All opinions are subject to modification
and technical correction prior to official publication in the
NO. COA08-279
Filed: 18 November 2008
DONNIE R. SPRINKLE,
Employee,
Plaintiff
v.
I.C.
File No. 021154
LILLY INDUSTRIES, INC.,
Employer,
LIBERTY MUTUAL INSURANCE COMPANY,
Carrier,
Defendants.
Appeal
by plaintiff from opinion and award entered 31 October 2007 by the North
Carolina Industrial Commission. Heard in
the Court of Appeals 6 October 2008.
Walden &
Walden, by Daniel S. Walden, for plaintiff-appellant.
Davis and Hamrick,
L.L.P., by Shannon Warf Beach, for defendants-appellees.
MARTIN, Chief Judge.
This
matter is on appeal to the Court of Appeals for the second time. Defendant-employer
Lilly Industries, Inc. and defendant-carrier Liberty Mutual Insurance Company
first appealed the Commission’s 25 April 2002 Opinion and Award, awarding
plaintiff Donnie R. Sprinkle total disability compensation benefits at the rate
of $532 per week and payment of all medical expenses resulting from plaintiff’s
injuries sustained in a car accident while traveling between work sites. The facts of the case are fully set out in
our unpublished opinion and need not be recounted here. Sprinkle v. Lilly Indus., Inc., 161
N.C. App. 741, 590 S.E.2d 23 (2003) (unpublished). This Court affirmed the Commission’s Opinion
and Award, rejecting defendants’ argument that plaintiff’s injury was not
within the course and scope of his employment.
During
the period of defendants’ denial of plaintiff’s claim, plaintiff’s medical
expenses were initially paid through his employer-provided, third-party health
insurance plan, with premiums partially paid by plaintiff. After plaintiff’s discharge from employment
and the expiration of his health insurance coverage through his employer under
COBRA, plaintiff’s medical expenses were paid through his wife’s health
insurance plan. After the Court of
Appeals’ decision, defendants reimbursed plaintiff his out-of-pocket expenses,
and defendants also reimbursed plaintiff’s third-party health insurer the
amounts it paid for treatment of plaintiff’s injuries arising from his work-related
accident. Defendants paid interest on
portions of the disability award which were unpaid during the pendency of the
appeal.
On 7
December 2005, plaintiff filed a request that his claim be assigned for
hearing, asserting (1) he was entitled to interest on the award of medical
compensation which was unpaid while the first appeal was pending, pursuant to
N.C.G.S. §97-86.2, and (2) he should be awarded attorney fees because
defendants lacked reasonable grounds to defend the claim for interest. Plaintiff also moved to compel defendants to
provide verified answers to plaintiff’s interrogatories. Absent complete information regarding the
amount of medical compensation awarded, plaintiff estimated that the accrued
interest would total nearly $200,000. The
Commissioner who presided over the hearing filed an Opinion and Award on 10
October 2006 denying plaintiff’s motion to compel, awarding plaintiff interest
on out-of-pocket expenditures related to medical compensation or other amounts
of medical costs personally paid for by plaintiff, and concluding plaintiff was
not entitled to an award of attorney fees.
Plaintiff appealed to the full Commission, a majority of which affirmed
the deputy commissioner’s Opinion and Award with minor modifications. The majority of the Commission specifically
denied “plaintiff’s request for interest on medical expenses paid for by his
and his wife’s third-party health insurance plans.” One Commissioner dissented. Plaintiff appeals to this Court.
_________________
N.C.G.S.
§97-86.2 provides for an award of interest to be made to the employee in
situations, such as the present, where the employer or insurance carrier fails
to pay compensation to the employee during the time when an appeal is pending
before the Court of Appeals.
Specifically, the statute states:
In any
workers’ compensation case in which an order is issued either granting or
denying an award to the employee and where there is an appeal resulting in an
ultimate award to the employee, the insurance carrier or employer shall pay
interest on the final award or unpaid portion thereof from the date of the
initial hearing on the claim, until paid . . . .
N.C. Gen. Stat. §97-86.2
(2007). Plaintiff argues that the plain
language of the statute necessitates that “final award or unpaid portion thereof”
includes all amounts of medical compensation awarded, including amounts
reimbursable to a third-party health insurer, citing Childress v. Trion,
Inc., 125 N.C. App. 588, 591, 481 S.E.2d 697, 699, disc. review denied,
346 N.C. 276, 487 S.E.2d 541 (1997), which holds “any award of medical
compensation for the plaintiff’s benefit is covered by G.S. 97-86.2.” Plaintiff asserts that the Commission erred
in its conclusions of law that such an interpretation of the statute “would be
far removed from the goals of the Workers’ Compensation Act” and that Childress
is distinguishable from the present case.
Accordingly, plaintiff contends that the Commission erred in awarding
interest only on “plaintiff’s out-of-pocket expenditures related to his medical
compensation and on such other medical costs as have been personally paid for
by plaintiff” and in denying “plaintiff’s request for interest on medical
expenses paid for by his and his wife’s third-party health insurance plans.”
“The
Commission’s conclusions of law are reviewed de novo.” McRae v. Toastmaster, Inc., 358 N.C.
488, 496, 597 S.E.2d 695, 701 (2004).
Our interpretation of N.C.G.S. §97-86.2 is guided by the following
principles. “Generally, if the language
of the statute is clear and not ambiguous, we must conclude that the General
Assembly intended the statute to be implemented according to the plain meaning
of its terms.” Childress, 125
N.C. App. at 591, 481 S.E.2d at 699 (citing Hyler v. GTE Products, 333
N.C. 258, 262, 425 S.E.2d 698, 701 (1993)).
However, “where a literal interpretation of the language of a statute
will lead to absurd results, or contravene the manifest purpose of the
Legislature, as otherwise expressed, the reason and purpose of the law shall
control and the strict letter thereof shall be disregarded.” Mazda Motors of Am., Inc. v. Sw. Motors,
Inc., 296 N.C. 357, 361, 250 S.E.2d 250, 253 (1979) (internal quotation
marks omitted). Although the Workers’
Compensation Act “should be liberally construed to effectuate its purpose to
provide compensation for injured employees or their dependants, and its
benefits should not be denied by a technical, narrow, and strict construction,”
Hollman v. City of Raleigh, Public Utils. Dep’t, 273 N.C. 240, 252, 159
S.E.2d 874, 882 (1968), the appellate courts’ “primary task in statutory
construction is to ensure that the legislative intent is accomplished.” Radzisz v. Harley Davidson of Metrolina,
Inc., 346 N.C. 84, 88, 484 S.E.2d 566, 569 (1997). We agree with the majority of the Commission
that a literal interpretation of the language of N.C.G.S. §97-86.2 would
contravene the legislative purpose and intent behind its enactment.
This
Court has previously noted:
[T]he goals of awarding interest include
the following: “(a) [T]o compensate a
plaintiff for loss of the use value of a damage award or compensation for delay
in payment; (b) to prevent unjust enrichment to a defendant for the use value
of the money, and (c) to promote settlement.”
Childress, 125 N.C. App. at 592, 481 S.E.2d at 699
(quoting Powe v. Odell, 312 N.C. 410, 413, 322 S.E.2d 762, 764
(1984)). The first purpose listed seeks
to provide compensation to an employee where that employee has suffered some
loss or disadvantage by the employer or carrier’s failure to pay the
award. In the case before us, plaintiff
paid some of his medical expenses out-of-pocket but was indemnified by his
health insurer for the majority of his medical expenses. See N.C. Gen. Stat. §58-1-10 (2007) (“A
contract of insurance is an agreement by which the insurer is bound to pay
money or its equivalent or to do some act of value to the insured upon, and as
an indemnity or reimbursement for the destruction, loss, or injury of
something in which the other party has an interest.” (emphasis added)). Upon an award to an employee for medical
compensation, the Workers’ Compensation Act provides that the health insurer “may
seek reimbursement from the employee, employer, or carrier that is liable or
responsible for the specific medical charge according to a final adjudication
of the claim.” N.C. Gen. Stat. §97-90.1
(2007). By contrast, the third-party
health insurer may not reap the benefit of any award of interest under the
statute, which specifically provides that interest may be paid only to the
employee. N.C. Gen. Stat. §97-86.2 (“If
interest is paid it shall not be a part of, or in any way increase attorneys’
fees, but shall be paid in full to the claimant.”). The issue before this Court concerns only
whether the calculation of interest on an unpaid award should include amounts
of the award which were reimbursed to the third-party health insurer. The parties do not dispute that interest
should be calculated for the amounts of medical compensation reimbursed to
plaintiff for his out-of-pocket expenses.
The
compensatory element of the first purpose of awarding interest compels us to
consider whether plaintiff in this case suffered loss or disadvantage by
defendants’ failure to pay the award of medical compensation while the appeal
was pending before the Court of Appeals.
Because plaintiff had a health insurance policy, which contractually
shifted the risk of loss from plaintiff to the health insurer, see N.C.
Gen. Stat. §58-1-10, plaintiff did not experience a loss of use of his money
nor was he disadvantaged by an inability to pay for care. Accordingly, in this case the goal of
compensating plaintiff for his loss or disadvantage is not met by awarding
interest on amounts of medical compensation for which plaintiff was indemnified
under his health insurance policy.
Absent
a compensatory purpose, the remaining purposes of awarding interest serve only
to penalize the employer and the carrier for benefitting from the use value of
the money and for electing not to settle the claim. However, to construe N.C.G.S. §97-86.2 as a
penalty is at odds with the general purpose of the Workers’ Compensation
Act. Our Courts have consistently
recognized “[t]he purpose of the North Carolina Workers’ Compensation Act is
not only to provide a swift and certain remedy to an injured worker, but also
to ensure a limited and determinate liability for employers.” Radzisz, 346 N.C. at 89, 484 S.E.2d at
569. Contrary to this purpose, to
construe N.C.G.S. §97-86.2 as a penalty would create an incentive for employers
or carriers to pay the award before the appeal has been decided, which would
provide a remedy to the third-party health insurer rather than the injured
worker. Furthermore, rather than
limiting employers’ liability, it would increase their liability by an
indefinite amount, which could be quite substantial as evidenced by the present
case. We conclude that to construe
N.C.G.S. §97-86.2 as creating a penalty without a countervailing compensatory
goal ignores the overall purpose of the Workers’ Compensation Act.
Viewed
another way, the award of interest to an employee on amounts of medical costs
for which he was indemnified by a third-party health insurer, where it fails to
compensate the employee for a loss or disadvantage, creates a windfall for the
employee. Our Courts have repeatedly
disfavored construction of the Workers’ Compensation Act as creating a
windfall. See Radzisz, 346
N.C. at 89, 484 S.E.2d at 569 (“[T]he [Workers’ Compensation] Act in general
and N.C.G.S. §97-10.2 specifically were never intended to provide the employee
with a windfall of a recovery from both the employer and the third-party tort-feasor.”);
Pearson v. C.P. Buckner Steel Erection Co., 348 N.C. 239, 246, 498
S.E.2d 818, 822 (1998) (“To construe federal Medicaid statutes and regulations
as preempting the state workers’ compensation law under these circumstances
would permit employers and carriers to reap a financial windfall in savings on
medical expenses by denying liability for workplace injuries. This result would
clearly undermine a central purpose of the Act, which is to provide ‘swift and
sure’ compensation without protracted litigation.”); Hendrix v. Linn-Corriher
Corp., 317 N.C. 179, 189-91, 345 S.E.2d 374, 381-82 (1986) (reversing an
award of compensation that resulted in a windfall to plaintiff); Conyers v.
New Hanover County Sch., ___ N.C. App. ___, ___, 654 S.E.2d 745, 750, 751
(2008) (avoiding a result that “is not fair and just[,] as Defendant would be
unduly burdened while Plaintiff would receive a windfall” and concluding a
windfall for plaintiff would be “contrary to statutory intent”). But see Helsius v. Robertson,
174 N.C. App. 507, 516, 621 S.E.2d 263, 269 (2005) (“We recognize that the
Workers’ Compensation Act creates a system in which an employee may receive a ‘windfall,’
however the trial court has made specific findings of fact showing that this
did not occur in the instant case.”), appeal dismissed and disc. review
denied, 360 N.C. 363, 629 S.E.2d 851 (2006).
In Childress,
this Court addressed the potential for a windfall to plaintiff under N.C.G.S. §97-86.2. The issue before this Court was “whether the
Industrial Commission erred in requiring defendants to pay interest on
plaintiff’s outstanding medical expenses.”
Childress, 125 N.C. App. at 590, 481 S.E.2d at 698. Defendants in Childress argued that an
award of interest on any portion of medical expenses would result in a windfall
for plaintiff.
[W]e note that in contested cases,
workers’ compensation plaintiffs incur the liability for all medical expenses
if they lose; that plaintiffs often pay significant out-of-pocket medical
expenses for prescription drugs, travel, deductibles, or actual payment of
medical expenses when there is no other way plaintiffs can obtain treatment;
and that because the factual scenarios in determining whether plaintiffs in
workers’ compensation cases have incurred out-of-pocket expenses are so
numerous, the only reasonable construction is that any award of medical compensation
for the plaintiff’s benefit is covered by G.S. 97-86.2.
For
the foregoing reasons, we conclude that the legislative purpose and intent in
enacting N.C.G.S. §97-86.2 was not to create a penalty to employers and
carriers nor a windfall for the employee; therefore, the language “final award
or unpaid portion thereof,” N.C. Gen. Stat. §97-86.2, must not include amounts
of medical compensation for which plaintiff was indemnified by his health
insurer and which were reimbursable to the third-party health insurer.
Plaintiff
assigns error also to the Commission’s findings of fact, asserting that no
competent evidence supported the Commission’s finding that there were no
outstanding medical expenses. “The
findings of fact by the Industrial Commission are conclusive on appeal if
supported by any competent evidence.” Gallimore
v. Marilyn’s Shoes, 292 N.C. 399, 402, 233 S.E.2d 529, 531 (1977). At the hearing, plaintiff testified that, to
his knowledge, he did not have any outstanding medical bills, and no other
evidence was presented of any outstanding medical bills. Plaintiff argues his testimony was
insufficient to establish whether there were any outstanding bills mailed to
either his third-party health insurer or to defendant-carrier. In light of our holding in this opinion, the
only outstanding medical expenses the Commission needed to consider were those
plaintiff was responsible for paying.
Plaintiff’s testimony that he did not have any outstanding medical bills
was competent evidence to support the Commission’s findings of fact.
We
also conclude that the Commission did not err in denying plaintiff’s motion to
compel discovery because plaintiff sought to discover amounts of medical
compensation paid by defendant-carrier to plaintiff’s third-party health
insurer. Because plaintiff is not
entitled to interest on those amounts, for the reasons stated above, the
information was not relevant and the motion was properly denied.
Lastly,
plaintiff argues that the Commission abused its discretion in failing to award
attorney fees to plaintiff. The award of
attorney fees is within the Commission’s discretion, as provided in the Workers’
Compensation Act: “If the Industrial
Commission shall determine that any hearing has been brought, prosecuted, or
defended without reasonable ground, it may assess the whole cost of the
proceedings including reasonable fees for defendant’s attorney or plaintiff’s
attorney upon the party who has brought or defended them.” N.C. Gen. Stat. §97-88.1 (2007); see also
Taylor v. J.P. Stevens Co., 307 N.C. 392, 398, 298 S.E.2d 681, 685
(1983) (“G.S. 97-88.1 places the award of attorneys’ fees in the discretion of
the Commission . . . .”). “[T]he
Commission’s determination [of matters within its sound discretion] will not be
reviewed on appeal absent a showing of manifest abuse of discretion.” Lynch v. M.B. Kahn Constr. Co., 41
N.C. App. 127, 131, 254 S.E.2d 236, 238 (1979).
Plaintiff has not shown a manifest abuse of discretion; therefore, we
overrule this assignment of error.
Affirmed.
Judges
McGEE and STEPHENS concur.