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Easter-Rozzelle v. City of Charlotte

Supreme Court of North Carolina

December 8, 2017

DAVID EASTER-ROZZELLE, Employee
v.
CITY OF CHARLOTTE, Employer, SELF-INSURED

          Heard in the Supreme Court on 28 August 2017.

         On writ of certiorari pursuant to N.C. G.S. § 7A-32(b) of a unanimous decision of the Court of Appeals, __ N.C.App. __, 780 S.E.2d 244 (2015), reversing an opinion and award filed on 2 March 2015 by the North Carolina Industrial Commission.

          Sumwalt Law Firm, by Vernon Sumwalt; and Fink & Hayes, PLLC, by Steven B. Hayes, for plaintiff-appellant.

          Jones, Hewson & Woolard, by Lawrence J. Goldman, for defendant-appellee.

          Wallace and Graham, P.A., by Edward L. Pauley, for North Carolina Advocates for Justice, amicus curiae.

          HUDSON, Justice.

         Defendant, the City of Charlotte, appealed the opinion and award of the North Carolina Industrial Commission awarding plaintiff, David Easter-Rozzelle, benefits arising out of a 29 June 2009 automobile accident. Easter-Rozzelle v. City of Charlotte, __ N.C.App. __, 780 S.E.2d 244 (2015). On appeal, the Court of Appeals reversed, holding that because plaintiff had elected to settle his personal injury claim against the third-party tortfeasor without the consent of defendant and had received disbursement of the settlement proceeds, plaintiff was barred from pursuing compensation for that claim under the Workers' Compensation Act (Act). Id. at__, 780 S.E.2d at 250. Because the Act protects both the employer's lien against third-party proceeds and the employee's right to pursue workers' compensation benefits in these circumstances, we reverse.

         Background

         On 18 June 2009, while working as a utility technician, plaintiff injured his neck and shoulder when he slipped while handling a manhole cover. Defendant City, plaintiff's self-insured employer, accepted plaintiff's claim as compensable under the Act by filing a Form 60 with the North Carolina Industrial Commission. Defendant authorized treatment with Scott Burbank, M.D. at OrthoCarolina for plaintiff's injury. Dr. Burbank restricted plaintiff from work until 29 June 2009, at which point plaintiff contacted and informed defendant that he was still in too much pain to report to work. Following defendant's instructions, plaintiff contacted Dr. Burbank's office, which informed plaintiff that they would provide him with an out-of-work note that he could pick up at their office.

         While driving to Dr. Burbank's office to retrieve the note, plaintiff was involved in an automobile crash and suffered a traumatic brain injury. That same day, after being transported to the hospital, plaintiff gave his wife a card containing the name and contact information for his supervisor, Mr. William Lee, and asked her to call Mr. Lee and inform him of the incident. Plaintiff's wife contacted Mr. Lee and told him that plaintiff had been in a wreck while traveling to Dr. Burbank's office to get an out-of-work note and that plaintiff would not be coming to work that day. In the ensuing three-day period, plaintiff had at least two conversations with Mr. Lee about the circumstances of the injury. Plaintiff also informed his safety manager and multiple employees in defendant's personnel office that he had been in a car crash on the way to his doctor's office to get an out-of-work note for defendant.

         Plaintiff underwent surgery in May and November 2010 for his shoulder injury. On 18 November 2011, Dr. Burbank assigned plaintiff a ten percent permanent partial disability rating to the right shoulder and imposed permanent work restrictions. Defendant has continued to pay plaintiff weekly temporary total disability benefits.

         Meanwhile, plaintiff received treatment for the traumatic brain injury sustained in the car wreck from David R. Wiercisiewski, M.D. of Carolina Neurosurgery & Spine and Dr. Bruce Batchelor of Charlotte Neuropsychologists. Dr. Wiercisiewski diagnosed plaintiff with a concussion and post-concussion syndrome, and both physicians referred plaintiff to a psychologist for ongoing post-traumatic stress disorder symptoms, memory loss, and cognitive deficits.

         Plaintiff retained separate attorneys for his personal injury claim relating to the crash and for his workers' compensation claim relating to his original shoulder injury. Plaintiff's personal injury lawyer informed his personal health insurance carrier, Blue Cross Blue Shield, that he was not "at work" when he sustained the injuries from the crash, and therefore, medical bills for these injuries should be covered by Blue Cross Blue Shield. On 1 August 2011, the third-party claim settled for $45, 524.20. The settlement proceeds were disbursed and plaintiff received his share of the funds.

         As his workers' compensation claim proceeded, plaintiff and defendant agreed to mediation. At the 9 April 2012 mediation, plaintiff's workers' compensation attorney first learned that plaintiff had been traveling to the office of his authorized physician to get an out-of-work note when the wreck occurred. The mediation was suspended and plaintiff filed an amended Form 18 Notice of Accident to Employer in which he restated his initial claim for injuries and added a claim for his closed head and brain injury which occurred while he "was driving to see authorized treating physician and was involved in a car wreck." On 13 December 2012, defendant filed a Form 61 with the Commission denying the head injury claim. In its filing, defendant stated that it had no notice of the car accident or that plaintiff claimed that the car accident was related to his workers' compensation claim until the April 2012 mediation. Defendant asserted that plaintiff should be estopped from claiming compensation for the head injury because "the motor vehicle accident resulted in a settlement with a third party and the distribution of the settlement funds without preserving defendant's lien." Because the parties were unable to agree on compensability of the head injury, plaintiff filed a Form 33 with the Commission in January 2013 requesting that the claim be assigned for a hearing.

         Deputy Commissioner Phillip A. Holmes heard this matter on 11 December 2013. On 7 March 2014, Deputy Commissioner Holmes entered an opinion and award denying plaintiffs claim for benefits. The deputy commissioner concluded that N.C. G.S. § 97-10.2 "provides the only method in which the employer's lien is satisfied from a third party settlement." The deputy commissioner further concluded that under Hefner v. Hefner Plumbing Co., 252 N.C. 277, 113 S.E.2d 565 (1960), when an employee settles and disburses funds from a third-party settlement without preserving the defendant's lien, or applying to a superior court judge to reduce or eliminate the lien, the employee is barred from recovering under the Act. Accordingly, Deputy Commissioner Holmes determined that plaintiff here was estopped from claiming benefits from his 29 June 2009 car wreck because he did not contend it was compensable until after the third-party claim settled and the settlement proceeds were distributed. Plaintiff appealed to the Full Commission.

         The Full Commission heard the case on 15 August 2014, and on 2 March 2015, issued an opinion and award reversing the decision of the deputy commissioner. In so doing, the Commission considered the record of the proceedings before the deputy commissioner, which included the parties' stipulations, exhibits, and testimony from witnesses, including plaintiff and his wife. The Commission assigned credibility to the testimony of plaintiff and his wife and found that plaintiff was not aware that his injuries from the car crash were arguably compensable until the April 2012 mediation. Further, the Commission found and concluded that plaintiff provided timely actual notice of the car wreck to defendant and that defendant knew of the collision and its attendant circumstances. Regarding defendant's lien and the applicability of Hefner, the Commission found, in relevant part:

25. The Full Commission finds that the present case is distinguishable from Hefner. In Hefner, the Plaintiff was injured in an automobile collision arising out of and in the course of his employment. Plaintiff's attorney advised the Defendant-Carrier that Plaintiff was proceeding against the third-party and was not making a claim for workers' compensation benefits at that time. The Plaintiff's attorney did provide periodic correspondence and informed the carrier of the status of Plaintiff's injuries and the developments in the negotiations with the third-party. The Plaintiff then settled his claim against the third-party and executed a release and thereafter filed a claim with the North Carolina Industrial Commission. The Plaintiff in Hefner contended that although Plaintiff chose to settle with the third-party tortfeasor, Defendant-Carrier should now be made to pay a proportionate part of Plaintiff's attorney fees in the third-party matter. The Supreme Court specifically stated in Hefner that the Court based its decision upon the interpretation of N.C. Gen. Stat. § 97-10 as it existed prior to June 20, 1959, which restricted an employee from recovering both under a workers' compensation action and an action at law against a third party tortfeasor. The Supreme Court in Hefner held that pursuant to the repealed provisions of N.C. Gen. Stat. § 97-10, an employee may waive his claim against his employer and pursue his remedy against the third party. The Plaintiff in Hefner had elected to pursue his remedy against the third party instead of pursuing benefits under the Workers' Compensation Act and was therefore barred from recovering under the Act. The present matter is controlled by the current provisions of N.C. Gen. Stat. § 97-10.2 which do not include the waiver provisions in effect in the Hefner case. The Hefner holding is not applicable to the present case.

(Punctuation inconsistencies in original.) Furthermore, the Commission concluded that

5. With regard to Plaintiffs distribution of third party settlement funds without Defendant's knowledge and consent and without the prior approval of the Industrial Commission, or applying to a Superior Court Judge to determine the subrogation amount, the Full Commission concludes that the North Carolina Supreme Court decision in Hefner v. Hefner Plumbing Co., Inc[.], 252 N.C. 277, 113 S.E.2d 565 (1960) does not preclude Plaintiff from pursuing benefits under the Workers' Compensation Act for his June 29, 2009 automobile accident. The Supreme Court in Hefner stated:
This is the determinative question on this appeal: May an employee injured in the course of his employment by the negligent act of a third party, after settlement with the third party for an amount in excess of his employer's liability, and after disbursement of the proceeds of such settlement, recover compensation from his employer in a proceeding under the Workman's Compensation Act. In light of the provisions of the Act as interpreted by this Court, the answer is "No."
However, the Full Commission concludes that the present case is distinguishable from Hefner. As stated in the findings of fact above, in Hefner, the Plaintiff was injured in an automobile collision arising out of and in the course of his employment. Plaintiffs attorney advised the Defendant-Carrier that Plaintiff was proceeding against the third-party and was not making a claim for workers' compensation benefits at that time. The Plaintiffs attorney did provide periodic correspondence and informed the carrier of the status of Plaintiff's injuries and the developments in the negotiations with the third-party. The Plaintiff then settled his claim against the third-party and executed a release and thereafter filed a claim with the North Carolina Industrial Commission. The Plaintiff in Hefner contended that although Plaintiff chose to settle with the third-party tortfeasor, Defendant-Carrier should now be made to pay a proportionate part of Plaintiff's attorney fees in the third-party matter. The Supreme Court specifically stated in Hefner that the Court based its decision upon the interpretation of N.C. Gen. Stat. § 97-10 as it existed prior to June 20, 1959, which restricted an employee from recovering both under a workers' compensation action and an action at law against a third party tortfeasor. The Supreme Court in Hefner held that pursuant to the repealed provisions of N.C. Gen. Stat. § 97-10, an employee may waive his claim against his employer and pursue his remedy against the third party. The Plaintiff in Hefner had elected to pursue his remedy against the third party instead of pursuing benefits under the Workers' Compensation Act and was therefore barred from recovering under the Act. The present matter is controlled by the current provisions of N.C. Gen. Stat. § 97-10.2 which do not include the waiver provisions in effect in the Hefner case. The Hefner holding is not applicable to the present case. Hefner v. Hefner Plumbing Co., Inc[.], 252 N.C. 277, 113 S.E.2d 565 (1960).
. . . .
11. An employer's statutory right to a lien on recovery from the third party tortfeasor is mandatory in nature. Radzisz v. Harley Davidson of Metrolina, Inc., 346 N.C. 84, 484 S.E.2d 566 (1997). The employer's lien is in existence even before payments have been made by the employer. Id. Even though Defendant has not accepted Plaintiff's claim for his June 29, 2009 accident and has not paid any medical bills related to his June 29, 2009 accident, Defendant is entitled to a statutory lien on recovery from the third party settlement proceeds. Although the third party settlement funds have been disbursed, Defendant is still entitled to a reimbursement for its statutory lien after the subrogation lien amount has been determined. Id.

(Punctuation inconsistencies in original.) Accordingly, the Commission awarded plaintiff benefits arising out of the 29 June 2009 automobile crash and ordered defendant to pay all related medical expenses incurred by plaintiff when those bills are approved by the Commission under established procedures. The Commission further ordered that defendant be reimbursed "for its statutory lien against the third party settlement in this matter when the subrogation amount is determined by agreement of the parties or by a Superior Court Judge." The Commission ordered defendant ...


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