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All opinions are subject to modification and technical correction prior to official publication in the North Carolina Reports and North Carolina Court of Appeals Reports. In the event of discrepancies between the electronic version of an opinion and the print version appearing in the North Carolina Reports and North Carolina Court of Appeals Reports, the latest print version is to be considered authoritative.
RONALD C. COX, Employee, Plaintiff, v. CITY OF WINSTON-SALEM,
Employer, SELF INSURED, Defendant
Filed: 21 June 2005
1. Workers' Compensation--credit--disability payments--made while claim pending
While an employer who pays benefits while contesting the claim may be entitled to a
credit against the subsequently determined claim, it has not been held that an employer is
necessarily entitled to a credit for payments received by an injured employee pursuant to a
program partially funded by the employee. Here, there was no abuse of discretion in the
Industrial Commission's decision to deny a city a credit for disability payments made to a city
worker from the Local Government Employees' Retirement System (LGERS).
2. Workers' Compensation--disability calculation--longevity payment
There was evidence to support the Industrial Commission's calculation of the average
weekly wage for a disability plaintiff where the calculation included a longevity payment that
plaintiff received in the last year before his injury but which was not guaranteed.
3. Workers' Compensation--appeal--attorney fees--discretion of Commission
The Industrial Commission did not err by denying attorney fees to a workers'
compensation plaintiff where the case had been appealed and remanded. Although N.C.G.S. §
97-88 allows the Commission to order payment of attorney fees to the plaintiff for an insurer's
unsuccessful appeal, the plain language of the statute and the cases decided under it establish
that the decision to award attorney fees is in the discretion of the Commission.
Appeal by plaintiff and defendant from opinion and award filed
5 April 2004 by the North Carolina Industrial Commission. Heard in
the Court of Appeals 9 March 2005.
Robert A. Lauver for plaintiff appellant-appellee.
Wilson & Iseman, L.L.P., by S. Ranchor Harris, III, for
On 31 August 1998, plaintiff Ronald C. Cox fell into an open
manhole and injured his shoulder while working as a wastewater pump
mechanic for defendant City of Winston Salem. This injuryexacerbated problems related to a preexisting tumor in Cox's right
sternoclavicular joint. After his treating physicians advised
plaintiff to remain out of work indefinitely, plaintiff began
drawing long-term disability retirement from the Local Governmental
Employees' Retirement System (LGERS).
In an opinion and award entered 10 September 2001, the North
Carolina Industrial Commission awarded Cox temporary total
disability benefits, granted the City a partial credit for Cox's
LGERS' disability retirement payments, and denied Cox's request for
attorney's fees. Cox filed a motion for reconsideration with
respect to whether the City should receive a credit for the LGERS'
disability payments; the Commission denied this motion. On an
appeal by both parties, this Court affirmed the award of temporary
total disability benefits, but remanded with instructions that the
Commission, inter alia: (1) make findings to clarify how it
determined Cox's average weekly wage for the purpose of determining
his compensation rate; (2) hear additional evidence and determine
whether the City is entitled to a credit for LGERS' disability
payments to Cox in light of new information presented with Cox's
motion for reconsideration, and (3) reconsider whether Cox is
entitled to attorney's fees in light of its conclusion on the
credit issue. Cox v. City of Winston-Salem, 157 N.C. App. 228,
238-39, 578 S.E.2d 669, 677 (2003).
On remand, the Commission received additional testimony
concerning the LGERS' disability fund and entered an opinion and
award on 5 April 2004 in which it adjusted Cox's average weeklywage and provided an explanation of its calculations, denied the
City credit for LGERS' disability retirement payments to Cox, and
again denied Cox's request for attorney's fees. From the 5 April
2004 opinion and award, both parties now appeal.
THE CITY'S APPEAL
 We first address the City's appeal. In its first
argument, the City contends that the competent evidence of record
does not support the denial of a credit for the LGERS' disability
payments made to Cox. We do not agree.
The standard of review for an opinion and award of the North
Carolina Industrial Commission is (1) whether any competent
evidence in the record supports the Commission's findings of fact,
and (2) whether such findings of fact support the Commission's
conclusions of law. Creel v. Town of Dover, 126 N.C. App. 547,
552, 486 S.E.2d 478, 480 (1997). The Commission's findings of fact
are conclusive on appeal if supported by competent evidence,
notwithstanding evidence that might support a contrary finding.
Hobbs v. Clean Control Corp., 154 N.C. App. 433, 435, 571 S.E.2d
860, 862 (2002). This Court reviews the Commission's conclusions
of law de novo. Deseth v. LensCrafters, Inc., 160 N.C. App. 180,
184, 585 S.E.2d 264, 267 (2003).
With respect to the granting of a credit, the Workers'
Compensation Act provides the following guidance:
Payments made by the employer to the injured
employee during the period of his disability,
or to his dependents, which by the terms ofthis Article were not due and payable when
made, may, subject to the approval of the
Commission be deducted from the amount to be
paid as compensation. Provided, that in the
case of disability such deductions shall be
made by shortening the period during which
compensation must be paid, and not by reducing
the amount of the weekly payment. Unless
otherwise provided by the plan, when payments
are made to an injured employee pursuant to an
employer-funded salary continuation,
disability or other income replacement plan,
the deduction shall be calculated from
payments made by the employer in each week
during which compensation was due and payable,
without any carry-forward or carry-back of
credit for amounts paid in excess of the
compensation rate in any given week.
N.C. Gen. Stat. § 97-42 (2003). Pursuant to the statute, [t]he
decision of whether to grant a credit is within the sound
discretion of the Commission. Shockley v. Cairn Studios Ltd., 149
N.C. App. 961, 966, 563 S.E.2d 207, 211 (2002), disc. review
denied, 356 N.C. 678, 577 S.E.2d 888 (2003). Therefore, this Court
will not disturb the Commission's grant or denial of a credit to
the employer on appeal in the absence of an abuse of discretion.
Our Supreme Court has held that, if an employer contests a
worker's compensation claim, but nevertheless pays the employee
wage-replacement benefits which are fully funded by the employer
and are not due and payable to the employee, then the employer
should not be penalized by being denied full credit for the amount
paid as against the amount which [is] subsequently determined to be
due the employee under workers' compensation. Foster v.
Western-Electric Co., 320 N.C. 113, 117, 357 S.E.2d 670, 673(1987); see also Lowe v. BE&K Construction Co., 121 N.C. App. 570,
576, 468 S.E.2d 396, 399 (1996) (holding that the Commission erred
by denying employer a credit where employer contested the claim but
provided the employee with three months of full salary, followed by
partial salary for the remaining time out of work). The failure to
award such a credit constitutes an abuse of discretion by the
Commission. Thomas v. B.F. Goodrich, 144 N.C. App. 312, 319 n.2,
550 S.E.2d 193, 197 n.2, disc. review denied, 354 N.C. 228, 555
S.E.2d 276 (2001). However, neither the Supreme Court nor this
Court has held that an employer is necessarily entitled to a credit
against a worker's compensation award for payments received by an
injured employee pursuant to a benefits program that has been
partially funded by the employee. See Foster, 320 N.C. at 117 n.1,
357 S.E.2d at 673 n.1 (We express no opinion as to whether
payments made to a claimant under a plan to which the claimant
contributed are within the purview of N.C.G.S. § 97-42.); Peagler
v. Tyson Foods, Inc., 138 N.C. App. 593, 605, 532 S.E.2d 207, 214
(2000) (The competent evidence in the record does not indicate
that the employee contributed to this disability plan. Accordingly,
we conclude that the [employer] is entitled to a credit for the
In the instant case, it is undisputed that Cox was required to
contribute six percent of his pay to receive benefits under LGERS.
LGERS is administered in accordance with the North Carolina General
Statutes, which permit a disabled employee with five or more yearsof creditable service to be retired . . . on a disability
retirement allowance. N.C. Gen. Stat. § 128-27(c) (2003).
Upon retirement for disability . . . , a
member [employee] shall receive a service
retirement allowance if he has qualified for
an unreduced service retirement allowance;
otherwise the allowance shall be equal to a
service retirement allowance calculated on the
member's average final compensation prior to
his disability retirement and the creditable
service he would have had had he continued in
service until the earliest date on which he
would have qualified for an unreduced service
N.C. Gen. Stat. § 128-27(d4) (2003). The term retirement
allowance is statutorily defined to include both employer and
employee contributions into the retirement system. N.C. Gen. Stat.
§ 128-21(20), (3), (15) (2003).
The City presented the Commission with deposition testimony
from Clark Case, its financial system and employee accounting
manager. Case testified that he had developed an acid test to
determine whether the City or its employees were paying for LGERS'
disability retirement benefits. For the purpose of this test, Case
considered the impact of no one taking disability retirement.
According to Case, if this happened, employees would still be
required to contribute six percent of their pay to fund their
service retirement, but the City's contribution amount would be
greatly reduced because it would no longer have to pay for
disability. Case further posited that, if all employees took
disability retirement, the employee contribution into the
retirement system would remain six percent of their pay, but theCity's required contribution would be greatly increased. Case also
opined that, because Cox was eligible to request a refund of his
contributions plus four percent interest, he didn't contribute
anything to pay for his disability benefits.
Cox presented the deposition of the Deputy Director of the
State Retirement System, J. Marshall Barnes, III, who testified
the benefits provided by the system, both service
retirement and disability, are funded in part by the
employer and funded in part by the employee. . . . The
employer contributions for . . . all of the employers
participating in the system, and again remember it's a
multi-employer plan or actually lumped into one fund
which is the Pension Accumulation Fund. So all the
employer monies go into the Pension Accumulation Fund.
The employee contributions go into the Annuity Savings
Fund. And we actually keep individual records of the
employee contributions. We do not keep individual
records of the employer contributions. Pensions are paid
out of the Pension Accumulation Fund, whether it be a
disability or service, it's paid from the Pension
Accumulation Fund. When a person retires, the amount of
money their contributions and interest are credited to
their account and the Annuity Savings Fund [comprised of
employee contributions] is actually transferred from that
fund to the Pension Accumulation Fund. Again from which
all pensions are paid.
Thus, Barnes opined that Cox's disability benefits were not
entirely funded by the City.
In its 5 April 2004 opinion and award, the Commission made the
following finding of fact:
[A]fter considering the additional depositions of Mr.
Barnes and Mr. Case, the Full Commission finds that the
disability retirement allowance benefits that were paid
to plaintiff beginning in October 1999 through the Local
Governmental Employees' Retirement System (a defined
benefit plan), were not fully funded by
defendant-employer, as the program is a joint
contributory program whereby the employee is required tocontribute six percent of pay for the benefits as his
The Commission concluded that the City is not entitled to a credit
for benefits paid . . . pursuant to a disability retirement plan to
which the defendant-employer and employee jointly contributed.
Barnes' testimony provides competent record evidence to
support the Commission's finding of fact, and this finding supports
the Commission's conclusion of law. Moreover, on the facts of the
instant case, we discern no abuse of discretion in the Commission's
decision to deny the City a credit for disability retirement
payments made to Cox. This assignment of error is overruled.
 In its second argument on appeal, the City contends that
on remand the Commission erroneously determined Cox's average
weekly wage and, therefore, his weekly compensation. We do not
[W]here the incapacity for work resulting from [a
compensable] injury is total, the employer shall pay or cause to be
paid . . . to the injured employee during such total disability a
weekly compensation equal to sixty-six and two-thirds percent
(66.%) of his average weekly wages . . . . N.C. Gen. Stat. § 97-
29 (2003). The term average weekly wages is defined as
the earnings of the injured employee in the
employment in which he was working at the time
of the injury during the period of 52 weeks
immediately preceding the date of the injury
. . . ; but if the injured employee lost more
than seven consecutive calendar days at one or
more times during such period, although not in
the same week, then the earnings for theremainder of such 52 weeks shall be divided by
the number of weeks remaining after the time
so lost has been deducted.
N.C. Gen. Stat. § 97-2(5) (2003).
In the instant case, it is not disputed that, in the year
immediately preceding his injury, Cox earned $28,295.09 and was
also paid a longevity bonus of $600.29 and an overtime adjustment
for longevity of $57.64. At the hearing before the Commission, the
City contended that the longevity payments were not guaranteed and
could not be considered as part of Cox's wages. The Commission
made the following finding of fact:
[Cox]'s correct average weekly wage is $570.95 and the
compensation rate is $380.65. These figures are
determined by taking plaintiff's total earnings of
$28,295.09, together with the longevity bonus of $600.29
and the overtime adjustment for longevity of $57.64 for
a total of $28,953.02. This total gross earnings amount
is then divided by 50.71 (52 weeks less 1.29 weeks, a
period of lost time exceeding seven consecutive days).
This finding is supported by competent evidence in the record and
must be affirmed. This assignment of error is overruled.
 In his only argument on appeal, Cox contends that the
Commission erred by denying his motion for attorney's fees. We do
Cox's motion for attorney's fees was made pursuant to N.C.
Gen. Stat. § 97-88 (2003), which provides that
[i]f the Industrial Commission at a hearing on
review or any court before which any
proceedings are brought on appeal under this
Article, shall find that such hearing or
proceedings were brought by the insurer and
the Commission or court by its decision ordersthe insurer to make, or to continue payments
of benefits, including compensation for
medical expenses, to the injured employee, the
Commission or court may further order that the
cost to the injured employee of such hearing
or proceedings including therein reasonable
attorney's fee to be determined by the
Commission shall be paid by the insurer as a
part of the bill of costs.
This provision permits the Full Commission or an appellate court
to award fees and costs based on an insurer's unsuccessful appeal.
Rackley v. Coastal Painting
, 153 N.C. App. 469, 475, 570 S.E.2d
121, 125 (2002). It does not require that the appeal be brought
without reasonable ground for plaintiff to be entitled to
attorney's fees. Troutman v. White & Simpson, Inc.
, 121 N.C. App.
48, 53, 464 S.E.2d 481 (1995), disc. review denied
, 343 N.C. 516,
472 S.E.2d 26 (1996). This Court reviews the Commission's ruling
on a motion for attorney's fees for an abuse of discretion. Taylor
v. J.P. Stevens Co
., 307 N.C. 392, 394, 298 S.E.2d 681, 683 (1983).
In the instant case, the Commission's 10 September 2001
opinion and award denied Cox's motion for attorney's fees pursuant
to N.C. Gen. Stat. § 97-88 because the City, which is self-insured,
was successful on appeal with regard to entitlement to a credit
[for disability retirement payments to Cox]. In its 5 April 2004
opinion and award, which was entered on remand from this Court, the
Commission determined that the City is not entitled to a credit and
again concluded that Cox is not entitled to attorney['s] fees
pursuant to N.C. Gen. Stat. § 97-88. Cox argues that the
Commission could not deny his motion for attorney's fees because
the Commission revers[ed] its previous error on the credit issue,and thereby eliminat[ed] its previously expressed ground for the
denial of the motion for attorney's fees. This position is
contrary to the plain language of N.C. Gen. Stat. § 97-88 and the
cases decided under it, all of which establish that the decision to
award attorneys fees is consigned to the discretion
After careful review, we are unpersuaded that the Commission
abused its discretion by denying Cox's motion for attorney's fees.
This assignment of error is overruled.
Judges HUNTER and LEVINSON concur.
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