COURT OF APPEALS OF VIRGINIA 

Present: Judges Elder, McClanahan and Haley 

Argued at Richmond, Virginia 

NICOLASA A. DIAZ 

 OPINION BY 

v. Record No. 1846-09-2 JUDGE LARRY G. ELDER 

APRIL 20, 2010 

WILDERNESS RESORT ASSOCIATION AND 

 LIBERTY MUTUAL INSURANCE COMPANY 

 FROM THE VIRGINIA WORKERS’ COMPENSATION COMMISSION 

 Wesley G. Marshall (Law Offices of Wesley G. Marshall PLC, on 

briefs), for appellant. 

 Christopher R. Costabile (Law Offices of Christopher R. Costabile, 

on brief), for appellees. 

 Nicolasa A. Diaz (claimant) appeals from a decision of the Workers’ Compensation 

Commission terminating the obligation of Wilderness Resort Association and Liberty Mutual 

Insurance Company (hereinafter collectively employer except where otherwise noted) to pay her 

temporary disability benefits pursuant to an award and declining claimant’s request for penalties 

and interest based on what she contends was employer’s late payment of those benefits. On 

appeal, claimant contends the commission erroneously concluded that the application was 

properly docketed, that employer and carrier properly paid all compensation due pursuant to the 

award, and that claimant was not entitled to statutory penalties or interest. We hold the record 

supports the commission’s conclusion that employer’s hearing application was properly 

docketed. We also hold the commission erred in concluding that the wages employer paid 

claimant constituted compensation for purposes of determining whether all compensation due 

under the award had been paid and whether employer and carrier owed penalties and interest. 
 - 2 -

Finally, we conclude the commission erred in not awarding (a) penalties on all late paid 

compensation and (b) interest on compensation delayed during the pendency of this appeal. 

Thus, we affirm in part, reverse in part, and remand for further proceedings consistent with this 

opinion. 

I. 

BACKGROUND 

 On February 23, 2000, while working as a housekeeper for employer, claimant sustained 

a compensable injury to her back. Employer paid benefits for various periods of disability, and 

in 2003, following a dispute about claimant’s entitlement to additional benefits, the commission 

entered an award for temporary total disability benefits commencing July 19, 2003, and 

continuing. Claimant returned to light-duty work with employer on August 1, 2004, at which 

time she was paid a gross weekly wage of $415.20 or higher, which was greater than her gross 

pre-injury average weekly wage of $310.93. Employer notified the carrier that claimant had 

returned to work, and the carrier ceased its payments of disability compensation. 

Later that month, the commission sent its standard letter to the carrier indicating its 

records reflected an outstanding award and notifying the carrier that if payments had been 

terminated, it was required to file an executed termination of wage loss award form or an 

employer’s application for hearing to end the award. The carrier responded that claimant had 

returned to work at a wage greater than her pre-injury wage and indicated that, although it had 

provided claimant with an agreement to pay benefits form and a termination of wage loss award 

form on two occasions, she had not signed the forms. 

 By letter dated November 19, 2004, the commission notified the carrier it “ha[d] been 

advised that because of difficulties in obtaining an executed Termination of Wage Loss Award, 

[it] ha[d] unilaterally terminated [claimant’s] compensation benefits.” The commission directed 
 - 3 -

employer “to submit evidence that benefits have been reinstated or a basis upon which benefits 

may be suspended” within two weeks. Employer thereafter submitted properly executed 

termination of wage loss award forms covering six different periods of temporary partial and 

total disability, including not only the period for which the award was outstanding but also for 

several one- to three-day periods during 2002. 

By notice dated April 20, 2005, the commission notified the carrier that it was required to 

file additional forms before the commission could enter the requested orders. By letter dated 

June 5, 2005, the commission again notified the carrier that it required additional forms to 

terminate the outstanding award and it explained with specificity what forms were needed. It 

emphasized that “[u]ntil the proper agreements are received the outstanding award is in effect.” 

 Employer apparently took no additional action to submit the requested paperwork, and by 

letter of December 5, 2005, claimant’s attorney sought full compliance with the ongoing award 

and a twenty percent penalty for non-compliance. Claimant also sought compliance with the 

outstanding medical award and temporary total disability for several additional one- to three-day 

periods of disability in 2005. The commission issued a show cause order commanding the 

carrier to appear before the commission. The carrier filed an affidavit indicating it had 

authorized payment for thirteen days of temporary total disability benefits and payment of a 

twenty percent penalty, as well. The commission entered an order on February 27, 2006, 

dismissing the show cause. 

 On March 2, 2006, the commission again sent the carrier its standard form letter 

indicating the award remained outstanding and that it assumed payments under the award were 

continuing. By letter dated May 3, 2006, claimant’s attorney forwarded employer’s attorney a 

supplemental agreement to pay benefits form, executed by claimant, for one of the periods for 

which the commission had indicated it still required such documentation, and claimant’s counsel 
 - 4 -

asked the carrier to forward the appropriate form to the commission, which it appears the carrier 

never did. 

 On March 1, 2007, the commission yet again sent the carrier its standard form letter 

indicating an award was outstanding and that it assumed payments under the award were 

continuing. 

 By letter to the commission dated June 23, 2008, claimant’s attorney renewed his request 

for entry of an order requiring employer to comply with the outstanding award and for 

assessment of a twenty percent penalty on all compensation more than 14 days past due. 

Claimant’s attorney indicated that if employer disputed its obligation to pay compensation or 

penalties, claimant desired an evidentiary determination or entry of an order to show cause. 

Employer and carrier responded by filing an employer’s application for hearing form 

dated July 8, 2008. That application, completed by the carrier’s attorney, alleged claimant had 

returned to light-duty work on August 1, 2004, at her pre-injury average weekly wage. Although 

the carrier had earlier terminated claimant’s temporary total disability compensation payments 

upon her return to work in 2004, the carrier indicated that in conjunction with filing the 2008 

application for hearing, it made a lump sum payment to claimant for temporary total disability at 

the rate of $207.28 due under the award for the period from her return to work on August 1, 

2004, through July 8, 2006, two years prior to the date on which it completed the application for 

hearing form. The application also requested “credit for overpayment of benefits” for that same 
 - 5 -

 

period. The carrier issued claimant a check for $20,551.90, which indicated it was disability 

compensation for the relevant time period1

 at the lower rate of $206.68.2

 Claimant’s attorney opposed employer’s application for hearing, alleging, inter alia, that 

the check should instead have been for $20,935.28. The commission’s dispute resolution 

department determined that the carrier’s application was supported by probable cause and 

referred it to the hearing docket. Employer defended on the ground “that the employer was 

paying [wages] at or above the comp rate for all days except when the claimant was out of work 

and that the payments were therefore not late.” Employer also offered evidence of the temporary 

total disability compensation payments the carrier made to claimant in the course of the 2006 

show cause proceeding for twelve dates in 2005, and claimant stipulated that employer made 

payments to her on February 23, 2006, totaling $354.36.3 Finally, employer offered wage 

evidence showing claimant returned to light-duty employment with it in 2004 and that she had 

remained employed by employer since that time, earning more than her pre-injury average 

weekly wage every week during that period. 

 In a written decision dated December 22, 2008, the deputy held as follows: 

When the employer filed its application [for hearing] on July 8, 

2008, it was required by Rule 1.4(C) to pay benefits through the 

alleged date of return to work [on August 1, 2004]. Rule 1.4(E) 

[further] provides that no change in condition may be considered 

unless filed “within two years from the date compensation was last 

paid pursuant to an award.” In an effort to comply with this 

section, the employer paid the claimant $20,551.90 for temporary 

1

 The check indicated it was for compensation through “07/08/08,” but the parties agreed 

the date indicated should have been 2006 rather than 2008. 

2

 Claimant was initially paid temporary total disability compensation at the rate of 

$206.68 under a July 18, 2002 award. In 2003, however, the parties agreed that the correct 

weekly compensation rate was $207.28, and the commission entered an order to that effect. 

3

 These payments were erroneously based on the compensation rate of $206.68 rather 

than $207.28. See supra footnote 2. 
 - 6 -

 

total disability benefits for the period August 1, 2004 through July 

8, 2006. However, the correct amount due the claimant was 

$20,936.29. We find that the application is void ab initio. 

On that basis, the deputy held claimant was entitled to “the underpayment and penalties.” 

The employer and carrier filed a request for review, again alleging that because employer 

paid claimant wages in excess of her compensation rate through the date of the hearing, the 

application for hearing was not void ab initio. Employer conceded that when it filed its 

application for hearing asking to terminate the award, it underpaid the amount of compensation 

due to bring its payments under the outstanding award current to within two years of the date of 

the filing of the application.4

On review, a majority of the commission rejected the deputy’s ruling and sided with 

employer, holding “employer’s application was valid.” Noting that the employer “erroneously 

paid a lesser amount than the owed $20,936.29,” the commission nevertheless concluded 

employer’s payment of wages to claimant for light-duty work at a rate equal to or greater than 

her pre-injury average weekly wage constituted the payment of compensation under the tolling 

provisions of Code § 65.2-708. It reasoned as follows: 

[T]he dissent argues that [Code §] 65.2-708(C), the tolling 

provision for the two-year statute of limitations . . . in [Code 

§] 65.2-708(A)[,] does not apply when an employee is under an 

Award. The effect of such a holding would be that [§] 65.2-708(C) 

applies to employees but not to employers, since employer’s 

applications seek to terminate [existing] awards. If no award 

exists, then there would be no basis upon which an employer could 

file a change in condition application. Indeed, the Commission 

routinely dismisses employer change in condition applications 

which are filed when an award is not in place. 

4

 Employer conceded it owed a total of $20,936.29 for the entire period between August 

1, 2004, and July 8, 2006, and made a lump sum payment of only $20,551.90, which would 

result in an underpayment of $384.39. In so doing, it may have overlooked the payments of 

temporary total disability for various dates in 2005 it made on February 23, 2006. Under either 

method of calculation, however, employer’s payment was insufficient to satisfy the 

commission’s “strict interpretation of [Rule 1.4’s] provisions,” Specialty Auto Body v. Cook, 14 

Va. App. 327, 331, 416 S.E.2d 233, 235 (1992), and employer does not contend otherwise. 
 - 7 -

However, if the Virginia General Assembly intended to 

preclude employers from invoking [Code §] 65.2-708(C), it could 

have done so within the language of the statute. There is simply no 

exception specified within the language of [Code §] 65.2-708(C) 

that indicates that this provision is inapplicable to change in 

condition filings by employers. 

 Here, the employer paid wages at a rate greater than or 

equal to the pre-injury wage to an employee who was physically 

unable to return to [her] pre-injury work due to a compensable 

injury and who was provided work within [her] capacity. Pursuant 

to the plain language of [§] 65.2-708(C), this is all that is required 

for the wages to “be considered compensation.” 

 Accordingly, we terminate the outstanding award effective 

July 8, 2006[,] as the employer properly paid compensation in 

connection with the filing of its application pursuant to [Code 

§] 65.2-708(C). In passing, we note that our decision on this issue 

clearly works no hardship on the claimant, as [s]he has, even under 

our holding, been overpaid by over $20,000 which the carrier will 

not be able to recover by way of a credit or otherwise. 

The commission terminated the award as of July 9, 2006, and denied claimant’s request for 

penalties and interest. 

 Commissioner Diamond dissented, agreeing with the deputy’s ruling that employer’s 

application was void ab initio. She cited Scott v. Scott, 16 Va. App. 815, 433 S.E.2d 259 (1993), 

for the proposition that subsection (C) of Code § 65.2-708 extends the statutory period in 

subsection (A) of that statute “‘to prevent employers from lulling partially disabled workers into 

a false sense of security during this two year period by providing employees light duty work at 

their pre-injury wage for two years and then terminating the employee without liability for future 

disability benefits.’” She averred subsection (C) “would only apply if the employee was not 

under award for compensation benefits and needed to file a change in condition application to 

receive an additional award of compensation” and “does not mean we will now equate wages 

[paid to an employee who has returned to work for her employer in a light-duty capacity] as 

compensation which was paid pursuant to an award.” 
 - 8 -

 Commissioner Diamond relied upon the ruling in Genesis Health Ventures, Inc. v. Pugh, 

42 Va. App. 297, 591 S.E.2d 706 (2004), in which the injured claimant returned to work for the 

pre-injury employer, at which time the employer stopped paying compensation but failed to file 

an application for hearing to terminate the disability award until a little over two years later. 

Commissioner Diamond noted that the commission’s claims examiner rejected the application as 

invalid under Rule 1.4 (tracking the language of Code § 65.2-708(A)); that the commission 

affirmed on review; and that the Court of Appeals affirmed the rejection because, quoting Pugh, 

42 Va. App. at 299-300, 591 S.E.2d at 707, ‘“the application was not “filed within two years 

from the date compensation was last paid pursuant to [the] award” and . . . did not satisfy the 

requirement of Rule 1.4(E).’” 

Finally, Commissioner Diamond reasoned that “[t]he most logical way to address this 

issue is to require the employer to file an application when the employee returns to work and if 

the employer does not follow the rules, then the employer must pay the correct amount of 

compensation as awarded by the Commission.” She argued that, “[o]therwise, the 

[commission’s] Benefits Administration Department will not be able to determine if the 

application is technically correct.” 

 Claimant noted this appeal. 

II. 

ANALYSIS 

 Claimant contends the commission erroneously concluded that employer’s application for 

hearing was properly docketed, that employer’s payment of wages should be considered the 

payment of compensation due pursuant to the outstanding award, and that those payments were 

made in a timely fashion such that claimant was not entitled to statutory penalties or interest. For 

the reasons that follow, we hold the commission properly concluded it had authority to consider 
 - 9 -

employer’s application for hearing but erroneously concluded both that employer had paid all 

compensation due under the award and that claimant was not entitled to penalties or interest. 

A. APPLICABLE LAW AND RULES 

 On review on appeal, we must defer to the commission’s findings of fact if supported by 

credible evidence in the record. Rusty’s Welding Serv., Inc. v. Gibson, 29 Va. App. 119, 127, 

510 S.E.2d 255, 259 (1999) (en banc). “When a challenge is made to the commission’s 

construction of its rules, ‘our review is limited to a determination of whether the commission’s 

interpretation of its own rule was reasonable.’ We will not set aside the commission’s 

interpretation of its rules unless that interpretation is arbitrary and capricious.” Boyd v. People, 

Inc., 43 Va. App. 82, 86-87, 596 S.E.2d 100, 102-03 (2004) (quoting Classic Floors, Inc. v. Guy, 

9 Va. App. 90, 93, 383 S.E.2d 761, 763 (1989)). As to issues of statutory construction, 

[a]lthough “the practical construction given to a statute by public 

officials charged with its enforcement is entitled to great weight by 

the courts and in doubtful cases will be regarded as decisive,” [S.] 

Spring Bed Co. v. State Corp. Comm’n, 205 Va. 272, 275, 136 

S.E.2d 900, 902 (1964), “when an issue involves a pure question of 

statutory interpretation, that issue does not invoke the agency’s 

specialized competence but is a question of law to be decided by 

the courts.” Alliance to Save the Mattaponi v. Commonwealth, 

270 Va. 423, 442, 621 S.E.2d 78, 88 (2005). 

Commonwealth v. Barker, 275 Va. 529, 536, 659 S.E.2d 502, 505 (2008); see Gordon v. Ford 

Motor Co., 55 Va. App. 363, 370 n.5, 685 S.E.2d 880, 883 n.5 (2009) (en banc). 

 Pursuant to Code § 65.2-708(A), “a party may ask the commission to ‘review any award’ 

of benefits based upon a change of condition.” Gordon, 55 Va. App. at 369, 685 S.E.2d at 883 

(quoting Code § 65.2-708(A)). That subsection provides in relevant part as follows: 

Upon its own motion or upon the application of any party 

in interest, on the ground of a change in condition, the Commission 

may review any award and on such review may make an award 

ending, diminishing or increasing the compensation previously 

awarded, subject to the maximum or minimum provided in this 

title . . . . No such review shall affect such award as regards any 
 - 10 -

moneys paid except [under certain circumstances not applicable in 

the instant case]. No such review shall be made after twenty-four 

months from the last day for which compensation was paid, 

pursuant to an award under this title, except [under certain 

circumstances not applicable in the instant case]. 

Code § 65.2-708(A). “This section is the only statutory authority for a review on the ground of a 

change in condition,” and both the claimant and the insurer or employer derive “the same” rights 

“to make such application” “from the same source.” Bristol Door & Lumber Co. v. Hinkle, 157 

Va. 474, 477, 161 S.E. 902, 903 (1932) (decided under § 47 of a predecessor version of the 

Workers’ Compensation Act, 1918 Va. Acts. ch. 400). 

 We recently observed that 

the twenty-four-month limitation of Code § 65.2-708(A) “is not a 

statute of limitations in the ordinary sense. It does not provide that 

[a party] has twenty-four months from the date the change in 

condition occurred to file.” Rather subsection A provides that the 

change in condition must occur within twenty-four months from 

the date [for which] compensation was last paid. 

Gordon, 55 Va. App. at 369, 685 S.E.2d at 883 (quoting Armstrong Furn. v. Elder, 4 Va. App. 

238, 241, 356 S.E.2d 614, 615 (1987) (applying former Code § 65.1-99, now Code 

§ 65.2-708(A))). It is also well settled that the time provisions of Code § 65.2-708 are not 

jurisdictional and may be waived. Binswanger Glass Co. v. Wallace, 214 Va. 70, 74, 197 S.E.2d 

191, 194 (1973) (decided under the predecessor statute, Code § 65.1-99). 

 As we also have recently observed, “Subsection [(C)] of Code § 65.2-708, in turn, 

operates as a tolling provision that extends th[e] limitation [in subsection (A)]. This tolling is 

effected by an expanded definition of compensation to include wages paid to a claimant for 

light-duty work that are equal to or greater than his pre-injury wages . . . .” Gordon, 55 Va. App. 

at 369-70, 685 S.E.2d at 883. As set out in subsection (C), 

All wages paid, for a period not exceeding twenty-four 

consecutive months, to an employee (i) who is physically unable to 

return to his pre-injury work due to a compensable injury and 
 - 11 -

(ii) who is provided work within his capacity at a wage equal to or 

greater than his pre-injury wage, shall be considered compensation. 

Code § 65.2-708(C). 

 Pursuant to subsection (A) of the statute, the commission has developed Rule 1.4, which 

provides in relevant part that if an employer wishes to have a change-in-condition application 

docketed and set for hearing, “[c]ompensation shall be paid through the date the application was 

filed, unless” “[t]he application alleges the employee returned to work, in which case payment 

shall be made to the date of the return.” Rule 1.4(C)(1).5

 In addition, subsection (E) of Rule 1.4, 

which tracks the language in the last sentence of Code § 65.2-708(A), provides that “[n]o change 

in condition application under § 65.2-708 of the Code of Virginia shall be accepted unless filed 

within two years from the date compensation was last paid pursuant to an award.” 

B. DOCKETING OF EMPLOYER’S APPLICATION 

 Neither Code § 65.2-708 nor the related commission rule, Rule 1.4, provides a time 

limitation within which an employer must file a change-in-condition application after a claimant 

returns to work at or above his pre-injury wage, as it must if it wishes to have the commission 

terminate an outstanding award without the claimant’s consent.6

 See May v. Hartz Broadway, 

 5

 In Sargent Electric Co. v. Woodall, 228 Va. 419, 323 S.E.2d 102 (1984), based on 

language in the predecessor to present Rule 1.4, the Court, without discussion, interpreted the 

rule’s “‘returned to work’” language to mean “returned to work at an average weekly wage equal 

to [the employee’s] pre-injury wage.” 228 Va. at 422 n.1, 425, 323 S.E.2d at 103 n.1, 105 

(quoting Rule 13 as it existed prior to the amendment effective May 1, 1979) (emphasis added). 

The commission gives present Rule 1.4(C)(1) a similar construction. See Odin, Inc. v. Price, 23 

Va. App. 66, 70, 474 S.E.2d 162, 163-64 (1996) (noting the commission’s holding that where a 

claimant was under an outstanding award of temporary total disability and “returned to work at a 

lesser wage” with the employer’s knowledge, the employer was “not entitled to unilaterally 

discontinue payment of compensation” and was required to “file an Agreed Statement of Fact 

[endorsed by both parties] memorializing the return to work,” along with “a Supplemental 

Memorandum of Agreement for the temporary partial disability that was clearly due,” or “an 

Employer’s Application for Hearing”). 

6

 This issue is distinct from the question of how long an employer may wait after 

terminating compensation to file the related change-in-condition application. Other than the 
 - 12 -

No. 218-80-32 (Va. Workers’ Comp. Comm’n Aug. 22, 2007). Code § 65.2-708(A) provides 

instead simply that, subject to certain exceptions not applicable here, “[n]o such review shall be 

made after twenty-four months from the last day for which compensation was paid.” Code 

§ 65.2-708(A) (emphasis added); see also Rule 1.4(E) (providing in the commission’s rule 

relating to employers’ applications for hearing that “[n]o change in condition application under 

§ 65.2-708 . . . shall be accepted unless filed within two years from the date compensation was 

last paid pursuant to an award”). Construed together, the statute and Rule 1.4 require that where, 

as here, a claimant under an outstanding award returns to work earning a wage at or above her 

pre-injury wage and the employer unilaterally ceases making payments under the award, if the 

employer waits more than two years after the last date for which it paid compensation to request 

a hearing to terminate the award, it must pay “compensation” as defined by the Act through a 

date no less than two years prior to the date on which it files its application for hearing. 

Here, claimant returned to work on August 1, 2004, at which time employer ceased 

making compensation payments under the award, and employer filed its application to terminate 

 

two-year restriction in Code § 65.2-708(A), see also Rule 1.4(E), in the case of an employee’s 

return to work at or above his pre-injury wage, neither the statute nor the rule explicitly states 

how long an employer may wait after terminating compensation to file the related 

change-in-condition application. Compare Rule 1.4(C)(1) (providing that upon an employer’s 

filing of a change-in-condition application, “[c]ompensation shall be paid through the date the 

application was filed, unless . . . 1. [t]he application alleges the employee returned to work, in 

which case payment shall be made to the date of the return [to work]” (emphasis added)), with

Rule 1.4(C)(2) (providing that upon an employer’s filing of a change-in-condition “application 

alleg[ing] a refusal of selective employment or medical attention or examination, . . . payment 

shall be made to the date of the refusal or 14 days before filing, whichever is later” (emphasis 

added)), and Rule 1.2(B) (providing that upon an employee’s filing of a change-in-condition 

application, “[a]dditional compensation may not be awarded more than 90 days before the filing 

of the claim” (emphasis added)). For all types of change-in-condition applications other than an 

employer’s application based on a return to work at or above the claimant’s pre-injury wage, the 

commission’s rules contain explicit time limitations for when compensation may be terminated 

in relation to when the application is filed. See Rules 1.2 & 1.4. We need not consider on these 

facts whether some other legal principle might require an employer to file by a date earlier than 

“twenty-four months from the last day for which compensation was paid” because claimant has 

not advanced such an argument in this case. 
 - 13 -

the award on July 8, 2008, almost four years later. Thus, in order to have its application for 

hearing docketed, employer was required to pay “compensation” within the meaning of Code 

§ 65.2-708 through at least July 8, 2006, the date two years prior to the filing of the application. 

 The commission concluded that employer’s payment of wages to claimant for light-duty 

work at a rate equal to or greater than her pre-injury wage constituted the payment of 

“compensation” as defined in Code § 65.2-708(C), thereby satisfying the time provisions of 

Code § 65.2-708(A). Under the commission’s reasoning, per subsection (C) of Code § 65.2-708, 

employer’s ongoing payment of these wages to claimant beginning on the date of her return to 

work on August 1, 2004, tolled the subsection (A) statute of limitations for up to twenty-four 

consecutive months, until August 1, 2006. Per subsection (A), employer then had twenty-four 

months from August 1, 2006—the date the tolling ceased—to file a timely change-in-condition 

application. Thus, employer’s filing on July 8, 2008—just three weeks before the expiration of 

the statute of limitations on August 1, 2008—was timely. 

Claimant contends, as the dissenting commissioner posited, that subsection (C) applies 

only to applications submitted by claimants and not to those submitted by employers. She points 

to various appellate decisions commending the commission’s promulgation of its Rule 1.4 “to 

police th[e] tendency of employers and insurers to terminate first and litigate later,” Dillard v. 

Commission, 416 U.S. 783, 789, 94 S. Ct. 2028, 2032, 40 L. Ed. 2d 540, 547 (1974), quoted with 

approval in Speciality Auto Body v. Cook, 14 Va. App. 327, 330-31, 416 S.E.2d 233, 235 

(1992). She cites the evolution of the various subsections of Code § 65.2-708 in support of her 

argument. 

 We hold the commission properly interpreted Code § 65.2-708(C) as it applies to toll the 

provisions of subsection (A). In our recent decision in Gordon, which involved a claimant’s 
 - 14 -

application for hearing, we stated as follows without making any distinction between 

applications filed by claimants and those filed by employers and carriers: 

Subsection C sets forth a caveat to the operation of the subsection 

A statute of limitations by providing that wages, when paid under 

the prescribed circumstances, are “considered compensation.” As 

a result, the payment of such wages tolls the statute of limitations 

in the same manner as the payment of compensation. This caveat, 

in turn, is subject to the condition that the wages will cease being 

treated as compensation at the point when “a period” of such 

payment of wages “exceed[s] twenty-four consecutive months.” 

Gordon, 55 Va. App. at 372, 685 S.E.2d at 884 (quoting Code § 65.2-708(C) (emphasis 

omitted)). 

 We see nothing in the language of the statute or its context within the Workers’ 

Compensation Act (the Act) to indicate subsection (C) applies to extend the statute of limitations 

only for change-in-condition applications filed by claimants. “In construing statutes, courts are 

charged with ascertaining and giving effect to the intent of the legislature.” Crown Cent. 

Petroleum Corp. v. Hill, 254 Va. 88, 91, 488 S.E.2d 345, 346 (1997). “That intention is initially 

found in the words of the statute itself, and if those words are clear and unambiguous, we do not 

rely on rules of statutory construction or parol evidence, unless a literal application would 

produce a meaningless or absurd result.” Id. “[W]here the legislature has used words of a plain 

and definite import[,] the courts cannot put upon them a construction which amounts to holding 

the legislature did not mean what it has actually expressed.” City of Va. Beach v. ESG Enters., 

243 Va. 149, 152-53, 413 S.E.2d 642, 644 (1992). Although the Act is “highly remedial” and 

should “be liberally construed [in favor of claimants] to advance its purpose . . . [of 

compensating employees] for accidental injuries resulting from the hazards of the employment,” 

Henderson v. Cent. Tel. Co., 233 Va. 377, 382, 355 S.E.2d 596, 599 (1987), “‘statutory 

construction may not be used to extend the rights created by the Act beyond the limitations and 

purposes set out therein,’” Corp. Res. Mgmt. v. Southers, 51 Va. App. 118, 126, 655 S.E.2d 34, 
 - 15 -

38 (2008) (en banc) (quoting Garcia v. Mantech Int’l Corp., 2 Va. App. 749, 754, 347 S.E.2d 

548, 551 (1986)). 

Subsection (C) provides simply that “all wages paid . . . to an employee [that meet certain 

requirements] shall be considered compensation.” This subsection provides no language 

indicating it applies only to claimants’ applications for hearing or only when no compensation 

award is then in effect. Cf. Hinkle, 157 Va. at 477, 161 S.E. at 903 (holding that subsection 

(A)’s predecessor statute provides claimants and employers with “the same” rights upon the 

occurrence of a change in condition). “Had the legislature intended a different result, it could 

easily have used different language.” Scott, 16 Va. App. at 819, 433 S.E.2d at 262. 

 We also see nothing in the history of the evolution of the statute contravening its 

language and compelling the conclusion that subsection (C) does not apply to the determination 

of whether an employer’s application for hearing was timely filed.7

 Claimant points to our 

decisions in Greene v. Gwaltney of Smithfield, Inc., 13 Va. App. 486, 413 S.E.2d 650 (1992), 

and Scott, 16 Va. App. 815, 433 S.E.2d 259, for the proposition that the legislature’s sole 

purpose in enacting Code § 65.1-55.1, the predecessor to Code § 65.2-708(C), was to benefit 

claimants by “‘prevent[ing] possible abuse by employers of the two year limitation period 

[previously] set forth in Code § 65.1-99 [and now codified in § 65.2-708(A)].’” Scott, 16 

Va. App. at 819, 433 S.E.2d at 262. 

It is true we held in Greene, 13 Va. App. at 492, 413 S.E.2d at 654, that the legislature, in 

enacting Code § 65.1-55.1, “recognized the problem identified by Greene”–the need “to prevent 

employers from lulling partially disabled workers into a false sense of security during this two 

year period by providing employees light duty work at their pre-injury wage for two years and 

then terminating the employee without liability for future disability benefits,” Scott, 16 Va. App. 

 7 See infra Part II(C) for a more detailed analysis of the evolution of this statute. 
 - 16 -

at 819, 433 S.E.2d at 262 (relying on Greene and stating in another context that “[the] statute was 

designed to prevent possible abuses by employers of the two year limitation period set forth in 

Code § 65.1-99”). Further, settled principles provide that “a statute should, if possible, be given 

a reasonable construction which will effect rather than defeat a legislative purpose evident from 

the history of the legislation.” Ambrogi v. Koontz, 224 Va. 381, 389, 297 S.E.2d 660, 664 

(1982). Here, the statute accomplishes the purpose of protecting claimants regardless of whether 

it also applies to applications submitted by employers. We did not hold in Greene or Scott that 

the legislature’s only purpose in enacting the predecessor to subsection (C) of Code § 65.2-708 

was to protect claimant employees. In short, the language of the statute prevails, and if the 

legislature had intended for Code § 65.2-708(C) to apply only to claimants’ change-in-condition 

applications, it could have said so. 

Of course, to the extent Rule 1.4’s purpose of “policing th[e] tendency of employers and 

insurers to terminate first and litigate later” to the detriment of the claimant might conflict with 

the tolling provisions of Code § 65.2-708(C), the statute’s provisions would control. See Ashby 

v. Ramar Coal Co., 47 Va. App. 8, 13, 622 S.E.2d 230, 232-33 (2005) (noting the commission 

lacks power to make rules that are inconsistent with the Act and that in the case of a conflict, 

“the statute must prevail”). In any event, we detect no conflict. To the contrary, we conclude the 

tolling provision of Code § 65.2-708(C) ensures that injured employees are not deprived of the 

financial resources to which they are entitled under the Act (disability compensation or 

pre-injury wages) while simultaneously providing that, where an employee is working in 

light-duty employment provided by the employer and earning at least his pre-injury average 

weekly wage, the employer and carrier may have the commission docket an application 

requesting the termination or adjustment of the outstanding award without being required to pay, 

in addition to the claimant’s wages, compensation it may never be able to recoup. However, the 
 - 17 -

 

issue of the docketing of the employer’s application for hearing is separate and distinct from the 

issue of whether the employer and carrier may subsequently be found to owe additional 

compensation and penalties under the ongoing award. 

Employers will comply with the Act by paying compensation when due under an award 

and seek immediate adjustment of an award when circumstances change that may justify 

reduction or termination. An employer who fails promptly to request such action does so at its 

peril. However, Code § 65.2-708 provides an employer is entitled to file its application for 

hearing without bringing its compensation payments current to closer than two years to the date 

of filing.8

C. CLAIM FOR ADDITIONAL COMPENSATION AND PENALTIES 

 Claimant contends further, however, that the commission erroneously extended 

subsection (C)’s statement that the wages of specified employees “shall be considered 

compensation” under certain circumstances beyond the confines of Code § 65.2-708 to other 

portions of the Act involving calculation of the amount of compensation and penalties to which 

she was entitled under the outstanding award. After holding that the wages employer paid would 

“be considered compensation” “[p]ursuant to the plain language of [Code §] 65.2-708(C),” the 

commission concluded without further explanation that termination of the award effective July 8, 

2006, two years prior to the date on which employer filed its application for hearing, was 

8

 Our decision in Pugh, 42 Va. App. 297, 591 S.E.2d 706, relied upon by claimant and the 

dissenting commissioner, does not require the reversal of the commission’s decision to docket 

employer’s application for hearing. Pugh involved a claimant who was paid wages upon return 

to his full pre-injury employment, see Pugh v. Genesis Health Ventures, Inc., No. 202-16-56 (Va. 

Workers’ Comp. Comm’n Jan. 23, 2003), whereas Code § 65.2-708(C)’s expanded definition of 

wages expressly applies only where the claimant is “physically unable to return to his pre-injury 

work due to a compensable injury” and is “provided work within his capacity at a wage equal to 

or greater than his pre-injury wage,” see Nguyen v. Fairfax County Bd. of Sup’rs., 26 Va. App. 

100, 103, 493 S.E.2d 391, 392 (1997). Thus, our decision in Pugh does not compel the rejection 

of employer’s application for hearing. 
 - 18 -

appropriate because “the employer properly paid compensation in connection with the filing of 

its application.” The commission made no mention of the penalties and interest claimant had 

requested and observed that its decision to terminate benefits without awarding any additional 

payments “clearly works no hardship on the claimant, as [s]he has, even under our holding, been 

overpaid by over $20,000 which the carrier will not be able to recover by way of a credit or 

otherwise.” The commission, which had already found that employer did not pay temporary 

total disability benefits in the amount due through July 8, 2006, therefore implicitly held that 

wages “considered compensation” for purposes of Code § 65.2-708(C) would also be 

“considered [timely-paid] compensation” for purposes of the outstanding award. Based on the 

above principles of statutory construction and the legislative history surrounding Code 

§ 65.2-708(C), we agree that the commission’s holding on this issue in this case was erroneous9

and that claimant is entitled to unpaid compensation and penalties for late payment. 

 The language in present Code § 65.2-708 comprises what was once two separate code 

sections, §§ 65.1-99 and -55.1. Code § 65.1-99, the predecessor to subsection (A) of Code 

§ 65.2-708, provided the time limitation for filing a change-in-condition application. That statute 

originally allowed the commission to review an award based on a change in condition “at any 

time,” see 1918 Va. Acts. ch. 400, and evolved into the present limit of twenty-four months, see

1977 Va. Acts ch. 380. In 1989, the legislature enacted former Code § 65.1-55.1, the substance 

of which is presently codified in subsection (C) of Code § 65.2-708. See 1989 Va. Acts ch. 552. 

As already discussed, that enactment was based in some part upon the concern that 

 9

 We note that, on a prior occasion, the commission reached what we hold today to be the 

correct conclusion. See Peak v. McNew, No. 158-56-32 (Va. Workers’ Comp. Comm’n June 23, 

1994) (“We now consider payment of regular wages to a partially impaired worker to be 

‘compensation’ for the purposes of filing change in condition applications . . . because of a 

recent specific statutory change extending the definition for that very limited purpose.” (citing 

Code § 65.2-708) (emphasis added)). 
 - 19 -

unless wages paid in lieu of compensation are treated as 

compensation benefits paid under an award, employers will be able 

to deprive employees of their full compensation benefits merely by 

providing them light-duty employment at their pre-injury wage, in 

lieu of paying workers’ compensation benefits, and then 

terminating employees with impunity as soon as the period of 

limitation provided in Code § 65.1-99 [for filing a change in 

condition application] had expired. 

Greene, 13 Va. App. at 492, 413 S.E.2d at 654. As enacted in 1989, former Code § 65.1-55.1 

provided as follows: 

All wages paid, for a period not exceeding twenty-four consecutive 

months, to an employee (i) who is physically unable to return to 

his pre-injury work due to a compensable injury and (ii) who is 

provided work within his capacity at a wage equal to or greater 

than his pre-injury wage shall, for the sole purposes of Code 

§ 65.1-99, be considered compensation. 

1989 Va. Acts ch. 552 (emphasis added). Thus, as originally enacted, former Code § 65.1-55.1 

expressly provided that its statement of what type of wages shall “be considered compensation” 

applied only to determining whether a change-in-condition application under former Code 

§ 65.1-99, now Code § 65.2-708(A), had been timely filed and did not apply to calculating the 

amount of compensation ultimately due under the award. See Rose v. Red’s Hitch & Trailer 

Serv., Inc., 11 Va. App. 55, 59, 396 S.E.2d 392, 394 (1990). 

 When the legislature recodified Title 65.1 in 1991, it combined the provisions of former 

Code § 65.1-99 and § 65.1-55.1 in the same statute, present Code § 65.2-708. See 1991 Va. Acts 

ch. 355. Under settled principles, we presume “that a recodified statute does not make 

substantive changes in the former statute unless a contrary intent plainly appears in the recodified 

statute.” Waldrop v. Commonwealth, 255 Va. 210, 214, 495 S.E.2d 822, 825 (1998). Applying 

these principles in this case, we presume that when the legislature combined these two statutes 

and eliminated the language indicating the definition of “wages” to be “considered 

compensation” applied only to applications for change in condition, the legislature did not intend 
 - 20 -

to expand that definition of wages to other parts of the Act. Rather, we presume it intended no 

change in the application of the definition and eliminated the phrase, “for the sole purpose of 

Code § 65.1-99,” simply because, due to the consolidation of those provisions in a single statute, 

that limitation was obvious and no longer required to be expressly stated. See Introduction to 

Report of the Virginia Code Commission on the Recodification of Title 65.1 of the Code of 

Virginia (1991) (indicating that many of the revisions were to “combin[e] [sections] that, while 

topically related, were scattered throughout the title” and that “[d]rafting notes highlighting 

significant changes . . . are provided throughout”); id. at 21 (including a drafting note indicating 

that “[t]he provisions of [Code § 65.1-55.1] are incorporated into proposed § 65.2-708” and 

making no mention of an intent to change the meaning of the provision by removing the 

language limiting application of the “considered compensation” language); id. at 36-37 

(including a drafting note indicating that due to the interrelationship of the subjects, “§ 65.1-55.1 

is moved here to subsection C [of § 65.2-708]” and again making no mention of an intention to 

change the meaning of former § 65.1-55.1 in doing so). Although we have not expressly 

addressed this issue, our prior case decisions support this analysis. See Gordon, 55 Va. App. at 

369-70, 685 S.E.2d at 883 (observing that “[s]ubsection [(C)] of Code § 65.2-708 . . . operates as 

a tolling provision that extends th[e] limitation [in subsection (A)]” (emphasis added)); Augusta 

County Sch. Bd. v. Humphreys, 53 Va. App. 355, 364 n.7, 672 S.E.2d 117, 121 n.7 (2009) 

(holding that “[f]or purposes of tolling the statute of limitations on a change-in-condition 

application, [Code § 65.2-708(C)] mandates [that all wages meeting certain criteria shall be 

considered compensation]” (emphasis added)). Thus, we hold that by crediting employer for 

wages paid to claimant following her return to work on August 1, 2004, as against the temporary 

total disability compensation required to be paid under the outstanding award for purposes of 
 - 21 -

satisfying that award, the commission erroneously concluded that employer had paid all 

compensation in a timely fashion and that no additional compensation or penalties were due. 

 Further, contrary to the arguments advanced by employer, Virginia’s prior appellate 

decisions make clear in similar contexts that an employer who fails to comply with an 

outstanding award is not entitled to be excused from paying past due benefits and penalties 

simply because the claimant returned to work at a wage equal to or greater than his pre-injury 

wage. As the Supreme Court held in Washington v. United Parcel Service of America, 267 Va. 

539, 593 S.E.2d 229 (2004), 

the relevant statutes do not give an employer or carrier the 

unilateral right to cease paying compensation benefits to a disabled 

employee under an outstanding award, when that employee returns 

to work and the employer or carrier does not file an application 

[for hearing] or [a termination of wage loss award form]10 along 

with a supplemental [agreement to pay benefits form].11

Id. at 545, 593 S.E.2d at 232 (footnotes added). 

We applied this holding in The Washington Post v. Fox, 49 Va. App. 692, 644 S.E.2d 

105 (2007). In Fox, the claimant, who was receiving temporary disability benefits pursuant to an 

award, returned to work with the employer in a full-duty capacity at a wage equal to or greater 

than his pre-injury wage, and the employer unilaterally ceased paying benefits “without filing the 

appropriate paperwork with the commission.” Id. at 694-95, 644 S.E.2d at 106. Twice prior to 

the employer’s unilateral cessation of payments, the commission sent the employer’s adjuster its 

standard letter stating as follows: “Our records indicate an outstanding award in this case. The 

Commission assumes that payments are continuing pursuant to the award. If payments have 

 10 The commission has replaced the agreed statement of fact form with the termination of 

wage loss award form. See Carter v. Denny’s, No. 179-91-88 (Va. Workers’ Comp. Comm’n 

Dec. 8, 2000). 

11 The commission has replaced the memorandum of agreement form with the agreement 

to pay benefits form. See Southers, 51 Va. App. at 129 n.4, 655 S.E.2d at 39 n.4. 
 - 22 -

ceased, an executed [Termination of Wage Loss Award form] or an Employer’s Application for 

Hearing must be filed to end the award.” Id. at 695, 644 S.E.2d at 106. Between 1996 and 2003, 

after the employer’s unilateral cessation of payments, the commission sent the employer’s 

insurance adjusting service an additional seven letters containing the same or similar 

information, but employer’s adjuster failed to file the forms necessary to have the award 

terminated. Id. at 695-96, 644 S.E.2d at 106-07. The award terminated by operation of law upon 

the passage of 500 weeks during which the award was outstanding. Id. at 696, 644 S.E.2d at 

107. Thereafter, the claimant filed an application alleging the employer had underpaid him 

because it had ceased making temporary partial disability payments when the claimant ceased to 

experience a wage loss in 1996, even though the award remained outstanding for several more 

years. Id. The claimant also sought interest and a 20% penalty. Id. at 698, 644 S.E.2d at 107. 

 The deputy “declined to award back benefits and assess interest and a penalty,” finding 

that to do so “would unjustly enrich [the] claimant.” Id. at 698, 644 S.E.2d at 108. The 

commission ruled the Supreme Court’s holding in Washington dictated a contrary result, and we 

agreed. Fox, 49 Va. App. at 698-99, 703, 644 S.E.2d at 108, 110. We also relied on language in 

Uninsured Employer’s Fund v. Peters, 43 Va. App. 731, 601 S.E.2d 687 (2004), that the 

claimant’s right to compensation due under the open award had vested, and we held 

no legal authority supports [the] employer’s argument that, under 

the facts of this case, it should be excused from the consequences 

of its decision to unilaterally stop paying [the] claimant 

compensation benefits due under the March 19, 1993[,] 

outstanding award, when he returned to work with employer in 

April 1996, without filing the appropriate paperwork or an 

employer’s application with the commission to terminate that 

award. 

Fox, 49 Va. App. at 700, 644 S.E.2d at 109. We cited the commission’s repeated notifications to 

the employer that the award remained outstanding and the employer’s repeated failure to take 

appropriate action. Id.
 - 23 -

 Similarly, here, although the commission notified employer the award had not been 

properly terminated and employer attempted to submit the paperwork necessary to terminate the 

award in the fall of 2004, the commission notified employer it had failed to submit certain 

additional paperwork that was required to process the termination request. Employer failed to 

act in response to that notice, and the commission notified employer on two additional occasions 

during 2005 that the award remained outstanding and that it assumed payments under the award 

were ongoing. On one of those occasions in 2005, the commission included an itemized list of 

the additional documents employer needed to submit in order to have the award terminated, but 

by late 2005, employer still had failed to comply. 

In 2006, claimant, by counsel, notified the commission that employer was not paying her 

pursuant to the outstanding award and sought employer’s full compliance and an award of 

penalties. The commission issued a show cause order, and employer responded by paying 

compensation for only twelve days of disability rather than the 18 months of disability 

compensation then due pursuant to the ongoing award. The deputy dismissed the show cause, 

but the commission again immediately sent employer its standard letter indicating the award 

remained outstanding and that it assumed payments under the award were continuing. In May 

2006, claimant forwarded employer a signed supplemental agreement to pay benefits form 

covering one of the periods for which the commission had requested additional paperwork, but 

employer apparently took no action with respect to that form. 

In 2007, the commission yet again sent the carrier its standard letter indicating the award 

remained outstanding, but again employer took no action in response to that letter. In 2008, 

claimant renewed her request for entry of an order requiring employer to pay past due 

compensation and penalties, and claimant indicated that if employer disputed its obligation to 

pay compensation or penalties, she desired an evidentiary hearing or entry of an order to show 
 - 24 -

cause. The commission issued a second show cause order, and by submission dated July 8, 

2008, employer finally requested a hearing seeking to terminate the award. 

 We hold the facts of this case are legally indistinguishable from Washington, Fox, and 

Peters. Although employer submitted some of the forms required for termination, the 

commission promptly notified employer it required certain additional forms in order to terminate 

the ongoing award. Thereafter, despite repeated notifications like in Fox, employer took no 

action whatever to seek termination of the open award for a period of more than three years. On 

these facts, we hold the commission erred in failing to order payment of the remaining past due 

compensation and penalties pursuant to Code § 65.2-524. 

D. CLAIM FOR INTEREST 

 Claimant also requests payment of interest pursuant to Code § 65.2-707. That code 

section provides that “[t]o the extent any payment due under an award is delayed beyond its due 

date by reason of an appeal to the full Commission or an appellate court, payments so delayed 

shall bear interest at the judgment rate as provided in § 6.1-330.54.” Code § 65.2-707 (emphases 

added). Thus, on remand, the commission should determine how much compensation remains 

“due [to claimant] under [the] award” within the meaning of Code § 65.2-707. Because penalties 

are paid pursuant to Code § 65.2-524, they are not “payment[s] due under an award,” Code 

§ 65.2-707, and thus, claimant is not entitled to interest on those sums.12

III. 

 For these reasons, we hold the record supports the commission’s conclusion that 

employer’s hearing application was properly docketed. We also hold the commission erred in 

 12 Although the commission’s decisions in other cases, like our own memorandum 

opinions, are not binding on us, the commission reached this same conclusion in Kelley v. 

Midway Trucking, Inc., No. 197-69-19 (Va. Workers’ Comp. Comm’n Apr. 23, 2001), aff’d per 

curiam, No. 2597-03-3 (Va. Ct. App. Feb. 17, 2004). 
 - 25 -

concluding that the wages employer paid claimant constituted compensation for purposes of 

determining whether all compensation due under the award had been paid and whether employer 

and carrier owed penalties and interest. Finally, we conclude the commission erred in not 

awarding (a) penalties on all late paid compensation and (b) interest on compensation remaining 

due during the pendency of the appeal. Thus, we affirm in part, reverse in part, and remand for 

further proceedings consistent with this opinion. 

Affirmed in part, 

 reversed in part, 

 and remanded.