|Michael F. Easley, Governor
Buck Lattimore, Chairman
Stephen T. Gheen
|Bernadine S. Ballance,
Thomas J. Bolch, Commissioner
Laura K. Mavretic, Commissioner
Christopher Scott, Commissioner
Dianne C. Sellers, Commissioner
Pamela T. Young, Commissioner
TO: All Interested Parties
FROM: Stephen T. Gheen, Chief Deputy Commissioner
DATE: September 14, 2004
RE: Forms 21/26 Permanent Partial Disability Compensation
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.
I remain in your service.
The procedure and requirements for submission to the Industrial
Commission of Forms
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
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
payment of PPD submitted without complete medical reports and a Form
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
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
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.
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:
a. In the case of a Form 21:
i. All relevant medical records must be submitted; and the
ii. Form 25A must be submitted.
b. In the case of a Form 26:
i. All relevant medical records must be submitted; a
ii. Form 25A must be submitted; and a
iii. Form 28 must be 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:
a. Notes a release to return to work; and
b. Notes a claimant’s physical or non-physical restrictions; and
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).
Processing the PPD Submission
Once the package is deemed complete, the Claims Examiners will:
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.
3. Verify that the date of return to work is before the date of payment of PPD.
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.
Deputy Commissioner Review
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.
The Deputy Commissioner will:
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.
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.
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.
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.
6. Verification that the total benefits to be paid are mathematically correct.
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:
5 days for the PPD submission to arrive;
2 business days for a Claims Examiner to review the package;
3 business days for a Deputy Commissioner to evaluate the package;
1 business day for final processing of the package; and
5 days for return mailing of the package.
Questions regarding these Interim Procedures and Guidelines should be directed to:
T. Gheen, Chief Deputy Commissioner
Douglas E. Berger, Deputy Commissioner
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.
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
The Atkins decision follows both Vernon and Lewis.