Case Title: National Union Fire Insurance v. McDougall

Citation: 

Docket Number: 116, 2004

State: delaware

Court: Delaware Supreme Court

Date: 2005-06-06T00:00:00Z

Document:
IN THE SUPREME COURT OF THE STATE OF DELAWARE 
 
NATIONAL UNION FIRE INSURANCE §  
COMPANY OF PITTSBURGH, 
 
§  
PENNSYLVANIA, a foreign corporation, 
§   No. 116, 2004 
 
 
 
 
 
 
 
§  
 
Defendant Below,  
 
 
§  
 
Appellant,  
 
 
 
§  Court Below–Superior Court 
 
 
 
 
 
 
 
§  of the State of Delaware, 
 
v. 
 
 
 
 
 
§   in and for Kent County 
 
 
 
 
 
 
 
§   C.A. No. 94C-03-040 
WILLIAM S. McDOUGALL, SR., by and §  
through his Guardian ad Litem,  
 
§  
Paulette McDougall, 
 
 
 
§  
 
 
 
 
 
 
 
§  
 
Plaintiff Below, 
 
 
 
§  
 
Appellee. 
 
 
 
 
§  
 
 
 
 
 
 
  Submitted:  April 20, 2005 
 
 
 
 
 
     Decided:  June 6, 2005 
 
Before STEELE, Chief Justice, HOLLAND, BERGER, JACOBS 
and NOBLE, Vice Chancellor,1 constituting the Court en Banc. 
 
 
Upon appeal from the Superior Court.  AFFIRMED. 
 
 
James F. Bailey, Jr., Esquire, Bailey & Associates, P.A., Wilmington, 
Delaware, for appellant. 
 
 
William D. Fletcher, Jr., Esquire, Schmittinger & Rodriguez, P.A. 
Dover, Delaware, for appellee. 
 
 
HOLLAND, Justice: 
                                          
 
1 Sitting by designation pursuant to Del. Const. art. IV, § 12 and Supr. Ct. R. 2 and 4. 
 
2
This is an appeal from a final judgment entered by the Superior Court.  
The plaintiff-appellee, William S. McDougall (“McDougall”), filed a civil 
action for the payment of workers’ compensation benefits and for related 
liquidated damages, attorney’s fees and costs against the defendant-
appellant, National Union Fire Insurance Company of Pittsburgh (“National 
Union”), as a result of awards made to McDougall by the Industrial Accident 
Board (“IAB”).  The Superior Court granted McDougall’s motion for 
summary judgment and entered a final judgment in favor of McDougall and 
against National Union.   
National Union has raised one issue in this direct appeal.  National 
Union contends that McDougall’s civil action was time barred, and that the 
Superior Court erred in concluding otherwise, because the correct statute of 
limitations for his lawsuit was one year, as opposed to the five year statute of 
limitations that the Superior Court found to be applicable.  We have 
concluded that National Union’s argument is without merit.  Accordingly, 
the judgment of the Superior Court is affirmed. 
Facts 
 
In 
November 
1991, 
McDougall 
began 
receiving 
workers’ 
compensation disability payments for a work-related injury.  Those 
payments were made pursuant to an agreement between McDougall and his 
 
3
employer, Air Products & Chemicals, Inc. (“Air Products”).  Those 
payments have continued without interruption by National Union, the 
employer’s workers’ compensation insurance carrier, ever since they were 
awarded. 
 
On November 23, 1998, the IAB awarded McDougall additional 
benefits in the amount of $32,187.47 for medical expenses, plus attorney’s 
fees of $2,250 and medical witness fees of $1,724.  Air Products appealed 
the IAB’s award of additional benefits to the Superior Court.  By stipulation 
of the parties dated August 3, 1998, that appeal was dismissed.  By letter 
dated July 30, 1999, McDougall demanded that the amount awarded by the 
IAB on November 23, 1998 be paid by National Union within thirty days 
under Del. Code Ann. tit. 19, § 2357.2  The attorney’s fees and the medical 
witness fees were apparently paid, albeit in an untimely manner.  The 
medical expenses of $32,187.47 were not paid, however, as reflected in 
Count I of the complaint filed by McDougall in the Superior Court.   
 
In 1999, McDougall filed a separate successive petition with the IAB 
seeking additional compensation.  On September 15, 1999, the parties 
                                          
 
2 That section provides as follows: 
If default is made by the employer for 30 days after demand in the 
payment of any amount due under this chapter [the workers’ compensation 
chapter], the amount may be recovered in the same manner as claims for 
wages are collectible. 
 
4
entered into a settlement under which National Union, on behalf of Air 
Products, agreed to pay additional compensation of $32,019.98 for 
permanent partial disability, plus $2,250 in attorney’s fees and $1,600 in 
medical witness fees.  By letter dated November 2, 1999, McDougall 
demanded that this amount be paid within thirty days.  National Union paid 
the attorney’s fees and medical witness fees but did not pay the additional 
award of $32,019.98 for permanent partial disability benefits, as reflected in 
Count II of the complaint that McDougall filed in the Superior Court. 
 
On July 17, 2001, McDougall filed this civil action in the Superior 
Court seeking to recover the additional benefits awarded in 1998 and the 
additional compensation awarded in 1999, plus liquidated damages, costs 
and attorney’s fees.  The basis for McDougall’s request for liquidated 
damages, costs and attorney’s fees is Huffman v. C.C. Oliphant & Son, Inc.3  
In Huffman, this Court held that under Del. Code Ann. tit. 19, § 2357, the 
remedies available for recovery of unpaid wages are also available for the 
recovery of wrongfully withheld workers’ compensation benefits.4  These 
remedies, which are found in Chapter 11 of Title 19 (Wage Payment and 
Collection Act), include recovery of liquidated damages under Del. Code 
                                          
 
3 Huffman v. C.C. Oliphant & Son, Inc., 432 A.2d 1207 (Del. 1981). 
4 Id. 
 
5
Ann. tit. 19, § 1103(b)5 and costs and attorney’s fees under Del. Code Ann. 
tit. 19, § 1113(c).6  Civil actions filed under section 2357 to collect unpaid 
workers’ compensation awards have become known as “Huffman” claims.     
Final Judgment 
 
The Superior Court decided that McDougall’s civil action was timely 
filed because the applicable statute of limitations is the five-year statute 
found at section 2361(b) of Title 19.  Therefore, the Court granted 
McDougall’s motion for summary judgment and denied National Union’s 
motion for summary judgment.  Thereafter, a final judgment was entered in 
this matter.  The amounts set forth in that judgment were agreed to, as to 
form, by the parties.   
 
On Count I, McDougall received the following judgment award 
against National Union: 
Huffman award damages ………………… $32,187.47 
 
Huffman fees and costs damages ………… $ 3,974.00 
 
                                          
 
5 “If an employer, without any reasonable grounds for dispute, fails to pay an employee 
wages, as required under this chapter, the employer shall, in addition, be liable to the 
employee for liquidated damages in the amount of 10 percent of the unpaid wages for 
each day, except Sunday and legal holidays, upon which such failure continues after the 
day upon which payment is required or in an amount equal to the unpaid wages, 
whichever is smaller . . . .”  Del. Code Ann. tit. 19, § 1103(b). 
6 “Any judgment entered for a plaintiff in an action brought under this section shall 
include an award for the costs of the action, the necessary costs of prosecution and 
reasonable attorney’s fees, all to be paid by the defendant.”  Del. Code Ann. tit. 19, § 
1113(c). 
 
6
Interest on award damages from 9/14/99 
through 3/15/04 at 9.75% per annum……. $14,122.25 
 
Interest on fees and costs from 9/14/99 
through 3/15/05 at 9.75% per annum …… $ 1,743.59 
 
Total of Count I award …………………… $52,027.31 
 
Under Del. Code Ann. tit. 6, § 2301, post-judgment interest continues to 
accrue at the rate of 9.75% per annum on the Huffman award and on the fees 
and costs amounts until they are paid.  In this case, that post-judgment 
interest accrues at the rate of $9.77 per diem, commencing on March 16, 
2004. 
 
On Count II, McDougall received the following judgment award 
against National Union: 
Huffman award damages ……………………….. $32,019.98 
 
Accrued interest on Huffman award damages from 
12/14/99 through 3/15/04 at 10% per annum  ….. $13,608.00 
 
Total of Count II award ………………………… $45,627.98 
 
Under Del. Code Ann. tit. 6, § 2301, post-judgment interest continues to 
accrue at the rate of 10% per annum on the Huffman award amount until 
paid.  In this case, that post-judgment interest accrues at the rate of $8.77 per 
diem, commencing on March 16, 2004.   
 
The Superior Court also awarded attorney’s fees to McDougall in the 
amount of $3,320.  Accordingly, the total amount of the final judgment 
 
7
entered in favor of McDougall and against National Union was $100,975.29.  
Per diem interest at the rate of $18.43 began to accrue, commencing on 
March 16, 2004, and accrues each day thereafter, until the aforementioned 
amounts are paid in full. 
The Parties’ Contentions 
 
National Union argues that the statute of limitations that governs 
actions to collect wages should apply to McDougall’s civil action to recover 
workers’ compensation benefits awarded by the IAB, because actions under 
Del. Code Ann. tit. 19, § 2357 involve the same remedies that are available 
in actions to collect unpaid wages.  Thus, National Union submits that the 
applicable statute of limitations is Del. Code Ann. tit. 10, § 8111, which 
provides that an action to recover wages, salary, overtime for work or other 
damages or benefits arising from work, labor or personal services 
performed, must be brought within one year of the cause of action’s 
accrual.7  National Union contends that McDougall’s causes of action 
accrued thirty days after he made demand for payment under Del. Code 
Ann. tit. 19, § 2357, and that the expiration of one year from those dates 
                                          
 
7 “No action for recovery upon a claim for wages, salary, or overtime for work, labor or 
personal services performed, or for damages (actual, compensatory or punitive, liquidated 
or otherwise), or for interest or penalties resulting from the failure to pay any such claim, 
or for any other benefits arising from such work, labor or personal services performed or 
in connection with any such action, shall be brought after the expiration of one year from 
the accruing of the cause of action on which such action is based.”  Del. Code Ann. tit. 
10, § 8111. 
 
8
occurred in August and December 2000, respectively–both prior to the 
commencement of McDougall’s Superior Court civil action in July 2001. 
 
McDougall submits that the Superior Court correctly held the 
applicable statute of limitations is that which is contained in the Workers’ 
Compensation Act and prescribes a limitation period of five years.  That 
statute provides: 
Where payments of compensation have been made in any case 
under an agreement approved by the [IAB] or by an award of 
the [IAB], no statute of limitation shall take effect until the 
expiration of 5 years from the time of the making of the last 
payment for which a proper receipt has been filed with the 
[IAB].8 
 
McDougall also submits that, because payments are still being made to him 
by National Union under the original November 1991 agreement, no statute 
of limitations began to run on his cause of action to collect the additional 
benefits awarded to him by the IAB in 1998 and 1999.  We agree for the 
reasons next set forth in this opinion. 
History and Purpose 
Delaware’s first Workers’ Compensation Statute was enacted in 1917.  
That law was intended “to provide more direct and economical 
compensation for injured employees and create a pool of employers that 
would bear the burden of ameliorating the losses resulting from industrial 
                                          
 
8 Del. Code Ann. tit. 19, § 2361(b). 
 
9
accidents,” and “to provide prompt financial and medical assistance to 
injured employees and their families because the lengthy and protracted 
nature of tort litigation arising out of injuries to an employee often delayed 
such assistance for an extended period of time.”9  In Rafferty v. Hartman 
Walsh Painting Co., we noted that “Workers’ Compensation statutes similar 
to the Delaware Act were adopted in most states early in the last century in 
response to the failure of the common law to provide a quick, practical, cost 
effective remedy for on the job injuries suffered by workers.”10 
In Delaware, as in many other states’ workers’ compensation statutes, 
the elimination of an employee’s action at common law and the substitution 
of a complete statutory remedy for work-related injuries involves a trade-
off.11   On one side, compensation is to be paid promptly to an employee for 
a work-related injury without the employee being required to prove any fault 
by the employer.12  The trade-off is that the workers’ compensation statutes 
                                          
 
9 Rafferty v. Hartman Walsh Painting Co., 760 A.2d 157, 159 (Del. 2000).  See also 
Koeppel v. E.I. DuPont De Nemours & Co., 183 A. 516 (Del. Super. Ct. 1936), aff’d, 194 
A. 847 (Del. 1937) (stating that a purpose of the Workers’ Compensation Statute is to 
place a portion of loss arising from industrial accidents on industry and to make payment 
for the injury or death of an employee more direct, certain and economical); Frank C. 
Sparks Co. v. Huber Baking Co., 96 A.2d 456 (Del. 1953) (stating that the philosophy of 
the Workers’ Compensation Statute is to give an injured employee a prompt and sure 
means of receiving medical care without subjecting the worker to the costs and delays of 
a law suit). 
10 Rafferty v. Hartman Walsh Painting Co., 760 A.2d at 159.   
11 Id.   
12 Id. 
 
10
preclude the employee from bringing a common law tort action against the 
employer for injuries arising out of the job related accident.13  Indeed, most 
courts have held that the exclusivity provision of a workers’ compensation 
statute precludes a suit for negligence under the common law, even if the 
injury was caused by the gross, wanton, willful, deliberate, reckless, 
culpable or malicious negligence, or other misconduct of the employer.14 
Employees’ Additional Statutory Remedy 
Consistent with the purpose of providing employees prompt relief for 
work-related 
injuries, 
Delaware’s 
Workers’ 
Compensation 
Statute 
established the IAB to hear, determine and award or deny benefits.  After an 
award is made by the IAB, in certain limited situations the IAB may enter 
sanctions against an insurer that fails to make the compensation payments as 
due.15  Nothing in the Delaware Workers’ Compensation laws, however, 
gives the IAB the power to grant relief to an employee beyond requiring the 
payment of past due compensation amounts from the insurer.   
The facts alleged in McDougall’s complaint dramatically illustrate the 
kind of protracted delays in payments to an employee of an IAB award that 
the Delaware Workers’ Compensation laws were designed to eliminate.  The 
                                          
 
13 Id. 
14 Id.   See 6 Larson’s § 103.03: 103-5 through 103-6. 
15 See Del. Code Ann. tit. 19, § 2362. 
 
11
General Assembly anticipated that such aberrational conduct by an employer 
or its workers’ compensation insurance carrier might periodically occur.  In 
Huffman, this Court recognized that an additional statutory remedy is 
available to employees when employers wrongfully withhold, suspend or 
terminate compensation that has been awarded by the IAB.   
The General Assembly has expressly provided for the collection of 
amounts due following an award by the IAB under the Delaware Workers’ 
Compensation laws in the same manner provided for the collection of 
wages.  Section 2357 of the Workers’ Compensation statute provides: 
If default is made by the employer for 30 days after demand in 
the payment of any amount due under this chapter, the amount 
may be recovered in the same manner as claims for wages are 
collectible. 
 
Pursuant to section 2357, an employee with a claim based on the employer’s 
alleged failure to pay compensation due after proper demand has been made, 
may elect to pursue an action under Chapter 11 of Title 19.  Jurisdiction over 
claims brought under Chapter 11 is conferred by Del. Code Ann. tit. 19, § 
1113(a) which provides: 
 
A civil action to recover unpaid wages and liquidated 
damages may be maintained in any court of competent 
jurisdiction. 
 
In Huffman, we held that “in order to give effect to the provisions of section 
2357, the reference in section 1113(a) to ‘wages’ must be construed to 
 
12
include claims based on unpaid workmen’s compensation benefits due after 
proper demand therefor has been made.”16   
Section 1113(a) grants jurisdiction over such cases to “any court of 
competent jurisdiction,” which includes the Superior Court where 
McDougall filed his civil action.  Section 1113(a) does not confer 
jurisdiction over workers’ compensation claims arising under section 2357 
and Chapter 11, upon the IAB.  Thus, only a court of competent jurisdiction 
and not the IAB has authority to entertain workers’ compensation claims 
arising under section 2357 and Chapter 11.   
In Huffman, we stated that this jurisdictional distinction is important 
because the relief available to an employee under Chapter 11 is broader than 
the relief that is otherwise available from the IAB in cases such as 
McDougall’s.17  The only relief that the IAB may grant to an employee is an 
order that the employer or insurer pay all past due compensation that has 
been wrongfully withheld.  That relief is also available in any court-filed 
action under Chapter 11.  However, Del. Code Ann. tit. 19, § 1103(b) 
provides that in a proper case: 
the employer shall, in addition, be liable to the employee for 
liquidated damages in the amount of 10 percent of the unpaid 
wages for each day, except Sunday and legal holidays, upon 
                                          
 
16 Huffman v. C.C. Oliphant & Son, Inc., 432 A.2d 1207, 1210 (Del. 1981). 
17 Id.   
 
13
which such failure continues after the day upon which payment 
is required or in an amount equal to the unpaid wages, 
whichever is smaller . . . .    
 
Del. Code Ann. tit. 19, § 1113(c) also provides that if an employee is 
entitled to a judgment under Chapter 11, the judgment “shall include an 
award for the costs of the action, the necessary costs of prosecution and 
reasonable attorney’s fees, all to be paid by the defendant.”   
McDougall’s Civil Action Timely 
 
It is undisputed in this case that McDougall made a written demand 
for payment of the additional benefits that the IAB awarded to him in 1998 
and 1999 – payments that National Union refused to honor for much more 
than thirty days, thus bringing the facts within section 2357.  Instead of 
seeking the limited relief that was available to him from the IAB, 
McDougall decided to proceed in the manner by which wages are collectible 
under Del. Code Ann. tit. 19, §§ 1101-15.  As already discussed, those 
statutes provide for the filing of a civil action in a court of competent 
jurisdiction and the imposition of liquidated damages, attorney’s fees and 
costs, i.e., a Huffman claim.18   
National Union argues that although section 2357 afforded 
McDougall the additional remedy of filing a civil action in the same manner 
                                          
 
18 Huffman v. C.C. Oliphant & Son, Inc., 432 A.2d 1207 (Del. 1981). 
 
14
that wages are collected, that statute also subjected McDougall’s civil action 
to the one-year statute of limitation found at section 8111 of Title 10.  We 
disagree.  National Union’s argument runs contrary to the statutory scheme 
of the Delaware Workers’ Compensation laws and, in particular, to section 
2305 which provides: 
No agreement, rule, regulation or other device shall in any 
manner operate to relieve any employer or employee in whole 
or in part from any liability created by this chapter, except as 
specified in this chapter.19 
 
This statutory statement of policy in section 2305 requires us to examine the 
Delaware Workers’ Compensation laws to determine which statute of 
limitations that applies to the statutory cause of action created by section 
2357.   
National Union acknowledges that:  “[i]n November 1991, William S. 
McDougall, Sr. began to receive worker’s compensation disability benefits 
for a work-related injury.  Payments were made pursuant to an agreement 
between [McDougall] and his employer, Air Products and Chemicals, Inc., 
and continued thereafter.”  Because McDougall was seeking to collect 
benefits that had been awarded in addition to those he had been receiving 
since 1991, the Superior Court concluded that the five-year statute of 
limitations found at Del. Code Ann. tit. 19, § 2361(b) was controlling: 
                                          
 
19 Del. Code Ann. tit. 19, § 2305 (emphasis added).   
 
15
Where payments of compensation have been made in any case 
under an agreement approved by the Board or by an award of 
the Board, no statute of limitation shall take effect until the 
expiration of five years from the time of the making of the last 
payment for which a proper receipt has been filed with the 
Board. 
 
Section 2361(b) unambiguously provides that no statute of limitation 
shall take effect until five years from the last payment of benefits.  At the 
time McDougall filed his civil action for additional benefits, he was 
continuing to receive payments from National Union under the original 1991 
award of compensation.  Therefore, we hold that the Superior Court 
correctly concluded that McDougall’s complaint was timely filed because 
section 2361(b) applied to McDougall’s civil action to enforce the payment 
of the additional benefits that he was awarded in 1998 and 1999.   
Conclusion 
 
The judgment of the Superior Court is affirmed.20 
 
 
                                          
 
20 To the extent that Johnson v. General Motors and Baio v. Frank A. Robino, Inc. are 
inconsistent with this opinion, they are overruled.  Johnson v. General Motors, 1990 WL 
18397 (Del. Super. Feb. 5, 1990); Baio v. Frank A. Robino, Inc., 1987 WL 12426 (Del. 
Super. May 28, 1987).