Workers' Compensation--severance pay--job eliminated--no workers' compensation credit
Defendant was not entitled to a workers' compensation credit for severance payments to
plaintiff when his job was eliminated because those payments were calculated solely by reference
to plaintiff's years of employment, and were paid pursuant to a written severance agreement.
They were an earned benefit of a contractual nature, due and payable when received, and not
compensation for plaintiff's disability. N.C.G.S. § 97-42.
The Sumwalt Law Firm, by Vernon Sumwalt and Mark T. Sumwalt,
for plaintiff-appellant.
Hedrick, Eatman, Gardner & Kincheloe, L.L.P., by Paul C.
Lawrence and Adam E. Whitten, for defendant-appellees.
LEVINSON, Judge.
Plaintiff (Billy Meares) appeals from an Opinion and Award of
the Industrial Commission granting defendant Dana Corporation a
credit for certain payments to plaintiff. We reverse and remand.
The relevant facts are largely undisputed, and are summarized
as follows: Plaintiff was born in 1934, and was 68 years old at the
time of the hearing before the Industrial Commission. He was
employed by defendant for twenty nine years, from 1972 to 2001. In
October 1999 plaintiff suffered an injury to his right knee, which
defendant accepted as compensable by filing an Industrial
Commission Form 60. In January 2000, plaintiff underwentarthroscopic surgery on his right knee. He received disability
compensation from 17 January 2000 through 15 March 2000, the period
of disability associated with his surgery. Plaintiff returned to
work in March 2000, and worked for defendant until March 2001.
After his return to work, plaintiff continued to experience
problems with his right knee; additionally, the injury to his right
knee aggravated a preexisting injury to his left knee.
In February of 2001 plaintiff's supervisor, Ed Nicholson, met
with plaintiff and informed him that plaintiff's job was being
eliminated effective 3 March 2001, and that he would not be offered
a replacement position. Nicholson also gave plaintiff a Severance
Agreement, setting out the details of plaintiff's job termination,
including a statement that “[y]ou have 29 years of service and
according to the schedule above will be entitled to 10 months pay,
beginning 3-1-01, your termination date.”
Plaintiff started receiving severance pay 1 March 2001, when
his position was terminated, and continued to receive severance pay
through 31 December 2001, the official date of his retirement.
On 18 June 2001 plaintiff had knee replacement surgery on his
right knee. Plaintiff became disabled as a result of the surgery
and associated complications, and filed an Industrial Commission
Form 18 seeking disability benefits. Plaintiff and defendant were
unable to agree on plaintiff's compensation, and on 9 September
2002 plaintiff filed an Industrial Commission Form 33 requesting a
hearing. Following a hearing, Industrial Commission Deputy
Commissioner Theresa Stephenson issued an Opinion and Awardconcluding, in pertinent part, that “Defendant is entitled to a
credit for . . . amounts paid to plaintiff pursuant to the
severance package from 18 June 2001 through 31 December 2001.”
Both parties appealed to the Full Commission, which affirmed the
Deputy Commissioner in an Opinion and Award issued 13 July 2004.
Plaintiff appeals from this Opinion.
4. On 1 February 2001 defendant notified
plaintiff his job was eliminated due to
company downsizing. Plaintiff received salary
continuation, which was not offered to allemployees affected by the downsizing. The
reason plaintiff received this continuation
was in appreciation of his years of service to
the company. It was not part of plaintiff's
employment contract. Plaintiff received this
full salary continuation through 31 December
2001. Plaintiff's resignation officially
became effective on 1 January 2002.
. . . .
12. Plaintiff has been disabled since the right
knee replacement surgery performed on 18 June
2001 and [is] unable to work. The full salary
continuation he received from 18 June 2001
through 30 December 2001 was not due and
payable at the time he received it.
. . . .
14. When plaintiff's salary continuation ended on
31 December 2001, defendant reinstated total
disability.
Based on these and other findings of fact, the Commission concluded
in part that:
7. Defendant is entitled to a credit for amounts
paid to plaintiff as a severance package for
the period 18 June 2001 through 31 December
2001. G.S. § 97-42.
Plaintiff argues on appeal that findings Number 4 and 12 are not
supported by competent evidence, that the Commission erred by
finding that plaintiff's severance pay was not due and payable, and
that conclusion of law Number 7 is erroneous. We agree.
“This Court has held that N.C.G.S. § 97-42 [(2003)] is the
only statutory authority for allowing an employer in North Carolina
any credit against workers' compensation payments due an injured
employee.” Effingham, 149 N.C. App. at 119, 561 S.E.2d at 296(citing Johnson v. IBM, 97 N.C. App. 493, 494-95, 389 S.E.2d 121,
122 (1990)). Section 97-42 provides in relevant part that:
Payments made by the employer to the injured
employee during the period of his disability,
. . . which by the terms of this 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.
“Whether the Commission may grant defendant any credit thus
depends on whether defendant's payments to plaintiff . . . were
'due and payable' when made.” Christopher v. Cherry Hosp., 145
N.C. App. 427, 429, 550 S.E.2d 256, 258 (2001). Therefore, we next
consider the correct interpretation of the phrase “due and
payable.” In this regard, we note that “[a]lthough the Commission
purported to find as a fact that defendant's payments to plaintiff
were 'due and payable' when made, that determination was actually
a conclusion of law and we review it as such.” Id.
“Legislative intent controls the meaning of a statute; and in
ascertaining this intent, a court must consider the act as a whole,
weighing the language of the statute, its spirit, and that which
the statute seeks to accomplish. The statute's words should be
given their natural and ordinary meaning unless the context
requires them to be construed differently.” Shelton v. Morehead
Memorial Hospital, 318 N.C. 76, 81-82, 347 S.E.2d 824, 828 (1986)
(citation omitted). And, “'in interpreting the meaning of a
statute, all parts of a single statute will be read and construed
as a whole to carry out the legislative intent.'” Champs
Convenience Stores v. United Chemical Co., 329 N.C. 446, 465, 406S.E.2d 856, 867 (1991) (quoting Martin v. Thornburg, 320 N.C. 533,
547, 359 S.E.2d 472, 480 (1987)).
This Court has held that the general intent of G.S. § 97-42 is
“to encourage voluntary payments by the employer while the worker's
claim is being litigated and he is receiving no wages[.]” Gray v.
Carolina Freight Carriers, 105 N.C. App. 480, 484, 414 S.E.2d 102,
104 (1992). Further, the phrase “due and payable” should not be
analyzed in isolation, but in the context of G.S. § 97-42 overall,
which refers to “[p]ayments made by the employer . . . which by
the terms of this Article were not due and payable when made[.]”
We conclude that the plain meaning of this statutory language
is that the Industrial Commission may credit an employer for
payments that were not due or payable under the terms of the
Workers' Compensation statutes, at the time they were made, thus
restricting credits to payments for workers' compensation benefits
and monies that were not due or payable. See Jenkins v. Piedmont
Aviation Servs., 147 N.C. App. 419, 427, 557 S.E.2d 104, 109
(2001):
Defendant's argument that N.C.G.S. § 97-42
grants the Commission the broad power to award
any and all credits the Commission may desire
is without merit. N.C.G.S. § 97-42
specifically authorizes the Commission to
award credits for payments the employer has
made which at the time of payment had not been
ordered payable by the Commission.
Because the Industrial Commission may credit an employer only
for payments not due or payable “under the terms of [the workers'
compensation statute],” an employer is not automatically entitled
to a credit for any and every payment to a claimant: These provisions are typically limited to
situations where, for example, an employer
pays a disabled employee wages intended as
compensation . . . or where the employer pays
the employee a lump sum in settlement of an
anticipated award[.] . . . In North Carolina,
this [does not] . . . apply to fringe benefits
or to insurance proceeds that are of a
contractual nature rather than proceeds that
are grounded in the workers' compensation law.
Moretz v. Richards & Associates, 316 N.C. 539, 541, 342 S.E.2d 844,
846 (1986) (citation omitted).
This Court has held that disability wage replacement payments
are not due and payable, and may be credited, if an employer denies
the compensability of an employee's injury, but then pays plaintiff
under a disability insurance plan. Foster v. Western-Electric Co.,
320 N.C. 113, 116-17, 357 S.E.2d 670, 673 (1987):
[W]here compensability under the Act is
disputed, it may be some time before the
injured worker begins to receive workers'
compensation benefits. . . . Payment by the
employer under a private disability plan
accomplishes sound policy objectives by
providing immediate financial assistance to
the disabled worker while she is disabled.
Through its plan, defendant affords a
much-needed continuity of income to injured
employees fully consistent with the expressed
policies of workers' compensation.
However, payments are due and payable if made after an
employer admits the compensability of a claim. Moretz, 316 N.C. at
542, 342 S.E.2d at 846 (“Because defendants accepted plaintiff's
injury as compensable, then initiated the payment of benefits,
those payments were due and payable and were not deductible under
the provisions of section 97-42[.]”). Further, N.C.G.S. § 97-42 does not authorize a credit for
payment of “'benefits [that] have nothing to do with the Workers'
Compensation Act and are not analogous to payments under a
disability and sickness plan.'” Christopher, 145 N.C. App. at 430,
550 S.E.2d at 258 (quoting Estes v. N.C. State University, 102 N.C.
App. 52, 59, 401 S.E.2d 384, 388 (1991)). In Christopher, this
Court held that an employer may not receive a credit for a
claimant's vacation pay:
an employee's accumulated vacation and sick
leave could be used by the plaintiff for
purposes other than those served by the
[Workers' Compensation] Act, [and] were not
tantamount to workers' compensation benefits.
. . . [P]ayments for such vacation and sick
leave are 'due and payable' when made because
they have been earned by the employee and are
not solely under the control of the employer.
Id. at 430, 432, 550 S.E.2d at 258, 260.
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