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
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NO. COA03-1130-2
NORTH CAROLINA COURT OF APPEALS
Filed: 2 August 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. Opinion filed 15 February 2005. Petition for rehearing granted 22 April 2005. The following opinion supersedes and replaces the opinion filed 15 February 2005.
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
million dollars after his injury pursuant to his employment contract. In order to determine whether the Panthers
were entitled to a credit for the monies paid to plaintiff post-injury requires
this Court to interpret and apply N.C. Gen. Stat. §97-42. The application of this statutory provision
in the context of a highly paid professional athlete presents an issue of first
impression. Unlike the typical workers’
compensation cases, cases such as this usually involve complex collective
bargaining agreements and individualized player contracts. Thus, the credit issues arising in this
context are complicated, and unlike some other states with professional teams,
North Carolina does not have a statute specifically addressing highly paid
professional athletes and workers’ compensation.
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 mini-camps 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, were injured reserve pay.
Plaintiff had knee surgery towards the end of the 2000
regular football season. Defendants
decided to place plaintiff on their 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 mini-camps, 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.
According to defendants, on 23 July 2001, plaintiff’s contract was
terminated 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. The Commission determined that if it were
not for plaintiff’s compensable injury, he would have likely made the
Panthers’s roster and would have had the capacity to earn at least
$20,000,000.00 under the contract. [Note 2] This figure included his 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.
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.
Whether
an employer is awarded a credit for payments made to an employee post-injury is
governed by N.C. Gen. Stat. §97-42 (2003), 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.
This provision “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 3] 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. In Moretz, the Commission determined
the plaintiff was entitled to 180 weeks of disability payments. Id. at 542, 342 S.E.2d at 847. However, the employer had admitted
compensability and had already paid the plaintiff nearly 255 weeks of
disability payments. Id. Thus, our Supreme Court held that
“[p]laintiff has therefore already received more than he was entitled by
statute to receive. . . . Plaintiff has
already been fully compensated for his injury, and we hold that defendants owe
plaintiff no additional compensation.” 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).
Unless otherwise provided by an employer funded salary continuation, wage replacement, or disability plan, 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. If the payment was made pursuant to an employer-funded salary continuation, disability, or other income replacement plan, different rules 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.
N.C.
Gen. Stat. §97-42 (emphasis added). 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, unless otherwise provided by a
plan, 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. [Note 4] 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, 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.
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 5]
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 when made, defendants cannot seek a
credit for the roster bonus.
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 mini-camp, and
$2,500.00 on 7 May 2001 for an appearance.
According to plaintiff’s contract, he was obligated to participate in
mini-camps, 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 Panthers’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 that 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 6] 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
were 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 7] 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. The Commission shall consider whether the
injury protection plan provisions modify the terms of N.C. Gen. Stat.
§97-42. 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.
c. Fourteen Payments of $47,059.00 in 2001
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 a dollar-for-dollar
credit for the fourteen payments of $47,059.00, instead of a time credit. In the alternative, defendants argue that if
a dollar-for-dollar credit is not allowed, 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. Although defendants did not make
any payments to plaintiff during this time period, 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.
First, 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 allows an employer to modify how a
credit is applied by including the modification in its benefits or wage
continuation plan. Defendants argue
they are entitled to a dollar-for-dollar credit pursuant to Paragraph 10 of the
NFL Player Contract entered into by the parties, which 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.
While the same contractual provision is present in this
case, Station and Steelers
do not provide relevant guidance. In
North Carolina, unless otherwise provided by an employer-funded disability
plan, N.C. Gen. Stat. §97-42 precludes a dollar-for-dollar credit. The Commission did not render any findings
of fact or conclusions of law as to whether Paragraph 10 of the CBA or the CBA
injured reserve pay provisions modify N.C. Gen. Stat. §97-42. Therefore, 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.
Second, “once an employee initially establishes a loss of wage-earning
capacity, a presumption of ‘ongoing’ or ‘continuing’ disability arises, and the
burden shifts to the employer to show that the employee is capable of earning
wages.” Knight v. Wal-Mart Stores,
Inc., 149 N.C. App. 1, 11, 562 S.E.2d 434, 441 (2002). Therefore, the Commission did not
erroneously award 300 weeks of disability compensation as plaintiff is presumed
to have an ongoing or continuing disability once disability, as defined under
the Workers’ Compensation Act, is established.
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, mini-camp, 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 fourteen
weeks of injured reserve pay, totaling $658,826.00, 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.
Chief Judge MARTIN and Judge 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. “Where an appellant fails to assign
error to the trial court’s findings of fact, the findings are ‘presumed to be
correct.’” Okwara v. Dillard Dep’t
Stores, Inc., 136 N.C. App. 587, 591, 525 S.E.2d 481, 484 (2000) (citation
omitted).
3. In the present case, 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.
4. We reiterate, however, that an employer
is not entitled to a credit for any type of payment if the payments were due
and payable when made. See N.C.
Gen. Stat. §97-42.
5. For a discussion of the remaining
installment payments which constituted injured reserve pay, see infra.
6. 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.
7. 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.