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In a recent decision issued by the North Carolina Court of Appeals, Judge Chris Dillion remanded Blackwell v. N.C. Dep’t of Pub. Instruction back to the Full Commission where a claimant’s appeal to convert her weekly benefits to a single, lump-sum award was denied.
The claimant was a former high school teacher who was injured on the job breaking up a fight. She was diagnosed with multiple physical and mental injuries and the Full Commission found her to be permanently and totally disabled and awarded weekly benefits. The claimant later requested her award to be converted into a single, lump-sum payment, as per by N.C. Gen. Stat. §97-44 (2018). Both the Deputy Commissioner and the Full Commission denied her request and she appealed. The sole issue on appeal was whether the Commission erred in concluding that a lump-sum award under Section 97-44 is never allowed where the sum of future installments is uncertain. The Commission relied on the “Uncommuted Value Clause” of N.C. Gen. Stat. §97-44 and reasoned that it prohibits any lump-sum award which would exceed the sum of the future installments that are being replaced. The Commission denied the claimant’s request on the basis that a lump sum award was not allowed in any situation where the number of future payments was uncertain. Under the original Opinion and Award, the claimant was eligible to receive weekly benefits for the rest of her life. As a result, the number of future installments the claimant was entitled to receive was unknowable because her weekly compensation could be terminated upon her death or a showing that she is capable of returning to suitable employment. The Commission thus concluded that a lump-sum award could exceed the amount she would have otherwise received had she continued to receive her benefits in weekly installments.
In its decision, the Court of Appeals noted that it has held that awards for permanent disability may be paid in weekly installments or in one lump sum. The Court acknowledged that the Commission has the authority, in unusual cases, to award a lump-sum even where the sum of future benefits is not certain, if there is competent evidence tending to show how long the claimant was reasonably likely to receive future benefits. Competent evidence would include a mortality table to determine life expectancy. The Court also indicated that the Commission should discount the sum of expected future benefits when there is competent evidence to set an appropriate discount rate.
The Court’s decision was, essentially, a roadmap for the Commission. First, the Commission should determine whether the claimant has shown her situation to be an “unusual case.” Second, the Commission should consider any competent evidence, such as the mortality table in N.C. Gen. Stat. §8-46, to determine the number of installments that the claimant is expected to receive under her current award. Lastly, in calculating the award, the Commission may discount the expected future installments to a present value.
The Court of Appeals established steps for the Commission to determine whether a lump-sum award is appropriate. The conclusion by the Court of Appeals that a lump sum payment for ongoing weekly installments may be an option is concerning for defendants in workers’ compensation cases. In permanent and total cases, it would behoove the Plaintiff’s Bar to request a lump sum payment in every case in order to collect a fee and ensure their client receives the most benefits he or she can get. However, the Court of Appeals did note that the lump sum award should be ”in the best interest of the employee” and that phrase should be “construed narrowly.” The Court specifically said that trying to reduce credit card debt would not be a reason to grant such an award.
It will be interesting to see how the Commission defines “unusual” in this case. If it is read narrowly, defendants may not have as much to worry about and the implications of this case may be minimal, but if the Commission defines “unusual” broadly, defendants will surely see the ramifications of this case for years to come. We will continue to monitor this case to determine its full impact.
If you have questions about the recent court decision, or other aspects of a workers’ compensation claim in North Carolina, reach out to a member of our Workers’ Compensation team.