Vernon R. Sumwalt on North Carolina Misrepresentation in Contract of Employment: Freeman v. Rothrock

Vernon R. Sumwalt on North Carolina Misrepresentation in Contract of Employment: Freeman v. Rothrock

In Freeman v. Rothrock, 657 S.E.2d 389 (2008), 2008 N.C. App. LEXIS 430, a majority of the North Carolina Court of Appeals announced that an employee’s misrepresentations in an application for employment rendered the subsequent employment contract—and also the employer-employee relationship—void ab initio, thus providing the employer with an affirmative defense against an otherwise legitimate workers’ compensation claim related to the misrepresented medical condition.

 This expert commentary by Vernon R. Sumwalt analyzes the court's holding and discusses the consequences of the Freeman case.

Background of case. Mr. Freeman had experienced back injuries in 1992 and 1996 for which he received workers’ compensation benefits from a prior employer, B.B. Walker.  In 1996, his doctors had assigned permanent restrictions of (1) lifting no more than thirty-five pounds occasionally; (2) lifting no more than fifteen pounds frequently; (3) lifting no more than seven pounds continuously; and (4) limited seating, bending, driving, and climbing.  These restrictions prevented Mr. Freeman from returning to work as a truck driver at B.B. Walker, although this conclusion was based on a review on truck driver jobs as they generally exist in the economy, as opposed to any particular truck driving job.  In February 2000, Mr. Freeman applied for a truck driving job with J.L. Rothrock, completing a medical questionnaire in the process.  On the questionnaire, Mr. Freeman denied (1) having prior health conditions such as a backache or “herniated intervertebral disk,” (2) the existence of “any health-related reason” that would have prevented Mr. Freeman from performing the job at J.L. Rothrock, (3) having “any physical defects” or “work limitations” that would have prevented him “from performing certain kinds of work,” (4) having “any disabilities or impairments” that would have affected his ability to work at J.L. Rothrock, or (5) having filed a workers’ compensation claim previously.  As a part of the application process, Mr. Freeman also passed a Department of Transportation physical examination with a medical doctor in which he denied any previous problems with his back.  See Freeman, 357 S.E.2d at 390-392.

Rothrock hired Mr. Freeman in June 2000.  Almost two years later, on March 11, 2002, Mr. Freeman injured his back while cranking a dolly at work.  Rothrock accepted liability and paid workers’ compensation benefits to Mr. Freeman on account of this compensable injury.  After two administrative decisions from Form 24 Applications to Terminate or Suspend Benefits, an Opinion and Award by a deputy commissioner, and an Opinion and Award by the Full Commission that did not allow Rothrock to suspend benefits, Rothrock appealed to the North Carolina Court of Appeals.

For the first time in North Carolina jurisprudential history, a majority of the court not only allowed Rothrock to stop workers’ compensation benefits, but it voided the employment relationship between Rothrock and Mr. Freeman altogether.  This provided a new affirmative defense to an otherwise legitimate workers’ compensation claim.

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