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Goodson v. N.C. Dep't of Insurance ex rel Long7/19/2005
elter had voluntarily terminated their status as a self-insured employer in North Carolina. DOI released Glatfelter's bond. In a subsequent memorandum regarding self-insured corporations, Ennis noted Glatfelter sold the Ecusta Division to RFS, who assumed all liabilities and posted a $1.6 million certificate of deposit as a "dollar for dollar exchange with [Glatfelter's] surety bond [and Glatfelter's] surety bond company was granted a full release from liability." A second memorandum by Ennis the following month added that DOI "notified the Industrial Commission of the transfer of the loss claims to to ensure the appropriate legal responsibility for their discharge." As noted previously, RFS assumed control of the operations of the Ecusta Division. Besides the certificate of deposit with DOI, RFS was insured at all times from 8 August 2002 to 23 September 2003 for claims arising during that period but not for prior pending claims. DOI did not require RFS to become self-insured when it posted the bond. In October 2002, RFS filed petitions in bankruptcy. RFS made no payments for plaintiff's admittedly compensable claim after 30 September 2002 yet failed to follow statutory procedures to terminate compensation.
Glatfelter and SIGA denied liability for payments on plaintiff's claim. North Carolina Chief Deputy Commissioner Stephen Gheen initiated a proceeding ex mero motu concerning continued payments of workers' compensation benefits from RFS and/or Glatfelter, and in an order entered 3 December 2002, the deputy commissioner added Glatfelter, SIGA, and DOI as parties. After a hearing on the matter and completion of the record, Deputy Commissioner George R. Hall, III, entered an opinion and award providing, in relevant part, as follows: (1) there were no additional necessary parties; (2) the acquisition agreement did not effectuate a valid transfer of Glatfelter's workers' compensation liabilities to RFS by virtue of N.C. Gen. Stat. § 97-6 (2003) and the lack of a statutory scheme permitting a self-insured employer to transfer liabilities for workers' compensation claims by private contractual agreement; (3) Glatfelter, as plaintiff's self-insured employer at the time of the injury, was responsible for paying the compensable claim; (4) DOI erroneously released Glatfelter's bondbecause no "special release bond" as required by N.C. Gen. Stat. § 97-185(g) (2003) had been posted and Glatfelter had not fully discharged its obligations under the Workers' Compensation Act; (5) the certificate of deposit posted by RFS did not qualify as a "special release bond" because RFS was not a corporate surety as defined by N.C. Gen. Stat. § 97-165(5) (2003); and (6) SIGA's liability was not at issue since RFS' certificate of deposit was not implicated.
The Commission affirmed the opinion and award on appeal but modified certain provisions, in relevant part, as follows: (1) the agreements between Glatfelter and RFS, to the extent they purported to transfer workers' compensation liabilities, were void ab initio as a matter of law and public policy; (2) Glatfelter negotiated its workers' compensation liabilities into the sales price of the Ecusta Division, and the purpose of the certificate of deposit posted by RFS was "to secure . . . the self-insurer's claims liability to insure that injured workers' injuries on the job will be properly compensated, irrespective of the employer's financial condition"; and (3) Glatfelter erroneously relied on the posting of the certificate of deposit by RFS to bring Glatfelter into compliance with the "special release bond" provisions. In its award, the Commission ordered the use of the certificate of deposit posted by RFS based on the purpose stated in the award and opinion. The Commissio
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