Henrico Public Utilities v. Taylor

COURT OF APPEALS OF VIRGINIA

Present: Judges Elder, Annunziata and Senior Judge Coleman ∗
Argued at Richmond, Virginia

HENRICO (COUNTY OF) PUBLIC UTILITIES
OPINION BY
v. Record No. 1214-00-2 JUDGE LARRY G. ELDER
JANUARY 23, 2001
SUSAN MARICE TAYLOR

FROM THE VIRGINIA WORKERS' COMPENSATION COMMISSION

Ralph L. Whitt, Jr. (John T. Cornett, Jr.;
Williams, Lynch & Whitt, on briefs), for
appellant.

B. Mayes Marks, Jr. (Marks and Williams,
P.C., on brief), for appellee.

In this appeal from an order of the Workers' Compensation

Commission (the commission) awarding Susan Taylor disability

benefits, the Henrico County Department of Public Utilities (the

County) asserts that the commission erred by 1) finding that a

de facto award of benefits existed between March 20 and

September 14, 1996; and 2) holding that Taylor's January 13,

1998 supplemental change in condition application related back

to her May 14, 1997 application. We hold that, pursuant to our

decision in National Linen Service v. McGuinn, 5 Va. App. 265,

∗
Judge Coleman participated in the hearing and decision of
this case prior to the effective date of his retirement on
December 31, 2000 and thereafter by his designation as a senior
judge pursuant to Code § 17.1-401.
362 S.E.2d 187 (1987) (en banc), the commission had the

authority to determine that a de facto award of benefits

existed. We also hold that the County's procedural due process

rights were not violated when the commission ruled that Taylor's

January 13 filing related back to her May 14 application.

Accordingly, we affirm the award of the commission.

Background

Taylor sustained a compensable injury to her back and leg

on January 7, 1993. On July 21, 1995, the commission entered an

award approving the memorandum of agreement filed by the County

providing for payment of temporary total benefits to Taylor

through May 14, 1995. Taylor returned to work, but the County

terminated her employment on March 19, 1996, after she was

unable to perform her pre-injury duties. The County then

voluntarily paid Taylor the equivalent of her temporary total

disability award from March 20 through September 14, 1996. The

County unilaterally ceased making payments to Taylor effective

September 15, 1996.

On May 14, 1997, Taylor notified the commission of the

County's voluntary payments to her. She also requested "ongoing

temporary partial compensation benefits." Two days prior to her

January 15, 1998 hearing before the deputy commissioner, Taylor

notified the commission that, while she was seeking temporary

partial disability benefits beginning September 26, 1996, she

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would be seeking temporary total disability benefits effective

on or about October 4, 1996 and continuing to the present.

The employer defended the claim on the ground that Taylor

was barred from claiming additional benefits by the two-year

statute of limitations established by Code § 65.2-708. 1

The deputy found that a de facto award of benefits existed

from March 20 through September 14, 1996. Although finding that

the January 13, 1998 claim did not relate back to the May 14,

1997 filing, the deputy nevertheless concluded that Taylor's

1998 claim complied with the statute of limitations because it

was filed within two years of the last payment made pursuant to

the de facto award. The deputy awarded Taylor temporary total

disability benefits effective October 16, 1997. 2

On appeal, the full commission affirmed the deputy's

finding of a de facto award. The majority opinion concluded,

however, that they did not need to address whether the finding

of the de facto award prevented the County from asserting a

1
Code § 65.2-708 establishes procedures for commission
review of awards based on changes in condition. With certain
exceptions not applicable to this appeal, "[n]o such review
shall be made after twenty-four months from the last date for
which compensation was paid, pursuant to an award under this
title." Code § 65.2-708(A).
2
Commission Rule 1:2(B) provides that "[a]dditional
compensation may not be awarded more than 90 days before the
filing of the claim with the Commission." The deputy concluded
that, pursuant to this rule, Taylor was not entitled to total
disability benefits prior to October 16, 1997, that is, ninety
days prior to the January 13, 1998 claim.

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statute of limitations defense "because the May 14, 1997, Claim

was filed within two years of [the] date compensation was last

paid under the most recent, de jure, award. The January 13,

1998, Claim would be within two years of any compensation

awarded pursuant to the May 14, 1997, Claim, and thus timely."

In ultimately concluding that Taylor was entitled to

temporary total disability benefits effective February 14, 1997,

the commission found that Taylor's 1998 filing amended and

related back to the 1997 application. Based on correspondence

from the County in July and September 1997, the commission found

the County knew Taylor was pursuing a claim for temporary total

disability benefits well before the January 13, 1998 filing.

The commissioners found no evidence that the County was

prejudiced by the amendment.

Existence of a De Facto Award

Code § 65.2-701 provides as follows:

A. If after injury or death, the employer
and the injured employee or his dependents
reach an agreement in regard to compensation
or in compromise of a claim for compensation
under this title, a memorandum of the
agreement in the form prescribed by the
Commission shall be filed with the
Commission for approval. The agreement may
be prepared by the employee, the employer or
the compensation carrier. If approved, the
agreement shall be binding, and an award of
compensation entered upon such agreement
shall be for all purposes enforceable as
provided by § 65.2-710. . . .

B. An employer or insurance carrier which
fails to file a memorandum of such agreement

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 with the Commission within fourteen calendar
days of the date of its complete written
execution as indicated thereon may be
subject to a fine not to exceed $1,000 and
to any other appropriate sanctions of the
Commission.

C. Nothing herein contained shall be
construed so as to prevent settlements made
by and between the employee and employer,
but rather to encourage them, so long as the
amount of compensation and the time and
manner of payment are approved by the
Commission. A copy of such settlement
agreement shall be filed with the Commission
by the employer.

In McGuinn, we addressed the consequences of an employer's

failure to submit a memorandum of agreement to the commission

where the employer voluntarily paid disability benefits to the

claimant. After the claimant injured his ankle at work, the

employer voluntarily paid him total disability benefits for a

period of thirteen months. The employer did not, however,

submit a memorandum of agreement to the commission. After the

employer ceased paying benefits, the claimant filed an

application for hearing seeking continued benefits. The

employer defended on the ground that the claimant had failed to

market his residual capacity. See McGuinn, 5 Va. App. at

267-68, 362 S.E.2d at 188.

In allocating the burden of proof, we noted that, had the

employer filed the memorandum of agreement with the commission,

the employer would have shouldered the burden of proving that

the claimant was not entitled benefits. We concluded that Code

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§§ 65.1-45 and 65.1-93 required the employer to submit a

memorandum of agreement to the commission when it voluntarily

decided to compensate the claimant for his injuries. 3 See

McGuinn, 5 Va. App. at 270, 362 S.E.2d at 189-90. We further

held that a de facto award of disability benefits arose when the

employer paid the claimant benefits for thirteen months without

filing the memorandum of agreement with the commission. See id.

at 269-70, 362 S.E.2d at 189.

The County seeks to limit our holding in McGuinn to initial

claims for benefits. The County reasons that changes of

condition are governed by Code § 65.2-708, while McGuinn was

decided under what is now Code § 65.2-701. We do not, however,

view this distinction as dispositive. Whether an agreement

between the parties pertains to an initial award or a

supplemental award following a change of condition, the employer

is still obligated to file a memorandum of agreement with the

commission. Code § 65.2-701 refers to agreements reached "after

injury" and does not expressly state or imply that the

employer's obligation to file memoranda of agreement is limited

to the initial award. See Commission Rule 4 ("All agreements as

to payment of compensation shall be reduced to writing by the

3
Code §§ 65.1-45 and 65.1-93 were incorporated into Code
§ 65.2-701(C) and (A), respectively, when the General Assembly
revised the Workers' Compensation Act in 1991. See 1991 Va.
Acts, ch. 97 and 355.

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employer and promptly filed with the Commission." (Emphasis

added)).

We are not persuaded by the County's suggestion that a de

facto award is precluded because the claimant has the

responsibility for applying for a change of condition that is

favorable to her. Code § 65.2-708 does not require a claimant

to file an application for change of condition if she can reach

a satisfactory agreement with her employer regarding her

entitlement to continuing disability benefits. Taylor was not

required to file a change of condition application in March 1996

because the County voluntarily paid the equivalent of temporary

total disability benefits to her. Having evidently conceded

that Taylor was entitled to these benefits, it was the County's

responsibility to file a supplemental memorandum of agreement

with the commission.

The County asserts that, by finding a de facto award, the

commission, in effect, overruled this Court's decisions in

Niblett v. Piedmont Aviation, Inc., 12 Va. App. 652, 405 S.E.2d

635 (1991), and Sparrer v. Commonwealth, 9 Va. App. 251, 385

S.E.2d 908 (1989). The County also challenges the commission's

authority to find a de facto award in the absence of a showing

of fraud or deceit by the employer.

In Niblett, after receiving benefits pursuant to a de jure

award, the claimant went back to work. When the claimant's

injuries flared up again and she was unable to work, the

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employer voluntarily began making disability payments to her.

The employer submitted a proposed supplemental memorandum of

agreement to the claimant, but she refused to sign it.

Thereafter, the claimant filed an application seeking to have

the commission compel the employer to continue making the

disability payments that it had been making until approximately

seven months before the date of the application. The

application was filed nearly four years after the last

disability payment made pursuant to the de jure award. The

commission held that, although a mistake of fact existed

regarding whether an open award existed when the employer ceased

its voluntary payments, the claimant was barred from pursuing

her claim because it was filed outside the statute of

limitations period. See Niblett, 12 Va. App. at 654, 405 S.E.2d

at 637.

We rejected the claimant's assertion that mutual mistake of

fact estopped the employer from asserting a statute of

limitations defense. Id. Clarifying our earlier holding in

Sparrer, we held that Code § 65.2-708 "requires evidence of

fraud or concealment to estop an employer from asserting the

statute of limitations." Id. at 655, 405 S.E.2d at 637. See

Sparrer, 9 Va. App. at 252-53, 385 S.E.2d at 909 (holding that

the employer was not estopped from asserting a statute of

limitations defense where, although the claimant did not realize

that agreements for the payment of compensation to her were not

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being filed with the commission, there was no evidence that the

employer had engaged in fraud or concealment designed to deprive

the claimant of benefits to which she was entitled).

Niblett and Sparrer are inapposite to the present case.

The issue of de facto awards was neither raised nor criticized

in those decisions. Moreover, the County's assertion that the

finding of the de facto award denied it the right to assert a

statute of limitations defense ignores the commission's

rationale for concluding that Taylor's applications were timely

filed. Taylor last received benefits pursuant to a de jure

award on May 14, 1995, and the County concedes that her May 14,

1997 application for continued partial disability benefits was

filed within the time limitations of Code § 65.2-708(A). The

commission did not hold that the timeliness of the 1998

application was dependent upon the de facto award. Rather, it

held that the 1998 application was timely because it was filed

within two years of the last payment Taylor was entitled to

receive pursuant to the award made in response to her 1997

application. 4

4
The County's argument that the statute of limitations
should not run from the last date compensation is paid pursuant
to a de facto award constitutes a challenge to the conclusion
reached by the deputy commissioner (and Commissioner Tarr in his
concurring opinion). The commission's majority opinion did not
adopt this rationale, and at no point has the County contested
the commission's actual reasons for rejecting the statute of
limitations defense. Accordingly, we do not address the merits
of the full commission's holding that the January 13, 1998
filing was timely under Code § 65.2-708(A). See Rule 5A:18.

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 The County finally contends that the commission erred in

finding a de facto award because Taylor neither alleged nor

proved that the County acted fraudulently or deceitfully. The

County's reliance on Niblett and Sparrer in support of this

proposition is misplaced. In McGuinn, we did not condition the

finding of a de facto award upon a showing of fraud or

concealment. See McGuinn, 12 Va. App. at 269-70, 362 S.E.2d at

189. As we explained in Ryan's Family Steak Houses, Inc. v.

Gowan, 32 Va. App. 459, 528 S.E.2d 720 (2000),

where the employer has stipulated to the
compensability of the claim, has made
payments to the employee for some
significant period of time without filing a
memorandum of agreement, and fails to
contest the compensability of the injury, it
is "reasonable to infer that the parties
ha[ve] reached an agreement as to the
payment of compensation," and a de facto
award will be recognized.

The fact that the commission relied upon a different
rationale than the deputy commissioner does not excuse the
County from bringing the error to the commission's attention
before pursuing the matter on appeal to this Court. Whether by
motion for reconsideration or for rehearing, any argument that a
party seeks to raise on appeal in support of a reversal must
have been presented to the commission. As we said in Overhead
Door Co. of Norfolk v. Lewis, 29 Va. App. 52, 509 S.E.2d 535
(1999):

We recognize that employer was unaware of
this alleged problem until the commission
issued its written opinion and could not
have raised the issue prior to that point,
but we see no reason why employer could not
have given the commission an opportunity to
correct this alleged error prior to appeal.

Id. at 62, 509 S.E.2d at 539.

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Id. at 463, 528 S.E.2d at 722 (quoting McGuinn, 5 Va. App. at

269-70, 362 S.E.2d at 189). We hold, therefore, that the

presence of fraud or concealment by the employer is not a

requisite precondition for determining that a de facto award

should be recognized. 5

Relating Back of the 1998 Filing

The commission ruled that, for purposes of the ninety-day

rule, Taylor's January 13, 1998 filing constituted an amendment

of the May 14, 1997 application. The commission's finding

enabled Taylor to receive temporary total disability benefits

beginning February 14, 1997, instead of October 16, 1997. See

Rule 1:2(B).

The County contends 1) the commission erred in permitting

the 1998 filing to relate back to the 1997 filing; and 2) the

commission inappropriately considered, in making its decision,

correspondence between the parties that was never admitted into

evidence. Because the County did not raise the latter argument

with the commission, we will not address it. See Rule 5A:18;

Overhead Door Co. of Norfolk v. Lewis, 29 Va. App. 52, 62, 509

S.E.2d 535, 539 (1999). We must decide, however, whether the

5
On appeal, other than asserting that a de facto award of
benefits cannot be found as a result of a change in condition
and in the absence of fraud or concealment, the County does not
challenge the merits of the commission's decision finding the
existence of such an award under the facts of this case.
Accordingly, we need not address whether the circumstances here
supported the finding of a de facto award.

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commission acted in accordance with the County's procedural

rights.

"Pleading requirements in administrative proceedings before

the . . . Commission are traditionally more informal than

judicial proceedings." Sergio's Pizza v. Soncini, 1 Va. App.

370, 376, 339 S.E.2d 204, 207 (1986). In the context of a

workers' compensation proceeding, due process "'is flexible and

calls for such procedural protections as the particular

situation demands.'" Duncan v. ABF Freight System, Inc., 20 Va.

App. 418, 422, 457 S.E.2d 424, 426 (1995) (quoting Mathews v.

Eldridge, 424 U.S. 319, 334 (1976)). "[T]he commission must use

procedures that 'afford the parties minimal due process

safeguards.'" WLR Foods, Inc. v. Cardosa, 26 Va. App. 220, 227,

494 S.E.2d 147, 150 (1997) (quoting Sergio's Pizza, 1 Va. App.

at 376, 339 S.E.2d at 207).

"Consolidation of claims at the hearing is permissible and

in accordance with due process, provided the 'employer had

notice of the time, location and subject matter of the

proceeding which was reasonably calculated to afford the

employer an opportunity to be heard.'" Crystal Oil Co., Inc. v.

Dotson, 12 Va. App. 1014, 1017, 408 S.E.2d 252, 253 (1991)

(quoting Sergio's Pizza, 1 Va. App. at 373, 339 S.E.2d at 205).

Where the commission permits the consolidation of claims with

little or no advance notice, the dispositive issue is whether

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the employer suffered prejudice. Id. at 1018, 408 S.E.2d at

253-54.

In Crystal Oil, the employer challenged the commission's

ruling that permitted an amendment to the claimant's change of

condition application and permitted the amendment to relate back

to the date of that application. On October 26, 1989, the

claimant filed a change in condition application seeking partial

disability benefits effective September 11, 1989. At the

hearing before the deputy commissioner, the claimant sought to

amend his application by claiming total disability benefits from

July 25 through September 10, 1989. See id. at 1015-16, 408

S.E.2d at 252-53.

The deputy commissioner ultimately held that the claimant

was entitled to three days of total disability benefits

(covering the period of time he underwent diagnostic testing),

but denied the rest of the claim. The deputy commissioner

approved the amendment of the application, noting that the

medical record was complete. The full commission affirmed,

holding that the employer's success in defending the bulk of the

application belied any claim of prejudice. See id. at 1018, 408

S.E.2d at 253.

We affirmed the commission, noting that the employer had

defended the application with significant success. See id. at

1018-19, 408 S.E.2d at 254. We also found that the employer had

been given advance notice of some of the claimant's contentions

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from prior proceedings. See id. at 1019, 408 S.E.2d at 254.

But see WLR Foods, 26 Va. App. at 227, 494 S.E.2d at 151

(holding that, where the change of condition application sought

benefits effective February 1, 1996, and where the commission,

sua sponte and without notice to the employer awarded benefits

predating February 1, the employer was prejudiced).

In the present case, two days prior to the hearing before

the deputy commissioner, Taylor formally declared she would be

claiming entitlement to temporary total disability benefits

during much of the period of time she had previously indicated

she was entitled to partial disability benefits. The

correspondence authored by counsel for the County in July and

September 1997 reflects the County knew Taylor would be

attempting to prove entitlement to total disability benefits.

In its January 14, 1998 letter to the commission, the County

neither objected to the deputy considering the January 13 filing

nor sought a continuance to review the medical records. The

County merely requested that the record be held open for it to

gather additional evidence pertaining to Taylor's claimed total

disability. Finally, the amendment did not seek any benefits

outside of the time period identified in the 1997 application.

Cf. WLR Foods, 26 Va. App. at 227, 494 S.E.2d at 151.

Accordingly, we hold that the County failed to establish

prejudice as a result of the commission's action.

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 The County asserts that permitting an amendment to relate

back to an earlier change of condition application impermissibly

evades the statute of limitations imposed by Code § 65.2-708.

The commission did not, however, conclude that the 1998 filing

complied with the statute of limitations because it constituted

an amendment of the 1997 filing and related back thereto.

Rather, the commission held that the 1998 filing related back to

1997 for purposes of Rule 1:2(B). Whether permitting the 1998

filing to relate back to May 1997 for the purposes of satisfying

the statute of limitations would have been proper is, therefore,

a moot question.

Conclusion

The commission had the authority to determine that a de

facto temporary total disability award existed between March 20

and September 14, 1996. We do not reach the issue of whether

the limitations period set out in Code § 65.2-708(A) runs from

the date of the last payment made pursuant to a de facto award

of disability benefits because the commission did not so hold.

We also do not address the propriety of the commission's

rationale in finding the 1998 filing timely because the County

did not preserve the issue for appeal. Finally, we hold that

the commission did not err when it held the 1998 filing related

back to 1997 for purposes of calculating the ninety-day period

of Rule 1:2(B).

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 Accordingly, for the reasons stated above, the commission

decision is affirmed.

Affirmed.

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