Court Opinion

ID: 3199794
Source: CourtListenerOpinion
Date Created: 2016-05-03 12:09:49.785967+00
Date Added: 2024-06-11T14:50:26.359621
License: Public Domain

IN THE COURT OF APPEALS OF NORTH CAROLINA

                                   No. COA15-756

                                  Filed: 3 May 2016

North Carolina Industrial Commission, Nos. Y16837 & Y20122

ALLAN ROBERT CAMPBELL, Plaintiff,
              v.

GARDA USA, INC. and NEW HAMPSHIRE
INSURANCE COMPANY, Defendants.

        Appeal by defendants from opinion and award entered 19 March 2015 by the

North Carolina Industrial Commission. Heard in the Court of Appeals 3 December

2015.

        Charles G. Monnett, III & Associates, by Lauren O. Newton, for employee
        plaintiff-appellee.

        Hedrick, Gardner, Kincheloe & Garofalo, LLP, by M. Duane Jones, Jeffrey A.
        Kadis, and Brooke A. Mullenex, for employer and carrier defendant-appellants.

        DIETZ, Judge.

        Plaintiff Allan Campbell suffered two workplace injuries while employed by

Defendant Garda USA: one in December 2011 and one in July 2012. He reported

both injuries to his employer immediately after they occurred. Campbell did not miss

any work, but his injuries required medical treatment.

        In August 2012, Campbell filed separate workers’ compensation claims for his

two workplace injuries. In November 2012, Garda agreed to pay medical benefits for
                            CAMPBELL V. GARDA USA, INC.

                                   Opinion of the Court

the December 2011 injury, while reserving its right to later contest compensability.

Garda denied the claim for the July 2012 injury.

      During discovery, Garda falsely stated that it did not possess any written

documents concerning the 2012 injury. In a later deposition, a Garda employee

conceded that a written document existed and indicated that he had a copy on his

computer, which he had with him at the deposition. Garda’s lawyers then told the

employee to stop talking and to power down his computer. Even after the deposition,

Garda still refused to produce the document and, ultimately, a deputy industrial

commissioner had to order its production.         In its final opinion and award, the

Industrial Commission imposed attorneys’ fees on Garda under N.C. Gen. Stat. § 97–

88.1 for “unfounded litigiousness.”

      On appeal, Garda contends that some of the grounds on which the Commission

relied to award attorneys’ fees are erroneous. As explained below, we agree with

Garda that some of the Commission’s reasoning, such as faulting Garda for asserting

an unfounded notice defense that Garda never actually asserted, would not support

attorneys’ fees. But Garda’s discovery violation readily provides a legal basis for

attorneys’ fees under N.C. Gen. Stat. § 97–88.1. Accordingly, we hold that attorneys’

fees under § 97–88.1 are permitted in this case but, because some of the Commission’s

reasoning is erroneous, remand for the Industrial Commission to reassess its

attorneys’ fees award in light of the unfounded litigiousness described in this opinion.

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                            CAMPBELL V. GARDA USA, INC.

                                   Opinion of the Court

                          Facts and Procedural History

      On 1 December 2011, Allan Campbell sprained his left ankle while working for

Garda USA, Inc. Campbell immediately informed his manager of the incident. He

received medical treatment for the sprain, including physical therapy and various

forms of pain medication. Campbell did not miss any work as a result of his injury.

      On 19 July 2012, Campbell again injured himself when he slipped and fell

while trying to lift a wooden pallet at work. After his fall, Campbell sent an email to

his branch manager to notify him of the incident. The email had the subject line

“keep this on file” and stated as follows:

          I lifted a pallet and slipped on oil in the bay. Tweaked my lower
          back. I will take it easy today but at this time do not wish to seek
          medical. That’s all I need right now is to file a claim with all of
          the stuff going on. We need to get oil dry today.

No one witnessed Campbell’s fall, and he did not seek immediate medical treatment.

      On 27 July 2012, Garda terminated Campbell’s employment due to poor job

performance. Later that day, at a scheduled appointment with his doctor concerning

his high blood pressure, Campbell informed his doctor that he had severe back pain

and explained that the pain originated with his fall earlier in the month.

      On 6 August 2012, Campbell filed a claim against Garda for his December

ankle injury. Two days later, Campbell filed another claim, this time addressing his

July back injury.

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                           CAMPBELL V. GARDA USA, INC.

                                 Opinion of the Court

      On 8 November 2012, Garda agreed to pay Campbell’s medical expenses

without prejudice to later denying the compensability of the claim using Form 63.

Garda denied the compensability of Campbell’s back injury using Form 61. The two

claims were later consolidated for hearing before a deputy industrial commissioner.

      During discovery, Campbell requested that Garda identify any statements

obtained from Garda employees concerning Campbell’s back injury and to turn over

any documents concerning that injury. Garda initially responded to these requests

with a blanket objection based on attorney-client privilege. After further discussion

between counsel for the parties, Garda amended its discovery responses and stated

that it was “not in possession of any written statement, photograph, writing or

document related to the incident [on 19 July 2012].”

      Six months later, Campbell deposed Bart Gibbons, a Garda risk management

analyst, via telephone. During Gibbons’s deposition testimony, he acknowledged that

the company that manages Garda’s workers’ compensation claims had made an entry

concerning Campbell’s 19 July 2012 back injury in records accessible to Garda. That

entry, called a “first report of injury,” is part of a generated report described by

Gibbons as “an internal document that comes from [a] third-party administer [sic].”

      Gibbons had a copy of that document on his computer, which he had with him

as he was testifying. When Campbell’s counsel asked Gibbons to provide her with a

copy of that document, counsel for Garda instructed Gibbons not to comply with that

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                            CAMPBELL V. GARDA USA, INC.

                                   Opinion of the Court

request and further instructed him to power down his computer and “not testify to

anything that you are looking at on your computer.” Gibbons obeyed, and Campbell’s

counsel expressed her intention to seek a ruling from the deputy industrial

commissioner compelling Garda to produce the document. She then instructed the

court reporter to hold Gibbons’s deposition open pending a determination from the

Industrial Commission.

         After further motions practice, the deputy industrial commissioner ordered

Garda to produce the document. The following day, Garda produced the document to

Campbell.     It contained an entry dated 27 July 2012 indicating that Campbell

“slipped on an oil spill” and “sustained unknown injuries to back.” As the Full

Commission later found, this evidence, which was plainly responsive to Campbell’s

discovery request, “was not produced voluntarily and . . . [Garda] had to be compelled

by the Commission to produce [it].”

         On 23 May 2014, the deputy commissioner filed an opinion and award ordering

Garda to pay certain medical expenses incurred, or to be incurred, from Campbell’s

injuries, and ordering Garda to pay Campbell’s attorneys’ fees in the amount of

$13,212.50. On 5 June 2014, Garda appealed to the Full Commission. The Full

Commission affirmed and Garda timely appealed its award of attorneys’ fees to this

Court.

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                           CAMPBELL V. GARDA USA, INC.

                                 Opinion of the Court

                                     Analysis

      The North Carolina Workers’ Compensation Act grants the Industrial

Commission the authority to impose attorneys’ fees on either party if it determines

that “any hearing has been brought, prosecuted, or defended without reasonable

ground.” N.C. Gen. Stat. § 97–88.1. Our precedent requires us to review an award

under § 97–88.1 using a two-part test. First, this Court reviews de novo the legal

question of whether a claim was “brought, prosecuted, or defended without

reasonable ground.” Ensley v. FMC Corp., 222 N.C. App. 386, 390, 731 S.E.2d 855,

858 (2012). If our de novo review reveals that there were legal grounds to impose

fees, we then review the Industrial Commission’s determination of “whether to make

an award and the amount of the award” for abuse of discretion. Id.

      We have no hesitation in concluding that Garda’s conduct satisfies the

statutory criteria for imposing attorneys’ fees under the first prong of our two-part

review. The record indicates that Garda falsely stated in discovery responses that it

did not have any information concerning Campbell’s July 2012 back injury when, in

fact, it had information, and had access to a document, relevant to issues of

compensability.   Moreover, after a Garda employee’s deposition revealed the

existence of the responsive document (which Garda previously denied even existed),

Garda did not immediately produce it. Ultimately, upon Campbell’s motion, a deputy

industrial commissioner had to order its production. As a matter of law, this type of

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                           CAMPBELL V. GARDA USA, INC.

                                   Opinion of the Court

discovery violation satisfies the statutory criteria of N.C. Gen. Stat. § 97–88.1 and

permits the Industrial Commission, in its discretion, to impose attorneys’ fees. See

Hauser v. Advanced Plastiform, Inc., 133 N.C. App. 378, 385–89, 514 S.E.2d 545, 550–

53 (1999).

      Garda does not dispute the underlying facts surrounding its discovery

violation, but argues that the Industrial Commission also relied on two improper

grounds in awarding attorneys’ fees: first, that Garda failed to contest the claim

within 90 days in violation of N.C. Gen. Stat. § 97–18(d) and, second, that Garda

asserted an unfounded notice defense. Garda argues that both of these grounds are

erroneous because N.C. Gen. Stat. § 97–18(d) does not apply to medical benefits-only

claims and Garda never asserted a notice defense.

      We agree with Garda that the Industrial Commission relied on these two

grounds in awarding fees under § 97–88.1, as the Commission’s order indicates:

         Although defendants accepted plaintiff’s foot injury as medical
         only via a Form 63, they never “contest[ed] the compensability of
         the claim or its liability therefore [sic] within 90 days from the date
         [they] first ha[d] written or actual notice of the injury” in
         accordance with N.C. Gen. Stat. § 97–18(d). As a result of the
         denial of medical treatment for Plaintiff’s foot, Plaintiff was
         denied medical treatment for his injury for over a year.
         Furthermore, defendants denied plaintiff’s back injury on the
         basis that they had no notice of said injury despite overwhelming
         evidence to the contrary that was not produced voluntarily and
         which they had to be compelled by the Commission to produce.
         The behavior of the defendant-employer in this claim has been
         unfoundedly litigious and defendant-employer is therefore
         subject to sanctions pursuant to N.C. Gen. Stat. § 97–88.1.

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                                CAMPBELL V. GARDA USA, INC.

                                        Opinion of the Court

       We also agree with Garda that neither of these two grounds would support an

award of attorneys’ fees under § 97–88.1. First, Form 63—the document issued by

the Industrial Commission for use in paying medical benefits without prejudice to

later challenging compensability—indicates that N.C. Gen. Stat. § 97–18(d) and its

corresponding 90-day response requirement do not apply to a medical benefits-only

claim like Campbell’s. Thus, even if that statute and its 90-day provision apply here,

Garda’s failure to comply with that statutory requirement, standing alone, was not

unreasonable. We cannot fault Garda for relying on the instructions in a government-

issued form.1

       Likewise, Garda did not assert a notice defense in this case. The Commission

cannot award attorneys’ fees for asserting an unfounded defense that Garda never

actually asserted.

       In short, although there are grounds to impose attorneys’ fees under § 97–88.1

in this case, the Commission at least partially relied on two erroneous grounds in its

analysis. Ordinarily, when a lower court’s decision is based in part on proper grounds

but in part on an error of law, “it is appropriate to remand for reconsideration in light

of the correct law.” Free Spirit Aviation, Inc. v. Rutherford Airport Auth., 206 N.C.

App. 192, 204, 696 S.E.2d 559, 567 (2010); see also Blitz v. Agean, Inc., 197 N.C. App.
1  Whether N.C. Gen. Stat. § 97–18(d) actually applies to a medical benefits-only claim is not
an issue before this Court. The only issue we address is whether, for purposes of awarding attorneys’
fees under § 97–88.1, it was reasonable for Garda to rely on the instructions in Form 63.

                                                -8-
                           CAMPBELL V. GARDA USA, INC.

                                  Opinion of the Court

296, 312, 677 S.E.2d 1, 11 (2009). Accordingly, we vacate and remand this matter for

the Commission to reassess its attorneys’ fees award in light of this opinion.

                                    Conclusion

      The portion of the Industrial Commission’s opinion and award concerning

attorneys’ fees under § 97–88.1 is vacated and remanded for further proceedings

consistent with this opinion.

      VACATED AND REMANDED IN PART.

      Judges STROUD and TYSON concur.

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