Diaz v. WILDERNESS RESORT ASS'N

Decision Date20 April 2010
Docket NumberRecord No. 1846-09-2.
CourtVirginia Court of Appeals
PartiesNicolasa A. DIAZ v. WILDERNESS RESORT ASSOCIATION and Liberty Mutual Insurance Company.

Wesley G. Marshall (Law Offices of Wesley G. Marshall PLC, on briefs), Fredericksburg, for appellant.

Christopher R. Costabile (Law Offices of Christopher R. Costabile, on brief), for appellee.

Present: ELDER, McCLANAHAN and HALEY, JJ.

ELDER, Judge.

Nicolasa A. Diaz (claimant) appeals from a decision of the Workers' Compensation Commission terminating the obligation of Wilderness Resort Association and Liberty Mutual Insurance Company (hereinafter collectively employer except where otherwise noted) to pay her temporary disability benefits pursuant to an award and declining claimant's request for penalties and interest based on what she contends was employer's late payment of those benefits. On appeal, claimant contends the commission erroneously concluded that the application was properly docketed, that employer and carrier properly paid all compensation due pursuant to the award, and that claimant was not entitled to statutory penalties or interest. We hold the record supports the commission's conclusion that employer's hearing application was properly docketed. We also hold the commission erred in concluding that the wages employer paid claimant constituted compensation for purposes of determining whether all compensation due under the award had been paid and whether employer and carrier owed penalties and interest. Finally, we conclude the commission erred in not awarding (a) penalties on all late paid compensation and (b) interest on compensation delayed during the pendency of this appeal. Thus, we affirm in part, reverse in part, and remand for further proceedings consistent with this opinion.

I. BACKGROUND

On February 23, 2000, while working as a housekeeper for employer, claimant sustained a compensable injury to her back. Employer paid benefits for various periods of disability, and in 2003, following a dispute about claimant's entitlement to additional benefits, the commission entered an award for temporary total disability benefits commencing July 19, 2003, and continuing. Claimant returned to light-duty work with employer on August 1, 2004, at which time she was paid a gross weekly wage of $415.20 or higher, which was greater than her gross pre-injury average weekly wage of $310.93. Employer notified the carrier that claimant had returned to work, and the carrier ceased its payments of disability compensation.

Later that month, the commission sent its standard letter to the carrier indicating its records reflected an outstanding award and notifying the carrier that if payments had been terminated, it was required to file an executed termination of wage loss award form or an employer's application for hearing to end the award. The carrier responded that claimant had returned to work at a wage greater than her pre-injury wage and indicated that, although it had provided claimant with an agreement to pay benefits form and a termination of wage loss award form on two occasions, she had not signed the forms.

By letter dated November 19, 2004, the commission notified the carrier it "had been advised that because of difficulties in obtaining an executed Termination of Wage Loss Award, it had unilaterally terminated claimant's compensation benefits." The commission directed employer "to submit evidence that benefits have been reinstated or a basis upon which benefits may be suspended" within two weeks. Employer thereafter submitted properly executed termination of wage loss award forms covering six different periods of temporary partial and total disability, including not only the period for which the award was outstanding but also for several one- to three-day periods during 2002.

By notice dated April 20, 2005, the commission notified the carrier that it was required to file additional forms before the commission could enter the requested orders. By letter dated June 5, 2005, the commission again notified the carrier that it required additional forms to terminate the outstanding award and it explained with specificity what forms were needed. It emphasized that "until the proper agreements are received the outstanding award is in effect."

Employer apparently took no additional action to submit the requested paperwork, and by letter of December 5, 2005, claimant's attorney sought full compliance with the ongoing award and a twenty percent penalty for non-compliance. Claimant also sought compliance with the outstanding medical award and temporary total disability for several additional one- to three-day periods of disability in 2005. The commission issued a show cause order commanding the carrier to appear before the commission. The carrier filed an affidavit indicating it had authorized payment for thirteen days of temporary total disability benefits and payment of a twenty percent penalty, as well. The commission entered an order on February 27, 2006, dismissing the show cause.

On March 2, 2006, the commission again sent the carrier its standard form letter indicating the award remained outstanding and that it assumed payments under the award were continuing. By letter dated May 3, 2006, claimant's attorney forwarded employer's attorney a supplemental agreement to pay benefits form, executed by claimant, for one of the periods for which the commission had indicated it still required such documentation, and claimant's counsel asked the carrier to forward the appropriate form to the commission, which it appears the carrier never did.

On March 1, 2007, the commission yet again sent the carrier its standard form letter indicating an award was outstanding and that it assumed payments under the award were continuing.

By letter to the commission dated June 23, 2008, claimant's attorney renewed his request for entry of an order requiring employer to comply with the outstanding award and for assessment of a twenty percent penalty on all compensation more than 14 days past due. Claimant's attorney indicated that if employer disputed its obligation to pay compensation or penalties, claimant desired an evidentiary determination or entry of an order to show cause.

Employer and carrier responded by filing an employer's application for hearing form dated July 8, 2008. That application, completed by the carrier's attorney, alleged claimant had returned to light-duty work on August 1, 2004, at her pre-injury average weekly wage. Although the carrier had earlier terminated claimant's temporary total disability compensation payments upon her return to work in 2004, the carrier indicated that in conjunction with filing the 2008 application for hearing, it made a lump sum payment to claimant for temporary total disability at the rate of $207.28 due under the award for the period from her return to work on August 1, 2004, through July 8, 2006, two years prior to the date on which it completed the application for hearing form. The application also requested "credit for overpayment of benefits" for that same period. The carrier issued claimant a check for $20,551.90, which indicated it was disability compensation for the relevant time period1 at the lower rate of $206.68.2

Claimant's attorney opposed employer's application for hearing, alleging, inter alia, that the check should instead have been for $20,935.28. The commission's dispute resolution department determined that the carrier's application was supported by probable cause and referred it to the hearing docket. Employer defended on the ground "that the employer was paying wages at or above the comp rate for all days except when the claimant was out of work and that the payments were therefore not late." Employer also offered evidence of the temporary total disability compensation payments the carrier made to claimant in the course of the 2006 show cause proceeding for twelve dates in 2005, and claimant stipulated that employer made payments to her on February 23, 2006, totaling $354.36.3 Finally, employer offered wage evidence showing claimant returned to light-duty employment with it in 2004 and that she had remained employed by employer since that time, earning more than her pre-injury average weekly wage every week during that period.

In a written decision dated December 22, 2008, the deputy held as follows:

When the employer filed its application for hearing on July 8, 2008, it was required by Rule 1.4(C) to pay benefits through the alleged date of return to work on August 1, 2004. Rule 1.4(E) further provides that no change in condition may be considered unless filed "within two years from the date compensation was last paid pursuant to an award." In an effort to comply with this section, the employer paid the claimant $20,551.90 for temporary total disability benefits for the period August 1, 2004 through July 8, 2006. However, the correct amount due the claimant was $20,936.29. We find that the application is void ab initio.

On that basis, the deputy held claimant was entitled to "the underpayment and penalties."

The employer and carrier filed a request for review, again alleging that because employer paid claimant wages in excess of her compensation rate through the date of the hearing, the application for hearing was not void ab initio. Employer conceded that when it filed its application for hearing asking to terminate the award, it underpaid the amount of compensation due to bring its payments under the outstanding award current to within two years of the date of the filing of the application.4

On review, a majority of the commission rejected the deputy's ruling and sided with employer, holding "employer's application was valid." Noting that the employer "erroneously paid a lesser amount than the owed $20,936.29," the commission nevertheless concluded employer's payment of wages to claimant for light-duty work at a rate equal to or...

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