Appeal by plaintiff from opinion and award entered 31 October
2007 by the North Carolina Industrial Commission. Heard in the
Court of Appeals 6 October 2008.
Walden & Walden, by Daniel S. Walden, for plaintiff-appellant.
Davis and Hamrick, L.L.P., by Shannon Warf Beach, for
defendants-appellees.
MARTIN, Chief Judge.
This matter is on appeal to the Court of Appeals for the
second time. Defendant-employer Lilly Industries, Inc. and
defendant-carrier Liberty Mutual Insurance Company first appealed
the Commission's 25 April 2002 Opinion and Award, awarding
plaintiff Donnie R. Sprinkle total disability compensation benefits
at the rate of $532 per week and payment of all medical expenses
resulting from plaintiff's injuries sustained in a car accident
while traveling between work sites. The facts of the case are
fully set out in our unpublished opinion and need not be recounted
here. Sprinkle v. Lilly Indus., Inc., 161 N.C. App. 741, 590S.E.2d 23 (2003) (unpublished). This Court affirmed the
Commission's Opinion and Award, rejecting defendants' argument that
plaintiff's injury was not within the course and scope of his
employment.
During the period of defendants' denial of plaintiff's claim,
plaintiff's medical expenses were initially paid through his
employer-provided, third-party health insurance plan, with premiums
partially paid by plaintiff. After plaintiff's discharge from
employment and the expiration of his health insurance coverage
through his employer under COBRA, plaintiff's medical expenses were
paid through his wife's health insurance plan. After the Court of
Appeals' decision, defendants reimbursed plaintiff his out-of-
pocket expenses, and defendants also reimbursed plaintiff's third-
party health insurer the amounts it paid for treatment of
plaintiff's injuries arising from his work-related accident.
Defendants paid interest on portions of the disability award which
were unpaid during the pendency of the appeal.
On 7 December 2005, plaintiff filed a request that his claim
be assigned for hearing, asserting (1) he was entitled to interest
on the award of medical compensation which was unpaid while the
first appeal was pending, pursuant to N.C.G.S. § 97-86.2, and (2)
he should be awarded attorney fees because defendants lacked
reasonable grounds to defend the claim for interest. Plaintiff
also moved to compel defendants to provide verified answers to
plaintiff's interrogatories. Absent complete information regarding
the amount of medical compensation awarded, plaintiff estimatedthat the accrued interest would total nearly $200,000. The
Commissioner who presided over the hearing filed an Opinion and
Award on 10 October 2006 denying plaintiff's motion to compel,
awarding plaintiff interest on out-of-pocket expenditures related
to medical compensation or other amounts of medical costs
personally paid for by plaintiff, and concluding plaintiff was not
entitled to an award of attorney fees. Plaintiff appealed to the
full Commission, a majority of which affirmed the deputy
commissioner's Opinion and Award with minor modifications. The
majority of the Commission specifically denied “plaintiff's request
for interest on medical expenses paid for by his and his wife's
third-party health insurance plans.” One Commissioner dissented.
Plaintiff appeals to this Court.
_________________
N.C.G.S. § 97-86.2 provides for an award of interest to be
made to the employee in situations, such as the present, where the
employer or insurance carrier fails to pay compensation to the
employee during the time when an appeal is pending before the Court
of Appeals. Specifically, the statute states:
In any workers' compensation case in
which an order is issued either granting or
denying an award to the employee and where
there is an appeal resulting in an ultimate
award to the employee, the insurance carrier
or employer shall pay interest on the final
award or unpaid portion thereof from the date
of the initial hearing on the claim, until
paid . . . .
N.C. Gen. Stat. § 97-86.2 (2007). Plaintiff argues that the plain
language of the statute necessitates that “final award or unpaidportion thereof” includes all amounts of medical compensation
awarded, including amounts reimbursable to a third-party health
insurer, citing
Childress v. Trion, Inc., 125 N.C. App. 588, 591,
481 S.E.2d 697, 699,
disc. review denied, 346 N.C. 276, 487 S.E.2d
541 (1997), which holds “any award of medical compensation for the
plaintiff's benefit is covered by G.S. 97-86.2.” Plaintiff asserts
that the Commission erred in its conclusions of law that such an
interpretation of the statute “would be far removed from the goals
of the Workers' Compensation Act” and that
Childress is
distinguishable from the present case. Accordingly, plaintiff
contends that the Commission erred in awarding interest only on
“plaintiff's out-of-pocket expenditures related to his medical
compensation and on such other medical costs as have been
personally paid for by plaintiff” and in denying “plaintiff's
request for interest on medical expenses paid for by his and his
wife's third-party health insurance plans.”
“The Commission's conclusions of law are reviewed
de novo.”
McRae v. Toastmaster, Inc., 358 N.C. 488, 496, 597 S.E.2d 695, 701
(2004). Our interpretation of N.C.G.S. § 97-86.2 is guided by the
following principles. “Generally, if the language of the statute
is clear and not ambiguous, we must conclude that the General
Assembly intended the statute to be implemented according to the
plain meaning of its terms.”
Childress, 125 N.C. App. at 591, 481
S.E.2d at 699 (citing
Hyler v. GTE Products, 333 N.C. 258, 262, 425
S.E.2d 698, 701 (1993)). However, “where a literal interpretation
of the language of a statute will lead to absurd results, orcontravene the manifest purpose of the Legislature, as otherwise
expressed, the reason and purpose of the law shall control and the
strict letter thereof shall be disregarded.”
Mazda Motors of Am.,
Inc. v. Sw. Motors, Inc., 296 N.C. 357, 361, 250 S.E.2d 250, 253
(1979) (internal quotation marks omitted). Although the Workers'
Compensation Act “should be liberally construed to effectuate its
purpose to provide compensation for injured employees or their
dependants, and its benefits should not be denied by a technical,
narrow, and strict construction,”
Hollman v. City of Raleigh,
Public Utils. Dep't, 273 N.C. 240, 252, 159 S.E.2d 874, 882 (1968),
the appellate courts' “primary task in statutory construction is to
ensure that the legislative intent is accomplished.”
Radzisz v.
Harley Davidson of Metrolina, Inc., 346 N.C. 84, 88, 484 S.E.2d
566, 569 (1997). We agree with the majority of the Commission that
a literal interpretation of the language of N.C.G.S. § 97-86.2
would contravene the legislative purpose and intent behind its
enactment.
This Court has previously noted:
[T]he goals of awarding interest include the
following: “(a) [T]o compensate a plaintiff
for loss of the use value of a damage award or
compensation for delay in payment; (b) to
prevent unjust enrichment to a defendant for
the use value of the money, and (c) to promote
settlement.”
Childress, 125 N.C. App. at 592, 481 S.E.2d at 699 (quoting
Powe v.
Odell, 312 N.C. 410, 413, 322 S.E.2d 762, 764 (1984)). The first
purpose listed seeks to provide compensation to an employee where
that employee has suffered some loss or disadvantage by theemployer or carrier's failure to pay the award. In the case before
us, plaintiff paid some of his medical expenses out-of-pocket but
was indemnified by his health insurer for the majority of his
medical expenses.
See N.C. Gen. Stat. § 58-1-10 (2007) (“A
contract of insurance is an agreement by which the insurer is bound
to pay money or its equivalent or to do some act of value to the
insured upon, and as an
indemnity or reimbursement for the
destruction, loss, or injury of something in which the other party
has an interest.” (emphasis added)). Upon an award to an employee
for medical compensation, the Workers' Compensation Act provides
that the health insurer “may seek reimbursement from the employee,
employer, or carrier that is liable or responsible for the specific
medical charge according to a final adjudication of the claim.”
N.C. Gen. Stat. § 97-90.1 (2007). By contrast, the third-party
health insurer may not reap the benefit of any award of interest
under the statute, which specifically provides that interest may be
paid only to the employee. N.C. Gen. Stat. § 97-86.2 (“If interest
is paid it shall not be a part of, or in any way increase
attorneys' fees, but shall be paid in full to the claimant.”). The
issue before this Court concerns only whether the calculation of
interest on an unpaid award should include
amounts of the award
which were reimbursed to the third-party health insurer. The
parties do not dispute that interest should be calculated for the
amounts of medical compensation reimbursed to plaintiff for his
out-of-pocket expenses. The compensatory element of the first purpose of awarding
interest compels us to consider whether plaintiff in this case
suffered loss or disadvantage by defendants' failure to pay the
award of medical compensation while the appeal was pending before
the Court of Appeals. Because plaintiff had a health insurance
policy, which contractually shifted the risk of loss from plaintiff
to the health insurer,
see N.C. Gen. Stat. § 58-1-10, plaintiff did
not experience a loss of use of his money nor was he disadvantaged
by an inability to pay for care. Accordingly, in this case the
goal of compensating plaintiff for his loss or disadvantage is not
met by awarding interest on amounts of medical compensation for
which plaintiff was indemnified under his health insurance policy.
Absent a compensatory purpose, the remaining purposes of
awarding interest serve only to penalize the employer and the
carrier for benefitting from the use value of the money and for
electing not to settle the claim. However, to construe N.C.G.S. §
97-86.2 as a penalty is at odds with the general purpose of the
Workers' Compensation Act. Our Courts have consistently recognized
“[t]he purpose of the North Carolina Workers' Compensation Act is
not only to provide a swift and certain remedy to an injured
worker, but also to ensure a limited and determinate liability for
employers.”
Radzisz, 346 N.C. at 89, 484 S.E.2d at 569. Contrary
to this purpose, to construe N.C.G.S. § 97-86.2 as a penalty would
create an incentive for employers or carriers to pay the award
before the appeal has been decided, which would provide a remedy to
the
third-party health insurer rather than the
injured worker. Furthermore, rather than limiting employers' liability, it would
increase their liability by an indefinite amount, which could be
quite substantial as evidenced by the present case. We conclude
that to construe N.C.G.S. § 97-86.2 as creating a penalty without
a countervailing compensatory goal ignores the overall purpose of
the Workers' Compensation Act.
Viewed another way, the award of interest to an employee on
amounts of medical costs for which he was indemnified by a third-
party health insurer, where it fails to compensate the employee for
a loss or disadvantage, creates a windfall for the employee. Our
Courts have repeatedly disfavored construction of the Workers'
Compensation Act as creating a windfall.
See Radzisz, 346 N.C. at
89, 484 S.E.2d at 569 (“[T]he [Workers' Compensation] Act in
general and N.C.G.S. § 97-10.2 specifically were never intended to
provide the employee with a windfall of a recovery from both the
employer and the third-party tort-feasor.”);
Pearson v. C.P.
Buckner Steel Erection Co., 348 N.C. 239, 246, 498 S.E.2d 818, 822
(1998) (“To construe federal Medicaid statutes and regulations as
preempting the state workers' compensation law under these
circumstances would permit employers and carriers to reap a
financial windfall in savings on medical expenses by denying
liability for workplace injuries. This result would clearly
undermine a central purpose of the Act, which is to provide 'swift
and sure' compensation without protracted litigation.”);
Hendrix v.
Linn-Corriher Corp., 317 N.C. 179, 189-91, 345 S.E.2d 374, 381-82
(1986) (reversing an award of compensation that resulted in awindfall to plaintiff);
Conyers v. New Hanover County Sch., ___
N.C. App. ___, ___, 654 S.E.2d 745, 750, 751 (2008) (avoiding a
result that “is not fair and just[,] as Defendant would be unduly
burdened while Plaintiff would receive a windfall” and concluding
a windfall for plaintiff would be “contrary to statutory intent”).
But see Helsius v. Robertson, 174 N.C. App. 507, 516, 621 S.E.2d
263, 269 (2005) (“We recognize that the Workers' Compensation Act
creates a system in which an employee may receive a 'windfall,'
however the trial court has made specific findings of fact showing
that this did not occur in the instant case.”),
appeal dismissed
and disc. review denied, 360 N.C. 363, 629 S.E.2d 851 (2006).
In
Childress, this Court addressed the potential for a
windfall to plaintiff under N.C.G.S. § 97-86.2. The issue before
this Court was “whether the Industrial Commission erred in
requiring defendants to pay interest on plaintiff's outstanding
medical expenses.”
Childress, 125 N.C. App. at 590, 481 S.E.2d at
698. Defendants in
Childress argued that an award of interest on
any portion of medical expenses would result in a windfall for
plaintiff.
Id. at 591, 481 S.E.2d at 699. In response to this
contention, the Court wrote:
[W]e note that in contested cases, workers'
compensation plaintiffs incur the liability
for all medical expenses if they lose; that
plaintiffs often pay significant out-of-pocket
medical expenses for prescription drugs,
travel, deductibles, or actual payment of
medical expenses when there is no other way
plaintiffs can obtain treatment; and that
because the factual scenarios in determining
whether plaintiffs in workers' compensation
cases have incurred out-of-pocket expenses are
so numerous, the only reasonable constructionis that any award of medical compensation for
the plaintiff's benefit is covered by G.S.
97-86.2.
Id. By this language, the Court recognized a compensatory element
to the award of interest on outstanding medical expenses. Noting
the disadvantages and losses that an employee suffers while waiting
for a disposition of the claim, the Court specifically acknowledged
that “any award of medical compensation
for the plaintiff's
benefit” included interest.
Id. (emphasis added). However, as
noted above, interest awards on amounts reimbursed to a third-party
health insurer are not for plaintiff's benefit.
For the foregoing reasons, we conclude that the legislative
purpose and intent in enacting N.C.G.S. § 97-86.2 was not to create
a penalty to employers and carriers nor a windfall for the
employee; therefore, the language “final award or unpaid portion
thereof,” N.C. Gen. Stat. § 97-86.2, must not include amounts of
medical compensation for which plaintiff was indemnified by his
health insurer and which were reimbursable to the third-party
health insurer.
Plaintiff assigns error also to the Commission's findings of
fact, asserting that no competent evidence supported the
Commission's finding that there were no outstanding medical
expenses. “The findings of fact by the Industrial Commission are
conclusive on appeal if supported by any competent evidence.”
Gallimore v. Marilyn's Shoes, 292 N.C. 399, 402, 233 S.E.2d 529,
531 (1977). At the hearing, plaintiff testified that, to his
knowledge, he did not have any outstanding medical bills, and noother evidence was presented of any outstanding medical bills.
Plaintiff argues his testimony was insufficient to establish
whether there were any outstanding bills mailed to either his
third-party health insurer or to defendant-carrier. In light of
our holding in this opinion, the only outstanding medical expenses
the Commission needed to consider were those plaintiff was
responsible for paying. Plaintiff's testimony that he did not have
any outstanding medical bills was competent evidence to support the
Commission's findings of fact.
We also conclude that the Commission did not err in denying
plaintiff's motion to compel discovery because plaintiff sought to
discover amounts of medical compensation paid by defendant-carrier
to plaintiff's third-party health insurer. Because plaintiff is
not entitled to interest on those amounts, for the reasons stated
above, the information was not relevant and the motion was properly
denied.
Lastly, plaintiff argues that the Commission abused its
discretion in failing to award attorney fees to plaintiff. The
award of attorney fees is within the Commission's discretion, as
provided in the Workers' Compensation Act: “If the Industrial
Commission shall determine that any hearing has been brought,
prosecuted, or defended without reasonable ground, it may assess
the whole cost of the proceedings including reasonable fees for
defendant's attorney or plaintiff's attorney upon the party who has
brought or defended them.” N.C. Gen. Stat. § 97-88.1 (2007);
see
also Taylor v. J.P. Stevens Co., 307 N.C. 392, 398, 298 S.E.2d 681,685 (1983) (“G.S. 97-88.1 places the award of attorneys' fees in
the discretion of the Commission . . . .”). “[T]he Commission's
determination [of matters within its sound discretion] will not be
reviewed on appeal absent a showing of manifest abuse of
discretion.”
Lynch v. M.B. Kahn Constr. Co., 41 N.C. App. 127,
131, 254 S.E.2d 236, 238 (1979). Plaintiff has not shown a
manifest abuse of discretion; therefore, we overrule this
assignment of error.
Affirmed.
Judges McGEE and STEPHENS concur.
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