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technical correction prior to official publication in the North Carolina
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NO. COA04-1196
NORTH CAROLINA
COURT OF APPEALS
Filed: 2 August 2005
BILLY MEARES,
Employee/Plaintiff,
v. North
Carolina Industrial Commission
I.C.
File No. 988084
DANA CORPORATION/
WIX DIVISION
Employer,
and
SPECIALTY RISK SERVICES,
Carrier,
Defendants.
Appeal by plaintiff from Opinion and Award entered 13 July
2004 by the North Carolina Industrial Commission. Heard in the Court of Appeals 24 March 2005.
The
Sumwalt Law Firm, by Vernon Sumwalt and Mark T. Sumwalt, for
plaintiff-appellant.
Hedrick,
Eatman, Gardner & Kincheloe, L.L.P., by Paul C. Lawrence and Adam E.
Whitten, for defendant-appellees.
LEVINSON, Judge.
Plaintiff (Billy Meares) appeals from an Opinion and Award
of the Industrial Commission granting defendant Dana Corporation a credit for
certain payments to plaintiff. We
reverse and remand.
The relevant facts are largely undisputed, and are
summarized as follows: Plaintiff was born in 1934, and was 68 years old at the
time of the hearing before the Industrial Commission. He was employed by defendant for twenty nine years, from 1972 to
2001. In October 1999 plaintiff suffered
an injury to his right knee, which defendant accepted as compensable by filing
an Industrial Commission Form 60. In
January 2000, plaintiff underwent arthroscopic surgery on his right knee. He received disability compensation from 17
January 2000 through 15 March 2000, the period of disability associated with
his surgery. Plaintiff returned to work
in March 2000, and worked for defendant until March 2001. After his return to work, plaintiff
continued to experience problems with his right knee; additionally, the injury
to his right knee aggravated a preexisting injury to his left knee.
In February of 2001 plaintiff’s supervisor, Ed Nicholson,
met with plaintiff and informed him that plaintiff’s job was being eliminated
effective 3 March 2001, and that he would not be offered a replacement
position. Nicholson also gave plaintiff
a Severance Agreement, setting out the details of plaintiff’s job termination,
including a statement that “[y]ou have 29 years of service and according to the
schedule above will be entitled to 10 months pay, beginning 3-1-01, your
termination date.”
Plaintiff started receiving severance pay 1 March 2001, when
his position was terminated, and continued to receive severance pay through 31
December 2001, the official date of his retirement.
On 18 June 2001 plaintiff had knee replacement surgery on
his right knee. Plaintiff became
disabled as a result of the surgery and associated complications, and filed an
Industrial Commission Form 18 seeking disability benefits. Plaintiff and defendant were unable to agree
on plaintiff’s compensation, and on 9 September 2002 plaintiff filed an
Industrial Commission Form 33 requesting a hearing. Following a hearing, Industrial Commission Deputy Commissioner
Theresa Stephenson issued an Opinion and Award concluding, in pertinent part,
that “Defendant is entitled to a credit for . . . amounts paid to plaintiff
pursuant to the severance package from 18 June 2001 through 31 December
2001.” Both parties appealed to the
Full Commission, which affirmed the Deputy Commissioner in an Opinion and Award
issued 13 July 2004. Plaintiff appeals
from this Opinion.
Standard of Review
“This Court’s review is limited to a determination of (1)
whether the Commission’s findings of fact are supported by competent evidence,
and (2) whether the Commissioner’s conclusions of law are supported by the
findings of fact. The Commission’s
findings of fact are conclusive on appeal if supported by competent evidence,
even where there is evidence to support contrary findings. The Commission’s conclusions of law,
however, are reviewable de novo by this Court. The Commission is the sole judge of the credibility of the
witnesses and the weight accorded to their testimony.” Effingham v. Kroger Co., 149 N.C.
App. 105, 109-10, 561 S.E.2d 287, 291 (2002) (citations omitted).
_____________________
Plaintiff’s sole argument on appeal is that the Industrial
Commission erred by giving defendant a credit for the severance pay he received
between 18 June 2001 and 30 December 2001.
In the instant case, the Industrial Commission found, in
relevant part, that:
4. On 1
February 2001 defendant notified plaintiff his job was eliminated due to
company downsizing. Plaintiff received
salary continuation, which was not offered to all employees affected by the
downsizing. The reason plaintiff
received this continuation was in appreciation of his years of service to the
company. It was not part of plaintiff’s
employment contract. Plaintiff received
this full salary continuation through 31 December 2001. Plaintiff’s resignation officially became
effective on 1 January 2002.
. . . .
12. Plaintiff has
been disabled since the right knee replacement surgery performed on 18 June
2001 and [is] unable to work. The full
salary continuation he received from 18 June 2001 through 30 December 2001 was
not due and payable at the time he received it.
. . . .
14. When
plaintiff’s salary continuation ended on 31 December 2001, defendant reinstated
total disability.
Based
on these and other findings of fact, the Commission concluded in part that:
7. Defendant is
entitled to a credit for amounts paid to plaintiff as a severance package for
the period 18 June 2001 through 31 December 2001. G.S. §97-42.
Plaintiff argues on appeal that findings Number 4 and 12 are not supported by competent evidence, that the Commission erred by finding that plaintiff’s severance pay was not due and payable, and that conclusion of law Number 7 is erroneous. We agree.
“This Court has held that N.C.G.S. §97-42 [(2003)] is the only
statutory authority for allowing an employer in North Carolina any credit
against workers’ compensation payments due an injured employee.” Effingham, 149 N.C. App. at 119, 561
S.E.2d at 296 (citing Johnson v. IBM, 97 N.C. App. 493, 494-95, 389
S.E.2d 121, 122 (1990)). Section 97-42
provides in relevant part that:
Payments made
by the employer to the injured employee during the period of his disability, .
. . 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.
“Whether the Commission may grant defendant any credit
thus depends on whether defendant’s payments to plaintiff . . . were ‘due and
payable’ when made.” Christopher v.
Cherry Hosp., 145 N.C. App. 427, 429, 550 S.E.2d 256, 258 (2001). Therefore, we next consider the correct
interpretation of the phrase “due and payable.” In this regard, we note that “[a]lthough the Commission purported
to find as a fact that defendant’s payments to plaintiff were ‘due and payable’
when made, that determination was actually a conclusion of law and we review it
as such.” Id.
“Legislative intent controls the meaning of a statute; and
in ascertaining this intent, a court must consider the act as a whole, weighing
the language of the statute, its spirit, and that which the statute seeks to
accomplish. The statute’s words should
be given their natural and ordinary meaning unless the context requires them to
be construed differently.” Shelton
v. Morehead Memorial Hospital, 318 N.C. 76, 81-82, 347 S.E.2d 824, 828
(1986) (citation omitted). And, “‘in
interpreting the meaning of a statute, all parts of a single statute will be
read and construed as a whole to carry out the legislative intent.’” Champs Convenience Stores v. United
Chemical Co., 329 N.C. 446, 465, 406 S.E.2d 856, 867 (1991) (quoting Martin
v. Thornburg, 320 N.C. 533, 547, 359 S.E.2d 472, 480 (1987)).
This Court has held that the general intent of G.S. §97-42
is “to encourage voluntary payments by the employer while the worker’s claim is
being litigated and he is receiving no wages[.]” Gray v. Carolina Freight Carriers, 105 N.C. App. 480, 484,
414 S.E.2d 102, 104 (1992). Further,
the phrase “due and payable” should not be analyzed in isolation, but in the
context of G.S. §97-42 overall, which refers to “[p]ayments made by the
employer . . . which by the terms of
this Article were not due and payable when made[.]”
We conclude that the plain meaning of this statutory
language is that the Industrial Commission may credit an employer for payments
that were not due or payable under the terms of the Workers’ Compensation
statutes, at the time they were made, thus restricting credits to payments for
workers’ compensation benefits and monies that were not due or payable. See Jenkins v. Piedmont Aviation Servs.,
147 N.C. App. 419, 427, 557 S.E.2d 104, 109 (2001):
Defendant’s
argument that N.C.G.S. §97-42 grants
the Commission the broad power to award any and all credits the Commission may
desire is without merit. N.C.G.S.
§97-42 specifically authorizes the Commission to award credits for payments the
employer has made which at the time of payment had not been ordered
payable by the Commission.
Because the Industrial Commission may credit an employer
only for payments not due or payable “under the terms of [the workers’
compensation statute],” an employer is not automatically entitled to a credit
for any and every payment to a claimant:
These
provisions are typically limited to situations where, for example, an employer
pays a disabled employee wages intended as compensation . . . or where the
employer pays the employee a lump sum in settlement of an anticipated award[.]
. . . In North Carolina, this [does not] . . . apply to fringe benefits or to
insurance proceeds that are of a contractual nature rather than proceeds that
are grounded in the workers’ compensation law.
Moretz
v. Richards & Associates, 316 N.C. 539, 541, 342 S.E.2d 844, 846 (1986)
(citation omitted).
This Court has held that disability wage replacement
payments are not due and payable, and may be credited, if an employer denies
the compensability of an employee’s injury, but then pays plaintiff under a
disability insurance plan. Foster v.
Western-Electric Co., 320 N.C. 113, 116-17, 357 S.E.2d 670, 673 (1987):
[W]here
compensability under the Act is disputed, it may be some time before the
injured worker begins to receive workers’ compensation benefits. . . . Payment
by the employer under a private disability plan accomplishes sound policy
objectives by providing immediate financial assistance to the disabled worker while
she is disabled. Through its plan,
defendant affords a much-needed continuity of income to injured employees fully
consistent with the expressed policies of workers’ compensation.
However, payments are due and payable if made after an
employer admits the compensability of a claim.
Moretz, 316 N.C. at 542, 342 S.E.2d at 846 (“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[.]”).
Further, N.C.G.S. §97-42 does not authorize a credit for
payment of “‘benefits [that] have nothing to do with the Workers’ Compensation
Act and are not analogous to payments under a disability and sickness
plan.’” Christopher, 145 N.C.
App. at 430, 550 S.E.2d at 258 (quoting Estes v. N.C. State University,
102 N.C. App. 52, 59, 401 S.E.2d 384, 388 (1991)). In Christopher, this Court held that an employer may not
receive a credit for a claimant’s vacation pay:
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. . . . [P]ayments 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 430, 432,
550 S.E.2d at 258, 260.
___________________
The plaintiff herein received severance pay pursuant to
defendant’s Severance Agreement, which stated in relevant part that:
1. In the
course of managing our business in a competitive environment, it occasionally
becomes necessary to address adjustments in our work force. The purpose of this plan is to minimize the
impact of these workforce reductions on our people while maximizing the best
utilization of our remaining people resources. . . .
. . . .
[5.] Separation
Benefit: Should an affected person not
be available to accept other opportunities for placement within the Company,
separation benefits will apply as outlined below: A) Normal pay will continue
until the effective date of termination. . . . F) On the effective date, separation
pay will commence and will be paid monthly in accordance with the following
schedule of benefits: . . . 26 to 29 years [Dana Service] – 10 months pay
[Separation Benefit]. . . . You have 29 years of service and according to the
schedule above will be entitled to 10 months pay, beginning 3-1-01, your
termination date. If you have any
questions, please contact me. Tim Zorn
At the hearing on this matter, defendant’s human resources
manager, Tim Zorn, testified that the Severance Agreement was based on “how we
had treated some of the other district managers” and that his decision to award
plaintiff severance pay was based on plaintiff’s position as a district
manager. Moreover, on
cross-examination, Zorn testified in part as follows:
Q. Under this severance package, how do you determine the amount that is payable to an employee whose job is terminated[?]
A. Well, we put a chart together, as far as years of service goes. And then, we provided months of separation based on their years of service.
Q. So, the
benefit amount is a function of the years of service only?
A.. Yes.
Q. Is it a
function of the employee’s health condition?
A. No.
Q. Is it a
function of the employee’s ability to work with Dana Corporation because of a
health condition?
A. No.
. . .
Q. Okay. Interrogatory number four asked for you to
identify all qualifying events for which Dana Corporation employees could
become entitled to the separation pay that was paid to Mr. Meares. Is that correct?
A. Yes.
Q. And what are
- or give me a description of all the qualifying events, as you put forth in
that answer.
A. I answered
that an employee would become entitled to separation pay due to plant closings,
layoffs, workforce reductions or job elimination.
Q. Those are all
the qualifying events?
A. As I
determined, yes.
Q. Disability is
not one of those qualifying events, is it?
A. That’s right.
Q. So, the
severance package does not compensate an employee for disability. Is that right?
A. That’s right.
We
also note that, in response to plaintiff’s request for a hearing, defendants
filed Industrial Commission Form 33R, stating in relevant part that:
The
employee-plaintiff received a severance package after March 1, 2001, that was
on a contractual obligated benefit. The
employee-plaintiff was not disabled under the Workers’ Compensation Act and
rather, the time period he was out of work from March 1, 2001, through December
31, 2001, was due to economic circumstances of the company.
We conclude that the record contains no evidence that plaintiff’s severance pay was in any way associated with his injury, disability, or workers’ compensation claim. Defendant’s severance agreement contains no indication that severance pay was part of a disability insurance plan or disability wage-replacement plan, or that it might be paid to compensate plaintiff for injury or disability. And, it is undisputed that plaintiff’s severance pay began several months before his disabling surgery, and was calculated on the basis of his years of service to the company. The record evidence all suggests that plaintiff’s severance pay had nothing to do with workers’ compensation, and that he would have received the same amount of severance pay for the same duration if he had not been disabled.
Defendants, however, argue that “the determinative issue is
not whether the Plaintiff was compensated for his disability,” and that “[t]he
court does not need to make a finding that the payment was tantamount to
workers’ compensation or that the benefits compensated him for his disability.” Defendant cites no authority for this
assertion, and relevant jurisprudence suggests otherwise. See Rice v. City of Winston-Salem,
154 N.C. App. 680, 684-85, 572 S.E.2d 794, 798 (2002):
The issue
remaining in this case is whether defendant’s payments to plaintiff . .
. constituted a wage replacement program such that it . . . could form the
basis of an offset against workers’ compensation benefits. . . . [I]n Evans, payments for
which an employer was seeking an offset were made pursuant to the employer’s
sickness and accident disability plan.
That plan allowed for payments regardless of the cause of an employee’s
injury, and ‘operate[d] as a wage replacement program[‘] [that was]
tantamount to workers’ compensation.[]
Therefore, the Court held the employer was entitled to an offset as was
necessary to avoid duplicative payments.
(quoting
Evans v. AT&T Technologies, Inc., 332 N.C. 78-79, 85, 418 S.E.2d
503-04, 508 (1992)).
Defendants also attach great significance to (1) whether
other employees were also offered severance pay, and (2) whether or not the
Severance Agreement was an enforceable contract. Regarding the job classification, or the number, of other
employees receiving severance pay, we conclude this issue is not germane to
whether plaintiff’s severance pay was tantamount to workers’ compensation
disability compensation and could properly be credited against defendants’
workers’ compensation obligation.
We conclude further that the enforceability of the Severance
Agreement as a contract was not before the Commission. Moreover, with respect to this conclusion,
defendant essentially argues that it is entitled to a credit for any and all
monies paid to plaintiff unless plaintiff proves that a payment was made
pursuant to a written contract which would be enforceable in a civil suit. However, defendant cites no authority for
such an expansive reading of G.S. §97-42, and “[i]n North Carolina, this
section has been held not to apply to fringe benefits or to insurance proceeds
that are of a contractual nature rather than proceeds that are grounded in the
workers’ compensation law.” Moretz, 316
N.C. at 541, 342 S.E.2d at 846 (citation omitted). Plaintiff’s severance pay clearly was “of a contractual nature”;
it was paid pursuant to a written Severance Agreement and was calculated solely
by reference to his years of employment with defendant. As discussed above, “payments . . . are ‘due and payable’ when made . . . [if]
they have been earned by the employee and are not solely under the control of
the employer.” Christopher, 145
N.C. App. at 432, 550 S.E.2d at 260.
We conclude (1) that plaintiff’s severance pay was an earned
benefit of a contractual nature, which was due and payable when received, and
(2) that plaintiff’s severance pay was not compensation for his
disability. Accordingly, the Industrial
Commission erred by concluding that defendant was entitled to a credit for its
payment to plaintiff of severance pay.
Reversed in part and remanded.
Judges HUNTER and McCULLOUGH concur.