Hieb v. HOWELL'S CHILD CARE CENTER, INC.

472 S.E.2d 208 (1996)

Gaye A. HIEB, Employee/Plaintiff/Appellee,
v.
HOWELL'S CHILD CARE CENTER, INC., Employer, and
St. Paul Fire & Marine Insurance Company, Carrier/Defendants/Appellants.

No. COA95-766.

Court of Appeals of North Carolina.

July 2, 1996.

Charles G. Monnett III & Associates by Charles G. Monnett III, Charlotte, for plaintiff appellee.

Russell & King, P.A. by Sandra M. King, Ashville, for defendant appellants.

ARNOLD, Chief Judge.

Defendants argue that the Commission has exclusive jurisdiction over disbursement of the third party proceeds and therefore erred in not staying Judge Sitton's order of distribution. Although defendants are correct in asserting that the Commission has exclusive jurisdiction over disbursement of the third party proceeds in this case, it does not follow that the Commission has the authority to stay a superior court order, even if that order were in error.

Under the Workers' Compensation Act, recovery from a third party tortfeasor is generally distributed by the Industrial Commission pursuant to N.C.Gen.Stat. § 97-10.2(f) (1991). An exception to this rule is provided in G.S. § 97-10.2(j), which grants jurisdiction over distribution of third party proceeds to a superior court judge "in the event that a judgment is obtained which is insufficient to compensate the subrogation claim of the Workers' Compensation Insurance Carrier."

Acting under the apparent authority of this provision, Judge Sitton assumed jurisdiction over the matter and ordered distribution of the third party proceeds. Defendant St. Paul appealed Judge Sitton's order, arguing that Judge Sitton had no jurisdiction under G.S. § 97-10.2(j) to modify Judge Johnston's judgment. Hieb v. Lowery, 121 N.C.App. 33, 464 S.E.2d 308 (1995) (Hieb II). Because the third party judgment exceeded the subrogation claim of the workers' compensation insurance carrier, this Court agreed and held that G.S. § 97-10.2(j) was inapplicable, even if the actual proceeds of the judgment were insufficient to compensate the subrogation claim. "Giving the statute its plain meaning, requires us to read the term `judgment' to mean just that, and to reject plaintiffs' argument that we should look only at the insurance `proceeds' that Mrs. Hieb is to receive in determining the applicability of section 97-10.2(j)." Id. at 38, 464 S.E.2d at 311.

Thus, the Industrial Commission, not the superior court, has exclusive jurisdiction over distribution of the proceeds recovered from the third party tortfeasor in this case. Without the benefit of our decision in Hieb II, the Commission erred in finding that it did not have jurisdiction over the disbursement of the third party funds. This issue, however, is secondary to the appeal here. The only issue we address is whether the Commission had jurisdiction to stay Judge Sitton's order.

Rule 62 of the North Carolina Rules of Civil Procedure governs stays of proceedings to enforce judgments and provides that when an appeal is taken, the appellant may obtain a stay of execution by acting in accordance with and subject to G.S. §§ 1-289, -290, -291, -292, -293, -294, and -295. N.C.Gen. Stat. § 1A-1, Rule 62(d) (1990). Section 1-289 addresses stays of execution on money judgments and provides:

If the appeal is from a judgment directing the payment of money, it does not stay the execution of the judgment unless a written undertaking is executed on the part of the appellant, by one or more sureties, to the effect that if the judgment appealed from, or any part thereof, is affirmed, or the appeal is dismissed, the appellant will pay the amount directed to be paid by the judgment, or the part of such amount as to which the judgment shall be affirmed, if affirmed only in part, and all damages which shall be awarded against the appellant upon the appeal.... The perfecting of an appeal by giving the undertaking mentioned in this section stays proceedings in the court below upon the judgment appealed from....

Defendants did not pursue a stay under Rule 62(d) and G.S. § 1-289, instead improperly filing a motion with the Commission. Although we found in Hieb II that the Commission, not the superior court, has jurisdiction to disburse third party proceeds in this case, such jurisdiction does not extend over a motion to stay execution of a superior court's order. The Full Commission correctly declined to stay Judge Sitton's order.

Defendants next contend that the Full Commission erred in ordering them to resume payment of medical and compensation benefits immediately, to pay all past due accrued amounts, and to continue making payments pending the outcome of the instant appeal to this Court. We disagree.

Defendants argue that G.S. § 97-86.1(a) and (b) are the sole provisions authorizing the Commission to order payment of compensation during the pendency of an appeal, and that these provisions are inapplicable here. While we agree that neither G.S. § 97-86.1(a) nor (b) applies in this case, we find that the Commission did have the authority to order resumption and repayment of workers' compensation benefits after defendants stopped payment without proper approval and in violation of Workers' Compensation Rule 404.

The Industrial Commission has continuing jurisdiction over all proceedings begun before it for compensation in accordance with its terms. Butts v. Montague Bros., 208 N.C. 186, 188, 179 S.E. 799, 801 (1935). In other words, "it is clothed with such implied power as is necessary to perform the duties required of it by the law which it administers." Hogan v. Cone Mills Corp., 315 N.C. 127, 137, 337 S.E.2d 477, 483 (1985).

In Hogan, the Supreme Court found that the Commission has the power to set aside one of its former judgments—a "judicial power conferred on the Commission by the legislature and [ ] necessary to enable the Commission to supervise its own judgments." Id. Because "it is apparent that the Industrial Commission possesses such judicial power as is necessary to administer the Workers' Compensation Act," id. at 138, 337 S.E.2d at 483, it follows that the Commission's continuing jurisdiction over its judgments includes the power to supervise and enforce them. The fact that the lifetime benefits in this case were awarded pursuant to an approved Industrial Commission Form 26 agreement rather than a judgment does not preclude the Commission's jurisdiction to enforce that agreement. See Tabron v. Gold Leaf Farms, Inc., 269 N.C. 393, 396, 152 S.E.2d 533, 535 (1967) (observing that the Commission's jurisdiction is invoked when either a compensation claim is filed or a voluntary settlement is submitted for approval).

The Commission's continuing jurisdiction over compensation awards is revealed in G.S. § 97-18(g) (1995), which provides:

If any installment of compensation is not paid within 14 days after it becomes due, there shall be added to such unpaid installment an amount equal to ten per centum (10%) thereof, which shall be paid at the same time as, but in addition to, such installment, unless such nonpayment is excused by the Commission after a showing by the employer that owing to conditions over which he had no control such installment could not be paid within the period prescribed for the payment.

This section recognizes not only the Commission's power to order a penalty for unpaid installments, but also its power to enforce payment of the late installment itself. The Commission's authority to order an insurer "to make, or to continue payments of benefits, including compensation for medical expenses," is also contemplated in G.S. § 97-88, which governs expenses of appeals brought by insurers. Considering the fact that defendants stopped payment without proper approval, the Full Commission clearly had authority to enforce the Form 26 agreement and order them to resume payments and pay their past due installments.

Finally, defendants argue that the Commission erred in ordering a ten percent penalty against all amounts past due and in ordering them to pay costs, including plaintiff's attorney's fees. The Commission clearly had statutory authority to order a ten percent penalty against all amounts past due pursuant to G.S. § 97-18(g). We are not persuaded by defendants' attempt to distinguish this provision.

The Full Commission's authority to order defendants to pay costs, including attorney's fees, derives from G.S. §§ 97-88 and -88.1. Section 97-88 allows the Commission to award attorney's fees for an insurer's appeal to the Full Commission in which the insurer is ordered to make or continue payments of benefits, and G.S. § 97-88.1 states:

If the Industrial Commission shall determine that any hearing has been brought, prosecuted, or defended without reasonable ground, it may assess the whole cost of the proceedings including reasonable fees for defendant's attorney or plaintiff's attorney upon the party who has brought or defended them.

The Full Commission awarded attorney's fees upon finding defendants in violation of Industrial Commission rules by terminating compensation without the Commission's approval, and by refusing to resume immediate payments following the deputy commissioner's order. We find sufficient evidence to support the Full Commission's conclusion that defendants brought this claim without reasonable grounds, and its decision to award reasonable attorney's fees was appropriate. See Robinson v. J.P. Stevens, 57 N.C.App. 619, 627-28, 292 S.E.2d 144, 149 (1982).

Affirmed.

JOHN C. MARTIN and SMITH, JJ., concur.