State News : North Carolina

Dorothy Jane Ketchie and Glegg Lee Jones worked for Fieldcrest Cannon, Inc. over the course of approximately two and 45 years respectively. The parties stipulated that Ms. Ketchie was last injuriously exposed to asbestos in the seven months before January 31, 1974.  The parties stipulated that Mr. Jones’ last injurious exposure was in the seven months before September 24, 1986.  In 2000, Ms. Ketchie was diagnosed with asbestosis as a result of her exposure during employment with Fieldcrest.  In 2003, Mr. Jones was diagnosed with mesothelioma and died on May 9, 2004.

The North Carolina General Assembly created the Security Association on October 1, 1986 to provide a way to pay covered claims against member self-insurers in order to avoid, among other things, non-payment of claims due to the insolvency of a member self-insurer. All self-insurers are required to be members of the Security Association as a condition of being licensed to self-insure.  Fieldcrest was a member of the Security Association from October 1986 until December 19, 1997, after which the company purchased workers’ compensation insurance.  The company thereafter filed for bankruptcy in 2000 and 2003.  After the bankruptcy in 2003, Fieldcrest defaulted on its outstanding workers’ compensation claims incurred during this period of self-insurance before the company became a member of the Association on October 1, 1986.  Mr. Ketchie and Mr. Jones’ claims, along with other plaintiffs, fell into the category where their employment and last injurious exposure occurred before October 1, 1986 but were not diagnosed until after the bankruptcies.  As such, these plaintiffs sought compensation from the Security Association because Fieldcrest had declared bankruptcy and had defaulted on their claims.  In 2009, both Ms. Ketchie and Mr. Jones’ estate filed workers compensation claims against Fieldcrest and the Security Association.

The Full Commission concluded that the plain language of N.C.G.S. § 97-130 statutorily excluded Ms. Ketchie’s and Mr. Jones’ claims because covered claims only include those claims where an injury occurred while the employer was a member of the Security Association. Under N.C.G.S. § 97-57, liability for an occupational disease attaches when the last injurious exposure occurs.  Because Fieldcrest was not a member of the Security Associates on the date of the last injurious exposures, Ms. Ketchie’s and Mr. Jones’ claims were not covered claims.

The Court of Appeals affirmed the Commission’s decision, relying on the plain language of N.C.G.S. §§ 97-130 and 131 to find that there was no coverage for these claims. In order for the claims to be covered by the Security Association, the claims must have arisen when the self-insured company was insolvent and when the company was a member of the Association.  The Court found that these claims arose in 1974 and September 1986, while Fieldcrest was solvent and before the company joined that Security Association.  Because the Association was not created until after Ms. Ketchie’s and Mr. Jones’ last injurious exposures, these claims could not be covered.  As such, Ms. Ketchie’s and Mr. Jones’ claims were barred and there was no recourse for them as a result of Fieldcrest’s bankruptcy.

Risk Handling Hints:  This decision shows that courts will apply the plain language of statutes to determine compensability, even when it leaves injured employees without recourse or relief.  The Workers’ Compensation Act is to be interpreted broadly to provide injured workers benefits, but this purpose will be limited by the laws enacted by the General Assembly.