COURT OF APPEALS OF VIRGINIA
Present: Judges Baker, Annunziata and Senior Judge Hodges
Argued at Norfolk, Virginia
ODIN, INC.
AND
THE PMA INSURANCE GROUP OPINION BY
JUDGE WILLIAM H. HODGES
v. Record No. 2152-95-1 AUGUST 20, 1996
JEFFREY C. PRICE
FROM THE VIRGINIA
WORKERS' COMPENSATION COMMISSION
S. Vernon Priddy, III (Sands, Anderson, Marks
& Miller, on briefs), for appellants.
Annette Miller (C. Allen Riggins; Parker,
Pollard & Brown, P.C., on brief), for
appellee.
Odin, Inc. and its insurer (hereinafter collectively
referred to as "employer") appeal a decision of the Workers'
Compensation Commission assessing a twenty percent penalty
against employer pursuant to Code § 65.2-524. Employer contends
that the commission erred in assessing the penalty against it for
late payment of temporary partial disability benefits and
temporary total disability benefits due for the period October 1,
1994 through November 30, 1994, where employer paid these
benefits to Jeffrey C. Price ("claimant") on December 14, 1994
and the commission did not enter the award requiring their
payment until January 13, 1995. We disagree and affirm the
commission's decision.
I.
By Memorandum of Agreement executed in August 1994, employer
accepted claimant's May 11, 1994 injury by accident as
compensable and agreed to pay him temporary total disability
benefits beginning May 19, 1994. On August 26, 1994, the
commission entered an award based upon the Memorandum of
Agreement.
On October 1, 1994, claimant returned to work at a wage
lower than his pre-injury average weekly wage. As of October 1,
1994, employer stopped making compensation payments to claimant.
Claimant worked from October 1, 1994 through November 5, 1994.
On November 5, 1994, he again became temporarily totally
disabled.
On December 8, 1994, the commission received a letter from
claimant stating that employer had not paid the compensation
payments due to him under the August 26, 1994 award. The
commission, by letter dated December 14, 1994 and pursuant to
Code § 65.2-524, directed employer to pay all compensation due to
claimant and assessed a twenty percent penalty against employer
for all compensation benefits more than two weeks in arrears.
Employer resumed making compensation payments to claimant on
December 14, 1994. Employer's December 14, 1994 payment
represented compensation benefits due for the period from October
1, 1994 through December 14, 1994. The December 14, 1994 payment
did not include any penalty.
2
On January 9, 1995, the commission received executed
Supplemental Memoranda of Agreement and an Agreed Statement of
Fact from employer. On January 13, 1995, based upon these forms,
the commission awarded claimant temporary partial disability
benefits for the period from October 1, 1994 through November 4,
1994 and temporary total disability benefits beginning November
5, 1994.
On February 7, 1995, the commission vacated the December 14,
1994 penalty order because "the claimant agreed he returned to
selective employment on October 1, 1994 and was no longer
entitled to temporary total benefits under the August 26, 1994
Award Order . . . ." Claimant filed for review of the
commission's decision vacating the penalty order. The full
commission remanded the matter to the Dispute Resolution
Department.
On June 15, 1995, the deputy commissioner imposed a new
twenty percent penalty for all compensation benefits due between
October 1, 1994 and December 13, 1994. The full commission
affirmed the June 15, 1995 penalty for the period October 1, 1994
through November 30, 1994, but found that payments were timely
made for the period December 1, 1994 through December 14, 1994,
and therefore, assessed no penalty for that period. In so
ruling, the commission found as follows:
[E]mployer was for all times pertinent to
this claim obligated to make payment pursuant
to the award entered on August 26, 1994. It
was not entitled to unilaterally discontinue
payment of compensation when the claimant
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returned to work at a lesser wage on October
1, 1994. Its remedy was to file an Agreed
Statement of Fact memorializing the return to
work, or an Employer's Application for
Hearing. An Agreed Statement of Fact would
have been approved by the Commission under
these circumstances only with a Supplemental
Memorandum of Agreement for the temporary
partial disability that was clearly due.
Having failed to do this with knowledge of
the work status of the claimant, the employer
remained obligated to comply with the earlier
Order of the Commission to pay compensation
benefits.
II.
"The Workers' Compensation Act ["the Act"] has always been
liberally construed for the benefit of employees and their
dependents." Chesapeake & Potomac Tel. Co. v. Williams, 10 Va.
App. 516, 519, 392 S.E.2d 846, 848 (1990). In addition,
"[f]ailure to promptly file memorandum of agreements is violative
of the statute and frustrates a primary purpose behind the . . .
Act -- to expedite the entry of awards in cases where the
parties agree as to the compensability of the employee's injury."
National Linen Serv. v. McGuinn, 5 Va. App. 265, 269, 362 S.E.2d
187, 189 (1987) (en banc).
Employer concedes that claimant received no payments from
October 1, 1994 through December 14, 1994, even though employer
knew that claimant's disability warranted the continuation of
some type of compensation payments during this period. Employer
argues that Code §§ 65.2-500 and 65.2-708, and Rule 1.4(C)(1) of
the Rules of the Workers' Compensation Commission, gave it the
unilateral right to decide when to stop paying benefits to
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claimant, and then, to postpone the filing of an application for
a hearing on the merits of its decision for twenty-four months.
Thus, employer asserts that, as of October 1, 1994, the August
26, 1994 award did not require it to continue paying benefits to
claimant and it had the unilateral right to stop paying claimant,
regardless of when it might file an application for hearing, an
agreed statement of fact, or a supplemental memorandum of
agreement. Employer further argues that because no award existed
until January 13, 1995 obligating it to pay benefits to claimant
for the period from October 1, 1994 through November 30, 1994,
the commission should not have assessed a penalty pursuant to
Code § 65.2-524. 1
Claimant argues that a long standing practice requires an
employer to file an agreed statement of fact form and a
supplemental memorandum of agreement before terminating benefits
under an outstanding award when an employee returns to light duty
work. Claimant correctly points out that employer did nothing
until the commission sent employer its December 14, 1994 letter
imposing a penalty. Claimant notes that he had no control over
when employer would send him the appropriate forms, other than to
file an application and request a penalty, as he did on December
8, 1994.
1
We note that employer's position is inconsistent with its
actions in that employer, on December 14, 1994, paid benefits due
to claimant for the period October 1, 1994 through December 14,
1994, before the commission entered its January 13, 1995 award.
5
Rule 1.4(C) provides that compensation shall be paid through
the date an employer files a change in condition application.
Rule 1.4(C)(1) provides an exception to this general rule. Under
Rule 1.4(C)(1), if an employer's change in condition application
alleges that an employee returned to work, then employer is
obligated to pay compensation up to the date of the return.
However, contrary to employer's assertion, Rule 1.4(C)(1) is not
applicable under the circumstances of this case. The plain
language of Rule 1.4(C)(1) allows an employer to cease payment of
compensation on the date an employee returns to work only when
the employer files an application alleging the employee returned
to work. Here, employer never filed an application alleging that
claimant returned to work. Rather, it did nothing. It
unilaterally stopped paying compensation to claimant, a partially
disabled employee, on October 1, 1994, even though employer
conceded that claimant was entitled to some form of compensation
between October 1, 1994 and December 14, 1994. Not until the
commission directed employer to pay claimant compensation and a
penalty did employer pay the temporary partial disability
benefits and temporary total disability benefits due to claimant
for the period October 1, 1994 through November 30, 1994. "The
commission promulgated Rule 13 [now Rule 1.4] 'to police this
tendency of employers and insurers to terminate first and
litigate later.'" Specialty Auto Body v. Cook, 14 Va. App. 327,
330, 416 S.E.2d 233, 235 (1992) (quoting Dillard v. Industrial
6
Comm'n, 416 U.S. 783, 789 (1974)).
Moreover, employer's reliance on Code §§ 65.2-500 and
65.2-708 is misplaced. Code § 65.2-500 sets forth the amount of
compensation a totally disabled employee is entitled to receive
from an employer. Its provisions do not set forth the procedure
for terminating such an award when an employee returns to light
duty work. Employer correctly points out that temporary total
disability benefits are only to be awarded when an employee
cannot work due to total incapacity. However, even if employer
had filed an application, which it did not do, "the determination
whether benefits, in fact, should have been terminated could only
have been made by the commission." Specialty Auto, 14 Va. App.
at 331-32, 416 S.E.2d at 236.
Employer correctly notes that Code § 65.2-708 allows an
employer to file a change in condition application within two
years from the last date for which compensation was paid.
However, no language in Code § 65.2-708 gives an employer the
unilateral right to cease paying compensation benefits to a
partially disabled employee under an outstanding temporary total
disability award, when that employee returns to work at a lesser
than pre-injury wage, and the employer does not file an
application or an agreed statement of fact along with a
supplemental memorandum of agreement. Thus, the commission's
decision is not inconsistent with Code §§ 65.2-500 and 65.2-708.
A penalty can only be imposed on amounts not paid within two
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weeks of their due date. Code § 65.2-524. An amount becomes due
on the date of an award by the commission. Audobon Tree Serv. v.
Childress, 2 Va. App. 35, 39, 341 S.E.2d 211, 213 (1986).
Employer intentionally failed to take the appropriate steps to
terminate the August 26, 1994 award when claimant returned to
light duty work on October 1, 1994. Accordingly, the August 26,
1994 award remained in effect until January 13, 1995. Thus,
employer's December 14, 1994 compensation payment to claimant,
for the period from October 1, 1994 through November 30, 1994,
occurred more than two weeks after it became due. In light of
these facts and the overriding purpose of the Act, the commission
did not err in assessing a twenty percent penalty against
employer.
For these reasons, we affirm the commission's decision.
Affirmed.
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