Diaz v. Smith

• Decision Date: 03 April 2012
• Docket Number: No. COA10–694–2.,COA10–694–2.
• Citation: 724 S.E.2d 141
• Parties: Ricardo DIAZ, Employee, Plaintiff, v. Jerry Mark SMITH, d/b/a Smith's Home Repair, Employer,Travelers Indemnity Company, Carrier, Defendants.
• Court: North Carolina Court of Appeals

724 S.E.2d 141

Ricardo DIAZ, Employee, Plaintiff,

v.Jerry Mark SMITH, d/b/a Smith's Home Repair, Employer,Travelers Indemnity Company, Carrier, Defendants.

No. COA10–694–2.

Court of Appeals of North Carolina.

April 3, 2012.

Appeal by plaintiff from opinion and award entered 19 March 2010 by the North Carolina Industrial Commission. Originally heard in the Court of Appeals 10 January 2011. Petition for Rehearing granted 6 May 2011.

The Olive Law Firm, PA, Charlotte, by Juan A. Sanchez, for plaintiff-appellant.

Hedrick, Gardner, Kincheloe & Garofalo, L.L.P., Charlotte, by Kelli A. Burns, M. Duane Jones, and Shelley W. Coleman, for defendant-appellee Travelers Indemnity Company.

HUNTER, Robert C., Judge.

Plaintiff Ricardo Diaz (“plaintiff”) appeals from the Industrial Commission's opinion and award in which it awarded plaintiff workers' compensation benefits, but concluded that defendant-employer Jerry Mark Smith's (“Smith”) workers' compensation insurance policy had been effectively cancelled by defendant-carrier Travelers Indemnity Company (“Travelers”). This case was originally decided 5 April 2011. See Diaz v. Smith, ––– N.C.App. ––––, 709 S.E.2d 424 (2011). We held that the Commission applied the notice requirements of the incorrect statute in determining whether Smith's insurance policy was properly cancelled. Consequently, we reversed and remanded the Commission's opinion and award. On 6 May 2011, Travelers' Petition for Rehearing was granted. After careful review upon rehearing, we affirm the Commission's opinion and award. ¹

Facts

Smith began Smith's Home Repair in the summer of 2006. After submitting an application with the North Carolina Rate Bureau, Smith obtained a workers' compensation insurance policy with Travelers as an assigned risk policy. Because Smith could not afford to pay his premium in full, he financed the premium through a third party known as Monthly Payment Plan, Inc. (“MPP”). MPP's financing agreement included a power of attorney provision authorizing MPP to cancel Smith's policy if he failed to make timely payments. Smith signed neither the Travelers' policy nor the MPP financing agreement; both were signed in Smith's name by his insurance agent, David Cantwell. An acknowledgment page, not normally contained in “regular policies,” was included at the end of Smith's policy with Travelers, notifying him that, pursuant to the power of attorney clause in the financing agreement, MPP could cancel his policy for non-payment.

In November 2006, MPP cancelled Smith's policy for non-payment of premiums. The policy was reinstated, however, after MPP received Smith's monthly premium payment. After Smith failed to make his premium payment for January 2007, MPP sent Smith a letter dated 2 January 2007, titled “Ten Day Notice,” advising Smith that “unless payment is made within ten days from the date of th[e] letter,” his workers' compensation policy would be “cancelled through the use of [the] power of attorney that [he] signed.” MPP sent copies of this letter by regular mail to Smith's correct address in Asheville, North Carolina, as well as to Cantwell's office. Both Smith and Cantwell received their respective copy of the letter.

After MPP did not receive payment from Smith, MPP sent a “Notice of Cancellation” letter, dated 15 January 2007, notifying Smith of MPP's intent to cancel his policy through the power of attorney provision in the finance agreement. Copies of this notice were sent to Smith's address and Cantwell's; both received the notice. A copy of the notice of intent also was sent to Travelers, notifying the insurer of MPP's intent to cancel Smith's policy through its power of attorney.

By certified mail, Traveler's sent a letter headed “Notice of Cancellation—Nonpayment of Premium Financed Policy,” explaining that MPP had “exercised its right to cancel th[e] policy as provided in its agreement with [Smith], due to [Smith]'s delinquent payment status.” Although the notice of cancellation stated that it was “issue[d]” on 1 February 2007, it back-dated the cancellation to be effective 25 January 2007. Travelers' notice of cancellation was sent to Smith at the last known address in its file, which was not Smith's then-current address. Smith did not receive the notice; the certified letter was returned undelivered to Travelers on 12 February 2007.

After conducting an audit on 5 March 2007, Travelers returned $317. 00 in unearned premiums to MPP. MPP issued Smith a refund check of $225.00. Smith cashed the check without contacting anyone but his insurance agent for an explanation of the refund.

Plaintiff began working for Smith around 17 April 2007 as a framer and roofer, working approximately 40 hours a week at $10.00 an hour. On 20 July 2007, plaintiff fell off the roof on which he was working and injured his left arm. Plaintiff was seen in Mission Hospital's emergency room, where x-rays showed that he had fractured his left humerus and dislocated his left elbow. His elbow was splinted and reduced. On 1 August 2007, plaintiff underwent “open reduction, internal fixation of the humerus, and exploration of the radial nerve.”

Plaintiff was released by his doctor to return to sedentary work, without any use of his left arm, on 17 September 2007. On that day, plaintiff filed his claim for workers' compensation benefits. Defendants denied plaintiff's claim “for lack of coverage” on 28 September 2007. Plaintiff did not return to work until 3 January 2008, when he started working for another employer at the same or greater average weekly wage. Plaintiff's doctor assigned a 20% permanent partial impairment rating to his left arm, with lifting restrictions of no more than 40 pounds with his left arm.

After conducting an evidentiary hearing on plaintiff's claim on 29 May 2008, the deputy commissioner entered an opinion and award on 23 December 2008, in which he concluded that plaintiff had sustained a compensable injury on 20 July 2007, and, as a result, was entitled to disability as well as ongoing medical benefits. The deputy commissioner also determined that Travelers had failed to comply with the notice requirements of N.C. Gen.Stat. § 58–36–105 (2009) in attempting to cancel Smith's workers' compensation policy. Thus, the deputy commissioner concluded, Travelers' cancellation was ineffective and the policy was “in full effect” on 20 July 2007.

Defendants appealed to the Full Commission, which issued an amended opinion and award on 19 March 2010, in which the Commission upheld the deputy commissioner's conclusion that plaintiff was entitled to disability and medical benefits as a result his compensable injury. The Commission ruled, however, that N.C. Gen.Stat. § 58–36–105 did not govern the cancellation of Smith's policy and that “Defendant Smith's policy was effectively and properly cancelled pursuant to the power of attorney held by MPP and in accordance with § 58–35–85.” Based on this determination, the Commission held that Smith, not Travelers, was liable for plaintiff's benefits. Plaintiff timely appealed to this Court.

I

Before reaching plaintiff's argument for reversal of the Commission's opinion and award, we address Travelers' contention that plaintiff, as he was awarded all workers' compensation benefits that he claimed, is not a “party aggrieved” by the Commission's decision. The Workers' Compensation Act provides that an appeal from an opinion and award of the Industrial Commission is subject to the “same terms and conditions as govern appeals from the superior court to the Court of Appeals in ordinary civil actions.” N.C. Gen.Stat. § 97–86 (2009); Ratchford v. C.C. Mangum, Inc., 150 N.C.App. 197, 199, 564 S.E.2d 245, 247 (2002). Under N.C. Gen.Stat. § 1–271 (2009), “ ‘[a]ny party aggrieved’ is entitled to appeal in a civil action.” Moody v. Sears Roebuck & Co., 191 N.C.App. 256, 262–63, 664 S.E.2d 569, 574 (2008). A “party aggrieved” is one whose legal rights have been denied or directly and injuriously affected by the action of the trial tribunal. Selective Ins. Co. v. Mid–Carolina Insulation Co., 126 N.C.App. 217, 219, 484 S.E.2d 443, 445 (1997). If the party seeking appeal is not an aggrieved party, the party lacks standing to challenge the lower tribunal's action and any attempted appeal must be dismissed. Culton v. Culton, 327 N.C. 624, 626, 398 S.E.2d 323, 325 (1990), superseded by statute on other grounds as recognized in In re J.A.A., 175 N.C.App. 66, 72–73, 623 S.E.2d 45, 49 (2005).

Generally, when an employee has been awarded the benefits to which he or she claimed entitlement under the Workers' Compensation Act, the employee is not aggrieved and lacks standing to appeal the Industrial Commission's decision. See Henke v. First Colony Builders, Inc., 126 N.C.App. 703, 705, 486 S.E.2d 431, 432 (concluding claimant, who had been “granted workers' compensation benefits, as well as attorney's fees” was not aggrieved by Commission's denial of request for interest to be included in payment to her attorney as “[p]laintiff suffer[ed] no direct legal injury in the denial of interest payments to her attorney”), appeal dismissed, disc. review denied, and cert. denied, 347 N.C. 266, 493 S.E.2d 455 (1997). Plaintiff acknowledges that the Commission's decision awards him all the benefits he requested, but contends that he is a “party aggrieved” in that “[t]he decision by the Full Commission adversely affects [his] ability to collect his monetary benefits and all but negates his ability to receive further treatment.”

Although the parties fail to point to any North Carolina authority—and we have found none—directly on point, other appellate courts that have addressed this issue have held that an employee is “aggrieved” by a workers' compensation tribunal's determination regarding workers' compensation insurance coverage. See, e.g., Shope v. Workmen's Comp. Appeals Bd., 21 Cal.App.3d 774, 777, 98 Cal.Rptr. 768, 770 (1971) (“Petitioner was affected by the decision...