North Carolina Divorce Lawyers Blog
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Worker’s Compensation and Equitable Distribution

By

FOSTER V. FOSTER, 2023-NCCOA-______ (2023) 

  1. Facts: Plaintiff and Defendant married in 2014 and separated at the end of 2019. Plaintiff filed for custody and equitable distribution (ED). Defendant counterclaimed. A trial on ED was held in February and March of 2022. There, the trial court entered a judgment with a slight unequal division in Defendant’s favor. One item that classified as Plaintiff’s separate property was an account with funds sourced from a settlement Plaintiff received pursuant to the Longshore and Harbor Workers’ Compensation Act (LHWCA), and some items of personal property purchased with those funds. Defendant appealed.  

 

  1. Issue:  Did the trial court err in classifying the LHWCA funds as Plaintiff’s separate property? 

 

  1. Holding: No. 

 

  1. Rationale: The trial court is required to classify property as marital, separate, or divisible, then value it, and finally distribute it equitably. In ED, separate property is removed from the calculus. Defendant argued that the trial court erred in classifying the LHWCA funds as separate property belonging to Plaintiff. Plaintiff worked for Academi N.K.A. Constellis Group as a “security specialist” and was working in Afghanistan when he received injuries. Pursuant to the LHWCA, Plaintiff reached a settlement and received “$35,000.00 for past, present, and future medical benefits and $550,000.00 for past, present, and future indemnity benefits, penalties, and interest for a total lump sum of $585,000.00.” For workers’ compensation awards, rewards replacing medical expenses, lost wages, or loss of earning capacity sustained during the marriage are marital property. The portions of the award that replace economic loss after separation are separate property. In this case, Plaintiff received a lump sum. He deposited that sum into a bank account. From the time his LHWCA claim arose to the time he settled, he received $1,377.02 per week. After some math, $154,226.24 was found to be the marital portion of the settlement. Plaintiff also did not comingle the funds with marital money, nor did he jointly title the account—the funds remained in the same account, and any funds used for marital purchases were first transferred from that account to the marital account.