Court Opinion

ID: 3007321
Source: CourtListenerOpinion
Date Created: 2015-10-06 13:06:52.277453+00
Date Added: 2024-06-11T11:39:22.592817
License: Public Domain

IN THE COURT OF APPEALS OF NORTH CAROLINA

                                  No. COA15-140

                               Filed: 6 October 2015

North Carolina Industrial Commission, I.C. Nos. 459234, 271904

DOROTHY JANE KETCHIE and CLEGG LEE JOINES, Employees, Plaintiffs,

             v.

FIELDCREST CANNON, INC., Insolvent Self-Insured Employer, N.C. SELF-
INSURANCE SECURITY ASSOCIATION, Defendants.

      Appeal by Plaintiffs-Appellants from order entered 29 October 2014 by the Full

Commission of the North Carolina Industrial Commission. Heard in the Court of

Appeals 13 August 2015.

      Wallace and Graham, P.A., by Michael B. Pross, Edward L. Pauley, and Cathy
      A. Williams, for Plaintiffs-Appellants.

      Stuart Law Firm, PLLC, by Catherine R. Stuart and Susan J. Vanderweert,
      for Defendants-Appellees.

      INMAN, Judge.

      Plaintiffs-Appellants are appealing the Full Commission’s order denying their

claims on the grounds that their claims are not “covered claims,” as that term is

defined in N.C. Gen. Stat. § 97-130(4), because their last injurious exposure to

asbestos occurred before Fieldcrest was a member of the North Carolina Self-

Insurance Security Association (“the Security Association”). After careful review, we

affirm.
                      JOINES & KETCHIE V. FIELDCREST CANNON

                                   Opinion of the Court

      When workers who suffer from occupational disease incurred their last

injurious exposure to asbestos prior to a self-insurer joining the Security Association,

this Court cannot interpret the statute in a manner contrary to its plain and

unambiguous language, even if this interpretation bars recovery by workers who have

no other recourse due to the employer’s bankruptcy.

                      Factual and Procedural Background

      Plaintiff-Appellant Clegg Lee Joines (“Mr. Joines”) was employed for various

periods of time by Defendant-Appellee Fieldcrest Cannon, Inc. (“Fieldcrest”)

beginning in 1941 and ending 24 September 1986. It is undisputed that Mr. Joines

was exposed to asbestos during his employment with Fieldcrest.             The parties

stipulated that Mr. Joines’s last injurious exposure to asbestos occurred during the

seven months prior to 24 September 1986.              Mr. Joines was diagnosed with

mesothelioma in 2003 and died on 9 May 2004.

      Plaintiff-Appellant Dorothy Jane Ketchie (“Ms. Ketchie”) was employed by

Fieldcrest from 1972 to 1974. Her last date of employment was 31 January 1974.

The parties stipulated that her last injurious exposure to asbestos occurred within

the seven months prior to 31 January 1974. In 2000, Ms. Ketchie was diagnosed with

asbestosis as a result of her exposure to asbestos during her employment with

Fieldcrest.

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                      JOINES & KETCHIE V. FIELDCREST CANNON

                                  Opinion of the Court

      The General Assembly created the Security Association on 1 October 1986 after

several large, self-insured trucking companies became insolvent which resulted in

many injured employees’ outstanding claims not being paid.             The Security

Association’s enabling statute states that the purpose of the Security Association is,

among other things, “to provide mechanisms for the payment of covered claims

against member self-insurers, to avoid excessive delay in payment of covered claims,

[and] to avoid financial loss to claimants because of the insolvency of a member self-

insurer[.]” N.C. Gen. Stat. § 97-131(a) (2013). This same language was used in the

original 1986 version of section 97-131(a).

      Fieldcrest (which later became a subsidiary of Pillowtex Inc. and Pillowtex

Corporation) was a member of the Security Association from 1 October 1986 until 19

December 1997, at which time Fieldcrest purchased workers’ compensation

insurance.   In 2000, Pillowtex filed for bankruptcy in Delaware.      However, the

bankruptcy court ordered relief from the automatic stay to allow Pillowtex to continue

resolving workers’ compensation claims that had arisen prior to Fieldcrest’s

membership in the Security Association, i.e., claims that arose prior to 1 October

1986. Pillowtex reorganized and emerged from bankruptcy.

      Pillowtex filed for a second bankruptcy in 2003. At that time, Fieldcrest

defaulted on its workers’ compensation claims incurred during its period of self-

insurance—claims that arose prior to Fieldcrest joining the Security Association on 1

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                      JOINES & KETCHIE V. FIELDCREST CANNON

                                  Opinion of the Court

October 1986. Plaintiffs’-Appellants’ claims, and approximately 15 other similarly

situated former employees’ claims, fell into this category—their employment and

their last injurious exposure to asbestos both occurred prior to 1 October 1986 but

their asbestos-related diseases were not diagnosed until after Fieldcrest’s

bankruptcies. Because Plaintiffs-Appellants were diagnosed with their asbestos-

related diseases after Fieldcrest declared bankruptcy in 2003 and defaulted on all of

its outstanding workers’ compensation claims, their last resort to seek compensation

is the Security Association.

      Both Plaintiffs-Appellants filed workers’ compensation claims against

Fieldcrest and the Security Association in the Industrial Commission in 2009. The

matter came on for hearing before the Full Commission on 4 August 2014. The Full

Commission concluded that the language of section 97-130(4) was plain and

unambiguous and statutorily excluded both Plaintiffs’-Appellants’ claims because

“covered claims” only includes those claims that relate to an injury that occurred

while the employer was a member of the Security Association.           Here, because

Plaintiffs-Appellants were not injured but had asbestos-related diseases, the Full

Commission relied on N.C. Gen. Stat. § 97-57, which provides that in latent

occupational disease cases, “liability attaches to the employer or carrier who is on

the risk when the last injurious exposure occurs.” Thus, because “Fieldcrest was not

a member of [the] Security Association on the alleged date of last injurious exposure,”

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                     JOINES & KETCHIE V. FIELDCREST CANNON

                                  Opinion of the Court

the Plaintiffs’-Appellants’ claims were not “covered claims” under section 97-130(4).

Plaintiffs-Appellants appeal.

                                Standard of Review

      “The Industrial Commission's conclusions of law are reviewable de novo by this

Court.” Moore v. City of Raleigh, 135 N.C. App. 332, 334, 520 S.E.2d 133, 136 (1999).

“Although the Workers' Compensation Act should be liberally construed, judges must

interpret and apply statutes as they are written” to ensure that the legislative intent

is accomplished. Clark v. ITT Grinnell Indus. Piping, Inc., 141 N.C. App. 417, 426,

539 S.E.2d 369, 375 (2000). As our Supreme Court has noted:

             This Court has interpreted the statutory provisions of
             North Carolina's workers' compensation law on many
             occasions. In every instance, we have been wisely guided
             by several sound rules of statutory construction which
             bear repeating at the outset here. First, the Workers'
             Compensation Act should be liberally construed, whenever
             appropriate, so that benefits will not be denied upon mere
             technicalities or strained and narrow interpretations of its
             provisions. Second, such liberality should not, however,
             extend beyond the clearly expressed language of those
             provisions, and our courts may not enlarge the ordinary
             meaning of the terms used by the legislature or engage in
             any method of “judicial legislation.” Third, it is not
             reasonable to assume that the legislature would leave an
             important matter regarding the administration of the Act
             open to inference or speculation; consequently, the
             judiciary should avoid ingrafting upon a law something
             that has been omitted, which it believes ought to have been
             embraced.

Shaw v. U.S. Airways, Inc., 362 N.C. 457, 462-63, 665 S.E.2d 449, 452-53 (2008).

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                      JOINES & KETCHIE V. FIELDCREST CANNON

                                   Opinion of the Court

                                       Analysis

      The only issue on appeal is whether N.C. Gen. Stat. § 97-130(4) can be

interpreted to include Plaintiffs’-Appellants’ claims even though their last injurious

exposure occurred prior to Fieldcrest becoming a member of the Security Association.

      The Security Association is a nonprofit, unincorporated entity created to,

among other things, “provide mechanisms for the payment of covered claims against

member self-insurers, to avoid excessive delay in payment of covered claims, [and] to

avoid financial loss to claimants because of the insolvency of a member self-insurer.”

N.C. Gen. Stat. § 97-131(a) (2013). All individual and group self-insurers are required

to be members of the Security Association as a condition of being licensed to self-

insure by the Commissioner of Insurance. N.C. Gen. Stat. § 97-131(b) (2013). “An

individual self-insurer or group self-insurer shall be deemed to be a member of the

Association for purposes of its own insolvency if it is a member when the compensable

injury occurs.” N.C. Gen. Stat. § 97-131(b)(2) (2013). “Covered claims” are the unpaid

claims against insolvent self-insurers “that relate[] to an injury that occurs while the

[self-insurer] is a member of the Association and that is compensable under [the

Workers’ Compensation Act].” N.C. Gen. Stat. § 97-130(4) (2013).

      The plain language of sections 97-130 and 97-131 restricts the scope of

compensation to those claims that arise while a self-insured company is both (1)

insolvent and (2) a member of the Security Association. Thus, the only claims that

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                      JOINES & KETCHIE V. FIELDCREST CANNON

                                   Opinion of the Court

the Security Association would be obligated to pay on behalf of Fieldcrest are those

that “relate to an injury” that occurred—or in this case, relate to an occupational

disease where the last injurious exposure occurred—while Fieldcrest was a member

of the Security Association. Because the Security Association was not created until

1 October 1986, a date after each of Plaintiffs’-Appellants’ last injurious exposure to

asbestos occurred, these claims do not constitute “covered claims” within the scope of

the statutes.    Thus, the Full Commission properly concluded that Plaintiffs-

Appellants are not eligible for compensation pursuant to N.C. Gen. Stat. § 97-130(4)

and § 97-131.

      Plaintiffs-Appellants contend that the plain meaning approach to interpreting

the statutes is “overly narrow” for two reasons. First, Plaintiffs-Appellants argue

that because the General Assembly used only the word “injury” in N.C. Gen. Stat. 97-

130(4), “the General Assembly simply never contemplated some of the unique issues

found in disease claims when it enacted the Security Association statutes.”

Therefore, as Plaintiffs-Appellants contend, the laws regarding the Security

Association must be “flexibly construe[d]” to effectuate the intent of the legislature to

compensate victims of occupational disease in addition to victims of injuries. This

argument fails because section 97-52 (2013) of the Workers’ Compensation Act

provides that the disablement or death from an occupational disease “shall be treated

as the happening of an injury by accident.” Thus, the General Assembly’s use of the

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                      JOINES & KETCHIE V. FIELDCREST CANNON

                                  Opinion of the Court

word “injury” necessarily included any claims for occupational disease. Therefore, it

is not necessary to “flexibly” expand our interpretation of what constitutes a “covered

claim” based on the General Assembly’s failure to use the word “occupational disease”

in the relevant statutes.

      Second, Plaintiffs-Appellants allege that the amendments to the statutes when

the Security Association was first created in 1986 evidence a legislative intent that

“all claims arising due to an insolvency whether before or after 1986 would be paid

by the Security Association.” Following Plaintiffs’-Appellants’ logic, “covered claims”

would include even those claims that had arisen before a self-insurer became a

member of the Security Association; in other words, once a self-insurer joined the

Security Association, all claims were retroactively covered. We disagree with this

interpretation of the amendments.

      As noted, while we must liberally construe workers’ compensation statutes,

this Court must not enlarge the definition of “covered claims” beyond the clearly

expressed language of the statutes. See Shaw, 362 N.C. at 462-63, 665 S.E.2d at 453.

Plaintiffs-Appellants rely on the original 1986 version of section 97-133(a)(4), which

has been subsequently amended, that states:

             The Association shall pay claims against a self-insurer that
             are not or have not been paid as a result of a determination
             of insolvency or the institution of bankruptcy or
             receivership proceedings that occurred prior to the effective
             date of this Article; provided that any assessments made to
             pay such claims may be credited towards the tax paid by

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                      JOINES & KETCHIE V. FIELDCREST CANNON

                                  Opinion of the Court

             the self-insurers under G.S. 97-100.

1986 N.C. Sess. Laws 208, 208-09, ch. 928, § 1 (emphasis added).             Plaintiffs-

Appellants interpret this language to mean that any claims that arose “prior to the

effective date” of the Security Association statutes are covered. However, Plaintiffs-

Appellants have misinterpreted this statute; the clause “that occurred prior to the

effective date of this Article” refers to when the insolvency occurred, not when the

claims arose. This original version of the statute required the Security Association to

pay claims that had arisen prior to 1 October 1986 only if the self-insurer had become

insolvent prior to the creation of the Security Association, in order to cover the

existing workers’ compensation claims against the insolvent trucking companies.

However, the original language does not reflect an intent to cover pre-existing claims

against companies that were solvent prior to creation of the Security Association. In

other words, there is no coverage for pre-1986 claims if the insolvency of the self-

insurer occurred after the Security Association was created.

      In addition to misconstruing the original language of section 97-133(a)(4),

Plaintiffs-Appellants completely disregard the plain language of the original version

of section 97-131(b)(2):

             A self-insurer shall be deemed to be a member of the
             Association for purposes of its own insolvency when: (a) the
             self-insurer is a member of the Association when the
             insolvency occurs, but claims relating to a compensable
             event that occurred prior to the date the self-insurer joined
             the Association are not included hereunder[.]

                                         -9-
                      JOINES & KETCHIE V. FIELDCREST CANNON

                                   Opinion of the Court

1986 N.C. Sess. Laws 402, 403, ch. 1013, § 1 (emphasis added). This language plainly

precluded claims that arose before a self-insurer joined the Security Association if the

self-insurer was solvent prior to the creation of the Security Association. Moreover,

even under the original version of the statutes, a “covered claim” still only included

those claims that related to an injury that occurred while the self-insurer was a

member of the Security Association. Id. Plaintiffs’-Appellants’ interpretation of the

1986 version of section 97-133(a)(4) cannot be reconciled with the other provisions of

the statutes expressly precluding coverage for pre-existing claims against self-

insurers who were solvent at the time the Security Association was created. Thus,

even if this Court were to conclude that the language is ambiguous, and look to the

legislative history to discern intent, the original 1986 statutes precluded Plaintiffs’-

Appellants’ claims from being “covered claims” because: (1) Fieldcrest was solvent

when it joined the Security Association on 1 October 1986; and (2) Plaintiffs’-

Appellants’ last injurious exposure occurred prior to Fieldcrest becoming a member.

      Finally, Plaintiffs-Appellants contend that the Full Commission’s order

violates their due process and equal protection rights. However, because Plaintiffs-

Appellants fail to raise any constitutional argument before the Industrial

Commission, they waived these arguments on appeal.           See Powe v. Centerpoint

Human Servs., 215 N.C. App. 395, 412, n.3, 715 S.E.2d 296, 307, n.3 (2011) (refusing

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                     JOINES & KETCHIE V. FIELDCREST CANNON

                                 Opinion of the Court

to address a plaintiff’s constitutional argument when she failed to raise this issue

before the Industrial Commission).

                                     Conclusion

      Based on the plain and unambiguous language of the statutes governing the

Security Association, we affirm the Full Commission’s conclusion that Plaintiffs’-

Appellants’ claims are not “covered claims” for purposes of compensation.

      AFFIRMED.

      Judges STROUD and MCCULLOUGH concur.

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