Shah v. Howard Johnson

• Decision Date: 19 September 2000
• Docket Number: No. COA99-964.,COA99-964.
• Citation: 535 S.E.2d 577,140 NC App. 58
• Court: North Carolina Court of Appeals
• Parties: Bharat SHAH, Employee, Plaintiff-Appellant, v. HOWARD JOHNSON, Employer, Self-Insured, Key Risk Management Services, Servicing Agent, Defendant-Appellees.

535 S.E.2d 577

140 NC App. 58

Bharat SHAH, Employee, Plaintiff-Appellant, v. HOWARD JOHNSON, Employer, Self-Insured, Key Risk Management Services, Servicing Agent, Defendant-Appellees.

No. COA99-964.

Court of Appeals of North Carolina.

September 19, 2000.

Mark T. Sumwalt, Charlotte, for plaintiff appellant-appellee.

Hedrick, Eatman, Gardner & Kincheloe, L.L.P., by Hatcher Kincheloe and Sharon E. Dent, Charlotte, for defendant appellant-appellee. HORTON, Judge.

The law governing appellate review of Industrial Commission decisions is well settled in this state. Review "is limited to a determination of (1) whether the findings of fact are supported by competent evidence, and (2) whether the conclusions of law are supported by the findings." Barham v. Food World, 300 N.C. 329, 331, 266 S.E.2d 676, 678, reh'g denied, 300 N.C. 562, 270 S.E.2d 105 (1980). Furthermore, so long as there is some "evidence of substance which directly or by reasonable inference tends to support the findings, this Court is bound by such evidence, even though there is evidence that would have supported a finding to the contrary." Porterfield v. RPC Corp., 47 N.C.App. 140, 144, 266 S.E.2d 760, 762 (1980).

Defendant's Appeal

First, defendant argues that the Commission erred in imposing sanctions for its allegedly improper use of Form 63. Second, defendant argues that the Commission erred in finding that plaintiff's free lodging and food, valued at $100.00 per week, was in lieu of wages so that plaintiff's salary at the time of the injury by accident was actually $300.00 per week. While we have carefully considered both arguments, we affirm the decision of the Commission in both respects.

Sanctions for use of Form 63

With respect to the alleged improper use of Form 63, the Full Commission made the following findings of fact:

5. Plaintiff began employment with the defendant-employer on December 16, 1995 as a desk clerk and night auditor.

6. On December 31, 1995, plaintiff was performing his regular job duties as a desk clerk and night auditor when he was robbed at gunpoint. Plaintiff received multiple gunshot wounds in his back, right arm and left thigh. A co-worker was fatally wounded at the same time.

* * * *

22. On January 14, 1996, defendant began paying plaintiff pursuant to a Form 63, Payment of Compensation Without Prejudice to Later Deny the Claim. Under the unquestionably compensable circumstances in which plaintiff was injured, defendant should have paid plaintiff for his compensable injuries pursuant to either a Form 21 Agreement for Compensation or a Form 60 Employer's Admission of Employee's Right to Compensation. If defendant had used the proper form, defendant would have been required to obtain Commission approval prior to terminating plaintiff's benefits for his compensable injuries. Further, the filing of the proper form with the Commission would have prevented defendant from unilaterally terminating the plaintiff's benefits.

Based on these findings of fact, the Commission then concluded that:

2. Defendant should have filed a Form 21 Agreement for Compensation or a Form 60 Admission of Employee's Right to Compensation, but instead defendant filed a Form 63 Payment of Compensation Without Prejudice to Later Deny the Claim. Defendant's decision to deny plaintiff's claim based on a disagreement over continuing liability during the 90-day period following defendant's notice of the plaintiff's injury was not permissible. Plaintiff should have been allowed the opportunity to be heard on the termination of his benefits pursuant to the Form 24 procedure adopted by the Commission. N.C. Gen.Stat. §§ 97-18(b), 97-18(d) and 97-18.1.

Based on its conclusion of law, the Commission ordered that the defendant pay $2,500.00 as sanctions "for its failure to file the appropriate Form 21 or Form 60 and for subsequently failing to follow statutory procedures for termination of benefits."

Despite the Commission's finding that plaintiff was injured under "unquestionably compensable circumstances," defendant contends that the police were investigating the shooting incident, and it had no way of being certain that this was a compensable claim. Therefore, defendant argues that it was justified in filing the Form 63. We disagree.

N.C. Gen.Stat. § 97-18(d) (1999) provides that when the employer or insurer is uncertain "on reasonable grounds" whether a claim is compensable, it may begin payments of compensation "without prejudice and without admitting liability." Id. In order to comply with the statute,

[t]he employer or insurer is required to file the prescribed form, I.C. Form 63, stating that the payments are made without prejudice, and that such payments continue until the claim is either accepted or contested or until 90 days from the date upon which the employer first obtains written or actual notice of the injury. If, during the 90 day period, which may be extended by the Commission for an additional 30 days upon application, the employer or insurer contests compensability, it may cease payment upon giving the proper notice specifying the grounds upon which liability is contested. However, if the employer or insurer does not contest compensability of the claim or its liability therefor within the statutory period, it waives its right to do so and the entitlement to compensation becomes an award of the Commission pursuant to G.S. § 97-82(b).

Higgins v. Michael Powell Builders, 132 N.C.App. 720, 723-24, 515 S.E.2d 17, 20 (1999).

The evidence in the record overwhelmingly supports the Commission's finding that plaintiff was shot during a robbery and thus was injured under "unquestionably compensable circumstances." Plaintiff and a coworker were held at gunpoint and forced to give the perpetrators the money in the cash register. The police investigation was aimed at ascertaining the circumstances of the incident and the identities of the perpetrators. Defendant responds that the assault on plaintiff by an unknown assailant might have been for personal reasons and thus not compensable under the holding of Robbins v. Nicholson, 281 N.C. 234, 188 S.E.2d 350 (1972).

In Robbins, the deceased employee was shot and killed by the husband of a coworker. Because the underlying impetus for the attack lay in an ongoing domestic dispute, the court held that the fatal injury to the employee did not arise out of his employment with the defendant in that case. In Robbins, our Supreme Court stated that

when the moving cause of an assault upon an employee by a third person is personal, or the circumstances surrounding the assault furnish no basis for a reasonable inference that the nature of the employment created the risk of such an attack, the injury is not compensable. This is true even though the employee was engaged in the performance of his duties at the time, for even though the employment may have provided a convenient opportunity for the attack, it was not the cause.

Id. at 240, 188 S.E.2d at 354.

Here, there is nothing in the record to support defendant's speculation that the assault on plaintiff might have been personally motivated. When an employer or insurer avails itself of the procedure set out in N.C. Gen.Stat. § 97-18(d) and utilizes Form 63 to make payments to an employee without prejudice, the employer or insurer has the burden of demonstrating that it had at that time "reasonable grounds" for its uncertainty about the compensability of the claim. Defendant states in its appellate brief that "the Record is devoid of evidence of what Defendant knew and did not know when the Form 63 was filed...." The burden was on the defendant to place in the record evidence to support its position that it acted on "reasonable grounds." Defendant having failed to offer evidence to support the reasonableness of its belief, we affirm the conclusion of the Commission that defendant's use of Form 63 in this case was improper.

Even had defendant demonstrated reasonable grounds to use the Form 63 procedure, it erred when it unilaterally terminated plaintiff's benefits because plaintiff allegedly refused suitable employment. The professed grounds for termination of benefits had no relation as to whether the assault on plaintiff had its origins in a personal dispute. Had defendant properly admitted compensability in the first instance by filing Form 21, it would not have been allowed to unilaterally cease payments to plaintiff but would have had to first seek the permission of the Commission. By utilizing the Form 63 procedure, defendant effectively avoided the necessity of filing Form 24 and seeking permission of the Commission to stop weekly compensation payments. The Commission found, and we agree, that is an improper use of Form 63. If an employer or insurer initially believes that a claim may not be compensable and utilizes the Form 63 procedure, then discovers after investigation that the claim is clearly compensable, the better practice would be for defendant to promptly file either Form 21 or Form 60. In the case before us, the Commission found that defendant improperly used the Form 63 procedure and improperly stopped payments to plaintiff. In its discretion, the Commission then imposed sanctions of $2,500.00 on defendant. On this record, we cannot say that the Commission acted arbitrarily or abused its discretion. This assignment of error is overruled.

Value of Lodging as Wages

Defendant also argues that the Commission erred in finding that the value of plaintiff's lodging was $100.00 per week, and that plaintiff received lodging in lieu of additional wages. N.C. Gen.Stat. § 97-2(5) (1999) provides in pertinent part that "[w]herever allowances of any character made to an employee in lieu of wages are specified part of the wage contract they shall be deemed a part of his earnings." Id.

On this issue, the Commission found the following facts:

3. The Full Commission reopened this matter for additional evidence on the value of the lodging

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