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

• 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.

 

Rule 2

• 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 limited resources.

 

Rule 3

• 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.

 

Rule 4

• 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."

 

Rule 5

• 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

• 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

• 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.

 

Rule 8

• 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 AOC.

 

Rule 9

• This rule contains the new neutral evaluation procedures which may be utilized in lieu of mediation only with the full consent of all parties.

 

Rule 10
(formerly Rule 9)
Waiver of Rules

• No changes were made to this rule.

 

Rule 11
(formerly Rule 10)
Motions

• 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.

 

Rule 12
Miscellaneous

• This rule summarizes the calculation of time periods within which acts may be performed by the parties, and is consistent with the current procedures.

 

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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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