Easter-Rozzelle v. City of Charlotte

IN THE SUPREME COURT OF NORTH CAROLINA
No. 52PA16
Filed 8 December 2017
DAVID EASTER-ROZZELLE, Employee
v.
CITY OF CHARLOTTE, Employer,
SELF-INSURED
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.
Heard in the Supreme Court on 28 August 2017.
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
EASTER-ROZZELLE V. CITY OF CHARLOTTE
Opinion of the Court
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
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Opinion of the Court
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
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Opinion of the Court
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
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Opinion of the Court
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 plaintiff’s 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
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Opinion of the Court
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-
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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 Plaintiff’s 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. 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
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Opinion of the Court
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
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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 to continue paying plaintiff temporary total disability benefits. Defendant
appealed from the Commission’s opinion and award.
In a unanimous opinion filed on 1 December 2015, with one judge concurring
separately, the Court of Appeals reversed the Full Commission. Easter-Rozzelle, ___
N.C. App. at ___, 780 S.E.2d at 250. The majority opined that the Commission
misstated the law by asserting that Hefner precluded an employee from recovering
both from his employer under the Act and from a third-party tortfeasor in an action
at law. Id. at ___, 780 S.E.2d at 248. The majority noted that the provision requiring
an employee to elect between the two remedies was removed in 1933 and observed
that Hefner recognized that an employee could pursue both remedies under the
formerly applicable statute, N.C.G.S. § 97-10. Id. at ___, 780 S.E.2d at 248; see also
Hefner, 252 N.C. at 282-83, 113 S.E.2d at 569 (“Indeed the applicable statute
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contemplates that where employee pursues his remedy against the employer and
against the third party, a determination of benefits due under the Act must be made
prior to the payment of funds recovered from the third party.”).
Furthermore, relying upon this Court’s decision in Pollard v. Smith, 324 N.C.
424, 426, 378 S.E.2d 771, 773 (1989), the Court of Appeals majority stated that under
the current statute, N.C.G.S. § 97-10.2, a settlement requires the written consent of
the employer in order to be valid, even when the case is settled in accord with
subsection (j), which allows either party to apply to the superior court to determine
the subrogation amount of the employer’s lien. Id. at ___, 780 S.E.2d at 248-49. The
majority opined that the General Assembly intended for employers to have
involvement and consent in the settlement process and added that allowing
defendant to be reimbursed “from settlement funds already paid and disbursed does
not accomplish the statute’s purpose and intent, and is unfair to Defendant.” Id. at
___, 780 S.E.2d at 249-50. The majority concluded that, “[i]n light of the requirement
of N.C. Gen.[ ]Stat. § 97-10.2(h) that the employer provide written consent to the
Plaintiff’s settlement with a third party, the reasoning of the Hefner case is applicable
here.” Id. at ___, 780 S.E.2d at 250. Because plaintiff here settled his claim with the
third party and disbursed the proceeds without the written consent of defendant, and
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without an order from the superior court or the Commission, the majority held that
plaintiff was barred from recovery under the Act. Id. at ___, 780 S.E.2d at 250.1
Plaintiff sought this Court’s review of the Court of Appeals’ unanimous
decision. On 8 December 2016, the Court allowed plaintiff’s petition for writ of
certiorari.
Analysis
Plaintiff argues that in reversing the Full Commission, the Court of Appeals
relied upon cases that had been superseded by statute, including Hefner and Pollard,
and misinterpreted the provisions of the Act. We agree, and thus reverse the decision
of the Court of Appeals.
We review an order of the Full Commission to determine only “whether any
competent evidence supports the Commission’s findings of fact and whether the
findings of fact support the Commission’s conclusions of law.” Deese v. Champion
Int’l Corp., 352 N.C. 109, 116, 530 S.E.2d 549, 553 (2000); see also N.C.G.S. § 97-86
(2015). “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).
1 Writing separately, Judge Dietz concurred in the result, but opined that plaintiff is
barred from recovery under the Act by the doctrine of quasi-estoppel. Id. at ___, 780 S.E.2d
at 250 (Dietz, J., concurring) (“This case presents a hornbook example of the doctrine of quasi-
estoppel.”) Because plaintiff accepted the benefit of a settlement without defendant’s consent
and without court approval, Judge Dietz opined that plaintiff later “took a plainly
inconsistent position by asserting that his injury was, in fact, subject to the [Act] despite
having just settled the claim in a manner that indicated it was not.” Id. at ___, 780 S.E.2d
at 250.
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We review decisions of the Court of Appeals for errors of law. Irving v. Charlotte-
Mecklenburg Bd. of Educ., 368 N.C. 609, 611, 781 S.E.2d 282, 284 (2016) (citing N.C.
R. App. P. 16(a)).
Here the Court of Appeals majority concluded that the Commission misstated
the holding in Hefner and that Hefner bars plaintiff from recovering compensation
under the Act. This reliance on Hefner is misplaced because the provisions relating
to claims against third-party tortfeasors were substantially amended in 1959, and
Hefner was decided under the previous statute. Further, we note that the
Commission did slightly misstate this Court’s holding in Hefner by suggesting that
under the old statutory framework, an employee could never recover both under a
workers’ compensation claim and against a third-party tortfeasor. This is
understandable on the part of the Commission in that the Court in Hefner was
applying N.C.G.S. § 97-10, a “somewhat prolix enactment,” Lovette v. Lloyd, 236 N.C.
663, 667, 73 S.E.2d 886, 890 (1953), which was the last in a line of provisions not
heralded for their clarity. See A Survey of Statutory Changes in North Carolina in
1943, 21 N.C. L. Rev. 323, 382 (1943) [hereinafter Survey] (“Section 11 of the Act has
always been a source of difficulty.” (footnote omitted)).
The original Workers’ Compensation Act, enacted in 1929, required an
employee to choose between recovering compensation from his employer under the
Act or recovering damages against the third-party tortfeasor. The North Carolina
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Workmen’s Compensation Act, ch. 120, sec. 11, 1929 N.C. Pub. [Sess.] Laws 117, 122.
Specifically, section 11 provided that when an employee
may have a right to recover damages for such injury, loss
of service, or death from any person other than such
employer, he may institute an action at law against such
third person or persons before an award is made under this
act, and prosecute the same to its final determination; but
either the acceptance of an award hereunder, or the
procurement of a judgment in an action at law, shall be a
bar to proceeding further with the alternate remedy.
Id. (emphasis added). This express “election of remedies” language was removed in
1933 when the General Assembly deleted section 11 and replaced it with a new
version, Act of May 12, 1933, ch. 449, sec. 1, 1933 N.C. Pub. [Sess.] Laws 798, 798,
which was further amended in 1943, Act of Mar. 8, 1943, ch. 622, sec. 1, 1943 N.C.
Sess. Laws 728, 728-29. The amended section, which was codified at N.C.G.S. § 97-
10, provided that “after the Industrial Commission shall have issued an award, or the
employer or his carrier has admitted liability . . . the employer or his carrier shall
have the exclusive right to commence an action” against the third party for a period
of six months, after which the employee possessed the right to bring the action.2
2 Following the 1933 amendments, the Act
seemed to intend that compensation claims should be
determined and the employer (or insurer) should then be
assured of reimbursement from any common law recovery to
which the employee was entitled by giving the employer the
exclusive right to assert such claim for a period of six months.
The section as interpreted, however, did not prevent the
employee from getting his common law action under way and
collecting both a judgment and compensation without the
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N.C.G.S. § 97-10 (1943) (emphasis added). Because an employee who had received
either an award from the Commission or an admission of liability from the employer
could—after the employer’s exclusive six-month period expired—also proceed against
the third-party tortfeasor, this amended section, which was applicable in Hefner, was
no longer a wholesale bar to an employee pursuing both remedies. See Lovette, 236
N.C. at 667, 73 S.E.2d at 890 (“Under [N.C.G.S. § 97-10], the right to maintain a
common law action still exists in behalf of an employee against a third party through
whose negligence he is injured, even though the injury is compensable under the Act,
and even though the employee actually receives compensation for it under the Act.”).
Yet, the amended section gave little guidance in situations when an employee had
filed a claim for compensation, but there had been no award and no admission of
liability, or in situations in which the employee had yet to file a claim at all.3
employer knowing of the suit at common law.
Survey at 382; see also Whitehead & Anderson, Inc. v. Branch, 220 N.C. 507, 17 S.E.2d 637,
(1941) (holding that an employer who had paid benefits to a deceased employee’s dependents
under the Act could not proceed in a wrongful death action against an independent third-
party tortfeasor when the administrator of the deceased employee had already obtained a
judgment against that third party). This may explain why in 1943 the legislature added the
word “exclusive” to the employer’s right to bring the action, and also provided that the right
existed not just after an award by the Commission, but also upon an admission of liability by
the employer. Survey at 382-83; see also ch. 622, sec. 1, 1943 N.C. Sess. Laws at 728-29.
3 See Survey at 383 (“Whether an action already started by the employee would abate
on the commission’s awarding of compensation (it certainly would not automatically) or
whether the employer could then join as party plaintiff and take charge of the suit, the statute
does not say. It should have gone farther and dealt with these and other specific and highly
practical problems in detail.”).
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A variation of the latter situation arose in Ward v. Bowles, 228 N.C. 273, 45
S.E.2d 354 (1947). There, after the plaintiff was injured in a car accident while in
the course of his employment, he brought a negligence action against the third party.
Id. at 274-75, 45 S.E.2d at 354-55. The third-party defendant contended that, because
the plaintiff had never filed a claim for compensation against his employer, and
because there had been no award issued by the Commission and no admission of
liability by the employer, the plaintiff was precluded from pursuing damages against
the defendant under N.C.G.S. § 97-10. Id. at 274-75, 45 S.E.2d at 354-55. The Court
disagreed, concluding that “[w]hile the rights of the employee, as against a third party
after claim for compensation is filed, are limited, G.S. 97-10, there is nothing in the
Act which denies him the right to waive his claim against his employer and pursue
his remedy against the alleged tort-feasor by common law action for negligence.” Id.
at 275, 45 S.E.2d at 355. Thus, while N.C.G.S. § 97-10, as interpreted, allowed an
employee who had filed a claim for compensation against his employer to also seek
recovery from the third party in the limited circumstances prescribed by the statute,
section 97-10 still provided for an election of remedies for a plaintiff who sought to
avoid those limitations. This decision became the basis for the holding in Hefner.
In Hefner, after the plaintiff was injured in a car accident, he informed the
insurance carrier that he was making no workers’ compensation claim at that time
and was proceeding against the third-party tortfeasor. 252 N.C. at 278, 113 S.E.2d
at 565-66. The plaintiff reached a settlement with the third party, and the settlement
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funds were disbursed. Id. at 278-79, 113 S.E.2d at 566-67. The plaintiff then filed a
workers’ compensation claim seeking to have the defendant insurance carrier pay a
proportionate part of the attorney’s fee in the third-party action. Id. at 278, 113
S.E.2d at 566. The Court first noted that, although N.C.G.S. § 97-10 had recently
been repealed and replaced with new provisions, the new provisions did not apply in
Hefner based on the date of the plaintiff’s injuries. Id. at 281, 113 S.E.2d at 568. The
Court then stated:
Under the language of the deleted statute, G.S. 97-
10, it appears that several courses of action are open to an
employee who is injured, in the course of his employment
by the negligent act of a person other than his employer.
Among the remedies, he may waive his claim against his
employer and pursue his remedy against the third party.
Ward v. Bowles, 228 N.C. 273, 45 S.E.2d 354. This is the
course taken by plaintiff here.
Id. at 282, 113 S.E.2d at 568-69. The Court did recognize that an employee could
recover compensation under the Act and also seek damages from a third party, but
in accordance with Ward, see 228 N.C. at 275, 45 S.E.2d at 355 (“[T]he rights of the
employee, as against a third party after claim for compensation is filed, are limited,
G.S. 97-10 . . . .”), concluded that in those cases the specific procedures of the section
needed to be followed. Hefner, 252 N.C. at 282-83, 113 S.E.2d at 569 (“Indeed the
applicable statute contemplates that where [the] employee pursues his remedy
against the employer and against the third party, a determination of benefits due
under the Act must be made prior to the payment of funds recovered from the third
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party.”).
Accordingly, the Court of Appeals majority here correctly noted that the
“Hefner opinion was not a blanket preclusion of an employee’s right to recover from
his employer as well as the third party tortfeasor under N.C. Gen.[ ]Stat. § 97-10.”
Easter-Rozzelle, ___ N.C. App. at ___, 780 S.E.2d at 248 (majority opinion).
Nonetheless, Hefner did apply an election of remedies that is incompatible with the
current statutory framework.
In 1959 the General Assembly repealed N.C.G.S. § 97-10 and enacted N.C.G.S.
§§ 97-10.1 and 97-10.2. Act of June 20, 1959, ch. 1324, sec. 1, 1959 N.C. Sess. Laws
1512, 1512-15. Notably, these new provisions gave to the employee the exclusive right
to bring the third-party action for the first twelve months from the date of the injury.
Id. at 1512-13. More importantly, subsection 97-10.2(i), which was not addressed
here by the Court of Appeals, provides, as it has continuously since 1959, that:
Institution of proceedings against or settlement with
the third party, or acceptance of benefits under this
Chapter, shall not in any way or manner affect any other
remedy which any party to the claim for compensation may
have except as otherwise specifically provided in this
Chapter, and the exercise of one remedy shall not in any way
or manner be held to constitute an election of remedies so as
to bar the other.
N.C.G.S. § 97-10.2(i) (2015) (emphasis added); see also ch. 1324, sec. 1, 1959 N.C.
Sess. Laws at 1515. We can hardly envision a stronger legislative mandate against
an election of remedies doctrine. The Court’s pronouncement in Hefner that among
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an employee’s remedies, “he may waive his claim against his employer and pursue
his remedy against the third party,” 252 N.C. at 282, 113 S.E.2d at 568-69, is contrary
to the express language of N.C.G.S. § 97-10.2. Accordingly, Hefner does not apply
here to bar plaintiff’s claim under the Act.
Nor does the employer’s lack of consent to the settlement revive Hefner’s
application for a new era. See Easter-Rozzelle, ___ N.C. App. at ___, 780 S.E.2d at
250 (“In light of the requirement of N.C. Gen.[ ]Stat. § 97-10.2(h) that the employer
provide written consent to the Plaintiff’s settlement with a third party, the reasoning
of the Hefner case is applicable here.”). Subsection (h) of the original N.C.G.S. § 97-
10.2 required the employee or employer to obtain the written consent of the other
before making a settlement or accepting payment from a third party and provided
that no release or agreement obtained without consent was valid or enforceable.
N.C.G.S. § 97-10.2(h) (1959); see also ch. 1324, sec. 1, 1959 N.C. Sess. Laws at 1514-
15. In 1983 the legislature added N.C.G.S. § 97-10.2(j), which provided:
In the event that a judgment is obtained which is
insufficient to compensate the subrogation claim of the
Workers’ Compensation Insurance Carrier, or in the event
that a settlement has been agreed upon by the employee
and the third party when said action is pending on a trial
calendar and the pretrial conference with the judge has
been held, either party may apply to the resident superior
court judge of the county in which the cause of action arose
or the presiding judge before whom the cause of action is
pending, for determination as to the amount to be paid to
each by such third party tortfeasor. If the matter is
pending in the federal district court such determination
may be made by a federal district court judge of that
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Opinion of the Court
division.
Act of June 30, 1983, ch. 645, sec. 1, 1983 N.C. Sess. Laws 604, 604. In Pollard we
opined that “subsection (j) must be read in pari materia with the rest of the section,”
specifically subsection (h), and therefore, written consent was still required before a
case was settled in accord with subsection (j). 324 N.C. at 426, 378 S.E.2d at 773; see
also Williams v. Int’l Paper Co., 324 N.C. 567, 572, 380 S.E.2d 510, 513 (1989) (“This
statute, by its terms, makes it clear that neither the employer nor the employee may
make a valid settlement without the written consent of the other. . . . N.C.G.S. § 97-
10.2(j) does not supersede § 97-10.2(h) and subsection (j) should be read in pari
materia with the other provisions of the statute.”). Here the Court of Appeals
majority correctly recited the Court’s holding in Pollard, but failed to account for the
statutory revisions that followed.
Specifically, in 1991 the legislature substantially overhauled subsections (h)
and (j), Act of June 26, 1991, ch. 408, sec. 1, 1991 N.C. Sess. Laws 768, 771-72, and
made further revisions to subsection (j) in 1999 and 2004, Act of June 9, 1999, ch.
194, sec. 1, 1999 N.C. Sess. Laws 401, 401; Act of July 18, 2004, ch. 199, sec. 13.(b),
2003 N.C. Sess. Laws (Reg. Sess. 2004) 786, 792. Unlike the applicable statute in
Pollard, the current version of N.C.G.S. § 97-10.2 provides that no consent is required
when a case is settled in accord with subsection (j). Specifically, subsection (h) states:
Neither the employee or his personal representative nor
the employer shall make any settlement with or accept any
payment from the third party without the written consent
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EASTER-ROZZELLE V. CITY OF CHARLOTTE
Opinion of the Court
of the other and no release to or agreement with the third
party shall be valid or enforceable for any purpose unless
both employer and employee or his personal representative
join therein; provided, that this sentence shall not apply:
(1) If the employer is made whole for all benefits paid or to
be paid by him under this Chapter less attorney’s fees
as provided by (f)(1) and (2) hereof and the release to or
agreement with the third party is executed by the
employee; or
(2) If either party follows the provisions of subsection (j) of
this section.
N.C.G.S. § 97-10.2(h) (2015) (emphases added). Furthermore, subsection (j) has been
amended to further obviate the need for consent:
(j) Notwithstanding any other subsection in this
section, in the event that a judgment is obtained by the
employee in an action against a third party, or in the event
that a settlement has been agreed upon by the employee
and the third party, either party may apply to the resident
superior court judge of the county in which the cause of
action arose or where the injured employee resides, or to a
presiding judge of either district, to determine the
subrogation amount. After notice to the employer and the
insurance carrier, after an opportunity to be heard by all
interested parties, and with or without the consent of the
employer, the judge shall determine, in his discretion, the
amount, if any, of the employer’s lien, whether based on
accrued or prospective workers’ compensation benefits, and
the amount of cost of the third-party litigation to be shared
between the employee and employer.
Id. § 97-10.2(j) (2015) (emphasis added). Accordingly, it is clear that consent is no
longer required for a valid settlement and that either party can avail itself of
subsection (j). See, e.g., Fogleman v. D&J Equip. Rentals, Inc., 111 N.C. App. 228,
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Opinion of the Court
232, 431 S.E.2d 849, 852 (“Pollard endowed subrogation lienholders . . . with the right
not to have their lien abridged without their consent. The amended version of section
97-10.2 affected that right by allowing a party to apply to Superior Court to have it
determine the amount of the lien, regardless of whether the lienholder had
consented.”), disc. rev. denied, 335 N.C. 172, 436 S.E.2d 374 (1993).
Defendant attempts to draw a distinction between the situation here and the
statute based on the settlement funds having been disbursed, asserting that allowing
plaintiff to pursue workers’ compensation benefits is unfair when defendant had no
participation in the settlement process. The court below agreed. See Easter-Rozzelle,
___ N.C. App. at ___, 780 S.E.2d at 249-50 (“[T]he General Assembly clearly intended
for the employer to have involvement and consent in the settlement process . . . .
Allowing Defendant to recoup its lien from settlement funds already paid and
disbursed does not accomplish the statute’s purpose and intent, and is unfair to
Defendant.”). This argument is without merit. Any distinction based upon the timing
of the disbursement of a third-party settlement ignores the entirety of N.C.G.S. § 97-
10.2. We conclude that barring a plaintiff who has received funds from a third party
from pursuing a workers’ compensation claim contravenes the express language of
subsection (i). See N.C.G.S. § 97-10.2(i) (“[T]he exercise of one remedy shall not in
any way or manner be held to constitute an election of remedies so as to bar the other.”
(emphasis added)).
Further, we note that an employer’s lien interest in third-party proceeds is
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Opinion of the Court
“mandatory in nature,” and thus, there is no “windfall of a recovery” to plaintiff here
because defendant is entitled to recover the amount of its lien by means of a credit
against plaintiff’s ongoing workers’ compensation benefits. Radzisz v. Harley
Davidson of Metrolina, Inc., 346 N.C. 84, 88-90, 484 S.E.2d 566, 568-70 (1997)
(holding that although the defendants had denied liability and there had been no
award from the Commission, as contemplated by subsection (f), the defendants were
still entitled to a lien interest in settlement proceeds that had been disbursed to the
plaintiff). Subsection (j) contains no temporal requirement, and either party here
may apply to the superior court judge to determine the amount of defendant’s lien.
As the Commission found:
Plaintiff’s distribution of the third party funds does not
affect Defendant’s right to a subrogation lien on the third
party settlement funds. Plaintiff is still receiving Workers’
Compensation benefits and Defendant can still pursue
reimbursement of its lien from benefits due Plaintiff after
the subrogation amount is determined by agreement of the
parties or by a Superior Court Judge.
The Commission’s approach was entirely consistent with the current statutes, which
protect both the employee’s right to pursue his workers’ compensation claim and the
employer’s right to reimbursement if a third party also has some liability for the
injuries.
Moreover, while the Court of Appeals expressed concern with the fairness of
the notice given by plaintiff here, we conclude that the applicable statute, N.C.G.S. §
97-22, as well the unchallenged findings of the Commission, addresses this concern.
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Opinion of the Court
Specifically, the statute provides:
Every injured employee or his representative shall
immediately on the occurrence of an accident, or as soon
thereafter as practicable, give or cause to be given to the
employer a written notice of the accident, and the employee
shall not be entitled to physician’s fees nor to any
compensation which may have accrued under the terms of
this Article prior to the giving of such notice, unless it can
be shown that the employer, his agent or representative,
had knowledge of the accident, or that the party required
to give such notice had been prevented from doing so by
reason of physical or mental incapacity, or the fraud or
deceit of some third person; but no compensation shall be
payable unless such written notice is given within 30 days
after the occurrence of the accident or death, unless
reasonable excuse is made to the satisfaction of the
Industrial Commission for not giving such notice and the
Commission is satisfied that the employer has not been
prejudiced thereby.
N.C.G.S. § 97-22 (2015); see also N.C.G.S. § 97-18(j) (2015) (“The employer or insurer
shall promptly investigate each injury reported or known to the employer and at the
earliest practicable time shall admit or deny the employee’s right to compensation or
commence payment of compensation . . . .”).
Here the Commission made findings and conclusions that plaintiff gave
defendant notice of the car accident. The Commission found, in relevant part:
6. The Full Commission finds the testimony of
Plaintiff’s wife and Plaintiff to be credible.
7. Based upon a preponderance of the evidence,
the Full Commission finds as fact that Plaintiff notified Mr.
Lee, his supervisor, Ms. Brown, his safety manager, and
some other employees in Defendant’s personnel office that
he was injured in an automobile accident on June 29, 2009
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Opinion of the Court
while traveling to his doctor’s office to get an out-of-work
medical note related to his shoulder injury.
....
20. With regard to Defendant’s notice of
Plaintiff’s June 29, 2009 automobile accident and injury
and the fact that his injury from the automobile accident
occurred while he was driving to see Dr. Burbank for
treatment relating to his compensable right shoulder, the
Full Commission finds, based upon a preponderance of the
credible evidence, that Defendant had actual notice from
Plaintiff’s wife on the day of his automobile accident and
from Plaintiff within three days following his automobile
accident that Plaintiff was injured on June 29, 2009 while
traveling to Dr. Burbank’s office to obtain an out-of-work
note related to his work-related right shoulder injury,
which had been requested by Defendant-Employer.
21. The Full Commission further finds that the
notice to Defendant-Employer given by Plaintiff’s wife and
Plaintiff advising that Plaintiff was injured in an
automobile accident on June 29, 2009 while traveling to his
doctor’s office to get an out-of-work medical note for his
compensable shoulder injury as requested by his employer
was timely given and constituted sufficient actual notice to
alert Defendant that Plaintiff’s injury from the automobile
accident flowed directly from and was causally related to
his compensable right shoulder injury. At a minimum,
Defendant had sufficient actual notice to investigate
whether the automobile accident was compensable under
the Act and to direct medical treatment for Plaintiff, if
appropriate.
22. The Full Commission also finds that Plaintiff
had a reasonable excuse for his delay in giving written
notice to Defendant that he was injured in an automobile
accident on June 29, 2009 while traveling to his doctor’s
office to get an out-of-work medical note for his
compensable shoulder injury as requested by his employer,
as Defendant was given actual notice on the day of the
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Opinion of the Court
accident and again within three days thereafter. Thus,
Defendant had actual notice that Plaintiff’s automobile
accident either was, or was likely compensable under the
Act because it occurred under circumstances where
Plaintiff was seeking medically related treatment for his
compensable right shoulder condition. Additionally,
Plaintiff did not know that his injuries from the automobile
accident were arguably compensable as part of his
Workers’ Compensation claim until the date of mediation
on April 9, 2012.
We note that these findings were unchallenged by defendant, and they therefore are
binding on our review. See Medlin v. Weaver Cooke Constr., LLC, 367 N.C. 414, 423,
760 S.E.2d 732, 738 (2014) (“[W]here findings of fact are not challenged and do not
concern jurisdiction, they are binding on appeal.” (citing, inter alia, N.C.G.S. § 97-86
(2013))). Further, the Commission concluded:
4. The Full Commission concludes that
Defendant had actual notice from Plaintiff’s wife on the day
of his automobile accident and from Plaintiff within three
days following his automobile accident that Plaintiff was
injured on June 29, 2009 while traveling to Dr. Burbank’s
office to obtain an out-of-work note related to his work-
related right shoulder injury, which had been requested by
Defendant-Employer. The notice provided to Defendant
was timely given and constituted sufficient actual notice to
alert Defendant that Plaintiff’s injury from the automobile
accident flowed directly from and was causally related to
his compensable right shoulder injury. At a minimum,
Defendant had sufficient actual notice to investigate
whether the automobile accident was compensable under
the Act and to direct medical treatment for Plaintiff, if
appropriate. Plaintiff had a reasonable excuse for his delay
in giving written notice to Defendant as Defendant had
actual notice of the automobile accident and Plaintiff’s
resulting injury and that the automobile accident flowed
directly from and was causally related to travel related to
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Opinion of the Court
medical treatment for his compensable shoulder condition.
Additionally, Plaintiff did not know that his injuries from
the automobile accident were arguably compensable as
part of his Workers’ Compensation claim until the date of
mediation on April 9, 2012.
This conclusion is supported by the unchallenged findings of fact.
Accordingly, defendant had an opportunity to participate in the settlement
process with the third-party tortfeasor but did not do so. Plaintiff had no reason to
delay negotiations with the third party or disbursement of the settlement proceeds
because, based on the unchallenged findings of the Commission, he did not know that
his injuries were potentially compensable under the Act. On the other hand, because
defendant received actual notice, it had an opportunity to promptly investigate the
accident and determine its compensability. Had defendant done so, it would have
discovered what became apparent in the 9 April 2012 mediation—that plaintiff
suffered compensable injuries—and it could have participated in the settlement
process.
Conclusion
In sum, we hold that the Commission correctly concluded that Hefner is
inapplicable here and that plaintiff had not waived his right to compensation under
the Act. Further, the Commission correctly determined that once the subrogation
lien amount is determined by agreement of the parties or by a superior court judge,
defendant is entitled to reimbursement of its lien from the benefits due to plaintiff.
Accordingly, we reverse the decision of the Court of Appeals, and remand this case to
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Opinion of the Court
that court for further remand to the Commission for additional proceedings not
inconsistent with this opinion.
REVERSED AND REMANDED.
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