Court Opinion

ID: 9573209
Source: CourtListenerOpinion
Date Created: 2023-08-21 20:49:54.44576+00
Date Added: 2024-06-11T12:38:06.471209
License: Public Domain

Justice Frye
dissenting.
I do not agree with the majority’s interpretation of N.C.G.S. § 97-10.2 of the Workers’ Compensation Act. I do not believe that it ensures that the legislative intent is accomplished. Nor do I agree that the “Settlement Stipulation and Agreement” entered into by the parties in this case acknowledges defendants’ entitlement to a subrogation lien. Therefore, I respectfully dissent.
The purpose of the Workers’ Compensation Act is to provide a swift and certain remedy to injured workers, as well as to ensure a limited and determinate liability for employers. Barnhardt v. Yellow Cab Co., 266 N.C. 419, 427, 146 S.E.2d 479, 484 (1966). This Court has noted:
The [Workers’ Compensation] Act represents a compromise between the employer’s and employee’s interests. The employee surrenders his right to common law damages in return for guaranteed, though limited, compensation. The employer relinquishes the right to deny liability in return for liability limited to the employee’s loss of earning capacity.
Whitley v. Columbia Lumber Mfg. Co., 318 N.C. 89, 98-99, 348 S.E.2d 336, 341-42 (1986). The Workers’ Compensation Act has been repeatedly amended, causing the potential for some of its language to be unclear. However, in light of possible ambiguity, “the Act should be liberally construed to effectuate its purpose.” Hyler v. GTE Prods. Co., 333 N.C. 258, 268, 425 S.E.2d 698, 704 (1993). I believe that construing the Act as defendants and the majority do is contrary to its terms and its purpose.
The Industrial Commission, the agency charged with the administration of the Workers’ Compensation Act, made the following pertinent conclusions of law:
11. Defendants claim a subrogation interest pursuant to N.C.G.S. § 97-10.2, based upon a stipulation by the parties in paragraph 9 of the Pre-Trial Agreement, and Exhibit A thereto, which read that the defendants here “will have a lien, as provided in N.C.G.S. Section 97-10.2 against [the] proceeds [of a $25,000.00 settlement with the third-party tort feasor incorporated in a *92November 16, 1990 consent judgment], and [Mr. Radzisz] stipulates that they will be entitled to a credit against the workers’ compensation benefits to the extent they have a subrogation interest in the proceeds of the settlement of the civil action. The amount of the subrogation interest is to be determined as if the civil action were settled after the total amount of the workers’ compensation lien is determined by the Industrial Commission . . . and is to be determined in accordance with N.C.G.S. Section 97-10.2. The parties specifically reserve the right to contest the issue of the amount of the lien.”
Further, the agreement read: [“]the purpose of this agreement is to protect the potential subrogation interest, if any, of Harley-Davidson of Metrolina, Inc. and Universal Underwriters Group. As of the date of execution of this agreement, David Radzisz contends that no such interest exists in this case. This agreement is not to be construed as granting or conceding the existence of any potential subrogation interest until Mr. Radzisz’s workers’ compensation claim is honored. David Radzisz reserves all rights under N.C.G.S. § 97 and N.C.G.S. § 97-10.2 to contest the amount of the subrogation interest before the Industrial Commission of a Court of appropriate jurisdiction.”
This settlement stipulation was entered into on November 9, 1990.
N.C.G.S. 97-10.2(f)(l) provides that:
“[i]f the employer has filed a written admission of liability for benefits under this Chapter with, or if an award final in nature in favor of the employee has been entered by the Industrial Commission, then any amount obtained by any person by settlement with, judgment against, or otherwise from the third party by reason of such injury or death shall be disbursed by Order of the Industrial Commission...”
As defendants did not admit liability for this injury and instead denied and contested liability, and as no final award has been entered by the Industrial Commission, defendants shall have no subrogation interest or lien as to the $25,000.00 third party settlement.
12. The settlement stipulation entered into by the parties does not purport on its face or otherwise to create a subrogation interest as agreed to by the parties. Instead, it merely purports *93and preserves any such interest as defendants may have eventually been found to exist. It was explicitly noted that the issue was still to be contested. Further, N.C.G.S. 97-10.2’s requirements, and not any stipulated agreement to another effect by the parties, controls this matter.
Accordingly, defendants are not entitled to any subrogation interest in the third party settlement of $25,000.00.
(Alterations in original.)
The Commission’s interpretation of N.C.G.S. § 97-10.2 in this case is consistent with the overall intent of the Workers’ Compensation Act to allow recovery by employees for work-related injuries. See Barnhardt, 266 N.C. at 427, 146 S.E.2d at 484. Under this interpretation, a final award must be made by the Commission or the employer must file an admission of liability prior to the disbursement of proceeds from a third-party settlement. This interpretation encourages the swift settlement of workers’ compensation claims between injured workers and employers, which is a central purpose of the Act. See id.
However, defendants contend that the Industrial Commission’s interpretation abrogates an employer’s subrogation interest under N.C.G.S. § 97-10.2 by creating conditions precedent to recovery, namely, a final award or an admission of liability prior to distribution of the third-party settlement proceeds. I disagree with these contentions.
The plain language of the statute imposes a temporal requirement for an employer’s subrogation lien. The statute clearly conditions the disbursement of proceeds from a third-party settlement to an employer as reimbursement on the filing of a written admission of liability for benefits or a final award entered by the Commission in favor of the employee in its use of the words “if’ and “then.” See N.C.G.S. § 97-10.2(f)(1) (1991). I further note that the language “all amounts paid or to be paid” quoted in the majority opinion comes from the language of the UIM policy in Hieb v. Lowery, 344 N.C. 403, 474 S.E.2d 323 (1996), rather than from N.C.G.S. § 97-10.2.
Moreover, the main purpose of the Act, a swift and certain remedy, is eviscerated by an interpretation of N.C.G.S. § 97-10.2 that guarantees a subrogation lien to the employer regardless of when it accepts or settles an employee’s claim. There is no motivation for an employer to timely accept an employee’s workers’ compensation *94claim when the employer is certain to be reimbursed by proceeds from a possible third-party settlement in the future. The employer’s financial interest is served by denying a claim until a third party settles with the injured employee, at which time the employer can receive immediate reimbursement upon accepting the claim. In the meantime, the injured worker is unable to work, is without any means of financial support, and has creditors who still need to be paid. I do not believe that this result comports with the spirit and purpose of the Workers’ Compensation Act.
In addition, when the third party does agree to settle, the third party may require the consent of the employer, as it did in this case. The injured worker is thus in the position of desperately needing the proceeds from a settlement and having to obtain the consent of his employer, who has denied his workers’ compensation claim. This leaves the injured worker with little or no bargaining power with either the third party or his employer. In order to get the proceeds from the settlement, the injured worker is somewhat forced, due to his predicament, into entering an agreement, such as the one in this case, with the employer.
In this case, the Settlement Stipulation and Agreement states that “if [plaintiff’s] worker’s compensation claim is upheld by the Industrial Commission ... or if [defendants] file a written admission of liability for benefits with the Commission, [defendants] will have a lien, as provided in G.S. § 97-10.2, against these proceeds” and further states that “[defendants] will be entitled to a credit against the workers.]’] compensation benefits to the extent that they have a subrogation interest in the proceeds of the settlement of the civil action.” The majority holds that the agreement “acknowledges that defendants are legally entitled to a subrogation or lien interest and leaves undecided only the question of the amount of the lien.” I disagree.
The agreement also states that
[t]he purpose of this agreement is to protect the potential subrogation interest, if any, of [defendants]. As of the date of execution of this agreement, [plaintiff] contends that no such interest exists in this case. This agreement is not to be construed as granting or conceding the existence of any potential subrogation interest.
(Emphasis added.) Considering the language of the agreement as a whole, I find the Commission’s finding that the settlement agreement *95“merely purports and preserves any such interest as defendants may have eventually been found to exist” to be correct. Since the settlement agreement “created no rights other than those already existing under G.S. § 97-10.2,” Radzisz v. Harley-Davidson Metrolina, Inc., 123 N.C. App. 602, 609, 473 S.E.2d 655, 659 (1996), and defendants were not entitled to a lien under N.C.G.S. § 97-10.2, defendants are not entitled to a subrogation lien by virtue of the agreement.
Furthermore, concerns about an employee’s potential recovery from both a settlement with a third party and a workers’ compensation claim are misplaced. N.C.G.S. § 97-10.2(h) specifically requires the employer’s consent to a settlement between the employee and a third party. This allows the employer to protect its interest in subrogation with respect to the workers’ compensation claim and thereby prevent a double recovery.
Accordingly, I vote to reverse the Court of Appeals’ decision and remand this case for reinstatement of the Industrial Commission’s opinion and award.
Justices Webb and Lake join in this dissenting opinion.