By Sarah Morris,2014-06-28 19:53
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VIRGINIA: 04/11/2006


WADE G. BUNDY, Claimant

     Opinion by DIAMOND


    v. VWC File No. 192-50-20



Wesley G. Marshall, Esquire

    600 Westwood Office Park

    Fredericksburg, Virginia 22401

    for the claimant.

    (Copy sent by Priority Mail)

Roger L. Williams, Esquire

    2809 Emerywood Parkway, Suite 200

    Richmond, Virginia 23294

    for the employer.

    (Copy sent by Priority Mail)

     REVIEW on the record by Commissioner Tarr, Commissioner Diamond, and Commissioner Dudley at Richmond, Virginia.

    The employer requests Review of the deputy commissioner’s October 19, 2005, Opinion.

    The claimant suffered a June 16, 1998, injury by accident, and was awarded compensation benefits for various periods. The present dispute involved the claimant’s request for a penalty on unpaid benefits. The deputy commissioner assessed a penalty, and also assessed attorney’s fees against the employer. The employer appeals, and we AFFIRM in part and REVERSE in part.

    The claimant injured his right shoulder in the June 16, 1998, accident. The parties

    submitted agreement forms, and on August 11, 1999, the Commission awarded temporary total disability benefits from March 15 to 28, 1999. The claimant thereafter was disabled, and the parties unsuccessfully attempted to execute agreements, covering a period of disability in 2001

     VWC File No. 192-50-20

and 2002. Ultimately, a hearing was scheduled for April 22, 2004. In a June 25, 2004, opinion,

    the deputy commissioner noted that the claimant sought benefits relating to the right-shoulder

    injury, and also alleged a compensable left-shoulder condition. The employer was noted to assert

    a statute-of-limitations defense, and defenses of no compensable left-shoulder condition or any

    causally related disability. In the June 25, 2004, opinion, the deputy commissioner awarded

    temporary total disability benefits beginning May 31, 2001, and also awarded “COLA payments

    for periods during which he was receiving temporary total disability benefits.” The deputy

    commissioner denied benefits for a left-shoulder condition. The deputy commissioner also

    awarded the employer “credit for benefits paid.” This decision was not appealed.

    On October 19, 2004, the claimant filed a request for assessment of a penalty, alleging that

    the employer had not made payment in compliance with the June 25, 2004, award. The

    Commission requested a response from the employer, and when no response was received,

    ordered the employer to pay a 20% penalty on all compensation in arrears. In its November 22,

    2004, penalty order, the Commission also ordered the employer to provide notice, within ten days,

    of how much was paid pursuant to the penalty order. The employer responded on January 4,

    2005, and asserted that the claimant had received “medical disability compensation for his

    injuries,” and referred to “medical disability benefits” that were being paid to the claimant.

    On February 2, 2005, the Commission entered a Show Cause Order against the employer,

    instructing the employer to show cause why it should not be held in contempt for failure to

    comply with the November 22, 2004, penalty order. On February 11, 2005, the claimant

    requested that the Show Cause hearing be conducted along with a hearing on his October 19,

    2004, claim, which had asserted the employer’s non-compliance with the June 25, 2004, award.


     VWC File No. 192-50-20

    On March 7, 2005, the Commission continued the Show Cause hearing, and on March 29, 2005, continued the hearing a second time. On April 7, 2005, the claimant again requested that

    the Show Cause hearing be conducted along with a hearing on his October 19, 2004, claim. On

    May 6, 2005, the Commission continued the Show Cause hearing a third time, at the employer’s

    request, and on May 25, 2005, continued the hearing a fourth time, at the claimant’s request. It

    appears that a hearing was called on June 23, 2005, and appearances by counsel for the claimant,

    and a legal assistant from counsel for the employer’s firm, were noted. Regardless, the

    Commission took no formal action on the pending Show Cause Order.

    On June 29, 2005, the Commission scheduled a hearing on the claimant’s October 19, 2004, claim. On August 30, 2005, Deputy Commissioner Stevick corresponded with the parties,

    notifying them that the “case is being transferred to Deputy Commissioner Link’s office.” The correspondence did not make a distinction between the claimant’s October 19, 2004, claim and

    the Show Cause Order.

    A hearing took place on September 9, 2005. The deputy commissioner noted that the dispute involved the claimant’s request for a penalty, as well as an assessment of attorney’s fees.

    Counsel for the claimant noted at the outset of the hearing that the claimant relied, in support of

    his request for a penalty and assessment of fees, on the Commission’s November 22, 2004,

    penalty order. The claimant testified that since the June 25, 2004, opinion, he had not received

    any payments marked “workers’ compensation benefits,” nor had he received any payments for

    “penalties” or for “cost of living adjustments.” He acknowledged receiving payments from the

    employer’s “sickness and accident program,” through approximately December 2004, and that

    since May 2004, he received retirement payments. He stated that his monthly retirement amount

    was $1,800, but also stated that the monthly payment was $1,535, which he later explained was


     VWC File No. 192-50-20

“after taxes.” He stated that during 2001 and 2002, he received payments marked “workers’

    comp,” but that in May 2002, the payments were made under a sickness and accident insurance

    policy. He stated that he was not certain whether or not he paid premiums for this policy. He

    stated that he also had received payments under an extended disability insurance policy, but did

    not know whether he contributed to the premiums for this plan.

    On cross-examination, the claimant agreed that he received sickness and accident policy

    payments after May 2002, and also received extended disability policy payments until May 1,

    2004. On re-direct examination, the claimant was questioned about the employer’s payment

    history documents, which showed three payments in August 2005 - - one for $2,145.00, one for

    $1,795.41, and one for $349.59. The claimant denied receiving checks for these amounts, but

    stated that he received a single check, for $1,535.00.

    The deputy commissioner indicated at the hearing that interrogatories would be issued to

    the employer. Counsel for the claimant objected, arguing that the dispute concerned a Show

    Cause proceeding on a penalty order, requiring attendance at two hearings, and “nothing has been

    resolved.” The deputy commissioner noted that the September 9, 2005, hearing would be

    considered the Show Cause hearing, and that the ultimate decision would resolve the pending

    Show Cause Order.

    On September 12, 2005, Deputy Commissioner Link issued interrogatories to the

    employer, requesting specific information concerning payments made to the claimant. The deputy

    commissioner noted that the record was left open after the September 9, 2005, hearing “to obtain

    precise information about payments made by General Motors Corp. to the claimant.” The deputy

    commissioner also instructed the employer to identify a corporate officer to verify the information,

    under oath. The deputy commissioner noted that counsel for the claimant had traveled to


     VWC File No. 192-50-20

    Richmond on two occasions for Show Cause hearings, and that an evidentiary hearing originally had been scheduled so that a representative of the employer could be present to testify.

    In a September 26, 2005, letter, the employer provided responses to the questions. The

    responses were provided by counsel for the employer, and no corporate office was identified, or provided verification of the responses. The employer noted that it had made payments to the claimant at an incorrect rate - - $342.68 - - and had also offset payments by amounts paid to the claimant under a short-term disability insurance policy. The employer also noted that it was entitled to offset payments made to the claimant under an extended disability insurance policy. The employer attached various printouts, listing amounts, dates, and different codes, and which obviously would require more information to decipher fully.

    The file also contained a June 23, 2005, letter from counsel for the employer, addressed to

    Deputy Commissioner Mayo, which was not stamped as received by the Commission, but which we conclude was handed to the deputy commissioner at the June 23, 2005, Show Cause hearing. Attached to the letter was a printout showing disability plan payments made to the claimant by the employer. Counsel asserted that the employer was entitled to a credit for payments made to the claimant under the plan.

    In the October 19, 2005, Opinion, the deputy commissioner found that the employer

    should receive a credit for payments made under the sickness and accident plan, but not under the extended disability plan or the retirement plan. The deputy commissioner noted that the payment history documents were difficult to interpret and understand, and that the only period that was reasonably comprehensible was from June 1, 2001, to May 19, 2002, and awarded a credit only for payments made during that period. The deputy commissioner also assessed attorney’s fees against the employer, reasoning that despite several hearings and opportunities to provide


     VWC File No. 192-50-20

    evidence of compliance with the Commission’s orders, the employer failed to pay the penalty ordered by the Commission. The deputy commissioner did not take up the issue of the pending Show Cause Order.

    On Review, the employer argues that the deputy commissioner improperly assigned the

    burden of proof upon the employer, whereas it was the claimant who was required to “prove that he was entitled to the penalties sought.” The employer also objects to an assessment of attorney’s fees, arguing that a true dispute existed over the amount of the employer’s credit. The employer also objects to the amount of the fees assessed.

    We first address the employer’s argument concerning the burden of proof. Here, the

    claimant alleged that the employer had not complied with a Commission order, requiring payment of benefits, and seeking assessment of a penalty. The Commission provided the employer an opportunity to be heard on this issue, but no response was made. Therefore, the Commission ordered the employer to pay a penalty on overdue payments of compensation. The Commission also ordered the employer to provide evidence of payment within ten days, but the employer did not comply. The employer eventually supplied a list of payments made to the claimant, but did not indicate what penalty, if any, was owing, or had been paid. Therefore, the Commission issued a Show Cause Order against the employer.

    Thus, the procedural posture of this dispute was straightforward: The claimant alleged

    non-compliance with an award, and requested a penalty; the Commission requested the employer’s position, and receiving none, ordered that a penalty be paid and that the employer advise how much penalty was paid; the employer did not comply with that order, and the Commission ordered the employer to show why it should not be held in contempt. Eventually, after several aborted efforts at sorting through this dispute, a hearing was conducted, and the


     VWC File No. 192-50-20

deputy commissioner’s clear instructions were that the employer was required to prove what

    payments were made, and what penalties were owinga request that had first been made to the

    employer by the Commission at least as early as its February 2, 2005, Show Cause Order.

    Throughout this litigation, the employer at no time alleged that it had fully complied with

    the Commission’s outstanding award, nor did it object to the Commission’s several orders

    requiring evidence of payment. The employer alleged that it had made certain payments to the

    claimant, but has never established, in a coherent form, the amount of these payments. Moreover, the employer has not complied with the Commission’s order to show what amount of a penalty it

    paid to the claimant. In short, the employer has received numerous opportunities to take a

    position as to payments made to the claimant, and was ordered on at least two occasions - - the

    penalty order and the Show Cause Order - - to state its position, and yet it has not done so. Thus, we do not believe that the deputy commissioner misapplied the burden of proof.

    Moreover, the claimant’s testimony was that he received various payments from the employer, but none were marked “workers’ compensation” since May 2002. The employer’s

    payment records confirmed this confusing set of circumstances. Thus, even if the employer had

    complied with the Commission’s orders, and taken the position, in a timely fashion, that it had

    fully complied with the Commission’s outstanding award, the claimant’s testimony, concerning

    various payments, from various employer sources, and at varying amounts, established non-

    compliance. Although a payment does not necessarily have to be marked “workers’

    compensation” for the employer to receive credit for payment of workers’ compensation benefits,

    here the claimant was receiving varying payments, including retirement payments. The Act not

    only requires prompt payment of compensation benefits, but also requires reasonably

    understandable payment procedures, such that an employee can readily conclude that an employer


     VWC File No. 192-50-20

is complying with an outstanding award. Here, the claimant’s testimony, which was confirmed by

    the documentary record, established a confusing method of payment, which understandably left

    Commission personnel, as well as counsel for the employer and the claimant, not to mention the

    claimant himself, at a loss to explain whether the employer was complying with the Commission’s

    outstanding Award. Thus, we believe that even if the employer had timely noted its position to

    the claimant’s penalty request, the claimant still established a prima facie case of non-compliance.

    Turning to the merits of the dispute, the deputy commissioner found that for the period

    June 1, 2001, to May 19, 2002, the employer paid the claimant $8,078.51, for which it should

    receive a credit. The documentary evidence, however, showed that the claimant was entitled to

    receive disability payments during this period totaling $540.00 per week, but that these payments

    were offset by payments of $392.46 per week, which counsel for the employer explained was

    based on the maximum compensation rate for the State of Delaware. Regardless, the claimant

    was paid a total of $540.00 each week, and his compensation rate was $513 per week. Thus, the

    claimant was not underpaid during this period, and no penalty was owed for this periodthe

    employer paid a total of $27,232.20 during this 50.43-week period ($540.00 x 50.43), whereas

    accrued compensation was $25,870.59 ($523.00 x 50.43). Cost-of-living increases during this

    period, based upon $513.00 per week compensation, totaled $2,165.89. Thus, the employer is

    ORDERED to pay the claimant $804.28, representing accrued COLA benefits for this period, less

    the credit for the overpayments ($27,232.20 - $25,870.59 = $1,361.61; $2,165.89 - $1,361.61 =


    The deputy commissioner reasoned that during this period, the disability insurance plan

    was fully funded by the employer, based on language from the policy, and this reasoning was not

    questioned on Review. The insurance-plan language in question, however, concerned both


     VWC File No. 192-50-20

disability plans - - the “sickness and accident” plan and the “extended disability” plan - - and

    referred to “automatic” coverage by virtue of the employment relationship. We see no distinction

    between the two plans, as far as the issue of premiums, and we find that the employer should

    receive a credit for payments made to the claimant under both plans.

    The next period was June 1, 2002, to April 30, 2004. The records showed monthly payments of $2,145.00 during this period, labeled extended disability payments. This 23-month

    period showed payments under the plan totaling $49,335.00. Accrued compensation under the

    Act, at the rate of $513.00 per week, totaled $51,300.00. (100 weeks x $513 per week) Thus,

    the employer underpaid the claimant $1,965.00 for this period, and a 20% penalty on this amount

    would be $393.00. COLA would be $6,023.53, and thus the employer is ORDERED to pay

    $8,381.53, represented accrued underpaid compensation benefits for this period, plus penalties

    and COLA.

    The next period at issue was May 1, 2004, to December 31, 2004. The records showed a continued entitlement under the disability plan to $2,145.00 per month, but this was offset by a

    monthly “pension” of $1,795.41. As for the pension offset, the claimant stated that he received

    retirement benefits. The deputy commissioner found that the Act did not provide a credit for

    payments made under a retirement plan, and the employer offers no argument to the contrary.

    We agree with the deputy commissioner’s decision on this issue. Thus, after taking this offset, the

    employer paid the claimant $349.59 per month in disability plan benefits during this period, for a

    total of $2,796.72 ($349.59 per month x 8 months). His workers’ compensation award called for

    a total of $17,955.00 (35 weeks x $513.00 per week). Thus, the employer underpaid the claimant

    $15,158.28 for this period, and the penalty would be $3,031.66. COLA would be $2,625.62.

    The employer is ORDERED to pay $20,815.56 to the claimant, representing accrued unpaid


     VWC File No. 192-50-20

compensation for this period, plus penalties and COLA.

    Finally, we turn to the period January 1, 2005, to September 9, 2005, the date of the

    hearing. Beginning in January 2005, the employer took an offset of $1,625 per month against disability plan payments of $2,145, and these were labeled as “SSDIB Offset.” There was no

    evidence concerning what this deduction represented. The claimant testified that he did not receive Social Security Disability benefits. Absent additional evidence, concerning who paid this amount, and why, we do not believe a credit for the amount would be appropriate. After deducting the continuing pension offset, which for the reasons above cannot be used as a credit against compensation benefits, and after deducting the SSDIB offset, the claimant was not paid any disability plan benefits, and thus the employer was not entitled to any credit during this period.

     Accrued compensation would be $18,468.00 (36 weeks x $513.00 per week), and the penalty on this amount would be $3,693.60. COLA would be $2,930.40. Thus, the employer is ORDERED to pay $25,092.00 to the claimant, representing accrued but unpaid compensation benefits, plus penalties and COLA. This would bring the total amount of accrued but underpaid or unpaid compensation benefits, plus penalties, and with accrued COLA to $55,093.37.

    We now turn to the assessment of attorney’s fees. It was clear that the claimant was

    accurate that he was dramatically underpaid during most of the time since his disability began in 2001, despite a final award of the Commission, and despite a November 22, 2004, penalty order and a February 2, 2005, Show Cause order. This proceeding was initiated by the claimant’s request for a penalty on unpaid compensation. Although the employer argues that it reasonably believed that it should receive a credit, and that the parties differed simply as to the amount of the credit, for much of the time at issue there should have been no dispute that the claimant was being underpaid, even with a full credit granted to the employer. As described above, the claimant


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