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NO. COA04-1436
NORTH CAROLINA COURT OF APPEALS
Filed: 2 August 2005
JESSIE BILL CHILDRESS,
Petitioner,
v. Haywood
County
No.
04 CVS 320
FLUOR DANIEL, INC.,
and
BROADSPIRE (formerly KEMPER
INSURANCE COMPANY),
Respondents.
Appeal by plaintiff from an order entered 27 May 2004 by
Judge Zoro J. Guice, Jr. in the Superior Court in Haywood County. Heard in the Court of Appeals 11 May 2005.
Wallace
& Graham, by Edward L. Pauley, for petitioner-appellant.
Hedrick,
Eatman, Gardner & Kincheloe, L.L.P., by Hatcher Kincheloe and Edward A.
Sweeney, for respondent-appellees.
HUDSON, Judge.
The case arises from an attempt by plaintiff Jessie Bill
Childress to reduce the amount of a workers’ compensation lien held by
defendants Fluor Daniel, Inc.(Employer) and Broadspire (Carrier) on plaintiff’s
recovery from a third-party tort-feasor.
On 8 May 1997, plaintiff filed a Form 18B with the Commission alleging
asbestosis and seeking benefits.
Plaintiff later amended his Form 18B to include a claim for colon
cancer. Defendants denied
liability. On 16 April 2002, the Full
Commission entered an opinion and award, awarding $20,000 each for three
permanent injuries to three internal organs pursuant to N.C. Gen. Stat.
§97-31(24) (2001). The Commission also
directed defendants to pay all medical expenses incurred or to be incurred by
plaintiff as a result of the asbestosis and colon cancer. Plaintiff appealed the opinion and award to
this Court, arguing in part that the Commission should have addressed issues
concerning the distribution of settlements with third parties, pursuant to N.C.
Gen. Stat. §97-10.2 (2001). Childress
v. Fluor Daniel, 162 N.C. App. 524, 590 S.E.2d 893 (2004) (Childress I). This Court held that the Commission did not
have jurisdiction to address these issues until a final award was entered. Id. at 527, 590 S.E.2d at 897.
Following this Court’s decision, plaintiff filed a request
for distribution of settlement proceeds with the Commission and a petition for
reduction of the lien (“the petition”) in the superior court in Haywood
County. Following a hearing, the
superior court dismissed the petition on grounds that it lacked jurisdiction in
the matter. Plaintiff appeals. As discussed below, we reverse and remand to
the superior court.
Plaintiff argues that the court erred in dismissing his
petition due to lack of jurisdiction pursuant to N.C. Gen. Stat. §97-10.2. We agree.
We begin by noting that “whether a trial court has subject
matter jurisdiction is a question of law, which is reviewable on appeal de
novo.” Ales v. T. A. Loving Co.,
163 N.C. App. 350, 352, 593 S.E.2d 453, 455 (2004). In its order of 14 May 2004 dismissing plaintiff’s petition, the
court concluded that because plaintiff’s claim was final, the superior court
did
not have
jurisdiction to consider [plaintiff’s] request for adjustment or elimination of
[defendants’] workers’ compensation claim.
Rather, any questions concerning the rights and liabilities of the
parties with regard to liens in third-party settlements now rest with the North
Carolina Industrial Commission pursuant to the provisions of N.C. Gen. Stat.
§97-10.2(f)(1).
Plaintiff
contends that this conclusion misapplies the statutory provisions of N.C. Gen.
Stat. §97-10.2 (2003) and the holding in Childress I. We agree.
“The 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 v. Harley Davidson, 346 N.C.
84, 89, 484 S.E.2d 566, 569 (1997).
“Section 97-10.2 and its statutory predecessors were designed to secure
prompt, reasonable compensation for an employee and simultaneously to permit an
employer who has settled with the employee to recover such amount from a
third-party tort-feasor.” Id. However, the amount of an employer’s lien on
recovery from a third-party tort-feasor can be reduced or eliminated pursuant
to N.C. Gen. Stat. §97-10.2. Subsection
(j) provides in pertinent part:
Notwithstanding
any other subsection in this section, in the event that a judgment is obtained
by the employee in an action against a third party, or in the event that a
settlement has been agreed upon by the employee and the third party, either
party may apply to the resident superior court judge of the county in which
the cause of action arose or where the injured employee resides, or to a
presiding judge of either district, to determine the subrogation amount. After notice to the employer and the
insurance carrier, after an opportunity to be heard by all interested parties,
and with or without the consent of the employer, the judge shall determine,
in his discretion, the amount, if any, of the employer’s lien, whether
based on accrued or prospective workers’ compensation benefits, and the amount
of cost of the third-party litigation to be shared between the employee and employer.
N.C.
Gen. Stat. §97-10.2(j) (2003) (emphasis supplied). “We interpret N.C. Gen. Stat. §97-10.2(j) as permitting the
superior court to adjust the amount of a subrogation lien if the agreement
between the parties has been finalized so that only performance of the
agreement is necessary to bind the parties.”
Ales, 163 N.C. App. at 353, 593 S.E.2d at 455.
The conclusion of the trial court in its order dismissing
plaintiff’s petition cites N.C. Gen. Stat. §97-10.2(f)(1). This subsection does not govern liens, but
merely requires the Commission to enter an order allowing distribution of the
proceeds of a third party settlement once an award of workers’ compensation
benefits becomes final:
If the employer
has filed a written admission of liability for benefits under this Chapter
with, or if an award final in nature in favor of the employee has been
entered by the Industrial Commission, then any amount obtained by any
person by settlement with, judgment against, or otherwise from the third party
by reason of such injury or death shall be disbursed by order of the
Industrial Commission . . . [sets forth order of priority]
N.C.
Gen. Stat. §97-10.2 (2003) (emphasis supplied). Thus, the superior court, in its discretion, determines whether
to order any reduction in the lien (the amount the workers’ compensation
carrier or employer may recover from the third party settlement), pursuant to
N.C. Gen. Stat. §97-10.2(j). In a
separate proceeding, pursuant to N.C. Gen. Stat. §97-10.2(f)(1), the Commission
then issues an order detailing to whom and in what amounts the funds will be
distributed, including the amount of distribution to satisfy the workers’
compensation lien if any, once the worker’s compensation award is final. N.C. Gen. Stat. §97-10.2 specifies that
while the power to set the amount of the lien is in the superior (or federal)
court pursuant to N.C. Gen. Stat. §97-10.2(j), the Commission orders
distribution under N.C. Gen. Stat. §97-10.2(f)(1). The court erred by applying the latter provision, when it should
have looked to N.C. Gen. Stat. §97-10.2(j), which explicitly gives it
jurisdiction over setting the amount of the lien.
REVERSED AND REMANDED.
Judges HUNTER and GEER concur.