North Carolina Chiropractic Ass'n, Inc. v. Aetna Cas. & Sur. Co.

• Decision Date: 01 March 1988
• Docket Number: No. 8727SC657,8727SC657
• Citation: 89 N.C.App. 1,365 S.E.2d 312
• Court: North Carolina Court of Appeals
• Parties: , 1988-1 Trade Cases P 67,993 NORTH CAROLINA CHIROPRACTIC ASSOCIATION, INC., Dr. Robert Hay, Dr. Fletcher G. Keith, Dr. John T. Tierney, Dr. Dean R. Kenny, Dr. Joe Case, Dr. Phillip Van Campen, Dr. Gary Dackor, Dr. James Watkins and Dr. Joseph Duffy v. AETNA CASUALTY & SURETY CO., Amerisure Insurance Co., Crawford & Company, Hartford Accident & Indemnity Co., the Home Insurance Co., Liberty Mutual Insurance Co., the Shelby Mutual Insurance Company and United States Fidelity and Guaranty Co.

Page 312

365 S.E.2d 312

89 N.C.App. 1, 1988-1 Trade Cases P 67,993

NORTH CAROLINA CHIROPRACTIC ASSOCIATION, INC., Dr. Robert Hay, Dr. Fletcher G. Keith, Dr. John T. Tierney, Dr. Dean R Kenny, Dr. Joe Case, Dr. Phillip Van Campen, Dr. Gary Dackor, Dr. James Watkins and Dr. Joseph Duffy v. AETNA CASUALTY & SURETY CO., Amerisure Insurance Co. Crawford & Company, Hartford Accident & Indemnity Co., the Home Insurance Co., Liberty Mutual Insurance Co., the Shelby Mutual Insurance Company and United States Fidelity and Guaranty Co.

No. 8727SC657.

Court of Appeals of North Carolina.

March 1, 1988.

Smith, Patterson, Follin, Curtis, James and Harkavy by Norman B. Smith and Martha A. Geer, Greensboro, and Carl J. Stewart, Gastonia, for plaintiffs-appellants.

Moore and Van Allen by Joseph W. Eason, Donald S. Ingraham, and Denise Smith Cline, Raleigh, for defendant-appellee Hartford Acc. & Indem. Co.

Hedrick, Eatman, Gardner and Kincheloe by J.A. Gardner, III, Charlotte, and LeBoeuf, Lamb, Leiby and MacRae by David Turetsky, Raleigh, for defendant-appellee Home Ins. Co.

Golding, Crews, Meekins and Gordon by Henry C. Byrum, Jr., and Michael K. Gordon, Charlotte, for defendant-appellee Liberty Mut. Ins. Co.

Underwood, Kinsey and Warren by Ralph C. Kinsey, Jr., Charlotte, for defendant-appellee Aetna Cas. & Sur. Co.

Parker, Poe, Thompson, Bernstein, Gage and Preston by Kevin A. Dunlap, Charlotte, for defendant-appellee Amerisure Ins. Co.

Kennedy, Covington, Lobdell and Hickman by F. Fincher Jarrell, Charlotte, for defendant-appellee Crawford & Co.

Wade and Carmichael by R.C. Carmichael, Jr., Charlotte, for defendant-appellee Shelby Mut. Ins. Co.

Stott, Hollowell, Palmer and Windham by James C. Windham, Jr., Gastonia, for defendant-appellee U.S. Fid. and Guar. Co.

PARKER, Judge.

The sole issue presented for review by this appeal is whether the trial court erred in dismissing plaintiffs' complaint for lack of subject matter jurisdiction. Plaintiffs contend that the Industrial Commission does not have exclusive jurisdiction over their claims, and that said claims are within the subject matter jurisdiction of the superior court. Plaintiffs further argue that the superior court must assert jurisdiction over their claims because they are unable to obtain relief for defendants' misconduct from the Industrial Commission. Defendants, on the other hand, argue that the statutory provisions governing payment of workers' compensation mandate that jurisdiction of plaintiffs' claims lies in the Industrial Commission. Our research discloses no case in which the courts of this State have addressed the specific issue raised by this action: whether the superior court may properly hear claims which are within its jurisdiction when there are issues underlying these claims within the exclusive jurisdiction of an administrative agency.

Preliminarily, we note that one of plaintiffs' claims alleges a violation of a section of the Sherman Act, 15 U.S.C.A. § 1. The federal courts have exclusive jurisdiction over federal antitrust claims. Blumenstock Bros. Advertising Agency v. Curtis Publishing Co., 252 U.S. 436, 440, 40 S.Ct. 385, 386, 64 L.Ed. 649, 652 (1920). Accordingly, any claim that plaintiffs may have under the Sherman Act cannot be brought in a state court.

All plaintiffs' claims are based on allegations of wrongdoing on the part of defendants with respect to workers' compensation insurance policies. By statute the Industrial Commission is vested with jurisdiction over "all questions arising under" the Workers' Compensation Act. G.S. 97-91. Therefore, to resolve this controversy, we need first to consider certain provisions of the Act.

Under the Workers' Compensation Act, an employee is generally required to obtain the employer's consent as to medical treatment. Schofield v. Tea Co., 299 N.C. 582, 587, 264 S.E.2d 56, 60 (1980). The employee may choose his own physician only if he obtains the approval of the Industrial Commission. Id. at 591, 264 S.E.2d at 62; G.S. 97-25. If the employer and employee cannot agree on a course of treatment, then the Commission may order appropriate treatment to be provided at the employer's expense. G.S. 97-25. All fees for medical services provided pursuant to the Act must be approved by the Commission, G.S. 97-90, and the exclusive remedy for disputes as to medical treatment is a hearing before the Commission. Worley v. Pipes, 229 N.C. 465, 50 S.E.2d 504 (1948). Thus, the Industrial Commission has ultimate control over the extent and cost of an employee's treatment under the Act.

General Statutes 97-98 and 97-99 provide that all insurance policies procured pursuant to the Act must comply with all relevant provisions of the Act. Hartsell v. Thermoid Co., 249 N.C. 527, 532-33, 107 S.E.2d 115, 119 (1959). Policy coverage is coextensive with liability approved by the Commission under the Act. Therefore, plaintiffs' allegations that defendants have refused to provide coverage for treatment that has been agreed upon by employers and employees assert possible violations of the Act's provisions. Whether defendants' alleged conduct amounts to non-compliance with the Act depends on whether defendants have denied coverage for treatment that is authorized and approved under the Act. As noted above, what treatment is appropriate for a particular employee is a matter within the exclusive jurisdiction of the Industrial Commission.

Plaintiffs contend, however, that they are unable to pursue their claims with the Commission because only an employer or employee may institute such a proceeding. The question then is whether a provider of medical treatment may apply to the Commission for a determination of an insurer's obligations under the Act.

Although this issue has not been directly addressed in our courts, relevant case law indicates that plaintiffs could have obtained such a determination from the Commission. The Supreme Court has held in two cases that, when medical services are provided to an employee who has filed a claim under the Act, the provider must proceed under the Act to recover the cost of the services. Matros v. Owen, 229 N.C. 472, 50 S.E.2d 509 (1948); Worley v. Pipes, 229 N.C. 465, 50 S.E.2d 504 (1948). In both cases, a physician had brought an action seeking to recover the value of services rendered to an employee who was covered by the Act. The Supreme Court held that the physicians' sole remedies were under the Act. Matros v. Owen, supra; Worley v. Pipes, supra. In Matros, the Court stated: "the applicable remedy open to [the employee] and to [the physician], in respect to his bill for services rendered, was to make [an] application to the Industrial Commission...." Matros, 229 N.C. at 475, 50 S.E.2d at 511. Thus, the Court implicitly recognized the right of the physician to seek relief under the Act. Other jurisdictions have permitted providers of medical services to bring such claims before agencies charged with administering state workers' compensation acts. See Smith v. Stephenson, 641 S.W.2d 900 (Tex.1982); Dump All, Inc. v. Grossman, 475 So.2d 976 (Fla.Dist.Ct.App.1985).

The present case differs from the above-cited cases in that plaintiffs here are not seeking to collect for services rendered, but were apparently denied the opportunity to render their services when defendants refused to provide coverage. Under G.S. 97-98, an employee claiming compensation under the Act has the right to enforce the employer's workers' compensation insurance policy. Hartsell v. Thermoid Co., 249 N.C. at 533, 107 S.E.2d at 119. The employee's right to enforce the policy, however, arises from construing the contract of insurance as "a direct promise by the insurer to the person entitled to compensation enforceable in his name." G.S. 97-98. Although plaintiffs have not raised the issue in reference to G.S. 97-98, they have argued generally that the Commission may not hear their claims because they do not involve the rights of employees.

This argument is inconsistent with the allegations in plaintiffs' complaint. Plaintiffs have alleged that defendants have denied coverage for chiropractic services agreed upon by the employer and employee. This alleged conduct certainly affects the rights of employees who desire plaintiffs' services. Indeed, in the situations alleged, the employees could have applied to the Commission for relief. Questions regarding approval of a course of treatment and the liability of workers' compensation insurance carriers are properly brought before the Industrial Commission. Greene v. Spivey, 236 N.C. 435, 445, 73 S.E.2d 488, 495-96 (1952); Hedgepeth v. Casualty Co., 209 N.C. 45, 182 S.E. 704 (1935).

Although the conduct of which plaintiffs complain may have violated provisions of the Act and may initially be governed by the Act, plaintiffs are also asserting rights under the common law and G.S., Chap. 75. These causes of action raise issues that are clearly beyond the scope of the Act and the jurisdiction of the Industrial Commission. The Act does not take away common law rights that are unrelated to the employer-employee relationship. See Bryant v. Dougherty, 267 N.C. 545, 148 S.E.2d 548, 28 A.L.R.3d 1057 (1966) (Commission did not have jurisdiction over employee's malpractice claim against physician who treated employee's compensable injury); Clark v. Ice Cream Co., 261 N.C. 234, 134 S.E.2d 354 (1964) (Commission had no jurisdiction to reform workers' compensation policy when the rights of the employee were not involved).

Spivey v. General Contractors, 32 N.C.App. 488, 232 S.E.2d 454 (1977) and Wake County Hospital v. Industrial Comm., 8 N.C.App. 259, 174 S.E.2d 292, cert. denied, 277 N.C. 117 (1970), cited by defendants, do not require a different conclusion. In Spivey, this Court held that the Commission had jurisdiction to determine whether the workers' compensation policy in question had been effectively cancelled before the date of the employee's injury. We...