Easter-Rozzelle v. City of Charlotte

IN THE COURT OF APPEALS OF NORTH CAROLINA
No. COA15-594
Filed: 1 December 2015
North Carolina Industrial Commission, No. W31301
DAVID EASTER-ROZZELLE, Employee, Plaintiff,
v.
CITY OF CHARLOTTE, Employer, SELF-INSURED, Defendant.
Appeal by defendant from an opinion and award entered 2 March 2015 by the
North Carolina Industrial Commission. Heard in the Court of Appeals 5 November
2015.
Fink & Hayes, P.L.L.C., by Steven B. Hayes, for plaintiff-appellee.
Jones, Hewson & Woolard, by Lawrence J. Goldman, for defendant-appellant.
TYSON, Judge.
The City of Charlotte (“Defendant”) appeals from the Opinion and Award
issued by the North Carolina Industrial Commission in favor of David Easter-
Rozzelle (“Plaintiff”). We reverse.
I. Background
Plaintiff was employed by Defendant as a utility technician. On 18 June 2009,
Plaintiff sustained injury to his neck and right shoulder while lifting a manhole cover
to access a sewer line. Defendant filed a Form 60 in the Industrial Commission
admitting liability and compensability for the injury.
EASTER-ROZZELLE V. CITY OF CHARLOTTE
Opinion of the Court
Plaintiff was treated by Dr. Scott Burbank at OrthoCarolina for the shoulder
injury. On 22 June 2009, Dr. Burbank restricted Plaintiff from work activities until
29 June 2009. Plaintiff continued to experience pain and was unable to perform his
job duties on 29 June 2009. He contacted his employer and was instructed to obtain
a work restriction note from Dr. Burbank. Dr. Burbank’s staff advised Plaintiff to
come to the doctor’s office to pick up the note.
Plaintiff was involved in an automobile accident while driving to Dr. Burbank’s
office and sustained a traumatic brain injury. Plaintiff retained an attorney to
represent him in a personal injury claim for injuries arising out of the accident. He
previously retained different counsel to represent him for his workers’ compensation
claim.
Plaintiff was transported to the hospital following the automobile accident and
asked his wife to contact his supervisor, William Lee. Plaintiff provided his wife with
a card containing Mr. Lee’s name and contact information. Plaintiff’s wife contacted
Mr. Lee and informed him that Plaintiff had been involved in an automobile accident
on the way to obtain an out-of-work note from Dr. Burbank and could not come to
work that day. Plaintiff spoke with Mr. Lee on at least two occasions during the
three-day period following his automobile accident. He also informed Mr. Lee that
he had been injured in an automobile accident while traveling to Dr. Burbank’s office
to pick up the note to extend the work restriction. Plaintiff also relayed this
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EASTER-ROZZELLE V. CITY OF CHARLOTTE
Opinion of the Court
information to his safety manager and other employees in Defendant’s personnel
office.
Plaintiff underwent surgery on his right shoulder on 20 May 2010 and 18
November 2010. On 18 November 2011, Dr. Burbank assigned a 10% permanent
partial disability rating to Plaintiff’s right shoulder. Dr. Burbank also assigned
permanent physical restrictions.
Plaintiff received treatment for traumatic brain injury from Dr. David
Wiercisiewski of Carolina Neurosurgery & Spine and Dr. Bruce Batchelor of
Charlotte Neuropsychologists. Dr. Wiercisiewski diagnosed Plaintiff with a
concussion and post-concussion syndrome. Both Dr. Wiercisiewski and Dr. Batchelor
referred Plaintiff to a psychologist for symptoms of post-traumatic stress disorder,
memory loss, and cognitive deficits.
Plaintiff, through counsel, settled his personal injury claim for $45,524.00 on
1 August 2011. After attorney fees, costs, and medical expenses related to the
accident were paid from the proceeds of the settlement, Plaintiff received net proceeds
of $16,000.00. At the time of disbursement of the settlement proceeds, Plaintiff
continued to be represented by separate law firms for the personal injury and
workers’ compensation claims.
The settlement proceeds were disbursed without either reimbursement to
Defendant for its workers’ compensation lien or a superior court order reducing or
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EASTER-ROZZELLE V. CITY OF CHARLOTTE
Opinion of the Court
eliminating the lien, and without an Industrial Commission order allowing
distribution of the funds. In correspondence to Plaintiff’s personal health insurance
carrier, his personal injury attorney stated Plaintiff was not “at work” when he
sustained the injuries from the automobile accident. Plaintiff’s attorney claimed the
health insurance carrier was responsible for those medical bills.
The parties mediated Plaintiff’s workers’ compensation claim on 9 April 2012.
During the mediation, the workers’ compensation attorney representing Plaintiff
became aware the automobile accident had occurred while Plaintiff was driving to
Dr. Burbank’s office to obtain the work restriction note. Plaintiff’s attorney asserted
the injuries from Plaintiff’s automobile accident should also be covered under
Defendant’s workers’ compensation insurance policy.
Plaintiff’s attorney suspended the mediation and filed a Form 33 request for
hearing on 31 January 2013. Defendant denied the claim based upon estoppel and
because the settlement proceeds from the automobile accident were disbursed
without Industrial Commission approval or release by the superior court.
The matter was heard before the Deputy Commissioner on 11 December 2013.
The Deputy Commissioner concluded that under Hefner v. Hefner Plumbing Co., Inc.,
252 N.C. 277, 113 S.E.2d 565 (1960), Plaintiff had no right to recover additional
compensation from Defendant for the injuries arising out of the automobile accident.
The Deputy Commissioner concluded Plaintiff had settled with and disbursed the
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EASTER-ROZZELLE V. CITY OF CHARLOTTE
Opinion of the Court
funds from a third party settlement without preserving Defendant’s lien, or applying
to a superior court judge or the Commission to reduce or eliminate the lien. The
Deputy Commissioner also concluded Plaintiff was estopped from contending he is
entitled to benefits under the Workers’ Compensation Act.
Plaintiff appealed to the Full Commission, and the matter was heard on 15
August 2014. The Commission found the injuries Plaintiff sustained in the
automobile accident on 29 June 2009 were causally related to Plaintiff’s shoulder
injury, and are compensable as part of Plaintiff’s shoulder injury claim. The
Commission further found Plaintiff provided Defendant with sufficient notice of the
automobile accident and his injuries.
The Commission concluded the Supreme Court of North Carolina’s decision in
Hefner is inapplicable to facts and law of this case, and Hefner does not preclude
Plaintiff from pursuing benefits under the Workers’ Compensation Act. The
Commission further determined Plaintiff is not judicially nor equitably estopped from
recovery under the Workers’ Compensation Act for injuries related to his automobile
accident. The Commission determined Defendant is entitled to a statutory lien on
recovery from the third party proceeds Plaintiff had received from settlement of his
personal injury claim when the subrogation amount is determined by agreement of
the parties or a superior court judge. Defendant appeals from the Full Commission’s
Opinion and Award.
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EASTER-ROZZELLE V. CITY OF CHARLOTTE
Opinion of the Court
II. Issues
Defendant argues the Full Commission erred by concluding: (1) the Supreme
Court’s decision in Hefner is not applicable to this case to prevent Plaintiff’s recovery
under the Workers’ Compensation Act for injuries he sustained in the third party
automobile accident; (2) Plaintiff is not barred from recovery under the Act by
principles of estoppel; and (3) Defendant maintained a subrogation lien and suffered
no prejudice from Plaintiff’s settlement with the third party tortfeasor.
III. Standard of Review
This Court reviews the Industrial Commission’s conclusions of law de novo.
Lewis v. Sonoco Prods. Co., 137 N.C. App. 61, 68, 526 S.E.2d 671, 675 (2000). Under
a de novo standard of review, this Court considers the matter anew and can freely
substitute its legal conclusions for those of the Commission. Peninsula Prop. Owners
Ass’n v. Crescent Res., LLC, 171 N.C. App. 89, 92 614 S.E.2d 351, 353 (2005) (citing
In re Appeal of the Greens of Pine Glen Ltd. P’ship, 356 N.C. 642, 647, 576 S.E.2d 316,
319 (2003)), appeal dismissed and disc. review denied, 360 N.C. 177, 626 S.E.2d 648
(2005).
IV. Right to Recovery under the Workers’ Compensation Act
Defendant argues the Commission erred in concluding the Supreme Court’s
decision in Hefner is inapplicable to the facts of this case. We agree.
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EASTER-ROZZELLE V. CITY OF CHARLOTTE
Opinion of the Court
In Hefner, the plaintiff was injured in an automobile accident during the course
and scope of his employment. The plaintiff’s counsel advised the workers’
compensation insurance carrier that the plaintiff was pursuing a claim against the
third party tortfeasor and was “making no claim for Workmen’s Compensation
benefits at this time.” 252 N.C. at 279, 113 S.E.2d at 566.
The plaintiff’s attorney in Hefner kept the workers’ compensation insurance
carrier informed of the status of the plaintiff's injuries and of developments in the
negotiations with the third party tortfeastor. Id. at 278, 113 S.E.2d at 566. The
plaintiff reached a settlement agreement with the third party tortfeasor and the
settlement funds were disbursed without providing for the workers’ compensation
lien. Id.
Following settlement, the plaintiff filed a claim with the Industrial
Commission. Id. He argued that, although he had specifically chosen to settle with
the third party tortfeasor, the workers’ compensation carrier should be ordered to pay
a proportionate part of his attorney fees in the third party matter. The Supreme
Court 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 Workmen’s Compensation Act. In
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EASTER-ROZZELLE V. CITY OF CHARLOTTE
Opinion of the Court
light of the provisions of the Act as interpreted by this
Court, the answer is ‘No.’
Id. at 281, 113 S.E.2d 568.
Here, the Full Commission concluded:
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).
(Emphasis supplied).
The Opinion and Award contains error and a misstatement of law with regard
to the Court’s holding in Hefner. The Hefner rationale does not hold that, under the
former statute, the injured employee was restricted from recovering both under a
workers’ compensation action and an action at law against a third party tortfeasor.
The Court in Hefner recognized the former statute, N.C. Gen. Stat. § 97-10, permitted
the plaintiff to recover compensation under the Workers’ Compensation Act and seek
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EASTER-ROZZELLE V. CITY OF CHARLOTTE
Opinion of the Court
damages from the third party tortfeasor. Id. 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 party.”
(emphasis supplied)).
The provision of the Workers’ Compensation Act, which formerly required the
injured employee to elect between pursuing a remedy against the employer versus
the third party tortfeasor, was eliminated by the 1933 amendment of the Act.
Whitehead & Anderson, Inc. v. Branch, 220 N.C. 507, 510, 17 S.E.2d 637, 639 (1941).
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.
Defendant argues that under the holding in Hefner, Plaintiff may not ignore
the disbursement provisions of the Workers’ Compensation Act and thereafter
attempt to recover benefits from the employer under the Act. The Hefner case was
determined under N. C. Gen. Stat. § 97-10, which was repealed by Session Laws 1959,
c. 1324.
The current version of the statute, N.C. Gen. Stat. § 97-10.2, sets forth the
rights and interests of the parties when the employee holds a common law cause of
action for damages against a third party tortfeasor. N.C. Gen. Stat. § 97-10.2 (a)
(2013). The statute gives both the employer and the employee the right to proceed
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EASTER-ROZZELLE V. CITY OF CHARLOTTE
Opinion of the Court
against, and make settlement with, the third party. N.C. Gen. Stat. § 97-10.2(b) and
(c) (2013). The statute provides:
(h) In any proceeding against or settlement with the third
party, every party to the claim for compensation shall have
a lien to the extent of his interest under (f) hereof upon any
payment made by the third party by reason of such injury
or death, whether paid in settlement, in satisfaction of
judgment, as consideration for covenant not to sue, or
otherwise and such lien may be enforced against any
person receiving such funds. 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 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. Gen. Stat. § 97-10.2(h) (2013) (emphasis supplied).
Pursuant to subsection (j) of the statute, following the employee’s settlement
with the third party, either the employee or the employer may apply to a superior
court judge to determine the subrogation amount. N.C. Gen. Stat. § 97-10.2(j) (2013).
“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
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EASTER-ROZZELLE V. CITY OF CHARLOTTE
Opinion of the Court
judge shall determine, in his discretion, the amount, if any, of the employer’s lien.”
Id.
When a case is settled pursuant to subsection (j), our Supreme Court has held
that the employer must still give written consent pursuant to subsection (e). Pollard
v. Smith, 324 N.C. 424, 426, 378 S.E.2d 771,773 (1989). Defendant’s mandatory right
to reimbursement under N.C. Gen. Stat. § 97-10.2 (e) is not waived by failure to admit
liability or obtain a final award prior to distribution of the third party settlement
proceeds. Radzisz v. Harley Davidson, 346 N.C. 84, 90, 484 S.E.2d 566, 569-70 (1997).
“The purpose of the North Carolina Workers’ Compensation Act is not only to
provide a swift and certain remedy to an injured worker, but also to ensure a limited
and determinate liability for employers.” Id. at 89, 484 S.E.2d 566, 569 (1997)
(citation omitted). By enacting N.C. Gen. Stat. § 97-10.2(e) and (j), the General
Assembly clearly intended for the employer to have involvement and consent in the
settlement process, including allocation and approval of costs and fees, and
determination of the employer’s lien. Allowing the employee to settle with the third
party tortfeasor, determine the allocation, distribute funds, and later claim
entitlement to workers’ compensation benefits would eviscerate the statute’s intent.
Plaintiff argues the Hefner holding is distinguishable because the settlement
in that case involved an amount in excess of the employer’s liability under the
Workers’ Compensation Act. Here, Plaintiff asserts he recovered “an amount grossly
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EASTER-ROZZELLE V. CITY OF CHARLOTTE
Opinion of the Court
inadequate” to cover his medical bills and lost wages. This distinction is insignificant.
Regardless of the amount of the settlement, the employer was not provided an
opportunity to participate in the settlement or allocation of its disbursement by its
providing written consent. Also, neither the superior court nor the Commission had
a role in determining the respective rights or obligations of the parties.
In Pollard v. Smith, the plaintiff, a highway patrolman, was injured in an
automobile accident while on duty. Pollard, 324 N.C. at 425, 378 S.E.2d at 772. The
North Carolina Department of Crime Control and Public Safety paid workers’
compensation benefits to the plaintiff. The plaintiff then settled with the third party
without the Department’s consent to the settlement. Id. Also, without any notice to
the Department, the plaintiff petitioned the superior court for an order distributing
the funds. The superior court ordered that all proceeds from the settlement be paid
to the plaintiff. Id.
The Supreme Court held “[t]he settlement . . . is void because it does not comply
with N.C.G.S. § 97-10.2(h) in that the Department did not give its written consent to
the settlement.” Pollard, 324 N.C. at 426, 378 S.E.2d at 771 (emphasis supplied);
accord Williams v. International Paper Co., 324 N.C. 567, 380 S.E.2d 510 (1989)
(holding a settlement reached by the parties without the written consent of the
employer is void). Plaintiff argues that under Pollard and Williams, the settlement
should be treated as void, rather than bar recovery under the Act. Plaintiff asserts
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EASTER-ROZZELLE V. CITY OF CHARLOTTE
Opinion of the Court
the correct remedy is to void the settlement and allow the superior court to determine
the amount, if any, of Defendant’s lien. If any amount is due Defendant, Plaintiff
asserts future payment can be deducted from benefits due to Plaintiff. We disagree.
Plaintiff’s claims against the third party tortfeasor are not before this Court.
The difference between this case and Pollard and Williams, is both those cases
involved appeals from the superior court’s order allowing the settlements to be
disbursed. The settlements had not been disbursed without the court’s or
Commission’s approval.
Here, the settlement was agreed to, paid, allocated and disbursed without
notice to Defendant and prior to Plaintiff’s later claim for entitlement to workers’
compensation benefits. Initial and oral notice of the accident to Defendant does not
satisfy the required statutory written notice of the claim and consent to the
settlement or disbursement. The statute specifically prohibits either party from
entering into a settlement or accepting payment from the third party without written
consent of the other. N.C. Gen. Stat. 97-10.2(h).
Plaintiff’s assertion does not consider or align with the legislative purpose of
N.C. Gen. Stat § 97-10.2(h) to allow Defendant to participate in the settlement
process by requiring review and written consent to the settlement. 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.
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EASTER-ROZZELLE V. CITY OF CHARLOTTE
Opinion of the Court
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. Where an employee is injured in the course of
his employment by the negligent act of a third party, settles with the third party, and
proceeds of the settlement are disbursed in violation of N.C. Gen. Stat. § 97-10.2, the
employee is barred from recovering compensation for the same injuries from his
employer in a proceeding under the Workers’ Compensation Act. Hefner, 252 N.C. at
281, 113 S.E.2d 568.
In light of our holding, we need not address the applicability of principles of
judicial and equitable estoppel. By the express language of the statute and the
General Assembly’s stated intent, Plaintiff is precluded from recovering workers’
compensation benefits under the Act for injuries arising from the automobile accident
after excluding Defendant from the settlement allocation and disbursement of
proceeds. Id. Plaintiff’s arguments are overruled.
V. Conclusion
Plaintiff is barred from later claiming entitlement to compensation under the
Workers’ Compensation Act after settling his claim with the third party tortfeasor
without the written consent of the employer in violation of N.C. Gen. Stat. § 97-10.2,
or an order from the superior court or the Commission, prior to disbursement of the
proceeds of the settlement. The Industrial Commission erred in finding and
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EASTER-ROZZELLE V. CITY OF CHARLOTTE
Opinion of the Court
concluding Plaintiff was entitled to workers’ compensation benefits under these facts.
The Commission’s Opinion and Award is reversed.
REVERSED.
Judges McCULLOUGH concurs.
Judge DIETZ concurs with separate opinion.
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No. COA15-594 – Easter-Rozzelle v. City of Charlotte
DIETZ, Judge, Concurring.
This case presents a hornbook example of the doctrine of quasi-estoppel.
Under the Workers’ Compensation Act, an employee who is injured by a third party
in the course of his employment cannot settle and collect payment from the tortfeasor
without (1) the written consent of the employer; (2) an order from a superior court
judge setting the amount of the employer’s lien on the settlement payment; or (3)
paying the employer the full amount of its claimed lien as part of the settlement. See
N.C. Gen. Stat. § 97-10.2(h),(j).
By settling his tort claim and receiving a substantial settlement payment
without doing any of these things, Easter-Rozzelle received a benefit: the immediate
receipt of money that, had he treated the claim as one subject to the Workers’
Compensation Act, likely would have been split with—or paid entirely to—his
employer.
The acceptance of this benefit invokes the doctrine of quasi-estoppel. Easter-
Rozzelle had a choice—either follow the statutory procedure for settling a tort claim
that also gives rise to a compensable workers’ compensation injury, or treat the
subsequent injury as an ordinary tort claim not subject to the statutory provisions.
Easter-Rozzelle chose the latter. As a result, he received the benefit of a settlement
not subject to employer approval, and a settlement check not subject to a workers’
EASTER-ROZZELLE V. CITY OF CHARLOTTE
Dietz, J., Concurring
compensation lien. Later, Easter-Rozzelle took a plainly inconsistent position by
asserting that his injury was, in fact, subject to the Workers’ Compensation Act
despite having just settled the claim in a manner that indicated it was not.
“Quasi-estoppel ‘has its basis in acceptance of benefits’ and provides that
‘[w]here one having the right to accept or reject a transaction or instrument takes
and retains benefits thereunder, he ratifies it, and cannot avoid its obligation or effect
by taking a position inconsistent with it.’” Carolina Medicorp, Inc. v. Bd. of Trustees
of State of N.C. Teachers’ & State Employees Comprehensive Major Med. Plan, 118
N.C. App. 485, 492, 456 S.E.2d 116, 120 (1995).
I would hold that, by entering into a settlement with the tortfeasor that treated
his injury claim as one not subject to the Workers’ Compensation Act, Easter-Rozzelle
is estopped from later seeking benefits under the Act for that same injury. Of course,
Easter-Rozzelle can continue to receive his workers’ compensation benefits for his
underlying shoulder injury—the one that sent him to meet with his doctor on the day
of the accident. But I would hold that quasi-estoppel precludes Easter-Rozzelle from
asserting that the injuries sustained in the accident are compensable under the
Workers’ Compensation Act because Easter-Rozzelle chose to receive the benefits of
an up-front settlement payment from the tortfeasor that treated those injuries as if
they were not subject to the Act.
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