Appeal by defendants from opinion and award entered 28 April
2003 by the North Carolina Industrial Commission. Heard in the
Court of Appeals 19 May 2004.
J. Randolph Ward, for defendant-appellee Branch Erections
Company, Inc.
NELSON MULLINS RILEY & SCARBOROUGH, L.L.P., by Christopher J.
Blake and Joseph W. Eason, for defendant-appellant N.C.
Guaranty Association.
TIMMONS-GOODSON, Judge.
Defendant North Carolina Guaranty Association (“the
Association”) appeals the amended opinion and award of the North
Carolina Industrial Commission (“the Commission”) awardingplaintiffs a ten percent increase in worker's compensation. For
the reasons stated herein, we reverse the Commission's amended
opinion and award and remand the case for further proceedings.
The facts and procedural history pertinent to the instant
appeal are as follows: On 23 March 2000, Billy Charles Vogler
(“decedent”) was an employee of Branch Erections Company, Inc.
(“Branch”). Decedent was working on a communications tower when a
nearby crane broke from its platform and fell, striking decedent
and causing him to fall twenty feet to the ground. As a result of
his injuries, decedent was killed. Decedent is survived by his
wife, Mary Nicole Boone Vogler, his daughter, Kristin Dakota
Vogler, and his stepdaughter, Megan Nicole Boone (collectively,
“plaintiffs”).
Shortly after decedent's injury, the Occupational Safety and
Health Administration (“OSHA”) investigated the accident. The OSHA
investigator determined that Branch had failed to inspect the crane
turret bolts for two years prior to the accident, although OSHA
regulations require daily inspection of the crane's turret bolts
when the crane is in use. The OSHA investigator further determined
that Branch's failure to inspect the crane and other equipment
resulted in worn, cracked, and rusty crane turret bolts on the
crane, which caused the crane to snap and fall on top of decedent.
The OSHA investigator ultimately cited Branch for twenty violations
of OSHA regulations, all of which were characterized as “serious.”
Subsequent to decedent's death, plaintiffs filed a worker's
compensation claim against Branch and its insurer, Reliance
Insurance Company (“Reliance”). On 14 December 2001, NorthCarolina Industrial Commission Deputy Commissioner George T. Glenn
(“Deputy Commissioner Glenn”) issued an opinion and award entitling
plaintiffs to weekly benefits, expenses for decedent's burial,
medical expenses incurred by decedent as a result of the accident,
and attorneys' fees. In addition to this award, Deputy
Commissioner Glenn concluded as a matter of law that “[p]laintiffs
are entitled to a 10% penalty due to [Branch's] willful violations
of OSHA safety standards,” and ordered that “[Branch and Reliance]
shall pay a ten percent (10%) penalty of the total amount due
plaintiffs.” Branch appealed the award to the Commission. On 17
July 2002, the Commission issued an opinion and award affirming
Deputy Commissioner Glenn's decision.
On 3 October 2001, Reliance was declared insolvent. Thus,
pursuant to the Insurance Guaranty Association Act (“Guaranty
Act”), N.C. Gen. Stat. § 58-48-1 (2003) et. seq, the Association
assumed Reliance's obligations to the case.
On 13 August 2002, the Association filed a Motion For Joinder
As Party; And To Reconsider And To Alter And Amend Judgment. The
Association asserted that it was not responsible for payment of the
ten percent “penalty” for Branch's willful violation of OSHA safety
rules because the “penalty” was not covered by the Guaranty Act and
because plaintiffs' claim was not covered by the policy between
Branch and Reliance. On 20 September 2002, Branch filed a response
to the Association's motion for reconsideration, asserting that the
Association is obligated to pay the ten percent “penalty” under the
Worker's Compensation Act and that the Guaranty Act does not excuse
the Association from liability. The Association filed a replyasserting that it is not the legal successor of Reliance, and
reiterating its assertion that the ten percent “penalty” is not
covered by the Guaranty Act or by Branch's insurance policy with
Reliance.
On 28 April 2003, the Commission issued an amended opinion and
award. The Commission's amended opinion and award contained the
following pertinent conclusions of law:
9. [The Association] denies any obligation
to pay the additional compensation
awarded pursuant to N.C. Gen. Stat. § 97-
12 based upon two arguments. First, [the
Association] asserts that the additional
compensation is not within the coverage
of the insurance policy issued by
Reliance because the policy specifically
requires [Branch] to be responsible for
any payment in excess of the benefits
regularly provided by the Worker's
Compensation Act, including those imposed
due to the employer's failure to comply
with a health or safety law or
regulation. This first issue is a
coverage question not properly before the
Commission for determination at this
time. The record before us contains no
evidence concerning the contractual
provisions of the insurance policy on
which to base findings of fact and
conclusions of law. Although portions of
the policy were attached to the briefs of
the parties, no evidence on the coverage
issue is properly before the Commission
because no evidence was presented at the
Deputy Commissioner hearing. Therefore,
the coverage question is reserved for
further hearing and subsequent
determination in the event the parties
are unable to resolve this issue.
10. Secondly, [the Association] argues that
the award of additional compensation
under N.C. Gen. Stat. § 97-12 constitutes
a “penalty” and that the Guaranty Act
specifically excludes amounts awarded as
punitive or exemplary damages. See, N.C.
Gen. Stat. § 58-48-20(4). However, the
clear language of N.C. Gen. Stat. § 97-12provides that “compensation shall be
increased ten percent (10%)” (emphasis
added). The North Carolina Court of
Appeals has stated that “'[I]f the
language of the statute is clear and is
not ambiguous, we must conclude that the
legislature intended the statute to be
implemented according to the plain
meaning of its terms.'” Morris
Communications Corp. v. City of
Asheville, 145 N.C. App. 597, 605, 551
S.E.2d 508, 514 (2001), citing Hyler v.
GTE Prods. Co., 333 N.C. 258, 262, 425
S.E.2d 698, 701 (1993). Thus, based upon
a clear reading of the statute, the ten
percent additional compensation awarded
pursuant to N.C. Gen. Stat. § 97-12 is
compensation or punitive damages.
Therefore, the additional compensation is
part of a covered claim and must be paid
by [the Association].
It is from this amended opinion and award that the Association
appeals.
The issues presented on appeal are: (I) whether the
Commission erred by failing to consider Branch's insurance policy
with Reliance; and (II) whether the Commission erred by concluding
that the increase in compensation pursuant to N.C. Gen. Stat. § 97-
12 was not a “penalty.” Because we conclude the Commission erred
by failing to consider Branch's insurance policy with Reliance in
making its determination, we reverse the Commission's opinion and
award and remand the case for further proceedings.
On appeal of a decision by the Commission, this Court is
“limited to reviewing whether any competent evidence supports the
Commission's findings of fact and whether the findings of fact
support the Commission's conclusions of law.”
Deese v. Champion
Int'l Corp., 352 N.C. 109, 116, 530 S.E.2d 549, 553 (2000). TheCommission “is not required . . . to find facts as to all credible
evidence. That requirement would place an unreasonable burden on
the Commission. Instead, the Commission must find those facts
which are necessary to support its conclusions of law.”
Peagler v.
Tyson Foods, Inc., 138 N.C. App. 593, 602, 532 S.E.2d 207, 213
(2000). However, the Commission must also “make specific findings
with respect to crucial facts upon which the question of
plaintiff's right to compensation depends.”
Gaines v. Swain & Son,
Inc., 33 N.C. App. 575, 579, 235 S.E.2d 856, 859 (1977). Thus,
“[a]lthough the Industrial Commission is the sole judge of the
credibility and the evidentiary weight to be given to witness
testimony, the Commission's conclusions of law are fully
reviewable.”
Holley v. ACTS, Inc., 357 N.C. 228, 231, 581 S.E.2d
750, 752 (2003) (citations omitted). “When the Commission acts
under a misapprehension of the law, the award must be set aside and
the case remanded for a new determination using the correct legal
standard.”
Ballenger v. ITT Grinnell Industrial Piping,
320 N.C.
155, 158, 357 S.E.2d 683, 685 (1987).
Where an insurer has become insolvent, the Guaranty Act
requires that the Association:
(1) Be obligated to the extent of the
covered
claims existing prior to the
determination of insolvency and arising
within 30 days after the determination of
insolvency, or before the policy
expiration date[.] . . .
In no event
shall the Association be obligated to a
policyholder or claimant in an amount in
excess of the obligation of the insolvent
insurer under the policy from which the
claim arises.
[and]
(2) Be deemed the insurer to the extent of
the Association's obligation on the
covered claims and to such extent shall
have all rights, duties, and obligations
of the insolvent insurer as if the
insurer had not become insolvent.
N.C. Gen. Stat. § 58-48-35(a)(1) and (2) (2003) (emphasis added).
The Guaranty Act defines a “covered claim” in pertinent part
as follows:
“Covered claim” means an unpaid claim,
including one of unearned premiums, which is
in excess of fifty dollars ($50.00) and
arises
out of and is within the coverage and not in
excess of the applicable limits of an
insurance policy . . . .
“Covered claim” shall
not include any amount awarded . . . as
punitive or exemplary damages[.]
N.C. Gen. Stat. § 58-48-20(4) (2003) (emphasis added).
In accordance with the Guaranty Act, this Court has previously
limited the Association's obligations to those benefits the
employee would have recovered as a beneficiary of his employer's
insurance policy. In
Greensboro v. Reserve Ins. Co., 70 N.C. App.
651, 321 S.E.2d 232 (1984), we held that the Association was not
liable for prejudgment interest owed to the plaintiffs. We
recognized that “it is the identity of the Association as a
statutory creation that relieves it from liability for prejudgment
interest.”
Id. at 664, 321 S.E.2d at 240. Thus, we concluded
that, “[a]s the Superior Court of Pennsylvania reasoned in a 1980
case, interpreting statutes similar to North Carolina's, a guaranty
association is not the legal successor of the insolvent insurer;
rather, it is obligated to pay claims only to the extent of covered
claims, which shall not include any amount in excess of the
obligation of the insolvent insurer under the policy from which theclaim arises.”
Id. (citing
Sands v. Pa. Ins. Guaranty Ass'n., 423
A. 2d 1224, 1229 (1980)). Similarly, in
BarclaysAmerican/Leasing,
Inc. v. N.C. Ins. Guaranty Ass'n, 99 N.C. App. 290, 392 S.E.2d 772
(1990),
disc. review denied, 328 N.C. 328, 402 S.E.2d 829 (1991),
we recognized that the plaintiff's claim was excluded by the
underlying insurance policy, and thus neither the insolent insurer
nor the Association was liable for the plaintiff's claim.
Accordingly, we reversed the trial court's decision granting
summary judgment in favor of the plaintiff, and we remanded the
case for entry of summary judgment in favor of the Association
,
whom we noted was not required to assume the obligation of
uncovered claims.
Id. at 294, 392 S.E.2d at 774.
In the instant case, the Association argued in its motion for
reconsideration that the ten percent increase in compensation
awarded by Deputy Commissioner Glenn was “not within the coverage
of the insurance policy issued by Reliance[.]” The insurance
policy between Branch and Reliance (“the policy”) reads in
pertinent part:
PART ONE -- WORKERS' COMPENSATION INSURANCE
. . . .
F. Payments You Must Make
You are responsible for any payments in
excess of the benefits regularly provided
by the workers' compensation law
including those required because:
1. of your serious and willful
misconduct;
. . . .
3. you fail to comply with a
health or safety law orregulation[.]
PART TWO -- EMPLOYER'S LIABILITY INSURANCE
. . . .
C. Exclusions
This insurance does not cover:
. . . .
4. any obligation imposed by a
workers' compensation,
occupational disease,
unemployment compensation or
disability benefits law or any
similar law;
. . . .
11. fines or penalties imposed for
violation of federal or state
law[.]
The Association provided the Commission with a copy of the
policy and argued in support of the terms of the policy when the
case was reconsidered. As detailed above, in the amended opinion
and award, the Commission concluded that the issue of whether
plaintiff's claim was a “covered claim” under the policy was not
“properly before the Commission for determination” because “the
record . . . contains no evidence concerning the contractual
provisions of the insurance policy on which to base findings of
fact and conclusions of law . . . because no evidence was presented
at the Deputy Commissioner hearing.” However, in its next
conclusion of law the Commission nevertheless determined that “the
additional compensation is part of a covered claim and must be paid
by the Association.” We conclude that the Commission erred.
The Commission chose not to determine the issue in the instant
case because Deputy Commissioner Glenn had not determined the issueor received evidence pertaining to it. However, the Commission
cited no authority for its conclusion that, because the Deputy
Commissioner had not considered an issue, it could not in turn
consider the issue. We note that the Worker's Compensation Act
provides that on appeal of a Deputy Commissioner's opinion and
award, the Commission “shall review the award, and, if good ground
be shown therefor, reconsider the evidence, receive further
evidence, rehear the parties or their representatives, and, if
proper, amend the award[.]” N.C. Gen. Stat. § 97-85 (2003).
“Whether good ground is shown is within the sound discretion of the
Commission, and the Commission's determination in that regard will
not be reviewed on appeal absent abuse of discretion.”
Thompson v.
Burlington Industries, 59 N.C. App. 539, 543, 297 S.E.2d 122, 125
(1982),
cert. denied, 307 N.C. 582, 299 S.E.2d 650 (1983).
As detailed above, the Guaranty Act and the cases interpreting
it require that the Commission determine whether an employee's
claim is covered under an insurance policy before holding the
Association liable for an insolvent insurance company's nonpayment
of a claim. However, in the instant case, the Commission refused
to consider the policy proffered by the Association, despite
allowing the Association to join the case as a party, thereby
granting the Association the right to assert its own defenses. We
conclude that the Association's recent entry into the case, coupled
with the Association's argument that it was statutorily prevented
from the obligation claimed by plaintiffs, is “good ground” for the
Commission to reconsider the evidence and receive further evidence
in the case, in the form of the policy between Branch and Reliance. Thus, we also conclude the Commission abused its discretion by
declining to receive the policy as evidence and by failing to take
into account the terms of the policy while reconsidering the case.
Furthermore, as discussed above, in any opinion and award, the
Commission must make those “specific findings with respect to [the]
crucial facts” necessary to determine whether an employee is
entitled to compensation.
Gaines, 33 N.C. App. at 579, 235 S.E.2d
at 859. Accordingly, the Commission's conclusions must be
supported by sufficient findings of fact.
Peagler, 138 N.C. App.
at 602, 532 S.E.2d at 213. In the instant case, the Commission
concluded that the additional compensation was part of a “covered
claim,” despite failing to make any findings of fact regarding the
policy and despite previously concluding that the issue of whether
the additional compensation was part of a “covered claim” was not
properly before the Commission. Therefore, we further conclude
that the Commission's determination is not supported by sufficient
findings of fact.
In light of our conclusions, we hold that the Commission erred
in its amended opinion and award, and, accordingly, we reverse the
amended opinion and award and remand the case for further
proceedings. On remand, the Commission shall receive and consider
the evidence it deems necessary for a proper determination of
plaintiffs' claims consistent with this opinion, including the
insurance policy between Branch and Reliance.
Reversed and remanded.
Judges McGEE and TYSON concur.
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