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  "name": "MICHAEL K. TINSLEY, Employee, Plaintiff v. CITY OF CHARLOTTE, Employee, Self-Insured, Defendant",
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    "judges": [
      "Judges BRYANT and HUNTER, JR. (Robert N.) concur."
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    "parties": [
      "MICHAEL K. TINSLEY, Employee, Plaintiff v. CITY OF CHARLOTTE, Employee, Self-Insured, Defendant"
    ],
    "opinions": [
      {
        "text": "McCullough, Judge.\n\u2022 Attorney Curtis Osborne (\u201cappellant\u201d) appeals from the Opinion and Award filed by the North Carolina Industrial Commission (the \u201cCommission\u201d) on 22 October 2012 that limited his recovery of attorneys\u2019 fees to one-third of the settlement in the third-party case. For the following reasons, we affirm.\nI. Background\nThis appeal arises out of appellant\u2019s representation of Michael K. Tinsley (\u201cplaintiff\u2019) in worker\u2019s compensation and third-party cases. The cases stem from a 1 December 2007 work-related automobile accident in which plaintiff was injured.\nIn the workers\u2019 compensation case, the City of Charlotte (\u201cCharlotte\u201d), plaintiff\u2019s employer, filed an admission of plaintiff\u2019s right to compensation with the Commission on 14 May 2008. Thereafter, on 6 March 2009, the Commission approved an award of permanent partial disability compensation to plaintiff totaling $16,839.12. The award provided for 24 weeks of compensation to plaintiff at a rate of $701.63 per week based on a 10% permanent partial disability rating to plaintiff\u2019s left shoulder.\nThe third-party case subsequently commenced with the filing of a complaint in Mecklenburg County Superior Court on 17 June 2009. In the complaint, plaintiff asserted that the individual driving the second vehicle was negligent and that the individual\u2019s employers were liable for the negligence under theories of respondeat superior and agency. Following the voluntary dismissal of one of the defendants on 8 February 2010, plaintiff filed a motion on.8 April 2010 to stay litigation in the third-party case and compel arbitration. The motion was granted on 19 April 2010. The ensuing arbitration in the third-party case resulted in the entry of an award of $137,500.00 in compensatory damages to plaintiff on 7 July 2010. Plaintiff, however, was only able to recover $100,000, the combined policy limit of the liability and underinsured motorist insurance carriers.\nOn 25 August 2010, plaintiff and Charlotte entered into an agreement \u201cfor final compromise settlement release and distribution of the third party settlement[.]\u201d In the agreement, Charlotte agreed to accept \u201ca net of $15,000.00 from the proceeds of the settlement\u201d in the third-party case in full satisfaction of its $47,295.79 workers\u2019 compensation lien, waiving any farther rights it had under N.C. Gen. Stat: \u00a7 97-10.2. Conversely, plaintiff \u201cagree [d] to accept the aforesaid reduction in lien in full satisfaction of any and all claims, demands, suits, actions, or rights of action\u201d against Charlotte arising as a result of the 1 December 2007 accident.\nTracy H. Weaver, Executive Secretary of the Commission, filed an order on 27 August 2010 approving the agreement and ordering distribution of the proceeds from the third-party case. The order provided the following distribution: $15,000.00 to Charlotte in accordance with the agreement, $33,333.33 to appellant for attorneys\u2019 fees, and the remaining $51,666.67 to plaintiff. The Commission failed to designate funds for the reimbursement of costs.\nOn 2 September 2010, appellant submitted a motion for reconsideration of determination of attorneys\u2019 fees and costs to the Commission. Appellant sought an increase in fees to $38,000.00 and $8,950.29 to reimburse costs. Along with the motion, appellant submitted an affidavit and a copy of the fee agreement, whereby plaintiff and appellant agreed to a contingency fee of thirty-three and one-third percent (33-1/3%) of the gross recovery if litigation was not required and forty percent (40%) of the gross recovery if litigation was required.\nSecretary Weaver filed an order on 9 September 2010, modifying the previous distribution. The new order awarded $8,950.29 to appellant for the reimbursement of costs and reduced plaintiff\u2019s recovery by an equal amount. The new order did not, however, allocate additional funds to appellant for fees. As a, result, appellant appealed the 9 September 2010 order to the deputy commissioner to determine whether N.C. Gen. Stat. \u00a7 97-10.2 was properly applied in distributing the proceeds from the third-party case -- specifically, whether the Commission had jurisdiction to apply N.C. Gen. Stat. \u00a7 97-10.2(f)(1)(b) as a cap on fees.\nOn 29 March 2011, Deputy Commissioner J. Brad Donovan filed an Opinion and Award, affirming Secretary Weaver\u2019s order. Appellant appealed the 29 March 2011 Opinion and Award to the Full Commission.\nOn 18 April 2011, appellant filed a motion to stay the appeal to the Full Commission pending a constitutional challenge to N.C. Gen. Stat. \u00a7 97-10.2(f)(1)(b) to be filed in superior court. Appellant then filed a declaratory judgment action in Mecklenburg County Superior Court on 16 June 2011. In the declaratory judgment action, appellant sought declarations that the cap on attorneys\u2019 fees at one-third of the amount recovered from a third-party in N.C. Gen. Stat. \u00a7 97-10.2(f)(1)(b) is unconstitutional and the Commission exceeded its jurisdiction by capping and approving the fees in the third-party case.\nSubsequent to the filing of the declaratory judgment action, on 24 June 2011, appellant filed a second motion to stay the appeal of the 29 March 2011 Opinion and Award to the Full Commission. Moreover, on 7 July 2011, appellant filed a motion with the Commission to certify questions of law to this Court pursuant to N.C. Gen. Stat. \u00a7 97-86. The questions of law requested certified were the same issues raised by appellant in the declaratory judgment action.\nOn 21 July 2011, an Order for the Full Commission was filed certifying the question of the constitutionality of N.C. Gen. Stat. \u00a7 97-10.2(f)(1) (b) to this Court for review. The order also removed the appeal of the 29 March 2011 Opinion and Award from the Full Commission hearing docket. Appellant filed notice of appeal to this Court on 29 July 2011.\nAs a result of the appeal to this Court, the parties stipulated to a dismissal without prejudice of the declaratory judgment action filed in Mecklenburg County Superior Court.\nDuring the time the appeal was pending in this Court, plaintiff and appellant entered into an agreement to split the difference between the thirty-eight percent (38%) fee claimed by appellant and the thirty-three and one-third percent (33-1/3%) fee awarded by the Commission, the difference amounting to $4,666.67. Accordingly, appellant further reduced his fee to thirty-five and seven-tenths percent (35-7/10%) of the gross recovery. Upon disbursement of the $4,666.67 held in trust, of which plaintiff received a check for $2,300.00, plaintiff signed an agreement dated 2 February 2012, relinquishing any and all claims concerning the remaining funds.\nDespite complete disbursement of the proceeds from the third-party case, the appeal to this Court came on for oral argument on 9 February 2012. Following oral arguments, however, the parties submitted a joint motion to dismiss the appeal and remand to the Commission for additional proceedings concerning non-constitutional issues that arose during the appeal. This Court granted the joint motion for dismissal and remanded the case to the Commission by order filed 7 March 2012.\nThe Full Commission reviewed the case on 1 August 2012. On 22 October 2012, the Opinion and Award for the Full Commission was filed affirming the 29 March 2011 Opinion and Award of Deputy Commissioner Donovan affirming the 9 September 2010 Order of Secretary Weaver. Appellant appealed the Full Commission\u2019s Opinion and Award to this Court on 5 November 2012.\nII. Analysis\nOn appeal, appellant raises issues concerning the subject matter jurisdiction of the Commission and the constitutionality of N.C. Gen. Stat. \u00a7 97-10.2(f)(1)(b). Issues concerning the Commission\u2019s jurisdiction and the constitutionality of a statute are questions of law subject to de novo review.\nSubject Matter Jurisdiction\nThe first issue on appeal is whether the Commission exceeded its subject matter jurisdiction by capping attorneys\u2019 fees from the third-party case at one-third of the gross recovery. We hold the Commission did not exceed its jurisdiction.\n\u201cThe jurisdiction of the Industrial Commission is limited by statute.\u201d Parker v. Thompson-Arthur Paving Co., 100 N.C. App. 367, 369, 396 S.E.2d 626, 628 (1990). In this case, two sections of the Workers\u2019 Compensation Act, N.C. Gen. Stat. \u00a7\u00a7 97-10.2(f)(1) and -90(c), are in apparent conflict.\nIn general, N.C. Gen. Stat. \u00a7 97-10.2 governs the rights of an injured employee and the employee\u2019s employer to enforce the liability of a third party by appropriate proceedings. N.C. Gen. Stat. \u00a7 97-10.2 (2011). When a recovery is \u201cobtained by settlement with, judgment against, or otherwise from the third party[,]\u201d and \u201cthe employer has filed a written admission of liability for [workers\u2019 compensation] benefits..., or... an award final in nature in favor of the employee has been entered by the . . . Commission,\u201d N.C. Gen. Stat. \u00a7 97-10.2(f)(1) provides that the amount recovered from the third party shall be disbursed:\na. First to the payment of actual court costs taxed by judgment and/or reasonable expenses incurred by the employee in the litigation of the third-party claim.\nb. Second to the payment of the fee of the attorney representing the person making settlement or obtaining judgment, and except for the fee on the subrogation interest of the employer such fee shall not be subject to the provisions of G.S. 97-90 but shall not exceed one third of the amount obtained or recovered of the third party.\nc. Third to the reimbursement of the employer for all benefits by way of compensation or medical compensation expense paid or to be paid by the employer under award of the Industrial Commission.\nd. Fourth to the payment of any amount remaining to the employee or his personal representative.\nN.C. Gen. Stat. \u00a7 97-10.2(f)(1) (emphasis added).\nOn the other hand, N.C. Gen. Stat. \u00a7 97-90 governs the Commission\u2019s approval of fees. Subsection (c) of the statute specifically provides that the Commission shall determine the reasonableness of agreements for attorneys\u2019 fees under the Workers\u2019 Compensation Act and determine a reasonable fee if such an agreement is found to be unreasonable. N.C. Gen. Stat. \u00a7 97-9.0(c) (2011). Yet, \u201cthe Commission shall in no event have any jurisdiction over any attorneys\u2019 fees in any third-party action.\u201d Id.\nOn appeal, appellant contends that N.C Gen. Stat. \u00a7 97-90(c) controls when it comes to the Commission\u2019s jurisdiction over attorneys\u2019 fees, whereas N.C. Gen. Stat. \u00a7 97-10.2(f)(1) simply directs the order of distribution. Appellant argues that \u201c[although N.C. Gen. Stat. \u00a7 97-90(c) enables the Commission to approve fees, it does so only for fees in workers\u2019 compensation claims, not third-party actions.\u201d Therefore, based on the plain meaning of N.C. Gen. Stat. \u00a7 97-90(c), appellant contends the Commission lacks jurisdiction to apply N.C. Gen. Stat. \u00a7 97-10.2(f)(1)(b) as a cap on attorneys\u2019 fees in third-party cases. We disagree.\nN.C. Gen. Stat. \u00a7\u00a7 97-10.2(f)(1) and -90(c) are not so easily isolated. Appellant\u2019s argument ignores the second portion of N.C. Gen. Stat. \u00a7 97-10.2(f)(1)(b), which provides \u201cexcept for the fee on the subrogation interest of the employer such fee shall not be subject to the provisions of G.S. 97-90 but shall not exceed one third of the amount obtained or recovered of the third party.\u201d Based on the reference to N.C. Gen. Stat. \u00a7 97-90 in N.C. Gen. Stat. \u00a7 97-10.2(f)(1)(b), it is evident that the General Assembly was aware of the jurisdictional limits of the Commission when it provided that \u201csuch fee . . . shall not exceed one third of the amount obtained or recovered of the third party.\u201d N.C. Gen. Stat. \u00a7 97-10.2(f)(1)(b).\nStatutes in pari materia, although in apparent conflict or containing apparent inconsistencies, should, as far as reasonably possible, be construed in harmony with each other so as to give force and effect to each .... Further, interpretations that would create a conflict between two or more statutes are to be avoided, and statutes should be reconciled with each other whenever possible.\nBarnes v. Erie Ins. Exch., 156 N.C. App. 270, 278, 576 S.E.2d 681, 686 (2003) (internal quotation marks and citations omitted).\nConsidering N.C. Gen. Stat. \u00a7\u00a7 97-10.2(f)(1)(b) and -90(c) in pari materia, we arrive at the same conclusion as this Court did in Hardy v. Brantley, 87 N.C. App. 562, 361 S.E.2d 748 (1987), rev\u2019d in part on other grounds, appeal dismissed in part, 322 N.C. 106, 366 S.E.2d 485 (1988) (for the reasons stated in the dissent).\nAs noted above, N.C. Gen. Stat. \u00a7 97-90(c) provides that the Commission has jurisdiction to determine the reasonableness of an agreement for attorneys\u2019 fees and, where there is no agreement, to determine a reasonable fee. Where the entirety of subsection (c) refers to reasonableness, we interpret the provision, \u201cthe Commission shall in no event have any jurisdiction over any attorneys\u2019 fees in any third-party action[,]\u201d to refer to a determination of reasonableness. Consequently, the cap on attorneys\u2019 fees at one-third of the recovery from a third-party in N.C. Gen. Stat \u00a7 97-10.2(f)(1)(b) does not conflict with N.C. Gen. Stat. \u00a7 97-90(c). Under N.C. Gen. Stat. \u00a7 97-10.2(f)(1)(b), the Commission need not undertake a determination of the reasonableness.\nAccordingly, we construe N.C. Gen. Stat. \u00a7 97-10.2(f)(1)(b) to provide\nthe attorney fee taken from the employee\u2019s share may not exceed one third of the amount recovered, but it is not otherwise subject to the reasonableness requirement of N.C. Gen. Stat. \u00a7 97-90(c); the attorney fee on the subrogation interest of the employer (or its carrier) is subject to the reasonableness requirement of N.C. Gen. Stat. \u00a7 97-90(c) and may not exceed one-third of the amount recovered from the third party.\nHardy, 87 N.C. App. at 567, 361 S.E.2d at 751.\nAppellant contends that it is error to rely on this Court\u2019s decision in Hardy because the decision does not support the interpretation of N.C. Gen. Stat. \u00a7 97-10.2(f)(1)(b) as a cap on attorneys\u2019 fees for two reasons: (1) the majority opinion was reversed by the Supreme Court for the reasons stated in the dissent; and (2) the decision in Hardy did not address an agreement for attorneys\u2019 fees in excess of one-third of the recovery from a third-party. We recognize that both of appellant\u2019s assertions are accurate. Nevertheless, we find this Court\u2019s interpretation of N.C. Gen. Stat. \u00a7\u00a7 97-10.2(f)(1)(b) and -90(c) in Hardy instructive and now adopt it as our own.\nAppellant additionally argues that the purpose of the one-third language in N.C. Gen. Stat. \u00a7 97-10.2(f)(1)(b) is to ensure adequate reimbursement of the employer\u2019s workers\u2019 compensation lien and to regulate employee and employer contributions to attorneys\u2019 fees pursuant to N.C. Gen. Stat. \u00a7 97-10.2(f)(2). As a result, appellant urges this Court to hold that, although the priority of distribution in N.C. Gen. Stat. \u00a7 97-10.2(f)(1) controls, the Commission cannot override a fee agreement in the third-party action when there is enough of a recovery to satisfy the workers\u2019 compensation lien. Therefore, where attorneys\u2019 fees under an agreement in a third-party case remain unpaid following the one-third distribution and full satisfaction of the workers\u2019 compensation lien, appellant asserts that the unpaid portion of attorneys\u2019 fees should be disbursed from the distribution to the employee in N.C. Gen. Stat. \u00a7 97-10.2(f)(1)(d). In support of his assertions, appellant provides mathematical examples and cites various provisions of N.C. Gen. Stat. \u00a7 97-10.2 to demonstrate that the one-third language was not intended to apply as a cap on attorneys\u2019 fees. We are not persuaded. Had the General Assembly intended the distribution scheme appellant urges this Court to adopt, it could have easily provided for it in the statute. As written, we find no such intent in N.C. Gen. Stat. \u00a7 97-10.2(f)(l).\nEqual Protection\nThe second issue on appeal is whether N.C. Gen. Stat. \u00a7 97-10.2(f)(1) (b) is unconstitutional as applied in this case. Appellant contends that the application of N.C. Gen. Stat. \u00a7 97-10.2(f)(1)(b) as a cap on attorneys\u2019 fees recoverable in a third-party case creates an equal protection issue between two classes of civil litigants, those with concurrent workers\u2019 compensation claims and those without.\nAs conceded by appellant, N.C. Gen. Stat. \u00a7 97-10.2(f)(1)(b) does not interfere with a fundamental right or single out a suspect class; thus, the lower tier of equal protection analysis requiring a rational basis applies in the present case. See White v. Pate, 308 N.C. 759, 766-67, 304 S.E.2d 199, 204 (1983) (discussing the two-tiered scheme of equal protection analysis). Under the rational basis standard, we look to see if the \u201cclassification bear[s] some rational relationship to a conceivable legitimate interest of government.\u201d Id. A governmental act is presumed valid when reviewed pursuant to the rational basis standard. Id. at 767, 304 S.E.2d at 204.\nIn this case, appellant contends that the government interest in capping attorneys\u2019 fees in N.C. Gen. Stat. \u00a7 97-10.2(f)(1)(b) is to provide \u201cadequate reimbursement of workers\u2019 compensation liens in third-party actions . . . [thereby] placing the ultimate cost of workplace injuries on the third parties who cause those injuries.\u201d Thus, appellant argues the cap on attorneys\u2019 fees in the present case serves no rational basis because Charlotte\u2019s workers\u2019 compensation hen has been fully satisfied.\nWe agree that reimbursing the employer\u2019s workers\u2019 compensation lien and passing the cost of workplace injuries to those third-parties responsible are legitimate government interests. Yet, they are not the exclusive interests.\nAs recognized by our Supreme Court, the interests behind the Workers\u2019 Compensation Act as a whole are twofold: (1) to compensate the injured worker for their loss of earning capacity; and (2) to insure employer\u2019s limited and determinate liability. Hendrix v. Linn-Corriher Corp., 317 N.C. 179, 190, 345 S.E.2d 374, 381 (1986); see also Radzisz v. Harley Davidson of Metrolina, 346 N.C. 84, 89, 484 S.E.2d 566, 569 (1997). Thus, \u201c[N.C. Gen. Stat. \u00a7] 97-10.2 and its statutory predecessors were designed to secure prompt, reasonable compensation for an employee and simultaneously to permit an employer who has settled with the employee to recover such amount from a third-party tort-feasor.\u201d Radzisz, 346 N.C. at 89, 484 S.E.2d at 569.\nDespite appellant\u2019s attempt to persuade us otherwise, it is axiomatic that increased attorneys\u2019 fees reduce the amount of compensation available from a third-party case to be distributed to an injured worker pursuant to N.C. Gen. Stat. \u00a7 97-10.2(f)(1). Therefore, the cap on attorneys\u2019 fees is rationally related to the legitimate government interest where there is an interest in compensating the injured worker. Accordingly, we hold N.C. Gen. Stat. \u00a7 97-10.2(f)(1)(b) constitutional as applied in the present case.\nIII. Conclusion\nFor the reasons discussed above, we affirm the Opinion and Award of the Full Commission.\nAffirmed.\nJudges BRYANT and HUNTER, JR. (Robert N.) concur.\n. In appellant\u2019s motion for reconsideration, appellant notes that he subsequently agreed to reduce his fee to thirty-eight percent (38%) of the gross recovery if litigation was required.\n. We note that the dissent in Hardy did not disagree with the interpretation of N.C. Gen. Stat. \u00a7 97-10.2(f)(1)(b) that we now adopt. Instead, the dissent took issue with the Court\u2019s conclusion that the Commission \u201chad either the authority or duty to determine the \u2018reasonableness\u2019 of the fee involved.\u201d Hardy, 87 N.C. App. at 568-69, 361 S.E.2d at 752 (Phillips, dissenting).\n. \u201cThe attorney fee paid under (f)(1) shall be paid by the employee and the employer in direct proportion to the amount each shall receive under (f)(1)c and (f)(1)d hereof and shall be deducted from such payments when distribution is made.\u201d N.C. Gen. Stat. \u00a7 97-10.2(f)(2).",
        "type": "majority",
        "author": "McCullough, Judge."
      }
    ],
    "attorneys": [
      "The Sumwalt Law Firm, by Vernon Sumwalt, for Curtis Osborne, Esq., d/b/a Osborne Law Firm appellant.",
      "Attorney General Roy Cooper, by Assistant Attorney General Marc X. Sneed, for defendant appellee."
    ],
    "corrections": "",
    "head_matter": "MICHAEL K. TINSLEY, Employee, Plaintiff v. CITY OF CHARLOTTE, Employee, Self-Insured, Defendant\nNo. COA12-1543\nFiled 6 August 2013\n1. Workers\u2019 Compensation \u2014 attorney fees award \u2014 third-party action \u2014 limited to one third of the recovery\nThe North Carolina Industrial Commission did not exceed its authority in a workers\u2019 compensation case by limiting plaintiff\u2019s \u2022 attorney\u2019s recovery of attorneys\u2019 fees to one-third of the settlement in the third-party case. N.C.G.S. \u00a7 97-10.2(f)(l)(b) provides that the attorney fee taken from the employee\u2019s share may not exceed one-third of the amount recovered, but it is not otherwise subject to the reasonableness requirement of N.C.G.S. \u00a7 97-90(c).\n2. Workers\u2019 Compensation \u2014 attorney fees \u2014 rationally related to interest in compensating injured worker \u2014 constitutional\nN.C.G.S. \u00a7 97-10.2(f)(l)(b), which limits the attorney fee taken from the employee\u2019s share of a third-party settlement when there is a concurrent worker\u2019s compensation action to one-third of the amount recovered, was not unconstitutional as applied in this case. The cap on attorneys\u2019 fees is rationally related to the legitimate government interest where there is an interest in compensating the injured worker.\nAppeal by Attorney Curtis Osborne from the Opinion and Award of the Industrial Commission filed 22 October 2012. Heard in the Court of Appeals 10 April 2013.\nThe Sumwalt Law Firm, by Vernon Sumwalt, for Curtis Osborne, Esq., d/b/a Osborne Law Firm appellant.\nAttorney General Roy Cooper, by Assistant Attorney General Marc X. Sneed, for defendant appellee."
  },
  "file_name": "0744-01",
  "first_page_order": 754,
  "last_page_order": 762
}
