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Reed v. Holdings

Court of Appeals of North Carolina

February 7, 2017

CHRISTOPHER S. REED, Employee, Plaintiff,
v.
CAROLINA HOLDINGS, WOLSELEY MANAGEMENT, Employer, ACE USA/ESIS, Carrier, Defendants.

          Heard in the Court of Appeals 7 June 2016.

         Appeal by Defendants from an Opinion and Award entered 17 April 2015 by the Full North Carolina Industrial Commission I.C. No. 845311

          Lennon, Camak & Bertics, PLLC, by George W. Lennon and Michael W. Bertics, for Plaintiff-Appellee.

          Hedrick Gardner Kincheloe & Garofalo, LLP, by Paul C. Lawrence and M. Duane Jones, for Defendant-Appellants.

          INMAN, Judge.

         A defendant may not argue on appeal that the North Carolina Industrial Commission lacks the authority to award fees for attorneys to be paid out of an award of medical compensation without preserving the issue before the Commission. An award of attendant care compensation will be upheld where the Commission's findings of fact are supported by competent evidence and the findings of fact support the Commission's conclusion of law that the attendant care services are reasonable and necessary.

         Carolina Holdings, Wolseley Management, and ACE USA/ESIS ("Defendants") appeal from an Opinion and Award of the Full Commission of the North Carolina Industrial Commission (the "Commission"), wherein the Commission awarded retroactive and ongoing medical compensation for attendant care services for Christopher S. Reed ("Mr. Reed" or "Plaintiff"), and twenty-five percent of the retroactive medical compensation to be paid to Mr. Reed's attorney as an attorney's fee.

         Defendants contend the Commission erred in awarding attendant care services and exceeded its authority in granting an attorney's fee award to be deducted from the retroactive award of attendant care. Mr. Reed filed a motion to dismiss Defendants' appeal for failure to properly preserve their challenge to the attorney's fee award below. After careful review, we affirm the Commission's award of attendant care services and grant Mr. Reed's motion to dismiss Defendant's appeal as to the award of attorney's fees.

         Factual and Procedural History

         Mr. Reed began working with Defendants on 20 May 1998. On 26 June 1998, Mr. Reed sustained a traumatic brain injury along with injuries to his shoulder, back, and other body parts when a stack of building supplies collapsed on top of him. Defendants accepted liability for Mr. Reed's injuries and provided compensation for Mr. Reed's lost income and medical treatment resulting from the injury. Psychological and psychiatric evaluations over the next decade indicated that Mr. Reed's cognitive and emotional condition continued to deteriorate and that Mr. Reed was not reliably taking prescribed medication. In 2010, a forensic psychiatrist diagnosed Mr. Reed with a cognitive disorder, obsessive compulsive disorder, and a mood disorder.

         On 18 March 2011, Mr. Reed filed a Form 33 requesting that the Commission hear his claim for attendant care compensation. Following a hearing, Deputy Commissioner George R. Hall, III entered an Opinion and Award requiring Defendants to pay Mr. Reed's mother ("Mrs. Reed") ten dollars per hour for twenty-four hours per day, seven days per week from 27 June 1998 through the date of the Opinion and Award and continuing, and allowing Mr. Reed's counsel to deduct twenty-five percent of the back due attendant care owed from the award as a reasonable attorney's fee. The Deputy Commissioner denied Mr. Reed's counsel's request to deduct twenty-five percent of the compensation for future attendant care as an attorney's fee.

         Defendants appealed the award to the Full North Carolina Industrial Commission pursuant to N.C. Gen. Stat. § 97-85 and Rule 701 of the North Carolina Industrial Commission. Mr. Reed appealed to the Full Commission pursuant to N.C. Gen Stat. § 97-90(c) that portion of the award denying the claim for attorney's fee to be deducted from future medical compensation.

         On appeal from the Deputy Commissioner's decision, the Commission received additional evidence with respect to Mr. Reed's attendant care claim. Defendants offered surveillance evidence conducted from July 2012 through November 2012 in support of their contention that Mr. Reed does not require attendant care. This evidence included testimony by three private investigators regarding Mr. Reed's ability to perform daily activities, his physical limitations, and his regular residence. Mr. Reed introduced additional deposition testimony by himself, his mother, his friend Jessica Lloyd, and two of his doctors.

         After reviewing the additional evidence, the Commission entered its Opinion and Award on 17 April 2015. The Commission made extensive findings of fact and conclusions of law and issued the following award:

1. Plaintiff's request for compensation for attendant care services provided to him from March 18, 2007 to March 17, 2011 is DENIED. Plaintiff's request for attendant care services provided to him beginning March 18, 2011 to the present and continuing is GRANTED. From March 18, 2011, through the present and continuing, Defendants shall pay Plaintiff's mother, Mrs. Reed, for 8 hours per day, 7 days per week of attendant care services she has provided and continues to provide to Plaintiff at a reasonable rate agreed upon by the parties. The amounts awarded are subject to the attorneys' fee set forth below.
2. As a reasonable attorney's fee, Plaintiff's counsel is entitled to be paid 25% of all accrued retroactive attendant care compensation herein. Defendants shall deduct 25% from the accrued amount and pay it directly to Plaintiffs counsel as a reasonable attorney's fee. Plaintiffs counsel request for 25% of future attendant care payments is DENIED. However, Plaintiffs counsel may seek additional compensation if future attendant care issues arise.

         Following the Commission's Opinion and Award, the parties respectively filed a series of pleadings in three forums:

• On 30 April 2015, Mr. Reed filed with the Wake County Superior Court a notice of appeal from the Opinion and Award pursuant N.C. Gen. Stat. § 97-90(c) regarding the Commission's denial of his request for attorney's fees to be deducted from future attendant care compensation.
• On 5 May 2015, Defendants filed with the Commission a Motion for Reconsideration arguing-apparently for the first time-that the Commission had erred in awarding any attorney's fees from medical compensation awarded to Mr. Reed. The Motion cited the same legal authorities that would later be raised in Defendants' appeal to this Court. The record does not reflect that Defendants raised this issue or presented these legal arguments previously before either Deputy Commissioner Hall or the Commission.[1]
• On 13 May 2015, Defendants filed with this Court a notice of appeal from the Commission's Opinion and Award.
• Two days later, on 15 May 2015, Defendants filed with the Wake County Superior Court a pleading captioned "Defendants' Response to Plaintiffs Notice of Appeal of Award of Attorney's Fees, " asserting the same argument Defendants presented to the Commission in their Motion for Reconsideration. Defendants asked the Wake County Superior Court to reverse the Commission's award of attorney's fees to Mr. Reed "or at the very least allow for this matter to be decided by the Full Commission" based on Defendants' then pending Motion for Reconsideration.[2]
• On 2 June 2015, the Commission filed an Order concluding that Defendants' appeal to the Wake County Superior Court deprived the Commission of jurisdiction to reconsider its Opinion and Award.
• On 10 June 2015, Defendants filed a Motion to Intervene in the Wake County Superior Court proceeding initiated by Mr. Reed.
• On 23 June 2015, the Superior Court entered an order allowing Defendants to intervene in that proceeding, but holding the case in abeyance pending the outcome of Defendants' appeal to this Court.

          On appeal before this Court, Defendants challenge the Commission's findings of fact related to Mr. Reed's ability to function independently, his need for around the clock monitoring, the medical necessity of his attendant care services, and the weight given to Defendants' surveillance evidence. Defendants also challenge the Commission's authority to award attorney's fees pursuant N.C. Gen. Stat. § 97-90(c) to be deducted from an award of attendant care compensation. Mr. Reed has filed a motion to dismiss Defendants' appeal as to the issue of attorney's fees.

         Plaintiff's Motion to Dismiss Defendants' Appeal

         Mr. Reed's motion to dismiss asserts (1) that Defendants lack standing to challenge an award of attorney's fees; (2) that our Court lacks subject matter jurisdiction regarding attorney's fees because the Superior Court has exclusive jurisdiction regarding such fees; and (3) that our Court lacks subject matter jurisdiction because Defendants failed to preserve their argument regarding the Commission's authority to grant attorney's fee awards from medical compensation. After careful review, we agree that Defendants failed to preserve their argument regarding the Commission's authority to award attorney's fees to be deducted from attendant care compensation. We therefore dismiss Defendants' appeal with respect to that issue.

         Rule 701 of the North Carolina Industrial Commission states:

(2) After receipt of notice of appeal, the Industrial Commission will supply to the appellant a Form 44 Application for Review upon which appellant must state the grounds for appeal. The grounds must be stated with particularity, including the specific errors allegedly committed by the Commissioner or Deputy Commissioner and, when applicable, the pages in the transcript on which the alleged errors are recorded.
(3) Particular grounds for appeal not set forth in the application for review shall be deemed abandoned, and argument thereon shall not be heard before the Full Commission.

Workers' Comp. R. of N.C. Indus. Comm'n 701, 2011 Ann. R. ( N.C. ) 1070-71. It is well established that "the portion of Rule 701 requiring appellant to state with particularity the grounds for appeal may not be waived by the Full Commission." Roberts v. Wal-Mart, Inc., 173 N.C.App. 740, 744, 619 S.E.2d 907, 910 (2005). "[T]he penalty for non-compliance with the particularity requirement is waiver of the grounds, and where no grounds are stated, the appeal is abandoned." Wade v. Carolina Brush Mfg. Co., 187 N.C.App. 245, 249, 652 S.E.2d 713, 715-16 (2007) (citations omitted). Applying established precedent to the record in this case, we conclude that although Defendants preserved their objection to the award of attorney's fees as a derivative of their objection to the award of attendant care compensation, Defendants failed to preserve a challenge to the Commission's authority to award attorney's fees deducted from such compensation. There is no indication in the record that this issue was raised at all before the Commission prior to the Opinion and Award from which this appeal arises. Defendants pleaded only a generalized assignment of error regarding the attorney's fee award. There is no indication in the record that Defendants stated in any form or fashion the basis of their objection to the award of attorney's fees with sufficient particularity to give Mr. Reed or the Commission notice of a legal issue to be addressed on appeal from the Deputy Commissioner's decision.

         Defendants argue they preserved the issue of attorney's fees on appeal to the Full Commission because the fifteenth-and last-assignment of error in their Form 44 referred to the Deputy Commissioner's award of attorney's fees. Assignment of Error 15 stated:

For all the reasons stated above, Award #2 is contrary to law, is not supported by the findings of fact and is contrary to the competent and credible evidence of record.

         Although neither the word "attorney" nor the word "fee" is mentioned in the assignment of error, Paragraph No. 2 under the heading "Award" in the Deputy Commissioner's Opinion and Award provides for the award of attorney's fees. Therefore, the fifteenth assignment of error could be said to identify the attorney's fee award in general. As for the basis of the objection, however, the assignment simply states it is "[f]or all the reasons stated above . . . ." The reasons stated above, i.e., assignments of error 1 through 14, challenge factual findings and conclusions of law related to whether Mr. Reed requires attendant care and whether Mr. Reed and his mother are entitled to reimbursement for attendant care services. So Defendants' objection to the award of attorney's fees appears to be based solely on their objections to the award of attendant care compensation. None of the prior assignments challenge the Commission's authority to award attorney's fees to be deducted from attendant care compensation.

         The fifteenth assignment of error is similar to the assignment of error that this Court found insufficient to preserve a challenge to a deputy commissioner's award of attorney's fees in Adcox v. Clarkson Bros. Constr. Co., 236 N.C.App. 248, 254, 773 S.E.2d 511, 516 (2015). That assignment of error challenged an award

on the grounds that it is based upon Findings of Fact and Conclusions of Law which are erroneous, not supported by competent evidence or evidence of record, and are contrary to the competent evidence of record, and are contrary to law: Award Nos. 1-3.

Id.

         Although the assignment of error in Adcox mentioned the paragraph number corresponding to attorney's fees in the deputy commissioner's award, this Court held that the generalized assignment "covers everything and touches nothing." Id. at 255, 773 S.E.2d at 516 (citation and quotation marks omitted). The assignment did "not state the basis of any objection to the attorneys' fee award with sufficient particularity to give [the] plaintiff notice of the legal issues that would be addressed by the Full Commission such that he could adequately prepare a response." Id. (citation omitted). The Court in Adcox compared the insufficient assignment of error there to the appellant's assignment of error in Walker v. Walker, 174 N.C.App. 778, 782, 624 S.E.2d 639, 642 (2005). Adcox, 236 N.C.App. at 255, 773 S.E.2d at 516. The assignment of error in Walker, analogous to that in Adcox and in this case, asserted that several rulings of the trial court were "erroneous as a matter of law." Walker, 174 N.C.App. at 782, 624 S.E.2d at 642. This Court held that the assertion "that a given finding, conclusion, or ruling was 'erroneous as a matter of law' completely fails to identify the issues actually briefed on appeal." Id. (emphasis in original).

         Defendants contend that they did properly raise sufficient grounds in their brief to the Commission to preserve their challenge to the Commission's authority to grant attorney's fees from an award of attendant care compensation. They rely on this Court's decision in Cooper v. BHT Enters., 195 N.C.App. 363, 672 S.E.2d 748 (2009). In Cooper, the plaintiff asserted that the defendant's failure to file a Form 44 constituted abandonment of the grounds for the defendant's appeal from a deputy commissioner's decision to the Commission, and therefore the Commission erred in hearing the appeal. Id. at 368, 672 S.E.2d at 753. But this Court concluded that "both this Court and the plain language of the Industrial Commission's rules have recognized the Commission's discretion to waive the filing requirement of an appellant's Form 44 where the appealing party has stated its grounds for appeal with particularity in a brief or other document filed with the Full Commission, " and overruled the plaintiff's argument. Id. at 369, 672 S.E.2d at 753-54. Thus, the Court in Cooper refused to put form over substance and affirmed the Commission's discretion to hear an issue that had been stated with particularity.

         Here, unlike in Cooper, we find in the record no substance that can mend the insufficiency of Defendants' Form 44. Although Defendants contend in response to the Motion to Dismiss that they stated their challenge to the Commission's authority to award attorney's fees in their brief to the Commission on appeal from the Deputy Commissioner's decision, they did not include the referenced brief in the record. Nor did Defendants seek to supplement the record with the referenced brief in response to the Motion to Dismiss. We have searched the record and find no such pleading filed with the Commission by Defendants regarding attorney's fees other than the Defendants' Motion for Reconsideration, which Defendants filed after the Commission had issued its Opinion and Award. Like the defendants in Adcox, Defendants do not point to any support in the record indicating that they raised this issue in their appeal from the Deputy Commissioner's decision. Nor do Defendants point to any indication in the record that the Commission sought to exercise its discretion to determine this issue. As discussed further infra, the only pleadings in the record regarding this issue were filed after the Commission had issued its Opinion and Award. Accordingly, we hold Defendants abandoned their argument that the Commission lacked the authority under the Act to grant an award of attorney's fees out of an award of attendant care compensation, and dismiss Defendants' appeal as to this issue.

         The dissenting opinion asserts that we decline to address the issue of attorney's fees "solely because Defendants did not include a copy of their supporting legal brief to the Full Commission in the long settled record on appeal." To be clear, we hold that because there is no indication in the record that Defendants raised the issue before the Commission and there is no indication that the Commission addressed the issue, we have no jurisdiction to review it. This is not a case of a technicality foreclosing review based on an inadvertent omission in the record. Not only did Defendants not include in the record the brief they now claim preserved the issue, but they failed to supplement the record with the referenced brief when challenged to point to any portion of the record preserving the issue for review. Indeed, the record reflects only that after the Commission issued its Opinion and Award, Defendants filed a Motion for Reconsideration regarding the attorney's fee issue. That pleading tellingly does not refer to Defendants having raised the issue in any prior brief or argument to the Commission.

         The dissent seeks to justify a different result by relying on inapposite case authority. In Tucker v. Workable Company, 129 N.C.App. 695, 701, 501 S.E.2d 360, 365 (1998) the parties had mistakenly stipulated before the Commission that the worker's weekly salary was $659.70 per week although it was actually $157.80 per week. The employer discovered the error after the Commission's Opinion and Award and sought reconsideration, which the Commission denied. Id. This Court reversed the denial and remanded the matter to the Commission. Id.

         The award of attorney's fees from attendant care compensation does not arise from a factual mistake or a legal error that has previously been recognized by this Court or the Supreme Court of North Carolina. It is an issue of first impression requiring careful interpretation of the Workers' Compensation Act. We cannot circumvent the limits of our jurisdiction to address a watershed issue with broad reaching consequences.

         Because we dismiss Defendants' appeal regarding the Commission's authority to award attorney's fees from attendant care compensation based on their abandonment of the issue before the Commission, we need not address the other arguments presented by Plaintiff in his Motion to Dismiss.

         Award of Attendant Care Compensation

         Defendants assign error to the Commission's award of attendant care compensation by asserting there was insufficient evidence to support the Commission's findings of fact and therefore, the findings of fact do not support the Commission's conclusions of law. We disagree.

         A. Standard of Review

         When reviewing an award from the Commission, our review is limited to determining: (1) whether the findings of fact are supported by competent evidence, and (2) whether those findings support the Commission's conclusions of law. Chambers v. Transit Mgmt., 360 N.C. 609, 611, 636 S.E.2d 553, 555 (2006). Unchallenged findings of fact "are 'presumed to be supported by competent evidence' and are, thus 'conclusively established . . . .' " Chaisson v. Simpson, 195 N.C.App. 463, 470, 673 S.E.2d 149, 156 (2009) (quoting Johnson v. Herbie's Place, 157 N.C.App. 168, 180, 579 S.E.2d 110, 118 (2003)). "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) (citation omitted). "An opinion and award of the Industrial Commission will only be disturbed upon the basis of a patent legal error." Roberts v. Burlington Indus., Inc., 321 N.C. 350, 354, 364 S.E.2d 417, 420 (1988).

         B. Analysis

         In North Carolina, the Workers' Compensation Act provides employees compensation for injuries sustained within the course and scope of employment, charging employers with the responsibility to cover costs such as medical compensation. N.C. Gen. Stat. § 97-1 et seq. (2015). The Act defines medical compensation as:

medical, surgical, hospital, nursing, and rehabilitative services, including, but not limited to, attendant care services prescribed by a health care provider authorized by the employer or subsequently by the Commission, vocational rehabilitation, and medicines, sick travel, and other treatment, including medical and surgical supplies, as may reasonable be required to effect a cure or give relief and for such additional time as, in the judgment of the Commission, will tend to lessen the period of disability; and any original artificial members as may reasonably be necessary at the end of the healing period and the replacement of such artificial members when reasonably necessitated by ordinary use or medical circumstances.

N.C. Gen. Stat. § 97-2(19).[3] To award medical compensation, and specifically attendant care services, the Commission must make findings from competent evidence to support its conclusion that the attendant care services were reasonable and necessary as a result of the employee's injury. See Shackleton v. Southern Flooring & Acoustical Co., 211 N.C.App. 233, 245, 712 S.E.2d 289, 297 (2011). Such competent evidence includes, but is not limited to: "a prescription or report of a healthcare provider; the testimony or a statement of a physician, nurse, or life care planner; the testimony of the claimant or the claimant's family member; or the very nature of the injury." Id. at 250-51, 712 S.E.2d at 300.

         Here, the Commission made the following findings of fact, which Defendants challenge, in support of its conclusion that Mr. Reed's attendant care services were reasonable and necessary:

6. Dr. Prakken [Mr. Reed's physician] also opined that Plaintiff is not able to function independently. Plaintiff cannot effectively shop for himself, pay his own bills, or set up his own appointments because of his obsessive compulsive symptoms and his high level of anxiety. He is inconsistent with his activities of daily living. Dr. Prakken compared Plaintiff's levels of function with that of an 8-year-old child and testified that Plaintiff could not function outside an institution without his mother, Elizabeth Reed.
7. Since Plaintiff's injury, Mrs. Reed has been caring for him. The attendant care services Mrs. Reed provides for Plaintiff include shopping for him, cooking, transporting and attending with Plaintiff most medical visits, cleaning, providing money management, scheduling medical appointments, reminding him to bathe and attend to personal hygiene, making sure he takes his prescription medications, monitoring his status 24 hours per day, seven days per week since Plaintiff's behavior and sleeping habits are unpredictable, calming him down during an anxiety attack or other crisis. Mrs. Reed has not worked in the competitive labor market since Plaintiff's accident.
8. Prior to his injury, Plaintiff was a fully functional college student who was able to function independently. There is no evidence that he would have become wholly dependent on the care of his mother, but for the compensable accident at work and resulting traumatic brain injury.
. . .
33. Dr. Prakken was deposed for a second time after the reopening of the record in this matter. Dr. Prakken is board certified in psychiatry and pain management. He reviewed the surveillance taken by Defendants and testified that the surveillance evidence did not show Plaintiff's mental or emotional states and that Plaintiff's impairment is not the kind of impairment you can easily see in a snapshot. Dr. Prakken testified that his opinion regarding Plaintiff's need for attendant care has not changed and that Plaintiff need around the clock passive medical monitoring. Dr. Prakken explained that Plaintiff was one of the most anxious and ill patients he has had in his practice and that Plaintiff required attendant care because he has grave difficulties from his traumatic brain injury. Dr. Prakken testified that Plaintiff's decision-making process is so concrete and centered on what he feels at that moment that it leaves him very impulsive and he doesn't have the capacity to modulate those feelings and understand that he may feel differently later. Dr. Prakken further testified that Plaintiff's actions and his choices change moment to moment like his feelings do and that is something that requires management and he cannot live independently for even a moderate amount of time. For example, Dr. Prakken testified that living independently would leave Plaintiff impulsive about potential medication use and he would not be able to consistently pay bills, feed himself, or take care of his activities of daily living.
34. As a part of his anxiety, Plaintiff also suffers from obsessive compulsive disorder which according to Dr. Prakken is like a "double whammy, where he's not only in this very, very short decision-making loop based solely on how he feels, but how he feels is just profused with anxiety." Dr. Prakken testified that if Plaintiff did not have attendant care he would need to be institutionalized and that Plaintiff has difficulty getting out of his internal anxiety state long enough to attend to the social needs of others and to efficiently be able to hold a job. With respect to Plaintiff's relationship with Ms. Lloyd, Dr. Prakken testified that Plaintiff longs to be normal and has a ...

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