Case Name: John R. DILLARD, etc., Plaintiff, v. INDUSTRIAL COMMISSION OF VIRGINIA et al., Defendants
Court: United States District Court for the Eastern District of Virginia
Jurisdiction: United States
Decision Date: 1972-07-17
Citations: 347 F. Supp. 71
Docket Number: Civ. A. No. 537-71-R
Parties: John R. DILLARD, etc., Plaintiff, v. INDUSTRIAL COMMISSION OF VIRGINIA et al., Defendants.
Judges: Before BRYAN, Circuit Judge, and KELLAM and MERHIGE, District Judges.
Reporter: Federal Supplement
Volume: 347
Pages: 71–82

Head Matter:
John R. DILLARD, etc., Plaintiff, v. INDUSTRIAL COMMISSION OF VIRGINIA et al., Defendants.
Civ. A. No. 537-71-R.
United States District Court, E. D. Virginia, Richmond Division.
July 17, 1972.
Judgment Vacated Dec. 11, 1972.
See 93 S.Ct. 566.
Kurt Berggren, Roanoke, Va., John M. Levy, Neighborhood Legal Aid Society, Inc., Richmond, Va., for plaintiff.
Willard I. Walker, Richmond, Va., for defendant Aetna Casualty & Surety Co.
Vann H. Lefcoe, Anthony F. Troy, Richmond, Va., for other defendants.
Before BRYAN, Circuit Judge, and KELLAM and MERHIGE, District Judges.

Opinion:
OPINION
KELLAM, District Judge.
Plaintiff brings this action on behalf of himself and all other persons similarly situated, challenging the constitutionality of a Rule of the Industrial Commission of Virginia (Commission). He asserts the Commission approved a memorandum of agreement entered into between Aetna Casualty & Surety Company (Aetna), insurance carrier for Roanoke Mills, Incorporated, and himself, for the payment of a weekly sum beginning March 23, 1971, and to continue during his incapacity, with medical benefits. Thereafter, Aetna filed a petition with the Commission asserting a change of condition and ceased payment on and after the date of the filing of the petition. It subsequently resumed payment.
The limited issue before the Court is whether Rule 13 of the Rules of the Commission violates plaintiff's [and the class he purports to represent] rights to due process guaranteed by the Fourteenth Amendment to the Constitution of the United States. Plaintiff asserts that the Rule permits the termination of the payment of benefits by an employer or insurer, on the ground of a change in the condition of the employee, prior to a full hearing on the merits by the Commission.
The Virginia Workmen's Compensation Act, Title 65.1 of the Code of Virginia, 1950, as amended, Volume 9, was enacted in 1968, Chapter 660 Acts of Assembly of 1968, to take effect October 1, 1968. It was a rewrite and revision of former Title 65. The first Workmen's Compensation Act of Virginia was adopted by the Legislature in 1918, Acts of Assembly of 1918, Chapter 400, page 640. It was modeled after and followed the Act adopted by the State of Indiana.
Pursuant to the Act, compensation is paid for all workmen coming within the provisions of the Act if injured during the course of their employment. The Act provides a system where employer and employee may escape personal injury litigation, and provides for the payment of compensation under fixed rules. It was a substitute of more certain and broader remedies for the previously existing inadequate common law rights and remedies, regardless of fault or negligence. The doctrines of contributory negligence, assumption of risk, fellow servant, and similar defenses, which frequently defeated recoveries and occupied the time of litigants and the courts, were abolished. The advantages are shared by the employer and employee. Damages resulting from an accident are treated as a part of the expense of operating the business. The Act, in effect, read into every contract of employment, within the provisions of the Act, the obligation of the employer to pay the employee for injuries. It provided an exclusive remedy in the field of industrial accidents, leaving the common law remedies to those incidents not covered by the Act.
A proceeding under the Act is not one for damages for a wrong done, but to obtain compensation for a loss sustained by reason of injury and disability. The employer's liability is not based upon tort, the rules of the common law for tort actions do not apply, and the rules of evidence are "so laxly" enforced that an award may be made on hearsay evidence alone if credible and not contradicted. Glassco v. Glassco, 195 Va. 239, 77 S.E.2d 843; Burlington Mills Corporation v. Hagood, 177 Va. 204, 13 S.E.2d 291; Humphries v. Boxley Brothers Co., 146 Va. 91, 135 S.E. 890.
Workmen's Compensation benefits are not mandatory for the employee. By notice he may exempt himself from the terms of the Act and retain his common law rights. No such right exists for the employer. Virginia Code 65.1-23, etc.
The Commission, operating within the general legislative framework, and having both regulatory and judicial functions, is charged with the administration of the Act. When an employee is injured, he may enter into a "Memorandum of Agreement" with his employer or the employer's insurance carrier, stipulating the right to compensation, the average weekly wages, the amount of compensation, and the period of payment. The memorandum is then submitted to the Industrial Commission for approval. This was the procedure followed in the case at bar. If an agreement is not approved, or if the parties have not been able to agree, the matter is heard and determined by the Commission. Enforcement of the award is not with the Commission, but vested in a court of record of Virginia. Virginia Code Section 65.1-100.
A review of an award may be had upon motion of the Commission or of any party in interest "on the ground of a change in condition." Virginia Code Section 65.1-99. Upon such review, the Commission may increase or decrease the compensation previously awarded, but no such review "shall affect such award as regards any moneys paid." Virginia Code 65.1-99.
Prior to the enactment of Rule 13 of the Commission, there was no provision in the Act or Rules to prevent an employer or insurer from ceasing payment of benefits at any time, asserting a change in condition, and either petitioning for an amendment or correction of the award, or waiting for the employee to proceed with action.
To prevent the insurer or employer from following such procedure, the Commission, utilizing the authority granted by the Act — Virginia Code Title 65.1-18 —enacted Rule 13, recently amended, which provides:
Applications for Review on Ground of Change in Condition. — Applications for review under § 65.1-99 of the Act must be in writing and state the ground relied upon for relief. Reviews of awards on the ground of a change in condition shall be determined as of the date of the filing of the application in the offices of the Commission, except as provided in paragraphs two and three hereof.
All applications for hearing by an employer or insurer under § 65.1-99 shall show the date through which compensation benefits have been paid. No application shall be considered by the Commission until all compensation under the outstanding award has been paid to the date such application is filed with the Commission. Except, that in any case in which the employee has actually returned to work or has refused employment (§ 65.1-63), medical attention (§ 65.1-88), or medical examination (§ 65.1-91), compensation may be terminated as of the date the employee returned to work or refused employment, medical attention or medical examination, or as of a date fourteen days prior to the date the application is filed, whichever is later. In such cases the application will be considered and determined as of the date of return to work, or refusal, or as of a date fourteen days prior to the date the application is filed, whichever is later. All applications by an employer or insurer shall be under oath and shall not be deemed filed and benefits shall not be suspended until the supporting evidence which constitutes a legal basis for changing the existing award shall have been reviewed by the Commission, or such of its employees as may be designated for that purpose, and a determination made that probable cause exists to believe that a change in condition has occurred.
All applications for hearing by an employee on the ground of further work incapacity shall be considered and determined as of the date incapacity for work actually begins, or as of a date fourteen days prior to the date the application is filed, whichever is later.
NOTE: The italicized portion represents the language of the amendment which became effective April 1, 1972.
Neither the statute, nor the Rule enacted, make any provision for the employer or insurer to cease payments. They merely provide that upon a change in condition the Commission may review any prior award and make a new award ending, diminishing or increasing the compensation previously awarded. The statute makes no grant to the Commission to stop an award previously granted prior to a review by the Commission. Rule 13, enacted by the Commission, sets forth the procedure to be followed upon the filing of a petition alleging a "change in condition." In effect, it provides the application for review (a) must be in writing, under oath, and state the grounds for relief, (b) the review will be determined as of the date of the filing of the application, (c) it must show the date through which compensation has been paid, (d) no application will be considered until compensation has been paid to the date of the filing, and (e) the application shall not be deemed filed and benefits shall not be suspended until the supporting evidence which constitutes a legal basis for changing the existing award has been reviewed by the Commission, and a determination made that probable cause exists to believe that a change in condition has occurred. An exception exists where an employee (a) has returned to work, or (b) has refused employment, medical attention or medical examination.
Nowhere in the Rule does it authorize or direct the employer or insurer to cease payments before a full hearing. It merely provides the Commission will not hear the petition of the employer or insurer asserting any change in condition if payments under the award have not been made up to the date the application is deemed filed, with an admonition that benefits shall not be suspended until the supporting evidence submitted with the petition has been reviewed and it is determined probable cause exists to believe a change has occurred, and if a finding of probable cause is made, the application will then be deemed filed. Here again, it does not authorize or direct suspension of payments, but merely provides the insurer or employer may not have a hearing on an alleged change of condition unless and until the provisions of the Rule are complied with. The determination of "probable cause" is to be made from an examination of "supporting evidence which constitutes a legal basis" for changing the existing award. Nowhere does the Rule say the determination may be made without notice to the employee and a chance to be heard. The mere fact such an inference may exist— a determination without notice to the employee and an opportunity to be heard —does not render the language objectionable on its face. Lindsey v. Normet, 405 U.S. 56, 65, 92 S.Ct. 862, 31 L.Ed.2d 36. The amendment to the Rule is new and the evidence does not indicate what the Commission will require in the way of supporting evidence to constitute a legal basis for establishing probable cause to believe a change in condition has occurred. As pointed out above, any payments made prior to the filing of the petition and prior to the Commission's authorizing a change of the award are not recoverable by the employer or insurer. Virginia Code Section 65.1-99. To discourage unwarranted applications for cessation of payments or other abuses, the Act provides that if employer or insurer bring, prosecute or defend any proceeding without reasonable grounds, the Commission or court may assess them with all of the costs, including a reasonable attorney's fee for any counsel appearing for the employee. Virginia Code Section 65.1-101.
It must be kept in mind that the award is for a stipulated sum per . week "during incapacity." It is not an unlimited award. When incapacity ceases, the award ceases to exist.
Plaintiff's attack upon the Rule is that it authorizes the insurer or employer to cease payments without meeting the requirements of due process. He says it permits a change in the award without the holding of a full-scale hearing at which he may be permitted to present evidence and contest any contentions made by the insurer or employer. Plaintiff makes no contention that he is denied the opportunity- of a full-scale hearing with the assistance of counsel, when the application for a review is heard by the Commission.
The average time between the filing of an application for a review of the award on an alleged change in condition and the full-scale hearing by the Commission is one month. But even assuming that the Rule does not provide for notice and a hearing to the employee prior to termination of the award, and that the Rule is authority for the employer or insurer to terminate payments, under the facts and circumstances in this case the State function involved does not constitute a denial of due process. A full due process hearing is provided with the right of appeal to the highest court of the State and any determination favorable to the employee results in full retroactive payments.
The very nature of due process negates any concept of inflexible procedure universally applicable to every imaginable situation. As early as Hagar v. Reclamation District No. 108, 111 U.S. 701, 707-708, 4 S.Ct. 663, 667, 28 L.Ed. 569, the Court-said "that by 'due process' is meant one which, following the forms of law, is appropriate to the case, and just to the parties to be affected." Numerous definitions have been given of due process varying from that set forth in Joint Anti-Fascist Refugee Committee v. McGrath, 341 U.S. 123, 162-163, 71 S. Ct. 624, 643, 95 L.Ed. 817 saying it represents "a profound attitude of fairness between man and man, and more particularly between the individual and government . . .," to saying, as was done in Hannah v. Larche, 363 U.S. 420, 442, 80 S.Ct. 1502, 1515, 4 L.Ed.2d 1307 that it "embodies the differing rules of fair play, which through the years, have become associated with differing types of proceedings. Whether the Constitution requires that a particular right obtain in a specific proceeding depends upon a complexity of factors. The nature of the alleged right involved, the nature of the proceeding, and the possible burden on that proceeding, are all considerations which must be taken into account." In Bowles v. Willingham, 321 U.S. 503, 64 S.Ct. 641, 88 L.Ed. 892, dealing with administrative action, the Court at page 520, 64 S.Ct. at page 650 said:
To be sure, that review comes after the order has been promulgated; and no provision for a stay is made. But as we have held in Yakus v. United States, supra [321 U.S. 414, 64 S.Ct. 660, 88 L.Ed.2d 834], that review satisfies the requirements of due process. As stated by Mr. Justice Brandéis for a unanimous Court in Phillips v. Commissioner, 283 U.S. 589, 596-597 [51 S.Ct. 608, 511, 75 L.Ed. 1289]: "Where only property rights are involved, mere postponement of the judicial enquiry is not a denial of due process, if the opportunity given for the ultimate judicial determination of the liability is adequate. Springer v. United States, 102 U.S. 586, 593 [26 L.Ed. 253]; Scottish Union & National Ins. Co. v. Bowland, 196 U.S. 611, 631 [25 S.Ct. 345, 351, 49 L.Ed. 619].
As was pointed out in Torres v. New York State Department of Labor, 321 F.Supp. 432 (S.D.N.Y.1971), at page 437:
The concept of due process does not involve a set of fixed, unalterable principles. "[Consideration of what procedures due process may require under any given set of circumstances must begin with a determination of the precise nature of the government function involved as well as of the public interest that has been affected by governmental action." Cafeteria & Restaurant Workers Union v. McElroy, 367 U.S. 886, 895, 81 S.Ct. 1743, 6 L.Ed.2d 1230 (1961). See Goldberg v. Kelly, supra, 397 U.S. [254,] at 263, 90 S.Ct. 1011, at 1018 [, 25 L.Ed.2d 287].
The touchstones in the area of procedural due process and the test of whether one has been afforded due process is one of fundamental fairness and reasonableness in the light of the total circumstances. Joint Anti-Fascist Refugee Committee v. McGrath, supra; Whitfield v. Simpson, 312 F.Supp. 889 (E.D.Ill.1970); Sigma Chi Fraternity v. Regents of University of Colorado, 258 F.Supp. 515 (D.C.Cal.1966); Due v. Florida A & M, 233 F.Supp. 396 (D.C. Fla.1963).
The demands of due process do not require a hearing at the initial stage or at any particular point or at more than one point in an administrative proceeding so long as the request hearing is held before the final order becomes effective. Inland Empire Dist. Council v. Millis, 325 U.S. 697, 710, 65 S.Ct. 1316, 89 L.Ed. 1877; Bowles v. Willingham, 321 U.S. 503, 519-521, 64 S.Ct. 641, 88 L.Ed. 892; Opp Cotton Mills v. Administrator, 312 U.S. 126, 152-153, 61 S.Ct. 524, 85 L.Ed. 624.
The payment of sums awarded under the Workmen's Compensation Act is entirely different from payment of welfare. As was pointed out in Torres v. New York State Department of Labor, supra, Workmen's Compensation payments like unemployment compensation differ from relief in that each are made as a matter of right, not on a needs basis, but only while the worker is involuntarily unemployed. They are based on wages previously received and are completely unrelated to need. [321 F. Supp. 437.]
This is not a case of "brutal need." or "overpowering need" which existed in Goldberg v. Kelly, 397 U.S. 254, 90 S.Ct. 1011, 25 L.Ed.2d 287. The Court pointed out in the Torres case, an employee cut off from Workmen's Compensation "may qualify for welfare payments, if he can show the requisite need. Thus the worst possible effect of the procedure which plaintiffs attack as being lacking in due process would be that for a period of a few weeks until a hearing is held a claimant who is finally determined to be eligible for payments would have to live on his accumulated savings or, if he had no savings, would have to resort to relief. If he is eventually found to be eligible he will receive retroactively all the payments to which he was entitled." Here, unlike in Torres where there was a right to recover back any sums improperly paid, no such right exists under the Workmen's Compensation Act. In addition, the Commission may assess all of the costs, including a reasonable attorney's fee for employee's counsel, against an insurer or employer who brings any such proceeding without reasonable grounds.
The award is during incapacity. When incapacity ceases, the award ceases. Let us suppose there was an award for the lifetime of the injured. To be sure, due process does not mean the award could not be terminated upon the death of the employee without a full-scale hearing. Under the award, when the employee regains capacity the award terminates. If plaintiff's contentions are correct, if an employee regains capacity to return to employment, or even if he obtains other employment, employer or insurer could not stop payments under the award until there was notice and an opportunity for him to be heard. Payments made between the time of his regaining capacity are not recoverable by the employer or insurer. As the Court pointed out in Cafeteria & Rest. Workers v. McElroy, 367 U.S. 886, 895, 81 S.Ct. 1743, 6 L.Ed.2d 1230, due process does not require a trial-type hearing in every conceivable case of government impairment of private interest, nor where an official may have abused his discretion. "It is not a requirement of due process that there be judicial inquiry before discretion can be exercised. It is sufficient, where only property rights are concerned, that there is at some stage an opportunity for a hearing and a judicial determination." Ewing v. Mytinger & Casselberry, 339 U.S. 594, 599, 70 S.Ct. 870, 873, 94 L.Ed. 1088; Phillips v. Commissioner, 283 U.S. 589, 596-597, 51 S.Ct. 608, 75 L.Ed. 1289; Bowles v. Willingham, 321 U.S. 503, 520, 64 S.Ct. 641, 88 L.Ed. 892; Yakus v. United States, 321 U.S. 414, 442-443, 64 S.Ct. 660, 88 L.Ed. 834.
Plaintiff attempts to equate Workmen's Compensation payments with welfare benefits and affix to each of them a label of "brutal need." But, as the Court pointed out in Richardson v. Belcher, 404 U.S. 78, 83, 92 S.Ct. 254, 258, 30 L.Ed.2d 231, discrimination "between two like classes cannot be rationalized by assigning them different labels, but neither can two unlike classes be made indistinguishable, by attaching to them a common label." Torres held "brutal need" could not be equated with Unemployment Compensation. Neither can it be equated with Workmen's Compensation.
The situation here is much like that referred to in Mr. Justice Black's dissent, joined in by Chief Justice Burger, in Goldberg [397 U.S. 254, 277, 90 S.Ct. 1011, 25 L.Ed.2d 287] where one party owing another money ceases payment. The payee has a right of action against payor, but there is no provision in law that before payor ceases payments, he must give notice and an evidentiary hearing be held. Here employee has an award of weekly compensation by agreement between the parties, approved by the Industrial Commission, to continue during incapacity. Power o,f enforcement is not in the Commission. The Commission can order payment, but cannot enforce it. Enforcement is with a court of record. Requesting a hearing on an alleged change of condition, and the fixing of a time for it, do not invalidate or change the award. Employee can still proceed with the same action for collection which he would take if the employer or insurer merely ceased payments without asserting any change in condition or making a request for a hearing.
For the reasons hereinabove stated, the complaint and this action are dismissed.
. Section 65.1-100 provides that any interested party may file in a court of record a copy of the memorandum of agreement approved by the Commission, or its order or decision, or its award, and the court shall render judgment in accordance therewith and notify the parties. Such judgment has the same effect as any other judgment rendered in that court. Such is the way for enforcement.
. In such event the employee could petition the Commission for an amendment of the award as provided in § 65.1-99, or proceed with enforcement of his existing award under the provisions of Virginia Code § 65.1-100.
. He makes no attack upon the language of the statute, but only the Rule enacted by the Commission.
. Cert. denied 405 U.S. 940, 92 S.Ct. 1185, 31 L.Ed.2d 228.