Hardee v. Bruce Johnson Trucking Co., 0989

• Decision Date: 18 May 1987
• Docket Number: No. 0989,0989
• Citation: 360 S.E.2d 522,293 S.C. 349
• Court: South Carolina Court of Appeals
• Parties: Roy L. HARDEE, Appellant, v. BRUCE JOHNSON TRUCKING COMPANY and Liberty Mutual Insurance Company, Respondents. . Heard

Page 522

360 S.E.2d 522

293 S.C. 349

Roy L. HARDEE, Appellant, v. BRUCE JOHNSON TRUCKING COMPANY and Liberty Mutual Insurance

Company, Respondents.

No. 0989.

Court of Appeals of South Carolina.

Heard May 18, 1987.

Decided July 20, 1987.

Robert B. Wallace and Paul E. Tinkler both of Wallace and Tinkler, Charleston, for appellant.

Robert A. Patterson of Barnwell, Whaley, Patterson & Helms, Charleston, for respondents.

GARDNER, Judge:

This is a workers' compensation case involving the claimant's settlement of a third party action and the effect of the settlement on the employer's liability under the Workers' Compensation Act. The appealed order reversed an order of the full Industrial Commission reducing the carrier's lien on the proceeds. We reverse and remand.

Roy L. Hardee (the claimant) was an employee of Bruce Johnson Trucking Company (the employer). The claimant suffered a work-related injury to his back on September 30, 1982, that was exacerbated by alleged negligent surgery in January 1983. The surgery-related injury resulted in the claimant's having to take pain medication daily; he is required to catheterize himself four times per day to empty his bladder; he controls his bowel movements by laxatives. The surgery also resulted in permanent impotency along with chronic (recurring and persistent) depression and other injuries.

Liberty Mutual Insurance Company (the carrier) agreed to an award of permanent total disability under the Workers' Compensation Act; the carrier began making payments and paid medical expenses.

On April 24, 1984, ¹ the claimant instituted a third party negligence action against the surgeon; within thirty days, pursuant to Section 42-1-560(b), Code of Laws of South Carolina (1976), notice on the prescribed form of the third party action was given the Industrial Commission and the respondents in this appeal. The negligence suit was subsequently settled by a structured settlement. The total present value of the structured settlement, including the wife's loss of consortium claim, ² was $330,000. Of this sum, $120,000 was paid in cash to the claimant's attorney and claimant; the agreement provided for monthly payments thereafter.

After the settlement, $15,000 was paid by the claimant's attorney to the claimant's wife as a partial payment of her loss of consortium claim, i.e., $30,000. The balance was held in escrow by the claimant's attorney pending an order of the Industrial Commission.

The parties were unable to agree upon the carrier's lien on the settlement proceeds. Both the carrier and the claimant petitioned the Commission for a determination of the respondent's lien pursuant to Section 42-1-560(f). On April 23, 1985, the carrier stopped compensation payments to the claimant.

Pursuant to the claimant's and the carrier's petition, the single commissioner held by order of December 13, 1985, (1) that the claimant was not entitled to future compensation, (2) that the settlement was, under the circumstances, fair and reasonable as to all parties, and that the carrier was entitled to one half of its asserted lien of $35,568.23 and (3) that plaintiff's attorney was entitled to a fee of $30,000 from the cash settlement of $120,000.

After this order, claimant's attorney paid the balance of the cash he held in trust in accordance with the single commissioner's order, which included $17,784.12 to the carrier.

The claimant appealed to the full Commission, which reversed in part the single commissioner's holding, inter alia, (1) that the carrier wrongfully terminated payments to claimant, (2) that claimant's total cognizable damages at law in the third party action were $1,200,000, (3) ordered resumption of payments with penalty by the carrier of the compensation payments to the claimant, (4) reduced the carrier's lien to 25 percent of the settlement, (5) held that claimant's attorney had distributed the funds without the approval of the Industrial Commission and (6) remanded the case to the single commissioner to:

1. Determine the total of the Employer/Carrier's lien as equal to all Workers' Compensation benefits paid to date of such hearing and future probable costs in this Workers' Compensation case; and then to reduce the total lien (past and future) by seventy-five percent (75%) with appropriate credits to the lien holder; and

2. Prorate attorneys fee and costs proportionately to Claimant and Employer/Carrier as the distributive share of each such party bears to the settlement of Three Hundred Thousand and No/100 Dollars ($300,000.00).

The issues of merit are whether the trial court erred (1) by holding that the full Commission erred as a matter of law in holding that the carrier wrongfully terminated compensation payments; (2) by holding applicable to this case the rule of Fisher v. South Carolina Department of Mental Retardation, 277 S.C. 573, 291 S.E.2d 200 (1982), which prohibits the claimant from bringing an action against a third party except as provided by law; (3) by holding that because the claimant had not paid to the carrier the proceeds of the settlement, the claimant forfeited his rights to further compensation; (4) by holding that there is no provision of the Workers' Compensation Act for reducing the carrier's lien when the third party settlement is more than the claimant's total entitlement to compensation and (5) by holding that the claimant forfeited his right to compensation by failing to obtain the written consent of the carrier.

As to the first issue, we adopt the reasoning and authority of the full commission; we quote:

Section 42-9-260. Notice to Commission when payments have begun; suspension or termination of payments.

Upon making the first payment, the employer shall immediately notify the Commission, in accordance with a form prescribed by the Commission, that payment of compensation has begun.

The Commission shall provide by rule the method and procedure by which benefits may be suspended or terminated for any cause, but such rule shall provide for an evidentiary hearing and Commission approval prior to termination or suspension unless such prior hearing is expressively waived in writing by the recipient. Further, the Commission shall not entertain any application to terminate or suspend benefits unless and until the employer or carrier is current with all payments due.

Failure to comply with such rule as to termination or suspension of benefits shall result in a twenty-five percent penalty imposed upon the carrier or employer computed on the amount of benefits withheld without prior Commission approval.

In the absence of the employee waiver, compensation payments can be terminated only after an evidentiary hearing. This was not done. Therefore, the compensation carrier took the Law into their own hands to decide, both and at the same time, their rights and the employee's rights under the Workers' Compensation Law. This was illegal. There is nothing in the statutes and the cases cited which support the action of the compensation carrier.

For the above reasons, we hold that once the carrier was ordered to make compensation payments, the carrier could not legally terminate the payments except by order of the Industrial Commission. The trial judge erred by overruling the full Commission in this holding, and we so hold.

The appealed order held that the claimant had forfeited his right to compensation. The trial court put the issue as follows:

The issue in this case is whether the claimant was entitled to settle his third party tort suit without the consent of the carrier, keep the proceeds of the settlement, force the compensation carrier to reduce its compensation lien, and continue to receive compensation in the future.

The appealed order held that perforce of Fisher v. South Carolina Department of Mental Retardation, supra, the claimant forfeited his right to compensation after settling the third party action. We disagree. In Fisher, the claimant instituted a third party action without giving notice within thirty days of the institution of the action. Upon reviewing the record of Fisher on appeal, which we have before us, we find that the carrier...