Hudson v. Lancaster Convalescent Ctr.

• Decision Date: 06 March 2014
• Docket Number: No. 27348.,27348.
• Citation: 407 S.C. 112,754 S.E.2d 486
• Court: South Carolina Supreme Court
• Parties: Frances S. HUDSON, Deceased Employee, by Kenneth L. HUDSON and Keith B. Hudson, Co–Executors of her Estate, as well as Matthew Deese and/or Andrew Deese, of whom Kenneth L. Hudson and Keith B. Hudson are Petitioners/Respondents, v. LANCASTER CONVALESCENT CENTER, Employer, and Legion Insurance Company, In Liquidation through the South Carolina Property and Casualty Insurance Guaranty Association, Carrier, Respondents/Petitioners. Appellate Case No. 2011–194189.

407 S.C. 112

754 S.E.2d 486

Frances S. HUDSON, Deceased Employee, by Kenneth L. HUDSON and Keith B. Hudson, Co–Executors of her Estate, as well as Matthew Deese and/or Andrew Deese, of whom Kenneth L. Hudson and Keith B. Hudson are Petitioners/Respondents,

v. LANCASTER CONVALESCENT CENTER, Employer, and Legion Insurance Company, In Liquidation through the South Carolina Property and Casualty Insurance Guaranty Association, Carrier, Respondents/Petitioners.Appellate Case No. 2011–194189.

No. 27348.

Supreme Court of South Carolina.

Heard Sept. 19, 2013.

Decided Jan. 8, 2014.

Rehearing Denied March 6, 2014.

Andrew N. Safran, of Andrew N. Safran, LLC, of Columbia, for Petitioners/Respondents.

E. Ross Huff, Jr. and Shelby H. Kellahan, both of Huff Law Firm, LLC, of Irmo, and Mark D. Cauthen and Temus C. Miles, Jr., both of Mckay, Cauthen, Settana & Stubley, P.A., of Columbia, all for Respondents/ Petitioners.

Justice PLEICONES.

This case concerns a workers' compensation lump-sum award to a claimant who passed away while an appeal of her award was pending. This Court granted certiorari to review a Court of Appeals opinion that refused to reach Respondents/Petitioners' argument that the award abated upon the beneficiary's death; granted the entire lump-sum award to beneficiary's dependent grandsons; reversed the grant of interest on the award; and affirmed the reinstatement of a ten-percent penalty. Hudson v. Lancaster Convalescent Center, 393 S.C. 1, 709 S.E.2d 65 (Ct.App.2011). We affirm in part, reverse in part and remand.

FACTS

This case comes to the Court after multiple workers compensation hearings/appeals spanning more than 11 years. In 1997, Frances S. Hudson suffered a leg injury while in the scope of her employment with Lancaster Convalescent Center (Employer) for which it and its insurance carrier Legion accepted liability. Thereafter, in an October 2001 order, a single commissioner found Mrs. Hudson permanently disabled and unable to perform any kind of work due to a combination of injuries arising from her 1997 work related injury.

Afterward, Mrs. Hudson requested, over the objection of Employer and Legion, a lump-sum payment of her disability award. After a hearing, a single commissioner issued an order granting Mrs. Hudson's lump-sum request. Employer and Legion appealed this lump-sum award to the Appellate Panel of the South Carolina Workers' Compensation Commission (Appellate Panel). During the pendency of this appeal, Mrs. Hudson passed away from cancer unrelated to her workplace injury. The Appellate Panel affirmed all of the single commissioner's findings of fact and conclusions of law.

Following affirmance of the lump-sum award, Legion and Employer appealed to the circuit court. While this appeal was pending, Legion became insolvent. As a result, the South Carolina Property and Casualty Insurance Guaranty Association (Guaranty) assumed all rights, duties and obligations of Legion pursuant to S.C.Code Ann. § 38–31–60 (2001).

Guaranty and Employer appealed to circuit court, arguing that it was error to grant Mrs. Hudson's award in lump-sum, and, that in light of Mrs. Hudson's death, the entire award must abate. The appeal was heard by the Honorable Paul E. Short, who affirmed the Appellate Panel's order in its entirety. Judge Short found that the lump-sum award was proper and supported by substantial evidence. Concerning Employer's and Guaranty's argument that the lump-sum award abated upon Mrs. Hudson's death, Judge Short found the issue was not preserved for review. However, the court went on to find that even if the argument were properly before the court, the award would survive Mrs. Hudson's death.

Guaranty and Employer appealed Judge Short's order to the Court of Appeals but voluntarily withdrew their appeal. As a result, the appeal was dismissed and the remittitur was sent on April 20, 2004.

During the above appeals, Employer and Guaranty stopped making payments after Mrs. Hudson's death. After Employer and Guaranty voluntarily dismissed their appeal to the Court of Appeals, Petitioner/Respondents, Kenneth and Keith Hudson, as executors and sole beneficiaries of their mother's estate (the Estate), initiated this action against Employer and Guaranty, seeking enforcement of the lump-sum award.

A dependency hearing was held to determine entitlement to the lump-sum award.¹ Despite Judge Short's rulings and the voluntary dismissal of their appeal to the Court of Appeals, Employer and Guaranty maintained they were not required to pay the lump-sum award because it abated upon Mrs. Hudson's death. The single commissioner found Judge Short's unappealed 2004 order, which found the abatement argument unpreserved, was the law of the case and could not be challenged or relitigated.

As to potential beneficiaries, the single commissioner found that all four beneficiaries had colorable claims to the lump-sum award, and approved a settlement that had been entered into between the Estate and Grandsons under S.C.Code Ann. § 42–9–390 (1976). The settlement divided the award fifty-percent to the Estate and fifty-percent to the Grandsons. Additionally, the single commissioner imposed interest on the award and a ten-percent penalty against Guaranty.

Employer and Guaranty appealed to the Appellate Panel, which affirmed all of the single commissioner's factual findings and conclusions of law with the exception of the ten-percent penalty. Specifically, the Appellate Panel noted that Guaranty and Legion “did not pursue a frivolous defense,” and therefore concluded that no penalty should be imposed.

Thereafter, the Estate, Employer, and Guaranty cross-appealed to the circuit court. The Honorable Kenneth E. Goode heard the appeal and issued an order affirming the Appellate Panel with the exception of the ten-percent penalty. Judge Goode reinstated the ten-percent penalty finding that S.C.Code Ann. § 42–9–90 (1976) mandated a penalty in this case.

Employer and Guaranty appealed. The Court of Appeals refused to address their argument that the award abated, holding that Judge Short's ruling was the law of the case. Additionally, the Court of Appeals affirmed the circuit court's imposition of the ten-percent penalty, but reversed the imposition of interest on the lump-sum award. It concluded that under S.C.Code Ann. § 38–31–60 (2001), Guaranty was only liable for “covered claims” which do not include claims for interest. Additionally, the Court of Appeals reversed the Judge Goode's ruling upholding the settlement which divided half of the lump-sum award to the Estate and half to the Grandsons.

Thereafter, this Court granted Employer's, Guaranty's, and Estate's petitions for writ of certiorari.

ISSUES

I. Does the law of the case doctrine prevent the Court from reaching the merits of Respondents/Petitioners' argument that the lump-sum award abated upon Mrs. Hudson's death?

II. Does S.C.Code Ann. § 42–9–280 (1976) require that the settlement approved by the Commission be set aside, and the entire lump-sum award be distributed to Mrs. Hudson's dependent grandsons as her “next of kin dependents?”

III. Is an assessment of interest on this award appropriate?

IV. Is imposition of a ten-percent penalty under S.C.Code Ann. § 42–9–90 (1976) appropriate?

DISCUSSION

I. Abatement

Employer and Guaranty contend that the Court of Appeals erred by not reaching the merits of their abatement argument because Judge Short's ruling should not have been the law of the case. We disagree.

Judge Short's 2004 order found the abatement issue unpreserved because Employer and Guaranty failed to raise it to the Appellate Panel. Employer and Guaranty appealed this order but later withdrew their appeal. Under the law of the case doctrine, a party is precluded from re-litigating issues decided in a lower court order, when the party voluntarily abandons its appeal of that order. Judy v. Martin, 381 S.C. 455, 458, 674 S.E.2d 151, 153 (2009) (holding that Appellant may not seek relief from a prior unappealed order of the circuit court because the ruling has become the law of the case); In re Morrison, 321 S.C. 370 n. 2, 468 S.E.2d 651 n. 2 (1996) (noting that an unappealed ruling becomes the law of the case and precludes further consideration of the issue on appeal); Watkins v. Hodge, 232 S.C. 245, 247–48, 101 S.E.2d 657, 658 (1958) (refusing to consider jurisdictional matter of underlying case where issue had been ruled upon and not challenged on appeal). Accordingly, we affirm the Court of Appeals' holding that Judge Short's ruling that the abatement issue was unpreserved is the law of the case.

I. Distribution

The Court of Appeals found that pursuant to § 42–9–280² all of the unpaid balance of the lump-sum award must be paid to Grandsons as her next of kin dependents. As a result, the Court of Appeals reversed the circuit court order that upheld the Appellate Panel's approval of the settlement between the Estate and Grandsons.³ The Estate argues this was error. We agree.

Our courts have a long standing policy favoring settlements See, Darden v. Witham, 258 S.C. 380, 388, 188 S.E.2d 776, 778 (1972) (“The courts favor settlements and agreements amongst litigants”). This Court has recognized, “that litigants are free to devise a settlement agreement in any manner that does not contravene public policy or the law.” Poston v. Barnes, 294 S.C. 261, 264, 363 S.E.2d 888, 890 (1987). Given that all potential beneficiaries agreed to the settlement, it was approved pursuant to the procedure in S.C.Code Ann. § 42–9–390, and nothing in § 42–9–280 prevents a potential beneficiary from structuring a settlement as to how their award will be distributed, we agree with the Estate that the Court of Appeals erred in reversing the circuit court order.

Furthermore, the only parties challenging this settlement are Guaranty and Employer, neither of whom were aggrieved in any way by the settlement agreement.⁴ Therefore, they could not properly appeal the circuit...