Opinion
I.C. NOS. 120822 348062.
Filed 20 April 2006.
This matter was reviewed by the Full Commission on May 17, 2005 upon the appeal of defendant from an Opinion and Award filed on December 22, 2004 by former Deputy Commissioner Lorrie L. Dollar who was scheduled to hear this matter in Raleigh October 8, 2004. Prior to the hearing before the deputy commissioner, the parties agreed to submit the dispute for decision by stipulations contained in the Pre-Trial Agreement and the exhibits attached thereto in lieu of presenting arguments on the record.
Plaintiff: Scudder Hedrick, Attorneys, Raleigh, North Carolina; John A. Hedrick, appearing.
Defendant: McNair Law Firm, Attorneys, Charlotte, North Carolina; John Brem Smith, appearing.
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The undersigned have reviewed the prior Opinion and Award based upon the record of the proceedings before former Deputy Commissioner Dollar and the briefs and arguments of the parties. The appealing party has shown good ground to reconsider the evidence. Accordingly the Full Commission reverses the Opinion and Award of the Deputy Commissioner and enters the following Opinion and Award.
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The Full Commission finds as fact and concludes as matters of law the following, which were entered into by the parties in a Pre-Trial Agreement as
STIPULATIONS
1. On March 2, 2001 and February 14, 2003, the parties were subject to and bound by the provisions of the North Carolina Workers' Compensation Act.
2. The employment relationship existed between the parties at the relevant times.
3. The parties settled these claims by a Compromise Settlement Agreement, dated April 22, 2004. The agreement provided in pertinent part that plaintiff was settling his claims in exchange for a lump sum payment of $127,500.00. The agreement further provided defendant would continue paying plaintiff compensation at the rate of $380.45 per week "up to" the date the agreement is approved by the Industrial Commission.
4. By Order filed on May 5, 2004, the Industrial Commission approved the Compromise Settlement Agreement. The Order was transmitted to the parties via facsimile on the same date. Both parties received the Order approving Compromise Settlement Agreement on May 5, 2004.
5. On May 6, 2004, plaintiff's counsel faxed a copy of the Order approving Compromise Settlement Agreement to defendant's counsel, as well as by US Mail. The letter accompanying the Order informed defendant that payment must be made within 24 days to avoid imposition of a late payment penalty pursuant to the Court of Appeals' decision in Carroll v. Living Centers Southeast, 157 N.C. App. 116, 577 S.E.2d 925 (2003).
6. On May 6, 2004, defense counsel prepared a fax to Sandy Douglas of Key Risk with a copy of the Order of Approval, with a courtesy copy to the three separate representatives of PSNC Energy. Neither Sandy Douglas Key Risk, nor the three representatives of PSNC Energy, received the fax. Defense counsel learned of this after receiving notification from plaintiff's counsel that he was contending payments were late.
7. The period of 24 days after May 5, 2004 expired on June 1, 2004.
8. On Friday, May 21, 2004, Scudder Hedrick received a check from Key Risk Management Services in the amount of $380.45, reflecting an attorney fee payment from the ongoing compensation payments. On the same date, plaintiff's counsel learned that plaintiff had continued to receive weekly indemnity payments after the Industrial Commission approved the Compromise Settlement Agreement. By the terms of the Compromise Settlement Agreement the ongoing benefits should have ceased as of May 5, 2004 when the Commission approved the Agreement.
9. On Monday, May 24, 2004, plaintiff's counsel contacted defendant's counsel via electronic mail to inform him that payment pursuant to the Order approving Compromise Settlement Agreement had not been received and that if payment was not received by June 1, 2004, a ten percent late payment penalty would attach. The message was received by defense counsel.
10. On May 24, 2004, defense counsel forwarded a copy of the e-mail message to Sandy Douglas at Key Risk.
11. On May 26, 2004, plaintiff's counsel received a telephone call from Ms. Douglas, requesting a copy of the May 5, 2004 Order approving Compromise Settlement Agreement. On the same day, plaintiff's counsel sent her a copy of the Order along with a copy of the May 6, 2004 letter to defense counsel, which stated in part that payment pursuant to the Order was due within 24 days. This facsimile transmission was received on May 26, 2004.
12. A check was issued on May 27, 2004 to Scudder Hedrick in the amount of $31,875.00, representing attorney fees on the settled lump sum. The check was mailed to Scudder Hedrick on June 1, 2004 and received by Scudder Hedrick on June 2, 2004.
13. A check in the amount of $95,625.00 made payable to Robert Morrison was issued on June 1, 2004. The check was mailed to Scudder Hedrick on June 1, 2004 and received by Scudder Hedrick on June 3, 2004.
14. On June 1, 2004, defendant again issued a check to plaintiff in the amount of $380.45. Following the Industrial Commission's approval of the Compromise Settlement Agreement on May 5, 2004, defendant made 5 payments to plaintiff which totaled $1,902.25. These payments constituted an overpayment.
15. Thereafter, plaintiff filed a Motion for 10% Late Payment Penalty which Executive Secretary Weaver denied by Order filed July 19, 2004.
16. After the Executive Secretary denied plaintiff's motion, plaintiff repaid defendant the total amount of the amount paid to him in error after May 5, 2004 by check dated July 23, 2004.
17. Plaintiff appealed Executive Secretary Weaver's Order by filing a request for hearing on July 23, 2004.
18. The following documentary exhibits, attached hereto, are stipulated into evidence by the parties:
(a) Compromise Settlement Agreement, (b) Order Approving Compromise Settlement, (c) Letter from plaintiff's counsel to defense counsel dated May 6, 2004, (d) Electronic correspondence dated May 24, 2004. (e) Facsimile transmission dated May 26, 2004. (f) Check dated May 27, 2004 to Scudder Hedrick. (g) Envelope post-marked June 1, 2004 addressed to Scudder Hedrick from Key Risk Management Services. (h) Check dated June 1, 2004 to Robert Morrison. (i) Envelope addressed to Robert Morrison post-marked June 1, 2004 from Key Risk Management Services. (j) Check from Robert Morrison to Key Risk Management Services dated July 23, 2004.
19. The issue for determination is whether plaintiff is entitled to payment of a late payment penalty pursuant to N.C. Gen. Stat. § 97-18(g) in the amount of $12,750.00?
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Based upon all of the competent evidence the record, the Full Commission makes the following
FINDINGS OF FACT
1. Key Risk administers the self-funded workers' compensation account for employer PSNC Energy. In this capacity, Key Risk issues the checks for compensation payments. Sandy Douglas was the person responsible for handling these claims for Key Risk.
2. Ms. Douglas was unaware that the Compromised Settlement Agreement had been approved by the Industrial Commission until May 24, 2004 because she had not received the fax prepared by counsel for defendant on May 6, 2004 attaching a copy of the Order of approval.
3. Being unaware that the Compromised Settlement Agreement had been approved, Ms. Douglas mistakenly continued to issue to plaintiff weekly temporary total disability payments, and on May 21, 2004 issued an attorney's fee payment to plaintiff's attorney who was receiving every fourth check. Plaintiff mistakenly continued to receive and accept the temporary total disability payments.
4. Neither plaintiff nor defendant intended for temporary total disability benefits to continue after the date that the Compromised Settlement Agreement was approved by the Industrial Commission, that being May 5, 2004.
5. Plaintiff has acknowledged the mistake made by the parties and repaid the amount received after Executive Secretary Weaver denied the Motion for a Penalty.
6. Under the 24-day period in which to make payment under the Compromise Settlement Agreement, defendant had through June 1, 2004. Defendant placed both checks to plaintiff and plaintiff's attorney in the mail on June 1, 2004, thereby relinquishing control over the funds. By placing the funds in the mail on June 1, 2004, defendant made payment within the 24-day period to make payment pursuant to the Order Approving Compromised Settlement Agreement.
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Based upon the foregoing findings of fact, the Full Commission makes the following:
CONCLUSIONS OF LAW
1. Payment of a compromise settlement award must be tendered within twenty-four (24) days of receiving notice of a compromise settlement agreement to avoid imposition of a late payment penalty. Carroll v. Living Centers Southeast, Inc., 157 N.C. App. 116, 120-121, 577 S.E.2d 925, 929, cert. Denied, 357 N.C. 249, 582 S.E. 2d 29 (2003).
2. The issue before the Commission is at what point is payment made by defendant under N.C. Gen. Stat. § 97-17. Since case law does not clearly answer this question, for the sake of clarity and efficiency, we must determine the most reasonable point in time that is discernable and verifiable. Certainty is crucial to all parties. Defendants need to know they have complied with statutory law, and plaintiffs need to know for certain if they are entitled to the statutory ten percent (10%) penalty, they can directly seek payment from defendant without using the Industrial Commission's resources required when such motions are filed seeking penalties. Time and cost efficiencies are gained by all parties, including the Industrial Commission, and ultimately the taxpayers.
3. The time period must be definite in order for defendant to fulfill other statutory obligations. Under N.C. Gen. Stat. § 97-18(h), defendants are required in cases resolved by Compromise Settlement Agreements to submit a Form 28C to the Commission within sixteen (16) days after final payment is made indicating, among other things, the date on which final compensation has been paid. If defendant fails to file this form within the statutory time period, defendant is assessed a $25.00 penalty by the Commission. In order for defendant to fulfill this statutory obligation, defendant must know the exact date payment is made to both complete the form and determine when the statutory time period to file the form begins.
4. The most clear and determinable time to consider payment made is the time at which defendant mails the check by depositing it with the United State Postal Service or other recognized parcel service. Defendants have control over the point in time in which the check is mailed. The defendants know this date and will have certainty that their obligation has been met. When the check is handed over to the parcel service, the check is no longer in defendant's control. This is a clearly and easily identifiable date the parties can reference to analyze their responsibilities and determine if statutory requirements have been met. Once defendant mails the check, defendant has fulfilled its payment obligation and no longer has control over the funds. Making payment by mail is an accepted and customary practice for insurance carriers. Defendants should not be penalized for a delay in delivery since the actual delivery of the check is not in defendants' control, but that of the postal or other parcel service.
To use the date plaintiff actually receives the check is fraught with problems, Primarily it will require defendant to estimate the number of days it will take for the check to reach the plaintiff after mailing it to assure plaintiff receives the check within the twenty-four (24) day time period. By taking this estimation into consideration, defendant's period of time to make payment is shortened. Not only is this not an easily discernable period of time with any exactitude, but it also runs contrary to an otherwise simple process contemplated under N.C. Gen. Stat. § 97-18(g). Further, using the date plaintiff receives the check to determine when payment is made may cause confusion and create an opportunity for self-interest especially since defendant does not have control over when plaintiff receives the check. Defendant only has control over the point in time when the check is placed in the mail to make payment to plaintiff.
5. Morris v. L.G. DeWitt Trucking, 143 N.C. App 339, 545 S.E.2d 474 (2001) and Felmet v. Duke Power Co., 131 N.C. App 87, 504 S.E.2d 815 (1997) are not dispositive to the issue in the case sub judice and have been misrepresented to say payment is made the date it is received. Nevertheless, they are distinguishable. Both cases held that defendant had thirty-nine (39) days to make payment. The time period to make payment was reduced from thirty-nine (39) to twenty-four (24) days in Carroll v. Living Centers Southeast, Inc. 157N.C. App. 116, 120-121, 577S.E.2d 925, 929, cert. denied, 357 N.C. 249, 582 S.E.2d 29 (2003) which held that because of 2001 amendments to N.C. Gen. Stat. § 97-17, the parties no longer have an automatic right to appeal to the Court of Appeals, and the defendant must make payment within twenty-four (24) days of receipt of the order to avoid a penalty. Neither Morris nor Felmet discuss whether payment is made the date it is mailed or the date it is received.
6. Plaintiff in Morris received payment on the fortieth [now twenty-fifth] day after defendant received the order; however, the thirty-ninth [now twenty-fourth] day fell on a Sunday. The sold issue was the calculation of days within which a defendant must pay a compromise settlement pursuant to N.C. Gen. Stat. § 97-17 before defendant is assessed a penalty under N.C. Gen. Stat. § 97-18(g). Morris at 341, 475. The court references the fact plaintiff received the check within the statutory time period to avoid penalty, but only for the purpose of reciting specific facts and to address the issue of when a statutory deadline falls on a Sunday, defendant has until the following business day to make payment. Morris at 342, 476. Since the check in Morris was not only mailed within the statutory time period, but was also received within the statutory time period, when payment was made was not an issue. If payment was received within the statutory time period, payment was obviously mailed and payment made timely. In the case at bar, payment was made within the statutory time period, though not received by the plaintiff's attorney until one day after and by plaintiff two days after the end of the statutory time period.
7. Plaintiff in Felmet received payment from defendant twenty-seven days after receipt of Order for payment under a compromise settlement agreement. The court concluded "a paying party liable under a compromise settlement has thirty-nine [now twenty-four] days from the date the compromise settlement is approved to tender payment, with liability for non-payment attaching on the fortieth [now twenty-fifth] day." Supra at 91. Since defendant had twelve days remaining to make payment without penalty, the date when defendant made payment by placing the check in the mail was irrelevant to the outcome of the case. There was no issue or holding regarding when payment was made, as there is in this case, because payment was both made and received timely.
8. The date of issuance of the check by defendant is another identifiable point in time on which to determine when payment is made, in which case, the date of issuance could be the same as or earlier than the mailing date. There is Court of Appeals case law that holds by issuing a check within twenty-four (24) days of defendant's receipt of an Order Approving Compromise Settlement Agreement, defendant made payment timely. Sanders v. Brad Farrah Pontiac, No. COA05-77, 2005 WL 3046451 (N.C.App. Nov. 15, 2005)(unpublished). However, Sanders is an unpublished opinion; therefore, it is only persuasive, not controlling authority.
9. Since defendant timely made payment by placing the check in the email on June 1, 2004, in compliance with the Compromised Settlement Award, which was within twenty-four (24) days of the Order Approving Compromised Settlement Agreement, plaintiff is not entitled to a ten percent (10%) penalty under N.C. Gen. Stat. § 97-18(g). Carroll v. Living Centers Southeast, Inc., 157 N.C. App. 116, 120-121, 577 S.E.2d 925, 929, cert. denied, 357 N.C. 249, 582 S.E. 2d (2003). Morris v. L.G. Dewitt Trucking, 143 N.C. App. 339, 545 S.E.2d 474 (2001).
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Based upon the foregoing findings of fact and conclusions of law, the undersigned enters the following
AWARD
1. Plaintiff's claim for a 10% penalty under N.C. Gen. Stat. § 97-18(g) is DENIED.
2. Each party shall bear their on costs.
This the 26th day of October 2005.
S/
DIANNE C. SELLERS
COMMISSIONER
CONCURRING:
S/
LAURA KRANIFELD MAVRETIC
COMMISSIONER
DISSENTING:
S/
THOMAS J. BOLCH
COMMISSIONER
I believe that the majority has erred in finding that plaintiff is not entitled to a 10% penalty against defendants under N.C. Gen. Stat. § 97-18(g) for defendants' failure to make timely payment in accordance with the parties' Compromise Settlement Agreement.
At issue in this case is the application of N.C. Gen. Stat. § 97-18(g), which provides that a plaintiff shall be entitled to a penalty of 10% on any payment not "paid" within fourteen days of becoming due, unless such a penalty is excused by the Commission. The majority has concluded that the defendants' payment to plaintiff in the present case was "paid" when defendant mailed the payment, regardless of when plaintiff actually received it. I believe instead that the payment to plaintiff in the present case was not "paid" under N.C. Gen. Stat. § 97-18(g) until the payment was actually received by plaintiff, which did not happen until after the expiration of the deadline set forth under N.C. Gen. Stat. § 97-18(g).
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Under N.C. Gen. Stat. §§ 98-17 and 97-18(e) and Carroll v. Living Centers Southeast, 157 N.C. App. 116, 577 S.E.2d 925 (2003), the payment owed to a plaintiff in accordance with a settlement agreement becomes due ten days after the defendant's receipt of notice of approval of the agreement by the Commission. Accordingly, a payment is subject to the 10% penalty provided by N.C. Gen. Stat. § 17-18(g) unless the payment is paid within twenty-four days after the defendant's receipt of the notice of approval.
In the present case, both parties have stipulated that they received notice of the Commission's approval of their Compromise Settlement Agreement on the same day that it was filed, to wit: May 5, 2004. The twenty-fourth day after May 5, 2004, was May 29, 2004. Because May 29, 2004, was a Saturday, defendants were entitled under Workers' Comp. Rule 609(8) and Morris v. L.G. Dewitt Trucking, 143 N.C. App. 339, 545 S.E.2d 474 (2001), to an extension of that deadline "until the end of the next day which is not a Saturday, Sunday or a legal holiday." Because May 31, 2004, was Memorial Day, the deadline provided under N.C. Gen. Stat. § 97-18(g) in the present case was June 1, 2004.
The parties have stipulated that defendants placed the payments owed to plaintiff in the mail on June 1, 2004. The parties have further stipulated that the payments were not actually received by plaintiff's counsel until June 2, 2004, and June 3, 2004.
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The majority suggests that the Court of Appeals has provided no guidance concerning when a payment has been "paid" under N.C. Gen. Stat. § 97-18(g). However, while the Court may have never spoken directly to the issue, its cases appear to demonstrate a consistent treatment of payments under N.C. Gen. Stat. § 97-18(g), and I believe that treatment should guide the Commission in the present case.
In Carroll, the Court of Appeals held that the 2001 amendment to N.C. Gen. Stat. § 97-17 had shortened the period of time for payment in accordance with a settlement agreement before a penalty under N.C. Gen. Stat. § 97-18(g) could be imposed to the current twenty-four days, superceding the thirty-nine day period the court had earlier recognized in Felmet v. Duke Power Co., 131 N.C. App. 87, 504 S.E.2d 815 (1998), disc. review denied, 350 N.C. 94, 527 S.E.2d 666 (1999). Of note in regard to the present case, the court in Carroll described the dates that payments were "paid" under N.C. Gen. Stat. § 97-18(g) solely in terms of when they were received by the plaintiff:
On 10 September 2001, a compromise settlement agreement was approved. The agreement provided that defendants would pay plaintiff $90,264.34, and pay $22,500.00 to plaintiff's attorney. On 24 September 2001, plaintiff's counsel received the attorney's fees. On 10 October 2001, plaintiff filed a motion for a late payment penalty on the $90,264.34, which had not been received . Plaintiff received a payment of $90,000.00 on 16 October 2001, leaving only $264.34 unpaid.
Carroll, 157 N.C. at ___, 577 S.E.2d at ___ (emphasis added). See also, Felmet at 88, 504 S.E.2d at ___ ("On 10 March 1997, twenty-seven days after Duke Power's receipt of Deputy Berger's Order, claimant's counsel received payment satisfying the Order's terms.") (emphasis added). Cf. Sanders v. Brad Farrah Pontiac GMC Nissan, No. COA05-77 (N.C.App. Nov. 15, 2005) (unpublished) (quoting the finding of fact of the Full Commission that the defendant "issued" the check within twenty-four days from receipt of the order).
The analysis by the Court of Appeals in Morris provides even stronger support for the conclusion that a payment in accordance with a settlement agreement is not "paid" under N.C. Gen. Stat. § 97-18(g) until it has been received by the plaintiff. In Morris,
Defendant received the order approving the Agreement on 31 December 1997. On Monday, 9 February 1998, 40 days subsequent to Defendant's receipt of the order, Plaintiff's counsel received payment in the amount of $375,000.00 from Defendant
Morris, 143 N.C. App. at 339, 545 S.E.2d at ___ (emphasis added). The court concluded that, because the thirty-ninth day following the defendant's receipt of notice of approval of the settlement agreement was a Sunday, the period of time before a penalty was due under N.C. Gen. Stat. § 97-18(g) should be extended an additional day under Workers' Comp. Rule 609(8), and accordingly that the payment in the instant case had been "paid" in a timely manner under N.C. Gen. Stat. § 97-18(g):
Defendant . . . had thirty-nine days from 31 December 1997 to make the payment required by the Agreement without being assessed a 10% penalty under section 97-18(g). As 8 February 1998, the thirty-ninth day following 31 December 1997, fell on a Sunday, Defendant had until 9 February 1998 to pay Plaintiff without incurring a penalty. . . . Defendant's payment under the Agreement, which was received on 9 February 1998, was, therefore, timely for the purposes of section 97-18(g).
Id. at ___, 545 S.E.2d at ___ (emphasis added). Had the Court of Appeals agreed with the majority in the present case that the defendant's payment was "paid" when it was initially mailed , the court in Morris would surely have disposed of that case simply by noting that the defendant had shipped the payment to the plaintiff overnight by UPS on February 6, 1998, see I.C. No. 326758, a date clearly within the relevant thirty-nine-day time period. The court's decision to focus instead on the date that payment was received demonstrates that the Court of Appeals believed, as I do, that a payment has not been "paid" under N.C. Gen. Stat. § 97-18(g) until it has been actually received by the plaintiff.
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In lieu of relying on the above-described guidance from the Court of Appeals, the majority falls back on the policy of "certainty," and suggests that the date a payment is mailed is more "certain" than the date it is received . However, while both plaintiffs and defendants undoubtedly benefit from certainty regarding whether statutory law has been complied with, I do not believe that a date of receipt is any less certain than a date of mailing. The very mail or delivery service that certifies the date that a payment has been "mailed" by a defendant can likewise certify when it has been "delivered" to the plaintiff, rendering moot any suggestion of fraud or self-interest on behalf of the plaintiff receiving payment.
To the extent that the majority raises a concern that reliance on delivery erodes a defendant's "twenty-four days" to make payment under N.C. Gen. Stat. § 97-18(g), since a defendant must mail the payment before the full twenty-four days has elapsed in order to ensure receipt within the deadline, I respectfully point out that, under N.C. Gen. Stat. § 97-18(e), a defendant is actually allowed only ten days before a payment under a compromise settlement agreement becomes due. The subsequent fourteen days allowed under N.C. Gen. Stat. § 97-18(g) are merely the grace period before a penalty is owed. Because any payment mailed by a defendant on or about its due date under N.C. Gen. Stat. § 97-18(e) should be received by a plaintiff within fourteen days, regardless of the method of delivery, I do not believe a defendant is disadvantaged in any way by the requirement that the payment be received before the expiration of the deadline under N.C. Gen. Stat. § 97-18(g).
To the extent that the majority suggests that a defendant might be penalized under N.C. Gen. Stat. § 97-18(g) through no fault of its own, but instead because of undue delay by the carrier once a payment has been mailed, I respectfully point out that N.C. Gen. Stat. § 97-18(g) provides for that very eventuality, by expressly waiving penalty where the payment was delayed due to "conditions over which [the defendant] had no control."
Finally, the majority suggests that, because N.C. Gen. Stat. § 97-18(h) requires a defendant to file a Form 28C within sixteen days after "final payment of compensation has been made," the defendant can only calculate that deadline accurately if it knows the date that payment has been made, to wit, the date it mailed the payment. However, even supposing that a payment "made" under N.C. Gen. Stat. § 97-18(h) should be interpreted the same way as a payment "paid" under N.C. Gen. Stat. §§ 97-18(e) and (g), nothing under the statute prevents a defendant from determining with certainty the date that the payment has been received by the plaintiff through inquiry to the delivery agent itself. Furthermore, to the extent that a defendant chooses not to inquire as to the precise date of receipt, but instead relies solely on the date of mailing, that defendant can be assured that it will not inadvertently exceed the deadline provided under N.C. Gen. Stat. § 97-18(h), since a payment will never be received before it was mailed.
While I agree with the majority that all parties benefit from certainty regarding their statutory duties and obligations, I do not believe that the date of mailing of a payment is any more certain than the date of its receipt . Because I further believe that the statute provides plenty of flexibility for defendants to avoid incurring a penalty under N.C. Gen. Stat. § 97-18(g) even when the determinative date of payment is its receipt by the plaintiff, I respectfully disagree with the majority's policy-based interpretation of the statute.
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Because plaintiff did not receive payment under the parties' Compromise Settlement Agreement until more than twenty-four days after defendants received notice of the Commission's approval of the agreement, I believe that the majority has erred in finding that plaintiff is not entitled to a 10% penalty against defendants under N.C. Gen. Stat. § 97-18(g). For the reasons set forth above, I respectfully dissent.
This ___ day of April, 2006.
S/
THOMAS J. BOLCH
COMMISSIONER