The opinion
IN THE COURT OF APPEALS OF NORTH CAROLINA
No. COA 24-596
Filed 7 May 2025
N.C. Industrial Commission, IC No. 762806
EMERSON THOMPSON, Employee, Plaintiff
v.
CRANFILL, SUMNER & HARTZOG, LLP Employer, Defendant, and THE
PHOENIX INSURANCE COMPANY, Carrier, Defendants
Appeal by Defendants and cross-appeal by Plaintiff from the Decision and
Award entered 15 November 2023 by the North Carolina Industrial Commission.
Heard in the Court of Appeals on 11 February 2025.
The Sumwalt Group, by Vernon Sumwalt and Fink & Hayes, PLLC, by Steven
B. Hayes for Plaintiff-Appellee / Cross-Appellant.
Hedrick Gardner Kincheloe & Garofalo LLP, by M. Duane Jones and Neil P.
Andrews, for Defendants-Appellants / Cross-Appellees.
WOOD, Judge.
Emerson Thompson (“Plaintiff”) and Cranfill, Sumner, & Hartzog, LLP and
The Phoenix Insurance Company (“Defendants”) appeal from the Decision and Award
entered 15 November 2023 by the North Carolina Industrial Commission (“the
Commission”). Defendants contend that the Commission erred in: (1) awarding
retroactive attendant care; (2) awarding a ten percent (10%) late penalty on
indemnity; (3) failing to suspend benefits for failure to comply with the medical
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treatment requested; and (4) failing to award attorney fees against Plaintiff. In
contrast, Plaintiff asserts the Commission erred in mandating an offset for his
disability award and contends that even if Defendants are entitled to an offset the
Commission miscalculated the offset amount.
I. Factual and Procedural Background
Plaintiff is a former civil trial lawyer and former equity partner in the law firm
of Cranfill, Sumner & Hartzog. Plaintiff had preexisting back issues prior to his
injury at work. On 29 March 2006, Plaintiff re-injured his back at Charlotte Douglas
International Airport while on a work trip. The initial Form 18, Notice of Accident
and Claim of Employee, was filed on 17 April 2007. On 27 March 2008, Defendants
admitted liability for this compensable injury in an Industrial Commission Form 60
Employer’s Admission of Employee’s Right to Compensation (G.S. 97-18(b)).
Since the onset of the injury in 2007 Plaintiff and Defendants have disputed
numerous related issues. On 22 July 2019, a deputy commissioner for the
Commission ruled that a downstairs bedroom in Plaintiff’s home was medically
necessary for Plaintiff as well as a chair lift and grab bars to aid immediately while
construction in his home was ongoing. However, Plaintiff and Defendants have been
unable to agree on how to modify the home for a downstairs bedroom.
On 26 January 2020, Plaintiff advised Defendants that his doctor had
prescribed three months of temporary attendant care beginning 18 February 2020
because Plaintiff’s wife, who is his regular caregiver, was set to undergo surgery.
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Defendants authorized attendant care but a conflict arose between the parties
because Plaintiff wanted any caregiver to sign a confidentiality agreement to prevent
the disclosure of information to Defendants against Defendant’s policy.
In March to April of 2020, Plaintiff filed a Motion to Compel Reimbursement
of Medical Expenses and Defendants filed an Administrative Medical Motion to
Compel Compliance with Attendant Care. On 20 April 2020, a deputy commissioner
denied both motions. On 28 April 2020, Plaintiff appealed the deputy commissioner’s
order by filing a Request that Claim be Assigned for Hearing. On 10 November 2020,
Plaintiff filed an amended Request for Hearing adding the issue of payment of
permanent and total disability benefits and attorney fees. On 19 January 2021,
Defendants filed a Response to Request That Claim Be Assigned for Hearing, and on
1 September 2021, Defendants amended their response.
On 17 March 2022, a deputy commissioner conducted a hearing on the issues
and entered a Decision and Award on 25 October 2022. The deputy commissioner
determined that Defendants were entitled to attorney fees and sanctions for costs
based on unnecessary litigiousness; Plaintiff was barred from further medical
compensation or indemnity due to his refusal to select a home modification; and
Plaintiff’s claims for retroactive indemnity and attendant care as well as all other
claims were denied. Both parties appealed to the Full Commission.
On 15 March 2023, the case was heard before the Full Commission. The
evidence presented to the Commission tended to show: Plaintiff’s work-related injury
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necessitated several more back surgeries and other treatments. The parties had
stipulated to “permanent and total disability.” Plaintiff’s long-term medical providers
including Dr. Alden Milam, MD (“Dr. Milam”), an orthopedic surgeon, and Dr. T.
Kern Carlton, MD (“Dr. Carlton”), a physiatrist all declared him permanently and
totally disabled.
Before his injury, Mr. Thompson’s “average weekly wage,” as defined by N.C.
Gen. Stat. § 97-2(5), was $2,500.00. This entitled him to the maximum compensation
rate for 2006, the year of his injury, in the amount of $730.00 per week. Plaintiff
contends that Defendants have not paid any weekly workers’ compensation to
Plaintiff since he first became totally disabled on 9 February 2009. Plaintiff did
receive $10,000.00 from a long-term disability plan for which he had paid the
premiums through his employment at Defendant-Employer. In addition, between
February 2009 and 31 December 2015, Plaintiff also received $32,000.00 per year in
equity distributions under an equity partnership agreement with Defendant-
Employer. During testimony Plaintiff explained that these equity distributions were
used to cover his ongoing employment benefits, including insurance coverage and
retirement. However, Defendants contend the payments were compensation for
Plaintiff’s work as a client liaison.
On 15 November 2023, the Full Commission issued an Opinion finding
Plaintiff to have been totally disabled since 9 February 2009 and determining that
Defendants are responsible for total disability compensation under N.C. Gen. Stat. §
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97-29 since that date and continuing. However, the Commission gave Defendants an
offset against the $730.00 weekly amount in compensation payable to Plaintiff from
9 February 2009 until 31 December 2015 based on the equity distributions of
$32,000.00 per year that had previously been paid by Defendants. The Commission
did so by deducting the weekly equivalent of the equity distributions ($615.38 =
$32,000.00 / 52 weeks) from Plaintiff’s weekly compensation checks. The Full
Commission ordered Defendants pay Plaintiff’s full compensation rate—that is,
without an “offset”— beginning on 1 January 2016. In explaining why it reduced
Plaintiff’s compensation, the Full Commission stated “Defendants are entitled to an
offset or reduction under Moretz v. Richards & Associates, Inc., 316 N.C. 539, 342
S.E.2d 844 (1986) for the $615.38 per week paid to Plaintiff in an attempt to pay some
amount of salary continuation and receive some compensation to continue Plaintiff’s
access to benefits and to offset the cost of them.” In addition, a ten percent (10%) late
penalty was awarded to Plaintiff as well as attorney fees of twenty-five percent (25%)
of the temporary total disability compensation and penalty fees. Finally, Defendants
were required to pay for all reasonably necessary medical treatment, including
attendant care for four hours a day beginning in January 2022. Defendants’ request
for attorney fees was denied.
On 22 November 2023, Plaintiff filed a Notice of Appeal in Superior Court on
the issue of the Commission’s failure to award Plaintiff’s counsel a twenty-five
percent (25%) contingency fee from the compensation awarded in the original award
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for the payment of attendant care services provided by the wife. On 18 December
2023, the Full Commission sua sponte issued an order requesting information from
Plaintiff in order for the Commission to make findings and a determination on the
additional attorney fees issue. On 8 January 2024, the Full Commission issued an
order denying the attorney fees because Plaintiff’s counsel failed to submit the
requested documents and there was no information in the record from which a
decision could be made. On 10 January 2024, Plaintiff’s counsel filed a Motion for
Reconsideration based on the Commissions’ failure to accurately serve the prior
orders on the parties. On 11 January 2024, the Commission granted Plaintiff’s
Motion for Reconsideration and awarded Plaintiff’s attorney an attorney fee of
twenty-five percent (25%) of the attendant care services payments paid to Plaintiff’s
wife. On 11 January 2024, Plaintiff dismissed his appeal to Superior Court.
On 30 November 2023, Defendants filed a Motion to Reconsider the 15
November 2023 decision. On 25 January 2024, Defendants filed another Motion to
Reconsider adding a request to reconsider the 11 January 2024 decision. On 28
February 2024, the Commission denied both motions. Both parties filed Notices of
Appeal to this Court.
II. Analysis
“Appellate review of an award from the Commission is generally limited to two
issues: (1) whether the findings of fact are supported by competent evidence; and (2)
whether the conclusions of law are justified by the findings of fact. Gore v.
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Myrtle/Mueller, 362 N.C. 27, 40, 653 S.E.2d 400, 409 (2007) (cleaned up). “A finding
of fact is conclusive on appeal if supported by any competent evidence, even where
there is evidence to contradict the finding.” Scarboro v. Emery Worldwide Freight
Corp., 192 N.C. App. 488, 491, 665 S.E.2d 781, 784 (2008) (cleaned up). “Thus, this
‘court’s duty goes no further than to determine whether the record contains any
evidence tending to support the finding.’ ” Chandler v. Atl. Scrap & Processing, 217
N.C. App. 417, 423, 720 S.E.2d 745, 750 (2011) (cleaned up). The Industrial
Commission’s conclusions of law are reviewable de novo by this Court. Grantham v.
R.G. Barry Corp., 127 N.C.App. 529, 534, 491 S.E.2d 678, 681 (1997).
A. Arguments by Defendants
On appeal, Defendants contend that the Commission erred in: (1) awarding
retroactive attendant care; (2) awarding a ten percent (10%) late penalty on
indemnity; (3) failing to suspend Plaintiff’s benefits for failure to comply with the
medical treatment requested; and (4) failing to award attorney fees against Plaintiff.
1. Awarding retroactive attendant care
Defendants appeal the award of retroactive attendant care. They challenge
findings of fact 22, 51, and 52, asserting that the findings are insufficient to support
the award of retroactive attendant care. Therefore, Defendant’s believe the
Commission’s order awarding medical care including attendant care for four hours
per day beginning January 2022 and its supporting conclusion of law number 6 are
also in error. Defendants do not contest the accuracy of the enumerated findings only
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that they are insufficient to support the legal conclusion that attendant care is
medically necessary. We disagree.
“[T]he [Workers’ Compensation] Act places upon an employer the
responsibility to furnish ‘medical compensation’ to an injured employee.” Mehaffey v.
Burger King, 367 N.C. 120, 124, 749 S.E.2d 252, 255 (2013). At the time of Plaintiff’s
injury medical compensation was defined as:
medical, surgical, hospital, nursing, and rehabilitative
services, and medicines, sick travel, and other treatment,
including medical and surgical supplies, as may reasonably
be required to effect a cure or give relief and for such
additional time as, in the judgment of the Commission, will
tend to lessen the period of disability. . . .
Id. at 124-25, 749 S.E.2d at 255 (emphasis added). The Act’s provision for “other
treatment” was interpreted by our Supreme Court to include attendant care services.
Id. at 125, 749 S.E.2d at 255. Attendant care services were added directly to the
definition of medical compensation when the statute was amended in 2011, and this
Court has stated “the term ‘medical expenses’ encompasses attendant care services
rendered by an injured worker’s family members.” Chandler v. Atl. Scrap &
Processing, 217 N.C. App. 417, 424, 720 S.E.2d 745, 750 (2011); see also Mehaffey v.
Burger King, 367 N.C. 120, 125, 749 S.E.2d 252, 255 (2013).
Additionally, the Workers’ Compensation Act states:
[I]n case of a controversy arising between the employer and
the employee, the Industrial Commission may order
necessary treatment. In order for the Commission to grant
an employee’s request to change treatment or health care
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provider, the employee must show by a preponderance of
the evidence that the change is reasonably necessary to
effect a cure, provide relief, or lessen the period of
disability.
N.C. Gen. Stat. § 97-25(c) (2024). Therefore, the Commission was required to
determine if the attendant care services were “reasonably necessary.” This Court has
explicitly adopted
a flexible case-by-case approach in which the Commission
may determine the reasonableness and medical necessity
of particular attendant care services by reviewing a variety
of evidence, including but not limited to the following: a
prescription or report of a healthcare provider; the
testimony or a statement of a physician, nurse, or life care
planner; the testimony of the claimant or the claimant's
family member; or the very nature of the injury.
Shackleton v. Southern Flooring & Acoustical Co., 211 N.C. App. 233, 250-51, 712
S.E.2d 289, 301 (2011).
In the case sub judice the Commission made the following findings which
Defendants contend are insufficient to support the award of attendant care,
specifically:
22. Dr. Milam was of the opinion that Plaintiff needs
attendant care to manage the risk from falling and his
attention deficit and the accompanying risks. Dr. Milam
was of the opinion that Plaintiff is going to need assistance
for four hours a day, including helping with chores.
Plaintiff’s wife could participate in those four hours per
day.
51. Based upon the preponderance of the evidence in view
of the entire record, the Full Commission finds that
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Plaintiff requires four hours of attendant care daily as a
result of his compensable injury by accident arising out of
and in the course of his employment with Defendant-
Employer on March 29, 2006.
52. Based upon the preponderance of the evidence in view
of the entire record, the Full Commission finds that
Plaintiffs need for medical treatment, including but not
limited to his need for attendant care, is caused by his
compensable injury by accident arising out of and in the
course of his employment with Defendant-Employer on
March 29, 2006 and has been and is reasonably necessary
to effect a cure, lessen disability, and provide relief.
However, in addition to the challenged findings, the Commission also found:
10. Plaintiff testified that he could fall putting on his pants
and had fallen three times the week of the hearing. He
explained that he is in constant pain and that lifting causes
him to fall off balance because he depends on his knees
being locked.
15. Dr. Alice Cole practices with Tryon Medical Group as
an internist. Dr. Cole is board certified and has practiced
as an internist for 21 years. In the 2019 home modification
litigation, Dr. Cole was tendered without objection and was
admitted as an expert in the field of internal medicine by
the July 22, 2019 Opinion and Award. Dr. Cole treated
Plaintiff from approximately 2004 until his last visit on
June 14, 2018. Dr. Cole testified that Plaintiff became
weaker over the time that she knew him due to his back
surgeries and nerve injury. She also noted that Plaintiff’s
weakness was progressive and that it had become “more
and more of a problem” as Plaintiff aged. She was of the
opinion that Plaintiff was a 9/10 as to risk of falling.
16. Dr. Milam testified that a February 16, 2017 MRI
revealed Plaintiff had increased atrophy of the paraspinal
muscles greater on the right than left when compared with
the November 13, 2012 MRI. In February 2017 Dr. Milam
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indicated that Plaintiff was at an increased risk for falls
and that Plaintiff would require a first-floor bedroom as he
will be unable to ambulate up steps. By September 19,
2018, Dr. Milam recommended a chair lift (as a temporary
fix) and referenced his February 2017 recommendation for
a first-floor bedroom as it was unsafe for Plaintiff to go up
and down stairs due to recurrent falls caused by motor
weakness which had increased. On September 19, 2018,
Dr. Milam indicated that Plaintiff had permanent nerve
damage which was the cause of falls and that Plaintiff had
objective muscle atrophy and clear progression of his
symptoms. On January 7, 2020, Dr. Milam noted that
Plaintiff’s extremity weakness was progressive and
prescribed three months of one-hour per day attendant
care as Plaintiff’s wife was going to be incapacitated due to
her own surgery.
23. Dr. T. Kern Carlton, M.D. of the Rehab Center is a
stipulated expert in physical medicine and rehabilitation,
as well as pain medicine, and is one of Plaintiff’s authorized
treating physicians. Plaintiff first presented to Dr. Carlton
on October 30, 2020. Dr. Carlton stated that Plaintiff has
known nerve damage in his legs which causes weakness,
numbness, and pain, and this predisposes him to falls. Dr.
Carlton explained Plaintiff’s typical fall occurs when his leg
gives way due to weakness or due to a sharp pain or when
he trips and stumbles due to numbness and lack of normal
feeling in the leg. Plaintiff reported 55 falls in 2019 to Dr.
Carlton. In Dr. Carlton’s opinion, Plaintiff was not a good
candidate for the multidiscipline program at the Rehab
Center as getting him totally off opiates or getting him
back to work was unrealistic, nerve damage is not fixed by
work hardening, and Plaintiff is a fall risk.
26. Jessica Conard, MRC, CRC, CLCP, a certified life care
planner and certified rehabilitation counselor was hired by
Plaintiff to assess his need for home healthcare. Ms.
Conard has produced expert reports in dozens of cases in
workers’ compensation proceedings before the Industrial
Commission and has performed approximately 25 life care
plans in her career. The Full Commission accepts Ms.
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Conard as an expert in vocational rehabilitation and life
care planning. Ms. Conard, as is her usual practice,
reviewed all medical records pertinent to the claim, held a
remote interview (due to COVID concerns) with Plaintiff
and his wife, and then contacted his physician, Dr. Milam,
to obtain recommendations about Plaintiff's future medical
needs. From the medical record review, Ms. Conard
gleaned that Plaintiff has a history of limited compromised
mobility and falls, recommendations that he use assistive
devices while ambulating, and at least at one point, a
recommendation that Plaintiff be limited to sleeping on
the first floor of his home. . .
These findings were based on the record evidence as well as testimony from Plaintiff’s
doctors and the certified life care planner, all of which the Commission found to be
persuasive. Dr. Milan testified that Plaintiff needs support from his wife while
dressing and completing other life tasks. Similarly, the certified life care planner
testified that Plaintiff reported limited ability to cook or fix meals, do laundry, change
sheets, and other self-care tasks that require standing and mobility. Dr. Carlton
testified that he supports Dr. Milan’s recommendation for four hours of attendant
care per day and recognizes the balance that Plaintiff must maintain each day,
judging the amount of physical exertion he can manage to keep his independence and
mental health while still mitigating his high fall risk which could cause serious
injury. There was clearly an abundance of competent evidence, including everything
this Court in Shackleton delineated that trial courts should consider when making a
determination of “reasonable necessity” including: the report of a healthcare provider;
the testimony of a life care planner; the testimony of the claimant; and the nature of
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the injury. Therefore, we affirm the Commission’s determination that attendant care
is reasonably medically necessary.
2. Awarding a late payment penalty on indemnity
Defendants contend the Full Commission made no findings regarding
Plaintiff’s continued delaying of the indemnity payment and whether that fact should
or should not have any bearing on the timeliness of the payments. Therefore,
Defendants argue Plaintiff should not be entitled to a ten percent (10%) late payment
penalty due to his own denial of the need for these payments and his multiple
statements that disability payments were not in issue. We disagree.
Under the North Carolina Workers’ Compensation Act,
When the employer or insurer admits the employee’s right
to compensation, the first installment of compensation
payable by the employer shall become due on the
fourteenth day after the employer has written or actual
notice of the injury or death, on which date all
compensation then due shall be paid.
N.C. Gen. Stat. § 97-18(b) (2024). Additionally,
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.
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N.C. Gen. Stat. § 97-18(g) (2024) (emphasis added). Finally,
[T]he employer’s filing of a Form 60 is an admission of
compensability. Thereafter, the employer's payment of
compensation pursuant to the Form 60 is an award of the
Commission on the issue of compensability of the injury. . .
. Thus, an employer who files a Form 60 waives the right
to contest a claim that it is liable for a claimant’s injury. . .
.
....
. . . North Carolina law clearly places the burden on the
employer or carrier to determine whether a particular
claim is compensable and whether the employer or carrier
is liable before filing a Form 60.
Spivey v. Wright’s Roofing, 225 N.C. App. 106, 111-13, 737 S.E.2d 745, 749-50
(2013) (cleaned up).
In the case sub judice the Commission made multiple findings of fact related
to compensability:
28. . . . a hearing was held by Deputy Commissioner
Amanda Witzke Bruce on May 30, 2019. A Pre-Trial
Agreement entered by the parties at that hearing
contained the following [s]tipulations:
...
4. Plaintiff suffered an admittedly compensable
injury by accident to his lumbar spine on March 29, 2006
when he lost his balance and twisted his back while
overloaded with luggage and case materials.
...
6. As a result of these injuries, Plaintiff is
permanently and totally disabled.
37. Although workers’ compensation payments were not
made to Plaintiff by Defendants and although the issue had
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not been litigated, the record reveals that the issue of
periodic indemnity payments was present and that both
parties were aware of that issue. Documents from
Stipulated Exhibit 2 confirm that the issue of periodic
disability compensation was present throughout.
Allegations of prejudice by Defendants are unpersuasive
given that Defendant-Employer is a law firm engaged in
the practice of workers’ compensation law; that Defendant-
Carrier is in the business of providing workers’
compensation coverage and has familiarity with not only
North Carolina workers’ compensation law but also that
there are interactions between benefits for long-term
disability, social security disability, and workers’
compensation benefits; that Defendants had counsel; that
the parties were all aware of Plaintiff’s medical treatment;
and that the parties knew Plaintiff was pursuing and
receiving social security benefits and long-term disability
benefits.
46. Based upon the preponderance of the evidence in view
of the entire record, the Full Commission finds that the
parties stipulated that Plaintiff is permanently and totally
disabled and did so with full knowledge of the
circumstances and law without misrepresentation.
The Commission clearly made findings that Defendants admitted Plaintiff’s
right to compensation and were aware of the compensation laws in place. Pursuant
to N.C. Gen. Stat. § 97-18(g) a ten percent (10%) late penalty is statutorily required
when compensation is past due. Thus, we affirm the Commission’s order.
3. Failing to suspend benefits for failure to comply
Defendants contend that because of Plaintiff’s ongoing non-compliance with
the home modification order, Plaintiff must be barred from receiving any additional
compensation, including attendant care, or from receiving any past, present, or future
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indemnity until his unreasonable and unjustifiable refusal ceases.
At the time of Plaintiff’s injury in 2006, N.C. Gen. Stat. §97-25 stated, in
pertinent part,
The refusal of the employee to accept any medical, hospital,
surgical or other treatment or rehabilitative procedure
when ordered by the Industrial Commission shall bar said
employee from further compensation until such refusal
ceases, and no compensation shall at any time be paid for
the period of suspension unless in the opinion of the
Industrial Commission the circumstances justified the
refusal. . . .
N.C. Gen. Stat. §97-25 (2005). Our Court has applied the standard of “a similarly
situated reasonable man” when determining whether an employee’s refusal is
justified. Watkins v. City of Asheville, 99 N.C. App. 302, 305, 392 S.E.2d 754, 757
(1990). The Commission is the “sole judge of the credibility of the witnesses and the
weight given to their testimony.” Id. at 303, 392 S.E.2d at 756. “As long as there is
some competent evidence to support the Commission’s determination, it is binding on
appeal even though the evidence might also support contrary findings.” Bolick v.
ABF Freight Sys., Inc., 188 N.C. App. 294, 298, 654 S.E.2d 793, 796 (2008).
In the case sub judice the Commission found,
53. Based upon the preponderance of the evidence in view
of the entire record, the Full Commission finds that
Plaintiffs past refusal of some medical care was not
unreasonable. The Full Commission further finds that
Plaintiff should not be subject to a penalty for the past
refusal and that his current need for attendant care should
not be precluded by that reasonable refusal.
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In addition, in finding 56 the Commission assigned greater weight to the testimony
and opinions of Dr. Milam, Dr. Carlton and Ms. Conard than to Defendants’
witnesses.
According to Plaintiff’s testimony, Dr. Milam informed him he had concerns
about the modification of the downstairs living area being turned into a bedroom, in
part due to space constraints related to his present need for a walker and his future
need for a wheelchair. In addition, Plaintiff engaged the services of a licensed
architect to review the plans, and the architect opined that “this does not work.”
Additionally, while there is a 22 July 2019 Opinion and Award stating that a
downstairs bedroom is required, the Commissioner did not require a specific plan,
and the current proposals were not submitted to the Commission. The Commission’s
determination that a reasonable man would be justified in refusing a home
modification that does not align with his doctor’s assessments of his needs and whose
architect has told him, “this does not work” is supported by competent evidence. We
affirm the Commission’s determination that Plaintiff’s refusal was reasonable.
4. Failing to award attorney’s fees against Plaintiff
Defendants contend that attorney’s fees should be assessed against Plaintiff
under N.C. Gen. Stat. § 97–88.1, which provides the Commission with discretionary
authority to assess costs and attorney fees for bringing, prosecuting, or defending a
hearing without reasonable grounds. N.C. Gen. Stat. § 97–88.1 (2024). Defendants
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argue that they should be awarded attorney fees for the 30 May 2019 litigation
because Plaintiff brought the litigation “knowing” that his wife would not agree to
the modification of their home. As discussed supra, the record contains competent
evidence from which the Commission could find, as illustrated in finding of fact 53,
that Plaintiff’s refusal of the home modification offered by Defendants was
reasonable. Therefore, pursuant to N.C. Gen. Stat. § 97-88.1, Defendants are not
entitled to an award of attorney fees from Plaintiff as the Commission correctly stated
in its conclusion of law, specifically:
13. Defendants have requested an award of attorney’s fees
pursuant to N.C. Gen. Stat. § 97-88.1, which provides that
reasonable fees may be awarded if the Industrial
Commission “shall determine that any hearing has been
brought, prosecuted, or defended without reasonable
ground....” The test is not whether the defense prevails, but
whether it is based in reason rather than in stubborn,
unfounded litigiousness. Sparks v. Mountain Breeze Rest.
& Fish House, Inc., 55 N.C. App. 663, 664, 286 S.E.2d 575,
577 (1982). Because Defendants have failed to show that
Plaintiff’s prosecution or defense of this matter was
unreasonable or grounded in unfounded litigiousness,
Defendants’ request for attorney’s fees pursuant to N.C.
Gen. Stat. § 97- 88.1 must be denied.
We agree and affirm the Commission’s Order and Award denying Defendant’s
attorney fees for the 30 May 2019 litigation.
B. Arguments by Plaintiff
Plaintiff asserts that the Full Commission erred in mandating an offset for his
disability award. Plaintiff further contends that the offset amount, if allowed, was
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miscalculated. We agree.
This Court has consistently held that N.C. Gen. Stat. § 97–42 is the sole
statutory authority that allows an employer a credit offset toward its obligation for
workers’ compensation payments. Effingham v. Kroger Co., 149 N.C. App. 105, 119,
561 S.E.2d 287, 296 (2002); Johnson v. IBM, 97 N.C.App. 493, 494, 389 S.E.2d 121,
122 (1990). Pursuant to N.C. Gen. Stat. § 97–42:
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 Article 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. . . .
N.C. Gen. Stat. § 97–42 (2024). However, “because the Industrial Commission may
credit an employer only for payments not due or payable under the terms of the
workers’ compensation statute, an employer is not automatically entitled to a credit
for any and every payment to a claimant[.]” Meares v. Dana Corp./Wix Div., 172 N.C.
App. 291, 295, 615 S.E.2d 912, 916 (2005) (cleaned up). For example, “N.C. [Gen.
Stat.] § 97–42 does not authorize a credit for payment of benefits that have nothing
to do with the Workers’ Compensation Act and are not analogous to payments under
a disability and sickness plan.” Id. at 296, 615 S.E.2d at 917 (cleaned up). This Court
has held that vacation and sick leave are “due and payable” because they have been
earned and therefore are not creditable. In addition, severance payments pursuant
to a severance agreement have been determined to be “due and payable” and not
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Opinion of the Court
creditable because they had nothing to do with workers’ compensation, would have
been received regardless of the disability, and were of a contractual nature. Id. at
296-99, 615 S.E.2d at 917-18.
Defendants urge us to consider Clayton in which this Court clarified that “even
where an employer’s payments were due and payable, and thus, no credit is allowed,
an employee may not receive more in wage supplements than he is entitled to receive
under the Workers’ Compensation Act.” Clayton v. Mini Data Forms, Inc., 199 N.C.
App. 410, 419, 681 S.E.2d 544, 550 (2009) (cleaned up). Defendants’ assertions are
inapposite, however, because this Court’s holding in Clayton only applies where the
payment made by the employer is “a wage-replacement benefit equivalent to workers’
compensation [benefits]” and not to instances of payments unrelated to an employee’s
workers’ compensation which the individual was entitled to receive even if not
disabled. Id. at 420, 681 S.E.2d 551.
In the case sub judice, the Commission made the following findings of fact:
18. From 2009 until December 31, 2015, Plaintiff
performed some client development, business
development, client liaison duties, etc. for less than 30
hours per week. The nature of Plaintiff’s work was limited
and was more of a way for him to receive benefits and for
Defendant-Employer to retain clients, continue to market
to new clients, and maintain client goodwill. He received
continued partial equity payments monthly during this
time which amounted to approximately $32,000.00 per
year. From this payment, Plaintiff’s expenses including
costs for benefits like health insurance and life insurance
were deducted. Notwithstanding that Defendant-
Employer’s health insurance policy required that an
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Opinion of the Court
employee regularly work 30 hours per week in order to
qualify for coverage, the greater weight of the evidence is
that Plaintiff had phone conversations and occasional
lunches or meetings. The evidence does not support that
Plaintiff regularly worked 30 hours per week or that
Plaintiff was performing a job generally filled at
Defendant-Employer’s firm or other law firms. Since
March 9, 2009, Plaintiff has also received $10,000.00 per
month in long term disability through an Unum policy.
32. . . . At hearing, Plaintiff testified regarding the long-
term disability Unum policy:
. . . there was a three-month deductible. So from February
9, 2009 until May 8th, 2009, I got my salary, and then after
that it dropped down to my equity portion which was the
one half of one percent. And that’s what I used to pay for
my benefits for health insurance, for life insurance, for
retirement. And I actually had to supplement, I had to
write a check to the firm. I mean it was really just my
benefits package was being covered because I was a
partner and partners have to pay for their own benefits.
(emphasis added). These findings clearly state that the payments made to Plaintiff
were made as “partial equity payments” from his half-percent ownership as a partner
in the firm. This finding is supported by the testimony of Barry Pennell (“Pennell”)
the chief operating officer at Cranfill Sumner, LLP., formerly Cranfill, Sumner &
Hartzog, LLP.
Q. Okay. Was he an owner in the company?
A. He had a very small amount of equity percentage in the
firm. Yes.
Q. Okay. And from what time period was he an owner in
the company?
A. I believe he became a partial equity partner before I got
there, and I don’t know when exactly.
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Opinion of the Court
Q. Okay. And for how long after you were there was he an
equity partner?
A. He had some equity until I believe it was around 2013.
Q. Okay. And when did he last work for Cranfill?
A. 2015.
...
Q. Okay. If the – from 2009 to that termination date in
2015, was he working for the firm doing work?
A. There were some things that he had said he would
continue to do which were related to client development,
business development, other things that may have come
up.
Q. Okay. Was he receiving compensation?
A. That partial equity payment, yes.
...
Q. Was he getting a draw check or a dividend check each
quarter or month, however you get paid?
A. It was paid monthly and – and there – the first part
of that would’ve been that partial equity payment. We
estimate that, what that would be over the course of a
year, and then give – divide it by twelve and at the
end of every month he would get one-twelfth. And we
would true that up after we did the tax return, then
around that 2013 timeframe we converted that equity
into just being a guarantee. And I think it was a
$32,000 flat guarantee, and that’s what he was paid
for the last two years if I’m remembering correctly.
In addition, the determination that the payments were partial equity payments is
supported by records supplied by Defendants which report that in January 2011 they
were looking into options as to how to de-equitize Plaintiff because requirements in
the partnership agreement would not allow a partner to remain on disability long-
term. The firm sought advice on how to convert Plaintiff’s partnership into some type
of guaranteed payment. This information in the records is consistent with Pennell’s
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Opinion of the Court
testimony that “around that 2013 timeframe we converted that equity into just being
a guarantee. And I think it was a $32,000 flat guarantee, and that’s what he was
paid for the last two years if I’m remembering correctly.”
These payments had nothing to do with workers’ compensation or wage
replacement and would have been due to Plaintiff irrespective of his disability.
Initially, Plaintiff received equity payments pursuant to a contractual partnership
agreement. The payments were then converted into a contractual guarantee when
Plaintiff was phased out of the partnership agreement. These payments are directly
analogous to the severance payments in Meares which this Court determined were
not creditable against an employee’s workers’ compensation award in contrast to the
wage replacement payments considered in Clayton. Meares v. Dana Corp./Wix Div.,
172 N.C. App. 291, 299-300, 615 S.E.2d 912, 916 (2005); Clayton v. Mini Data Forms,
Inc., 199 N.C. App. 410, 420, 681 S.E.2d 544, 550 (2009). Because the equity
payments made by Defendants to Plaintiff were not wage replacements, the
Commission erred as a matter of law in determining that a credit should be applied
to offset Defendants’ workers’ compensation obligations. We reverse the
Commission’s offset credit mandate based on equity payments and remand for
correction of Plaintiff’s disability award not inconsistent with this opinion.
Because we have determined that Defendants are not entitled to offset credit
based on equity payments to Plaintiff, it is unnecessary to address Plaintiff’s
remaining argument concerning credit miscalculations.
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Opinion of the Court
III. Conclusion
For the foregoing reasons, we conclude the Commission’s fifty-eight findings of
fact were clearly supported by competent evidence. Defendant’s contentions
concerning the award of retroactive attendant care, a ten percent (10%) late penalty
on indemnity, Plaintiff’s compliance with the medical treatment requested, and the
refusal to award attorney fees against Plaintiff were addressed by the Commission in
its clearly supported findings of fact, which in turn support the Commission’s
conclusions of law. However, the Commission erred as a matter of law in mandating
an offset to Plaintiff’s disability award because the payments at issue were
contractual in nature. Therefore, we affirm the Commission’s Opinion and Award in
part, reverse the portion which awards an offset credit to Defendant, and remand for
recalculation of the amount of Plaintiff’s workers’ compensation award. It is so
ordered.
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
Judges STROUD and Judge GORE concur.
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