephone with a written notation by the Deputy Commissioner on the Forms 21 or 26 that TTD has been paid.

Practice Pointer: N.C. Industrial Commission Rule 401(4) requires that if the number of weeks of temporary total disability and the weeks applicable to the permanent partial disability rating exceed 21 days, the employer must pay claimant for the first seven days of work missed. Experience within the Industrial Commission indicates that carriers often do not subsequently pay the period of temporary total disability. It is highly recommended that if adjusters encounter this fact pattern that the adjuster affirmatively include a note in the PPD submission that the period of temporary total disability has been or will be paid.

3. Verify that the percentage used for the rating is correct based upon the medical records and other records that are submitted. If there is more than one possible rating based upon the medical records, the Deputy Commissioner shall determine if the rating to be paid is fair and just under the circumstances.

Practice Pointer: Cases in which only one rating has been assigned should not be problematical. Cases in which more than one rating has been assigned and “averaged,” will be evaluated by the Deputy Commissioner based upon the facts submitted. It is strongly recommended that where ratings are being “averaged” that the PPD submission contains a brief statement to support the averaging. The same advice applies to cases in which one rating may be selected over the use of another rating.

4. Verify that Line 8 on the Form 21 is complete showing that the employee has returned to work. If Line 1, “return to work” is not checked on the Form 26, or if there is evidence that the employee has not returned to work, the Deputy Commissioner will also review the Form 24 submission.

Practice Pointer: PPD submissions that will logically receive the most scrutiny are those in which the claimant is assigned a rating but is not returning to work at equal wages or has returned to work at reduced wages. Under either fact pattern, the immediate question would be whether the claimant would receive a more favorable benefit by the continuation of temporary total disability benefits or temporary partial disability benefits. In any case in which the employee is not returning to work or returning at less wages, it is imperative that the adjuster include some explanation with the PPD submission as to why the rating is more favorable.

For example: Claimant sustained an injury to their right arm by accident. Claimant completes treatment and a physician rates the physical impairment at 15%. The Industrial Commission Forms submitted indicate that the claimant has not returned to work. A Deputy Commissioner, looking at this fact pattern alone, will inquire as to why the employee has not returned to work as the employee could be entitled to continuing temporary total disability benefits.

Adjusters can ensure the timely processing of their PPD submissions by including an explanation with the package. In the example above, the adjuster can save time and extended communications with the Industrial Commission by stating, “Employer offered claimant job held on date of injury by accident at same wage. Employee is foregoing return to work to attend college.”

5. Determine from the medical records if there is any other compensable injury that may preclude returning to work. If such conditions exist, the Deputy Commissioner shall either disapprove the agreement or conduct a telephone conference with the parties.

A Deputy Commissioner will evaluate the PPD submission within three business days from the date the Deputy Commissioner received it. Once the agreement is approved or disapproved, the Deputy Commissioner will return the agreement to Ms. Frazier in the Claims Section for scanning, indexing and transmission to the parties.

The parties can reasonably expect that PPD submissions will require about 20 days before the parties can expect a response by the Industrial Commission. For example, a PPD submission is mailed to the Industrial Commission would reasonably require:

Questions regarding these Interim Procedures and Guidelines should be directed to:

Because of the anticipated volume of communications, contact by email is preferred, but not required.

[i] The Atkins decision is the last in a trilogy of cases that establish the level of review for Industrial Commission Form agreements.

The North Carolina Supreme Court held in Vernon v. Steven L. Mabe Builders, 336 N.C. 425, 444 S.E.2d 191 (1994) held that in approving an Industrial Commission Form 21 agreement the Industrial Commission acts in its judicial capacity to determine the fairness of the agreement. The Vernon Court further held that no distinction is made between the Industrial Commission’s review of Form agreements or compromise settlement agreements. Therefore, the Industrial Commission is required to conduct investigation and determine that Form agreement for payment of permanent partial disability benefits is fair and just before approving agreement in worker’s compensation case. The Industrial Commission must assure that settlement is in accord with intent and purpose of Workers’ Compensation Act and that injured employee receives correct disability benefits.

In Lewis v. Craven Regional Medical Center, 134 N.C. App. 438, 518 S.E.2d 1 (1999), the Court of Appeals held that “if [the] Industrial Commission approves workers’ compensation and compromise agreement without conducting the required inquiry and concluding that agreement is fair and just, the agreement is subject to being set aside, and at the hearing on motion to set aside agreement, Commission must determine the fairness and justness of the agreement from the medical evidence filed with the agreement at the time it was originally submitted to the Commission for approval.

The Atkins decision follows both Vernon and Lewis.

North Carolina Industrial Commission: Submission of Permanent Partial Disability Agreements

North Carolina Industrial Commission:
Submission of Permanent Partial
Disability Agreements