Seaboard Fire & Marine Ins. Co. v. Smith

• Decision Date: 31 July 1978
• Docket Number: No. 55483,55483
• Citation: 146 Ga.App. 893,247 S.E.2d 607
• Parties: SEABOARD FIRE & MARINE INSURANCE COMPANY v. SMITH.
• Court: Georgia Court of Appeals

Page 607

247 S.E.2d 607

146 Ga.App. 893

SEABOARD FIRE & MARINE INSURANCE COMPANY v. SMITH.

No. 55483.

Court of Appeals of Georgia.

Argued March 1, 1978.

Decided July 14, 1978.

Rehearing Denied July 31, 1978.

Bennet, Gilbert, Gilbert, Whittle, Harrell & Gayner, James B. Gilbert, Jr., Brunswick, for appellant.

Rudolph J. Chambless, Waycross, for appellee.

BANKE, Judge.

The appellant, Seaboard Fire & Marine Insurance Company, sued the appellee, Roger M. Smith, to recover alleged overpayments of workmen's compensation benefits. The trial judge found that the appellant had failed to state a claim upon which relief could be granted and entered judgment for the appellee.

The appellant applied to the workmen's compensation board for a change in condition hearing, alleging that the appellee had resumed (self) employment as a truck driver on January 10, 1975. The hearing was held on March 24, 1975, at which time the board, based on its finding that the appellee had undergone a change in condition on January 10, 1975, entered its interlocutory order that the appellant "suspend compensation payments previously agreed to or ordered by the Board pending issuance of the formal award, effective January 10, 1975." The board's final award was entered on April 30, 1975. The appellant then filed this suit in the superior court to recover the $637 in workmen's compensation benefits paid to the appellee between January 10 and March 24, 1975. The judge, sitting without a jury, found that the appellant had not stated a claim upon which relief could be granted and entered judgment for the appellee.

Included in the transcript, but not relevant to decision of the issue here on appeal, was evidence that the appellant had wrongfully discontinued payments to the appellee between November 20, 1974, and February 6, 1975. Upon request by appellee's attorney it resumed the payments as of February 6. Because of this violation, the board assessed a $100 penalty against the appellant in its April 30th award, which fine was paid. The appellee testified at trial that the appellant had paid him in one lump sum the benefits due him between November 20, 1974, and February 6, 1975.

Pacific Employers Ins. Co. v. King, 133 Ga.App. 458(2), 211 S.E.2d 396 (1974), is cited as controlling resolution of this case. In that case the court ruled that the board lacks authority to direct an employee to repay his former employer and/or insurer upon finding a retroactive change in condition. The decision was primarily based on the court's earlier ruling in Fireman's Fund Ins. Co. v. Crowder, 123 Ga.App. 469, 181 S.E.2d 530 (1971), that the board, as an administrative agency, has no jurisdiction to adjudicate the rights and liabilities of the parties involved and can merely determine the amount of compensation and the time of payment and change the award it previously made. See Fireman's Fund Ins. Co. v. Crowder, at pp. 475, 476, 181 S.E.2d 530.

The ancillary premise of the Pacific Employers decision, supra, was our interpretation of Code Ann. § 114-709. The court suggested that the provision in the statute that compensation continue at the rate specified in the previous award until the new award was entered affirmed the res judicata effect of the first award. The court then said that the earlier provision that the "new award shall be effective as of the time the change in condition actually occurred as found by the board, notwithstanding the retroactive effect of such award" referred to the board's jurisdiction to make an evidentially correct finding of fact.

There was considerable confusion at trial as to the effect on Pacific Employers of a 1973 amendment to the statute. We have reviewed the various legislative changes and have determined that that decision was, in fact, decided on the basis of the statute as amended in 1973. The decision, 133 Ga.App. on page 459, 211 S.E.2d on page 397, should have read: "Ga.L.1972, pp. 149, 150, deleted this language but (Ga.L.1973, pp. 232, 244) added the proviso above quoted that compensation under a prior order 'shall continue until terminated or suspended by award or order of the board.' "

In tracing the statute through its various amendments, the court has also discovered an error in its construction of section 114-709 in Pacific Employers Ins. Co. v. King, supra, in that we considered out of context the provision directing compensation to be continued at the prior rate. In reality, the 1973 amendment added to the statute a complex procedure to be followed whenever an employee refuses to enter into an agreement with his employer or the insurer based on the employee's return or ability to return to work. If upon notification by the board, the employee agrees or fails to respond to the employer's contentions, the board is authorized to issue a new award reducing or terminating compensation. The employee then has 30 days to have the award set aside and a hearing scheduled, but in the intervening time before the board's decision is announced, compensation continues at the reduced rate set forth in the new award.

If the employee disputes the employer's contentions from the outset, a hearing is scheduled but the employee in this situation is permitted to receive compensation at the rate specified in the previous award, pending announcement of the new award. It now seems clear that the purpose of this last provision was to protect an objecting employee in the event the employer's contentions were proved unfounded at the hearing, and that no legislative intent regarding the disposition of excess funds paid to the employee under this provision can be drawn. Furthermore, the court finds that it is not barred by Williams v. Ray, 146 Ga.App. 333, 246 S.E.2d 387 (1978), from entering a corrected interpretation of Code Ann. § 114-709 at this time. This is because the import of our decision on the merits in Pacific Employers Ins. Co. v. King, supra, was obfuscated by our error in identifying the amended status of the statute and because the gravamen of our decision there was the board's lack of jurisdiction rather than our construction of the statute. Accordingly, Pacific Employers Ins. Co. v. King, supra, will no longer be followed insofar as it conflicts with this decision.

Disregarding inaccuracies in the Pacific Employers decision, the appellant contends that its suit to recover overpayment is not barred by our ruling in Pacific Employers, since it has simply asked the superior court, which does have jurisdiction to declare the rights and liabilities between the parties, to implement the board's prior evidentiary ruling. See Pacific Employers Ins. Co. v. King, supra, 133 Ga.App. at 460, 211 S.E.2d 396. The appellant also argues that the ruling of the trial court has a windfall effect with regard to the employee as it permits him to retain benefits to which he was not entitled. See generally Code Ann. § 114-415; General Motors Corp. v. Dover, 239 Ga. 611, 238 S.E.2d 403 (1977) (board has discretion to credit employer-insurer's gratuitous payments to employee to compensation benefits employee later adjudged entitled to receive).

We hold that by virtue of its jurisdiction, the superior court is authorized to enter judgment for the appellant on its claim. We emphasize that the superior court is not usurping the function of the board by making an independent determination as to when the change in condition occurred, but rather is giving effect to the board's finding. We rely on the Supreme Court's recent decision in Woods v. Delta Airlines, Inc., 237 Ga. 332, 227 S.E.2d 376 (1976), and its express approval in that case of this court's decision in Hayes v. Layton, 125 Ga.App. 433, 188 S.E.2d 149 (1972).

The Woods decision 237 Ga. at page 332, 227 S.E.2d at page 376 established that "the doctrines of res judicata and estoppel by judgment are applicable to awards of the State Board of Workmen's Compensation on all questions of fact in matters in which it has jurisdiction. (Cits.)" Under Code Ann. § 114-709 and our prior decisions, it is uncontroverted that the board has jurisdiction to determine when a change in condition has occurred. The factual determination that the appellee had undergone a change in condition on January 10, 1975, was essential to the March 24th order (and the subsequently entered final award) of the workmen's compensation board terminating appellee's benefit eligibility. Here that finding is essential to the appellant's right to recover in the superior court its overpayment of benefits to the appellee. See Smith v. Wood, 115 Ga.App. 265, 154 S.E.2d 646 (1967) (discussing collateral estoppel).

For this reason, we find that the appellee is collaterally estopped by the board's ruling to deny that he was not entitled to the monies he received between January 10 and March 24, 1975, and that the appellant is entitled to rely on that determination in obtaining a money judgment. See Hayes v. Layton, supra.

We acknowledge that in the Hayes case the ruling of the board was appealed and affirmed by both the superior court and the Court of Appeals whereas the appellee in this case did not appeal the board's award terminating his right to compensation. At trial, his attorney acknowledged that "we didn't appeal it so the award stands on its face." An award of the board not appealed to the superior court is "a final award and shall be conclusive and binding as to all questions of fact." Code Ann. § 114-710. The court, therefore, finds the ruling in Hayes v. Layton, supra, to be fully applicable in this situation.

The court also expresses its concern that today's decision may result in hardship for those claimants affected, even though claimants should know that their eligibility to receive compensation terminates upon the resumption of (or ability to resume) comparable employment. Nevertheless, this court must be both fair and objective in its interpretations of the law. We, therefore, remand this case...