COURT OF APPEALS OF VIRGINIA
Present: Judges Frank, Clements and Senior Judge Fitzpatrick
Argued at Richmond, Virginia
THE WASHINGTON POST
OPINION BY
v. Record No. 1974-06-4 JUDGE JOHANNA L. FITZPATRICK
MAY 8, 2007
THOMAS L. FOX, JR.
FROM THE VIRGINIA WORKERS’ COMPENSATION COMMISSION
William H. Schladt (Ward & Klein, Chartered, on brief), for
appellant.
Andrew S. Kasmer for appellee.
The Washington Post (employer) appeals a decision of the Workers’ Compensation
Commission ordering it to pay compensation owed to Thomas L. Fox, Jr. (claimant) through
October 1, 2001, pursuant to the commission’s March 19, 1993 award, and assessing a twenty
percent penalty on unpaid compensation pursuant to Code § 65.2-524. Employer contends the
commission erred in (1) determining that employer was required to pay accrued benefits under
an award after claimant returned to full-duty work for employer at a wage equal to or greater
than his pre-injury wage; and (2) assessing a twenty percent penalty on accrued benefits under an
award where claimant did not suffer any wage loss. Finding no error, we affirm.
Background
On March 3, 1992, while working for employer as a journeyman mailer, claimant
sustained a herniated disc. Employer accepted the claim as compensable, and filed the
appropriate paperwork with the commission for it to enter an award. On October 19, 1992, the
commission entered an award providing claimant temporary total disability (TTD) benefits at the
compensation rate of $418 weekly from March 2, 1992 through March 6, 1992 and TTD benefits
at the same compensation rate from March 8, 1992 and continuing, along with medical benefits
for as long as necessary.
On March 19, 1993, the commission entered a supplemental award pursuant to a
Supplemental Memorandum of Agreement filed by employer, awarding claimant temporary
partial disability (TPD) benefits at the compensation rate of $355.18 weekly beginning January
16, 1993 and continuing, as well as medical benefits for as long as necessary.
It is undisputed that as of April 14, 1996, claimant returned to work with employer in a
full-duty capacity at a wage equal to or greater than his pre-injury average weekly wage and that
employer paid compensation benefits, due under the March 19, 1993 award, to claimant through
April 13, 1996. On April 14, 1996, without filing the appropriate paperwork with the
commission, employer unilaterally ceased paying compensation benefits to claimant. Claimant
denied receiving an Agreed Statement of Fact or any other paperwork from employer when he
returned to full-duty or thereafter.
In a “Request for Information” dated March 24, 1993, sent to employer, the commission
asked employer to verify that it had corrected an underpayment to claimant for the period from
March 8, 1992 through January 15, 1993. Continental Loss Adjusting Service (“Continental”)1
replied to the commission on April 9, 1993, indicating that it had corrected the underpayment.
In a letter dated December 16, 1993 from Betsy J. Anderson, an Assistant Claims
Examiner for the commission, to Continental, the commission notified employer’s adjuster as
follows:
Our records indicate an outstanding award in this case. The
Commission assumes that payments are continuing pursuant to the
award. If payments have ceased, an executed Agreed Statement of
1
Employer is self-insured.
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Fact or an Employer’s Application for Hearing must be filed to end
the award.
Any recent medical reports should also be promptly filed
with the Commission.
Neither the adjuster nor employer responded to the commission.
Letters dated December 15, 1994 and December 18, 1996, with the exact same content as
the December 16, 1993 letter, were sent by the commission to employer’s insurance adjusting
service.2 Neither the adjuster nor employer responded to the December 15, 1994 letter. In a
letter dated January 2, 1997, Dorothy Fritz, a Gallagher claims representative, wrote to the
commission indicating that she had received the commission’s December 18, 1996 letter. Fritz
requested that the commission send her copies of all awards in the case so that she could file the
proper forms.
In a letter dated December 30, 1997 to Fritz, Anderson indicated that the January 2, 1997
letter had been brought to her attention. Anderson enclosed copies of all awards and agreement
forms. Anderson specifically noted “the employee remains under an outstanding temporary
partial disability award dated March 19, 1993.”
In letters dated January 5, 1998, January 6, 1999, and June 7, 2000, from Anderson to
Gallagher, the commission again notified employer through its insurance adjuster that claimant
remained under an open award, that the commission assumed payments were continuing
pursuant to that award, and if they had ceased, appropriate agreement forms or an employer’s
application must be filed to end the award.
By letter dated August 1, 2000, Tracey Probst, a claims adjuster for Gallagher, responded
to the commission’s June 7, 2000 letter. Probst indicated that Gallagher’s office was in the
2
The December 18, 1996 letter was sent to Gallagher Bassett Services, Inc. (“Gallagher”),
which had recently taken over handling of the claim for employer.
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process of relocating, and as soon as they obtained the physical file, the matter would be
addressed.
In letters dated December 21, 2001 and January 2, 2003, the commission again notified
employer through Gallagher that claimant remained under an open award, that the commission
assumed payments were continuing pursuant to that award, and if they had ceased, appropriate
agreement forms or an employer’s application must be filed to end the award. Neither the
adjusting company nor employer responded to those letters.
In a letter dated July 26, 2004, the commission notified employer through Gallagher that
claimant “has now received the maximum 500 weeks of compensation benefits. In order that our
records may be complete, advise us in writing of the total amount of compensation paid in this
case.” Neither Gallagher nor employer responded. By letter dated August 27, 2004, the
commission asked for a prompt response to its July 26, 2004 letter. On September 7, 2004, the
commission received a memo from Gallagher indicating that the total compensation paid on the
claim was $62,319.39. The commission terminated the award, but pursuant to a preliminary
audit found that employer had underpaid benefits due under the March 19, 1993 award in the
amount of $99,442.83. By notice dated September 27, 2004, the commission requested that
employer verify that it had corrected the underpayment. Neither employer nor its adjuster
responded to the commission. On December 10, 2004, the commission notified employer,
Gallagher, and claimant of the results of its preliminary audit and suggested that claimant review
his records to determine if all compensation due had been paid by employer.
On April 4, 2005, approximately nine years after employer unilaterally ceased paying
compensation benefits to claimant under the March 19, 1993 award, employer filed an
application with the commission to terminate that award on the ground that claimant returned to
full-duty work on April 14, 1996, at a wage equal to or greater than his pre-injury average
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weekly wage. The commission rejected employer’s application because no open award existed
at that time. Five hundred weeks of compensation under the March 19, 1993 award expired on
October 1, 2001, and the commission had terminated the award on September 7, 2004.3
On April 20, 2005, claimant filed an application alleging employer had underpaid him by
not providing him TPD benefits in the weekly amount of $355.18 under the March 19, 1993
open award from April 13, 1996 through October 1, 2001. Claimant also sought interest and a
twenty percent penalty on all unpaid compensation.4
The deputy commissioner conducted an evidentiary hearing on claimant’s application on
January 11, 2006 and declined to award back benefits and assess interest and a penalty. The
deputy commissioner concluded that such an award would unjustly enrich claimant. The full
commission reversed the deputy commissioner’s decision and ordered employer to bring all
compensation under the March 19, 1993 award current through October 1, 2001, including a
twenty percent penalty on unpaid compensation. The commission reasoned as follows:
[T]he only issue before the Commission was whether the carrier
should be ordered to bring compensation under the award up to
date and to assess a penalty on unpaid benefits. The deputy
commissioner’s finding that the claimant suffered no lost wages
because of a return to pre-injury work, and thus that an award
would be inappropriate, was error. Moreover, the finding that an
order requiring payment of compensation would result in unjust
enrichment, because of compensation received for other injuries,
concerned an issue not properly before the Commission, and under
the clear instruction of the Court in Washington [v. United Parcel
3
We note that neither the commission’s record nor the appendix filed in this appeal
contain employer’s April 4, 2005 application or any document showing the commission’s
rejection of that application. However, the parties do not dispute that employer filed the April 4,
2005 application and that the commission rejected it. In addition, the commission’s July 27,
2006 opinion refers to employer’s April 4, 2005 application and its rejection. Accordingly, we
conclude that the omission of those documents does not prevent us from disposing of this case on
appeal, where the commission’s opinion adjudicated claimant’s April 20, 2005 application.
4
Code § 65.2-524 provides that “[i]f any payment is not paid within two weeks after it
becomes due, there shall be added to such unpaid compensation an amount equal to twenty
percent thereof, unless” certain conditions apply, which are not applicable to this case.
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Serv. of America, 267 Va. 539, 593 S.E.2d 229 (2004)], should not
have been addressed.
Thus, a final order awarding benefits to the claimant was in
place, and there was no dispute that it was not satisfied. There was
no subsequent order modifying the existing order, see Code
§ 65.2-708, and there was no request by the employer to modify
the existing order. Accordingly, under Code § 65.2-524, a 20%
penalty is owed on “such unpaid compensation.”
The only distinguishing fact, when applying the
Washington decision, was that here the Award had ended because
of the expiration of the 500-week maximum benefit period,
whereas in Washington, the award was still “open.” Importantly,
however, there was no dispute here that the Award, during the
period April 14, 1996, to October 1, 2001, was “open,” in that it
was never modified, suspended, or terminated. Thus, it continued
to be “conclusive and binding” on the issue of the payment of
benefits. Code § 65.2-524 requires the payment of a 20% penalty
on unpaid compensation, and here it was not disputed that accrued
benefits under the Award were unpaid. The “closing” of the
Award upon the expiration of the 500-week maximum benefit
period did not affect the character of the Award before the running
of that period.
Employer appeals the commission’s decision.
Analysis
Code § 65.2-708 provides in its pertinent part as follows: “No . . . review [on the ground
of a change in condition] shall be made after twenty-four months from the last day for which
compensation was paid, pursuant to an award under this title, except . . . [under certain
circumstances inapplicable to this case].” The commission’s Rule 1.4(C) requires an employer
to continue paying benefits due under an open award through the date it files a
change-in-condition application. If the application alleges the employee returned to work,
payment must be made to the date of the return. Id. However, “[n]o change in condition
application under § 65.2-708 . . . shall be accepted unless filed within two years from the date
compensation was last paid pursuant to an award.” Rule 1.4(E).
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It is undisputed that employer stopped paying claimant compensation benefits under the
then outstanding March 19, 1993 award, when he returned to full-duty work for employer on
April 14, 1996. In addition, it is undisputed that employer did not file appropriate paperwork or
an application to terminate the March 19, 1993 award until April 4, 2005, well outside the
two-year period provided for doing so under Code § 65.2-708, and in violation of Rule 1.4. This
lack of diligence spanned a nine-year period of time and at least seven requests by the
commission for a response to its notifications that an award was outstanding. Thus, the
commission properly rejected employer’s April 4, 2005 change-in-condition application.5
Employer erroneously asserts that “[c]laimant’s right to receive worker’s compensation
benefits terminated upon his returning to his pre-injury employment.” That statement is contrary
to the provisions of the Act and the commission’s rules and completely ignores employer’s
obligation in this case to comply with Code § 65.2-708 and Rule 1.4. Moreover, no legal
authority supports employer’s argument that, under the facts of this case, it should be excused
from the consequences of its decision to unilaterally stop paying claimant compensation benefits
due under the March 19, 1993 outstanding award, when he returned to work with employer in
April 1996, without filing the appropriate paperwork or an employer’s application with the
commission to terminate that award.
As of April 14, 1996, employer knew that claimant had returned to full-duty work for
employer at a wage equal to or greater than his pre-injury average weekly wage. Between
December 1993 and June 2000, employer and/or its insurance adjusting company received seven
notifications from the commission that an open award remained outstanding. The commission
provided the same notification to employer and/or its insurance adjusting company in 2001 and
5
We note that employer did not appeal the rejection of its application to the full
commission.
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2003. Yet, despite these repeated notices from the commission, employer took no action to file
the appropriate paperwork or an employer’s application with the commission to terminate
claimant’s open award. Rather, it unilaterally ceased paying him benefits, which were due and
owed under that award. Finally, approximately nine years after employer stopped paying
claimant the benefits he was owed under the March 19, 1993 award, employer, on April 4, 2005,
filed an application to terminate that award. Employer provided no excuse whatsoever for its
failure to comply with the Act’s requirements and commission’s Rule 1.4(C). Furthermore, no
evidence showed that claimant violated any duty owed by him under the commission’s rules or
the Act. Thus, no grounds exist in this case to apply equity.
The equitable doctrines set forth in Lam v. Kawneer Co., Inc., 38 Va. App. 515, 518-20,
566 S.E.2d 874, 875-76 (2002), are inapplicable to a situation, such as this, where an employer
simply ignores the law and fails to file the appropriate forms.
[T]he relevant statutes do not give an employer or carrier the
unilateral right to cease paying compensation benefits to a disabled
employee under an outstanding award when that employee returns
to work and the employer or carrier does not file an application or
agreed statement of facts along with a supplemental memorandum
of agreement.
Washington, 267 Va. at 545, 593 S.E.2d at 232. See also Genesis Health Ventures, Inc. v. Pugh,
42 Va. App. 297, 300-01, 591 S.E.2d 706, 707-08 (2004) (finding Lam equitable principles
inapplicable where commission sent two letters to employer notifying it of open award and its
obligation to file appropriate paperwork, and employer took no action within two years of
unilaterally ceasing payment of benefits to claimant when he returned to work with employer).
In Lam, unlike this case, Lam returned to work for an employer different from his
pre-injury employer, and he failed to provide Kawneer or the commission with information
regarding his new employment status, even though Kawneer requested such information. Lam,
38 Va. App. at 519, 566 S.E.2d at 876. Lam “did not dispute that he neglected to comply with
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the notice requirements of Code § 65.2-712.” Id. Here, claimant did not fail to perform any acts
required of him by the Act or the commission’s rules, and because he returned to work for
employer, it had full knowledge of the date of such return and the wages he earned. Here, unlike
Lam, employer had sufficient information to file appropriate paperwork with the commission to
terminate the award or to file an employer’s application, but ignored the commission’s inquiries,
took no action, and instead, unilaterally ceased paying claimant benefits due and owed under the
March 19, 1993 award in violation of the Act and the commission’s rules.
Employer contended during oral argument that the remand language included by the
Supreme Court in Washington limited its holding. Employer argued that language indicated that,
under circumstances similar to this case where an employer unilaterally ceased paying benefits
under an open award, a claimant would only be entitled to payment of benefits for periods when
he was actually not working, rather than for the entire period of time the employer failed to pay
benefits due under the open award. We disagree.
In Washington, the Supreme Court specifically stated the only issue properly before it
was whether this Court erred in affirming the commission’s denial of Washington’s request for it
to assess a twenty percent penalty against the employer’s insurance carrier for its failure to pay
him benefits under an open award. Id. at 541, 545, 593 S.E.2d at 230, 232. Similar to the facts
of this case, the employer in Washington unilaterally ceased paying benefits to the claimant
when he returned to full-duty pre-injury employment without filing the appropriate paperwork
with the commission. Id. at 542, 593 S.E.2d at 230. Under those circumstances, the Supreme
Court held that the open award remained valid and employer was responsible for a twenty
percent penalty on benefits that were not paid within two weeks after they were due. Id. at 546,
593 S.E.2d at 233. In its remand instructions to this Court and the commission, the Supreme
Court in Washington first remanded the case “for further proceedings in connection with the
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claim arising from the September 1999 injury, [the injury which was the subject of the valid May
16, 2000 open award],” id. at 547, 593 S.E.2d at 233, and then instructed the commission upon
remand to enter an award for additional benefits sought by Washington in his separate
change-in-condition application related to a period of time that he was again medically unable to
work, plus an additional twenty percent penalty. Id. Thus, we find nothing to distinguish the
Supreme Court’s underlying holding in Washington related to the validity of the open award and
the assessment of the penalty from this case.
In addition, the principles set forth below espoused by this Court in Uninsured
Employer’s Fund v. Peters, 43 Va. App. 731, 601 S.E.2d 687 (2004), are equally pertinent to this
case.
The general principle is well established that an employee
becomes vested with the right to receive workers’ compensation
benefits under an award in his favor so long as the award remains
outstanding. Equally well established is the principle that the
commission’s rules are “binding in law upon the parties and the
Commission as well.” These principles are of long standing and
are designed to eliminate unilateral failures to comply with awards.
The employer and the insurance carrier were
charged with knowledge of the rule, and the harsh
result here complained of is of their own making. It
is brought about by their failure or refusal to make
application for a hearing . . . [when] claimant
resumed work . . . . Instead of filing for a hearing
on the ground of a change of condition they took the
matter into their own hands and terminated the
compensation payments in the face of the
pre-existing award. The rule was adopted to require
prompt payment of compensation to all claimants
entitled thereto. One of its purposes was to
eliminate the result which took place in this case,
that is, the arbitrary discontinuance of compensation
by the employer and the insurance carrier without
legal sanction.
Id. at 736-37, 601 S.E.2d at 690 (citations omitted).
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For these reasons, we affirm the commission’s decision.
Affirmed.
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