Commentary on the Revised N.C. Industrial Commission Rules
Concerning Mediation and Neutral Evaluation
Adopted August 20, 1998
By John C. Schafer
Dispute Resolution Coordinator
The N.C. Industrial Commission mediation program continues to be very successful in
resolving contested cases without the need for a formal hearing. The most recent
statistics for the 1997-98 fiscal year indicate that in contested cases where a mediation
conference was convened, 72.5% of the cases were resolved at the conference. Meanwhile, in
order to improve the overall administration of the program, the Commission has adopted
revised mediation rules which also provide for a neutral evaluation settlement procedure.
The revised Rules For Mediated Settlement And Neutral Evaluation Conferences of the North
Carolina Industrial Commission("ICMSC rules") were adopted by the Commission on
August 20, 1998, and are effective as of that date. This article will highlight and
briefly summarize the revisions that were made to the ICMSC rules. This Commentary has not
been formally adopted, but it will hopefully be helpful.
Primary Purposes of Rule Revisions
- To reflect and incorporate many of the program's current practices, including the
automatic referral of cases to mediation upon the filing of requests for hearing.
- To address the two most serious problems currently being experienced in the
administration of the IC mediation program - (1) repeated postponements of mediation
conferences within 7 days of scheduled conferences, and (2) an excessive number of
requests for the substitution of appointed mediators after the expiration of the
applicable deadlines which is not only causing problems for mediators but, more
importantly, is causing an understaffed IC mediation "section"(consisting of two
persons) to spend an inordinate amount of its time appointing mediators and then
reappointing substitute mediators.
- To clarify and revise the attendance requirements for IC mediation conferences.
- To implement a neutral evaluation procedure which would make an evaluative settlement
procedure available to those parties and attorneys who are often seeking an evaluation of
their claim in IC mediated settlement conferences.
- For ease of reference, to make the ICMSC rules as similar as possible to the Superior
Court MSC rules.
Revisions to ICMSC Rules
- Rule 1(a) confirms that parties may elect to mediate a disputed matter without a
Commission order provided that they notify the Commission as to the status of the case if
a mediation order is subsequently entered.
- The modifications in Rule 1(b) reflect the automatic referral of cases upon the filing
of a request for hearing as the primary method for ordering cases into mediation, and the
discontinuation of the use of consent orders which are now basically handled the same as
party requests for a mediation order pursuant to Rule 1(d).
- Rule 1(g) was revised to clearly state that, in the absence of a full and complete
resolution of all disputed issues, the parties may request that the Commission dispense
with mediation, but "a mediation conference may not be dispensed with or canceled by
the parties or the mediator". The terms "dispensed with" and
"canceled" have been defined to avoid any confusion as to how those terms are
being used. This Rule(like Rules 1(i), 2(a) and 2(b)) also clarifies that the mediation
orders with the 21 day deadlines are the orders entered pursuant to Rules 1(c) and (d), as
opposed to the 55 day deadlines in the mediation orders entered pursuant to Rule 1(b) upon
the filing of Form 33 requests for hearing. Rule 1(g) further provides that untimely
motions to dispense with mediation may result in the assessment of a $100.00 fee payable
to the Commission.
- Rule 1(i) contains an explanation of the procedure for requesting Commission approval of
the use of a neutral evaluation procedure in lieu of mediation. This rule also provides
that "the Commission will not order the use of a neutral evaluation proceeding in any
case in which the plaintiff is not represented by counsel".
- In Rule 1(j) the "opt-in" procedures for pro se plaintiffs are incorporated
into the rules. Under these procedures cases involving pro se plaintiffs are excused from
mediation unless the plaintiff specifically requests mediation in a timely manner.
- The automatic referral deadlines are added.
- In Rule 2(b) a substitution of mediator fee payable to the Commission is specifically
authorized. This fee will hopefully encourage parties to designate mediators in a timely
fashion, or compensate the Commission for the unnecessary drain on the Commission's
- In Rule 3(c) the requirement that deadline extension requests by the mediator or the
parties be in writing and served on all other parties, and the requirement that the
Commission's deadline extension orders be in written form, have been deleted.
- In Rule 3(f) a brief explanation concerning the inadmissibility of mediation statements
and conduct is added to the somewhat vague reference to Rule 408.
- In Rule 4(a)(1)(B) the attendance requirements for employers have been rewritten to
clarify that employers who do not have "decisions-making authority with respect to
settlement" are generally not required to attend IC mediation conferences, despite
the fact that they are "parties" in the case.
- Rule 4(a)(3) was revised to indicate that in those cases where the defendant has a
separate workers' compensation carrier in addition to its general liability carrier, the
attendance of the workers' compensation carrier satisfies the carrier attendance
requirement. Rule 4(a)(3) was also revised to give carriers the option of having a
representative attend the mediation conference who may not have "the authority to
make a decision on behalf of such carrier or self-insured", as long as the
representative at the conference "has been authorized to negotiate on behalf of such
carrier or self-insured and can promptly communicate during the conference with persons
who have such decision-making authority". The current version of the ICMSC rule
provides carriers with this "prompt communication" alternative only if
"agreed upon by the parties and the mediator". This revision would make the
ICMSC rules consistent with the attendance requirements for carrier representatives in the
Superior Court MSC rules which have been in effect since 1995.
- Rule 4(a)4 was revised to provide that the primary workers' compensation carriers in
pending IC cases shall attend mediation conferences concerning related third-party
tortfeasor claims upon reasonable notice and the agreement of all of the parties in
related third-party tortfeasor claims. The current rule already requires the attendance of
the carriers for third-party tortfeasors at IC mediation conferences.
- Rule 4(a)(5) was modified to clarify what additional persons could be ordered to attend
a workers' compensation or state tort claim mediation conference. In addition, the revised
rule confirms that employer or carrier representatives who are not required to attend a
mediation conference by these rules or a Commission order may still attend the conference
if they elect to do so.
- Revised Rule 4(b)(1)(A) provides that the mediator and the parties are allowed to modify
the attendance requirements without an order from the Commission. This revision would make
this ICMSC rule consistent with the Superior Court MSC rules.
- In Rule 4(b)(2) there is a clarification of what it means for persons who, with prior
Commission approval, "appear" at mediation conferences by telephone.
- Revised Rule 4(c) provides that the employer must receive notice of the mediation order
within seven(7) days after the carrier's receipt of the order.
- Rule 4(d) was revised to provide that memoranda concerning mediation settlements may be
electronically or stenographically recorded. This would make the IC rule consistent with
the Superior Court MSC rules.
- Rule 4(e) was revised to provide that "[s]anctions may be assessed if the
mediator's fee is not paid in a timely fashion."
- The primary revision to Rule 5 was to provide that sanctions may be assessed against a
party's attorney, rather than the party, if the attorney's conduct necessitated the
assessment of sanctions. IC Rule 802 contains a similar provision.
- Rule 6(a)(1) was revised to provide that audio, video, electronic and stenographic
records of the negotiations and discussions that occur at the mediation conference are
prohibited, except as may be allowed elsewhere in the rules. Rule 4(d) specifically allows
memoranda of agreements reached in mediation to be electronically or stenographically
recorded with the consent of all parties and at their expense.
- Rule 6(b)(1)(D) was revised to clarify that Commissioners and Deputy Commissioners are
not necessarily prohibited from serving as mediators, although they could not thereafter
serve as a decision-maker in the case.
- Rule 6(b)(4) was revised to prohibit the attachment of copies of the parties' memoranda
of agreement to their mediator reports, as some mediators have been doing as a matter of
course. This practice may be a violation of the confidentiality and disclosure provisions
of the Standards of Conduct for Mediators, and the Commission doesn't need or want what
may be inadmissible and prejudicial settlement information in its files, especially in the
event that a party changes his or her mind about a proposed settlement, or if an agreement
is otherwise not approved by the Commission. When a settlement agreement needs to be
approved by the Commission, it will be transmitted in proper form by the parties.
- A copy of the revised report of mediator form is attached to the rules as Addendum A,
and there is a reference to the attached report form in Rule 6(b)(4). The revised Report
form, which is already being used in IC cases, requires mediators to specify whether the
settlement reached by the parties will be submitted for Commission approval in the form of
a clincher agreement or some other type of agreement.
- Rule 6(b)(5) was revised to clarify that mediators should attempt to schedule mediation
conferences prior to any hearings that may be scheduled before Deputy Commissioners. This
rule was also revised to be consistent with our current practice of not entering written
orders on time extension requests.
- Revised Rule 6(b)(6) requires that mediators adhere to the Standards of Conduct for
Mediators adopted by the North Carolina Dispute Resolution Commission.
- Rule 7(b) provides that the mediator's per case administrative fee shall be paid unless
the mediator and the Commission are advised, within 10 days of the appointment, that the
disputed issues have been resolved. In contrast, under the Superior Court MSC rules the
administrative fee "is due upon date of appointment." However, under the current
ICMSC rules, the administrative fee is not due unless the case is actually mediated or the
Commission otherwise orders that the administrative fee be paid. The revised rule also
provides for a postponement fee in the amount of $100.00 if a mediation conference is
postponed or canceled, without good cause, within seven(7) days of a scheduled conference,
and a postponement fee in the amount of $200.00 if the postponement or cancellation occurs
within three(3) days of a scheduled conference.
- Rule 7(d) was revised to reflect the current practice concerning the payment of
mediation fees by the defendant, subject to the defendant's right to be reimbursed for the
plaintiff's share when the case is concluded.
- In the event that a mediator fails to appear at a scheduled mediation conference Rule
8(d) now provides that "the mediator shall not be entitled to recover the
administrative fee for the case and may be deleted from the Commission's list of mediators
qualified for appointments for a period of six(6) months." The remaining revisions to
this rule reflect the current role of the Dispute Resolution Commission in lieu of the
- This rule contains the new neutral evaluation procedures which may be utilized in lieu
of mediation only with the full consent of all parties.
(formerly Rule 9)
Waiver of Rules
- No changes were made to this rule.
(formerly Rule 10)
- The primary change to this rule involves the handling of appeals from mediation orders.
The current rule provides that such appeals are directed to the attention of the Mediation
Coordinator, and are to be decided without oral argument, unless otherwise ordered. The
revised rule provides that such appeals are to be "addressed to the Commission
Chairman or the Chairman's designee for appropriate action". In addition, the revised
rule provides for "responses" to motions, as opposed to the reference to
"objections" to motions in the current rule. A response may be limited to or
include an objection, but may also include other information.
- This rule summarizes the calculation of time periods within which acts may be performed
by the parties, and is consistent with the current procedures.
Editor's note: John C. Schafer is the Dispute Resolution Coordinator for the
N.C. Industrial Commission. He can be reached by e-mail atSCHAFERJ@ind.commerce.state.nc.us
or by telephone at(919) 715-2791.
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