Ketchie v. Fieldcrest Cannon, Inc.

IN THE COURT OF APPEALS OF NORTH CAROLINA
No. COA15-140
Filed: 6 October 2015
North Carolina Industrial Commission, I.C. Nos. 459234, 271904
DOROTHY JANE KETCHIE and CLEGG LEE JOINES, Employees, Plaintiffs,
v.
FIELDCREST CANNON, INC., Insolvent Self-Insured Employer, N.C. SELF-
INSURANCE SECURITY ASSOCIATION, Defendants.
Appeal by Plaintiffs-Appellants from order entered 29 October 2014 by the Full
Commission of the North Carolina Industrial Commission. Heard in the Court of
Appeals 13 August 2015.
Wallace and Graham, P.A., by Michael B. Pross, Edward L. Pauley, and Cathy
A. Williams, for Plaintiffs-Appellants.
Stuart Law Firm, PLLC, by Catherine R. Stuart and Susan J. Vanderweert,
for Defendants-Appellees.
INMAN, Judge.
Plaintiffs-Appellants are appealing the Full Commission’s order denying their
claims on the grounds that their claims are not “covered claims,” as that term is
defined in N.C. Gen. Stat. § 97-130(4), because their last injurious exposure to
asbestos occurred before Fieldcrest was a member of the North Carolina Self-
Insurance Security Association (“the Security Association”). After careful review, we
affirm.
JOINES & KETCHIE V. FIELDCREST CANNON
Opinion of the Court
When workers who suffer from occupational disease incurred their last
injurious exposure to asbestos prior to a self-insurer joining the Security Association,
this Court cannot interpret the statute in a manner contrary to its plain and
unambiguous language, even if this interpretation bars recovery by workers who have
no other recourse due to the employer’s bankruptcy.
Factual and Procedural Background
Plaintiff-Appellant Clegg Lee Joines (“Mr. Joines”) was employed for various
periods of time by Defendant-Appellee Fieldcrest Cannon, Inc. (“Fieldcrest”)
beginning in 1941 and ending 24 September 1986. It is undisputed that Mr. Joines
was exposed to asbestos during his employment with Fieldcrest. The parties
stipulated that Mr. Joines’s last injurious exposure to asbestos occurred during the
seven months prior to 24 September 1986. Mr. Joines was diagnosed with
mesothelioma in 2003 and died on 9 May 2004.
Plaintiff-Appellant Dorothy Jane Ketchie (“Ms. Ketchie”) was employed by
Fieldcrest from 1972 to 1974. Her last date of employment was 31 January 1974.
The parties stipulated that her last injurious exposure to asbestos occurred within
the seven months prior to 31 January 1974. In 2000, Ms. Ketchie was diagnosed with
asbestosis as a result of her exposure to asbestos during her employment with
Fieldcrest.
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Opinion of the Court
The General Assembly created the Security Association on 1 October 1986 after
several large, self-insured trucking companies became insolvent which resulted in
many injured employees’ outstanding claims not being paid. The Security
Association’s enabling statute states that the purpose of the Security Association is,
among other things, “to provide mechanisms for the payment of covered claims
against member self-insurers, to avoid excessive delay in payment of covered claims,
[and] to avoid financial loss to claimants because of the insolvency of a member self-
insurer[.]” N.C. Gen. Stat. § 97-131(a) (2013). This same language was used in the
original 1986 version of section 97-131(a).
Fieldcrest (which later became a subsidiary of Pillowtex Inc. and Pillowtex
Corporation) was a member of the Security Association from 1 October 1986 until 19
December 1997, at which time Fieldcrest purchased workers’ compensation
insurance. In 2000, Pillowtex filed for bankruptcy in Delaware. However, the
bankruptcy court ordered relief from the automatic stay to allow Pillowtex to continue
resolving workers’ compensation claims that had arisen prior to Fieldcrest’s
membership in the Security Association, i.e., claims that arose prior to 1 October
1986. Pillowtex reorganized and emerged from bankruptcy.
Pillowtex filed for a second bankruptcy in 2003. At that time, Fieldcrest
defaulted on its workers’ compensation claims incurred during its period of self-
insurance—claims that arose prior to Fieldcrest joining the Security Association on 1
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Opinion of the Court
October 1986. Plaintiffs’-Appellants’ claims, and approximately 15 other similarly
situated former employees’ claims, fell into this category—their employment and
their last injurious exposure to asbestos both occurred prior to 1 October 1986 but
their asbestos-related diseases were not diagnosed until after Fieldcrest’s
bankruptcies. Because Plaintiffs-Appellants were diagnosed with their asbestos-
related diseases after Fieldcrest declared bankruptcy in 2003 and defaulted on all of
its outstanding workers’ compensation claims, their last resort to seek compensation
is the Security Association.
Both Plaintiffs-Appellants filed workers’ compensation claims against
Fieldcrest and the Security Association in the Industrial Commission in 2009. The
matter came on for hearing before the Full Commission on 4 August 2014. The Full
Commission concluded that the language of section 97-130(4) was plain and
unambiguous and statutorily excluded both Plaintiffs’-Appellants’ claims because
“covered claims” only includes those claims that relate to an injury that occurred
while the employer was a member of the Security Association. Here, because
Plaintiffs-Appellants were not injured but had asbestos-related diseases, the Full
Commission relied on N.C. Gen. Stat. § 97-57, which provides that in latent
occupational disease cases, “liability attaches to the employer or carrier who is on
the risk when the last injurious exposure occurs.” Thus, because “Fieldcrest was not
a member of [the] Security Association on the alleged date of last injurious exposure,”
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Opinion of the Court
the Plaintiffs’-Appellants’ claims were not “covered claims” under section 97-130(4).
Plaintiffs-Appellants appeal.
Standard of Review
“The Industrial Commission's conclusions of law are reviewable de novo by this
Court.” Moore v. City of Raleigh, 135 N.C. App. 332, 334, 520 S.E.2d 133, 136 (1999).
“Although the Workers' Compensation Act should be liberally construed, judges must
interpret and apply statutes as they are written” to ensure that the legislative intent
is accomplished. Clark v. ITT Grinnell Indus. Piping, Inc., 141 N.C. App. 417, 426,
539 S.E.2d 369, 375 (2000). As our Supreme Court has noted:
This Court has interpreted the statutory provisions of
North Carolina's workers' compensation law on many
occasions. In every instance, we have been wisely guided
by several sound rules of statutory construction which
bear repeating at the outset here. First, the Workers'
Compensation Act should be liberally construed, whenever
appropriate, so that benefits will not be denied upon mere
technicalities or strained and narrow interpretations of its
provisions. Second, such liberality should not, however,
extend beyond the clearly expressed language of those
provisions, and our courts may not enlarge the ordinary
meaning of the terms used by the legislature or engage in
any method of “judicial legislation.” Third, it is not
reasonable to assume that the legislature would leave an
important matter regarding the administration of the Act
open to inference or speculation; consequently, the
judiciary should avoid ingrafting upon a law something
that has been omitted, which it believes ought to have been
embraced.
Shaw v. U.S. Airways, Inc., 362 N.C. 457, 462-63, 665 S.E.2d 449, 452-53 (2008).
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Analysis
The only issue on appeal is whether N.C. Gen. Stat. § 97-130(4) can be
interpreted to include Plaintiffs’-Appellants’ claims even though their last injurious
exposure occurred prior to Fieldcrest becoming a member of the Security Association.
The Security Association is a nonprofit, unincorporated entity created to,
among other things, “provide mechanisms for the payment of covered claims against
member self-insurers, to avoid excessive delay in payment of covered claims, [and] to
avoid financial loss to claimants because of the insolvency of a member self-insurer.”
N.C. Gen. Stat. § 97-131(a) (2013). All individual and group self-insurers are required
to be members of the Security Association as a condition of being licensed to self-
insure by the Commissioner of Insurance. N.C. Gen. Stat. § 97-131(b) (2013). “An
individual self-insurer or group self-insurer shall be deemed to be a member of the
Association for purposes of its own insolvency if it is a member when the compensable
injury occurs.” N.C. Gen. Stat. § 97-131(b)(2) (2013). “Covered claims” are the unpaid
claims against insolvent self-insurers “that relate[] to an injury that occurs while the
[self-insurer] is a member of the Association and that is compensable under [the
Workers’ Compensation Act].” N.C. Gen. Stat. § 97-130(4) (2013).
The plain language of sections 97-130 and 97-131 restricts the scope of
compensation to those claims that arise while a self-insured company is both (1)
insolvent and (2) a member of the Security Association. Thus, the only claims that
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Opinion of the Court
the Security Association would be obligated to pay on behalf of Fieldcrest are those
that “relate to an injury” that occurred—or in this case, relate to an occupational
disease where the last injurious exposure occurred—while Fieldcrest was a member
of the Security Association. Because the Security Association was not created until
1 October 1986, a date after each of Plaintiffs’-Appellants’ last injurious exposure to
asbestos occurred, these claims do not constitute “covered claims” within the scope of
the statutes. Thus, the Full Commission properly concluded that Plaintiffs-
Appellants are not eligible for compensation pursuant to N.C. Gen. Stat. § 97-130(4)
and § 97-131.
Plaintiffs-Appellants contend that the plain meaning approach to interpreting
the statutes is “overly narrow” for two reasons. First, Plaintiffs-Appellants argue
that because the General Assembly used only the word “injury” in N.C. Gen. Stat. 97-
130(4), “the General Assembly simply never contemplated some of the unique issues
found in disease claims when it enacted the Security Association statutes.”
Therefore, as Plaintiffs-Appellants contend, the laws regarding the Security
Association must be “flexibly construe[d]” to effectuate the intent of the legislature to
compensate victims of occupational disease in addition to victims of injuries. This
argument fails because section 97-52 (2013) of the Workers’ Compensation Act
provides that the disablement or death from an occupational disease “shall be treated
as the happening of an injury by accident.” Thus, the General Assembly’s use of the
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Opinion of the Court
word “injury” necessarily included any claims for occupational disease. Therefore, it
is not necessary to “flexibly” expand our interpretation of what constitutes a “covered
claim” based on the General Assembly’s failure to use the word “occupational disease”
in the relevant statutes.
Second, Plaintiffs-Appellants allege that the amendments to the statutes when
the Security Association was first created in 1986 evidence a legislative intent that
“all claims arising due to an insolvency whether before or after 1986 would be paid
by the Security Association.” Following Plaintiffs’-Appellants’ logic, “covered claims”
would include even those claims that had arisen before a self-insurer became a
member of the Security Association; in other words, once a self-insurer joined the
Security Association, all claims were retroactively covered. We disagree with this
interpretation of the amendments.
As noted, while we must liberally construe workers’ compensation statutes,
this Court must not enlarge the definition of “covered claims” beyond the clearly
expressed language of the statutes. See Shaw, 362 N.C. at 462-63, 665 S.E.2d at 453.
Plaintiffs-Appellants rely on the original 1986 version of section 97-133(a)(4), which
has been subsequently amended, that states:
The Association shall pay claims against a self-insurer that
are not or have not been paid as a result of a determination
of insolvency or the institution of bankruptcy or
receivership proceedings that occurred prior to the effective
date of this Article; provided that any assessments made to
pay such claims may be credited towards the tax paid by
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Opinion of the Court
the self-insurers under G.S. 97-100.
1986 N.C. Sess. Laws 208, 208-09, ch. 928, § 1 (emphasis added). Plaintiffs-
Appellants interpret this language to mean that any claims that arose “prior to the
effective date” of the Security Association statutes are covered. However, Plaintiffs-
Appellants have misinterpreted this statute; the clause “that occurred prior to the
effective date of this Article” refers to when the insolvency occurred, not when the
claims arose. This original version of the statute required the Security Association to
pay claims that had arisen prior to 1 October 1986 only if the self-insurer had become
insolvent prior to the creation of the Security Association, in order to cover the
existing workers’ compensation claims against the insolvent trucking companies.
However, the original language does not reflect an intent to cover pre-existing claims
against companies that were solvent prior to creation of the Security Association. In
other words, there is no coverage for pre-1986 claims if the insolvency of the self-
insurer occurred after the Security Association was created.
In addition to misconstruing the original language of section 97-133(a)(4),
Plaintiffs-Appellants completely disregard the plain language of the original version
of section 97-131(b)(2):
A self-insurer shall be deemed to be a member of the
Association for purposes of its own insolvency when: (a) the
self-insurer is a member of the Association when the
insolvency occurs, but claims relating to a compensable
event that occurred prior to the date the self-insurer joined
the Association are not included hereunder[.]
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1986 N.C. Sess. Laws 402, 403, ch. 1013, § 1 (emphasis added). This language plainly
precluded claims that arose before a self-insurer joined the Security Association if the
self-insurer was solvent prior to the creation of the Security Association. Moreover,
even under the original version of the statutes, a “covered claim” still only included
those claims that related to an injury that occurred while the self-insurer was a
member of the Security Association. Id. Plaintiffs’-Appellants’ interpretation of the
1986 version of section 97-133(a)(4) cannot be reconciled with the other provisions of
the statutes expressly precluding coverage for pre-existing claims against self-
insurers who were solvent at the time the Security Association was created. Thus,
even if this Court were to conclude that the language is ambiguous, and look to the
legislative history to discern intent, the original 1986 statutes precluded Plaintiffs’-
Appellants’ claims from being “covered claims” because: (1) Fieldcrest was solvent
when it joined the Security Association on 1 October 1986; and (2) Plaintiffs’-
Appellants’ last injurious exposure occurred prior to Fieldcrest becoming a member.
Finally, Plaintiffs-Appellants contend that the Full Commission’s order
violates their due process and equal protection rights. However, because Plaintiffs-
Appellants fail to raise any constitutional argument before the Industrial
Commission, they waived these arguments on appeal. See Powe v. Centerpoint
Human Servs., 215 N.C. App. 395, 412, n.3, 715 S.E.2d 296, 307, n.3 (2011) (refusing
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Opinion of the Court
to address a plaintiff’s constitutional argument when she failed to raise this issue
before the Industrial Commission).
Conclusion
Based on the plain and unambiguous language of the statutes governing the
Security Association, we affirm the Full Commission’s conclusion that Plaintiffs’-
Appellants’ claims are not “covered claims” for purposes of compensation.
AFFIRMED.
Judges STROUD and MCCULLOUGH concur.
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