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King William County v. Jones

Court of Appeals of Virginia

August 9, 2016




          J. David Griffin (John D. Hasselberger; Winchester Law Group, P.C., on briefs), for appellants.

          Robert L. Flax (Robert L. Flax, P.C., on brief), for appellee.

          Amicus Curiae: Virginia Trial Lawyers Association (Kathleen Grace Walsh; Gregory O. Harbison; Law Office of Kathleen Grace Walsh; Harbison & Kavanagh, PLLC, on brief), for appellee.

          Present: Chief Judge Huff, Judges Humphreys, Petty, Beales, Alston, Chafin, Decker, O'Brien, Russell, AtLee and Malveaux Argued at Richmond, Virginia



         King William County and its insurer ("employer") appealed the Commission's award of disability benefits to the claimant, Linda Jones, asserting multiple assignments of error. In a unanimous opinion, a three-judge panel of this Court affirmed the Commission regarding certain of its factual findings. King William County v. Jones, 65 Va.App. 536, 544-50, 779 S.E.2d 213, 217-20 (2015).[1] The panel, however, reversed the award of disability benefits, holding that claimant failed to establish that she was entitled to benefits because "the record does not support the conclusion that claimant's inability to obtain employment after being laid off was causally related to her partial disability . . . ." Id. at 556, 779 S.E.2d at 223.

         Claimant sought en banc review, arguing in part that the panel decision "unfairly held that [claimant] did not prove that her unsuccessful search for work was due to her injury . . . ." Claimant also asserts that the panel decision was inconsistent with the prior decisions of this Court in Carr v. Atkinson/Clark/Shea, A Joint Venture, 63 Va.App. 281, 756 S.E.2d 191 (2014), and Utility Trailer Mfg. Co. v. Testerman, 58 Va.App. 474, 711 S.E.2d 232 (2011). Although, as will be discussed below, we find that the panel opinion is consistent with both Carr and Utility Trailer, we recognize that those cases are in conflict with our prior decisions in Metro Mach. Corp. v. Lamb, 33 Va.App. 187, 532 S.E.2d 337 (2000), and Metro Mach. Corp. v. Sowers, 33 Va.App. 197, 532 S.E.2d 341 (2000).[2] We granted rehearing en banc to resolve the conflict.


         Even before reaching this Court, claimant's quest for benefits had an extensive and procedurally complex history, requiring multiple hearings before a deputy commissioner and resulting in two separate review opinions from the full Commission. Because the underlying factual and procedural history is fully set forth in the panel opinion, Jones, 65 Va.App. at 539-43, 779 S.E.2d at 215-17, we restate only the facts that are necessary to understand the issue before us.

         Claimant worked as a part of employer's custodial staff for a number of years. On April 13, 2011, claimant fell from a ten-foot ladder while she was, as part of her duties, cleaning a window in the courthouse lobby. She suffered multiple injuries, and there is no dispute that the injuries arose out of and in the course of her employment. Despite her partial disability, she returned to work for her employer and worked in a light-duty capacity until June 30, 2011, when her work for employer ended.

         Claimant's tenure with employer ended not because of her injury, but rather, because, prior to claimant's accident, employer decided to outsource its custodial needs. Specifically, it decided to eliminate all custodial positions and entered into a contract with a private entity, Jani-King, to provide the custodial services. Jani-King's services under the contract did not commence until July 1, 2011. During the interval between the decision to eliminate the custodial positions and the commencement of Jani-King's services pursuant to the contract, the existing members of employer's custodial staff, including claimant, continued to work in their respective positions.

         Initially, none of employer's custodians were hired by Jani-King when it began performing its duties under the contract. Approximately one year after Jani-King began providing custodial services for employer, one of employer's former custodians was hired by Jani-King. Claimant never sought a position with Jani-King.

         After her employment with employer ended, claimant unsuccessfully sought jobs in the area in which she lived. Although claimant's testimony established that she applied for jobs with various employers, there was no evidence that she was not hired because of her partial disability. In fact, there is no evidence that the prospective employers were even aware that claimant was under any medical restrictions.

         The deputy commissioner denied claimant's application for benefits for multiple reasons, including a conclusion that the claim was barred by the economic loss rule because there was no causal connection linking claimant's lost wages to her injury. The full Commission reversed. The Commission determined that, because "the claimant was laid off from her selective employment job, she was entitled to continuing disability benefits[, ]" and, citing Utility Trailer, found that "[w]ages were lost and there was a causal connection between the wage loss and the claimant's injuries." Accordingly, the Commission awarded claimant benefits.[3]

         Employer appealed to this Court, presenting multiple assignments of error. Of significance here, one of employer's assignments of error was that "[t]he Workers' Compensation Commission erred in its reversal of the [d]eputy [c]ommissioner's determination that the claimant's lost time was barred by the economic loss rule." Although the Commission's opinion asserted that there was a causal relationship between claimant's economic loss and her injuries, the panel of this Court noted that the Commission "cited no evidence to support its conclusion[, ] . . . [and] the record . . . is devoid of such evidence." Jones, 65 Va.App. at 555, 779 S.E.2d at 222. Accordingly, the panel reversed.

         Claimant sought rehearing en banc regarding the panel's resolution of the economic loss rule issue. This Court granted the motion for rehearing en banc on the question of whether the record supported a conclusion that claimant had suffered an economic loss as a result of her work-related injuries. For the reasons that follow, we hold that the record does not support such a conclusion and reverse the Commission's award of benefits.


         I. Standard of Review

         Employer contends that its responsibility to pay disability benefits to claimant ended when employer eliminated all of the custodial positions. Employer reasons that the loss of claimant's position was not caused by her partial disability, and therefore, she is not entitled to continued benefits. Claimant counters that employer is required to continue to pay her disability benefits because she remains partially disabled, and therefore, is at a disadvantage in the marketplace.

         We review whether the elimination of positions terminates an employer's responsibility to pay continuing benefits to a partially disabled worker de novo. Carr, 63 Va.App. at 283, 756 S.E.2d at 192. In conducting our review, we are mindful that "the provisions of the [Workers'] Compensation Act are to be liberally construed, " but recognize that it was not intended to serve as a substitute for "unemployment insurance." Vega Precision Labs., Inc. v. Jwayyed, 218 Va. 1026, 1032, 243 S.E.2d 228, 231 (1978). Finally, we review the evidence in the light most favorable to the claimant because she prevailed below and will reverse a factual finding of the Commission only if it is not supported by credible evidence in the record. VFP, Inc. v. Shepherd, 39 Va.App. 289, 292, 572 S.E.2d 510, 511-12 (2002).

         II. Partial Versus Total Disability

         It is important to recognize that, having returned to a light-duty position, claimant was only partially disabled as opposed to totally disabled. This is a significant distinction. McKellar v. Northrop Grumman Shipbuilding, Inc., 290 Va. 349, 357, 777 S.E.2d 857, 861 (2015) (contrasting the different standards for claims of total disability under Code § 65.2-500 and claims of partial disability under Code § 65.2-502).

         The standard in cases involving total disability is whether the injury caused a loss of earning capacity. As stated by the Supreme Court in McKellar, "an injured worker's status in the labor market is irrelevant where the worker's incapacity is total . . . [, and thus, ] the loss of earning capacity test is the proper standard for awarding compensation in cases of total incapacity under Code § 65.2-500." Id. (emphasis added). In contrast, partial disability cases are not analyzed under the loss of earning capacity rubric, but rather, "Code § 65.2-502 presumes that where an injured worker is only partially disabled, that employee can continue working either on restricted duty or in an altogether new job. As a result, economic loss is the appropriate test for the compensation award in cases of partial incapacity . . . ." Id. (emphasis added).

         The difference between loss of earning capacity and economic loss is more than mere semantics. A loss of earning capacity can be established at a high level of abstraction because "a[ totally] injured worker's status in the labor market is irrelevant." Id. An economic loss analysis is far more granular, requiring proof that a claimant suffered an actual economic loss in the labor market and did not merely lose the theoretical capacity to perform abstract job functions.[4]

         In a typical case of partial disability, the fact that a claimant's employment is terminated while on partial disability often may provide evidence of an economic loss. For example, if a partially disabled claimant cannot return to pre-injury employment with the employer even though her position continues to exist and the employer offers no selective employment consistent with the claimant's restrictions, a claimant has produced some evidence that she has suffered an economic loss as a result of her injury-but for her work-related injury, she would still be in her pre-injury position.[5]

         III. Entitlement to Benefits in the Face of Layoffs and Furloughs

         The equation is different, however, when, as here, the claimant's employment with employer comes to an end because her position is eliminated along with the positions of her able-bodied colleagues. In such cases, although a claimant will have lost wages, evidence is required to establish that the loss of wages was caused by, or was in any way related to, her injury.

         Professor Larson has summarized the general rule as follows: "Loss of employment should not be deemed due to disability if a worker without the disability would lose employment or suffer a reduction in earnings under the same economic conditions . . . ." 7 Lex K. Larson, Larson's Workers' Compensation Law § 84.03 (Matthew Bender, rev. ed. 2015). Having stated the general rule, Larson recognizes that it is simple to state, but difficult to implement, noting that "whether this formula can be applied with any precision may be open to question." Id. The inconsistencies in our prior cases amply demonstrate this difficulty.

         A. The Metro Machine Cases

         In Lamb, a claimant who was under medical restrictions caused by a prior, compensable accident sought wage benefits when he, along with other employees, was laid off "from selective employment, due to the employer's loss of Navy ship repair work" and resultant "plant shut down." 33 Va.App. at 196, 532 S.E.2d at 341. We affirmed the Commission's award of benefits. Reasoning that "[u]ntil the employee can perform at his pre-injury capacity, he is protected from the economic vicissitudes of the market place, " we concluded that an "employee's layoff due to the employer's economic downturn does not preclude his entitlement to disability benefits." Id. at 197, 532 S.E.2d at 341.

         Similarly, in Sowers, we affirmed the Commission's award of benefits to a partially disabled worker who was subject to a layoff, focusing on the injury's effect on the worker's earning capacity in the abstract and noting that he was entitled to benefits because he "did not have the same opportunity or ability as other employees to find other employment." 33 Va.App. at 209, 532 S.E.2d at 347. See also Consol. Stores Corp. v. Graham, 25 Va.App. 133, 137, 486 S.E.2d 576, 578 (1997) ("[T]he employer's financial condition and the availability of alternative work do not affect the claimant's right to compensation due to an impaired capacity to perform his pre-injury duties.").

         B. Utility Trailer and Carr

         We returned to the issue in Utility Trailer. In Utility Trailer, the claimant had been involved in a compensable accident working on a manufacturing line in 2006 and had returned to work for the employer on the manufacturing line in a light-duty capacity. In 2009, in order to perform an inventory, employer furloughed all employees, including the claimant, for four days. The claimant sought wage benefits for the four days of work he missed as a result of the furlough. 58 Va.App. at 475-76, 711 S.E.2d at 232-33. The employer argued that the claimant was not entitled to benefits because any wages lost during the furlough were not caused by his partial disability, but rather, such loss was caused by the furlough of all of the manufacturing line employees. A divided Commission found for the claimant and awarded benefits.

         We reversed. While acknowledging that a claimant limited to light-duty status could be entitled to benefits under such scenarios, we held that he must establish that his partial disability placed him at a disadvantage when compared to non-restricted workers and show that there was a "causal relationship between his loss of wages and his injury." Id. at 482, 711 S.E.2d at 236. We concluded by holding that "[i]ndeed, the language of Code § 65.2-502 ('when the incapacity for work resulting from the injury is partial . . . .') admits of no interpretation but that a causal relationship is required." Id. at 483, 711 S.E.2d at 236 (citations omitted). Finding that the claimant had failed to meet these requirements, we reversed the Commission's award of benefits.

         Next, in Carr, citing Utility Trailer with approval, we upheld an award of benefits to a partially disabled worker who was subject to a furlough, but reiterated the established principle that a partially disabled claimant seeking disability benefits in this scenario has the burden of demonstrating that "the wage loss is causally related to the partial incapacity." Carr, 63 Va.App. at 285-86, 756 S.E.2d at 193.[6] Cf. Pocahontas Fuel Co. v. Agee, 201 Va. 678, 681, 112 S.E.2d 835, 837 (1960) (holding that granting disability benefits to a worker who has been laid off is "warranted if the Commission could reasonably find . . . that because of his disability he was unable to market his remaining capacity for work" (emphasis added)); Pocahontas Fuel Co. v. Barbour, 201 Va. 682, 684, 112 S.E.2d 904, 906 (1960) (stating that "[o]ne who has suffered a partial physical disability may obtain total incapacity payments if, because of his disability, he is unable to market his remaining capacity for work" (emphasis added)).

         C. Resolving the Inconsistency

         Thus, in the Utility Trailer and Carr line of cases, we have held that a claimant bears the burden of establishing a causal link between the work-related partial disability and the claimed economic loss. In contrast, the Metro Machine line of cases did not require such proof, allowing the mere fact of disability and an unrelated loss of position to establish an entitlement to benefits.

         Despite our best efforts to harmonize both lines of cases, we now recognize that they simply cannot be reconciled. For the reasons that follow, today we affirm the Utility Trailer ...

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