                    COURT OF APPEALS OF VIRGINIA


Present:  Chief Judge Moon, Judge Annunziata and
           Senior Judge Duff
Argued at Alexandria, Virginia


EWC CONSTRUCTION, ET AL.

v.          Record No.   1474-95-4       MEMORANDUM OPINION * BY
                                       JUDGE ROSEMARIE ANNUNZIATA
KENNETH ARNOLD PAYNE                         MARCH 12, 1996


         FROM THE VIRGINIA WORKERS' COMPENSATION COMMISSION

           William C. Walker (Bradford C. Jacob; Taylor
           & Walker, P.C., on brief), for appellants.

           Edward P. Cuccias for appellee.



     On September 7, 1993, Kenneth Payne ("claimant") suffered an

accidental injury arising out of and in the course of his

employment with EWC Construction ("employer").     Employer accepted

claimant's claim as compensable and paid him benefits for total

incapacity from September 14 through September 29, 1993 pursuant

to an award entered February 11, 1994.    On December 1, 1994,

claimant filed an application for hearing alleging a change in

condition and seeking reinstatement of compensation for total

incapacity beginning April 15, 1994.    The deputy commissioner

entered an award for claimant which the full commission affirmed.

 On appeal, employer contends the commission erred in concluding

that claimant was not required to prove that he had reasonably

marketed his residual work capacity.    We disagree, and, for the
     *
      Pursuant to Code § 17-116.010 this opinion is not
designated for publication.
reasons that follow, affirm.


                              BACKGROUND

        Claimant worked as a bricklayer for twenty-two years.   On

September 7, 1993, he suffered a back injury while working for

employer.    Claimant received treatment from Dr. W. Bartley Hosick

who ordered claimant not to work for two or three weeks.

Employer accepted claimant's claim as compensable and paid him

benefits for total incapacity from September 14 through September

29, 1993 pursuant to an award entered February 11, 1994.

Claimant returned to work for employer, but he could work only

part-time due to his back pain.
        Claimant continued to see Dr. Hosick who noted claimant's

continuing symptoms which were unexplained by an early 1994 bone

scan.    Dr. Hosick eventually diagnosed claimant's condition as a

chronic lumbar strain.    Because of claimant's symptoms and Dr.

Hosick's belief that claimant suffered a significant muscular

ligamentous injury to the lower back, Dr. Hosick ordered claimant

to stop working in mid-April 1994 and referred him to a work

hardening program.    At that time, employer began paying claimant

compensation for his total incapacity to work.    However, employer

failed to file a memorandum of agreement reflecting its payments.

        Claimant's work hardening continued from April 15 to May 27,

1994 but was discontinued because claimant's condition failed to

improve.    An MRI conducted at that time failed to identify the



                                 - 2 -
source of claimant's continuing problem.       Dr. Hosick referred

claimant to a spine specialist for evaluation and recommended

that claimant return to work on "a limited capacity" basis if the

spine specialist found no further treatment was necessary.

        Dr. Neal Kahanovitz evaluated claimant on July 25, 1994 and

found no neurological or structural abnormalities.      Concluding

that no further treatment was indicated, Dr. Kahanovitz found

that claimant could return to work on a "medium lifting capacity"

basis.      Claimant did not return to work.   However, employer

continued paying him total incapacity benefits until October 7,

1994.
    After employer ceased paying benefits, claimant filed an

application alleging a change in condition beginning April 15,

1994, the day on which he stopped working.      The deputy

commissioner found that employer had accepted claimant's change

in condition when it reinstated benefits in April 1994.         Because

employer continued to pay claimant benefits without filing a

supplemental memorandum of agreement, the deputy commissioner,

applying National Linen Service v. McGuinn, 5 Va. App. 265, 362

S.E.2d 187 (1987), placed the burden of proving a subsequent

change in condition on employer.     The deputy commissioner

concluded that employer, who did not appear at the hearing, had

not shown such a change in condition and awarded claimant total

incapacity benefits commencing April 15, 1994. 1     The full
        1
          The award provided employer a credit for the payments
it had voluntarily made.



                                  - 3 -
commission affirmed, finding that there was no disagreement that

claimant was totally disabled beginning April 15, 1994.   The

commission concluded that claimant's condition had changed,

employer was aware of the change, employer participated in the

change, and employer had an obligation under Code § 65.2-701 to

file a memorandum of agreement reflecting that a change occurred.
                            ANALYSIS

     Under Code § 65.2-708,
          upon the application of any party in
          interest, on the ground of a change in
          condition, the Commission may review any
          award and on such review may make an award
          ending, diminishing or increasing the
          compensation previously awarded.

The party alleging a change of condition has the burden of

proving the allegation by a preponderance of the evidence.      See

Jones Construction Co. v. Martin, 198 Va. 370, 373, 94 S.E.2d

202, 204 (1956); Pilot Freight Carriers, Inc. v. Reeves, 1 Va.

App. 435, 438-39, 339 S.E.2d 570, 572 (1986).

     Generally, partially disabled claimants seeking an award for

total incapacity, whether on initial application or on

application for change of condition, must prove that they have

made a reasonable effort to market their residual work capacity.
 See, e.g., Washington Metropolitan Area Transit Authority v.

Harrison, 228 Va. 598, 601, 324 S.E.2d 654, 654-55 (1985); cf.

Georgia Pacific Corp. v. Dancy, 17 Va. App. 128, 134, 435 S.E.2d

898, 901-02 (1993) (totally disabled claimants seeking award for

total incapacity not required to prove they made a reasonable


                              - 4 -
effort to market their residual capacity); National Linen Service

v. McGuinn, 5 Va. App. 265, 271, 362 S.E.2d 187, 190 (1987) (en

banc) (same).   Conversely, once a claimant receives benefits

pursuant to an award for total incapacity, the employer bears the

burden of showing a change in condition when the claimant's

condition improves.   See Foust Coal Co. v. Messer, 195 Va. 762,

768, 80 S.E.2d 533, 537 (1954); McGuinn, 5 Va. App. at 270, 362

S.E.2d at 189-90.   In such a case, the employer must prove "a

change as would enable [claimant] at least to do some kind of

selective work within his then capacity."      Messer, 195 Va. at

768, 80 S.E.2d at 537; see also McGuinn, 5 Va. App. at 270, 362

S.E.2d at 190 (employer must introduce evidence that claimant

either able to return to regular employment or had been offered

or provided selective employment within his capacity).

     Here, claimant filed an application alleging a change in

condition as of April 15, 1994, the day his doctor ordered him to

stop working.   Employer does not dispute that claimant was

totally incapacitated from work as of that date and that
                                    2
claimant's condition had changed.       Indeed, employer concedes

that it owed claimant compensation during the six weeks he

engaged in work hardening, and it had, in fact, resumed payment

of total incapacity benefits on April 15.      For these reasons, we

     2
          Since claimant was totally incapacitated as of April
15, he was not required to establish that he had made a
reasonable effort to market his residual work capacity to meet
his burden of proving a change in condition on that date.



                               - 5 -
find the evidence clearly supports the commission's finding that

claimant underwent a change of condition on April 15.      By

statute, the burden was thereafter on employer to prove any

subsequent change in claimant's condition.

     Employer attempts to escape this result by arguing that by

the time claimant filed his application, in December 1994,

claimant was only partially disabled and was, therefore, required

to establish that he had made a reasonable effort to market his

residual work capacity.   Employer's argument is flawed in three

major respects.
     First, claimant's application was based on a change of

condition alleged to have occurred on April 15, 1994.      As

discussed above, the parties did not dispute that claimant was

totally incapacitated as of April 15.

     Second, employer's argument assumes a finding of fact the

commission never made, viz., that claimant was only partially

disabled.   The issue before the commission was whether claimant

established a change of condition as of April 15 which entitled

him to total incapacity benefits, not whether claimant's

condition had improved by some later date.

     Finally, but for employer's failure to file a memorandum of
                                         3
agreement as required by Code § 65.2-701, reflecting its payment
     3
            Code § 65.2-701 provides, in part:


            [i]f after injury . . . the employer and the

            injured employee . . . reach an agreement in


                                - 6 -
of total incapacity benefits to claimant beginning April 15, an

award based on total incapacity would have been entered in

claimant's behalf contemporaneous with his April 15 change in

condition. 4    Had such an award been entered, "employer would have

been obligated to honor the award" until it established a

subsequent change of condition.      McGuinn, 5 Va. App. at 270, 362

S.E.2d at 189; see also Messer, 195 Va. at 768, 80 S.E.2d at 537;

Martin, 198 Va. at 373, 94 S.E.2d at 204; Reeves, 1 Va. App. at
(..continued)

           regard to compensation or in compromise of a

           claim for compensation under this title, a

           memorandum of the agreement in the form

           prescribed by the Commission shall be filed

           with the Commission for approval.    The

           agreement may be prepared by the employee,

           the employer or the compensation carrier.

               . . . Nothing herein contained shall be

           construed so as to prevent settlements made

           by and between the employee and employer, but

           rather to encourage them . . . . A copy of

           such settlement agreement shall be filed with

           the Commission by the employer.
     4
          Based on the undisputed finding that claimant underwent
a change of condition rendering him totally incapacitated, had
employer properly filed a memorandum of agreement, the commission
clearly would have entered an award in claimant's behalf. See
McGuinn, 5 Va. App. at 270, 362 S.E.2d at 189.




                                  - 7 -
438-39, 399 S.E.2d at 572.    Employer's failure to file a

memorandum of agreement violated the statute, and it cannot use

its failure to comply with the statute as a means of

circumventing the burden it would otherwise face.      See McGuinn, 5

Va. App. at 270, 362 S.E.2d at 189-90 ("To hold otherwise would

be to allow an employer or its carrier to unilaterally violate

the clear requirements of § [65.2-701] and thereby frustrate the

purpose behind that statute.").
     Employer argues that the result claimant urges and which we

reach here will discourage employers from making voluntary

payments to settle claims and that the result therefore

undermines the purposes of the Act.      Indeed, the Act encourages

voluntary settlement of compensable claims.      See Code

§ 65.2-701(C); McGuinn, 5 Va. App. at 268, 362 S.E.2d at 188.

However, the result reached here was caused not by employer's

attempt to settle the claim but, rather, by its failure to record

the settlement by filing a memorandum of agreement as required by

statute.   Employer ignores the "equally strong policy that when

agreements as to settlements are reached they . . . be

memorialized in a memorandum of agreement filed with the

commission."    See McGuinn, 5 Va. App. at 268, 362 S.E.2d at

188-89.    This policy serves the fundamental purpose of the Act:

"to protect employees, not to facilitate a deprivation of an

employee's rights by an employer who has not complied with the

statutory requirements."     McGuinn, 5 Va. App. at 270, 362 S.E.2d




                                 - 8 -
at 190 (citation omitted).

     Accordingly, the commission's award is affirmed.

                                                        Affirmed.




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