Appeal by defendants from Opinion and Award filed 5 May 2004
by the North Carolina Industrial Commission. Heard in the Court of
Appeals 24 March 2005.
Fink & Hayes, P.L.L.C., by Steven B. Hayes, for plaintiff-
appellee.
Morris, York, Williams, Surles & Barringer, L.L.P., by C.
Michelle Sain, for defendants-appellants.
GEER, Judge.
Defendants Hertz Corporation and Cambridge Integrated Services
Group, Inc. appeal from the Industrial Commission's opinion and
award granting plaintiff John Phillips temporary total disability
benefits. Because we hold that the Full Commission's conclusion of
law that Phillips is entitled to temporary total disability
payments dating from his accident on 8 June 2000 is not supported
by sufficient findings of fact, we reverse and remand to the Full
Commission for further findings.
Facts
Phillips became employed with Hertz in December 1999 as a lot
shuttler/coordinator. He was responsible for inspecting all cars
to make sure they were clean, in the correct space, and that the
mileage was correct. He also retrieved and parked cars and filled
cars with gas. Because the car lot was approximately the size of
six football fields, Phillips' job required a significant amount of
walking.
On 8 June 2000, Phillips sustained an admittedly compensable
injury. As he was exiting a car in the Hertz lot, he stepped into
a hole and twisted his right knee. Beginning on 28 June 2000,
Phillips was treated conservatively by First Family Physicians.
When he did not improve, he was referred to Dr. William L. Griffin
at Charlotte Orthopaedic Specialists. Phillips first saw Dr.
Griffin on 10 July 2000 and was diagnosed as suffering
osteoarthritis of the right knee as aggravated by a work-related
injury. Dr. Griffin also treated Phillips conservatively and
released him to return to work with the following restrictions: no
lifting over 10 pounds, sedentary work, and no standing or walking
exceeding 15 minutes per hour.
Following Phillips' visit with Dr. Griffin, Hertz placed him
in a light duty clerical position that was within his restrictions.
In this position, Phillips helped existing office employees with
paperwork, lost and found, and other clerical tasks. The
Commission found that (1) "[t]his modified light duty job was
tailored by the defendant-employer to compensate for plaintiff'sphysical restrictions," and (2) "[t]his job is not a reflection of
plaintiff's wage-earning capacity."
Phillips' knee condition failed to improve. On 25 August
2000, Dr. Griffin recommended arthroscopy in order to obtain a
better idea as to what was leading to Phillips' pain. He estimated
that Phillips might expect a 50% success rate in relieving the pain
for approximately two years. When the defendant-carrier did not
approve the surgery, Dr. Griffin continued Phillips' work
restrictions.
In early October 2000, Hertz placed Phillips in another
modified light duty position: Mobile III driver. In this job,
Phillips drove a shuttle that picked up and dropped off Hertz
employees. Phillips continued in this position through the
termination of his employment by Hertz in September 2001.
At an 11 November 2000 visit, Dr. Griffin again continued
Phillips' work restrictions. From 11 November 2000 until 10 May
2002, defendants did not authorize Phillips to return to Dr.
Griffin for treatment. Phillips, however, sought treatment from
Dr. Taub, another orthopedist, in April 2001, and Dr. Oweida in
September 2001.
On approximately 12 September 2001, Phillips' employment with
Hertz was terminated related to the decrease in business following
the terrorist bombings on 11 September 2001. After 12 September
2001, Phillips did not return to work for Hertz or any other
employer, although he did some free-lance interior design
consulting for which he earned approximately $3,000.00. When Phillips returned to Dr. Griffin on 10 May 2002, he
complained of pain in his right knee, a progressive knock knee
deformity, daily pain, and intermittent swelling of the knee,
especially with activity. An x-ray revealed that bone was rubbing
against bone in Phillips' knee. Dr. Griffin concluded that an
arthroscopy would no longer be of benefit to Phillips, but rather
that he needed a total knee replacement. Dr. Griffin also believed
that Phillips had not reached maximum medical improvement and
retained the same restrictions that he had in November 2001. While
Dr. Griffin anticipated that Phillips would continue in the future
to have restrictions, he felt that following the knee replacement,
the restrictions might be slightly less. Dr. Griffin expressed the
opinion that the necessity for a knee replacement was caused by
Phillips' compensable injury by accident on 8 June 2000.
On 25 October 2001, Phillips filed a Form 33, requesting a
hearing on his claims for payment of medical expenses and
attorneys' fees. Defendants' response stated that "[d]efendants
contend Employee-Plaintiff is not entitled to additional medical
treatment as a result of any workers' compensation injury." The
parties' pre-trial agreement included as additional issues to be
decided: (1) whether Phillips suffered a compensable injury and
(2) the nature of the benefits to which Phillips was entitled.
At the hearing before Deputy Commissioner Wanda Blanche Taylor
on 30 July 2002, defendants acknowledged that Phillips had suffered
a compensable injury on 8 June 2000. The parties then entered into
the following stipulation as described by the Deputy Commissioner:So we have a stipulation that plaintiff
suffered a compensable injury to his right
knee, that medical treatment is, shall we say,
as of today authorized by Dr. Griffin, and
that once he has an appointment with Dr.
Griffin, whatever Dr. Griffin says about
temporary total or whatever, is going to be
treated as compensable as well[.]
The parties also confirmed that the only issues to be resolved in
the hearing were accrued temporary partial disability and temporary
total disability.
On 22 November 2002, prior to a decision being rendered,
Phillips moved to compel payment of temporary total disability and
for sanctions. The motion asserted that Phillips underwent a full
knee replacement on 29 October 2002, but that defendants had,
contrary to the stipulation, refused to pay temporary total
disability following the surgery. The motion sought a 10% penalty
and $500.00 in attorneys' fees. On 13 December 2002, the Deputy
Commissioner entered an order finding that defendants had in bad
faith refused to pay temporary total disability benefits, that
Phillips was entitled to accrued unpaid benefits in the amount of
$1,960.62 for the period 29 October 2002 through 12 December 2002
and continuing, and that Phillips was entitled to receive a 10%
penalty in the amount of $196.06 and attorneys' fees in the amount
of $500.00. The order further directed that defendants
"immediately pay" to Phillips all accrued and unpaid benefits to
date. Defendants forwarded a letter to the Commission dated 23
December 2002 stating that it was a "Notice of Exception" to the 13
December 2002 order. On 26 December 2002, Phillips moved to compel compliance with
the 13 December 2002 order, asserting that as of 26 December 2002,
defendants had failed to make any payments to Phillips. On 13
January 2003, the Deputy Commissioner found that Phillips received
a check for $2,240.10 for temporary total disability compensation
on 31 December 2002, but that defendants had failed to pay the
compensation owed in a timely manner, making the amount subject to
a 10% penalty. The order also provided that "[d]efendants shall
pay plaintiff attorney's fees in the amount of $600.00 for
defendants' unreasonable litigiousness." On 13 January 2003,
defendants submitted a "Notice of Exception" to that order.
On 15 April 2003, the Deputy Commissioner entered an opinion
and award, concluding that Phillips was not entitled to temporary
partial disability benefits from 28 June 2000 through 11 September
2001 because any diminution in his wages was not a compensable
consequence of his compensable injury. With respect to the period
beginning 12 September 2001, the Deputy Commissioner declined to
award temporary total disability benefits because of Phillips'
failure to engage in an active job search. The Deputy Commissioner
denied the claim for sanctions for failure to provide medical
treatment, but ordered defendants to pay all future medical
compensation to the extent it was reasonably designed to provide
relief, lessen the period of disability, or effect a cure.
Phillips filed a notice of appeal to the Full Commission.
On 5 May 2004, the Full Commission entered its opinion and
award modifying the Deputy Commissioner's decision. The FullCommission agreed with the Deputy Commissioner that Phillips' wages
were not decreased from 8 June 2000 through 12 September 2001 and
that any diminution in earnings was due to a lack of overtime and
was not causally related to the compensable right knee injury.
Contrary to the Deputy Commissioner, however, the Full Commission
concluded that "[a]s a result of the 8 June 2000 injury, the
plaintiff remains disabled and is entitled to be paid by the
defendant ongoing total disability . . . from 8 June 2000 and
continuing until further order of the Commission." The Commission
also held that defendants were entitled to a credit for the wages
paid for the modified light-duty positions and for the interior
design work. Defendants have timely appealed from the Full
Commission's opinion and award.
Discussion
As our Supreme Court has held, "appellate review of an award
from the Commission is generally limited to two issues: (1)
whether the findings of fact are supported by competent evidence,
and (2) whether the conclusions of law are justified by the
findings of fact."
Johnson v. Southern Tire Sales & Serv., 358
N.C. 701, 705, 599 S.E.2d 508, 512 (2004). With respect to the
findings of fact, they "are conclusive on appeal when supported by
competent evidence even though evidence exists that would support
a contrary finding."
Id. (internal quotation marks omitted). When
the findings of fact "'are insufficient to determine the rights of
the parties, the court may remand to the Industrial Commission foradditional findings.'"
Id. (quoting
Hilliard v. Apex Cabinet Co.,
305 N.C. 593, 595, 290 S.E.2d 682, 684 (1982)).
I
Defendants first argue that the evidence did not support the
Commission's finding that the light-duty clerical position and the
Mobile III shuttle driver position were "make-work" positions that
did not evidence plaintiff's wage earning capacity.
It is well-established that "the fact that an employee is
capable of performing employment tendered by the employer is not,
as a matter of law, an indication of plaintiff's ability to earn
wages."
Saums v. Raleigh Cmty. Hosp., 346 N.C. 760, 764, 487
S.E.2d 746, 750 (1997). As our Supreme Court first explained in
Peoples v. Cone Mills Corp., 316 N.C. 426, 438, 342 S.E.2d 798, 806
(1986):
If the proffered employment does not
accurately reflect the person's ability to
compete with others for wages, it cannot be
considered evidence of earning capacity.
Proffered employment would not accurately
reflect earning capacity if other employers
would not hire the employee with the
employee's limitations at a comparable wage
level. The same is true if the proffered
employment is so modified because of the
employee's limitations that it is not
ordinarily available in the competitive job
market. The rationale behind the competitive
measure of earning capacity is apparent. If an
employee has no ability to earn wages
competitively, the employee will be left with
no income should the employee's job be
terminated.
The Supreme Court concluded: "The Workers' Compensation Act does
not permit [a defendant] to avoid its duty to pay compensation by
offering an injured employee employment which the employee undernormally prevailing market conditions could find nowhere else and
which [defendant] could terminate at will or . . . for reasons
beyond its control."
Id. at 439, 342 S.E.2d at 806.
In this case, the Full Commission found: "From 28 June 2000
through 12 September 2001, plaintiff worked modified light duty
jobs tailored by the defendant-employer to compensate for
plaintiff's physical restrictions. These jobs are not a reflection
of plaintiff's wage-earning capacity." When Dominique Colombo,
Hertz' manager, was asked about the two jobs, he testified:
"[B]oth jobs were in essence made available to [Phillips], were not
necessarily jobs that were there." He agreed with counsel that the
jobs were "made available" because Phillips had physical
restrictions and that Hertz did not have a need to replace Phillips
after he was laid off. Further, the record contains no evidence
that other employers apart from Hertz would hire plaintiff to
perform the light-duty work.
Our Supreme Court has consistently held that such evidence is
sufficient to support a finding that a position is a "make-work"
job not reflecting a plaintiff's ability to earn wages in the
competitive job market.
See Saums, 346 N.C. at 764, 487 S.E.2d at
750 (holding that a job newly created for the plaintiff's return to
work was not an accurate measure of the plaintiff's ability to earn
wages in the competitive job market when the record contained no
evidence that employers other than the defendant would hire the
plaintiff to do a similar job at a comparable wage);
Peoples, 316
N.C. at 438, 342 S.E.2d at 806 (holding that a position did notaccurately reflect the plaintiff's earning capacity when the
employer modified the job because of the plaintiff's condition, the
employer did not intend to hire anyone to replace the plaintiff in
that position, and the record contained no evidence that other
employers would hire the plaintiff for that position at that wage).
Accordingly, we hold that competent evidence supports the
Commission's finding of fact that the clerical and Mobile III
shuttle driver positions did not establish plaintiff's wage earning
capacity.
II
Defendants next contend that the record lacks "credible and
competent evidence" to support the Full Commission's conclusion
that Phillips is entitled to temporary total disability benefits
beginning 8 June 2000. The determination that an employee is
disabled is a conclusion of law that must be based upon findings of
fact supported by competent evidence.
Hilliard, 305 N.C. at 594-
95, 290 S.E.2d at 683
.
(See footnote 1)
In order to support a conclusion of disability, the Commission
must find:
(1) that plaintiff was incapable after his
injury of earning the same wages he had earned
before his injury in the same employment, (2)
that plaintiff was incapable after his injury
of earning the same wages he had earned beforehis injury in any other employment, and (3)
that this individual's incapacity to earn was
caused by plaintiff's injury.
Id. at 595, 290 S.E.2d at 683. Under this test, "[t]he burden is
on the employee to show that he is unable to earn the same wages he
had earned before the injury, either in the same employment or in
other employment."
Russell v. Lowes Prod. Distrib., 108 N.C. App.
762, 765, 425 S.E.2d 454, 457 (1993).
Plaintiff may meet his burden of proving disability through
one of the following methods:
(1) the production of medical evidence that he
is physically or mentally, as a consequence of
the work related injury, incapable of work in
any employment; (2) the production of evidence
that he is capable of some work, but that he
has, after a reasonable effort on his part,
been unsuccessful in his effort to obtain
employment; (3) the production of evidence
that he is capable of some work but that it
would be futile because of preexisting
conditions, i.e., age, inexperience, lack of
education, to seek other employment; or (4)
the production of evidence that he has
obtained other employment at a wage less than
that earned prior to the injury.
Id. (internal citations omitted).
In this case, there is no dispute that Phillips cannot return
to his pre-injury employment. Defendants have argued instead that
the light duty positions establish that Phillips was not disabled.
As discussed above, the Commission's findings of fact otherwise,
pursuant to
Peoples and
Saums, are supported by competent evidence
and, therefore, are binding on appeal. After, however, finding
that the light duty positions did not accurately reflect Phillips'
wage-earning capacity, the Commission did not make any findings offact regarding Phillips' actual wage earning capacity. As a
result, the opinion and award contains no findings of fact to
support the conclusion that Phillips was totally disabled from the
date of the injury on 8 June 2000 through the termination of his
employment on 12 September 2001.
See Peoples, 316 N.C. at 440, 342
S.E.2d at 807 (holding that although the defendant's offer of
employment was irrelevant, "an issue remains as to whether the
Industrial Commission erred in awarding plaintiff compensation for
total and permanent disability").
With respect to the period following Phillips' termination,
the Full Commission adopted, with only slight modification, the
findings of fact of the Deputy Commissioner:
20. During the period of time following
plaintiff's termination from defendant-
employer he was released to return to work
within his restrictions but admittedly did not
engage in any active job search as he was
"waiting for litigation that was pending to be
resolved." Plaintiff did earn some wages,
which he estimated to be approximately
$3,000.00 for interior design work. Plaintiff
did not engage in further job search other
than his interior design work due to the fact
that his litigation was pending, that he had
limited transportation and that his apartment
was not "bus-friendly."
. . . .
27. Following plaintiff's termination he
was released to return to work and did not
engage in any active job search because it
would not have made sense to do so in his
opinion because he was waiting for the results
of his workers' compensation litigation.
(See footnote 2)
Although the Full Commission then reached the opposite conclusion
from the Deputy Commissioner regarding disability, it made no
additional findings of fact to support its conclusion that Phillips
continued to be totally disabled after the termination of his
employment.
Thus, the sole findings of fact relating to the extent of
Phillips' disability do not establish that Phillips was totally
disabled. Those findings _ not challenged by Phillips on appeal _
also cannot, standing alone, support a conclusion that Phillips was
not totally disabled. Nor do they resolve whether Phillips might
have been partially disabled. The findings do no more than assert
that Phillips failed to engage in an active job search. In
Peoples, our Supreme Court held that the failure to conduct a job
search is not sufficient, without more, to establish a lack of
disability: "In order to prove disability, the employee need not
prove he unsuccessfully sought employment if the employee proves he
is unable to obtain employment." Peoples, 316 N.C. at 444, 342
S.E.2d at 809. Instead, when "an employee's effort to obtain
employment would be futile because of age, inexperience, lack of
education or other preexisting factors, the employee should not be
precluded from compensation for failing to engage in the
meaningless exercise of seeking a job which does not exist." Id.
The Full Commission's opinion and award contains no findings of
fact relating to the issue of futility even though Phillips offeredevidence relating to the futility of a job search prior to his knee
replacement surgery.
The Supreme Court stressed in Johnson the need for specific
findings of fact on the dispositive issues: "While the Commission
is not required to make findings as to each fact presented by the
evidence, it must find those crucial and specific facts upon which
the right to compensation depends so that a reviewing court can
determine on appeal whether an adequate basis exists for the
Commission's award." Johnson, 358 N.C. at 705, 599 S.E.2d at 511.
When the Commission fails to do so, we must "remand to the
Commission for the purpose of making adequate findings of fact."
Id. at 708, 599 S.E.2d at 513. Accordingly, because the Commission
has failed to make the necessary findings of fact regarding the
extent of Phillips' disability from 8 June 2000 through the date of
the hearing before the Deputy Commissioner, we must remand for
further findings of fact both as to the period from 8 June 2000
through 12 September 2001 and the period following the termination
of Phillips' employment on 12 September 2001.
III
Finally, defendants assign error to the Full Commission's
failure to address defendants' exceptions to the Deputy
Commissioner's 13 December 2002 and 13 January 2003 orders
assessing defendants a 10% penalty and awarding Phillips'
attorneys' fees. We hold that defendants did not properly appeal
those orders to the Full Commission and, therefore, decline to
address this assignment of error. Following each of the Deputy Commissioner's orders, defendants
filed a "Notice of Exception" with the Industrial Commission. Upon
receipt, the Commission, in a letter to the parties from the Docket
Director, stated that the "Exception has been noted for the
record." Once the Deputy Commissioner entered her opinion and
award denying Phillips disability compensation, Phillips filed a
notice of appeal and a Form 44 application for review. Defendants,
however, did not file a notice of appeal from the Deputy
Commissioner's orders or file their own Form 44 application for
review regarding the sanctions and attorneys' fees.
N.C. Gen. Stat. § 97-85 (2003) provides for review by the Full
Commission "[i]f application is made to the Commission within 15
days from the date when notice of the award shall have been given."
Defendants' "Notice of Exception" filed prior to the opinion and
award is not a substitute for a notice of appeal to the Full
Commission. An exception is simply a formal objection; it is not
an appeal.
See N.C.R. Civ. P. 46 (discussing objections and
exceptions);
Wilson v. Utah Constr. Co.,
243 N.C. 96, 98, 89 S.E.2d
864, 866 (1955) (distinguishing between a notice of appeal and a
bill of exceptions).
Defendants were obligated to file a separate notice of appeal
if they wished the Full Commission to review the Deputy
Commissioner's orders requiring payment of the 10% penalty and
attorneys' fees. These orders cannot be deemed encompassed by
Phillips' appeal of the Deputy Commissioner's opinion and award
since the orders are irrelevant to any of the issues raised by thatopinion and award. Without a notice of appeal, the Full Commission
had no indication that defendants wished to pursue review of those
orders, especially since defendants also did not file a Form 44
application for review.
The North Carolina Workers' Compensation Rules provide that a
party wishing to appeal a decision of the Deputy Commissioner to
the Full Commission must file a Form 44 "stat[ing] with
particularity" the grounds for the appeal, "including the specific
errors allegedly committed by the Commissioner or Deputy
Commissioner." Workers' Comp. R. of N.C. Indus. Comm'n 701(2),
2005 Ann. R. (N.C.) 943. "Failure to state with particularity the
grounds for appeal shall result in abandonment of such grounds."
Id.
Since defendants filed no notice of appeal and no Form 44
raising the issue of the propriety of the Deputy Commissioner's
orders, the Commission had no notice that the issue was before it
and, therefore, did not err in failing to address the question.
See Joyner v. Rocky Mount Mills, 85 N.C. App. 606, 608, 355 S.E.2d
161, 162 (1987) ("The
record must in some way reflect that the
matter was before the full Commission."). We may not re-examine
that issue now. Defendants' third assignment of error is,
therefore, overruled.
Reversed and remanded.
Judges TIMMONS-GOODSON and CALABRIA concur.
Report per Rule 30(e).
Footnote: 1