Collins v. Deparment of Alcoholic Beverage Control

BAKER, Judge.

In this appeal from a decision of the Workers’ Compensation Commission (commission), Donald F. Collins (claimant) contends that the commission erroneously permitted the Department of Alcohol Beverage Control and its insurance carrier (jointly referred to herein as employer) to recoup the overpayment of compensation benefits paid to claimant pursuant to an award. The commission found that because the calculation of claimant’s average weekly wage had been based upon inaccurate information resulting in an erroneous award, “there has been a mutual mistake that entitled the employer to recoup the overpayment.” Claimant asserts that the evidence does not support a finding of mutual mistake of fact and that Code §§ 65.2-708 and -712 prohibit retrospective recoupment of monies paid under an open award. For the reasons that follow, we affirm.

The material facts are not in dispute. Claimant sustained a compensable injury by accident on August 5, 1992, at which time his disability was accepted by employer as compensable. Initially, employer’s insurance adjuster had difficulty obtaining a wage chart from employer. She requested that claimant provide her with his last eight pay stubs to enable her to calculate his average weekly wage. The adjuster took this action in order to alleviate claimant’s concerns that he would have no money to buy Christmas gifts or pay his bills.

Using the eight pay stubs as a basis, the adjuster calculated claimant’s average weekly wage to be $534.24. If that sum were accurate, claimant would have been entitled to an award of $356.17 weekly benefits. The adjuster prepared a memorandum of agreement that was executed by the parties and presented to the commission for approval. The agreement certified that claimant’s pre-injury average weekly wage was $534.24. On January 11, 1993, the commission entered an award approving the agreement. The award was not in accord with Code § 65.2-101 because it was based upon sums in excess of claimant’s average weekly wage.

On February 23,1993, employer forwarded to the adjuster a wage earning chart covering the period from July 1, 1991 to July 30, 1992.¹ That chart disclosed that claimant’s average weekly wage was $210.64 instead of $534.24, which had been calculated from the eight pay stubs. Based upon an average weekly wage of $210, claimant’s weekly compensation benefits should have been $140.43 instead of $356.17. Compensation has been paid through August 1, 1993 in an amount equal to the award.

Employer filed a form entitled “Application for Hearing” and requested that the award be vacated. Employer also sought permission to recoup its overpayments by off-setting credits against future benefits it would be required to pay claimant.

The foregoing evidence was presented to a deputy commissioner, who found as follows:

A review of the evidence leads us to conclude that the significant difference between the average weekly wage reflected on the Memorandum of Agreement and the actual average weekly wage constitutes imposition. Furthermore, we find under these circumstances that the employer is entitled to a credit for overpayment made for excess compensation benefits and penalties in the amount of $8,629.60. There is no dispute concerning the claimant’s average weekly wage at the time of the injury but rather only as to whether or not the Award should be adjusted and the credit granted. We find they should.

The commission affirmed the finding that employer was entitled to credit for the overpayment but based its conclusion on mutual mistake of fact, not imposition, and said:

The Commission clearly has authority to amend an average weekly wage which results from fraud, imposition or mutual mistake. In this case, there has been a mutual mistake as to the claimant’s average weekly wage, and the employer is entitled to recoup the overpayment. The Opinion appealed from is AFFIRMED with the MODIFICATION that $60.00 per week shall be deducted until the overpayment is recovered.

As applicable to the case before us, “average weekly wage” means the total earnings of the injured employee in the employment in which he was working at the time of the injury during the period of fifty-two weeks immediately preceding the date of the injury, divided by fifty-two. John Briggs Co. v. Somers, 228 Va. 729, 732, 324 S.E.2d 694, 696 (1985); Code § 65.2-101(l)(a). If the average weekly wage is miscalculated and the employer voluntarily has paid the claimant sums that were not due, the employer may recoup the sums by credits or a shortened period of time for which compensation must be paid, subject to the approval of the commission. Code § 65.2-520.² Here, the claim had advanced to a stage beyond the provisions of that code section. An award based upon an agreed memorandum had been made by the commission, and the overpayment was made pursuant to that award, not voluntarily.

Claimant argues that if employer’s application for a hearing was based upon a change in condition pursuant to the provisions of Code § 65.2-708, he cannot recoup the overpayment made prior to filing his application, as relief granted pursuant to a change in condition may be prospective only. See Bristol Door & Lumber Co. v. Hinkle, 157 Va. 474, 161 S.E. 902 (1932). Employer contends that its application for a hearing was not premised upon Code § 65.2-708, but, instead, was based upon the doctrine of imposition established not by statute but rather by the courts. See Somers, 228 Va. at 735, 324 S.E.2d at 697; Harris v. Diamond Constr. Co., 184 Va. 711, 36 S.E.2d 573 (1946); Avon Prods., Inc. v. Ross, 14 Va.App. 1, 415 S.E.2d 225 (1992).

Claimant concedes that, in appropriate cases, the doctrine of imposition may be applied. Claimant argues, however, that the commission did not base its decision upon the doctrine of imposition but, instead, erroneously ordered recoupment based upon mutual mistake of fact. Claimant argues that the record does not support a finding of mutual mistake of fact and that the provisions of Code §§ 65.2-500, -707, and -712 do not permit retrospective credits for overpayment made pursuant to an award.

Employer asserts that these code sections do not bar recoupment. Employer concedes that if its application for a hearing were premised upon change in condition provided for by Code § 65.2-708, it could only recover prospectively. See Hinkle, 157 Va. 474, 161 S.E. 902. Employer argues, however, that it requested that the January 11, 1992 award be vacated upon principles of imposition. In support thereof, employer contends that the deputy commissioner was correct in applying the doctrine of imposition and that neither Code §§ 65.2-500, -708, nor -712 bar its request. Employer also contends that nothing in Code §§ 65.2-500 or -712 prohibits an employer from recouping by credits or prohibits the use of the imposition principle.

Claimant concedes that employer is entitled to relief but contends that credits should be allowed only on overpayments made after employer’s application for a hearing was filed; that is, prospectively. Claimant bases this contention upon the prohibitions contained in Code §§ 65.2-520,³ -708, and -712.

Nothing in this record shows that employer’s application for a hearing was based upon the change in condition provisions contained in Code § 65.2-708. That code section is not controlling. Of the statutes relied upon by claimant to limit the payments, only Code § 65.2-712 contains language that arguably is relevant. In pertinent part, that code section provides: Any payment to a claimant by an employer or insurer which is later determined by the Commission to have been procured by the employee by fraud, misrepresentation, or failure to report any incarceration, return to employment or increase in earnings may be recovered from the claimant by the employer or insurer either by way of credit against future compensation payments due the claimant, or by action at law against the claimant.

We now turn to claimant’s substantive argument that the commission is not authorized to order recoupment by credits against future payments for overpayment made pursuant to an award and prior to employer filing its application for hearing, whether by applying either Code § 65.2-712 or the doctrine of imposition.

“The general principle that statutes should be given a prospective rather than a retrospective construction has been given statutory approval in Code § 1-16.” Brushy Ridge Coal Co. v. Blevins, 6 Va.App. 73, 79, 367 S.E.2d 204, 207 (1988).

Retrospective laws are not favored, and a statute is always to be construed as operating prospectively, unless a contrary intent is manifest; but the legislature may, in its discretion, pass retrospective and curative laws provided they do not partake of the nature of what are technically called ex post facto laws, and do not impair the obligation of contracts, or disturb vested rights; and provided, further, they are of such nature as the legislature might have passed in the first instance to act prospectively.

Id.

We have been cited no authority, and have found none, that permits the commission to use the imposition doctrine to override the clear provisions of a workers’ compensation statute. Claimant argues that except as provided in Code §§ 65.2-500, -708, -712, -1105, and -1205, the commission has no authority to “deprive the claimant of compensation already paid pursuant to an award.”

We have examined the workers’ compensation code sections that provide relief to claimants and employers alike and find no specific statute that authorizes the commission to grant retrospective relief to an employer when it files a motion to vacate the commission’s order that has been entered pursuant to the memorandum of agreement submitted jointly by claimant and employer.

In Harris v. Diamond Constr. Co., 184 Va. 711, 717, 36 S.E.2d 573, 576 (1946), the Supreme Court asked: “Has [the commission] the implied authority to do so?” In answering that question in the affirmative, the commission noted that “the purpose of the Workers’ Compensation Act is to compensate injured workers for lost wages, not to enrich them unjustly.” We agree with that principle. Harris teaches us that the commission’s power to act upon a motion to vacate an award mistakenly entered is not limited to specific code provisions:

The Virginia Workmen’s Compensation Act contains no express provision authorizing the Commission to entertain such a petition. Has it the implied authority to do so?

Some courts take the view that the judicial functions of tribunals of this character are limited by the express terms of the act, and that they have no implied powers beyond those expressly granted them by the legislature. Consequently, these courts hold that an award procured through fraud or mistake can not be vacated in a proceeding before the commission, but that the parties must resort to a court of equity in an independent suit for relief.

On the other hand, the highest court of Indiana, whose opinions in workmen’s compensation cases are “peculiarly persuasive” with us, holds that the Industrial Board has the implied power, upon an application seasonably made, to vacate an award procured through fraud or mistake even after the lapse of the period for an application for review.⁴ [See Homan v. Belleville Lumber & Supply Co., 104 Ind. App. 96, 8 N.E.2d 127 (1937) ].⁵

* * *

We agree with the reasoning of the Indiana court which strikes us as the more liberal view and the one more nearly in harmony with the purposes of the Workmen’s Compensation Law of our State.

It seems to us that when the General Assembly established the Industrial Commission for the summary disposition of cases arising out of industrial accidents, it intended that that tribunal should have jurisdiction to do full and complete justice in each case. It granted to the Commission the power and authority not only to make and enforce its awards, but protect itself and its awards from fraud, imposition and mistake.

It does not appeal to us as being either logical, reasonable, or within the spirit of the Act to say that the Commission has the jurisdiction and authority to hear summarily claims for compensation, to make awards thereon, to enforce them, and yet when it develops that an award has been procured through fraud or mistake the aggrieved party, in order to get relief, must resort to an independent suit in equity—with its possible problems of venue and jurisdiction of the parties, incidental expense, delays, and right of appeal—and then, if successful in that proceeding, he must return to the Commission for a hearing of his claim on the merits.

On the contrary, it seems far more consonant with the spirit and purposes of the Act to say that the General Assembly intended that the same tribunal which was empowered to hear in a summary manner claims for compensation, was likewise authorized and empowered to determine in a similar manner whether one of its awards should be vacated and set aside on the ground that it had been procured through fraud or mistake.

Accordingly, we hold that the Industrial Commission has the implied power, incidental to those expressly granted, to entertain and hear an application, seasonably presented, to vacate and set aside an award procured through fraud or mistake.

Id. at 717-18, 720-21, 36 S.E.2d at 576, 577-78 (emphasis added) (citations omitted).

In the case before this Court, employer advances no claim of fraud or collusion. The parties simply made a substantial mistake in computing claimant’s average weekly wage necessary to determine claimant’s award. It is immaterial whether the mistake of fact is mutual or unilateral; Hams holds that the commission has the implied power to “do full and complete justice in each case,” including the power to vacate awards entered by mistake.

Nonetheless, the facts show that a mutual mistake of fact was made in this case. In determining whether a mutual mistake of fact existed at the time of the agreement, the inquiry is not, as the dissent suggests, who initially made the mistake, but rather, whether each party held the same mistaken belief with respect to a material fact at the time the agreement was executed. See Seaboard Ice Co. v. Lee, 199 Va. 243, 99 S.E.2d 721 (1957). In this case, each party went forward under the mistaken belief that the average weekly wage set forth in the agreement was correct, when, in fact, it was not. The mistake was mutual.

Within the principles established by statutes and the Supreme Court decisions, the commission has “ ‘jurisdiction to do full and complete justice in each case/ ” Avon Prods., Inc., 14 Va.App. at 7, 415 S.E.2d at 228 (quoting Harris, 184 Va. at 720, 36 S.E.2d at 577). Justice is not attained by failing to correct obvious mistakes or declining to place the parties in positions which are in accord with the Act. Because the Act empowers the commission with “jurisdiction to do full and complete justice in each case,” Somers, 228 Va. at 734, 324 S.E.2d at 697, we affirm the decision of the commission.

Accordingly, we affirm the commission’s action vacating its prior order and directing recoupment of the benefits erroneously paid to claimant.

Affirmed.

1 . That is the period beginning one week prior to claimant’s injury, as required by Code § 65.2-101.

2 . Code § 65.2-520. Voluntary payment by employer.—Any payments made by the employer to the injured employee during the period of his disability, or to his dependents, which by the terms of this title were not due and payable when made, may, subject to the approval of the Commission, be deducted from the amount to be paid as compensation provided that, in the case of disability, such deductions shall be made by shortening the period during which compensation must be paid and not by reducing the amount of the weekly payment.

See National Linen Serv. v. McGuinn, 5 Va.App. 265, 362 S.E.2d 187 (1987).

3 . Code § 65.2-520 concerns only payments made voluntarily and is not involved in this case.

4 . " ‘The holding of the Indiana court is peculiarly persuasive with us because the Virginia act is based upon that of Indiana.’ Basham v. Lowe, Inc., 176 Va. 485, 494, 11 S.E.2d 638, 642, 131 A.L.R. 761, and cases there cited.”

5 . See also Butts v. Montague Bros., 208 N.C. 186, 188, 179 S.E. 799, 801 (1935); In re Crawford, 205 S.C. 72, 30 S.E.2d 841, 850 (1944).