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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