After claimant fell out of a window, a Form 19 was filed by employer indicating that claimant's occupation was "framer/subcontractor" and that he had been "employed" for two and one-half years as a carpenter. The carrier filed a Form 63 Notice to Employee of Payment of Compensation Without Prejudice which indicated that claimant was an employee of employer. The carrier continued to pay compensation to claimant until it received information from employer's attorney that employer considered claimant to be a subcontractor. Although the ninety day payment without prejudice period had run, the carrier immediately discontinued payments and claimant filed for a hearing. Claimant was awarded benefits by the deputy commissioner on the basis that defendants failed to contest the claim within the ninety day period provided by N.C.G.S. §97-18(d).
On appeal, the Court of Appeals found that the carrier could have discovered claimant's true employment status within ninety days "had it made a reasonable investigation of the claim." It also reaffirmed the deputy commissioner's finding that the employer's listing of claimant as a "framer/subcontractor" on the employer's report of injury should have prompted an investigation. The Court found that pursuant to the provisions of N.C.G.S. §97-18(d), defendants waived their right to contest the compensability of claimant's injuries after the running of the ninety day period and, as a result, the award of compensation became final. Moreover, the carrier cannot now assert that the information to set aside the agreement was not reasonably available at the time of the investigation. Higgins v. Michael Powell Builders (citation omitted).
Risk Handling Hint: This case reiterates the pitfalls of the Form 63 payment without prejudice process. It also indicates that the failure to properly investigate claims before admitting them or entering into a Form 63 agreement may result in an inability to assert certain defenses when later discovered. Lastly, and perhaps most importantly, the decision reminds us that failing to contest a Form 63 agreement within ninety days can result in the agreement becoming "an award of the Commission," arguably complete with an ongoing presumption of disability.