Insurer’s Good Deed Restarts the Clock on Benefits, Carolina Appeals Court Finds

Insurers might say this one falls in the category of “no good deed goes unpunished.”

In a workers’ compensation decision published July 5, the North Carolina Court of Appeals held that the re-issuance of a missing check to an injured worker, discovered by the insurance company, restarted the clock on medical benefits.

In Francisco Dominguez vs. Dominguez Masonry and Builders Mutual Insurance Co., the majority of the court found that a knee injury that happened in 2005 was eligible for continued medical treatment, all because the insurer had re-issued a $329 check to the worker.

After his 2005 knee problem, Francisco Dominguez, a brick mason, was granted indemnity payments through 2013 and medical benefits until mid-2015. In 2017, Builders Mutual discovered that a check issued six years earlier had never been cashed. The worker said he never received it, and Builders reissued it.

A few months later, Dominguez’ attorney filed for additional medical compensation for the knee. The employer and carrier denied the claim, noting it was time-barred by statute. A deputy commissioner at the Industrial Commission disagreed, writing that the replacement check was a benefits payment as defined by statute – and that had extended the clock.

Builders Mutual appealed to the full Industrial Commission, but the board upheld the deputy commissioner.

On appeal, the appellate court cited the letter of the law, which stipulates that “the right to medical compensation shall terminate two years after the employer’s last payment …”

“The question before us is whether a corrective payment constitutes a ‘last payment’ for purposes of the N.C. Gen. Stat. § 97-25.1 limitations period,” Judge Valerie Zachary wrote in the opinion.

Adhering to the plain meaning of the statute and the doctrine that the workers’ comp statute should be liberally construed in favor of an injured worker, the court majority found that the replacement check did, in fact, serve as a final payment, restarting the statute of repose. North Carolina lawmakers had never addressed the question and the court cannot now create new statutory language, Zachary said.

Judge John Tyson dissented, contending that the majority had misinterpreted the plain language of the law.

“Their improper and deferential standard of review and overreach is contrary to our rules of statutory construction, binding precedents, and the stated purpose of the Workers’ Compensation Act,” Tyson wrote. “The majority’s opinion allows a plaintiff to re-open a seventeen-year-old claim, after undisputed evidence shows defendants audited and merely re-issued a previously paid check.”

In a separate decision, the appeals court found in favor of the employer and a Berkshire Hathaway company on a question of state jurisdiction.

In Leslie Duke vs. Xylem Inc. and Berkshire Hathaway Homestate Insurance Co., the court emphasized the importance of the “last act” test in determining workers’ comp jurisdiction: “For a contract to be made in North Carolina, the final act necessary to make it a binding obligation must be done here,” the court wrote, quoting from a 1998 North Carolina appeals court decision.

Duke, a truck driver, is a resident of Hertford, North Carolina. In 2017, he was offered a position with Xylem, a major provider of water treatment and other technology for utilities, with operations and headquarters in Virginia.

A year later, Duke tore his rotator cuff and herniated a spinal disk while on the job in Virginia. He filed a comp claim with the Virginia Workers’ Compensation Commission, but the commission later dismissed it after Duke failed to respond to discovery requests. The truck driver then filed a claim in North Carolina, arguing that because he had accepted the offer of employment over the phone, while he was in his home in North Carolina, the Tar Heel state had jurisdiction.

The North Carolina Industrial Commission disagreed and dismissed the claim. Duke appealed.

Xylem and Berkshire Hathaway attorneys contended that the employment offer was not made and accepted during the phone call but was contingent upon the driver completing onboarding employment paperwork and passing a physical exam, a driving test and a drug test at Xylem’s operation in Wakefield, Virginia. Duke later said he signed some documents on an electronic device there, but that his signature on paper documents was forged.

The appeals court did not address the alleged forgery, but cited case law on jurisdiction. The court noted that if an injury occurs outside the state, the North Carolina Industrial Commission has jurisdiction only if the contract was made in the state; if the employer’s principal place of business is in the state; or if the employee’s principal place of employment is in North Carolina.

“The last act of the employment contract is generally the employee’s acceptance of employment, but it can also be the completion of other conditions of employment that come after an employee accepts the offer of employment, such as an orientation session, a road test, a drug test, and a physical exam, the appeals court wrote, quoting from a 2017 court decision.

The key factor in determining whether those requirements constitute the “last act” is “whether there is a possibility that the prospective employee could fail to meet the criteria, thus becoming ineligible for employment,” Judge Richard Dietz wrote in the Duke opinion.

The court affirmed the Industrial Commission’s dismissal of the claim and found that the “last act necessary to create a binding employment contract occurred in Virginia … “