TOMMY HIGGINS, Employee, Plaintiff, v. MICHAEL POWELL BUILDERS,
Employer, and KEY BENEFIT SERVICES, Carrier, Defendants
No. COA98-812
(Filed 6 April 1999)
1. Workers' Compensation--period for contesting compensability-
-material information reasonably discoverable--award final
The Industrial Commission did not err in a workers'
compensation action in its determination that defendants were not
entitled to contest the compensability of plaintiff's claim after
the expiration of the statutory period provided by N.C.G.S. § 97-
18(d) where defendant employer had actual notice of plaintiff's
injury on the date it occurred, the statutory period for
contesting the claim expired with no application for an extension
having been made, and neither defendant-employer nor the carrier
gave notice that the compensability of plaintiff's claim was
being contested. There is competent evidence in the record to
support the finding that plaintiff's employment status was at all
times reasonably discoverable by both the employer and the
carrier and the award has become final as provided by N.C.G.S. §
97-82(b).
2. Workers' Compensation--employment status--newly discovered
evidence
A workers' compensation carrier was not entitled to relief
from an award of compensation based on newly discovered evidence
concerning plaintiff's employment status where competent evidence
supports the Commission's findings that plaintiff's employment
status was reasonably available at all times and that the carrier
did not exercise due diligence in its investigation of the matter
during the statutory period.
3. Workers' Compensation--compensability--employment status--
excusable neglect by carrier
The Industrial Commission did not err by refusing to grant a
carrier relief from an award based upon excusable neglect where
plaintiff's status as a subcontractor should have prompted a
reasonable investigation by the carrier. The failure of the
carrier to investigate plaintiff's status fell short of the
diligence reasonably expected of a party paying proper attention
to his case.
4. Workers' Compensation--compensability--not contested--mutual
mistake, misrepresentation or fraud
The Industrial Commission correctly refused to set aside a
workers' compensation award on the grounds of mutual mistake,
misrepresentation or fraud concerning plaintiff's status as an
employee or subcontractor where the award derived from defendantcarrier's unilateral initiation of payment of compensation and
subsequent failure to contest the claim under N.C.G.S. § 97-
18(d). The basis of the award was not an agreement and the
doctrines of mutual mistake, misrepresentation, and fraud do not
operate to afford the carrier relief. Moreover, even if these
doctrines were applicable, competent evidence supports the
Commission's findings and conclusion. Appeal by defendant Key Benefit Services from opinion and
award entered 9 April 1998 by the North Carolina Industrial
Commission. Heard in the Court of Appeals 24 February 1999.
Michaels Jones Martin Parris & Tessener, PLLC, by James S.
Walker, for plaintiff-appellee.
Orbock Bowden Ruark & Dillard, PC, by Barbara E. Ruark, for
defendant-appellant Key Benefit Services.
MARTIN, Judge.
Defendant Key Benefit Services (Key Benefit), the servicing
agent for the North Carolina Mutual Employer Self-Insured
Workers' Compensation Fund, appeals from an opinion and award of
the Full Commission awarding plaintiff continuing total
disability benefits for an injury sustained by plaintiff on 16
September 1996, when plaintiff fell out of a window while working
for defendant Michael W. Powell Builders, Inc. (Powell Builders).
Powell Builders was self-insured for workers' compensation
purposes through the North Carolina Mutual Employer Self-Insured
Workers' Compensation Fund.
Powell Builders prepared an I.C. Form 19, Employer's Report
of Injury to Employee and forwarded it to Key Benefits. The Form
19 indicated in some places that plaintiff had been employed for
2 and one-half years as a carpenter; in another place the form
indicated plaintiff's occupation was framer-subcontractor.
After receiving the report of plaintiff's injury from Powell
Builders, Key Benefit initiated compensation payments pursuant to
the provisions of G.S. § 97-18(d), without prejudice and without
accepting liability, and filed an I.C Form 63, Notice to Employee
of Payment of Compensation Without Prejudice, providing copies toplaintiff and to Powell Builders. The Form 63 indicated that
plaintiff was an employee of Powell Builders.
Key Benefits continued to pay compensation to plaintiff
until sometime in January when it received information from
Powell Builders' attorney that, in his opinion, plaintiff was not
an employee of Powell Builders but was, instead, a subcontractor.
Key Benefits immediately discontinued payments, and plaintiff
filed his claim and requested that it be assigned for hearing.
On 24 February 1997, Key Benefit filed an I.C. Form 61, denying
plaintiff's claim on the ground plaintiff was not an employee of
Powell Builders
The deputy commissioner awarded plaintiff benefits,
determining that defendants' failure to contest the claim within
the period for payment without prejudice provided by G.S. § 97-
18(d) constituted an award of the Industrial Commission pursuant
to G.S. § 97-82(b), that plaintiff's employment status was known
or reasonably should have been known prior to the expiration of
the statutory period had the servicing agent made any
investigation thereof, that there was no excusable neglect on
defendants' part, and that the reward was not subject to being
set aside as a mutual mistake.
Defendants appealed to the Full Commission, which adopted,
with minor modifications, the deputy commissioner's findings and
conclusions and affirmed the award.
___________________________
By the arguments brought forward in support of its
assignments of error, Key Benefit contends the Commission erredwhen: (1) it determined that plaintiff's employment status could
have been reasonably discovered before the expiration of the
statutory period for contesting the claim; (2) it refused to
grant relief from the binding effect of the Form 63 on the
grounds that plaintiff's employment status was newly discovered
evidence; (3) it refused to grant such relief on the grounds of
excusable neglect; and (4) it refused to set aside the award on
the grounds of misrepresentation or mutual mistake. For the
following reasons, we affirm the Commission's opinion and award.
I.
The standard of appellate review of an opinion and award of
the Industrial Commission is limited to whether there was any
competent evidence before the Commission to support its findings
of fact and whether the findings of fact justify the Commission's
legal conclusions and decision.
Harris v. North American
Products, 125 N.C. App. 349, 352, 481 S.E.2d 321, 323 (1997);
Pittman v. Thomas & Howard, 122 N.C. App. 124, 129, 468 S.E.2d
283, 285-86,
disc. review denied, 343 N.C. 513, 472 S.E.2d 18
(1996) (citations omitted). The Commission's findings 'will not
be disturbed on appeal if supported by any competent evidence
even if there is evidence in the record which would support a
contrary finding.'"
Harris at 352, 481 S.E.2d at 323 (quoting
Peoples v. Cone Mills Corp., 316 N.C. 426, 432, 342 S.E.2d 798,
803 (1986)). The Commission, and not this Court, is "the sole
judge of the credibility of witnesses" and the weight given to
their testimony.
Pittman at 129, 468 S.E.2d at 286 (quoting
Russell v. Lowes Product Distribution, 108 N.C. App. 762, 765,425 S.E.2d 454, 457 (1993)).
II.
[1]First, Key Benefit argues the Commission erred in its
determination that defendants are not entitled to contest the
compensability of plaintiff's claim after the expiration of the
statutory period provided by G.S. § 97-18(d). Key Benefit takes
issue with the Commission's findings and conclusion that
plaintiff's employment status was known to Powell Builders, and
could have been reasonably discovered by Key Benefit had it
conducted a diligent investigation, within the time period for
contesting the claim.
Under the statutory scheme provided by G.S. § 97-18(d), in
those cases in which an employer or insurer is uncertain about
the compensability of a claim, the employer or insurer may
commence payment of compensation without admitting liability and
without prejudice to its rights to contest the claim. The
employer or insurer is required to file the prescribed form, I.C.
Form 63, stating that the payments are made without prejudice,and that such payments continue until the claim is either
accepted or contested or until 90 days from the date upon which
the employer first obtains written or actual notice of the
injury. If, during the 90 day period, which may be extended by
the Commission for an additional 30 days upon application, the
employer or insurer contests compensability, it may cease payment
upon giving the proper notice specifying the grounds upon which
liability is contested. However, if the employer or insurer does
not contest compensability of the claim or its liability therefor
within the statutory period, it waives its right to do so and the
entitlement to compensation becomes an award of the Commission
pursuant to G.S. § 97-82(b). In such event, after the expiration
of the 90 day period, the employer or insurer may cease payments
and contest compensability only upon showing that material
evidence became available after the expiration of the statutory
period which could not have reasonably been discovered earlier.
N.C. Gen. Stat. § 97-18(d) (1997).
Here, defendant employer, Powell Builders, had actual notice
of plaintiff's injury on the date it occurred; the statutory
period for contesting the claim expired 16 December 1996, no
application for an extension having been made, and neither Powell
Builders nor Key Benefit gave notice that the compensability of
plaintiff's claim was being contested. Key Benefit argues,
however, that it is still entitled to contest the compensability
of plaintiff's claim because material information concerning
plaintiff's employment status was not discovered, and was not
reasonably discoverable, until after the expiration of thestatutory period.
We hold there is competent evidence in the record to support
the Commission's finding that plaintiff's employment status was
at all times reasonably discoverable by both the employer and
the carrier. The testimony of Powell Builders' owner, Michael
Powell, showed that Powell Builders became aware of plaintiff's
injury on the day it occurred and filed I.C. Form 19, the
employer's report of the injury. Line 28 of the injury report
listed plaintiff as a framer-subcontractor. Mr. Powell
testified that he spoke with Key Benefit's claims director, Jeff
Millett, and that Powell Builders' other employees were available
to provide information concerning plaintiff's injury and
employment status. Mr. Millett never inquired about plaintiff's
status as a framer-subcontractor, even though he discussed
plaintiff's medical bills with Powell Builders' office manager.
Mr. Millett also testified, admitting that he did not inquire
whether plaintiff was an employee or whether plaintiff was paid
via an independent contractor Form 1099. When asked whether the
information was reasonably available, Mr. Millett replied I
don't know if it was reasonably available because I didn't ask,
so how would I know.
Noting that defendant-employer had actual knowledge of the
plaintiff's employment status equal to that of the plaintiff,
the Commission correctly concluded that Key Benefit could have
discovered plaintiff's employment status had it made a
reasonable investigation of the claim. Having failed to
reasonably investigate the claim, Key Benefit cannot now assertthat the information was not reasonably available. Pursuant to
the provisions of G.S. § 97-18(d), defendants have waived their
right to contest the compensability of plaintiff's injuries, and
the award of compensation has become final as provided by G.S. §
97-82(b).
III.
Key Benefit next argues that it is entitled to relief from
the award of compensation made final by G.S. § 97-82(b).
Analogizing the award to a judgment in a civil case, Key Benefit
asserts three grounds for affording it relief: (1) newly
discovered evidence, (2) excusable neglect, and (3) mutual
mistake or misrepresentation.
A.
[2]First, Key Benefit argues the evidence with respect to
plaintiff's employment status was newly discovered evidence.
The standard for providing relief on the grounds of newly
discovered evidence, as applied in the context of the Workers'
Compensation Act, requires that the evidence be
new, i.e.,
available only after the initial hearing,
Andrews v. Fulcher Tire
Sales and Service, 120 N.C. App. 602, 463 S.E.2d 425 (1995), and
that the party seeking relief show that when the award was
entered evidence material to the case existed that he did not
learn about, through due diligence, until later.
Wall v. N.C.
Dept. of Human Resources: Div. of Youth Services, 99 N.C. App.
330, 332, 393 S.E.2d 109, 110 (1990),
disc. review denied, 328
N.C. 98, 402 S.E.2d 430 (1991).
As discussed above, competent evidence of record supportsthe Commission's findings that plaintiff's employment status was
reasonably available at all times and that Key Benefit did not
exercise due diligence in its investigation of the matter during
the statutory period. Key Benefit is not entitled to relief on
the grounds of newly discovered evidence.
B.
[3]Next, Key Benefit suggests the award should be set aside
on the grounds of excusable neglect, as permitted by G.S. § 1A-1,
Rule 60(b). Whether a litigant's actions constitute excusable
neglect is a question of law, reviewed on appeal based upon the
facts as found below.
Thomas M. McInnis & Associates, Inc. v.
Hall, 318 N.C. 421, 425, 349 S.E.2d 552, 554-55 (1986). To set
aside a judgment on the grounds of excusable neglect under Rule
60(b), the moving party must show that the judgment rendered
against him was due to his excusable neglect and that he has a
meritorious defense.
Id. at 424, 349 S.E.2d at 554.
While there is no clear dividing line as to
what falls within the confines of
excusable
neglect as grounds for the setting aside of a
judgment, what constitutes excusable neglect
depends upon what, under all the surrounding
circumstances, may be reasonably expected of
a party in paying proper attention to his
case.
Excusable neglect must have occurred
at or before entry of judgment and must be
the cause of the default judgment being
entered.
Id. at 425, 349 S.E.2d at 554-55 (citations omitted). Based upon
the Commission's findings of fact, plaintiff's status as a
framer-subcontractor in the employer's report of injury should
have prompted a reasonable investigation by Key Benefit; its
failure to investigate plaintiff's status fell short of thediligence reasonably expected of a party in paying proper
attention to his case. The Commission did not err in refusing
to grant Key Benefit relief based upon excusable neglect.
C.
[4]Finally, defendant contends that the Industrial
Commission should have set aside the award on the grounds of
mutual mistake, misrepresentation, or fraud. The Industrial
Commission possesses such judicial power as is necessary to
administer the Worker's Compensation Act and has the power to
set aside a former judgment on the grounds of mutual mistake,
misrepresentation, or fraud.
Hogan v. Cone Mills Corp., 315 N.C.
127, 138, 337 S.E.2d 477, 483 (1985). Because the doctrines of
mutual mistake, misrepresentation, and fraud generally apply to
agreements between parties, these doctrines will not provide
grounds to set aside an award not based upon such an agreement.
McAninch v. Buncombe County Schools, 347 N.C. 126, 132, 489
S.E.2d 375, 379 (1997) ("Thus, where there is no finding that the
agreement itself was obtained by fraud, misrepresentation, mutual
mistake, or undue influence, the Full Commission may not set
aside the agreement, once approved."
);
Brookover v. Borden, Inc.,
100 N.C. App. 754, 755-56, 398 S.E.2d 604, 606 (1990),
disc.
review denied, 328 N.C. 270, 400 S.E.2d 450 (1991);
Neal v.
Clary, 259 N.C. 163, 130 S.E.2d 39 (1963). G.S. § 97-17
expressly provides that:
[N]o party to any
agreement for compensation
approved by the Industrial Commission shall
thereafter be heard to deny the truth of the
matters therein set forth, unless it shall be
made to appear to the satisfaction of the
Commission that there has been error due tofraud, misrepresentation, undue influence or
mutual mistake, in which event the Industrial
Commission may set aside such
agreement.
N.C. Gen. Stat. § 97-17 (1997) (emphasis added);
see also N.C.
Gen. Stat. § 97-87 (1997) (Filing agreements approved by
Commission or awards; judgment in accordance therewith; discharge
or restoration of lien). Limitation of these doctrines to
agreements, in this context, reenforces the doctrinal basis of
these doctrines, i.e., that when there has been a mutual mistake,
misrepresentation, or fraud, no enforceable agreement exists
because a meaningful 'meeting of the minds' is lacking.
Creech
v. Melnik, 347 N.C. 520, 527, 495 S.E.2d 907, 911-12 (1998) (It
is essential to the formation of any contract that there be
'mutual assent of both parties to the terms of the agreement so
as to establish a meeting of the minds.'). Agreements formed
under these circumstances lack the requisite mutuality to become
legally binding.
Here, the basis of the award is not an agreement, hence,
there was no need for a meeting of the minds. The Commission's
award does not adopt an agreement between the parties; rather,
the award derives from defendant's unilateral initiation of
payment of compensation and subsequent failure to contest the
claim under G.S. § 97-18(d). Therefore, the doctrines of mutual
mistake, misrepresentation, and fraud do not operate to afford
Key Benefit relief from the award.
Even if these doctrines were applicable, competent evidence
supports the Commission's findings and its conclusion that
defendant's mistake was a unilateral decision of defendant's
servicing agent, who knew or should have
known of plaintiff's actual employment status
prior to the entry of the same award.
Plaintiff did not say or do anything to
induce defendant to enter the disputed award;
rather, plaintiff was merely the beneficiary
of defendant's unilateral action.
Under these circumstances, the Commission correctly refused to
set aside the award on the grounds of mutual mistake,
misrepresentation or fraud.
Affirmed.
Judges TIMMONS-GOODSON and HUNTER concur.
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