State budget could end two court battles over disability benefits

North Carolina’s new state budget could end two ongoing court fights over disability benefit payments. Lawyers from the state Department of Justice have asked the state’s highest court to take notice of the budget law as justices consider the cases.

The state Department of Health and Human Services and Cherry Hospital are defendants in one case. The Department of Public Safety is the defendant in the second case. In both instances, lawyers representing state government have asked the Supreme Court to overturn decisions earlier this year from the state Court of Appeals.

At issue is a 500-week limit for “temporary total disability” benefits established in state law.

“[T]hese cases involve the interpretation of N.C. Gen. Stat. § 97-29, a provision of the Workers’ Compensation Act,” according to a court filing Friday from state Justice Department lawyers. “In 2011, as part of a broader reform of the State’s laws that govern workers’ compensation, the General Assembly carefully amended this provision to limit payment of ‘temporary total disability’ benefits to the first 500 weeks following the first date of a claimant’s disability.”

“Under this amended provision, a claimant qualifies for benefits beyond this 500-week period only if the claimant has suffered a ‘total loss of wage-earning capacity,’” Justice Department lawyers explained. “Before this 500-week period, however, a claimant can qualify for benefits by making a lesser showing of ‘total disability’ — in other words, that the claimant may have some work capabilities but cannot find a compatible job.”

The 2011 law “established a carefully calibrated legislative scheme, whereby claimants have to make a more exacting showing of disability to receive benefits after 500 weeks,” state lawyers argued.

In both Sturdivant v. NC Department of Public Safety and Betts v. NC Department of Health and Human Services, the state’s second-highest court “held that the same standard governs whether a claimant is entitled to benefits both before and after 500 weeks,” state lawyers wrote. “That is, the Court of Appeals erroneously read the Act’s use of the different phrases ‘total loss of wage-earning capacity’ and ‘total disability’ to be synonymous, contrary to the unmistakably clear legislative intent.”

One paragraph on page 554 of the 625-page state budget law addresses the dispute.

“Under this clarifying amendment, consistent with the original legislative intent, the term ‘total loss of wage-earning capacity’ in N.C. Gen. Stat. § 97-29(c) that governs the award of benefits after 500 weeks has been defined to mean ‘the complete elimination of the capacity to earn any wages,’” state lawyers wrote. “Underscoring that this definition merely reflects the legislature’s original understanding of this provision, the statute emphasizes that this clarification reflects ‘the intent of the General Assembly when it’ first amended the statute in 2011.”

“[T]his new amendment applies to all claims that ‘accrued or [were] pending prior to’ the effective date of the new amendment. In other words, the amendment applies to the claims for benefits at issue in these cases and others that were pending when this legislation was enacted,” state lawyers argued.

State government’s court filing anticipates a response from plaintiffs in the two cases. “Defendants understand that the Plaintiffs in these and other cases plan to argue that applying this clarifying amendment would be an impermissibly retroactive application of the law, even though it is fully consistent with the General Assembly’s original intent when these reforms were first enacted in 2011.”

“Given the strong likelihood that this meritless argument will be made and cause further uncertainty for the State and private employers about the law in this area, discretionary review remains appropriate,” the Justice Department court filing argued. “Such review would allow this Court to confirm that the 2023 clarifying amendment to N.C. Gen. Stat. § 97-29 reflects the General Assembly’s original intent behind the original 2011 statutory reform. That is, if this Court were to grant review of these cases and reverse the decisions of the Court of Appeals, no question of the 2023 amendment’s retroactive effect would arise in the first place.”

The court filing offered a warning. “[A] contrary reading of the law could impose considerable unexpected workers’ compensation costs on both the State and private employers,” state lawyers wrote. “Indeed, without confirmation on this issue now, there could be years of litigation over this issue in our State’s lower courts, casting doubt and uncertainty over our State’s workers’ compensation system for years to come, when predictability and stability are instead needed.”

 If the state Supreme Court declines to take the two cases, state government lawyers ask the justices to throw out, or vacate, the Appeals Court decisions.

“Vacatur is warranted here because confusion could arise if the decisions of the Court of Appeals remain on the books,” state lawyers wrote. “Below, the Court of Appeals did not have the benefit of our legislature’s clarifying amendment when it ruled. As a result, it adopted a reading of the statute that our legislature has now clarified is wrong.”

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