All
opinions are subject to modification and technical correction prior to official
publication in the North Carolina Reports and North Carolina Court of Appeals
Reports. In the event of discrepancies between the electronic version of an
opinion and the print version appearing in the North Carolina Reports and North
Carolina Court of Appeals Reports, the latest print version is to be considered
authoritative.
NO. COA03-1130
NORTH CAROLINA COURT OF
APPEALS
Filed: 15 February 2005
CHARLES
H. SMITH, III,
Employee,
Plaintiff
v. North
Carolina Industrial Commission
I.C.
File No. 177902
RICHARDSON
SPORTS LTD. PARTNERS
d/b/a
CAROLINA PANTHERS,
Employer;
LEGION
INSURANCE COMPANY,
Carrier,
Defendants
Appeal by defendants from an opinion and award entered 3 June 2003 by the North Carolina Industrial Commission. Heard in the Court of Appeals 7 June 2004.
R. James Lore for
plaintiff-appellee.
Hedrick, Eatmon, Gardner
& Kincheloe, L.L.P., by Hatcher Kincheloe and Shannon P. Herndon, for defendant-appellants.
HUNTER, Judge.
Richardson Sports Ltd.
Partners, d/b/a The Carolina Panthers, et al. (“defendants”) present the
following issues for our consideration:
whether the North Carolina Industrial Commission (“Commission”) erred in
(I) only allowing defendants a fourteen-week credit, with an approximately
$8,000.00 value, for approximately six million dollars in post-injury payments
to plaintiff and not allowing a dollar-for-dollar credit for the total amount
paid to plaintiff post-injury,[Note 1] (II) awarding plaintiff an
automatic right to receive 300 weeks of partial disability benefits, and (III)
finding that the $225,000.00 paid to plaintiff pursuant to a contractual injury
protection plan represents payments made from revenue designated as “employee
revenue” and not funded by the defendants.
We affirm the opinion and award in part and remand this case to the
Commission for the reasons stated herein.
This is a rare case in
which a highly paid individual suffered a compensable injury and occupational
disease and received several millions of dollars after his injury pursuant to
his employment contract. Charles H.
Smith, III (“plaintiff”), entered into a contract with defendants on 1 March
2000 to play professional football for the Carolina Panthers (“Panthers”) of
the National Football League (“NFL”).
The contract was scheduled to end on 28 or 29 February 2005, unless the
contract was terminated, extended, or renewed as specified by the contract. The contract provided that defendants would pay
plaintiff (1) $800,000.00 for the 2000 season, (2) $1,500,000.00 for the 2001
season, (3) $2,700,000.00 for the 2002 season, (4) $3,500,000.00 for the 2003
season, and (5) $4,000,000.00 for the 2004 season. In addition to the salary, plaintiff would receive financial
bonuses such as a $4,500,000.00 signing bonus, a $1,000,000.00 roster bonus for
each season he was placed on the team’s roster starting in 2001, and payments
for making public appearances and attending the team minicamps and workouts. A one-year skill and injury guarantee
addendum to the contract provided plaintiff would receive $750,000.00 in 2002
if the team determined plaintiff’s skill for performance was unsatisfactory
when compared with other players competing for positions on the roster or if
plaintiff was unable to pass the team’s 2002 preseason physical due to a
football-related injury occurring prior to the 2002 season. The Collective Bargaining Agreement (“CBA”)
between the NFL clubs and the NFL Players Association was also a part of
plaintiff’s contract, and it contained several benefits, including an injury
protection provision. Under certain
conditions, this provision provides a one-time benefit to injured players
during the season after a player’s injury.
Plaintiff received $225,000.00 under this provision.
Prior to entering into a
five-year contract with defendants, plaintiff played football for four years in
college and played with the Atlanta Falcons (“Falcons”) of the NFL from 1992
until 2000. With the Falcons, plaintiff
received awards, including being voted greatest defensive lineman in Falcon
history, being selected to the All-Pro Bowl NFL team, and being chosen as
co-captain in Super Bowl XXXIII. While
playing for the Falcons, plaintiff sustained a knee injury and had knee
reconstruction surgery in 1994. He only
missed one game with the Falcons related to that injury.
After joining the
Panthers in 2000, plaintiff passed the pre-employment physical examination
performed by defendants’ physician, which made him eligible to play
football. After passing the physical
examination, defendants allowed plaintiff to undergo another surgical procedure
to get his knee “cleaned out.”
Plaintiff continued rehabilitation treatment and attended practices
sporadically. After playing the first
two games of the season, plaintiff sustained another knee injury during the
third game on 17 September 2000, and plaintiff was placed on injured
reserve. While on injured reserve,
plaintiff continued to receive his salary.
During the 2000 season, plaintiff was paid $800,000.00 in installments
of $47,059.00 for seventeen weeks.
Three of these installment payments were for the three games in which
plaintiff played, including the third game in which he was injured. The remaining fourteen installment payments,
totaling $658,826.00, was injured reserve pay.
Plaintiff had knee
surgery towards the end of the 2000 regular football season. Defendants decided to place plaintiff on its
2001 roster. As a result, plaintiff
received a $1,000,000.00 roster bonus in April 2001. From 2 April 2001 to 21 May 2001 plaintiff participated in
minicamps, workouts, and training camps, for which plaintiff was paid
$1,985.72. Plaintiff also made
appearances during this time period, for which defendants paid him $2,500.00. On 23 July 2001, plaintiff’s contract was
terminated by defendants due to unsatisfactory skill or performance as compared
with that of other players competing for positions on the club’s roster. Defendants paid plaintiff $87,500.00 in
severance pay, an amount based on his years of service with the NFL. As the conditions of the contractual injury
protection provision were met, plaintiff also received $225,000.00 in
installments during the 2001 regular season.
In 2002, plaintiff received $750,000.00 pursuant to the one year skill
and injury guarantee addendum to his contract.
At the time of the
Commission’s review, plaintiff earned $40,000.00 per year as a radio announcer
for 790 Zone Radio in Atlanta, Georgia.
If it had not been for the injury, he would have had the capacity to
earn at least $20,000,000.00 under the contract, which included the signing
bonus of $4,500,000.00, his salary each year, and his projected roster bonus
each year. In the Pre-trial Agreement,
defendants agreed to pay $588.00 per week, the maximum workers’ compensation
rate in effect for 2000, until the hearing.
Defendants denied
plaintiff’s injury was compensable by filing a Form 61 with the Commission on
11 October 2001. Thereafter, on 5 March
2002, defendants filed a Form 60 admitting compensability. The parties then proceeded before the deputy
commissioner regarding the amount of workers’ compensation, if any, to which
plaintiff was entitled. Defendants
argued they were entitled to credits for post-injury payments made to
plaintiff. In a 1 July 2002 opinion and
award, Deputy Commissioner Phillip A. Holmes determined plaintiff was entitled
to 300 weeks of compensation at a rate of $588.00 per week. Defendants were awarded a fourteen week
credit. Thus, plaintiff was awarded
compensation at the rate of $588.00 per week for 286 weeks and medical
expenses. On appeal, the Commission
affirmed the opinion and award with some modifications. The Commission concluded “[p]laintiff
sustained a compensable injury by accident and developed compensable
occupational disease(s) as a result of an admittedly compensable event arising
out of and in the course of his employment with defendants on September 17,
2000.” In the award, plaintiff was awarded
partial disability compensation of $588.00 for 300 weeks with a fourteen-week
credit to defendants. This would result
in a total award of $168,168.00.
Plaintiff was also awarded payment for past and future medical coverage
for injuries, diseases, and conditions resulting from the injury. Defendants appeal.[Note 2]
Defendants assert that
they are entitled to a greater credit than that awarded by the Commission. Specifically, defendants contend they should
have been awarded either a period credit or dollar-for-dollar credit for the
following payments:
·
fifteen
payments of $47,059.00 totaling $705,885.00 paid during the 2000 season
post-injury,
·
$1,000,000.00
roster bonus paid on 3 April 2001,
·
$1,985.72
paid in 2001 for workouts and mini-camps,
·
a
$2,500.00 appearance fee paid on 7 March 2001,
·
$225,000.00
in injury protection payments for the 2001 season,
·
$750,000.00
paid during the 2002 season pursuant to the One-Year Skill and Injury Guarantee
which is Addendum C to the 2001 contract, and the
·
$4,500,000.00
signing bonus.
We first address defendants’
contention that they were entitled to a dollar-for-dollar credit for the above
amounts paid to plaintiff post-injury.
Defendants contend they
are entitled to a dollar-for-dollar credit because this Court has previously
affirmed a dollar-for-dollar credit in Larramore, a workers’
compensation case involving a professional football player. See Larramore v. Richardson Sports
Ltd. Partners, 141 N.C. App. 250, 540 S.E.2d 768. In Larramore, however, this Court did not address the
issue of whether an employer was entitled to a dollar-for-dollar credit for the
amounts paid to an employee after his injury.
Moreover, this Court does not even discuss a dollar-for-dollar credit in
Larramore. The only reference to
a credit in Larramore is in this Court’s summary of the Commission’s
opinion and award. This Court
stated: “The Commission calculated
plaintiff’s average weekly wage as $1,653.85, yielding a weekly compensation
rate of $478.00, minus appropriate credits to defendants.” Id. at 253, 540 S.E.2d at 770. Accordingly, we conclude this Court’s
opinion in Larramore does not hold an employer is entitled to a
dollar-for-dollar credit for any amounts paid to an employee after his
injury. Rather, this issue is governed
by N.C. Gen. Stat. §97-42 (2003).
N.C. Gen. Stat. §97-42
states:
Payments made by the
employer to the injured employee during the period of his disability, or to his
dependents, which by the terms of this Article were not due and payable when
made, may, subject to the approval of the Commission be deducted from the
amount to be paid as compensation.
Provided, that in the case of disability such deductions shall be made
by shortening the period during which compensation must be paid, and not by
reducing the amount of the weekly payment.
Unless otherwise provided by the plan, when payments are made to an
injured employee pursuant to an employer-funded salary continuation, disability
or other income replacement plan, the deduction shall be calculated from
payments made by the employer in each week during which compensation was due
and payable, without any carry-forward or carry-back of credit for amounts paid
in excess of the compensation rate in any given week.
Thus, any credit awarded
to an employer for any amount paid to an employee, after his injury, is limited
to shortening of the period in which compensation is paid, under the
restrictions set forth in N.C. Gen. Stat. 97-42, and not by reducing the amount
of the weekly payment.[Note 3]
Nonetheless, defendants argue that they are entitled to a dollar-for-dollar credit pursuant to their contract with plaintiff. Paragraph 10 of the NFL Player Contract entered into by the parties states:
WORKERS’
COMPENSATION. Any compensation paid to
Player under this contract or under any collective bargaining agreement in
existence during the term of this contract for a period during which he is
entitled to workers’ compensation benefits by reason of temporary total,
permanent total, temporary partial, or permanent partial disability will be
deemed an advance payment of workers’ compensation benefits due Player, and
Club will be entitled to be reimbursed the amount of such payment out of any
award of workers’ compensation.
Defendants argue that
this contractual provision “specifically sets forth that the types of payments
that were made to Employee-Plaintiff in this action are deemed advances against
any award of workers’ compensation.” In
support of this contention defendants cite Pittsburgh Steelers Sports, Inc.
v. Workmen’s Compensation Appeal Board, 604 A.2d 319 (Pa. 1992) and Station
v. Workmen’s Compensation Appeal Board, 608 A.2d 625 (Pa. 1992). In Steelers and Station, the
Commonwealth Court of Pennsylvania explained the Workmen’s Compensation Board
should have determined the credit owed to the professional football team for
payments made to an injured player on a dollar-for-dollar basis. See Steelers, 604 A.2d at 323; Station,
608 A.2d at 632. In each of these
decisions, the Pennsylvania court based its decision upon Paragraph 10 of the
NFL Player Contract. Steelers,
604 A.2d at 322-23; Station, 608 A.2d at 632.[Note 4]
While the same
contractual provision is present in this case,
Station and Steelers do not provide relevant
guidance. First, in North Carolina,
N.C. Gen. Stat. §97-42 does not allow a credit to be given by reducing the
amount of the weekly payment. Rather,
the number of weeks in which a claimant receives workers’ compensation should
be shortened. Our review of the
Pennsylvania statutes does not reveal a similar provision.[Note 5] Second, North Carolina statutes
provide: “No contract or agreement,
written or implied, no rule, regulation, or other device shall in any manner
operate to relieve an employer in whole or in part, of any obligation created
by this Article, except as herein otherwise expressly provided.” N.C. Gen. Stat. §97-6 (2003). Thus, the North Carolina Workers’
Compensation Act precludes a dollar-for-dollar credit and prohibits contractual
modification of the workers’ compensation statutory provisions. See Hoffman v. Truck Lines, Inc., 306
N.C. 502, 507-08, 293 S.E.2d 807, 811 (1982) (stating “an employer would not
be permitted to escape his liability or
obligations under the Act through the use of a special contract or agreement if
the elements required for coverage of the injured individual would otherwise
exist”).
Moreover, in In the
Matter of an Arbitration between National Football League Players Association
and National Football League Management Council, Opinion and Decision of
Sam Kagel, National Arbitrator (28 December 1994), the arbitrator determined
Paragraph 10 of the NFL Players Contract was
designed to avoid
“double dipping” by a Player in a case where the Player is receiving a salary
or injury protection compensation and is also receiving Workers’ Compensation
by providing that the Club can offset Workers’ Compensation payments against
such salary or injury protection payments.
The “period” during
which such offsets can be made by the Club is the period of salary payments or
the period related to the injury protection period. . . .
See Arbitration at 19. Thereafter, the arbitrator decided the Club
was entitled to an “offset on a time basis.”
Id. The NFL CBA indicates
that each NFL club is bound by arbitration decisions. Article IX, Section 8 of the NFL CBA states in pertinent
part: “The decision of the arbitrator
will constitute full, final and complete disposition of the grievance, and will
be binding upon the player(s) and Club(s) involved and the parties to this
Agreement . . . .” As
the Panthers are a party to the CBA, they are bound by the arbitrator’s
decision that Paragraph 10 of the Players’ contract provides for an offset on a
time basis. Therefore, not only does
North Carolina law preclude a dollar-for-dollar credit, the NFL Players’ contract
has been interpreted to provide for a time credit and not a dollar-for-dollar
credit.
We next consider
defendants’ arguments that they were entitled to a greater credit than that
awarded by the Commission. In its
award, the Commission granted defendants a credit for fourteen weeks of
compensation payments at the weekly rate of $588.00, to be deducted from the
end of the 300-week period. As
previously stated, defendants contend they should have been awarded a credit
for the following payments:
·
fifteen
payments of $47,059.00 totaling $705,885.00 paid during the 2000 season
post-injury,
·
$1,000,000.00
roster bonus paid on 3 April 2001,
·
$1,985.72
paid in 2001 for workouts and mini-camps,
·
a
$2,500.00 appearance fee paid on 7 March 2001,
·
$225,000.00
in injury protection payments for the 2001 season,
·
$750,000.00
paid during the 2002 season pursuant to the One-Year Skill and Injury Guarantee
which is Addendum C to the 2001 contract, and the
·
$4,500,000.00
signing bonus.
Whether an employer is
awarded a credit for payments made to an employee post-injury is governed by
N.C. Gen. Stat. §97-42, which states:
Payments made by the
employer to the injured employee during the period of his disability, or to his
dependents, which by the terms of this Article were not due and payable when
made, may, subject to the approval of the Commission be deducted from the
amount to be paid as compensation.
Provided, that in the case of disability such deductions shall be made
by shortening the period during which compensation must be paid, and not by
reducing the amount of the weekly payment.
Unless otherwise provided by the plan, when payments are made to an
injured employee pursuant to an employer-funded salary continuation, disability
or other income replacement plan, the deduction shall be calculated from
payments made by the employer in each week during which compensation was due
and payable, without any carry-forward or carry-back of credit for amounts paid
in excess of the compensation rate in any given week.
For an employer to
receive a credit under this statute (1) the payment must not have been due and
payable, and (2) the Commission must decide, in its discretion, whether to
award a credit. If the Commission
decides to award a credit, the credit is awarded by shortening the number of
weeks for which the claimant receives compensation. The employer is not entitled to a dollar-for-dollar credit. If the payment was made pursuant to an
employer funded disability plan, different rules may apply.
N.C. Gen. Stat. §97-42
“expressly provides that payments made by the employer which were ‘due and
payable’ when made are not deductible.”
Moretz v. Richards & Associates, 316 N.C. 539, 541, 342
S.E.2d 844, 846 (1986); see also Thomas v. B.F. Goodrich, 144 N.C. App.
312, 318-19, 550 S.E.2d 193, 197 (2001) (stating “[i]f payments made by an
employer are due and payable, the employer may not be awarded a credit for the
payments under section 97‑42”).
Our appellate courts have determined there are at least three instances
where a payment is “due and payable.”
First, a payment is due and payable when the Commission has entered an
opinion awarding benefits to a claimant.
See Foster v. Western-Electric Co., 320 N.C. 113, 115, 357 S.E.2d
670, 672 (1987). Second, a payment is
due and payable after the employer has admitted the worker’s injury is
compensable and therefore entitled to workers’ compensation benefits.[Note
6] Moretz, 316 N.C. at
541-42, 342 S.E.2d at 846. As explained
by our Supreme Court in Moretz,
[t]he Workers’ Compensation
Act provides that a policy insuring an employer against liability arising under
that Act must contain an agreement by the insurer to pay promptly all benefits
conferred by its provisions, and that such agreement is to be construed as a
direct promise to the person entitled to compensation. N.C.G.S. §97-98 (1985). By virtue of this promise, once the employer
has accepted an injury as compensable, benefits are “due and payable.” See also N.C.G.S. §97-18(b)
(1985). Because defendants accepted plaintiff’s
injury as compensable, then initiated the payment of benefits, those payments
were due and payable and were not deductible under the provisions of section
97-42, so long as the payments did not exceed the amount determined by
statute or by the Commission to compensate plaintiff for his injuries.
Id. Thus, if the payments exceed the amount to
which the plaintiff is entitled, the employer will not have to pay any
additional compensation. See id.
at 542, 342 S.E.2d at 847 (stating the employer did not have to pay any
additional compensation because the plaintiff had already been fully
compensated for his injury). Third, a
payment is due and payable when made if the employee has earned the
compensation or benefit. In Christopher
v. Cherry Hosp., 145 N.C. App. 427, 550 S.E.2d 256 (2001), the employer
denied the employee’s workers’ compensation claim and the injured employee used
fifty-two days of accrued sick leave and vacation leave while she was out of
work. Christopher, 145 N.C. App.
at 427, 550 S.E.2d at 257. This Court
explained that “an employee’s accumulated vacation and sick leave could be used
by the plaintiff for purposes other than those served by the [Workers’
Compensation] Act, [and] were not tantamount to workers’ compensation benefits.” Id. at 430, 550 S.E.2d at 258. We further explained that:
“Such benefits have
nothing to do with the Workers’ Compensation Act . . . . [P]laintiff in the
instant case cannot be held to have received duplicative payments for his
injury or to have received more than he was entitled by the Workers’
Compensation Act to receive.”
Id. (citation
omitted). Based upon our analysis, we
held in Christopher “that payments for such vacation and sick leave are
‘due and payable’ when made because they have been earned by the employee and
are not solely under the control of the employer.” Id. at 432, 550 S.E.2d at 260.
When, however, an
employer makes payments that are not due and payable, the Commission may in its
discretion award the employer a credit for the payments pursuant to section 97‑42.
. . . Thus, this Court’s review of the
Commission’s decision to grant or deny a credit for payments made by an
employer that were not due and payable “is strictly limited to a determination
of whether the record affirmatively demonstrates a manifest abuse of
discretion” by the Commission.
Thomas, 144 N.C. App. at 319,
550 S.E.2d at 197 (footnote omitted).
When a credit is
awarded, the deduction “shall be made by shortening the period during which
compensation must be paid, and not by reducing the amount of the weekly
payment.” N.C. Gen. Stat. §97-42. Thus, any credit awarded to defendants may
not result in the reduction of the $588.00 weekly rate of compensation. Rather, the number of weeks in which
plaintiff receives compensation would be shortened.
However, if the payment
was made pursuant to an employer-funded salary continuation, disability, or
other income replacement plan, different rules may apply. In Foster v. Western-Electric Co.,
320 N.C. 113, 357 S.E.2d 670, our Supreme Court indicated that if an employer
pays an employee wage-replacement benefits at a time when workers’ compensation
benefits are not due and payable, the employer is entitled to a credit. Allowing a credit for these payments is in
accord with the public policies behind our Workers’ Compensation Act, i.e., “to
relieve against hardship,” “to provide payments based upon the actual loss of
wages[,]” and the avoidance of “duplicative payments.” Id. at 116-17, 357 S.E.2d at 673.
In Evans v. AT&T
Technologies, 332 N.C. 78, 418 S.E.2d 503 (1992), our Supreme Court
indicated that the credit for payments made pursuant to an employer-funded wage
replacement plan should be a dollar-for-dollar credit. In response to this holding, the General
Assembly amended N.C. Gen. Stat. §97-42 in 1994 to add the following provision:
Unless otherwise
provided by the plan, when payments are made to an injured employee pursuant to
an employer-funded salary continuation, disability or other income replacement
plan, the deduction shall be calculated from payments made by the employer in
each week during which compensation was due and payable, without any
carry-forward or carry-back of credit for amounts paid in excess of the
compensation rate in any given week.
The statute “was amended
to modify the decision of the Supreme Court [of North Carolina] in Evans v.
AT&T Technologies, 332 N.C. 78, 418 S.E.2d 503 (1992), which provided a
dollar-for-dollar credit against workers’ compensation due for payments
received under an employer-funded disability program.” Henry N. Patterson, Jr. and Maxine Eichner, 1994
Workers’ Compensation Reform Act, pp. 27-28.
Under the new language,
unless otherwise provided by the plan, payments made under an employer-funded
salary continuation, disability or other income replacement plan will be
deducted from payments due from the employer in each week during which
compensation is payable “without any carry-forward or carry-back for credit for
amounts paid in excess of the compensation rate in any given week.” The employer, therefore, is now entitled
only to a credit against compensation payable for weeks during which the
employer-funded disability benefits were paid unless otherwise provided in the
employer’s disability plan.
Id. Therefore, under N.C. Gen. Stat. §97-42, any credit an employer receives for payments made pursuant to an employer-funded salary continuation, disability, or other income replacement plan is awarded by reducing the number of weeks of workers’ compensation awarded to the claimant by the number of weeks in which an employer made payments under the plan, if the payments were not due and payable when made. If the payment made by the employer was more than what the employee was to receive under the Workers’ Compensation Act, the excess cannot be used towards an additional week of credit. However, the language “[u]nless otherwise provided by the plan” indicates an employer may include language in the wage-replacement plan which modifies the application of this amendment to N.C. Gen. Stat. 97-42.
In this case, our review
of the record indicates that five of the payments received by plaintiff
post-injury had been earned by the plaintiff, and were due and payable when
made. Thus, defendants cannot seek a
credit for these five payments: (1) one
of the fifteen payments of $47,059.00 paid during the 2000 season, (2) the
$1,000,000.00 roster bonus paid on 3 April 2001, (3) $1,985.72 paid in 2001 for
workouts and mini-camps, (4) a $2,500.00 appearance fee paid on 7 March 2001,
and (5) the $4,500,000.00 signing bonus.
1. The
$47,059.00 Payment Received in 2000
Plaintiff was injured on
17 September 2000 and the next day, on 18 September 2000, the plaintiff
received $47,059.00. In finding of fact
16, the Commission found in pertinent part:
“The payment made on September 18, 2000, represented earnings for
playing in the September 17, 2000, game in which plaintiff was injured, and was
not paid as a disability payment.”
According to Article XXXVIII, Section 9 of the NFL CBA: “Unless agreed upon otherwise between the
Club and the player, each player will be paid at the rate of 100% of his salary
in equal weekly or bi-weekly installments over the course of the regular season
commencing with the first regular season game. . . .” Plaintiff’s payment history indicates he was receiving his salary
weekly. As the CBA indicates a player
would begin receiving his salary weekly after the first regular season game,
the Commission’s conclusion that the 18 September 2000 payment reflected
plaintiff’s earnings for playing in the 17 September 2000 game is supported by
competent evidence, as the players were paid after the weekly football
game. Thus, defendants cannot seek a
credit for this payment because it was due and payable when made.[Note 7]
2. The $1,000,000.00
Roster Bonus Paid in 2001
Defendants seek a credit
for the $1,000,000.00 roster bonus paid on 3 April 2001. In finding of fact 19, the Commission found
in pertinent part:
The roster signing bonus
of $1,000,000.00 paid April 3, 2001, to plaintiff was the result of a
unilateral decision on the part of the Panthers to place plaintiff on the 2001
roster, most likely to keep him from being picked up by another team if he had
been able to recover from his injury and play again. This payment is deemed as earnings to plaintiff.
Paragraph 27 of Addendum
B to plaintiff’s Player Contract states:
If Player is a member of
the 80-man roster on the following dates of the respective seasons below, he
will be paid as follows:
April 1, 2001 -
$1,000,000 payable April 1, 2001.
March 1, 2002 -
$1,000,000 payable March 1, 2002.
March 1, 2003 -
$1,000,000 payable March 1, 2003.
March 1, 2004 -
$1,000,000 payable March 1, 2004.
Thus, plaintiff was
contractually entitled to the $1,000,000.00 roster bonus when the Panthers
decided to place him on the roster for the 2001 season. In explaining the decision to place
plaintiff on the roster and to reduce plaintiff’s salary from $1,500,000.00 to
$500,000.00 for the 2001 season, Marty Hurney, General Manager for the Panthers,
testified:
Q. . . . Did you have any part in the consideration of that renegotiation of the contract?
A. Yes, sir.
Q. Why did that occur?
A. Because we wanted to give Chuck extra
time to rehab from the injury, to see if‑‑see if he could get healthy
enough to play for us, since we had invested money into him, to play for us
over a long term. And his salary cap
number was too high to keep him. We had
a March roster that we had to pay in consideration for him to play for us that
year, and we asked him to reduce his Paragraph 5 salary by a million dollars.
Q. What would be the incentive for him to
reduce it by a million dollars?
A. To get a chance to still play for us,
and to receive the million-dollar roster bonus that was part of that contract to
play for us that season.
Q. So if he had not been accepted onto the
team in March of 2001, what would have happened to the roster bonus that would
have otherwise been payable?
A. Well, if we would have released him
before March 1, he wouldn’t have received a roster bonus.
The general manager’s
testimony indicates that the roster bonus was neither paid as a result of
plaintiff’s workers’ compensation claim nor was it a part of a wage replacement
plan for employees unable to work. Rather,
plaintiff was contractually entitled to the bonus because the Panthers decided
to place him on the roster. Thus, the
Commission’s finding that the bonus should be classified as earnings is
supported by competent evidence. As
this bonus was due and payable, defendants cannot seek a credit for the roster
bonus as it was due and payable when made.
3.
and 4. The $1,985.72 Payment for
Mini-Camps
and
Workouts and the $2,500.00 Appearance Fee
In finding of fact 15,
the Commission found:
Post injury payments in
the sum of $4,805.72 were made to plaintiff during the period of April 2, 2001,
to May 21, 2001, for plaintiff’s participation in the Workout, MiniCamp and
Training Camps, as well as an Appearance Fee pursuant to his contract. These payments constitute post-injury earnings.
Plaintiff’s payment history indicates he received six $320.00 payments between 2 April 2001 and 21 May 2001 for workouts, one payment of $385.72 for minicamp, and $2,500.00 on 7 May 2001 for an appearance. According to plaintiff’s contract, he was obligated to participate in minicamps, workouts, and to make appearances on behalf of the team. As plaintiff’s payment history indicates these payments between 2 April and 21 May 2001 were for participating in these activities, the Commission’s conclusion that these were post-injury earnings is supported by competent evidence. As such, defendants cannot seek a credit for these payments because they were due and payable when made.
5. The
$4,500,000.00 Signing Bonus
Defendants contend they
are entitled to a credit of $4,500,000.00 for the signing bonus because “[e]ven
though the signing bonus was paid in two lump sums, for salary cap purposes and
pursuant to the Collective Bargaining Agreement, that $4,500,000.00 signing
bonus is considered to be spread over the five-year length of
Employee-Plaintiff’s Contract.” In
finding of fact 14, the Commission found:
“The payment of a deferred 3.5 million dollar signing bonus on April 3,
2001, relates back as an amount plaintiff earned, though later paid, for signing
with the Panthers in February of 2000.”
According to plaintiff’s contract:
As additional
consideration for the execution of NFL Player Contract(s) for the year(s) 2000,
2001, 2002, 2003, and 2004, and for the Player’s adherence to all
provisions of said contract(s), Club agrees to pay Player the sum of Four
Million Five Hundred Thousand Dollars $4,500,000.
The above sum is payable
as follows:
$1,000,000 PAID
ON 2/22/00. . . .
$3,500,000 on
April 1, 2001.
According to the
Panther’s general manager, plaintiff would have received the remainder of his
signing bonus even if he had not been placed on the 2001 roster. The general manager also explained that even
though the signing bonus was paid in two lump sums in 2000 and 2001, for salary
cap purposes, the signing bonus amount is spread over the length of the
contract. Notwithstanding this
testimony, however, plaintiff became entitled to the signing bonus upon signing
the contract, which occurred pre-injury.
Therefore, finding of fact 14 is supported by competent evidence. As such, defendants may not seek a credit
for the signing bonus because it was due and payable when made.
We now turn to the
remaining payments for which defendants seek a credit: (a) the $225,000.00
injury protection provision payments paid during the 2001 regular season, (b)
the $750,000.00 one year skill and injury guarantee payments paid in 2002, and
(c) the injured reserve pay of fourteen $47,059.00 installments in 2000.
It is well-established
that our standard of review of an opinion and award of the Commission is
limited to a determination of “(1) whether the Commission’s findings of fact
are supported by any competent evidence in the record; and (2) whether the
Commission’s findings justify its conclusions of law.”
Larramore, 141 N.C. App. at 254,
540 S.E.2d at 770 (citation omitted).
a. The
$225,000.00 Injury Protection Payments
Defendants contend
plaintiff received $225,000.00 in seventeen installments between 20 September
2001 and 31 December 2001 for which they are entitled a credit. In finding of fact 17, the Commission found:
Payments in the sum of
$225,000.00 pursuant to the injury protection plan running from September 20,
2001, to approximately December 31, 2001 (made in installments of $13,235.30)
represent payments made from revenue designated as employee revenue under the
division of revenue between management and the players’ union pursuant to the
collective bargaining agreement. The
source of the injury protection plan monies were paid in toto by all NFL
player-employees, including plaintiff, and is for a type of disability
plan. The revenues that funded this
plan, which was the source of the payments made to plaintiff, were not paid by
the employer.
Defendants also contend
the Commission’s finding the injury protection plan was employee-funded is
unsupported by competent evidence. We
agree this finding of fact is not supported by competent evidence.
In this case, Tim
English (“English”), staff counsel for the NFL Players’ Association, gave the
following explanation of how the injury protection plan was funded. First, he explained that NFL revenue
generated from television and ticket sales is the “designated gross revenue”[Note
8] for the League. Then, according
to English, pursuant to the CBA, the portion of the defined gross revenue that
can be used for player salary and benefits is limited by a salary cap, which
was sixty-three percent (63%) in 2000.
The injury protection plan is part of the benefits a player receives
under the CBA. Then, English testified
as follows:
Q. Now, what is the source of the injury protection payments that are listed on this document, beginning on 9-20, 2001, and you may presume that it went up through 12-31, 2001?
A. Well, the player’s side of the revenue,
the sixty-three percent or so, is divided up generally into two
categories. The vast majority of the
money goes into the salary cap, which the players’--all the players’ salaries
come out of. And a smaller amount goes
into what’s called the benefit cap.
.
. .
Q. Well, stated alternatively for purposes
of the question, did Chuck Smith’s injury protection money come out of the
players’ side of the revenue, the sixty-three percent, or the management side
of the revenue, the thirty--thirty-seven percent?
A. Yeah, the players’ side of the revenue.
Although English
testified that the injury protection plan is funded out of the players’ side of
the revenue used for the salary cap, he did not testify that sixty-three
percent (63%) of the defined gross revenue generated belonged to the
players. Indeed, the CBA indicates the
defined gross revenue belongs to the NFL and the NFL teams. In Article XXIV, Section 1(a)(i), the
agreement states in pertinent part:
“Defined Gross Revenues”
(also referred to as “DGR”) means the aggregate revenues received or to be
received on an accrual basis, for or with respect to a League Year during
the term of this Agreement, by the NFL and all NFL Teams (and their
designees), from all sources, whether known or unknown, derived from, relating
to or arising out of the performance of players in NFL football games, with
only the specific exceptions set forth below.
The NFL and each NFL Team shall in good faith act and use their best
efforts, consistent with sound business judgment, so as to maximize Defined
Gross Revenues for each playing season during the term of this Agreement. . . .
(Emphasis added.)
In this case, the
testimony regarding the salary cap and revenue did not provide a clear
explanation of how the process worked.
The lack of a clear explanation led to contradictory results. According to English, all of the players’
salary and benefits in 2000 were paid out of the sixty-three percent (63%)
salary cap. The salary and benefits
included, among other things, the injury protection plan and the injured
reserve pay. Thus, the $47,059.00
weekly injured reserve payments plaintiff received was paid out of the
sixty-three percent (63%) salary cap.
Similarly, the injury protection plan payments received by plaintiff in
2001 would have been paid out of the salary cap.[Note 9] However, the Commission determined in
finding of fact 16 that the injured reserve payments were made pursuant to an
employer totally funded disability plan.
Then in finding of fact 17, the Commission determined the injury protection
plan was employee funded. These
findings of fact are contradictory as the injured reserve pay and the injury
protection plan payments were part of the salary cap. The Commission’s findings of fact do not clarify the
contradiction.
Therefore, we conclude
the determination that the injury protection plan payments were from an
employee-funded plan is unsupported by competent evidence as there is
insufficient evidence upon which a determination can be made. Accordingly, we remand to the Commission for
the hearing of additional evidence and further findings of fact as to whether
the injury protection plan is employee funded, employer funded, or both. If the injury protection plan is employer
funded, then the Commission must determine if a credit should be awarded in
accordance with this opinion. As
plaintiff did not appeal the Commission’s determination in finding of fact 16,
that the injured reserve pay was part of an employer-funded disability plan,
the Commission shall not address whether injured reserve pay was
employer-funded or employee-funded on remand.
b. The
$750,000.00 Payment
Defendants also contend
they are entitled to a credit for the $750,000.00 paid to plaintiff in 2002
pursuant to the One-Year Skill and Injury Guarantee which is Addendum B to
plaintiff’s 2001 contract. This
guarantee stated:
Despite any contrary
language in this NFL Player contract, Club agrees that for 2002 only it will
pay Player Seven Hundred Fifty Thousand Dollars ($750,000) of the salary
provided in Paragraph 5, if, in Club’s sole judgment Player’s skill for
performance is unsatisfactory as compared with that of other players competing
for positions on Club’s roster and Player’s contract is terminated via the NFL
waiver system, or, if, due to an injury suffered while participating or playing
for the Club prior to the 2002 season Player, in the sole discretion of Club’s
physician, is unable to pass Club’s pre-season physical examination for 2002
and Player’s contract is terminated via the NFL waiver system.
This guarantee by Club
only applies for the 2002 season, regardless of whether Player is under
contract or option to Club for a subsequent year; and regardless of whether
Player passes Club’s physical examination for a year subsequent to 2002.
This guarantee is for
one year only and in no way supersedes or obviates the applicability of the
League’s waiver system to Player.
Although the parties
stipulated that plaintiff would receive $750,000.00 in seventeen equal payments
during the 2002 football season, the Commission did not render any findings of
fact or conclusions of law as to whether it would award defendants a credit for
these payments. Thus, this case must be
remanded to the Commission for a determination of whether defendants are
entitled to a credit for these guarantee payments in accordance with this
opinion.
c. Fourteen
Payments of $47,059.00 in 2002
In finding of fact 16,
the Commission found defendants made fourteen post-injury weekly payments of
$47,059.00 pursuant to an employer totally funded disability plan. As stated, plaintiff did not appeal the
determination that these payments were from an employer totally funded
disability plan. In conclusion of law
4, the Commission determined “[d]efendant is entitled to a credit for 14 weeks
of compensation payments at the weekly rate of $588.00, to be deducted from the
end of the 300-week period under N.C. Gen. Stat. §§97-30 and 97-42.” Defendants contend they are entitled to
additional weeks of credit for the time period between the last regular season game
in 2000 through the end of plaintiff’s yearly contract on the last day of
February 2001. Defendants did not make
any payments to plaintiff during this time period. However, they argue that because plaintiff was paid his yearly
salary during the seventeen week regular season, as earnings and injured
reserve pay, they should be awarded a credit extending to the end of the
contractual year.
As explained, the 1994
amendment to N.C. Gen. Stat. §97-42 precludes the dollar-for-dollar credit
allowed by Evans, and allows a
credit against compensation for weeks during which the employer-funded
disability benefits were paid. See N.C.
Gen. Stat. §97-42; N.C. Academy of Trial Lawyers, Work Place Torts and
Workers’ Comp 1994, 1994 Workers’ Compensation Reform Act, Henry N.
Patterson, Jr. Although defendants are
not seeking to carry-forward a portion of the $47,059.00 payment to subsequent
weeks in the contract year, they are seeking a credit for weeks in which they
did not make any payments. To allow
such a credit would be contrary to the spirit of the 1994 amendment. See Shelton v. Morehead Memorial Hospital,
318 N.C. 76, 81-82, 347 S.E.2d 824, 828 (1986) (stating “[l]egislative intent
controls the meaning of a statute; and in ascertaining this intent, a court must
consider the act as a whole, weighing the language of the statute, its spirit,
and that which the statute seeks to accomplish”).
Nonetheless, N.C. Gen.
Stat. §97-42 allows an employer to modify how a credit is applied by including
the modification in its benefits or wage continuation plan. On remand, the Commission may hear
additional evidence and may make further findings of fact as to whether the
effect of N.C. Gen. Stat. §97-42 has been modified in this case.
Finally,
defendants challenge finding of fact 18 which states: “Plaintiff’s post injury wage earning capacity outside of the NFL
is $40,000.00 per year during the relevant 300-week time period covered by N.C.
Gen. Stat. §97-30.” At the time of the
hearing on 22 March 2002, plaintiff was earning $40,000.00 a year as a radio
announcer. Defendants argue the
Commission’s determination that plaintiff would only make $40,000.00 a year
throughout the entire 300 week compensation period was speculative. Defendants argue plaintiff could obtain employment
making the same or greater amount of money that he was making with the
Panthers. Therefore, defendants argue
finding of fact 18 is not supported by the evidence. We disagree.
Plaintiff’s
uncontradicted testimony that he was making $40,000.00 a year was competent
evidence upon which the Commission could determine plaintiff’s wage-earning
capacity. Moreover, if plaintiff’s
income changed and plaintiff began making more than $40,000.00 a year during
the 300 week period, such that he was no longer entitled to the maximum
compensation rate, defendants could move to terminate or diminish the amount of
compensation pursuant to N.C. Gen. Stat. §97-47. See also Smith v. Swift & Co., 212 N.C. 608, 194 S.E.
106 (1937) (indicating a party can move for a modification of an award if the
claimant began receiving a higher salary post injury than his average weekly
wage prior to injury as the change in salary could constitute a change in
condition).
In sum, we conclude the
Commission properly classified the roster bonus, signing bonus, minicamp,
workout, and appearance fees as plaintiff’s earnings for which defendants were
not entitled to a credit, as these payments were due and payable when
made. Similarly, the Commission correctly
found the 18 September 2000 $47,059.00 payment was for services rendered during
the prior week, including the 17 September 2000 game in which plaintiff was
injured. Also, the Commission’s finding
that plaintiff was entitled to 300 weeks of compensation was supported by
competent evidence. However, the
Commission did not make any findings of fact or conclusions of law regarding
the $750,000.00 payments to be received by plaintiff in 2002. Also, the Commission’s finding that the
$225,000.00 injury protection payments were paid out of an employee-funded plan
was unsupported by competent evidence. Finally, the parties are allowed to
present argument to the Commission as to whether additional credit should be
awarded for the injured reserve pay paid to plaintiff in 2000. Accordingly, this case is remanded to the
Commission for further proceedings in accordance with this opinion.
Affirmed in part,
remanded for further proceedings in part.
Judges MARTIN and
TIMMONS-GOODSON concur.
1. Our calculation of the sum of the
payments for which defendants seek a credit does not equal $6,172,135.40. We also note that some of the stipulated
exhibits do not equal some of the amounts stated by defendants in their
briefs. However, we choose to use the
numbers and figures used by the parties in their brief for the sake of
clarity. If necessary, on remand the
parties and the Commission may address any discrepancies.
2. We initially note that defendants have
not appealed the Commission’s computation of the average weekly wage. In its conclusions of law, the Commission
determined that exceptional reasons existed for using an alternative method to
calculate plaintiff’s average weekly wage in order to most accurately
approximate the amount which plaintiff would have earned but for the injury or
disease he sustained. See Larramore
v. Richardson Sports Ltd. Partners, 141 N.C. App. 250, 540 S.E.2d 768
(2000), per curiam aff’d, 353 N.C. 520, 546 S.E.2d 87 (2001). Defendants, however, do state in their
brief’s statement of facts, that the Commission’s determination that plaintiff
would have earned $20,000,000.00 under the entire contract was speculative, as
there was no guarantee plaintiff would have made the team each year. Our appellate rules indicate that the statement
of facts “should be a non-argumentative summary of all material facts
underlying the matter in controversy[.]”
N.C.R. App. P. 28(b)(5). As
defendants did not properly argue this issue in their brief, we will consider
this assignment of error abandoned. See
N.C.R. App. P. 28(b)(6) (“[a]ssignments of error not set out in the
appellant’s brief, or in support of which no reason or argument is stated or
authority cited, will be taken as abandoned”).
However, even assuming this issue was properly argued, our review of the
record indicates competent evidence supports the findings of fact regarding
what plaintiff would have earned under the contract.
3. See infra for a discussion of
the 1994 amendments to this statute.
4. The Pennsylvania decisions in Steelers
and Station were decided prior to the arbitration decision
indicating any credit under paragraph 10 of the NFL contract would be imposed
on a time basis. The NFL CBA indicates
each NFL team is bound by arbitration decisions. For further discussion, see infra.
5. After the Pennsylvania decisions in Station
and Steelers, the Pennsylvania legislature enacted legislation
applicable to highly paid professional athletes which limited workers’
compensation benefits. See 77
P.S. §565 (2004). This legislation
makes a distinction between highly paid professional athletes and athletes that
do not earn high salaries. See Lyons
v. Workers’ Comp. Appeal Bd., 803 A.2d 857 (Pa. 2002). North Carolina has not enacted similar
legislation.
6. Plaintiff was injured on 17 September
2000. Although the parties stipulated
that defendants admitted compensability by filing a Form 60 with the
Commission, the record indicates the Form 60 was not filed until 5 March
2002. The record also indicates that
defendants initially denied compensability by filing a Form 61 on 10 October
2001. On remand, the Commission should
determine whether any of the payments for which defendants seek a credit were
due and payable when made.
7. For a discussion of the remaining
installment payments which constituted injured reserve pay, see infra.
8. The CBA refers to this money as
“defined gross revenue,” not “designated gross revenue.” As the CBA uses the term “defined gross
revenue,” we will use the same term for clarity.
9. Defendants also argue that under
English’s interpretation of the NFL CBA, all of the players’ salaries and
benefits would have been paid out of money belonging to the players. According to defendants, this would mean the
players paid themselves. We express no
opinion on the merits of defendants’ argument as the Commission may consider it
on remand.