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Goodson v. N.C. Dep't of Insurance ex rel Long7/19/2005
RFS was the type of device contemplated by N.C. Gen. Stat. § 97-6 such that adjudication of the validity of that device fell within the scope of the Commission's delegated authority under N.C. Gen. Stat. § 97- 91.
Nor is our conclusion affected by the reasoning in TIG, which involved a dispute between an insurance company that provided workers' compensation coverage and an insurance company that provided excess workers' compensation coverage. TIG, 932 F.Supp. at 135. Neither TIG nor Clark v. Ice Cream Co., 261 N.C. 234, 134 S.E.2d 354 (1964), upon which the TIG opinion relied, implicatedthe operation of N.C. Gen. Stat. § 97-6 but, rather, concerned whether coverage ever arose under the terms of the contract for excess workers' compensation insurance. This assignment of error is overruled.
IV. Purported Transfer of Liabilities
Having determined the Commission had jurisdiction to make a determination with respect to the validity of the purported transfer of liabilities by Glatfelter to RFS, we now turn to whether the Commission properly decided the question. The Commission concluded that "to the extent the agreements purported to transfer Glatfelter's workers' compensation liabilities" under the Act, the agreement violated N.C. Gen. Stat. § 97-6 and was void ab initio. As this issue concerns statutory interpretation of the Act, it is a question of law we review de novo.
We have previously stated that an employer is "primarily liable to an employee for a workers' compensation award" and "'must pay benefits to its employees, whether the employer has the necessary insurance, is self-insured, or has no insurance at all.'" Tucker v. Workable Company, 129 N.C. App. 695, 700, 501 S.E.2d 360, 364 (1998) (quoting Ryles v. Durham County Hospital Corp., 107 N.C. App. 455, 461, 420 S.E.2d 487, 491 (1992)). Every employer is required to secure its obligations under the Act by either insuring its workers' compensation liability or self-insuring where it has the financial ability to pay for benefits. N.C. Gen. Stat. § 97-93 (2003). Noticeably absent in the Act, however, is a provision allowing one employer to effectively escape any obligation underthe Act by transferring en toto all of its obligations to another employer by contract or otherwise. Moreover, we agree with the Commission that any attempt to do so would conflict with the plain language of N.C. Gen. Stat. § 97-6 as an attempt to "relieve an employer [by contract] . . . of an obligation created" by the Workers' Compensation Act.
This does not mean, of course, that an employer is precluded from selling a division of a company to another. In such circumstances, the selling employer remains primarily liable for any workers' compensation liability arising during the time of ownership, and the selling employer is free to recover the costs associated with securing that liability in the purchase price of the division. Moreover, a selling employer may freely cease to self-insure if it complies with the following mandatory provision of N.C. Gen. Stat. § 97-185(g) (2003):
If a self-insurer ceases to self-insure . . . the self-insurer shall notify the Commissioner [of Insurance], and may recover all or a portion of the securities deposited with the Commissioner [of Insurance] upon posting instead an acceptable special release bond issued by a corporate surety in an amount equal to the total value of the securities. The special release bond shall cover all existing liabilities under the Act plus an amount to cover future loss development and shall remain in force until all obligations under the Act have been discharged fully.
Subsection (h) prohibits release of a self-insurer's deposits by the
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