Campbell v. Garda USA, Inc. ( 2016 )

IN THE COURT OF APPEALS OF NORTH CAROLINA
No. COA15-756
Filed: 3 May 2016
North Carolina Industrial Commission, Nos. Y16837 & Y20122
ALLAN ROBERT CAMPBELL, Plaintiff,
v.
GARDA USA, INC. and NEW HAMPSHIRE
INSURANCE COMPANY, Defendants.
Appeal by defendants from opinion and award entered 19 March 2015 by the
North Carolina Industrial Commission. Heard in the Court of Appeals 3 December
2015.
Charles G. Monnett, III & Associates, by Lauren O. Newton, for employee
plaintiff-appellee.
Hedrick, Gardner, Kincheloe & Garofalo, LLP, by M. Duane Jones, Jeffrey A.
Kadis, and Brooke A. Mullenex, for employer and carrier defendant-appellants.
DIETZ, Judge.
Plaintiff Allan Campbell suffered two workplace injuries while employed by
Defendant Garda USA: one in December 2011 and one in July 2012. He reported
both injuries to his employer immediately after they occurred. Campbell did not miss
any work, but his injuries required medical treatment.
In August 2012, Campbell filed separate workers’ compensation claims for his
two workplace injuries. In November 2012, Garda agreed to pay medical benefits for
CAMPBELL V. GARDA USA, INC.
Opinion of the Court
the December 2011 injury, while reserving its right to later contest compensability.
Garda denied the claim for the July 2012 injury.
During discovery, Garda falsely stated that it did not possess any written
documents concerning the 2012 injury. In a later deposition, a Garda employee
conceded that a written document existed and indicated that he had a copy on his
computer, which he had with him at the deposition. Garda’s lawyers then told the
employee to stop talking and to power down his computer. Even after the deposition,
Garda still refused to produce the document and, ultimately, a deputy industrial
commissioner had to order its production. In its final opinion and award, the
Industrial Commission imposed attorneys’ fees on Garda under N.C. Gen. Stat. § 97–
88.1 for “unfounded litigiousness.”
On appeal, Garda contends that some of the grounds on which the Commission
relied to award attorneys’ fees are erroneous. As explained below, we agree with
Garda that some of the Commission’s reasoning, such as faulting Garda for asserting
an unfounded notice defense that Garda never actually asserted, would not support
attorneys’ fees. But Garda’s discovery violation readily provides a legal basis for
attorneys’ fees under N.C. Gen. Stat. § 97–88.1. Accordingly, we hold that attorneys’
fees under § 97–88.1 are permitted in this case but, because some of the Commission’s
reasoning is erroneous, remand for the Industrial Commission to reassess its
attorneys’ fees award in light of the unfounded litigiousness described in this opinion.
-2-
CAMPBELL V. GARDA USA, INC.
Opinion of the Court
Facts and Procedural History
On 1 December 2011, Allan Campbell sprained his left ankle while working for
Garda USA, Inc. Campbell immediately informed his manager of the incident. He
received medical treatment for the sprain, including physical therapy and various
forms of pain medication. Campbell did not miss any work as a result of his injury.
On 19 July 2012, Campbell again injured himself when he slipped and fell
while trying to lift a wooden pallet at work. After his fall, Campbell sent an email to
his branch manager to notify him of the incident. The email had the subject line
“keep this on file” and stated as follows:
I lifted a pallet and slipped on oil in the bay. Tweaked my lower
back. I will take it easy today but at this time do not wish to seek
medical. That’s all I need right now is to file a claim with all of
the stuff going on. We need to get oil dry today.
No one witnessed Campbell’s fall, and he did not seek immediate medical treatment.
On 27 July 2012, Garda terminated Campbell’s employment due to poor job
performance. Later that day, at a scheduled appointment with his doctor concerning
his high blood pressure, Campbell informed his doctor that he had severe back pain
and explained that the pain originated with his fall earlier in the month.
On 6 August 2012, Campbell filed a claim against Garda for his December
ankle injury. Two days later, Campbell filed another claim, this time addressing his
July back injury.
-3-
CAMPBELL V. GARDA USA, INC.
Opinion of the Court
On 8 November 2012, Garda agreed to pay Campbell’s medical expenses
without prejudice to later denying the compensability of the claim using Form 63.
Garda denied the compensability of Campbell’s back injury using Form 61. The two
claims were later consolidated for hearing before a deputy industrial commissioner.
During discovery, Campbell requested that Garda identify any statements
obtained from Garda employees concerning Campbell’s back injury and to turn over
any documents concerning that injury. Garda initially responded to these requests
with a blanket objection based on attorney-client privilege. After further discussion
between counsel for the parties, Garda amended its discovery responses and stated
that it was “not in possession of any written statement, photograph, writing or
document related to the incident [on 19 July 2012].”
Six months later, Campbell deposed Bart Gibbons, a Garda risk management
analyst, via telephone. During Gibbons’s deposition testimony, he acknowledged that
the company that manages Garda’s workers’ compensation claims had made an entry
concerning Campbell’s 19 July 2012 back injury in records accessible to Garda. That
entry, called a “first report of injury,” is part of a generated report described by
Gibbons as “an internal document that comes from [a] third-party administer [sic].”
Gibbons had a copy of that document on his computer, which he had with him
as he was testifying. When Campbell’s counsel asked Gibbons to provide her with a
copy of that document, counsel for Garda instructed Gibbons not to comply with that
-4-
CAMPBELL V. GARDA USA, INC.
Opinion of the Court
request and further instructed him to power down his computer and “not testify to
anything that you are looking at on your computer.” Gibbons obeyed, and Campbell’s
counsel expressed her intention to seek a ruling from the deputy industrial
commissioner compelling Garda to produce the document. She then instructed the
court reporter to hold Gibbons’s deposition open pending a determination from the
Industrial Commission.
After further motions practice, the deputy industrial commissioner ordered
Garda to produce the document. The following day, Garda produced the document to
Campbell. It contained an entry dated 27 July 2012 indicating that Campbell
“slipped on an oil spill” and “sustained unknown injuries to back.” As the Full
Commission later found, this evidence, which was plainly responsive to Campbell’s
discovery request, “was not produced voluntarily and . . . [Garda] had to be compelled
by the Commission to produce [it].”
On 23 May 2014, the deputy commissioner filed an opinion and award ordering
Garda to pay certain medical expenses incurred, or to be incurred, from Campbell’s
injuries, and ordering Garda to pay Campbell’s attorneys’ fees in the amount of
$13,212.50. On 5 June 2014, Garda appealed to the Full Commission. The Full
Commission affirmed and Garda timely appealed its award of attorneys’ fees to this
Court.
-5-
CAMPBELL V. GARDA USA, INC.
Opinion of the Court
Analysis
The North Carolina Workers’ Compensation Act grants the Industrial
Commission the authority to impose attorneys’ fees on either party if it determines
that “any hearing has been brought, prosecuted, or defended without reasonable
ground.” N.C. Gen. Stat. § 97–88.1. Our precedent requires us to review an award
under § 97–88.1 using a two-part test. First, this Court reviews de novo the legal
question of whether a claim was “brought, prosecuted, or defended without
reasonable ground.” Ensley v. FMC Corp., 222 N.C. App. 386, 390, 731 S.E.2d 855,
858 (2012). If our de novo review reveals that there were legal grounds to impose
fees, we then review the Industrial Commission’s determination of “whether to make
an award and the amount of the award” for abuse of discretion. Id.
We have no hesitation in concluding that Garda’s conduct satisfies the
statutory criteria for imposing attorneys’ fees under the first prong of our two-part
review. The record indicates that Garda falsely stated in discovery responses that it
did not have any information concerning Campbell’s July 2012 back injury when, in
fact, it had information, and had access to a document, relevant to issues of
compensability. Moreover, after a Garda employee’s deposition revealed the
existence of the responsive document (which Garda previously denied even existed),
Garda did not immediately produce it. Ultimately, upon Campbell’s motion, a deputy
industrial commissioner had to order its production. As a matter of law, this type of
-6-
CAMPBELL V. GARDA USA, INC.
Opinion of the Court
discovery violation satisfies the statutory criteria of N.C. Gen. Stat. § 97–88.1 and
permits the Industrial Commission, in its discretion, to impose attorneys’ fees. See
Hauser v. Advanced Plastiform, Inc., 133 N.C. App. 378, 385–89, 514 S.E.2d 545, 550–
53 (1999).
Garda does not dispute the underlying facts surrounding its discovery
violation, but argues that the Industrial Commission also relied on two improper
grounds in awarding attorneys’ fees: first, that Garda failed to contest the claim
within 90 days in violation of N.C. Gen. Stat. § 97–18(d) and, second, that Garda
asserted an unfounded notice defense. Garda argues that both of these grounds are
erroneous because N.C. Gen. Stat. § 97–18(d) does not apply to medical benefits-only
claims and Garda never asserted a notice defense.
We agree with Garda that the Industrial Commission relied on these two
grounds in awarding fees under § 97–88.1, as the Commission’s order indicates:
Although defendants accepted plaintiff’s foot injury as medical
only via a Form 63, they never “contest[ed] the compensability of
the claim or its liability therefore [sic] within 90 days from the date
[they] first ha[d] written or actual notice of the injury” in
accordance with N.C. Gen. Stat. § 97–18(d). As a result of the
denial of medical treatment for Plaintiff’s foot, Plaintiff was
denied medical treatment for his injury for over a year.
Furthermore, defendants denied plaintiff’s back injury on the
basis that they had no notice of said injury despite overwhelming
evidence to the contrary that was not produced voluntarily and
which they had to be compelled by the Commission to produce.
The behavior of the defendant-employer in this claim has been
unfoundedly litigious and defendant-employer is therefore
subject to sanctions pursuant to N.C. Gen. Stat. § 97–88.1.
-7-
CAMPBELL V. GARDA USA, INC.
Opinion of the Court
We also agree with Garda that neither of these two grounds would support an
award of attorneys’ fees under § 97–88.1. First, Form 63—the document issued by
the Industrial Commission for use in paying medical benefits without prejudice to
later challenging compensability—indicates that N.C. Gen. Stat. § 97–18(d) and its
corresponding 90-day response requirement do not apply to a medical benefits-only
claim like Campbell’s. Thus, even if that statute and its 90-day provision apply here,
Garda’s failure to comply with that statutory requirement, standing alone, was not
unreasonable. We cannot fault Garda for relying on the instructions in a government-
issued form.1
Likewise, Garda did not assert a notice defense in this case. The Commission
cannot award attorneys’ fees for asserting an unfounded defense that Garda never
actually asserted.
In short, although there are grounds to impose attorneys’ fees under § 97–88.1
in this case, the Commission at least partially relied on two erroneous grounds in its
analysis. Ordinarily, when a lower court’s decision is based in part on proper grounds
but in part on an error of law, “it is appropriate to remand for reconsideration in light
of the correct law.” Free Spirit Aviation, Inc. v. Rutherford Airport Auth., 206 N.C.
App. 192, 204, 696 S.E.2d 559, 567 (2010); see also Blitz v. Agean, Inc., 197 N.C. App.
1 Whether N.C. Gen. Stat. § 97–18(d) actually applies to a medical benefits-only claim is not
an issue before this Court. The only issue we address is whether, for purposes of awarding attorneys’
fees under § 97–88.1, it was reasonable for Garda to rely on the instructions in Form 63.
-8-
CAMPBELL V. GARDA USA, INC.
Opinion of the Court
296, 312, 677 S.E.2d 1, 11 (2009). Accordingly, we vacate and remand this matter for
the Commission to reassess its attorneys’ fees award in light of this opinion.
Conclusion
The portion of the Industrial Commission’s opinion and award concerning
attorneys’ fees under § 97–88.1 is vacated and remanded for further proceedings
consistent with this opinion.
VACATED AND REMANDED IN PART.
Judges STROUD and TYSON concur.
-9-