Economic Downturn Recognized as a Cause of Lost Earning Capacity: NC Workers’ Compensation Ruling



The significant economic downturn in North Carolina has provided employers and insurance carriers a relatively new approach to defending claims for ongoing temporary total indemnity benefits. Defendants are increasingly turning the Industrial Commission’s attention to the effect of a depressed economy on claimants’ earning capacities. Just this fall, the North Carolina Court of Appeals filed an opinion finding that a claimant’s reduced earning capacity was solely a result of economic conditions and not his compensable injury. Medlin v. Weaver Cooke Construction, LLC, 748 S.E.2d 343 (filed Sep. 3, 2013).

Claude Medlin was an experienced project manager and estimator working for Weaver Cooke Construction. He graduated from North Carolina State University with a degree in civil engineering in 1974 and since that time had been employed in the construction industry as a project engineer, project manager, and estimator. While moving around some furniture at a worksite one day, Medlin injured his right shoulder. His workers’ compensation claim was deemed compensable and he received medical treatment while continuing to work for Weaver Cooke. However, the economic downturn hit Weaver Cooke especially hard in 2008. The company was forced to lay off two-thirds of its workforce, including Medlin.

After reaching maximum medical improvement and receiving permanent restrictions, Medlin began to look for work, and he was no slacker. He claimed to have made hundreds of job inquiries after being laid off. Unfortunately, none seemed to have panned out.

Weaver Cooke and its carrier, Key Risk, then filed an Application to Terminate Payment of Compensation arguing that Medlin could no longer establish disability as his inability to find work was due to the economic downturn and not his physical restrictions. The Full Commission sided with the employer and the case was appealed to the North Carolina Court of Appeals.

In evaluating the case before it, the Court of Appeals stated that “disability” in North Carolina Workers’ Compensation law means an “incapacity, due to injury, to earn the same wages which the employee was receiving at the time of injury in the same or any other employment.” Medlin argued that he met second prong for establishing disability laid out Russell v. Lowe’s Prod. Distribution stating, “the employee may meet this burden [by producing]…evidence that he is capable of some work, but that he has, after a reasonable effort on his part, been unsuccessful in his effort to obtain employment.” 

The court clarified that Russell provides an analytical framework through which a claimant can demonstrate the required link between wage loss and the work related injury. Just showing that you tried to find employment, but were unable to do so, is not enough to establish disability if it doesn’t show some causal link between your injury and why you were turned down for a job. 

In upholding the Commission’s order terminating Medlin’s indemnity benefits, the Court of Appeals emphasized that what claimants need to show in order to prove on-going disability is a causal connection between wage loss and their injuries. Without that causal link, evidence of job search efforts is not enough to establish ongoing disability. The court also relied heavily on expert testimony provided by a vocational case manager. After evaluating two labor market surveys, the expert concluded that Medlin could work as an estimator with his physical restrictions. The expert went on to testify that the only reason Medlin had not found work was because of the economic downturn and the limited number of estimator positions available.

So what can we take away from this case? When working with claimants in economically depressed industries, don’t underestimate the value of labor market surveys and their ability to identify non-injury related causes of wage loss. Also, be proactive in applying to terminate indemnity benefits when a claimant is shown to be physically capable of returning to work, but is unable to find employment. Just mailing in the job applications isn’t going to cut it anymore.

Jordan Benton is an attorney with McAngus Goudelock & Courie. Founded in 1995, MG&C is a full-service law firm with offices in Columbia, Greenville, Charleston and Myrtle Beach, S.C., and Asheville, Charlotte and Raleigh, N.C. The firm’s practice areas include workers’ compensation defense, employment, banking and consumer law, administrative law, government relations, construction litigation, commercial litigation, products litigation, business law, real estate law and health care and regulatory issues. Benton may be reached at 704-405-4572 or by email.

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