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The Import of McGuinn

On November 17, 1987, National Linen Service v. McGuinn was decided by the Virginia Court of Appeals. Since that time, many questions have arisen concerning what constitutes a de facto award, when is the de facto award applicable, and what defenses, if any, survive an entry of a de facto award.

In McGuinn, the claimant sustained an injury to his ankle in August 1983. Although the claimant had not filed a claim for benefits and no memorandum of agreement had been forwarded to the claimant, the carrier paid temporary total disability benefits from November 22, 1983 through December 17, 1984. Following cessation of these benefits, on January 23, 1985, the claimant filed an application for hearing alleging continuing entitlement to temporary total disability benefits. The claimant alleged the voluntary payments, coupled with the carrier’s failure to submit a memorandum of agreement, warranted the entry of a “de facto” award in favor of the claimant. The Deputy Commissioner agreed, and the Full Commission affirmed.

It is important to note two significant factors which are often lost in the McGuinn shuffle. First, the claimant’s claim for benefits form, filed on January 23, 1985, was within the two year limitation period for filing original claims. Second, it is very significant that the carrier did not dispute the compensability of the original accident. Instead, the carrier relied on the claimant’s failure to market his residual capacity in December, 1984 as a basis for termination of disability benefits. It is regarding this element of the claimant’s prima facie case that McGuinn has significance.

By relying on the marketing issue, the carrier attempted to hold the claimant to his long-standing burden of proving marketing when alleging temporary total disability benefits are owed after a light duty release. McGuinn holds that the entry of a de facto award (based on voluntary payments and failure to contest compensability) obviates the claimant’s burden of proving marketing. McGuinn does not “shift” the burden to the employer (as the employer still has no affirmative duty to produce evidence on this point), but merely relieves the claimant of the obligation to market.

If the employer does want to terminate the claimant’s benefits based on the claimant’s release to light duty, it must do so using the sword (refusal of selective employment) rather than the shield (failure to market). Fortunately, the Commission does not, in almost all situations, force the employer to file an application for hearing prior to the original hearing which results in the de facto award. [See Amigh v. Fox Seko, Const. Inc., VWC File No.: 177-77-47 (May 13, 1997)].

In short, voluntary payments and a failure to contest compensability may result in the entry of a de facto award. After the creation of this de facto award, the claimant has no duty to prove marketing. The employer, as with any effort to terminate an outstanding award, has the burden of proving elements which may give rise to the termination of the outstanding award (e.g. refusal of selective employment, refusal of reasonable and necessary medical treatment, etc.) Of course, the issue then becomes: How long do voluntary payments need to continue to create a de facto award? The short answer to this question is that there is no definitive answer. However, the Commission has held that anywhere from 9 weeks to 5 months is long enough, provided the carrier does not contest compensability. Tatum v. John D. Lucey & Son Plumbing, VWC File No.: 177-73-13 (March 24, 1998). Regrettably, the Commission is intentionally ambiguous. “We decline to establish a bright line test for determining how many weeks of voluntary payments are enough for a de facto award.” Id. Yet, the Commission has stated that “30 days is normally a sufficient period to investigate a claim.” Smith v. Southland Corp., 71 OWC 1,4 (1992).

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These articles are provided for general informational purposes only and are marketing publications of Gentry Locke. They do not constitute legal advice or a legal opinion on any specific facts or circumstances. You are urged to consult your own lawyer concerning your situation and specific legal questions you may have.