MONA LISA SMYTHE, Employee, Plaintiff, v. WAFFLE HOUSE, Employer,
and OSTEEN ADJUSTING SERVICES, INC., Servicing Agent, Defendants
1. Workers' Compensation--settlement agreement--approval--biographical and vocational
information--fairness
The Industrial Commission may not approve a workers' compensation settlement agreement
without the biographical and vocational information required by statute and without a determination
of the agreement's fairness. This record lacked medical evidence. N.C.G.S. § 97-17 and N.C.G.S.
§ 97-82.
2. Workers' Compensation--settlement agreement--approval--fairness
The issue of whether a workers' compensation settlement should have been set aside for
insufficient information upon which to determine fairness as required by Industrial Commission Rule
502 was properly raised below.
3. Workers' Compensation--settlement agreement--approval--required information
It is impermissible for the Industrial Commission to make a determination regarding the
fairness of a settlement agreement without the information required by Industrial Commission Rule
502(2)(h) where plaintiff had not returned to work for the same or greater wages and she was
unrepresented by counsel when she entered the settlement agreement. Here, there was no mention
of plaintiff's age, education, training, or experience.
4. Workers' Compensation--accord and satisfaction--settlement agreement--not properly
approved
There could be no accord and satisfaction of a workers' compensation claim based on a
settlement which was not properly approved and was therefore not a final agreement.
Appeal by plaintiff from opinion and award entered by the
North Carolina Industrial Commission on 15 May 2003. Heard in the
Court of Appeals 2 November 2004.
Ganly & Ramer, by Thomas F. Ramer, for plaintiff-appellant.
Hedrick, Eatman, Gardner & Kincheloe, L.L.P., by Shelley W.
Coleman, for defendant-appellees.
HUDSON, Judge.
Acting pro se
, plaintiff filed a Form 33 with the Industrial
Commission on 30 October 2001
,
requesting to set aside her
previously approved settlement agreements with defendants, signed
in May and amended in September of 2001. After a hearing at which
plaintiff represented herself, Deputy Commissioner Edward Garner
issued an opinion and award on 24 June 2002 setting aside the
settlement agreements based on findings of misrepresentation.
Defendants appealed to the Full Commission, which reversed the
Commissioner's opinion and award on 15 May 2003. Plaintiff
appeals. For the reasons discussed below, we reverse.
The evidence tends to show that on 26 August 1999, while
employed as a waitress by defendant employer, plaintiff slipped and
fell, sustaining an admittedly compensable injury to her left knee.
She was diagnosed with a left ACL tear and a medial meniscus tear
and began treatment with Dr. Greg Motley, an orthopedic surgeon.
On 22 October 1999, Dr. Motley operated on plaintiff's knee. He
released plaintiff to return to work in January 2000 in a light
duty position.
Dr. Andrew Rudins examined plaintiff on 11 January 2000 and
determined that unless plaintiff had ACL reconstruction, she hadreached maximum medical improvement. Dr. Rudins believed plaintiff
had a permanent partial impairment rating of 29% to her left knee.
Plaintiff continued with treatment while working in a light duty
position, until Dr. Motley performed a second surgery on 19 October
2000. In December of 2000, plaintiff's physicians again
recommended ACL reconstruction and plaintiff agreed. Defendants
had paid for most of plaintiff's medical procedures to this point.
Plaintiff was admitted to the hospital 21 March 2001 for the
recommended ACL surgery which was postponed. The surgery was
rescheduled twice, and ultimately not performed, because of
defendants' refusal to authorize payment. The record before us
contains no evidence that plaintiff returned to any form of wage-
earning activity after 19 October 2000.
Plaintiff was represented by counsel in her workers'
compensation case from March 2000 until April 2001, when she
released her attorney. During this period, plaintiff's attorney
communicated with defendants and the Commission. However, once she
discharged her attorney, plaintiff began contacting defendants
directly and discussing settlement of her claim for specific sums
of money. After several rounds of negotiation, plaintiff agreed to
accept $24,000 to settle her workers' compensation claim. On 15
May 2001, she met with defense counsel at their offices, where she
signed a Release of Employment Claims for $2,000, as well as aseparate workers' compensation settlement (clincher) agreement
for $24,000. Plaintiff signed the Release of Employment Claims
agreement first, and before plaintiff signed the clincher
agreement, a hospital called requesting authorization for
plaintiff's rescheduled knee surgery. Defendant denied this
request. On or about 31 May 2001, Deputy Commissioner Richard B.
Ford issued an order approving the settlement. Defendants then
paid plaintiff pursuant to the agreement and she cashed the $24,000
check.
On 26 September 2001, the attorney who represented plaintiff
in her Social Security Disability claim contacted defendants and
requested that they execute an amended settlement agreement which
included language to address the offset of those benefits due to
the worker's compensation settlement. Counsel for defendants
agreed and the revised, executed agreement was approved by a Deputy
Commissioner on 17 October 2001. Still pro se in her workers'
compensation claim, plaintiff filed her Form 33 on 30 October 2001.
Defendants contend in their brief that the appeal should be
dismissed due to violations of the Rules of Appellate Procedure,
including failure to provide all necessary documents in the Record
on Appeal (Rule 18) and failure to serve unpublished authority
(Rule 30(e)(3)). However, defendants also filed a separate motion
to dismiss, raising the same issues. By order, 14 July 2001, thisCourt denied defendants' motion to dismiss before the case was
assigned to this panel. As we are bound by this ruling, we need
not address these arguments.
[1] Plaintiff argues that the Commission erred by failing to
undertake a full investigation to determine if the settlement
agreement here was fair and just, as required by N.C. Gen. Stat. §§
97-17 and 97-82. We agree.
The Industrial Commission must review all compromise
settlement agreements to make sure they comply with the Workers'
Compensation Act and the Rules of the Industrial Commission, and to
ensure that they are fair and reasonable. Vernon v. Mabe Builders,
336 N.C. 425, 444 S.E.2d 191 (1994); Biddix v. Rex Mills, 237 N.C.
660, 75 S.E.2d 777 (1953). Pursuant to N.C. Gen Stat. § 97-17 (a)
(2000), all workers' compensation settlement agreements must be
filed with and approved by the Commission. This statute also
states that [t]he Commission shall not approve a settlement
agreement . . . unless . . . [it] is deemed by the Commission to be
fair and just. N.C. Gen Stat. § 97-17 (b)(1) (emphasis added).
N.C. Gen Stat. § 97-82 (2000) permits memoranda of agreement,
subject to approval of the Commission, in certain cases and
addresses payment and enforceability of such agreements. The
Courts have applied these requirements to clincher agreements as
well as those entered in ongoing cases, such as those involvingForm 26. See Vernon, 336 N.C. 425 at 433, 444 S.E.2d 191 at 195.
The Commission is the sole judge of the weight and
credibility of the evidence. Deese v. Champion Int'l Corp., 352
N.C. 109, 116, 530 S.E.2d 549, 553 (2000) (citing Adams v. AVX
Corp., 349 N.C. 676, 509 S.E.2d 411 (1998). This Court thus limits
its review to determining whether any competent evidence supports
the Commission's findings of fact and whether these findings
support the Commission's conclusions of law. Id. However, we
review the Commission's legal conclusions de novo. Hilliard, 305
N.C. 593, 595, 290 S.E.2d 682, 684 (1982). [W]hen the findings
are insufficient to determine the rights of the parties, the court
may remand to the Industrial Commission for additional findings.
Id.
Here, the plaintiff does not take issue with any of the
Commission's findings of fact. Indeed, the Commission did not make
any findings of fact regarding the fairness of the agreement or
whether it complied with N.C. Gen Stat. §§ 97-17 and 97-82, or
Industrial Commission Rule 502. Although the Commission found that
there was no evidence of fraud, misrepresentation, undue influence,
or mistake of fact, it did not address whether the agreement was
fair or whether the Commission possessed sufficient information
upon which to base a determination of fairness. By its own terms,
N.C. Gen Stat. § 97-17 (b) is mandatory and the Commission may notapprove a settlement without addressing the fairness of the
agreement. The Supreme Court in Vernon held that:
[T]he statute requires, on the part of the
Commission, a full investigation and a
determination that a Form 26 compensation
agreement is fair and just, in order to assure
that the settlement is in accord with the
intent and purpose of the Act that an injured
employee receive the disability benefits to
which he is entitled, and, particularly, that
an employee qualifying for disability
compensation under both sections 97-29 and -31
have the benefit of the more favorable remedy.
336 N.C at 432-433, 444 S.E.2d at 195. Similarly, in Atkins v.
Kelly Springfield Tire Co., this Court set aside a compensation
agreement approved by the Industrial Commission because it was
submitted to the Commission without complete medical records, as
required per N.C. Gen. Stat. § 97-82 (a) and Rule 501(3). 154 N.C.
App. 512, 571 S.E.2d 865 (2002), disc. review granted, 357 N.C. 61,
579 S.E.2d 284 (2003), disc. review improvidently granted, 358 N.C.
540, 597 S.E.2d 128 (2004). The Court concluded that it was
statutorily impermissible for the Commission to determine that
the agreement was fair and just without a review of the full
medical records. Id. at 514, 571 S.E.2d at 867.
In this record, it appears that plaintiff did not return to
employment after October 2000, and was not working at the time of
the settlement. We are unable to determine, which, if any, medical
records were before the Commission when the agreement was approved,or during the subsequent litigation to set it aside, since no
medical evidence at all appears in the record. As such, we see no
evidence from which the Commission could have determined the
fairness of the agreement. Thus, we hold that the Commission's
conclusion that [t]here is insufficient evidence to justify
setting aside the Compromise Settlement Agreements in this case is
not supported by competent evidence or necessary findings. As in
Atkins, we conclude that it was statutorily impermissible for the
Commission here to approve the settlement agreement without the
required biographical and vocational information, and the
Commission should have set aside its order of approval.
[2] Plaintiff also contends that the Commission erred by not
setting aside the agreement for failure to comply with Industrial
Commission Rule 502(2). Defendant argues that plaintiff failed to
properly raise this issue below and thus that it is not properly
before this Court. However, we conclude that plaintiff's Form 33
and the assertion in her brief to the Full Commission, that the
settlement agreement should be set aside because it does not
contain sufficient information upon which to base a determination
regarding it's [sic] fairness, sufficiently raised the issue
below.
[3] Industrial Commission Rule 502 provides that all
settlement agreements must be submitted to the Commission forapproval and will only be approved if deemed fair and just and in
the best interest of all parties. Rule 502(1). This requirement
is in accordance with N.C. Gen. Stat. § 97-17 and the discussion
above. Rule 502(2)(h) further provides that:
(2) No compromise agreement will be approved
unless it contains the following language or
its equivalent:
. . .
h. Where the employee has not returned to a
job or position at the same or greater
average weekly wage . . . the agreement shall
summarize the employee's age, educational
level, past vocational training, past work
experience, and any impairment . . . which
predates the current injury . . . . This
subsection of the Rule shall not apply where
employee is represented by counsel . . .
Here, the face of the compromise agreement indicates that plaintiff
had not returned to work for the same or greater wages and it is
undisputed that plaintiff was unrepresented when she entered the
agreement in May 2001. Thus, these more specific requirements of
Rule 502(2)(h) apply to the agreement here. However, the
settlement agreement here does not contain any of the information
required under Rule 502(2)(h). It contains no mention of
plaintiff's age, educational level, past vocational training, or
past work experience. As mentioned above, this Court held in
Atkins that it is impermissible for the Commission to determine
that a settlement agreement was fair and just without the medicalrecords required by Rule 503. 154 N.C. App. at 514, 571 S.E.2d at
867. Likewise, we conclude that is impermissible for the
Commission to make a determination regarding the fairness of a
settlement agreement without the information required by Rule 502
(2)(h).
[4] Defendant also asserts that plaintiff's appeal is barred
by the doctrine of accord and satisfaction, as she cashed
defendant's check after signing the settlement agreement.
An 'accord' is an agreement whereby one of the
parties undertakes to give or perform, and the
other to accept, in satisfaction of a claim .
. . arising either from contract or tort,
something other than or different from what he
is, or considered himself entitled to; and a
'satisfaction' is the execution or
performance, of such agreement.
Zanone v. RJR Nabisco, Inc., 120 N.C. App. 768, 772, 463 S.E.2d
584, 587 (1995) (internal citation omitted). However, because we
have concluded that the settlement agreement was not properly
approved by the Commission, as required by the Workers'
Compensation Act, it thus was not a final agreement. We conclude
that there could be no accord and satisfaction of an agreement
which has not been properly finalized. We do not address whether
defendant is entitled to a credit for the amount of the settlement.
Because the Commission lacked information to make a
determination of the agreement's fairness, as required by N.C. GenStat. § 97-17 and Rule 502, we reverse and remand to the Full
Commission to enter an order vacating the approval of the
settlement agreement, and for further proceedings as necessary.
Reversed and remanded.
Judges WYNN and ELMORE concur.
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