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NO. COA04-225
NORTH CAROLINA COURT OF APPEALS
Filed: 17 May 2005
MONA
LISA SMYTHE,
Employee,
Plaintiff,
v. North
Carolina Industrial Commission
I.C.
File No. 019947
WAFFLE
HOUSE,
Employer,
and
OSTEEN
ADJUSTING SERVICES, INC.,
Servicing Agent,
Defendants.
Appeal by plaintiff from opinion and award entered by the North Carolina Industrial Commission on 15 May 2003. Heard in the Court of Appeals 2 November 2004.
Ganly
& Ramer, by Thomas F. Ramer, for plaintiff-appellant.
Hedrick,
Eatman, Gardner & Kincheloe, L.L.P., by Shelley W. Coleman, for
defendant-appellees.
HUDSON,
Judge.
Acting
pro se, plaintiff filed a Form 33 with the Industrial Commission on 30
October 2001 , requesting to set aside her previously approved settlement
agreements with defendants, signed in May and amended in September of 2001.
After a hearing at which plaintiff represented herself, Deputy Commissioner
Edward Garner issued an opinion and award on 24 June 2002 setting aside the
settlement agreements based on findings of misrepresentation. Defendants
appealed to the Full Commission, which reversed the Commissioner’s opinion and
award on 15 May 2003. Plaintiff appeals. For the reasons discussed below, we
reverse.
The
evidence tends to show that on 26 August 1999, while employed as a waitress by
defendant employer, plaintiff slipped and fell, sustaining an admittedly
compensable injury to her left knee. She was diagnosed with a left ACL tear and
a medial meniscus tear and began treatment with Dr. Greg Motley, an orthopedic
surgeon. On 22 October 1999, Dr. Motley operated on plaintiff’s knee. He released
plaintiff to return to work in January 2000 in a light duty position.
Dr.
Andrew Rudins examined plaintiff on 11 January 2000 and determined that unless
plaintiff had ACL reconstruction, she had reached maximum medical improvement.
Dr. Rudins believed plaintiff had a permanent partial impairment rating of 29%
to her left knee. Plaintiff continued with treatment while working in a light
duty position, until Dr. Motley performed a second surgery on 19 October 2000.
In December of 2000, plaintiff’s physicians again recommended ACL
reconstruction and plaintiff agreed. Defendants had paid for most of
plaintiff’s medical procedures to this point. Plaintiff was admitted to the
hospital 21 March 2001 for the recommended ACL surgery which was postponed. The
surgery was rescheduled twice, and ultimately not performed, because of
defendants’ refusal to authorize payment. The record before us contains no
evidence that plaintiff returned to any form of wage-earning activity after 19
October 2000.
Plaintiff
was represented by counsel in her workers’ compensation case from March 2000
until April 2001, when she released her attorney. During this period,
plaintiff’s attorney communicated with defendants and the Commission. However,
once she discharged her attorney, plaintiff began contacting defendants
directly and discussing settlement of her claim for specific sums of money.
After several rounds of negotiation, plaintiff agreed to accept $24,000 to
settle her workers’ compensation claim. On 15 May 2001, she met with defense
counsel at their offices, where she signed a “Release of Employment Claims” for
$2,000, as well as a separate workers’ compensation settlement (“clincher”)
agreement for $24,000. Plaintiff signed the Release of Employment Claims
agreement first, and before plaintiff signed the clincher agreement, a hospital
called requesting authorization for plaintiff’s rescheduled knee surgery.
Defendant denied this request. On or about 31 May 2001, Deputy Commissioner
Richard B. Ford issued an order approving the settlement. Defendants then paid
plaintiff pursuant to the agreement and she cashed the $24,000 check.
On
26 September 2001, the attorney who represented plaintiff in her Social
Security Disability claim contacted defendants and requested that they execute
an amended settlement agreement which included language to address the offset
of those benefits due to the worker’s compensation settlement. Counsel for
defendants agreed and the revised, executed agreement was approved by a Deputy
Commissioner on 17 October 2001. Still pro se in her workers’
compensation claim, plaintiff filed her Form 33 on 30 October 2001.
Defendants
contend in their brief that the appeal should be dismissed due to violations of
the Rules of Appellate Procedure, including failure to provide all necessary
documents in the Record on Appeal (Rule 18) and failure to serve unpublished
authority (Rule 30(e)(3)). However, defendants also filed a separate motion to
dismiss, raising the same issues. By order, 14 July 2001, this Court denied
defendants’ motion to dismiss before the case was assigned to this panel. As we
are bound by this ruling, we need not address these arguments.
Plaintiff
argues that the Commission erred by failing to undertake a full investigation
to determine if the settlement agreement here was fair and just, as required by
N.C. Gen. Stat. §§97-17 and 97-82. We agree.
The
Industrial Commission must review all compromise settlement agreements to make
sure they comply with the Workers’ Compensation Act and the Rules of the Industrial
Commission, and to ensure that they are fair and reasonable. Vernon v. Mabe
Builders, 336 N.C. 425, 444 S.E.2d 191 (1994); Biddix v. Rex Mills,
237 N.C. 660, 75 S.E.2d 777 (1953). Pursuant to N.C. Gen Stat. §97-17 (a)
(2000), all workers’ compensation settlement agreements must be filed with and
approved by the Commission. This statute also states that “[t]he Commission shall
not approve a settlement agreement . . . unless . . . [it] is deemed by the
Commission to be fair and just.” N.C. Gen Stat. §97-17 (b)(1) (emphasis
added). N.C. Gen Stat. §97-82 (2000) permits memoranda of agreement, subject to
approval of the Commission, in certain cases and addresses payment and
enforceability of such agreements. The Courts have applied these requirements
to clincher agreements as well as those entered in ongoing cases, such as those
involving Form 26. See Vernon, 336 N.C. 425 at 433, 444 S.E.2d 191 at
195.
The
Commission is the “sole judge of the weight and credibility of the evidence.” Deese
v. Champion Int’l Corp., 352 N.C. 109, 116, 530 S.E.2d 549, 553 (2000)
(citing Adams v. AVX Corp., 349 N.C. 676, 509 S.E.2d 411 (1998). This
Court thus limits its review to determining whether “any competent evidence”
supports the Commission’s findings of fact and whether these findings support
the Commission’s conclusions of law. Id. However, we review the
Commission’s legal conclusions de novo. Hilliard, 305N.C. 593,
595, 290 S.E.2d 682, 684 (1982). “[W]hen the findings are insufficient to
determine the rights of the parties, the court may remand to the Industrial
Commission for additional findings.” Id.
Here,
the plaintiff does not take issue with any of the Commission’s findings of
fact. Indeed, the Commission did not make any findings of fact regarding the
fairness of the agreement or whether it complied with N.C. Gen Stat. §§97-17
and 97-82, or Industrial Commission Rule 502. Although the Commission found
that there was no evidence of fraud, misrepresentation, undue influence, or
mistake of fact, it did not address whether the agreement was fair or whether
the Commission possessed sufficient information upon which to base a
determination of fairness. By its own terms, N.C. Gen Stat. §97-17 (b) is
mandatory and the Commission may not approve a settlement without addressing
the fairness of the agreement. The Supreme Court in Vernon held that:
[T]he
statute requires, on the part of the Commission, a full investigation and a
determination that a Form 26 compensation agreement is fair and just, in order
to assure that the settlement is in accord with the intent and purpose of the
Act that an injured employee receive the disability benefits to which he is
entitled, and, particularly, that an employee qualifying for disability
compensation under both sections 97-29 and -31 have the benefit of the more
favorable remedy.
336 N.C at 432-433, 444 S.E.2d at 195.
Similarly, in Atkins v. Kelly Springfield Tire Co., this Court set aside
a compensation agreement approved by the Industrial Commission because it was
submitted to the Commission without complete medical records, as required per
N.C. Gen. Stat. §97-82 (a) and Rule 501(3). 154 N.C. App. 512, 571 S.E.2d 865
(2002), disc. review granted, 357 N.C. 61, 579 S.E.2d 284 (2003), disc.
review improvidently granted, 358 N.C. 540, 597 S.E.2d 128 (2004). The
Court concluded that it was “statutorily impermissible” for the Commission to
determine that the agreement was “fair and just” without a review of the full
medical records. Id. at 514, 571 S.E.2d at 867.
In
this record, it appears that plaintiff did not return to employment after
October 2000, and was not working at the time of the settlement. We are unable
to determine, which, if any, medical records were before the Commission when
the agreement was approved, or during the subsequent litigation to set it
aside, since no medical evidence at all appears in the record. As such, we see
no evidence from which the Commission could have determined the fairness of the
agreement. Thus, we hold that the Commission’s conclusion that “[t]here is insufficient
evidence to justify setting aside the Compromise Settlement Agreements in this
case” is not supported by competent evidence or necessary findings. As in Atkins,
we conclude that it was statutorily impermissible for the Commission here
to approve the settlement agreement without the required biographical and
vocational information, and the Commission should have set aside its order of
approval.
Plaintiff
also contends that the Commission erred by not setting aside the agreement for
failure to comply with Industrial Commission Rule 502(2). Defendant argues that
plaintiff failed to properly raise this issue below and thus that it is not
properly before this Court. However, we conclude that plaintiff’s Form 33 and
the assertion in her brief to the Full Commission, that the settlement
agreement should be set aside because it “does not contain sufficient
information upon which to base a determination regarding it’s [sic] fairness,”
sufficiently raised the issue below.
Industrial
Commission Rule 502 provides that all settlement agreements must be submitted
to the Commission for approval and will only be approved if “deemed fair and
just and in the best interest of all parties.” Rule 502(1). This requirement is
in accordance with N.C. Gen. Stat. §97-17 and the discussion above. Rule
502(2)(h) further provides that:
(2) No
compromise agreement will be approved unless it contains the following language
or its equivalent:
. . .
h. Where
the employee has not returned to a job or position at the same or greater
average weekly wage . . . the agreement shall summarize the employee’s age,
educational level, past vocational training, past work experience, and any
impairment . . . which predates the current injury . . . . This subsection of
the Rule shall not apply where employee is represented by counsel . . .
Here, the face of the compromise
agreement indicates that plaintiff had not returned to work for the same or
greater wages and it is undisputed that plaintiff was unrepresented when she
entered the agreement in May 2001. Thus, these more specific requirements of
Rule 502(2)(h) apply to the agreement here. However, the settlement agreement
here does not contain any of the information required under Rule 502(2)(h). It
contains no mention of plaintiff’s age, educational level, past vocational
training, or past work experience. As mentioned above, this Court held in Atkins
that it is impermissible for the Commission to determine that a settlement
agreement was “fair and just” without the medical records required by Rule 503.
154 N.C. App. at 514, 571 S.E.2d at 867. Likewise, we conclude that is
impermissible for the Commission to make a determination regarding the fairness
of a settlement agreement without the information required by Rule 502 (2)(h).
Defendant
also asserts that plaintiff’s appeal is barred by the doctrine of accord and
satisfaction, as she cashed defendant’s check after signing the settlement
agreement.
An
‘accord’ is an agreement whereby one of the parties undertakes to give or
perform, and the other to accept, in satisfaction of a claim . . . arising
either from contract or tort, something other than or different from what he
is, or considered himself entitled to; and a ‘satisfaction’ is the execution or
performance, of such agreement.
Zanone v. RJR Nabisco, Inc., 120 N.C. App. 768, 772, 463 S.E.2d 584,
587 (1995) (internal citation omitted). However, because we have concluded that
the settlement agreement was not properly approved by the Commission, as
required by the Workers’ Compensation Act, it thus was not a final agreement.
We conclude that there could be no accord and satisfaction of an agreement
which has not been properly finalized. We do not address whether defendant is
entitled to a credit for the amount of the settlement.
Because
the Commission lacked information to make a determination of the agreement’s
fairness, as required by N.C. Gen Stat. §97-17 and Rule 502, we reverse and
remand to the Full Commission to enter an order vacating the approval of the
settlement agreement, and for further proceedings as necessary.
Reversed
and remanded.
Judges
WYNN and ELMORE concur.