COURT OF APPEALS OF VIRGINIA
Present: Judges Benton, Clements and Senior Judge Coleman
Argued at Richmond, Virginia
LOWES OF SHORT PUMP VIRGINIA AND
LOWES HOME CENTERS, INC.
OPINION BY
v. Record No. 2427-01-2 JUDGE JAMES W. BENTON, JR.
APRIL 9, 2002
JAMES D. CAMPBELL
FROM THE VIRGINIA WORKERS' COMPENSATION COMMISSION
George J. Dancigers (Antony K. Jones; Heilig,
McKenry, Fraim & Lollar, P.C., on briefs),
for appellants.
Kevin M. McGowan (Marks & Harrison, P.C., on
brief), for appellee.
The Workers' Compensation Commission ruled (1) that Lowes
of Short Pump Virginia failed to give timely notice of its
intent to rely upon a defense under Code § 65.2-306, (2) that
James D. Campbell was entitled to an award for a compensable
injury by accident, and (3) that Lowes sought review of the
deputy commissioner's decision without reasonable grounds.
Lowes presents six questions for review, seeking a reversal of
the commission's award. For the reasons that follow, we affirm
the award and remand the case to the commission for an
assessment of additional costs for this proceeding pursuant to
Code § 65.2-713.
I.
The record establishes that Campbell filed a claim for
benefits, which alleged an injury by accident to his back. At
the evidentiary hearing, the deputy commissioner recited the
procedural history of the case and the following stipulations:
[Campbell] seeks an award of medical
benefits, along with temporary total
disability benefits from July 11, 2000
through March 2, 2001. The parties have
stipulated to a pre-injury average weekly
wage of $644.71. [Lowes] agrees, subject to
its defense of willful misconduct, that
[Campbell] otherwise suffered a compensable
accident and injury as alleged arising out
of and in the course of his employment, and
was totally disabled for the period alleged
. . . . [Lowes] also acknowledges that it
did not file a notice pursuant to Rule 1.10
for a willful misconduct defense. [Lowes]
asserts that it put that defense in its
answers to interrogatories . . . mailed to
[Campbell] on April 13, of this year. A
copy was not mailed to the Commission as I
understand it. [Lowes] defends this claim
on the grounds of willful misconduct under
[Code §] 65.2-306, subsections 1, 4, and 5,
in that [Campbell] violated a known safety
standard. [Campbell] objects to my
consideration of any 306 defense on the
grounds that proper notice was not given in
accordance with our rules. I have ruled
. . . [Lowes] did not file the notice of the
306 defense. . . . [T]hose interrogatories,
even if they would be sufficient, which I
find they would not be since they were not
filed with the Commission, were only mailed
–-- Today is April 18. –-- they were mailed
April 13. So certainly that does not meet
the 15 day requirement of Rule 1.10. I've
ruled that I will not hear evidence on the
willful misconduct defense. Therefore,
every issue has been resolved by a
stipulation. I'm going to allow [Lowes'
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attorney] to proffer her evidence of willful
misconduct.
In addition, the deputy commissioner noted that Lowes had
voluntarily paid Campbell some short-term disability benefits
and was entitled to a credit for those payments.
Lowes' attorney and Campbell's attorney agreed that the
deputy commissioner properly stated the stipulations and
defenses. Lowes' attorney then made a verbal proffer of the
facts Lowes would prove in support of its claim that Campbell
performed his work task in "violation of a known safety
standard." She concluded the proffer with the assertion that
"Campbell received all the necessary training so that he knew
that this was a safety standard which is enforced by the store,
we would proffer . . . that's what the evidence would show on
the defense of willful misconduct."
The deputy commissioner found that Lowes failed to file a
notice of its willful misconduct defense as required by the
commission's Rule 1.10; that Lowes' answer to an interrogatory
failed to meet the notice requirement of Rule 1.10; that Lowes'
answer to interrogatories was mailed to Campbell four days
before the hearing and was not filed with the commission; and
that Lowes failed to file with the commission a notice of its
defense as required by Rule 1.10. Upon these findings and the
stipulations of the parties, the deputy commissioner entered an
award of benefits for Campbell.
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Lowes requested a review of that decision by the
commission. In support of its request, Lowes noted that it "had
intended to defend the claim on the basis of [Campbell's]
willful misconduct pursuant to . . . Code § 65.2-306" and
contended that Campbell had actual notice of Lowes' defense
"well before the hearing and was not prejudiced by the technical
defect in notice." Applying its Rule 1.10, the commission ruled
that Lowes had failed to give notice of its intent to rely upon
a defense under Code § 65.2-306. In its opinion, the commission
cited its prior decisions that the notice requirement of Rule
1.10 is not satisfied by discovery responses, that failure to
give notice is grounds for rejection of the defense, and that
the rule does not pose an unreasonable burden on the employer.
The commission also found that, in any event, the alleged notice
was untimely. The commission affirmed the award and, upon its
finding that Lowes had no reasonable grounds for its review
petition, awarded costs against Lowes pursuant to Code
§ 65.2-713.
II.
The commission's authority to make rules for carrying out
the provisions of the Act is statutory and long standing. Code
§ 62.5-201(A); Nicholson v. Clinchfield Coal Corp., 154 Va. 401,
405, 153 S.E. 805, 807 (1930). The commission's decision in
this case turns on its application of Commission Rule 1.10,
which provides as follows:
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1.10 Willful Misconduct. – If the employer
intends to rely upon a defense under [Code]
§ 65.2-306 of the Act, it shall give to the
employee and file with the Commission no
less than 15 days prior to the hearing, a
notice of its intent to make such defense
together with a statement of the particular
act relied upon as showing willful
misconduct.
The rule explicitly requires an employer to give notice to
the employee and to the commission when the employer relies upon
the provisions of Code § 65.2-306 as a defense. In pertinent
part, that statute provides as follows:
A. No compensation shall be awarded to the
employee or his dependents for an injury or
death caused by:
1. The employee's willful misconduct or
intentional self-inflicted injury;
2. The employee's attempt to injure
another;
3. The employee's intoxication;
4. The employee's willful failure or
refusal to use a safety appliance or perform
a duty required by statute;
5. The employee's willful breach of any
reasonable rule or regulation adopted by the
employer and brought, prior to the accident,
to the knowledge of the employee; or
6. The employee's use of a nonprescribed
controlled substance identified as such in
Chapter 34 (§ 54.1-3400 et seq.) of Title
54.1.
B. The person or entity asserting any of
the defenses in this section shall have the
burden of proof with respect thereto. . . .
Code § 65.2-306.
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Lowes acknowledges that its attorney at the evidentiary
hearing stipulated, subject to Lowes' defense of willful
violation of a safety standard, that Campbell suffered an injury
by accident that arose out of and in the course of his
employment. The dispositive issue decided by the deputy
commissioner was whether Lowes had given proper notice of its
defense. Although the record contained Lowes' proffer of
evidence to preserve a defense of "willful misconduct pursuant
to . . . Code § 65.2-306," the commission affirmed the deputy
commissioner's ruling that Lowes failed to give proper notice.
On appeal from the commission's ruling that Rule 1.10
barred Lowes' defense, Lowes presents the following issues for
our review:
I. Was there sufficient evidence in this
case to demonstrate that the Employee's
injury did not arise out of the scope of his
employment at the time of the alleged
accident herein and therefore he is not
entitled to worker's compensation benefits?
II. Was there sufficient evidence to
demonstrate that the Employee was engaged in
"horseplay" at the time of the alleged
accident and thus not entitled to worker's
compensation benefits as a result of the
alleged accident herein because his injury
did not therefore arise out of the scope of
his employment?
III. In light of Rules 2.2 and 3 of the
Rules of the Commission, and in view of the
Commission's inherent equity power, should
the Commission have exercised its discretion
to determine that the Employee's injury did
not arise out of the scope of his employment
and/or that he was engaged in "horseplay" at
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the time of the alleged accident herein,
thus deeming the accident herein not an
injury by accident arising out of his
employment?
IV. Does the Court of Appeals have the
authority to examine the record in this case
and determine that, in fact, the Employee's
injury did not arise out of the scope of his
employment and/or that he was engaged in
"horseplay" at the time of the alleged
accident herein, thus deeming the accident
herein not an injury by accident arising out
of his employment and if so, whether that
discretion ought to now be exercised to so
find?
V. Was the Employer properly precluded from
proceeding with the misconduct defense?
VI. Was the Employer's Review Petition
brought without reasonable grounds?
Lowes failed to raise issues I, II, and III before the
commission. Thus, our review of those issues is barred by Rule
5A:18. See also Overhead Door Co. of Norfolk v. Lewis, 29 Va.
App. 52, 62, 509 S.E.2d 535, 539 (1999).
Furthermore, this record provides no meritorious "ends of
justice" or "good cause" basis for us to review issues I, II,
and III, as Lowes requests in its issue IV. At the evidentiary
hearing, Lowes specifically stipulated, subject to its "willful
misconduct" defense pursuant to Code § 65.2-306, that Campbell's
injury arose out of the scope of his employment. In addition,
Lowes' proffer of evidence at the evidentiary hearing did not
contain an allegation of "horseplay." The claim now made on
appeal, that this case should be considered as raising an issue
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of "horseplay," implicates the employee's burden of proving an
injury by accident that arises out of employment, see Dublin
Garment Co. v. Jones, 2 Va. App. 165, 168, 342 S.E.2d 638, 639
(1986), and is, therefore, contrary to Lowes' express
stipulation at the evidentiary hearing.
Lowes presents no meritorious challenge to the meaning or
applicability of Rule 1:10 to this case. Its defense at the
evidentiary hearing was asserted under Code § 65.2-306. We hold
that credible evidence in the record supports the commission's
findings that Lowes sought to rely upon a defense cognizable
under Code § 65.2-306 and that Lowes failed to timely file with
the commission notice of its intent to rely upon that defense.
The record contains no evidence that the commission abused its
discretion in the application of its Rule 1.10. See Specialty
Auto Body v. Cook, 14 Va. App. 327, 330, 416 S.E.2d 233, 235
(1992) (holding that when the commission makes rules not
inconsistent with the Act, our review is limited to determining
whether the commission applied its rule reasonably).
In view of the parties' stipulations, the commission's
decision concerning the untimeliness of the notice was
dispositive of the claim for benefits. Accordingly, we affirm
the commission's award. In addition, we hold that this appeal
was brought without reasonable grounds to support it, and we
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remand the case to the commission to assess costs and attorney
fees against Lowes.
Affirmed and remanded.
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