Opinion
I.C. NO. 567733
Filed 13 June 2001.
This case was reviewed by the Full Commission on 25 October 2000 upon appeal by both parties from an Opinion and Award by Deputy Commissioner Wanda B. Taylor filed 20 March 2000. Deputy Commissioner Taylor initially heard this case on 17 May 1999. The deposition of William A. Somers, M.D., was received into evidence and the record thereafter closed.
Plaintiff: Law Office of Leslie O. Wickham, Jr., Attorneys, Durham, North Carolina; Mark H. Woltz, appearing.
Defendants: Morris, York, Williams, Surles Barringer, Attorneys, Charlotte, North Carolina; G. Lee Martin, appearing.
***********Upon review of the competent evidence of record, and finding no good grounds to receive further evidence or rehear the parties or their representatives, the Full Commission upon reconsideration of the evidence, affirms the Opinion and Award of the Deputy Commissioner, with modification.
The Full Commission finds as fact and concludes as matters of law the following, which were entered into by the parties in a Pre-Trial Agreement and at the hearing as:
STIPULATIONS
1. All parties are subject to and bound by the provisions of the North Carolina Workers Compensation Act.
2. An employee-employer relationship existed between plaintiff and defendant-employer on 18 June 1995.
3. Plaintiff sustained an injury by accident arising out of and in the course of his employment on 18 June 1995 when he slipped and injured his left knee.
4. Plaintiffs average weekly wage was $555.50.
5. A Form 24 Application to Terminate or Suspend Payment of Compensation was approved by the Commission and filed on 26 August 1997, terminating plaintiffs temporary total disability benefits effective 16 January 1997.
6. Plaintiff received temporary total disability benefits from 12 September 1995 through August 1997.
7. The parties stipulated into evidence as Stipulated Exhibit 1, without need for further authentication or verification, plaintiffs medical records from the following providers:
• Durham Ambulatory Surgical Center;
• Durham Clinic, P. A.;
• David L. Williamson, D.C., N.S.;
• Duke University Medical Center; and
• Durham Regional Hospital.
8. The parties stipulated into evidence as Stipulated Exhibit 2, without need for further authentication or verification, plaintiffs tax returns from 1996, 1997, and 1998.
9. The parties stipulated into evidence as Stipulated Exhibit 3, without need for further authentication or verification, expense and income information from plaintiffs business from 1996.
10. The parties stipulated into evidence as Stipulated Exhibit 4, without need for further authentication or verification, expense and income information from plaintiffs business from 1997.
11. The parties stipulated into evidence as Stipulated Exhibit 5, without need for further authentication or verification, expense and income information from plaintiffs business from 1998.
12. The parties stipulated into evidence as Stipulated Exhibit 6, without need for further authentication or verification, Industrial Commission Forms.
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Based upon all the competent evidence of record, the Full Commission makes the following additional:
FINDINGS OF FACT
1. At the time of the hearing before the Deputy Commissioner, plaintiff was a forty year-old male who had earned a GED. Plaintiff has worked primarily in restaurants, but he worked briefly for IBM and drove a delivery truck.
2. Plaintiff began working at Applebees in August 1993 as a cook. He progressed to a shift supervisor and later became assistant general manager. On 18 June 1995, plaintiff was working as an assistant general manager, which involved a lot of walking around. Plaintiff was on his feet most of the shift except for a brief period for paperwork, dinner, and breaks. Plaintiff had to be able to fill in for every position in the restaurant.
3. On 18 June 1995, plaintiff slipped and fell at work in the course and scope of his employment, injuring his left knee. As a direct and proximate result of this fall, plaintiff suffered a left anterior cruciate ligament tear.
4. Plaintiff came under the care of William A. Somers, M.D., a Durham orthopedic surgeon. On 28 August 1995, Dr. Somers performed a surgical reconstruction of plaintiffs anterior cruciate ligament.
5. Defendants accepted plaintiffs claim on a Form 63 Notice to Employee of Payment of Compensation Without Prejudice to Later Deny the Claim, dated 13 November 1995. Defendants did not contest plaintiffs claim or their liability during the time allowed; thus, pursuant to G.S. 97-18(d), plaintiffs claim was accepted.
6. For several years before his 18 June 1995 compensable injury, plaintiff had had problems with occasional left knee swelling. However, plaintiffs knee problems did not become disabling until his 18 June 1995 compensable injury, which caused or accelerated and exacerbated his knee condition.
7. On 3 April 1996, after continuing to experience pain, plaintiff underwent an excision of an osteophyte and nerve decompression also performed by Dr. Somers.
8. Although plaintiff did not have objective findings, he continued to complain of pain. As early as 26 April 1996, Dr. Somers was of the opinion that plaintiff should have been able to return to restaurant work in approximately one month. At that point, plaintiff had a clinically stable knee with an excellent range of motion that was not tender, but he had some thickening of the tissues medially.
9. After continued complaints of pain, Dr. Somers explored the possibility of performing a high tibial osteotomy on plaintiff.
10. On 14 November 1996, plaintiff determined that he did not wish to undergo the high tibial osteotomy. Plaintiff continued to be tender at the medial joint, had a full range of motion of the knee, and was stable to the anterior, posterior, varus, and valgus. On 14 November 1996, plaintiff had reached maximum medical improvement of his left leg, and he retained a twenty-five percent permanent partial impairment rating. Plaintiff also had problems with his ankle at that time, but Dr. Somers was of the opinion that plaintiffs ankle condition was not causally related to his knee injury.
11. In November 1996, plaintiff started a gutter business, D D Gutter and Roofing, with a neighbor. This business manufactured and installed gutters and performed some roofing. Plaintiffs wife is listed as the owner and president of the business; however, she is also employed full-time as a manager of an apartment complex. Plaintiff is the vice president of the business and responsible for talking with contractors, writing invoices, ordering materials, generating business, performing technical consultations, inspecting jobs, and making job quotes. Plaintiffs wife keeps the financial records and calculates the taxes. The company has had as many as eight employees, but generally has three or four. Plaintiff has never physically worked on the roofs or carried bundles of shingles around the job site.
12. Plaintiff submitted business records from D D Gutter and Roofing. However, these records did not include a complete list of checks drawn on the checking account from that business. Checks were sometimes written for personal rather than business expenses, and the personal items were not included in the submitted records. There was also evidence that plaintiff and his wife had occasionally loaned money to the business. Gross sales for 1996 (November and December) were $13, 000.00. During that time, plaintiff continued to draw temporary total disability benefits at the rate of $370.35 per week. In 1997, the gross receipts were $54,841.00 and in 1998, the gross receipts of the company were $61,725.00. Income tax returns noted that 1998 was the first year of profit. However, deductions including depreciation, bad debt and the like, affect the profitability of the business.
13. D D Gutter and Roofing deducts expenses for advertising, vehicles, gas, mileage, tools and equipment, materials, supplies, salaries, and consulting fees. Plaintiffs family also allocates twenty-five percent of the family's electric bill to the business as an expense. Tax records, which showed profits and losses of the company, do not accurately reflect the worth of the company and do not indicate plaintiffs actual wage earning capacity.
14. Since being released by Dr. Somers in November 1996, plaintiff has not looked for work outside of his business with D D Gutter and Roofing.
15. Plaintiff now spends a portion of his time taking care of his children.
16. When plaintiff was released on 14 November 1996, he was restricted from activities requiring climbing, working on unleveled surfaces, and scaffolding. Plaintiff was advised to avoid prolonged squatting and kneeling and was told that he would not be able to perform these functions on a repetitive basis.
17. As late as October 1998, Dr. Somers was of the opinion that, because of plaintiffs knee condition and his unrelated ankle problem, plaintiff was not able to work in a job that required him to stand for prolonged periods. Further, prohibited activities for plaintiff included kneeling, squatting, crawling, and climbing. However, at that date, Dr. Somers did not understand why plaintiff could not return to work in a sedentary position.
18. Plaintiff bears a substantial risk of needing future medical treatment including, but not limited to, one or more knee replacement surgeries, follow-up arthroscopies, and continued medications.
19. From November 1996 and continuing, plaintiff has developed and operates a gutter and roofing business. Plaintiff has dealt with advertisers, workers, suppliers, and potential customers. Although plaintiffs business has not generated a "profit, it has generated substantial revenues due in large part to his efforts and skills. It is likely that plaintiff is compensated for his substantial contribution to the business.
20. Plaintiff is capable of earning wages as a business manager as he has the skills to develop and operate his own business, and he held a responsible managerial position in his employment with defendant-employer.
21. Plaintiffs return to work in his own business in November 1996 was a trial return to work, because he was under work restrictions. Plaintiffs return to work was successful, and he has not produced persuasive evidence of the extent of any continuing diminished earning capacity.
22. On 18 June 1995, plaintiff sustained a compensable injury by accident arising out of and in the course of his employment with defendant-employer.
23. As a direct and proximate result of his 18 June 1995 compensable injury, plaintiff sustained an anterior cruciate ligament tear and an aggravation of arthritis in his left knee.
24. As a direct and proximate result of his 18 June 1995 compensable injury by accident, plaintiff was unable to engage in physical activities required by his former job or any other job through 16 January 1997. Special Deputy Commissioner Amy L. Pffeifer terminated plaintiffs temporary total disability compensation on 16 January 1997, the date that the business receipts demonstrated that plaintiff had some wage-earning capacity. Plaintiff was paid temporary total disability benefits through 26 August 1997, when Deputy Commissioner Pffeifers Administrative Decision and Order was filed.
25. As a direct and proximate result of his 8 June 1995 compensable injury, plaintiff retains a twenty-five percent permanent partial impairment of his left leg.
26. Plaintiff bears a substantial risk of requiring future medical treatment for his leg condition, which was proximately caused by his 18 June 1995 compensable injury by accident.
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Based on the foregoing stipulations and findings of fact, the Full Commission makes the following:
CONCLUSIONS OF LAW
1. Plaintiff sustained a compensable injury by accident to his left knee on 18 June 1995. G.S. 97-2(6).
2. Plaintiff has failed to meet his burden of showing continuing disability. G.S. 97-2(9).
3. As a direct and proximate result of plaintiffs compensable injury, plaintiff retains a twenty-five percent permanent partial disability of the left leg. G.S. 97-31(15).
4. Plaintiff is entitled to compensation for fifty weeks at the rate of $370.34 per week for his permanent partial disability rating to the left leg. G.S. 97-31(15).
5. Defendants are entitled to an offset for total disability benefits paid to plaintiff from 16 January 1997 until 25 August 1997 as those payments were not due and payable when made. G.S. 97-42.
6. Plaintiff is entitled to have defendants provide all reasonably necessary medical treatment arising from this injury by accident to the extent that such treatment tends to effect a cure, give relief, or lessen plaintiffs period of disability. G.S. 97-25.
7. Plaintiff bears a substantial risk of needing further medical treatment due to his compensable injury and is entitled to have such medical treatment provided by defendants. G.S. 97-25.1.
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Based upon the foregoing stipulations, findings of fact, and conclusions of law, the Full Commission enters the following:
AWARD
1. Defendants shall pay plaintiff fifty weeks of compensation at the rate of $370.34 per week for his twenty-five percent permanent partial impairment rating to the left leg. Defendant-employer is entitled to an offset from this amount due to its payment to plaintiff of benefits from 16 January 1997 through 25 August 1997. Any accrued amount shall be paid to plaintiff in a lump sum, subject to a reasonable attorneys fee approved in Paragraph 2.
2. A reasonable attorneys fee of twenty-five percent of the compensation due plaintiff under this Award is approved for plaintiffs counsel and shall be paid as follows: twenty-five percent of the accrued amount due plaintiff shall be deducted and paid directly to plaintiffs counsel.
3. Defendants shall pay all medical expenses incurred by plaintiff as a result of his compensable injury, including all future medical expenses reasonably necessitated by plaintiffs injury.
4. Defendants shall bear the costs.
S/______________ RENE C. RIGGSBEE COMMISSIONER
CONCURRING:
S/_______________ LAURA K. MAVRETIC COMMISSIONER
DISSENTING:
S/___________________ BERNADINE S. BALLANCE COMMISSIONER
I respectfully dissent from the majority decision to affirm the Deputy Commissioners Opinion and Award in this case.
I disagree with the majority determination that there is sufficient evidence of record to show that plaintiff has sufficient skills as a manager to obtain work in the general marketplace, or that he is now capable of earning wages equal to or greater than his pre-injury wages.
There is no question that plaintiff was disabled following the surgical reconstruction of his anterior cruciate ligament. As the majority Opinion and Award states, as late as October 1998, plaintiff was not able to work in a job that required him to stand for long periods of time, and he had significant work restrictions. (Finding of Fact #17). Further, plaintiff has sustained a 25% permanent partial disability of his right leg, (Finding of Fact #25), and has a substantial risk of requiring future medical treatment for his leg condition. (Finding of Fact #26). Despite this, the majority finds that plaintiff is no longer disabled solely on the evidence that he spends some time operating his own business which the undersigned does not believe demonstrates a level of earning capacity sufficient to deny plaintiff further benefits.
In Finding of Fact #20, the majority states that "[p]laintiff is capable of earning wages as a business manager because he has the skills to develop and operate his own business, and he held a responsible managerial position in his employment with defendant-employer. As the majority finds, the position plaintiff held with defendant-employer was that of assistant general manager, and consisted primarily of filling in for every other position in the restaurant with brief periods of paperwork. (Finding of Fact #2). The position required plaintiff to spend most of his shift on his feet, which has been established is now beyond his physical capabilities. (Finding of Fact #17). The majority relies most upon plaintiffs establishment of a business to demonstrate his skills as a manager, but there is no evidence of what skills utilized by plaintiff would be transferable to real jobs in the competitive marketplace. The fact that someone starts his own business and manages it through trial and error, at his own speed, and under his own supervision, does not establish a level of skills which would automatically render him capable of obtaining a position running a business for another. Further, the evidence establishes that plaintiff does not work at his business on a full-time basis, nor does it establish that he is capable of working at his business on a full-time basis. (Finding of Fact #15). Accordingly, it has not been shown that plaintiff is capable of working full-time even in a managerial position.
Plaintiff has proven by the greater weight of the evidence that due to his injury and an unrelated ankle problem he was physically incapable of returning to his pre-injury job duties, that he has a permanent impairment to his leg, and that as of the date he reached maximum medical improvement on 14 November 1996 and continuing through and after October 1998, he could only do sedentary work. Plaintiffs prior work history which consisted mainly of working in a restaurant in all positions, including cooking and briefly driving a delivery truck was not sedentary employment. Plaintiff has a GED and no further formal educational training. Therefore, plaintiff has met his burden of proving continuing disability after maximum medical improvement. Defendant has not met its burden to prove that, despite his physical limitations, medical restrictions, his limited education, and his prior work history which consisted primarily of manual labor, plaintiff is capable of working and earning the wages he was receiving at the time of injury in suitable, sedentary employment.
Defendant has only shown that plaintiff has done some work in his own business. Plaintiff has proven that although the work he does in his own business is sedentary, he is able to work at his own pace, that sometimes he is unable to work at all due to pain, that he takes prescription medications for pain day and night, and that approximately four months prior to hearing before the Deputy Commissioner he became physically unable to perform sales, contracting, obtaining job quotes or bids and some of the other functions that he had ordinarily handled. Defendant has not provided plaintiff with vocational assistance to help him locate a suitable, sedentary job. Through his own initiative plaintiff borrowed money from parents and utilized his own money to start a guttering and roofing business, initially with a neighbor. He had no training in guttering, roofing or managing a business in November 1996 when he got started in the business.
The evidence does not establish that plaintiff is capable of earning his pre-injury wages. The majority acknowledges that the records of plaintiffs business "do not indicate plaintiffs actual wage earning capacity, (Finding of Fact #13), and there is no other evidence presented which would provide such an indication. The only evidence of the earnings of plaintiffs own business is "gross receipts from sales based on the efforts of all employees before business expenses are deducted. Absent competent evidence of plaintiffs actual wage earning capacity, the Commission cannot presume that it is equal to or greater than that which existed prior to his injury, especially when that presumption is based upon an unsupported finding that plaintiff possesses the skills necessary to obtain a position in the general marketplace.
Defendant has not proven that any money plaintiff may have earned from his business or that his work in his business demonstrated an ability to compete with others for wages in the competitive job market. An injured employees earning capacity may only be evaluated "by the employees own ability to compete in the labor market. If post-injury earnings do not reflect this ability to compete with others for wages, they are not a proper measure of earning capacity. Peoples v. Cone Mills Corp., 316 N.C. 426, 437, 342 S.E.2d 798, 805-06 (1986). The employees age, education, and work experience are factors which are to be considered when determining his or her capacity to earn wages. See Little v. Anson County Sch. Food Serv., 295 N.C. 527, 246 S.E.2d 743 (1978). An employees earning capacity is based upon his ability to earn a regular income in the labor market. See Larsons Workmens Compensation Law 57.51(e) (1996). Accordingly, an employees ownership of a business is only indicative of earning capacity to the extent that the employee is actively and personally involved in the management of that business and then only to the extent that those management skills are marketable in the labor market. Id. See also, Peoples, 316 N.C. at 438, 342 S.E.2d at 806 (income received from business owned by employee cannot be used to reduce a previously established disability unless the income is the "direct result of the [employees] personal management and endeavors); McGee v. Estes Express Lines, 125 N.C. App. 298, 300, 480 S.E.2d 416, 418 (1997) (emphasizing the importance of an employees ability to earn wages competitively). Therefore, an employees earning capacity through self-employment is limited to those situations in which the employee (1) is actively involved in the management of the business, and (2) possesses management skills which would enable him to compete in the competitive job market. Lanning v. Fieldcrest-Cannon, Inc., 352 N.C. 98, 530 S.E.2d 54 (2000). The determinative issue is whether the skills used by the employee in the furtherance of the operation of his business, considered in conjunction with his impairment, age, education and experience, would enable the employee to compete in the open labor market. Id. Plaintiff in this case was actively involved in the business as his physical condition permitted, but his activity level had diminished tremendously by the time of the hearing before the Deputy Commissioner in May 1999. The skills used by plaintiff in the operation of his business, when considered in conjunction with his past work experience, his impairment, his education, and his current physical limitations, would not enable plaintiff to compete in the open labor market for suitable employment based on these skills.
For these reasons, I vote to reverse the Opinion and Award of the Deputy Commissioner and continue plaintiffs disability compensation until sufficient evidence is presented that suitable jobs are available to plaintiff, that he is capable of obtaining such employment, and that his earning capacity has reached the level of his pre-injury wages. In the alternative, plaintiff is at least entitled to partial disability benefits based upon the difference between his pre-injury wage and his current earnings which arguably could be considered as evidence of wage earning capacity, pursuant to N.C. Gen. Stat. 97-30.
This the ___ day of June, 2001.
S/___________________ BERNADINE S. BALLANCE COMMISSIONER