Ex parte Fort James Operating Co.

• Citation: 895 So.2d 294
• Parties: Ex parte FORT JAMES OPERATING COMPANY. (In re Fort James Operating Company v. William F. Irby).
• Decision Date: 04 June 2004
• Court: Supreme Court of Alabama

895 So.2d 294

Ex parte FORT JAMES OPERATING COMPANY. (In re Fort James Operating Company v. William F. Irby).

1030607.

Supreme Court of Alabama.

June 4, 2004.

Terry A. Moore of Vickers, Riis, Murray & Curran, L.L.C., Mobile, for petitioner.

William L. Utsey and Tara B. Armistead of Utsey & Utsey, Butler, for respondent.

Richard W. Franklin and P. Vincent Gaddy of Armbrecht Jackson, LLP, Mobile, for amicus curiae Alabama Insurance Guaranty Association, in support of the petitioner.

HOUSTON, Justice.

William Irby was employed by Fort James Operating Company ("Fort James") for 32 years. In July 1997, while practicing with the Fort James fire-prevention department on a riverbank, Irby stepped onto a rock, the rock moved, and he fell and seriously injured his ankle. He underwent numerous surgeries to repair the damage. His doctors allowed him to return to work, but under certain restrictions limiting his activities.

When Irby was physically able to return to Fort James, Fort James told him that it had no job that fell within the restrictions under which Irby could work. Irby then decided that he would retire. From April 23, 1998, just after Irby applied for disability benefits, until June 21, 1998, the date he retired, Irby received $335 per week in sickness-and-accident benefits. Those benefits totaled $2,823.57. The benefits were administered by Aetna Life Insurance Company ("Aetna") but were paid from Fort James's funds. Irby eventually sued Fort James seeking workers' compensation benefits. Fort James pleaded several affirmative defenses, one of which was that it was "entitled to a credit against its compensation liability for all payments made to [Irby] due to his ankle injury out of the sickness and accident benefit plan provided by [Fort James]."

On September 20, 2002, the trial court for the workers' compensation action entered a judgment finding Irby permanently and totally disabled and awarding him the corresponding disability benefits, as well as future medical expenses and "other benefits as provided by the workers' compensation law of Alabama existing on July 10, 1997," which was the date that Irby was injured. The court also found that Fort James was not entitled to a setoff for any sickness-and-accident benefits it may have provided to Irby.

Fort James filed a postjudgment motion seeking to have the court alter, amend, or vacate its judgment for the same reasons Fort James now asserts on appeal. The trial court denied this motion. Fort James then appealed to the Court of Civil Appeals, which affirmed in part and reversed in part the judgment of the trial court. Fort James Operating Co. v. Irby, 895 So.2d. 282 (Ala.Civ.App.2004). Fort James then petitioned this Court for a writ of certiorari, which we granted to review two issues:

1. Whether Ala.Code 1975, § 25-5-57(c)(1), allows Fort James a setoff for the $2,823.57 in sickness-and-accident benefits it paid Irby as a result of the injury to his ankle; and

2. Whether the trial court's award to Irby of "other benefits" was proper.

We reverse and remand.

Standard of Review

"On certiorari review, this Court accords no presumption of correctness to the legal conclusions of the intermediate appellate court. Therefore, we must apply de novo the standard of review that was applicable in the Court of Civil Appeals." Ex parte Toyota Motor Corp., 684 So.2d 132, 135 (Ala.1996). The Court of Civil Appeals, in turn, is bound by Ala.Code 1975, § 25-5-57(e), which provides that legal issues are to be reviewed de novo and requires that the judgment of the trial court be affirmed if its factual findings are supported by substantial evidence.

I. Setoff for Sickness-and-Accident Benefits

Ala.Code 1975, § 25-5-57(c)(1), a part of the Workers' Compensation Act, § 25-5-1 et seq., Ala.Code 1975, provides:

"(c) Setoff for other recovery. In calculating the amount of workers' compensation due:

"(1) The employer may reduce or accept an assignment from an employee of the amount of benefits paid pursuant to a disability plan, retirement plan, or other plan providing for sick pay by the amount of compensation paid, if and only if the employer provided the benefits or paid for the plan or plans providing the benefits deducted."

We have explained that this subsection allows an employer to "reduce the amount of workers' compensation benefits due by the amount of benefits paid or payable under a qualifying disability, retirement, or sick pay plan." Ex parte Dunlop Tire Corp., 706 So.2d 729, 731 (Ala.1997). Thus, any payment by Fort James under such a qualifying plan would reduce its obligation to Irby for workers' compensation benefits by that amount. In this case, the amount at issue is $2,823.57, or $335 per week. The first issue we must address is the proper burden of proof. The party asserting an affirmative defense bears the burden of proof on that defense. Green Tree Fin. Corp. of Alabama v. Wampler, 749 So.2d 409, 415 (Ala.1999). In workers' compensation issues, other than certain threshold issues of compensability, the party bearing the burden of proof must meet that burden by a preponderance of the evidence. Ala.Code 1975, § 25-5-81(c). Yet the trial court found that Fort James had not proven by "clear and convincing evidence" that Fort James had paid Irby sick pay. We hold that the trial court erred in requiring Fort James to prove by "clear and convincing evidence" that it had paid Irby sick pay.

The second issue for our review is whether Fort James met its burden of proof with regard to the setoff. The trial court, applying the clear-and-convincing-evidence standard, held that Fort James did not. The Court of Civil Appeals upheld the trial court's decision to deny the setoff under the rationale of Toborkey v. Workmen's Comp. Appeal Bd., 655 A.2d 636 (Pa.Commw.Ct.1995), approved by this Court in Ex parte Dunlop Tire Corp., supra. In Toborkey, the court explained that "sick leave" was "`an incident or benefit provided under the work agreement and is an entitlement like wages for services performed.'" Toborkey, 655 A.2d at 638 (quoting Temple v. Pennsylvania Dep't of Highways, 445 Pa. 539, 542, 285 A.2d 137, 139 (1971)). On this authority, the Toborkey court denied any setoff of workers' compensation benefits for amounts paid for sick leave. However, upon a closer examination of Toborkey, it appears that that court distinguished "sick leave" from "sick pay." 655 A.2d at 639. Sick pay, noted the court, is earned "not in the nature of wages but, rather, [as] payment[ ] provided in lieu of compensation, based on the claimant's inability to work." Toborkey, 655 A.2d at 639 (footnote omitted; emphasis added).

Fort James argues that its provision of sickness-and-accident benefits constitutes "sick pay," as defined by the Toborkey court, and not "sick leave." Irby does not challenge this definition. Rather, he argues that Fort James has not produced any evidence indicating who funded the sickness-and-accident benefits. Yet one of the exhibits introduced by Fort James at trial, and which Irby cites, clearly states, "[the sickness-and-accident] benefits are not insured by [Aetna] but will be paid from the Employer's funds." Irby offers no evidence to contradict that statement.

Irby argues that even if Fort James paid those benefits out of its funds, he received them because he was unable to work, not because he was disabled. However, this distinction is irrelevant. Irby was paid under a "Temporary Disability Benefit" plan maintained by Fort James that covered any "time lost from work" as the result of...