BAY CONCRETE CONST. CO., INC. v. Davis

• Decision Date: 03 August 2004
• Docket Number: Record No. 3096-03-1.
• Parties: BAY CONCRETE CONSTRUCTION COMPANY, INC. and the Union Insurance Company v. Frankie Oreal DAVIS.
• Court: Virginia Court of Appeals

600 S.E.2d 144

43 Va.App. 528

BAY CONCRETE CONSTRUCTION COMPANY, INC. and the Union Insurance Company v. Frankie Oreal DAVIS.

Record No. 3096-03-1.

Court of Appeals of Virginia, Chesapeake.

August 3, 2004.

Richard A. Hobson (Law Office of Richard A. Hobson, Richmond, on brief), for appellants.

Carlton F. Bennett (Bennett and Zydron, P.C., on brief), Virginia Beach, for appellee.

Present: BENTON, ELDER and FRANK, JJ.

ELDER, Judge.

Bay Concrete Construction Co., Inc. (employer) and The Union Insurance Company (carrier) appeal from a decision of the Workers' Compensation Commission holding that overpayments of disability compensation to Frankie Oreal Davis (claimant) entitled carrier only to a credit against any future compensation due and did not entitle it to recover those overpayments from claimant "by action at law" pursuant to Code §§ 65.2-710 or 65.2-712. We hold the commission's refusal to certify the award for an action at law in the circuit court was not error, and we affirm.

I. BACKGROUND

The facts are largely undisputed. Claimant suffered an inguinal hernia on April 23, 1999, while working for employer as a concrete foreman. He continued working after the injury, but on May 3, 1999, he underwent surgery for that condition and was temporarily and totally disabled through at least October 11, 1999.

The carrier accepted the injury as compensable, and the commission entered an award for medical and disability benefits. Carrier paid claimant temporary total disability compensation from May 10, 1999, through October 11, 1999, in the total amount of $11,146.74. Notwithstanding claimant's inability to work during this same period, employer continued to pay him his pre-injury wages in the gross amount of $760 per week. Employer explained claimant had been a loyal and very hard-working employee for approximately 15 years prior to his injury. Employer "kept paying [claimant] ... because of the value he was to the company" and because "[it] just wanted to make sure that [he] was financially taken care of until he could come back to work." Although the carrier began paying claimant disability compensation as of May 10, 1999, claimant did not inform employer of this fact and did not notify carrier that he was simultaneously receiving payments from employer equal to his full pre-injury wages.

In October 1999, employer and carrier each learned of the other's payments to claimant, and the carrier voiced an intention to seek a credit for the compensation payments it had made to claimant during that time. "[I]n order to protect [claimant from] any action that the [carrier] was going to take" due to the "double payments" claimant had received, employer and claimant entered into an agreement characterizing employer's payments to claimant as a loan that claimant would pay back to employer at the rate of $100 per month. Due to the existence of an "open award giving [claimant] [c]ompensation benefits," claimant's ongoing disability, and employer's representation that claimant had agreed to pay back to employer the monies he had received from employer while also receiving disability compensation, carrier did not seek a credit for the compensation payments at that time.

Claimant made no payments to employer pursuant to the terms of the agreement. Claimant testified that employer's president, Jim Williams, asked him to sign the repayment agreement because "the insurance company was on his back." Claimant testified Williams said the agreement was "just for [carrier's] benefit," that Williams "was glad... he did what he did," and that he "wasn't looking for [claimant] to pay [the money] back." Williams testified he could not recall what, if anything, he told claimant about whether he expected claimant to make those payments.

In 2002, carrier filed an application for hearing in which it sought, inter alia, a credit for alleged overpayments made in 1999, based on claimant's simultaneous receipt of both monies equal to his full pre-injury wage from employer and temporary total disability compensation from carrier. Carrier also indicated its intent to request "certif[ication of] an[y] award for a credit to the circuit court to be reduced to a judgment upon which collection procedures at law would follow."¹

The deputy commissioner ruled as follows:

[K]nowledge regarding a claim is imputed from employer to insurer and from insurer to employer. Further, the evidence does not establish that the claimant engaged in any fraud or deception in regard to his receipt of these payments [from employer and insurer]. Nevertheless, the case law cited by the insurer shows that the insurer is due a credit for its overpayment of compensation as against any future compensation for disability that may be due....

The employer has requested that the Commission certify any "... credit awarded to the circuit court." ... We do not find any basis for such an attempt in the language of the Virginia Workers' Compensation Act.... [O]verpayments that occur absent fraud or a failure to report earnings can only be recouped by way of a credit. There is no evidence of fraud in this case and there was not a failure to report earnings given that the insurer and employer stand as one in regard to their knowledge of the status of the claim.

Carrier requested commission review of the deputy's decision. The commission, on review, summarized the deputy's decision and ruled as follows:

The deputy commissioner found that the employer should be awarded a credit for the [1999] payments ... [but] declined to find that the claimant violated Code § 65.2-712.... On [r]eview, the employer argues that these [1999] payments ... were an "increase in earnings" under Code § 65.2-712. We do not agree.

The evidence did not show any earnings between May 14 and October 11, 1999.... [T]he employer, for business reasons, made the payments because of the claimant's work history with the employer. Code § 65.2-712 seeks to protect employers and insurers when payments are made to an employee as a result of fraud or misrepresentation or when an employee returns to work, or receives a pay increase after a return to work, but does not report the return to work or the pay increase. Here, the payments clearly were not "earnings" pursuant to a return to work as envisioned by Code § 65.2-712.

The employer ... argues that the deputy commissioner incorrectly found that the claimant was not required to report the employer's payments to the carrier.... Code § 65.2-712 specifically provides that... a return [to work for one's pre-injury employer] shall be disclosed directly to the insurer, unless the employer is self-insured.... Here, however, there was no return to work, increase in post-return earnings, fraud, or misrepresentation such that Code § 65.2-712 should apply. Rather, there was an overpayment. The deputy commissioner awarded a credit to the employer against future compensation for this overpayment, and we see no reason to overturn this decision.

Carrier noted this appeal.²

II. ANALYSIS

Code § 65.2-710 provides that "[o]rders or awards of the Commission may be recorded, enforced, and satisfied as orders or decrees of a circuit court upon certification of such order or award by the Commission. The Commission shall certify such order or award upon satisfactory evidence of noncompliance with the same." Code § 65.2-712 provides in relevant part as follows:

So long as an employee ... receives payment of compensation under this title, [the employee] shall have a duty immediately to disclose to the employer, when the employer is self-insured, or insurer in all other cases, any ... return to employment [or] increase in his earnings.... Any payment to a claimant by an employer or insurer which is later determined by the Commission to have been procured by the employee ... by fraud, misrepresentation, or failure to report any ... return to employment [or] increase in earnings may be recovered from the claimant ... by the employer or insurer either by way of credit against future compensation payments due the claimant ... or by action at law against the claimant....

Here, the commission awarded employer a credit for the temporary total disability compensation carrier paid claimant while employer continued to pay the disabled claimant sums equal to his pre-injury wage.³ Employer assigns error to (1) the commission's conclusion that "carrier and employer stand as one in regard to their knowledge of the status of" a claimant's return to work for employer; (2) the commission's finding that claimant had no duty to report to carrier employer's ongoing payments to claimant under Code § § 65.2-712 because they were not an increase in earnings and did not result from a return to work; and (3) the commission's refusal to certify the award to the circuit court for a credit in accordance with Code §§ 65.2-710 or 65.2-712. We hold no reversible error occurred.

A. IMPUTING TO CARRIER KNOWLEDGE OF EMPLOYER'S ONGOING PAYMENTS

We hold employer's challenge to the conclusion that "carrier and employer stand as one in regard to their knowledge of the status of" a claimant's return to work for employer is not properly before us because only the deputy, not the commission, reached such a conclusion.

The deputy expressly held employer's knowledge of the status of claimant's claim was imputed to the carrier and implicitly held employer's payment of claimant's pre-injury wage amounted to a "return to employment" or "increase in earnings" that claimant would otherwise have had a duty to report under Code § 65.2-712.

The commission affirmed the deputy's award but did so for reasons different from those assigned by the deputy. The commission did not state that an employer's knowledge of a claimant's receipt of his pre-injury wage is imputed to the carrier. In fact, it implied the contrary by expressly acknowledging the language of Code § 65.2-712 providing that "a return [to work] shall be disclosed...