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1. Workers' Compensation--review of deputy commissioner's credibility
determination--evidence insufficient
Reconsidering 131 N.C. App. 299 on remand from the North Carolina Supreme Court,
the Court of Appeals held that the Industrial Commission erred by reversing the determination of
the deputy commissioner that plaintiff had regained his wage earning capacity and that
defendants should be permitted to terminate benefits where defendants presented evidence that
plaintiff was actively engaged in an automobile sales business. Under Adams v. AVX Corp., 349
N.C.676, the Commission is not required to demonstrate that sufficient consideration was paid to
the fact that credibility may best be judged by a first-hand observer and the Commission is the
sole judge of the credibility of witnesses and the weight to be given testimony. In finding this
plaintiff's testimony that he was not involved in an auto sales business credible, the
Commission based its determination on statements made by plaintiff to his psychologist and his
rehabilitation nurse and a corroborating statement made by plaintiff's wife; however, those
statements were made in 1992 and in early January 1994 and were not relevant to the
Commission's credibility determination because plaintiff did not become involved in the auto
sales business until February 1994.
2. Workers' Compensation--disability--determination--post-injury earning capacity
The relevant factor in assessing disability is the plaintiff's post-injury earning capacity
rather than the actual wages earned.
Appeal by defendants from Opinion and Award entered 4
September 1997 by the North Carolina Industrial Commission.
Heard in the Court of Appeals 15 September 1998.
The Supreme Court remanded this case from a unanimous
decision of the Court of Appeals, 131 N.C. App. 299, 506 S.E.2d
734 (1998) reversing and remanding the decision of the Commission
for reconsideration in light of Adams v. AVX Corp., 349 N.C. 676,
509 S.E.2d 411 (1998). The following opinion replaces the
opinion filed on 3 November 1998.
John A. Mraz, P.A., by John A. Mraz, for plaintiff-appellee.
Robinson & Lawing, L.L.P., by Jane C. Jackson and Jolinda J.
Steinbacher, for defendants-appellants.
WALKER, Judge.
On 4 August 1989, plaintiff injured his back lifting a box
of plugs while employed at defendant's paper mill. Defendant
admitted liability and a Form 21 agreement was approved by the
Industrial Commission on 16 January 1990.
Since the injury, plaintiff has had four back surgeries.
The first two were performed in 1989 by Dr. Steven Stranges and
the last two were performed by Dr. Todd Chapman of the Miller
Orthopaedic Clinic. Following the last surgery, Dr. Chapman
continued to see plaintiff in 1992 and 1993. Dr. Chapman
released plaintiff in October 1993 to return as needed. He
determined that plaintiff had a thirty percent impairment of the
spine and that he could not return to his job with defendant or
any job requiring manual labor or prolonged standing.
In addition, beginning on 1 September 1992, plaintiff was
treated by Dr. Joshua Miller of the Southeastern Pain Clinic who
prescribed various medications for plaintiff's back pain. At
that time, plaintiff also began treatment with Dr. Walter J.
Lawless, a clinical psychologist, who concluded that plaintiff
suffered from depression and anxiety. On 5 March 1993, due to
his improvement, plaintiff was released from Dr. Lawless' care.
In February 1994, plaintiff applied for a motor vehicle
dealership license so he could start a used car sales business
with his brother. The business operated as Deese's Auto Sales
from February through May 1994 when plaintiff signed over his
interest in vehicles owned by Deese's Auto Sales to his wife,Judith Deese. She then opened a used car business under the name
of J & J Auto Sales which continued to do business until late
1994 or early 1995. Mr. William Gregory, a private investigator
hired by defendants, conducted surveillance and recorded it on
videotapes which showed plaintiff on the premises of J & J Auto
Sales on a number of occasions during August and September 1994.
On 12 December 1994, defendants filed a Form 24 to terminate
plaintiff's benefits which they supported with documents and
videotapes of plaintiff's activities. Plaintiff filed no
response to the application to terminate his benefits and on 13
February 1995, the Commission entered an order terminating
benefits as of 15 February 1994.
After a hearing, the deputy commissioner found that
plaintiff was actively engaged in the sale of automobiles at J &
J Auto Sales; however, he did not report any of this activity to
either defendant-employer or their servicing agent. In addition,
the deputy commissioner's findings included the following:
17. The investigator, William Gregory,
conducted surveillance and recorded it on
videotapes which show plaintiff present at J
& J Auto Sales on every occasion surveillance
was conducted there in 1994. The videotapes
depict plaintiff inspecting vehicles,
including looking under the hood, talking
with customers, and working in the office.
At times, plaintiff was the only person
present on the premises, clearly indicating
he was running the business that day.
18. As shown on the videotapes, and as
supported by David Goode's testimony, the
work at Deese's Auto Sales was not strenuous
and was consistent with plaintiff's
capabilities. David Goode testified that he
was working at Deese's Auto Sales because hehimself could no longer work at Deese's Bait
due to a back problem and lifting
restrictions. Goode was able to do the sales
work at the auto dealership.
19. In addition to the surveillance,
William Gregory spoke with David Goode over
the phone to ask about the price of a vehicle
on J & J's lot. Mr. Goode said he would need
to check with the owner and identified Bracy
Deese as the owner of the dealership. Mr.
Gregory also visited J & J Auto Sales and
spoke with Mr. Goode, who told him he worked
for Bracy Deese.
20. The business records of J & J Auto
Sales also indicate plaintiff's involvement.
On October 15, 1994, plaintiff signed a check
from the business account of J & J Auto Sales
to Linda's Auto Sales for “cars”. Notations
on other checks for the account dated July 5,
1994, indicate plaintiff was involved in
purchasing other items for the business,
specifically a motor and a jeep.
21. At the hearing, plaintiff denied
involvement in auto sales, but could not
explain why he secured a dealership license
in his name. The plaintiff also had
attempted to operate these businesses
without the knowledge of the defendants.
Plaintiff never mentioned either business to
the defendants or to any of his treating
physicians until after he learned that his
activities had been videotaped.
22. The videotapes are significant in
that they shed light on the plaintiff's
veracity. The plaintiff's attempts to
operate these businesses without the
knowledge of the defendants, coupled with the
contradiction of his testimony by the videos
are circumstances the undersigned finds
significant in assessing the plaintiff's
propensity for truth. In view of the
documentary evidence and videotape evidence,
the undersigned finds plaintiff's testimony
that he was not involved in vehicle sales to
be unbelievable.
Based on these findings, the deputy commissioner concluded
that as of February 1994, defendants had shown that plaintiffregained his wage earning capacity and were permitted to
terminate his benefits as of 15 February 1994.
On appeal, the Commission, with one commissioner dissenting,
rejected the findings of the deputy commissioner and awarded
plaintiff temporary total benefits. Included in the findings of
the Commission are the following:
17. The Deputy Commissioner in this
matter found plaintiff's testimony regarding
his association with his brother's car
business and his later investment in said
business was not credible. The Deputy
Commissioner found that plaintiff had
attempted to keep his involvement with the
car business hidden from defendant and that
plaintiff had never mentioned his involvement
to any of his treating physicians until after
he learned that his activities had been
videotaped.
18. Despite the Deputy Commissioner's
first hand observations of the witness at
hearing, the Full Commission finds that
plaintiff's testimony regarding his
association with his brother's car business
and his later investment in said business to
be credible for the following reasons:
plaintiff informed Dr. Lawless that he had
been spending some time with his brother at
his brother's car dealership; plaintiff's
statements to Dr. Lawless are corroborated by
statements to Dr. Lawless by plaintiff's
wife; Ms. Donna Kropelnicki, the
rehabilitation nurse assigned by defendant to
plaintiff's case, had knowledge of the fact
that plaintiff was attempting to get out of
his house and that he had been frequently
visiting his brother's business, and; it was
only after Ms. Kropelnicki reported these
activities to defendant that the later
videotapes were taken.
. . .
21. As the result of his 4 August 1989
injury by accident, plaintiff has been unable
to earn wages in his former employment with
defendant or in any other employment from 15
February 1994 through the present and
continuing. [1]Defendants contend the Commission erred in improperly
disregarding the credibility determination of the deputy
commissioner and failing to give reasons for the reversal of that
determination.
A review of decisions by the Commission is limited to
whether the findings of fact are supported by any competent
evidence and whether those findings support the legal
conclusions. Perry v. Furniture Co., 296 N.C. 88, 92, 249 S.E.2d
397, 400 (1978). This Court can go no further than to determine
whether the record contains any evidence tending to support such
findings. Click v. Freight Carriers, 300 N.C. 164, 166, 265
S.E.2d 389, 390 (1980). Those findings are binding on appeal if
any competent evidence exists to support them even where evidence
exists to support contrary findings. Carroll v. Burlington
Industries, 81 N.C. App. 384, 387-88, 344 S.E.2d 287, 289 (1986),
aff'd, 319 N.C. 395, 354 S.E.2d 237 (1987). The Commission's
legal conclusions are reviewable on appeal to determine if they
are justified by the findings of fact. Pittman v. Thomas &
Howard, 122 N.C. App. 124, 128-29, 468 S.E.2d 283, 285-86, disc.
review denied, 343 N.C. 513, 472 S.E.2d 18 (1996).
In Adams v. AVX Corp., 349 N.C. 676, 681, 509 S.E.2d 411,
414 (1998), the Supreme Court asserted that if there is any
competent evidence within the record to support the Commission's
findings of fact, such findings are conclusive on appeal. In
addition, the Court held that “in reversing the deputy
commissioner's credibility findings, the full Commission is not
required to demonstrate, as Sanders states, 'that sufficientconsideration was paid to the fact that credibility may be best
judged by a first-hand observer of the witness when that
observation was the only one.'” Id. at 681, 509 S.E.2d at 413-14
(quoting Sanders v. Broyhill Furniture Industries, 124 N.C. App.
637, 641, 478 S.E.2d 223, 226 (1996), disc. review denied, 346
N.C. 180, 486 S.E.2d 208 (1997)). “The Commission is the sole
judge of the credibility of the witnesses and the weight to be
given their testimony.” Id. at 680, 509 S.E.2d at 413 (quoting
Anderson v. Construction Co., 265 N.C. 431, 433-34, 144 S.E.2d
272, 274 (1965)).
Here, after receiving evidence and viewing surveillance
videotapes, the deputy commissioner determined plaintiff was
involved in the auto sales business beginning with his obtaining
a dealer license in February 1994. The deputy commissioner then
found plaintiff's testimony that he was not involved in the auto
sales business not to be credible.
In finding the plaintiff's testimony to be credible, the
Commission based its determination on statements made by the
plaintiff to his psychologist, Dr. Lawless, and to his
rehabilitation nurse, Ms. Kropelnicki. However, plaintiff's
statement that he was “spending some time” at his brother's car
dealership was, according to testimony at the hearing, made to
Dr. Lawless in 1992, as was the corroborating statement made by
plaintiff's wife to Dr. Lawless. In addition, the statement made
by plaintiff to Ms. Kropelnicki that he was visiting his
brother's car lot was made in early January 1994. We fail to see
how these statements were relevant to the Commission'scredibility determination as plaintiff did not become involved in
the auto sales business until February 1994.
Thus, since this was the only finding to support the
Commission's determination that defendant was credible, we
conclude there was insufficient evidence to support such a
finding. Further there was competent evidence in the record that
beginning in February 1994 plaintiff applied for and received
business permits and licenses in his name; signed business
checks; was identified as the business owner by employees; and
was videotaped managing the business and performing a variety of
tasks at the business on a number of occasions. Plaintiff later
transferred the assets of the business into his wife's name
although she had no experience in this type of business, held a
non-related job elsewhere, and never actively worked at this
business.
In accepted claims where the plaintiff received benefits,
the plaintiff is relieved of the initial burden of proving
disability. Kisiah v. W.R. Kisiah Plumbing, 124 N.C. App. 72,
77, 476 S.E.2d 434, 436, disc. review denied, 345 N.C. 343, 483
S.E.2d 169 (1997). The presumption of continuing total
disability may be rebutted “by showing the employee's capacity to
earn the same wages as before the injury or by showing the
employee's capacity to earn lesser wages than before the injury.”
Brown v. S & N Communications, Inc., 124 N.C. App. 320, 330, 477
S.E.2d 197, 202 (1996). The burden is on the defendants to show
that plaintiff is employable by proving: (a) that suitable jobs
are available for the plaintiff; (b) that taking into accountphysical and vocational limitations, the plaintiff is capable of
obtaining such jobs; and (c) that the jobs would enable the
plaintiff to earn wages. Id. at 330, 477 S.E.2d at 202-03. If
the employer offers evidence sufficient to meet this burden, then
the plaintiff has the burden to show continuing disability by
offering evidence in support of a continuing disability or
evidence to prove a permanent partial disability. Id. at 331,
477 S.E.2d at 203. In this case, defendants have met their
burden of showing that plaintiff has wage earning capacity by
presenting evidence that plaintiff is able to work in the auto
sales business. Thus, on remand to the Commission, the burden
shifts to plaintiff to show that he continues to be disabled.
See Franklin v. Broyhill Furniture Industries, 123 N.C. App. 200,
209, 472 S.E.2d 382, 388 (Walker, J., concurring), cert. denied,
344 N.C. 629, 477 S.E.2d 39 (1996); N.C. Gen. Stat. §§ 97-29 and
30 (1991).
[2]Next, defendants contend the Commission should have
applied the standard required by N.C. Gen. Stat. § 97-2(9) of
plaintiff's wage earning capacity rather than his actual wages.
In order for plaintiff to continue to receive temporary total
disability he must be “disabled.” Disability is defined as the
“incapacity because of injury to earn the wages which the
employee was receiving at the time of injury in the same or any
other employment.” N.C. Gen. Stat. § 97-2(9)(Cum. Supp. 1998).
The plaintiff's post-injury earning capacity rather than his
actual wages earned is the relevant factor in assessing the
disability. McGee v. Estes Express Lines, 125 N.C. App. 298,300, 480 S.E.2d 416, 418 (1997); Tyndall v. Walter Kidde Co., 102
N.C. App. 726, 730, 403 S.E.2d 548, 550, disc. review denied, 329
N.C. 505, 407 S.E.2d 553 (1991).
This case is remanded to the Commission for further
proceedings consistent with this opinion.
Remanded.
Chief Judge EAGLES and Judge MARTIN concur.
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