PHILLIP JOHNSON
v
.
UNITED PARCEL SERVICE and LIBERTY MUTUAL INSURANCE COMPANY
Mast, Schulz, Mast, Mills & Stem, PA, by Charles D. Mast for
plaintiff-appellant.
Cranfill, Sumner & Hartzog, LLP, by P. Collins Barwick, III
and Jaye E. Bingham for defendants-appellants.
THOMAS, Judge.
Plaintiff, Phillip Johnson, appeals from an opinion and award
by the North Carolina Industrial Commission (Commission) regarding
the taxing of attorney fees in a workers' compensation claim. For
the reasons discussed herein, we reverse.
The parties stipulated to the following facts: Plaintiff was
working for defendant, the United Parcel Service (UPS), when he
sustained a compensable back injury on 11 June 1991. The parties
entered into a Form 21 agreement, by which defendants, UPS and
Liberty Mutual Insurance Company (Liberty) agreed: (1) plaintiffwas disabled; and (2) to pay him the maximum rate of $406.00 per
week and continuing for “necessary weeks.”
In July 1994, Liberty informed plaintiff of an offer of a
full-time job with Combined Contract Services paying $4.25 per hour
as an airport screener. Liberty sent plaintiff's counsel a letter
stating that plaintiff had until 18 July 1994 to accept or decline
the position. Plaintiff then filed a Form 33 request for hearing.
On 18 July 1994, defendants filed a Form 24 application to stop
payment of compensation. On the same day, plaintiff notified
defendants that he accepted the job as an airport security screener
under protest. There was no employment position available for
plaintiff with UPS.
Plaintiff only worked from 8 August 1994 to 16 October 1994
and defendants continued to pay temporary total disability
benefits. Then, with a hearing scheduled for December, defendants
wrote plaintiff's counsel a letter on 10 November 1995 stating in
part:
As you know, your client is continuing to
receive temporary total disability benefits,
and I do not believe that there are any issues
currently in dispute which would require the
necessity of the hearing. As long as we keep
paying temporary total disability, it would
not seem wise use of the Industrial
Commission's time to hold a hearing in this
matter.
Plaintiff received the temporary total disability paymentsuntil 30 May 1997, when defendants discontinued them alleging the
300-week maximum for benefits under N.C. Gen. Stat. § 97-30 had
passed. Defendants explained that the only way plaintiff could
receive additional benefits was if his condition worsened during
the two-year statute of limitations period after the 300-week
lapse.
Plaintiff has not worked since October 1994. Evidence showed
that plaintiff has received $40,009.44 in medical compensation and
$125,454 in disability compensation, of which $58,464 was temporary
partial disability. Defendants have paid plaintiff no weekly
benefits since 30 May 1997.
Defendants filed a Form 24 application to terminate
plaintiff's partial disability benefits, which was initially
approved. However, the Commission subsequently found that the Form
24 application was improvidently approved and based upon a
misunderstanding of the facts. It set the approval aside. Because
plaintiff had not elected to receive partial disability benefits,
defendants were ordered to pay plaintiff pursuant to N.C. Gen.
Stat. § 97-29 for total disability benefits, retroactive to 16
October 1994 and continuing through the present.
In its opinion and award, the Commission found that:
Defendants have not produced any evidence that
plaintiff has been able to return to suitable
employment at the same or similar wages as hewas earning prior to his injury. Nor have
defendants offered any evidence that plaintiff
is capable of earning wages at any kind of
employment beyond the return to work effort
which he made from August to October 1994 in a
part time, modified job. The wages earned by
plaintiff in his attempt to return to modified
work are not indicative of his wage earning
capacity in the competitive job market. All
plaintiff's treating physicians were of the
opinion that plaintiff should attempt to
return to work, and that his work attempt was
unsuccessful. Plaintiff's current treating
physicians are of the opinion that plaintiff
is not presently capable of working in any
kind of job, nor has he been since October
1994 when he stopped working the security job.
The Commission, however, then found defendants “had reasonable
grounds to defend this claim.” It ordered attorney fees to be paid
only from the accrued award, and not pursuant to N.C. Gen. Stat.
§ 97-88.1.
By plaintiff's sole assignment of error, he argues the
Commission erred in: (1) finding that defendants had reasonable
grounds to defend his claim; and (2) failing to tax plaintiff's
attorney fees as costs. We agree.
“Whether a defendant had reasonable ground[s] to bring a
hearing is a matter reviewed by this Court de novo.” Ruggery v.
N.C. Dept. of Corrections, 135 N.C. App. 270, 273, 520 S.E.2d 77,
80-81 (1999) (citing Troutman v. White & Simpson, Inc., 121 N.C.
App. 48, 50, 464 S.E.2d 481, 484 (1995), disc. rev. denied, 343
N.C. 516, 472 S.E.2d 26 (1996)). A defendant has reasonablegrounds to defend a claim where the defense is based in “reason
rather than in stubborn, unfounded litigiousness.” Sparks v.
Mountain Breeze Restaurant and Fish House, Inc., 55 N.C. App. 663,
665, 286 S.E.2d 575, 576 (1982).
Review of the Commission's award or denial of attorney's fees
is limited and will not be overturned absent an abuse of
discretion. See Lewis v. Sonoco Prods. Co., 137 N.C. App. 61, 71,
526 S.E.2d 671, 677 (2000). An abuse of discretion arises when a
decision is “manifestly unsupported by reason or is so arbitrary
that it could not have been the result of a reasoned decision.”
State v. Hennis, 323 N.C. 279, 285, 372 S.E.2d 523, 527 (1988).
The burden to establish the existence and extent of a
disability lies with the employee. Demery v. Perdue Farms, Inc.,
143 N.C. App. 259, 545 S.E.2d 485 (2001). In the instant case,
plaintiff carried his burden by signing the Form 21 agreement with
defendants. An approved Form 21 creates the presumption of an
employee's continued disability. Kisiah v. W.R. Kisiah Plumbing,
Inc., 124 N.C. App. 72, 476 S.E.2d 434 (1996), disc. rev. denied,
345 N.C. 343, 483 S.E.2d 169 (1997). Once the presumption
attaches, the employer then has the burden of establishing that the
employee is employable. Id.
Plaintiff accepted a position as an airport security screener,
but testified that he did so under protest. Then, claiming hesuffered excruciating pain, frequently fell down, and had serious
difficulties driving, he quit after approximately two months.
Prior to the 10 November 1995 letter, defendants corresponded
with plaintiff and referred to his benefits as “partial.”
Plaintiff, however, never signed a Form 26 agreement to elect
compensation for partial disability. The 10 November 1995 letter
and hearing cancellation appeared to settle the issue and restore
the presumption of ongoing total disability. See Watkins v.
Central Motor Lines, Inc., 279 N.C. 132, 181 S.E.2d 588 (1971).
Nothing thereafter occurred to put the presumption in question.
Defendants did not have reasonable grounds to defend plaintiff's
claim and, therefore, we reverse the Commission.
REVERSED.
Judges WYNN and HUDSON concur.
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