Summary
construing the predecessor statute to the current VA. CODE ANN. § 65.2-524 (2007 Repl.Vol.) to mean that the date of mailing was the date compensation was paid, because it avoids insurer liability
Summary of this case from Stachowski v. SyscoOpinion
45058 No. 0832-85
Decided March 4, 1986
(1) Constitutional Law — Equal Protection — Standard. — Equal protection of the laws is not violated when action taken is reasonably related to a proper purpose and is not arbitrary or discriminatory.
(2) Workers' Compensation — Benefits — Payment. — In computing the date by which benefits must be paid, the day following the award is the first day to be counted.
(3) Workers' Compensation — Benefits — Payment. — Actual receipt of benefits by the claimant is not the sole method of determining when a benefit is "paid" within the meaning of the act.
(4) Statutory Construction — Penalties — Standard. — Where a statute imposes a penalty, it must be strictly construed in favor of the party on whom the penalty is sought to be imposed.
(5) Workers' Compensation — Benefits — Payment. — A benefit is "paid" when payment is mailed directly to the claimant, at his current residential address, within two weeks after it becomes due.
(6) Workers' Compensation — Benefits — Payment. — Compensation must be paid directly to the claimant; this ruling applies even in cases where the employee is represented by counsel.
Benjamin J. Trichilo (Lewis Trichilo, on brief), for appellant.
Julia H. Butler (Ashcraft Gerel, on brief), for appellee.
SUMMARY
Employer appealed a decision of the Industrial Commission that assessed a twenty percent late payment penalty. Employer argued that the Commission's rules and practices were contrary to law and the constitution.
The Court of Appeals affirmed. The Court held that while the Commission erred in not following the law which provides that in computing the time allowed for doing an act, that time shall be allowed in addition to the day on which the judgment occurred, the Commission did not err in holding that a benefit is "paid" within the meaning of the act only when actually received by the claimant or mailed to the claimant within two weeks after it is due.
Affirmed.
OPINION
Audobon Tree Service appeals from an Industrial Commission decision assessing a twenty percent late payment penalty, pursuant to Code Sec. 65.1-75.1, for alleged late payment of benefits to Eric L. Childress. The award of benefits was based on a supplemental memorandum of agreement submitted by the parties. The issue presented on appeal is whether the penalty should have been assessed. While we agree with the Commission's decision that the penalty should have been assessed, we reach this conclusion for different reasons.
Code Sec. 65.1-75.1 provides: "If any payment is not paid within two weeks after it becomes due, there shall be added to such unpaid compensation an amount equal to twenty percent thereof."
On August 29, 1983, Childress sustained frostbite in his lower left leg as a result of and in the course of his employment. He received an award of temporary total disability benefits through January 1, 1984. On February 27, 1984, Childress filed an application for a change in condition, alleging continuing disability. On March 22, 1984, a deputy commissioner awarded Childress compensation for temporary total disability beginning January 2, 1984, and continuing until modified.
Childress returned to work on March 19, 1984, and compensation was paid through part of April, 1984. On July 12, 1984, he filed an application for a hearing, alleging a thirty percent permanent partial impairment to his lower left leg. Apparently, no action was taken on this application. He filed an application for a change in condition on October 4, 1984, alleging the same disability rating.
On January 23, 1985, a deputy commissioner entered an award providing Childress with benefits for fifty-two and one half weeks, commencing April 10, 1984. This award was based on the parties' stipulation that Childress had sustained a thirty percent permanent disability as a result of and in the course of his employment.
Childress' first compensation payment under this award was received by his attorney on February 8, 1985. The letter accompanying the check was dated February 6, 1985. Childress received the check by mail from his attorney on February 11, 1985. In a letter to the Commission dated February 11, 1985, Childress' attorney alleged that Childress had not been paid within two weeks of the date of the award. She therefore requested that Audobon be assessed a twenty percent penalty pursuant to Code Sec. 65.1-75.1. No evidence or argument was heard on the matter. In a letter dated February 28, 1985, the Chief Deputy Commissioner assessed Audobon with a twenty percent penalty.
At Audobon's request, the full Commission reviewed this decision. At the time of its review, the Commission had been presented with two affidavits for consideration. One affidavit was filed by Augustina Ammah, the Claims Representative for Audobon's insurance company. Ammah stated that her company did not receive notice of the January 23, 1985, award of the Commission until January 28, 1985. She further stated that she mailed Childress' check to his attorney on February 6, 1985.
The second affidavit before the Commission was filed by Debra Erwin, secretary to Childress' counsel. Erwin stated that on February 8, 1985, her office received Childress' check. She sent the check to Childress by certified mail, with a return receipt requested. She stated that her receipt indicated that Childress had received the check on February 11, 1985.
On May 24, 1985, the Commission affirmed the Chief Deputy Commissioner's assessment of the penalty. The Commission restated its position that for the purposes of Code Sec. 65.1-75.1, compensation is "due" on the date of the award. The Commission further held that payment is "paid" under Code Sec. 65.1-75.1 only after it has been received by the claimant.
We first address the issue of when payment becomes "due" within the meaning of Code Sec. 65.1-75.1. Audobon argues that the Commission's determination of this issue was arbitrary and capricious, and deprived it of due process and equal protection of law. Audobon claims denial of equal protection based on the fact that because of geographic location, some employers and insurers receive notice of an award by mail sooner than others, and thereby have more time to issue payment.
(1) We find no merit in Audobon's assertion that this constitutes a denial of equal protection. The Commission's interpretation of when payment becomes due under Code Sec. 65.1-75.1 is reasonably related to a proper purpose and is not arbitrary or discriminatory. Meeting this test, it does not violate the constitutional rights of equal protection and due process. Duke v. Pulaski County, 219 Va. 428, 438, 247 S.E.2d 824, 829 (1978). The legitimate purpose served by this interpretation of Code Sec. 65.1-75.1 is the provision of a uniform time for payment. It also establishes a fixed payment date known to all parties, and ensures prompt payment to workers whose right to benefits have already been established. Therefore, while it may be that some employers and insurers receive their mail sooner than others, there is no showing of lack of adequate notice nor is there any showing of how some employers are significantly disadvantaged by the rule. This interpretation of the statute, therefore, does not constitute invidious discrimination.
Audobon also argues that payment could not become due before the twenty day period for appeal to the full Commission had expired. A claimant's right to receive payment, however, is fixed as of the date of award, just as one's rights are fixed under a judgment order of a court. Further, Code Sec. 65.1-98.1, which provides for interest on appealed awards, states: "All awards entered by the Commission shall take effect as of the date thereof." In this case, Audobon did not request the full Commission to review the January 23, 1985, award. For this reason, it may not argue that the twenty day appeal period affected the date payment was due under Sec. 65.1-75.1. Therefore, based on these facts, we find that payment became "due" as of the date of the award.
Code Sec. 65.1-97.
Audobon next argues that Code Sec. 1-13.3 applies to payments made pursuant to the Workers' Compensation Act. It asserts that the time for computing the two week period under Code Sec. 65.175.1 began on the day following the award. The Commission's practice, however, is to begin computing the two week payment period as of the date of the award. We believe that the Commission's method of computation is incorrect.
Code Sec. 1-13.3 provides that: "[w]hen a statute requires a notice to be given or any other act to be done within a certain time after any event or judgment, that time shall be allowed in addition to the day on which the event or judgment occurred."
(2) The language of Code Sec. 1-13.3 clearly provides that in computing the time allowed for the doing of an act, "that time shall be allowed in addition to the day on which the event or judgment occurred." By its own terms, Sec. 1-13.3 applies to all statutes which provide for a notice or any other act to be done within a given time. The statute makes no exception for times computed pursuant to the Workers' Compensation Act. We hold that Code Sec. 1-13.3 is applicable to payments made pursuant to the Workers' Compensation Act and that the day following the award is the first day to be counted in computing the time allowed for making payments pursuant to an award.
Audobon further argues that it was denied due process of law because the Commission assessed a penalty without providing for an evidentiary hearing. We do not reach the substance of this argument because Audobon never requested, and therefore was never denied, an evidentiary hearing. Rule 5A:18.
We turn now to Audobon's argument that a payment is "paid" under Code Sec. 65.1-75.1 if it is mailed to the claimant within two weeks after it becomes due. This argument is in direct contravention of Commission precedent, and to date has not been addressed in either this court or the Supreme Court.
(3) In Hodge v. Great Coastal Express, O.I.C. (December 20, 1984), the Commission, in determining a payment due date, indicated that compensation is paid when actually received by the claimant. Although the actual holding of Hodge concerned the question of when compensation is "due" under Code Sec. 65.1-75.1, the result reached by the Commission incorporated a finding that actual receipt by the claimant is the event which fixes the time when compensation is "paid" under that section. In the case before us, the Commission stated: "[W]e further hold that payment is 'paid' only upon receipt of such payment by the claimant."
The language of Code Sec. 65.1-75.1 requires that payment be paid within two weeks after it becomes due. Nothing in the language of the statute suggests that "paid" means "received by the claimant." Further, if we were to find that "paid" means received by the claimant, payments would have to be mailed with a return receipt requested in order for the employer to prove when the claimant actually received payment. In many cases, claimants would not be present to sign the return receipt the first time delivery is attempted. This would create further delays in receiving benefit payments, thereby frustrating the purpose of Code Sec. 65.1-75.1.
Also, if a claimant was not physically present the first time delivery of his check was attempted, he could create a penalty situation where one should not fairly exist. If he received a notification of certified mail being held for him at the post office within the two week period set out in Code Sec. 65.1-75.1, but chose to delay obtaining the mail until after the two week period had expired, the employer would be required to pay a penalty pursuant to Code Sec. 65.1-75.1, although it had done nothing to contribute to the delay.
We do not believe that the legislature intended these results. Further, if the legislature had intended that actual receipt by the claimant was the test for when a benefit was "paid," it could have easily so stated in Code Sec. 65.1-75.1. Based on the foregoing, we find the Commission erred in holding that a benefit is "paid" when actually received by the claimant.
(4-5) Audobon asks us to hold that mailing payment to the claimant within two weeks after a benefit becomes due is sufficient to satisfy the requirements of Code Sec. 65.1-75.1. Where a statute imposes a penalty, it must be strictly construed in favor of the party on whom the penalty is sought to be imposed. Dennis v. Robertson, 123 Va. 456, 470, 96 S.E. 802, 806 (1918); Eaton v. Sealol, Inc., 447 A.2d 1147, 1148 (R.I. 1982). We hold that under Code Sec. 65.1-75.1 a benefit is "paid" when payment is mailed directly to the claimant, at his current residential address, within two weeks after it becomes due.
See Code Sec. 65.1-100.2.
(6) Although the Commission erred in its determination of when a benefit is "paid" under Code Sec. 65.1-75.1, application of the proper standard to the facts before us still mandates imposition of the penalty against Audobon. Childress' check was not mailed directly to him. Instead, the insurer mailed it to his counsel. This was done in violation of Rule 12 of the Commission which states: "All compensation due an injured employee . . . under the Virginia Workers' Compensation Act must be paid direct to the beneficiary or beneficiaries. This ruling applies in cases in which the employee is represented by counsel, as well as in cases in which he has no representation."
The Commission's award was dated January 23, 1985. Pursuant to Code Sec. 1-13.3, January 24, 1985, was the first day of the two week period by which Audobon was required to make payment pursuant to Code Sec. 65.1-75.1. The fourteenth day of the two week period, therefore, was February 6, 1985. Because Audobon did not mail Childress' check directly to him by February 6, 1985, the last date allowed under Code Sec. 65.1-75.1, and Childress did not actually receive his check within this time period, Audobon violated the provisions of Code Sec. 65.1-75.1. For this reason, we find that the Commission was correct in imposing the late payment penalty on Audobon and accordingly, the decision is affirmed.
Affirmed.
Koontz, C.J., and Benton, J., concurred.