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NO.
COA04-1037
NORTH
CAROLINA COURT OF APPEALS
Filed: 21 June 2005
RONALD C. COX,
Employee,
Plaintiff,
v. North
Carolina Industrial Commission
I.C.
File No. 910497
CITY
OF WINSTON-SALEM,
Employer,
SELF-INSURED,
Defendant.
Appeal by plaintiff and defendant from opinion and award filed 5 April 2004 by the North Carolina Industrial Commission. Heard in the Court of Appeals 9 March 2005.
Robert
A. Lauver for plaintiff appellant-appellee.
Wilson
& Iseman, L.L.P., by S. Ranchor Harris, III, for defendant
appellant-appellee.
McCULLOUGH,
Judge.
On
31 August 1998, plaintiff Ronald C. Cox fell into an open manhole and injured
his shoulder while working as a wastewater pump mechanic for defendant City of
Winston Salem. This injury exacerbated
problems related to a preexisting tumor in Cox’s right sternoclavicular
joint. After his treating physicians
advised plaintiff to remain out of work indefinitely, plaintiff began drawing
long-term disability retirement from the Local Governmental Employees’
Retirement System (LGERS).
In an opinion and award
entered 10 September 2001, the North Carolina Industrial Commission awarded Cox
temporary total disability benefits, granted the City a partial credit for
Cox’s LGERS’ disability retirement payments, and denied Cox’s request for
attorney’s fees. Cox filed a motion for
reconsideration with respect to whether the City should receive a credit for
the LGERS’ disability payments; the Commission denied this motion. On an appeal by both parties, this Court
affirmed the award of temporary total disability benefits, but remanded with
instructions that the Commission, inter alia: (1) make findings to
clarify how it determined Cox’s average weekly wage for the purpose of
determining his compensation rate; (2) hear additional evidence and determine
whether the City is entitled to a credit for LGERS’ disability payments to Cox
in light of new information presented with Cox’s motion for reconsideration,
and (3) reconsider whether Cox is entitled to attorney’s fees in light of its
conclusion on the credit issue. Cox
v. City of Winston‑Salem, 157 N.C. App. 228, 238-39, 578 S.E.2d 669,
677 (2003).
On remand, the
Commission received additional testimony concerning the LGERS’ disability fund
and entered an opinion and award on 5 April 2004 in which it adjusted Cox’s
average weekly wage and provided an explanation of its calculations, denied the
City credit for LGERS’ disability retirement payments to Cox, and again denied
Cox’s request for attorney’s fees. From
the 5 April 2004 opinion and award, both parties now appeal.
THE CITY’S APPEAL
I.
We
first address the City’s appeal. In its
first argument, the City contends that the competent evidence of record does
not support the denial of a credit for the LGERS’ disability payments made to
Cox. We do not agree.
The standard of review
for an opinion and award of the North Carolina Industrial Commission is “(1)
whether any competent evidence in the record supports the Commission’s findings
of fact, and (2) whether such findings of fact support the Commission’s
conclusions of law.” Creel v. Town
of Dover, 126 N.C. App. 547, 552, 486 S.E.2d 478, 480 (1997). “The
Commission’s findings of fact are conclusive on appeal if supported by
competent evidence, notwithstanding evidence that might support a contrary
finding.” Hobbs v. Clean Control Corp., 154 N.C. App. 433, 435, 571
S.E.2d 860, 862 (2002). “This Court
reviews the Commission’s conclusions of law de novo.” Deseth v. LensCrafters, Inc., 160
N.C. App. 180, 184, 585 S.E.2d 264, 267 (2003).
With respect to the
granting of a credit, the Workers’ Compensation Act provides the following
guidance:
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.
N.C.
Gen. Stat. §97-42 (2003). Pursuant to
the statute, “[t]he decision of whether to grant a credit is within the sound
discretion of the Commission.” Shockley
v. Cairn Studios Ltd., 149 N.C. App. 961, 966, 563 S.E.2d 207, 211 (2002), disc.
review denied, 356 N.C. 678, 577 S.E.2d 888 (2003). Therefore, this Court will not disturb the
Commission’s grant or denial of a credit to the employer on appeal in the
absence of an abuse of discretion. Id.
Our
Supreme Court has held that, if an employer contests a worker’s compensation
claim, but nevertheless pays the employee wage‑replacement benefits which
are fully funded by the employer and are not due and payable to the employee,
then the employer “should not be penalized by being denied full credit for the
amount paid as against the amount which [is] subsequently determined to be due
the employee under workers’ compensation.”
Foster v. Western‑Electric Co., 320 N.C. 113, 117, 357
S.E.2d 670, 673 (1987); see also Lowe v. BE&K Construction Co., 121
N.C. App. 570, 576, 468 S.E.2d 396, 399 (1996) (holding that the Commission
erred by denying employer a credit where employer contested the claim but
provided the employee with three months of full salary, followed by partial
salary for the remaining time out of work).
The failure to award such a credit constitutes an abuse of discretion by
the Commission. Thomas v. B.F.
Goodrich, 144 N.C. App. 312, 319 n.2, 550 S.E.2d 193, 197 n.2, disc.
review denied, 354 N.C. 228, 555 S.E.2d 276 (2001). However, neither the Supreme Court nor this
Court has held that an employer is necessarily entitled to a credit against a
worker’s compensation award for payments received by an injured employee
pursuant to a benefits program that has been partially funded by the
employee. See Foster, 320 N.C.
at 117 n.1, 357 S.E.2d at 673 n.1 (“We express no opinion as to whether
payments made to a claimant under a plan to which the claimant contributed are
within the purview of N.C.G.S. §97‑42.”); Peagler v. Tyson Foods, Inc.,
138 N.C. App. 593, 605, 532 S.E.2d 207, 214 (2000) (“The competent evidence in
the record does not indicate that the employee contributed to this disability
plan. Accordingly, we conclude that the [employer] is entitled to a credit for
the disability benefits.”).
In
the instant case, it is undisputed that Cox was required to contribute six
percent of his pay to receive benefits under LGERS. LGERS is administered in accordance with the North Carolina
General Statutes, which permit a disabled employee with five or more years of
creditable service to “be retired . . . on a disability retirement
allowance.” N.C. Gen. Stat. §128-27(c)
(2003).
Upon retirement for
disability . . . , a member [employee] shall receive a service retirement
allowance if he has qualified for an unreduced service retirement allowance;
otherwise the allowance shall be equal to a service retirement allowance
calculated on the member’s average final compensation prior to his disability
retirement and the creditable service he would have had had he continued in
service until the earliest date on which he would have qualified for an
unreduced service retirement allowance.
N.C.
Gen. Stat. §128-27(d4) (2003). The term
“retirement allowance” is statutorily defined to include both employer and
employee contributions into the retirement system. N.C. Gen. Stat. §128-21(20), (3), (15) (2003).
The
City presented the Commission with deposition testimony from Clark Case, its
financial system and employee accounting manager. Case testified that he had developed an “acid test” to determine
whether the City or its employees were paying for LGERS’ disability retirement
benefits. For the purpose of this test,
Case considered the impact of no one taking disability retirement. According to Case, if this happened,
employees would still be required to contribute six percent of their pay to
fund their service retirement, but the City’s contribution amount would be
greatly reduced because it would no longer have to pay for disability. Case further posited that, if all employees
took disability retirement, the employee contribution into the retirement
system would remain six percent of their pay, but the City’s required
contribution would be greatly increased.
Case also opined that, because Cox was eligible to request a refund of
his contributions plus four percent interest, he “didn’t contribute anything”
to pay for his disability benefits.
Cox
presented the deposition of the Deputy Director of the State Retirement System,
J. Marshall Barnes, III, who testified that
the benefits provided by
the system, both service retirement and disability, are funded in part by the
employer and funded in part by the employee. . . . The employer contributions
for . . . all of the employers participating in the system, and again remember
it’s a multi-employer plan or actually lumped into one fund which is the
Pension Accumulation Fund. So all the
employer monies go into the Pension Accumulation Fund. The employee contributions go into the
Annuity Savings Fund. And we actually
keep individual records of the employee contributions. We do not keep individual records of the
employer contributions. Pensions are
paid out of the Pension Accumulation Fund, whether it be a disability or
service, it’s paid from the Pension Accumulation Fund. When a person retires, the amount of money
their contributions and interest are credited to their account and the Annuity
Savings Fund [comprised of employee contributions] is actually transferred from
that fund to the Pension Accumulation Fund.
Again from which all pensions are paid.
Thus,
Barnes opined that Cox’s disability benefits were not entirely funded by the
City.
In
its 5 April 2004 opinion and award, the Commission made the following finding
of fact:
[A]fter considering the
additional depositions of Mr. Barnes and Mr. Case, the Full Commission finds
that the disability retirement allowance benefits that were paid to plaintiff
beginning in October 1999 through the Local Governmental Employees’ Retirement
System (a defined benefit plan), were not fully funded by defendant‑employer,
as the program is a joint contributory program whereby the employee is required
to contribute six percent of pay for the benefits as his cost.
The
Commission concluded that the City “is not entitled to a credit for benefits
paid . . . pursuant to a disability retirement plan to which the defendant‑employer
and employee jointly contributed.” Barnes’ testimony provides competent record
evidence to support the Commission’s finding of fact, and this finding supports
the Commission’s conclusion of law.
Moreover, on the facts of the instant case, we discern no abuse of
discretion in the Commission’s decision to deny the City a credit for
disability retirement payments made to Cox.
This assignment of error is overruled.
II.
In
its second argument on appeal, the City contends that on remand the Commission
erroneously determined Cox’s average weekly wage and, therefore, his weekly
compensation. We do not agree.
“[W]here
the incapacity for work resulting from [a compensable] injury is total, the
employer shall pay or cause to be paid . . . to the injured employee during
such total disability a weekly compensation equal to sixty‑six and two‑thirds
percent (66_%) of his average weekly wages . . . .” N.C. Gen. Stat. §97-29 (2003).
The term “average weekly wages” is defined as
the
earnings of the injured employee in the employment in which he was working at
the time of the injury during the period of 52 weeks immediately preceding the
date of the injury . . . ; but if the injured employee lost more than
seven consecutive calendar days at one or more times during such period, although
not in the same week, then the earnings for the remainder of such 52 weeks
shall be divided by the number of weeks remaining after the time so lost has
been deducted.
N.C.
Gen. Stat. §97-2(5) (2003).
In the instant case, it
is not disputed that, in the year immediately preceding his injury, Cox earned
$28,295.09 and was also paid a longevity bonus of $600.29 and an overtime
adjustment for longevity of $57.64. At
the hearing before the Commission, the City contended that the longevity
payments were not guaranteed and could not be considered as part of Cox’s
wages. The Commission made the
following finding of fact:
[Cox]’s correct average
weekly wage is $570.95 and the compensation rate is $380.65. These figures are
determined by taking plaintiff’s total earnings of $28,295.09, together with
the longevity bonus of $600.29 and the overtime adjustment for longevity of
$57.64 for a total of $28,953.02. This
total gross earnings amount is then divided by 50.71 (52 weeks less 1.29 weeks,
a period of lost time exceeding seven consecutive days).
This finding is
supported by competent evidence in the record and must be affirmed. This assignment of error is overruled.
COX’S APPEAL
In his only argument on
appeal, Cox contends that the Commission erred by denying his motion for
attorney’s fees. We do not agree.
Cox’s motion for attorney’s fees was made
pursuant to N.C. Gen. Stat. §97-88 (2003), which provides that
[i]f the Industrial
Commission at a hearing on review or any court before which any proceedings are
brought on appeal under this Article, shall find that such hearing or
proceedings were brought by the insurer and the Commission or court by its
decision orders the insurer to make, or to continue payments of benefits,
including compensation for medical expenses, to the injured employee, the
Commission or court may further order that the cost to the injured employee of
such hearing or proceedings including therein reasonable attorney’s fee to be
determined by the Commission shall be paid by the insurer as a part of the bill
of costs.
This provision “permits
the Full Commission or an appellate court to award fees and costs based on an
insurer’s unsuccessful appeal.” Rackley v. Coastal Painting, 153 N.C.
App. 469, 475, 570 S.E.2d 121, 125 (2002).
It does not require that the appeal be brought without reasonable ground
for plaintiff to be entitled to attorney’s fees. Troutman v. White &
Simpson, Inc., 121 N.C. App. 48, 53, 464 S.E.2d 481 (1995), disc. review
denied, 343 N.C. 516, 472 S.E.2d 26 (1996). This Court reviews the Commission’s ruling on a motion for
attorney’s fees for an abuse of discretion.
Taylor v. J.P. Stevens Co., 307 N.C. 392, 394, 298 S.E.2d 681,
683 (1983).
In
the instant case, the Commission’s 10 September 2001 opinion and award denied
Cox’s motion for attorney’s fees pursuant to N.C. Gen. Stat. §97-88 because the
City, which is self-insured, “was
successful on appeal with regard to entitlement to a credit [for disability
retirement payments to Cox].” In its 5
April 2004 opinion and award, which was entered on remand from this Court, the
Commission determined that the City is not entitled to a credit and again
concluded that Cox “is not entitled to attorney[‘s] fees pursuant to N.C. Gen.
Stat. §97‑88.” Cox argues that
the Commission could not deny his motion for attorney’s fees because the
Commission “revers[ed] its previous error on the credit issue, and thereby
eliminat[ed] its previously expressed ground for the denial of the motion for
attorney’s fees.” This position is
contrary to the plain language of N.C. Gen. Stat. §97-88 and the cases decided
under it, all of which establish that the decision to award attorneys fees is
consigned to the discretion of the Commission.
After
careful review, we are unpersuaded that the Commission abused its discretion by
denying Cox’s motion for attorney’s fees.
This assignment of error is overruled.
Affirmed.
Judges
HUNTER and LEVINSON concur.