Workers’ Compensation – Interest – ‘Initial Hearing’ – Vacated Award

Puckett v. Norandal USA, Inc. (Lawyers Weekly No. 11-07-0458, 16 pp.) (Sam Ervin IV, J.) Appealed from the Industrial Commission. N.C. App. Click here for the full-text opinion.

Holding: Even though the first deputy commissioner to hear plaintiff’s case made an erroneous ruling and even though the his award was vacated, that hearing was still the “initial hearing” in plaintiff’s case, and G.S. § 97-86.2 requires the Industrial Commission to award plaintiff interest on his award “from the date of the initial hearing on the claim….”

We reverse the commission’s denial of plaintiff’s request for interest between the first and second hearings on his claim.

Background

Plaintiff filed an asbestosis claim and requested a hearing. Before the hearing, plaintiff moved that defendants’ defenses be stricken due to their failure to file a Form 61 within 90 days of the filing of his claim. Deputy Commissioner George Glenn granted the motion.

At the March 1, 2004 hearing, Deputy Commissioner Glenn refused to allow defendants to present a defense, and, on March 8, 2005, he filed an opinion awarding plaintiff compensation plus a 10 percent penalty because of the defendant-employer’s willful failure to comply with safety statutes, plus attorney’s fees.

Defendants appealed, and the full commission vacated the award and remanded “for a full evidentiary hearing….”

On remand, Chief Deputy Commissioner Stephen Gheen held a hearing on May 1, 2006. In an opinion filed Feb. 12, 2008, Deputy Commissioner Gheen awarded plaintiff compensation, plus a 10 percent penalty for defendant’s willful failure to comply with OSHA requirements; however, Deputy Commissioner Gheen rejected plaintiff’s attorney fee request. The full commission affirmed.

Defendants paid the benefits awarded, plus interest from May 1, 2006. Plaintiff sought an award of interest between March 1, 2004 and May 1, 2006, but the commission denied his request.

Interest

G.S. § 97-86.2 provides, “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….”

The commission found “that the March 1, 2004 hearing before Deputy Commissioner Glenn was not a hearing on the merits because of Deputy Commissioner Glenn’s verbal order barring defendants from disputing the compensability of plaintiff’s claim…. To award interest from the date of a hearing that was not on the merits, and upon which the Deputy Commissioner’s Opinion and Award was ultimately vacated would be an abuse of the Commission’s discretion.”

Section 97-86.2 clearly provides that interest on a workers’ comp award begins accruing on the date of the first hearing held with respect to a plaintiff’s claim. The March 1, 2004 hearing was the first hearing on plaintiff’s claim and constituted the “initial hearing” from whose date interest should be calculated under ¤ 97-86.2. The commission erred in concluding otherwise.

Defendant argues that, as the commission concluded, the March 1, 2004 hearing before Deputy Commissioner Glenn was not a valid “hearing on the merits” because, prior to the hearing, Deputy Commissioner Glenn barred defendants from contesting the compensability of plaintiff’s claim due to their failure to file a Form 61 in a timely manner.  We disagree.

The commission’s decision that Deputy Commissioner Glenn’s decision denying defendants the chance to present certain defenses or to challenge the compensability of plaintiff’s claim was tantamount to a determination that the hearing held before Deputy Commissioner Glenn did not “count” as an “initial hearing” for purposes of G.S. § 97-86.2.

In reaching this conclusion, the commission effectively read into the statute a requirement that interest accrues from the date of the initial hearing held for the purpose of addressing the merits of the plaintiff’s claim at which the defendant was allowed to present any and all defenses to the plaintiff’s claim that the commission ultimately concluded should have been litigated. No such requirement appears anywhere in § 97-86.2.

Deputy Commissioner Glenn’s decision clearly addressed the merits of plaintiff’s claim. The fact that Deputy Commissioner Glenn erroneously deprived defendants of the right to raise certain issues does not establish that the hearing was not an initial hearing concerning the merits of plaintiff’s claim.

The commission’s interpretation of § 97-86.2 defeats the statute’s purpose: (a) To 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.

Given that plaintiff ultimately prevailed with respect to compensability, the fact that Deputy Commissioner Glenn erroneously deprived defendants of the right to contest the compensability issue provides no logical basis for failing to compensate plaintiff for loss of the use value of his damage award or to compensate him for delay in payment.

The Commission also concluded that, because Deputy Commissioner Glenn’s decision was “ultimately vacated,” the hearing that led to entry of his order “ha[d] no effect in law” and could not, for that reason, provide an appropriate date upon which to calculate interest with respect to plaintiff’s claim.

Nothing in the statute provides any support for construing it to mean that interest should be calculated from the date of the “initial hearing the result of which is not subsequently vacated.”

Although the commission vacated Deputy Commissioner Glenn’s decision, its decision to grant defendants relief from that order does not in any way mean that Deputy Commissioner Glenn’s order was not entered following the initial hearing concerning the merits of plaintiff’s claim.

The commission is required to determine the date upon which the interest calculation commences under the statute. This does not give the commission any discretion in making the required determination.

Reversed and remanded.