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and technical correction prior to official publication in the North Carolina
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NO. COA07-269
NORTH CAROLINA COURT OF APPEALS
Filed: 4 March 2008
RANDY B. FREEMAN,
Employee,
Plaintiff,
v. North
Carolina Industrial Commission
I.C.
File No. 231116
J.L. ROTHROCK,
Employer,
and
NORTH AMERICAN SPECIALTY,
Carrier,
AEQUICAP CLAIMS SERVICES, INC.
(Formerly CLAIMS CONTROL, INC.)
Administrator,
Defendants-Appellants,
Appeal by defendants from Opinion and Award of the Full
Commission of the North Carolina Industrial Commission entered 9 November
2006. Heard in the Court of Appeals 18
September 2007.
Jay
Gervasi, P.A., by Jay A. Gervasi, Jr., for plaintiff-appellee.
Brooks,
Stevens & Pope, P.A., by Joy H. Brewer, for defendants-appellants.
JACKSON, Judge.
J.L. Rothrock (“defendant-employer”), its insurance carrier,
North American Specialty, and its insurance administrator, Aequicap Claims
Services, Inc. (collectively, “defendants”) appeal from an order of the Full
Commission of the North Carolina Industrial Commission (“Full Commission”)
awarding workers’ compensation benefits to Randy B. Freeman (“plaintiff”). For the reasons stated below, we reverse.
Plaintiff has a history of lower back problems, having
experienced back injuries in 1992 and 1996 and having filed workers’
compensation claims with respect to both injuries. As a result of the lower back injury in 1996, plaintiff was
assigned a ten percent permanent partial impairment rating to his back and was
restricted to performing light- to medium-duty work, including: (1) lifting no
more than thirty-five pounds occasionally; (2) lifting no more than fifteen
pounds frequently; (3) lifting no more than seven pounds continuously; and (4)
limited sitting, bending, driving, and climbing. Plaintiff’s work restriction was based upon a general estimate of
a truck driver job as opposed to a specific job description. Plaintiff acknowledged in his testimony
that, as a result of these restrictions, he was (1) incapable of continuing to
drive a truck for B.B. Walker, his employer at the time, and (2) advised to
seek another line of employment.
In early 2000, plaintiff applied for employment with
defendant-employer, performing substantially the same work “[b]ecause it —
quite a time had passed there and it was — it was good. . . . I could do basically pretty much what I
wanted to do, up to a certain extent.”
At the time he applied for the position, plaintiff was aware that he remained
restricted to light- to medium-duty work, notwithstanding the fact that the job
description form prepared by defendant-employer expressly stated: “This is a strenuous position which requires
the ability to sit, stand, bend, stoop, reach, climb, push, pull, and live
under adverse conditions . . . .”
On 9 February 2000, plaintiff completed, as part of
defendant-employer’s application process, a medical history questionnaire. On the questionnaire, plaintiff denied (1)
suffering from any prior health conditions, including backache or a “herniated
intervertebral disk (slipped disk)”; (2) the existence of “any health-related
reason” that may prevent plaintiff from performing the job for which he was
applying; (3) having “any physical defects” or “work limitations” that would
have prevented him “from performing certain kinds of work”; (4) having “any
disabilities or impairments” that may have affected his performance in the
position for which he was applying; and (5) having ever filed a workers’
compensation claim. Plaintiff later
testified that he made these false representations on the questionnaire because
he was concerned that he would not be hired if he told the truth. Specifically, plaintiff stated, “The point
was I’d go fill out an application. At
that time, they’d ask if you’ve ever been injured, or you’d ever been hurt on a
job, or if you’ve ever drawn workers’ comp and I’d put ‘yes,’ and nobody ever
hired me.”
Also on 9 February 2000, plaintiff presented to Dr. Robert
Williford (“Dr. Williford”) for a Department of Transportation physical
examination — a prerequisite for hiring. Dr. Williford testified that as part of such an examination, he
interviews the patient and asks for a medical history, in part because there
are “conditions that cannot be discovered based purely on a physical
exam.” At the top of his examination
forms is a section entitled “Health History,” in which various injuries and
illnesses are listed. Next to each
injury or illness are two boxes, one for “Yes” and one for “No.” Dr. Williford testified that none of the
boxes were checked on the examination form for plaintiff’s 9 February 2000
examination that Dr. Williford retained in his files.[Note 1] Dr. Williford stated that he always asks if
the patient has had any serious injuries and explained that if plaintiff had
informed him of a prior injury, he probably would have checked the appropriate
box on the examination form.
In June 2000, after plaintiff executed the job description
form describing the position as “strenuous,” defendant-employer hired
plaintiff. Less than two years later,
on 11 March 2002, plaintiff sustained an injury by accident to his back while
cranking a dolly in the course and scope of his employment with defendant-employer. Plaintiff experienced significant pain in
his lower back, and over time, he also developed problems with his legs. Plaintiff reported the incident to
defendant-employer within fifteen to twenty minutes after its occurrence. Defendants admitted compensability of the
accident, and as of 12 March 2002, plaintiff began receiving ongoing total
disability payments of $431.32 per week.
On 23 December 2002, defendants filed a Form 24 Application
to Terminate or Suspend Payment of Compensation, contending that plaintiff had
refused an offer of suitable employment.
Defendants’ Form 24 was disapproved by order entered 3 February 2003 by
Special Deputy Commissioner Chrystina S. Franklin (“Special Deputy Commissioner
Franklin”). Defendants filed another
Form 24 on 5 March 2003, and by order entered 22 April 2003, Special Deputy
Commissioner Franklin indicated that she was unable to reach a decision, noting
that “[d]ue to the particular disputed issue, evidence will need to be taken,
and the matter should proceed to hearing.”
Following a hearing on 25 July 2003, Deputy Commissioner
Bradley W. Houser (“Deputy Commissioner Houser”) entered an Opinion and Award
in favor of plaintiff. Defendants
appealed to the Full Commission, and on 9 November 2006, the Full Commission
entered an Opinion and Award affirming Deputy Commissioner Houser’s Opinion and
Award. Chairman Buck Lattimore,
dissenting in part from the Full Commission’s Opinion and Award, stated that
“[t]he majority has erred in finding that plaintiff has established entitlement
to ongoing disability payments . . . [because] [t]he competent evidence of
record fails to show that plaintiff is completely incapable of performing any
work.” Defendants filed timely notice
of appeal to this Court.
As a preliminary matter, we note that plaintiff has included
in his brief a motion to dismiss defendants’ appeal. It is well-established, however, that “[s]uch motions may not be
raised in a brief, but rather must be made in accordance with [Rule 37 of the
North Carolina Rules of Appellate Procedure].” Warren v. Warren, 175
N.C. App. 509, 512, 623 S.E.2d 800, 802 (2006). Plaintiff’s motion is not properly before this Court, and
therefore, we decline to address it.
Our standard of review from a decision of the Full
Commission
is limited to
determining whether there is any competent evidence to support the findings of
fact, and whether the findings of fact justify the conclusions of law. The findings of the Commission are
conclusive on appeal when such competent evidence exists, even if there is
plenary evidence for contrary findings.
This Court reviews the Commission’s conclusions of law de novo.
Ramsey
v. S. Indus. Constructors, Inc., 178 N.C. App. 25, 2930, 630 S.E.2d 681, 685
(internal quotation marks and citations omitted), disc. rev. denied, 361
N.C. 168, 639 S.E.2d 652 (2006).
Additionally, in the instant case, defendants have failed to assign
error to the Full Commission’s findings of fact numbers 1 through 9, and
therefore, these findings of fact are deemed binding on appeal. See McGhee
v. Bank of Am. Corp., 173 N.C. App. 422, 427, 618 S.E.2d 833, 837 (2005).
Defendants first argue that the Full Commission erred in
concluding that plaintiff’s misrepresentations did not bar his right to recover
compensation. We agree.
In its Opinion and Award, the Full Commission found “that plaintiff had applied for a job with defendant-employer on June 1, 2000, had been hired conditionally, and had been given a medical questionnaire to complete to ensure he had the physical ability to perform its truck driving job.” The Full Commission further found that
[i]n completing
the medical questionnaire, plaintiff made no reference to prior back injuries
he had or to workers’ compensation claims associated with those injuries. While his responses to most of the questions
were either accurate or ambiguous, the negative answers to the direct questions
as to whether he had ever had a backache or made a workers’ compensation claim
were clearly incorrect.
Defendants,
therefore, argue that plaintiff should be barred from recovering based upon a
three-part test from Professor Larson’s treatise on workers’ compensation (“the
Larson test”).
Pursuant to the Larson test, an employee may be barred from
recovering workers’ compensation benefits as a result of a false statement at
the time of hiring when the employer proves:
(1) The
employee must have knowingly and wilfully made a false representation as to his
or her physical condition. (2) The employer must have relied upon the false
representation and this reliance must have been a substantial factor in the
hiring. (3) There must have been a
causal connection between the false representation and the injury.
3
Larson’s Workers’ Compensation Law §66.04 (2006) (footnotes omitted).
This Court previously has expressed disapproval for the
Larson test, explaining that “neither the Industrial Commission nor this Court
has the authority to adopt such a defense, if it is not found in the Workers’
Compensation Act.” Hooker v. Stokes-Reynolds Hosp., 161 N.C. App. 111,
115, 587 S.E.2d 440, 443 (2003), disc. rev. denied, 358 N.C. 234, 594
S.E.2d 192 (2004). The Court in Hooker,
however, expressly did not reach the merits of such an argument, and therefore,
we are not bound by its discussion of the Larson test. See Debnam v. N.C.
Dep’t of Corr., 334 N.C. 380, 386, 432 S.E.2d 324, 329 (1993)
(“[S]tatements in the nature of obiter dictum are not binding
authority.”). Accordingly, neither this
Court nor our Supreme Court has ruled conclusively on the Larson test.[Note
2]
“The Workers’ Compensation Act is a compromise arrived at
through the concessions of employees and employers alike.” Bare v. Wayne
Poultry Co., 70 N.C. App. 88, 92, 318 S.E.2d 534, 538 (1984), disc. rev.
denied, 312 N.C. 796, 325 S.E.2d 484 (1985). “The [A]ct should be construed liberally, to the end that rights
of parties may be fully protected. On
the other hand, it should not be so interpreted or the procedure thereunder be
of such a nature as to jeopardize the substantial rights of either party.” Singleton
v. Durham Laundry Co., 213 N.C. 32, 35, 195 S.E. 34, 36 (1938).
It is well-established that our “[Workers’ Compensation] Act
applies only where the employer-employee relationship exists.” Hicks v.
Guilford County, 267 N.C. 364, 365, 148 S.E.2d 240, 242 (1966). Pursuant to North Carolina General Statutes,
section 97-2,
[t]he term
“employee” means every person engaged in an employment under any appointment
or contract of hire or apprenticeship, express or implied, oral or written,
including aliens, and also minors, whether lawfully or unlawfully employed, but
excluding persons whose employment is both casual and not in the course of the
trade, business, profession, or occupation of his employer . . . .
N.C.
Gen. Stat. _ 97-2(2) (2005) (emphasis added).
Although “[o]ur Supreme Court ‘has warned against any
inclination toward judicial legislation’ in the construction of the Workers’
Compensation Act,” Hooker, 161 N.C. App. at 115, 587 S.E.2d at 443
(quoting Johnson v. S. Indus. Constructors, 347 N.C. 530, 536, 495
S.E.2d 356, 359 (1998)), it is well-settled that “in construing the provisions
of this State’s Workers’ Compensation Act, common law rules . . . remain in full force and continue to apply
in North Carolina, unless specifically abrogated or repealed by our General
Assembly or Supreme Court.” Tise v. Yates Constr. Co., Inc., 122 N.C.
App. 582, 587, 471 S.E.2d 102, 106 (1996), aff’d as modified, 345 N.C.
456, 480 S.E.2d 677 (1997). Therefore,
“[w]hether an employer-employee relationship existed at the time of the injury
is to be determined by the application of ordinary common law tests.” McCown
v. Hines, 353 N.C. 683, 686, 549 S.E.2d 175, 177 (2001). The first step in determining “whether an
employer-employee relationship exists [is] . . . ‘[w]hat are the terms of
the agreement — that is, what was the contract between the parties[?]’” Huntley
v. Howard Lisk Co., Inc., 154 N.C. App. 698, 702, 573 S.E.2d 233, 235
(2002) (emphasis in original) (alterations added) (quoting Askew v. Leonard
Tire Co., 264 N.C. 168, 172, 141 S.E.2d 280, 283 (1965)).
Although there appears to be no specific statutory basis for
the Larson test, we find authority for the test in the common law doctrine of
fraud in the inducement, the elements of which closely parallel those suggested
by Professor Larson.
The essential
elements of fraud in the inducement are: (i) that defendant made a false
representation or concealed a material fact he had a duty to disclose; (ii)
that the false representation related to a past or existing fact; (iii) that
defendant made the representation knowing it was false or made it recklessly
without knowledge of its truth; (iv) that defendant made the representation
intending to deceive plaintiff; (v) that plaintiff reasonably relied on the
representation and acted upon it; and (vi) plaintiff suffered injury.
Harton
v. Harton,
81 N.C. App. 295, 29899, 344 S.E.2d 117, 11920, disc. rev. denied, 317
N.C. 703, 347 S.E.2d 41 (1986). Fraud
in the inducement renders a contract void, see Clifford v. River Bend
Plantation, Inc., 312 N.C. 460, 464, 323 S.E.2d 23, 25 (1984), and it is
axiomatic that the employer-employee relationship is one based in principles of
contract. See Edwards v. Seaboard & Roanoke R.R. Co., 121 N.C. 490,
28 S.E. 137 (1897) (recognizing the contractual nature of the employment
relationship). Therefore, fraud in the
inducement of employment would render the employment contract void. In the absence of a valid employment
contract, a claimant would fail to meet the statutory definition of an
“employee” and therefore would lack standing under the Workers’ Compensation
Act. As explained by the Supreme Court
of Alabama,
[i]t is not a
usurpation of the legislative function for this Court to conclude that
misrepresentation on an employment application as to prior physical injuries is
a bar to recovery of worker’s compensation benefits. . . . [I]t has long been a part of the common law
that fraud in the inducement is a good defense to an action on a contract by
one of the contracting parties. That
worker’s compensation bears a contractual relationship is no longer
arguable. Thus, we hold that if the
evidence supports a finding that an employee, in entering into the employment
relationship, intentionally misrepresented the existence of a prior injury,
then that material misrepresentation, if relied upon by the employer, will bar
a claim for worker’s compensation benefits if the employer can establish a
causal relationship between the misrepresentation and the injury.
Ex
Parte S. Energy Homes, Inc., 603 So. 2d 1036, 1039 (Ala. 1992) (per curiam)
(internal citations omitted). But see Hilt Truck Lines, Inc. v. Jones,
281 N.W.2d 399, 403 (Neb. 1979) (finding that such misrepresentations render an
employment contract voidable, not void).
We also find support for adoption of the Larson test in the
common law doctrine of equitable estoppel. See, e.g., Lamay v.
Roswell Indep. Sch. Dist., 882 P.2d 559, 564 (N.M. Ct. App. 1994) (“We
believe that the Larson rule derives its essential ingredients from the
principle of equitable estoppel rather than contract law.”). But see Stovall
v. Sally Salmon Seafood, 757 P.2d 410, 416 (Or. 1988) (noting that most of
the cases adopting the Larson test “do not mention estoppel but discuss whether
the claimant must be barred from recovery by reason of fraud or
misrepresentation”). In fact, some
courts have looked to both fraud and estoppel in adopting the Larson
test. See Divita v. Hopple Plastics, 858 S.W.2d 214, 215 (Ky. Ct. App.
1993) (“What seems to be emerging, in place of a conceptual approach relying on
purely contractual tests, is a common-sense rule made up of a mélange of
contract, causation, and estoppel ingredients.” (internal quotation marks and
citation omitted)). [Note 3] In
North Carolina, “‘[t]he law of estoppel applies in [workers’] compensation
proceedings as in all other cases.’” Watkins v. Cent. Motor Lines, Inc.,
279 N.C. 132, 139, 181 S.E.2d 588, 593 (1971) (alterations added) (quoting
Biddix v. Rex Mills, Inc., 237 N.C. 660, 665, 75 S.E.2d 777, 781 (1953)); see
also Gore v. Myrtle/Mueller, 362 N.C. 29, 37, 653 S.E.2d 400, 408 (2007)
(noting “the general permissibility of estoppel under our workers’ compensation
law”). As our Supreme Court has
explained,
“[t]he doctrine
of equitable estoppel is based on an application of the golden rule to the
everyday affairs of men. It requires
that one should do unto others as, in equity and good conscience, he would have
them do unto him, if their positions were reversed. . . . Its compulsion is one of fair play.”
Watkins, 279 N.C. at
139, 181 S.E.2d at 593 (omission in original) (quoting McNeely v.
Walters, 211 N.C. 112, 113, 189 S.E. 114, 115 (1937)); see also Fed.
Copper & Aluminum Co. v. Dickey, 493 S.W.2d 463, 464 (Tenn. 1973) (“A
wrongdoer is precluded from profiteering from his fraud or wilful
misrepresentation in an ordinary civil suit.”).
Furthermore, we note that the Larson test has been adopted
by numerous state courts, [Note 4] and as the Virginia Court of Appeals
explained over twenty years ago, the Larson test “constitutes the majority view
in this country.” McDaniel v. Colonial Mech. Corp., 350 S.E.2d 225, 227
(Va. Ct. App. 1986). [Note 5]
Additionally, notwithstanding
plaintiff’s arguments with respect to judicial legislation, “[a] majority of
the states that have considered this issue have judicially recognized
intentional misrepresentation to gain employment as an affirmative defense even
in the absence of a specific statute.” Oesterreich v. Canton-Inwood Hosp.,
511 N.W.2d 824, 828 (S.D. 1994) (emphasis added). [Note 6]
For over the last eighteen years, North Carolina has been
surrounded by states that have adopted the defense. See Ga. Elec. Co.,
378 S.E.2d at 114; Cooper, 196 S.E.2d at 835; Fed. Copper &
Aluminum Co., 493 S.W.2d at 465; McDaniel, 350 S.E.2d at 227.
[Note 7] However, we refuse to
continue to countenance fraud perpetrated upon employers in our state, and as
aptly noted by the South Dakota Supreme Court, intentional misrepresentations
during the hiring process as to a prior medical condition “is the type of
conduct which cannot be rewarded through any liberal interpretation of the
worker’s compensation laws.” Oesterreich, 511 N.W.2d at 82829; see
also Dressler, 262 N.W.2d at 684 (Coleman, J., dissenting) (“The intriguing
effect of my colleague’s opinion is that it now legally pays to lie — and it is
the consumer who bears the cost.”).
Accordingly, we are persuaded that the three-pronged Larson test for
misrepresentations made by a prospective employee at the time of hiring with
respect to his or her medical condition, with the burden of proving each of the
prongs resting with the employer, is suitable for application in the instant
case.
Applying the Larson test to the case sub judice,
defendants had the burden first to demonstrate that plaintiff knowingly and
wilfully made a false representation as to his physical condition at the time
he was hired. In finding of fact number
10, the Full Commission found as fact that plaintiff misrepresented his
physical condition at the time of hiring:
In completing
the medical questionnaire, plaintiff made no reference to prior back injuries
he had had or to workers’ compensation claims associated with those
injuries. While his responses to most
of the questions were either accurate or ambiguous, the negative answers to the
direct questions as to whether he had ever had a backache or made a workers’
compensation claim were clearly incorrect.
(Emphasis
added). Although this finding arguably
is insufficient for a determination that plaintiff’s false representation was
knowingly and wilfully made, plaintiff nevertheless concedes in his brief “that
the first criterion on [sic] Larson’s test was satisfied.”
With respect to the second prong of the Larson test,
defendants had the burden of demonstrating that defendant-employer relied upon
plaintiff’s false representation and that its reliance was a substantial factor
in the hiring. Here, the Full
Commission found that Gerald Robertson (“Robertson”), defendant-employer’s
safety and recruiting director, “testified that plaintiff would have been hired
and given the job, even if he had answered all the questions accurately. Robertson further testified that the
question about prior worker’s [sic] compensation claims was superfluous.”
First, we agree with the Full Commission’s characterization
of the question concerning prior workers’ compensation claims. Robertson testified that as of 25 July 2003,
defendant-employer had approximately seventeen employees with prior workers’
compensation claims. Robertson further
testified: “As far as previously being hired, as long as it doesn’t affect
their ability to perform positions that we have available, we don’t really take
that into consideration.” Additionally,
the following colloquy transpired between plaintiff’s attorney and Robertson:
[PLAINTIFF’S
ATTORNEY]: I believe, Mr. Robertson, you said that — that if somebody had
answered “yes” to the workers’ comp claim question, then you’d go back to some
other part of the — of the form and look at the physical condition he’s talking
about with respect to the workers’ comp claim.
And the question I have is what does the fact that that injury was the
result of a workers’ comp claim do to change — change his physical condition
when you’re trying to assess his ability to do the job?
[ROBERTSON]:
Probably nothing.
[PLAINTIFF’S
ATTORNEY]: So that’s sort of a surplus question?
[ROBERTSON]:
Well, it could be, I suppose, but we would certainly want to know what he had
hurt on his self to make sure that we were not going to place him into some
type of a job position that he would get hurt again.
[PLAINTIFF’S
ATTORNEY]: But you’d get that information from all the other questions except
for [the question on prior workers’ compensation claims], is that accurate?
. . . .
[ROBERTSON]: In
most cases, yes.
Accordingly,
the Full Commission’s finding that “the question about prior worker’s [sic]
compensation claims was superfluous” was supported by competent evidence.
However, we disagree with the Full Commission’s finding that
defendant-employer did not rely upon the false representations made by
plaintiff in hiring plaintiff.
Robertson was asked point-blank whether defendant-employer would have
hired plaintiff had plaintiff disclosed his work restrictions:
[DEFENDANTS’
ATTORNEY]: Mr. Robertson, assuming that the medical evidence that’s admitted in
this case shows that [plaintiff] was limited to a light to medium demand level
indicating he could lift thirty-five pounds occasionally, fifteen pounds
frequently, seven pounds continuously, was limited to occasional sitting . . .
which indicates only a third of the day should be spent sitting, if you had
known of these prior restrictions, would you have hired [plaintiff] to perform
a job as a truck driver?
[ROBERTSON]:
No.
Robertson
further noted that “[i]t would have been very difficult . . . to make
reasonable accommodations for [plaintiff] . . . because of the driving
restrictions for one, and secondly, not knowing when — specifically when and
where or if a driver is going to be required to load and/or unload and/or what
type of product that that would even involve.”
The Full Commission appears to have based its finding on one
line of Robertson’s testimony, during which he equivocated on the issue:
[PLAINTIFF’S
ATTORNEY]: So is it your testimony that you don’t know what you would have
done, or is it your testimony that you would not have hired him to drive for
Rothrock, or is it your testimony that you would have allowed him to drive for
Rothrock?
[ROBERTSON]:
It’s very — I feel this is very a [sic] hypothetical. I suppose I would have hired him. I don’t know.
[PLAINTIFF’S
ATTORNEY]: Okay, thank you.
However,
Robertson immediately thereafter clarified his answer:
[ROBERTSON]: I
did hire him. Based upon no
information, I hired him.
[PLAINTIFF’S
ATTORNEY]: But I asked you the question concerning if you had had the
information that you think is full information and I believe your answer was
that you probably would have hired him anyway, is that correct?
[ROBERTSON]:
Again, it’s a hypothetical question. I
don’t know what I would have done.
[PLAINTIFF’S
ATTORNEY]: Well, it’s not hypothetical because you now have the information. If you had the information then that you
have now concerning his prior back problems as you perceive them, would he have
been hired or not?
[ROBERTSON]: Probably
not.
[PLAINTIFF’S
ATTORNEY]: Probably not?
[ROBERTSON]:
Probably not.
(Emphases
added). Later in his testimony,
Robertson elaborated on defendant-employer’s reliance on plaintiff’s honesty
with respect to plaintiff’s physical condition, stating, “We hired him based on
— from what he told us in his application and on these forms that he filled out
about his limitations . . . . That’s
what we hired him on.” Finally,
Robertson stated unequivocally at the end of his testimony that defendant-employer
would not have hired plaintiff but for plaintiff’s false representations as to
his prior medical condition:
[DEFENDANT’S
ATTORNEY]: [I]f [plaintiff] had indicated to you he was physically able to
perform the job but those medical restrictions were in place, what would your
decision have been regarding [plaintiff]’s employment?
[ROBERTSON]: I
would not have hired him.
The evidence presented to the Full Commission demonstrates
that defendant-employer relied upon plaintiff’s false representation and that
defendant-employer’s reliance was a substantial factor in the hiring. The Full Commission, therefore, erred in
finding that defendant-employer did not rely upon plaintiff’s
misrepresentations.
Finally, defendants had the burden under the third prong of
the Larson test to demonstrate the existence of a causal connection between the false representation and the
injury. The Full Commission stated in
finding of fact number 12 that “Doctors Ramos, Aluiso, and Rogers all
testified, and the Full Commission finds as fact, that plaintiff’s prior back
problems did not increase his risk of sustaining the type of injury he
sustained on March 11, 2002.” This
finding, however, is not supported by competent evidence.
First, Dr. Richard D. Ramos (“Dr. Ramos”) testified that he
could not state with any certainty whether plaintiff’s 11 March 2002 injury was
an aggravation of a prior injury or a new injury. Regardless, Dr. Ramos testified that plaintiff was “definitely at
risk for reinjury in his lower back” as a result of his prior injuries. Dr. Ramos explained that plaintiff probably
should have stayed away from a truck driving job, noting that such a job would
be “a more strenuous job than the light-medium level” work restrictions to
which plaintiff was assigned and that working outside assigned restrictions may
place an employee “at an increased risk for additional injury or
aggravation.” Dr. Ramos further
explained that “somebody with [plaintiff]’s condition who performs a heavy-duty
job such as this for a 19-month period . . . can [absolutely] make them [sic]
more susceptible to another injury.”
Finally, Dr. Ramos testified that the type of activity in which
plaintiff was engaging for defendant-employer “certainly could” aggravate
plaintiff’s condition.
Next, Dr. Frank V. Aluiso (“Dr. Aluiso”) was asked during
his deposition why work restrictions are assigned to persons with a back
condition, such as that experienced by plaintiff. Dr. Aluiso explained that
[p]art of it is
that there’s, with a degenerative disk or bulging disk, there would be a higher
risk for recurrent back injuries if they’re on a job that has no restrictions
with respect to the amount they lift or how frequently they’re lifting. They’re just more prone to getting a
recurrent back injury.
Dr.
Aluiso then noted that by returning to a truck-driving job, plaintiff was
working outside his work restrictions.
He further explained that by returning to a “heavy-duty truck-driving
job” after the 1996 incident, plaintiff placed himself “at high risk for
reinjuring himself.” Dr. Aluiso noted
that the fact that plaintiff worked for nearly two years without incident was
not dispositive with respect to the likelihood of injury. Specifically, he explained that plaintiff
“had documented evidence of degenerative disk as well as bulging disk, so he
could reinjure himself at any time. It
doesn’t matter if it’s a year or five years.
It could be anytime.” Dr. Aluiso
opined that any number of activities, including pushing, pulling, lifting,
cranking, and driving, could aggravate plaintiff’s back condition. [Note 8] Ultimately, contrary to the Full
Commission’s finding, Dr. Aluiso testified that plaintiff “was at increased
risk of having problems in his back” and that it was “likely with [plaintiff’s]
condition that an exacerbation would have occurred at some point.”
Testimony by Dr. Tate Rogers (“Dr. Rogers”) also
demonstrates that plaintiff’s prior back injury increased his risk of
sustaining the 11 March 2002 injury or aggravation, thereby contradicting the
Full Commission’s finding of fact.
Although plaintiff quotes Dr. Rogers as explaining that it would be
speculative to say that the heaviness of plaintiff’s other work activities
increased the risk of injury while cranking the dolly, the issue is not whether
other aspects of the job increased his risk of injury, but whether his
undisclosed medical condition increased his risk of injury. See 3 Larson’s
Workers’ Compensation Law §66.04 (2006) (“There must have been a causal
connection between the false representation and the injury.” (emphasis
added)). Dr. Rogers clearly provided
his opinion on this issue:
[DR. ROGERS]: .
. . But I would tend to agree that, given his back condition, truck driving
would not be the best type of work for him to be doing.
[DEFENSE
COUNSEL]: And so assuming that an orthopedist in 1996 made that recommendation,
you would be inclined to concur with that?
[DR. ROGERS]: I
would, yes.
[DEFENSE
COUNSEL]: And would, in your opinion, a
recommendation such as that back in 1996, does that reflect the fact that if he
were to return to a truck-driving position, he was at a higher risk of
reinjury?
[DR. ROGERS]:
In my opinion, yes.
[DEFENSE
COUNSEL]: And if after the — [plaintiff] has actually had two prior work
injuries in ‘92 and ‘96. And if after
the 1996 incident, [plaintiff] was to return to a heavy duty or strenuous
truck-driving position and suffered an injury, would that be something you
would see as foreseeable based upon his condition?
[DR. ROGERS]: I
don’t know if you can say it’s “foreseeable.”
You can certainly say he was at increased risk for it. He would definitely be at increased risk,
and then I wouldn’t be surprised if he did suffer a back injury; but I
couldn’t predict a back injury.
(Emphasis
added). Dr. Rogers also agreed with Dr.
Aluiso’s assessment that plaintiff’s injury or aggravation could have happened
at any time and that the nearly two years of injury-free work did not alter the
fact that plaintiff was at an increased risk for injury. Specifically, Dr. Rogers stated that “[a]
person can have a ruptured lumbar disk for 30 years and work for 30 years and
never have any trouble out of it, but that doesn’t change the fact that they’re
still — they’re in a high-risk group.
They just happen to luck out.”
Although the Full Commission found that plaintiff’s prior
back problems did not increase his risk of the 11 March 2002 injury, this
finding was not supported by competent evidence. Dr. Ramos, Dr. Aluiso, and Dr. Rogers all testified to the effect
that plaintiff’s undisclosed medical condition increased his risk of the back
injury at issue. Additionally, we note,
as did the Tennessee Supreme Court, that “[c]ommon sense dictates that a prior
injury of the nature suffered by defendant would create a predisposition to
further injury considering the nature of the work involved.” U.S. Fid. &
Guar. Co. v. Edwards, 764 S.W.2d 533, 536 (Tenn. 1989). Defendants, therefore, satisfied the third
and final prong of the Larson test.
Because defendants satisfied their burden of proof under the
Larson test, plaintiff is barred from workers’ compensation benefits for his
injury sustained on 11 March 2002.
Accordingly, the Full Commission erred in awarding workers’ compensation
benefits to plaintiff. Additionally,
because we reverse the Opinion and Award of the Full Commission, we need not
reach defendants’ remaining assignments of error. See Demery v. Perdue
Farms, Inc., 143 N.C. App. 259, 267, 545 S.E.2d 485, 491, aff’d, 354
N.C. 355, 554 S.E.2d 337 (2001) (per curiam).
Reversed and Remanded.
Judge Hunter concurs.
Judge Wynn dissents in a separate opinion.
1. All of the “No” boxes, however, are
checked on the form contained in the exhibits submitted with the record on
appeal.
2. Although this Court rejected the Larson
test in an unpublished opinion, McCollum v. Atlas Van Lines, No.
COA03-897, 2004 N.C. App. LEXIS 1651, at *20 (N.C. Ct. App. Sept. 7, 2004), disc.
rev. denied, 359 N.C. 190, 607 S.E.2d 276 (2005), it is well-established
that unpublished opinions are not binding upon this Court. See United Servs.
Auto. Ass’n. v. Simpson, 126 N.C. App. 393, 396, 485 S.E.2d 337, 339, disc.
rev. denied, 347 N.C. 141, 492 S.E.2d 37 (1997). Therefore, we are free to reconsider the issue.
3. The Larson test was codified in
Kentucky shortly after Divita was issued. See Ky. Rev. Stat. Ann.
§342.165(2).
4. See, e.g., Shippers Transp.
of Ga. v. Stepp, 578 S.W.2d 232, 233 (Ark. 1979) (en banc); Ex Parte S.
Energy Homes, Inc., 603 So. 2d at 1039; Air Mod Corp. v. Newton, 215
A.2d 434, 440 (Del. 1965); Martin Co. v. Carpenter, 132 So. 2d 400, 404
(Fla. 1961); Ga. Elec. Co. v. Rycroft, 378 S.E.2d 111, 114 (Ga. 1989); Divita,
858 S.W.2d at 215; Shaw’s Supermarkets, Inc. v. Delgiacco, 575 N.E.2d
1115, 1119 (Mass. 1991); Jewison v. Frerichs Constr., 434 N.W.2d 259,
261 (Minn. 1989) (en banc); Hilt Truck Lines, Inc., 281 N.W.2d at 403; Sanchez
v. Mem. Gen. Hosp., 798 P.2d 1069, 1071 (N.M. Ct. App.), cert. denied,
798 P.2d 1039 (N.M. 1990); Cooper v. McDevitt & Street Co., 196
S.E.2d 833, 835 (S.C. 1973); Oesterreich v. Canton-Inwood Hosp., 511
N.W.2d 824, 828 (S.D. 1994); Fed. Copper & Aluminum Co., 493 S.W.2d
at 465; McDaniel v. Colonial Mech. Corp., 350 S.E.2d 225, 227 (Va. Ct.
App. 1986); Volunteers of Am. v. Indus. Comm’n, 141 N.W.2d 890, 895 (Wis.
1966); Long v. Big Horn Constr. Co., 295 P.2d 750, 754 (Wyo. 1956). See generally Tracy A. Bateman,
Eligibility for Workers’ Compensation as Affected by Claimant’s
Misrepresentation of Health or Physical Condition at Time of Hiring, 12
A.L.R. 5th 658 (1993); William J. Collins III, An Exception for Deception:
Why McKennon Should not be Extended to Employment Application
Misrepresentations of Pre-Existing Injuries, 37 S. Tex. L. Rev. 779, 80910
(1996).
5. In referencing Virginia caselaw, we
note that “at the time the general assembly adopted the North Carolina
Workmen’s Compensation Act it had before it the Virginia Workers’ Compensation
Act. The Virginia act was identical to
the bill originally presented to the North Carolina general assembly . . . .”
J. Cameron Furr, Jr., Whitley v. Columbia Lumber Manufacturing Co.:
Abolishing the Exclusive Remedy Requirement for the Scheduled Injuries Section
of the North Carolina Workers’ Compensation Act, 66 N.C. L. Rev. 1365, 1369
(1988). Our Act’s similarity to Virginia’s statute has
survived the decades since its enactment. Cf. Joyce v. A.C. & S., Inc.,
785 F.2d 1200, 1207 (4th Cir. 1986) (“The Virginia Workers’ Compensation Act
was modeled after the analogous statute in Indiana.”); Riley v. Debaer,
149 N.C. App. 520, 528, 562 S.E.2d 69, 73 (2002) (Eagles, C.J., dissenting)
(“The Indiana . . . workers’ compensation act[] [is] substantially similar to
our Act.”).
6. Several courts, however, have held — or
at least implied — that the Larson test must be adopted legislatively, rather
than judicially. See, e.g., Marriott
Corp. v. Indus. Comm’n, 708 P.2d 1307, 1312 (Ariz. 1985) (en banc);
Kraus v. Artcraft Sign Co., 710 P.2d 480, 482 (Colo. 1985) (en banc); Teixeira
v. Kauikeolani Children’s Hosp., 652 P.2d 635, 636 (Haw. Ct. App. 1982); Dressler
v. Grand Rapids Die Casting Corp., 262 N.W.2d 629, 634 (Mich. 1978); Goldstine
v. Jensen Pre-Cast, 729 P.2d 1355, 1356 (Nev. 1986); Akef v. BASF Corp.,
658 A.2d 1252, 125556 (N.J. 1995); Harris v. Syracuse Univ., 564 N.Y.S.2d
227, 228 (N.Y. App. Div. 1990); H.J. Jeffries Truck Line v. Grisham, 397
P.2d 637, 643 (Okla. 1964); Stovall, 757 P.2d at 417; Blue Bell
Printing v. Workmen’s Comp. Appeal Bd., 539 A.2d 933, 936 (Pa. Commw. Ct.
1988); see also State Dep’t of Highways & Pub. Transp. v. Thrasher,
805 S.W.2d 798, 800 (Tex. Ct. App. 1990) (declining to extend the
misrepresentation defense to all injuries when the legislature only provided
for a misrepresentation defense with respect to occupational diseases).
7. The North Carolina’s Workers’
Compensation Act was enacted contemporaneously with the analogous statutes as
originally enacted in these states — Virginia in 1918, Tennessee in 1919,
Georgia in 1920, and South Carolina in 1936.
It also is notable that South Carolina, which has adopted the Larson
test, modeled their worker’s compensation statute after North Carolina’s
statute. See Pressley v. REA Constr. Co., Inc., 648 S.E.2d 301, 304
(S.C. Ct. App. 2007) (“Inasmuch as our Worker’s Compensation Act is modeled
after the North Carolina Act, we naturally look to North Carolina’s decisions
in interpreting similar provisions.”).
8. Plaintiff contends that Dr. Aluiso only
testified that plaintiff had an increased risk of injury due to lifting, as
opposed to cranking a dolly, and that Dr. Aluiso acknowledged that plaintiff’s
work restrictions did not mention turning a hand crank. Dr. Aluiso, however, responded to a question
concerning the risk posed by a cranking motion by saying that “if there’s a lot
of pushing and pulling, that’s an activity that could also aggravate the
back.” Later in his deposition, Dr.
Aluiso stated that “lifting up to 70 pounds, a lot of bending and stooping,
[and] the operating of the crank . . . most likely” would have
exacerbated plaintiff’s condition at some point. (Emphasis added).
NO. COA07-269
NORTH CAROLINA COURT OF APPEALS
Filed: 4 March 2008
RANDY B. FREEMAN,
Employee,
Plaintiff,
v. North
Carolina Industrial Commission
I.C.
File No. 231116
J.L. ROTHROCK,
Employer,
and
NORTH AMERICAN SPECIALTY,
Carrier,
AEQUICAP CLAIMS SERVICES, INC.
(Formerly CLAIMS CONTROL, INC.)
Administrator,
Defendants-Appellants,
WYNN, Judge, dissenting.
In this case, the majority adopted the Larson test
and in applying the test, concluded that Mr. Freeman is barred from receiving
workers’ compensation benefits for his injury because of his misrepresentations
at the time of his hiring. Because I
disagree with the adoption of the Larson test, I respectfully dissent.
In published and unpublished opinions, this Court has
rejected the Larson test. In Hooker,
the defendants argued that this Court should adopt a misrepresentation defense
in workers’ compensation cases. Hooker
v. Stokes-Reynolds Hosp., 161 N.C. App. 111, 115, 587 S.E.2d 440, 443
(2003), disc. review denied, 358 N.C. 234, 594 S.E.2d 192 (2004).
In response, this Court stated that “neither the Industrial Commission
nor this Court has the authority to adopt such a defense, if it is not found in
the Worker’s Compensation Act. Our
Supreme Court ‘has warned against any inclination toward judicial legislation’
in the construction of the Worker’s Compensation Act.” Id. (citation omitted).
Additionally, as the majority concedes, this Court has
rejected the Larson test in an unpublished opinion. In McCollum v. Atlas Van Lines, the
defendants urged this Court to adopt the three-part Larson test to bar
workers’ compensation recovery where an employee made misrepresentations about
his physical condition. McCollum v.
Atlas Van Lines, 166 N.C. App. 280, 603 S.E.2d 167 (unpublished, Sept. 7,
2004), disc. review denied, 359
N.C. 190, 607 S.E.2d 276 (2004). This
court cited Hooker as the basis for the rejection of the Larson
test, and concluded that “defendants’ . . . argument is without merit.” Id.
Not only have we previously rejected the Larson test,
there is no legislative authority for this Court to adopt such a test. Our Supreme Court has stated:
With respect to
interpreting the Workers’ Compensation Act, this Court has warned against any
inclination toward judicial legislation . . . . This Court has long
distinguished between liberal construction of statutes and impermissible
judicial legislation or the act of a court in “ingrafting upon a law something
that has been omitted, which [it] believes ought to have been embraced.”
Johnson
v. Southern Indus. Constructors, Inc., 347 N.C. 530, 536, 495 S.E.2d
356, 359-60 (1998) (citations omitted).
Because the Larson test is not included in our Workers’
Compensation Act, the adoption of the test by this Court is impermissible
judicial legislation. Accordingly, I
must dissent.